Healy v. Beer Institute, Inc.

PETITIONER: Healy
RESPONDENT: Beer Institute, Inc.
LOCATION: Boston Municipal Court

DOCKET NO.: 88-449
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 491 US 324 (1989)
ARGUED: Mar 28, 1989
DECIDED: Jun 19, 1989

ADVOCATES:
Jeffrey Ives Glekel - on behalf of the Appellees
Robert F. Vacchelli - on behalf of the Appellants

Facts of the case

Question

Media for Healy v. Beer Institute, Inc.

Audio Transcription for Oral Argument - March 28, 1989 in Healy v. Beer Institute, Inc.

William H. Rehnquist:

We'll hear argument now in No. 88-449, John Healy v. The Beer Institute; No. 88-513, Wine and Spirits wholesalers of Connecticut v. The Beer Institute.

Mr. Vacchelli?

Robert F. Vacchelli:

Mr. Chief Justice, and may it please the Court.

This case is an action for declaratory judgment and injunction challenging the constitutionality of Connecticut's beer affirmation law.

Under Connecticut law brewers must post their prices once a month on the sixth day of the month, and at that time affirm or swear under oath that that price is no higher than the lowest then being offered in the surrounding states of Massachusetts, New York or Rhode Island.

The law... the price becomes effective on the first day of the next month and is effective all throughout that next month.

Also, under another provision of Connecticut law, brewers are free to change or lower their prices at any time elsewhere, and such a change or decrease in price does not constitute a violation of Connecticut law.

The law is challenged under the Commerce Clause, and three issues emerge: one, whether it contains an impermissible extraterritorial thrust and thus directly regulates commerce in other states; second, whether it constitutes protectionist legislation by neutralizing the competitive advantages in other states; and third, whether it is an indirect burden on interstate commerce.

We submit that the law passes muster under all three Commerce Clause tests and to whatever effect it has on interstate commerce, it is sanctioned by the Twenty-first Amendment to the United States Constitution.

Considering extraterritorial effect, the case of Brown-Forman is on point.

In that case, this Court struck down New York's affirmation law because it prevented brewers from lowering their prices in other states lower than that which was in effect in New York at the time.

The Court noted that that constituted an impermissible extraterritorial effect because it, in effect, regulated prices in other states in violation of the Commerce Clause.

Connecticut's law was struck down in 1982 for this same reason.

And it was amended in 1984 with precisely this defect in mind.

Today under Connecticut law, brewers are free to change their prices in other states at any time, and that price change does not constitute a violation of Connecticut law.

Brewers, however, contend that they do not have the pricing flexibility that the Connecticut statute purports to extend.

New York, they argue, has a 180-day price hold on price reductions, and Massachusetts has a 30-day price hold on all prices.

The Second Circuit agreed and found that there... since there was no difference between what, in effect, occurred prior to the amendment, that even with the amendment, the law still contains an impermissible extraterritorial thrust.

We respectfully submit that it should be clear that Connecticut has no control over the pricing laws in New York or Massachusetts.

Connecticut allows brewers to change their prices at any time and it does not constitute a violation of Connecticut law.

Connecticut has done all that it can to satisfy the statements in Brown-Forman and the prohibitions discouraged there.

Harry A. Blackmun:

Counsel, you have no brewery in the State of Connecticut.

Robert F. Vacchelli:

That's correct, Your Honor.

There is still no brewery in Connecticut.

Harry A. Blackmun:

How does that ever happen?

The... the record indicates... or I think... that beer prices in Connecticut have always been a little bit high.

Robert F. Vacchelli:

Yes.

Harry A. Blackmun:

Why is this?

Robert F. Vacchelli:

Well, the... that is because we submit in Connecticut prior to 1981, the Connecticut laws were congested with regulatory provisions that protected the local industry.

And as a result, liquor prices were high and consumers found it worthwhile to cross the state borders in large numbers.