Joseph E. Seagram & Sons, Inc. v. Hostetter

PETITIONER: Joseph E. Seagram & Sons, Inc.
RESPONDENT: Hostetter
LOCATION: Congress

DOCKET NO.: 545
DECIDED BY: Warren Court (1965-1967)
LOWER COURT:

CITATION: 384 US 35 (1966)
ARGUED: Feb 23, 1966
DECIDED: Apr 19, 1966

Facts of the case

Question

Media for Joseph E. Seagram & Sons, Inc. v. Hostetter

Audio Transcription for Oral Argument - February 23, 1966 in Joseph E. Seagram & Sons, Inc. v. Hostetter

Earl Warren:

-- et al.

Mr. Daly.

Thomas F. Daly:

Mr. Chief Justice and may it please the Court.

This is an appeal from a judgment of the New York Court of Appeals determined by a divided vote 4 to 3, judgments on the Appellate Division and of the special term holding -- upholding the constitutionality of certain provisions of Section 7 and upholding the constitutionality of the entirety of Section 9 of the Chapter 431 of the laws of New York of 1964.

My remarks here are going to be directed entirely to the question of the constitutionality of Section 9.

I'll leave the question of the constitutionality of Section 7, because of the limitations of time, to my brief.

The parties involved here, the appellants are in three categories.

The first are the most of the distillers who sell liquor throughout the United States.

They will be referred to here either as distillers, manufacturers, or the owners of the brand name.

Also, appellants here are importers of liquor from other countries who sell here.

They will be referred to either as the brand owners or as importers.

Also as appellants, are wholesalers who sell the liquor of the various whole -- importers and distillers exclusively in the State of New York.

Mr. Jack Goodman, who is associated with me in this case, will at the conclusion of my remarks have some remarks to make concerning the New York wholesalers.

Now, before I get into a discussion of Section 9 and what it entails and why we think it is unconstitutional, I would like to review briefly the alcoholic beverage control law of New York State because I think with an understanding of what has gone before, it will be more readily apparent why we believe and urge that Section 9 is unconstitutional.

New York, like most of the other states, after repeal in 1933 for the purpose of promoting temperance and at least to limit the social evils that flow from unrestricted consumption of alcohol past an Alcoholic Beverage Control Law.

That law still continues in effect with various amendments which I am going to mention.

Sometime in the late 1940s, the legislature apparently felt that the distillers and some of the wholesalers were taking advantage of the law and were giving discounts and other things that weren't helpful to restricting the evils which the legislation and the Act tried to prevent.

So, at that time, the Act was amended to provide that each distiller and each wholesaler must file each month a schedule of the prices at which they were to sell their liquor, that is, the wholesaler would have to file the price or the distiller or brand owner would have to file a schedule, they are called postings, and they were publicly displayed which would show the price that his commodity was being sold throughout the state to wholesalers and it had to be sold to every wholesaler at that price, less certain discounts which were provided for in the law.

Likewise, the wholesaler had to file each month a schedule which would show the prices at which he would sell to retailers anywhere in the state, and they had to abide by those prices.

In other words, there couldn't be competition between wholesalers, there could be competition between wholesalers but there couldn't be competition between one wholesaler and various retailers.

Wholesalers, after they had posted their prices, however, within 10 days after the original posting, if they saw that another wholesaler was selling the same brands for less, could then reduce his price to the price of the other wholesaler so there was competition as between wholesalers but no competition as between wholesalers and retailers.

Now, that law went on until the early 1950s or the late 1940s and then --

There was no control of the consumer price?

Thomas F. Daly:

Only the contractual fair trade pricing.

So --

Thomas F. Daly:

I'm going to come to that in a minute.

During all this period, they could fair trade by contractual arrangements, but that was the only control on consumer prices.

Now, in the late 40s, it was discovered that there was a price war going on that in spite of price control, the contractual price control, a price war is going on and retailers and other people were selling liquor in a way that the legislature felt again, was not carrying out the objects of temperance and controlling the evils that are thought to flow from the unrestricted sale and consumption of liquor.

So at that time, the legislature passed an Act which became law, which made price control mandatory, and they did that for the expressed purpose and I quote -- I don't quote this, I read this, as a result and for the purpose of eliminating price wars “which unduly stimulate the sale of liquor and wine, mandatory price control will be adopted.”

Now, what mandatory price control was, the state said, the alcohol -- we, the distiller, the wholesaler -- the price set by the distiller for the sale and retail of the brand named product will be enforced by the State.