West Lynn Creamery, Inc. v. Healy, 512 U.S. 186 (1994)

West Lynn Creamery, Inc. v. Healy

No. 93-141

Argued March 2, 1994
Decided June 17, 1994
512 U.S. 186

CERTIORARI TO THE SUPREME JUDICIAL COURT OF MASSACHUSETTS

Syllabus

A Massachusetts pricing order subjects all fluid milk sold by dealers to Massachusetts retailers to an assessment. Although most of that milk is produced out of State, the entire assessment is distributed to Massachusetts dairy farmers. Petitioners -- licensed dealers who purchase milk produced by out-of-state farmers and sell it within Massachusetts -- sued to enjoin enforcement of the order on the ground that it violated the Federal Commerce Clause, but the state court denied relief. The Supreme Judicial Court of Massachusetts affirmed, concluding that the order was not facially discriminatory, applied evenhandedly, and only incidentally burdened interstate commerce, and that such burden was outweighed by the "local benefits" to the dairy industry.

Held: The pricing order unconstitutionally discriminates against interstate commerce. Pp. 192-207.

(a) The order is clearly unconstitutional under this Court’s decisions invalidating state laws designed to benefit local producers of goods by creating tariff-like barriers that neutralized the competitive and economic advantages possessed by lower cost out-of-state producers. See, e.g., Bacchus Imports, Ltd. v. Dias, 468 U.S. 263. The "premium payments" are effectively a tax making milk produced out of State more expensive. Although that tax also applies to milk produced in Massachusetts, its effect on Massachusetts producers is entirely (indeed more than) offset by the subsidy provided exclusively to Massachusetts dairy farmers, who are thereby empowered to sell at or below the price charged by lower cost out-of-state producers. Pp. 192-197.

(b) Respondent’s principal argument -- that, because both the local subsidy and nondiscriminatory tax components of the order are valid, the combination of the two is equally valid -- is rejected. Even granting respondent’s assertion that both components of the pricing order would be constitutional standing alone, the order must still fall because it is funded principally from taxes on the sale of milk produced in other States, and therefore burdens interstate commerce. More fundamentally, the argument is logically flawed in its assumption that the lawfulness of each of two acts establishes the legality of their combination. Indeed, by conjoining a tax and a subsidy, Massachusetts has created a program more dangerous to interstate commerce than either part alone: The Commonwealth’s political processes cannot be relied on to prevent legislative abuse where dairy farmers, one of the powerful in-state interests that would ordinarily be expected to lobby against the order premium as a tax raising milk prices, have been mollified by the subsidy. Pp. 198-202.

(c) Respondent’s second argument -- that the order is not discriminatory because the dealers who pay premiums are not competitors of the farmers who receive disbursements -- cannot withstand scrutiny. The imposition of a differential burden on any part of the stream of commerce -- from wholesaler to retailer to consumer -- is invalid because a burden placed at any point will result in a disadvantage to the out-of-state producer. Pp. 202-203.

(d) If accepted, respondent’s third argument -- that the order is not protectionist because the program’s costs are borne only by Massachusetts dealers and consumers and its benefits are distributed exclusively to Massachusetts farmers -- would undermine almost every discriminatory tax case. State taxes are ordinarily paid by in-state businesses and consumers, yet, if they discriminate against out-of-state products, they are unconstitutional. More fundamentally, the argument ignores the fact that Massachusetts dairy farmers are part of an integrated interstate market. The obvious impact of the order on out-of-state production demonstrates that it is simply wrong to assume that it burdens only in-state consumers and dealers. Pp. 203-204.

(e) Acceptance of respondent’s final argument -- that the order’s incidental burden on commerce is justified by the local benefit of saving the financially distressed dairy industry -- would make a virtue of the vice that the rule against discrimination condemns. Preservation of local industry by protecting it from the rigors of interstate competition is the hallmark of the economic protectionism that the Commerce Clause prohibits. Pp. 204-207.

415 Mass. 8, 611 N.E.2d 239, reversed.

STEVENS, J., delivered the opinion of the Court, in which O’CONNOR, KENNEDY, SOUTER, and GINSBURG, JJ., joined. SCALIA, J., filed an opinion concurring in the judgment, in which THOMAS, J., joined, post, p. 207. REHNQUIST, C.J., filed a dissenting opinion, in which BLACKMUN, J., joined, post, p. 212.