North Dakota Board of Pharmacy v. Snyder’s Drug Stores, Inc. – Oral Argument – November 06, 1973

Media for North Dakota Board of Pharmacy v. Snyder’s Drug Stores, Inc.

Audio Transcription for Opinion Announcement – December 05, 1973 in North Dakota Board of Pharmacy v. Snyder’s Drug Stores, Inc.

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Warren E. Burger:

We’ll hear arguments next in number 72-1176, North Dakota Board of Pharmacy against Snyder.

Mr. Lucas, you may proceed whenever you’re ready.

A. William Lucas:

Mr. Chief Justice and may it please the Court, I am William Lucas representing the petitioner in this action.

In North Dakota, we have a statute which provides that if a corporation applies for a pharmacy permit that a majority to stock in that corporation must be owned by a registered pharmacist in good standing, actively and regularly employed in and responsible for that actual management, operation and supervision of that pharmacy.

Now, the respondent in this action applied for a pharmacy permit.

And in their application, they disclosed that all of the stock in their corporation was owned by Red Owl Stores, which is a large supermarket chain in the Midwest and that it was not known if any of the shareholders of Red Owl were registered pharmacists.

The State Board of Pharmacy in North Dakota then denied this application based upon the reason that they did not comply with the ownership law that I have mentioned.

The respondent then appealed to the District Court to raise various constitutional questions mainly the Due Process Clause of the Fourteenth Amendment, the Equal Protection Clause and various constitutional issues on the North Dakota Constitution and then a motion for summary judgment.

The District Court relied on the Liggett versus Baldridge’s decision of this case and declared that this statute was a violation of the Due Process Clause and also a violation of the Equal Protection Clause and unconstitutional.

The petitioner then appealed to the North Dakota Supreme Court, and the North Dakota Supreme Court basically relied entirely on the Liggett versus Baldridge’s decision of this Court in 1928 and stated being bound by the decision in Liggett versus Baldridge and see an insufficient reason to distinguish that decision from this case, we sustain a trial court’s conclusion.

The Liggett decision was based upon a Pennsylvania statute —

William H. Rehnquist:

Mr. Lucas, before you go any further, my understanding of the procedural history of the case may be a little bit different to yours.

Let me check it with you.

As I understand, the North Dakota District Court, your trial court, gave summary judgment for Snyder’s.

A. William Lucas:

That’s correct.

William H. Rehnquist:

And that was on the basis that the constitutional provision that the North Dakota Law violated the constitutional provision and that the Pharmacy Board’s conclusion that the drug store did not meet the space requirements was also invalid for the first summaries.

And I take it the Pharmacy Board had two reasons for turning down Snyder.

A. William Lucas:

Well, there is the ownership compliance problem and then the physical safeguard problem.

William H. Rehnquist:

And then, when that was appealed by you to the Supreme Court of North Dakota, the Supreme Court of North Dakota affirmed on the constitutional issue but reversed the District Court.

Didn’t it on the space issue saying that the board should have further proceedings?

A. William Lucas:

That’s correct Your Honor.

They decided there was a fact question in regard to the physical safeguards.

William H. Rehnquist:

Do you think this is a final judgment then for purposes of our jurisdiction?

A. William Lucas:

Well, it was final in regard to the constitutional question.

It was remanded back down for an additional hearing in regard to the physical safeguard problem of the facility.

William H. Rehnquist:

And I suppose the Pharmacy Board could fine against Snyder’s on that issue and they could lose — they could be denied the license and there’d be no more case, would there?

A. William Lucas:

Well, it would be appealed.

I imagined by the respondent again if it adverse on physical safeguard feature.

William H. Rehnquist:

But, very likely not on a constitutional basis?

A. William Lucas:

No.

A. William Lucas:

I think that the decision was final in regard to the constitutional questions presented.

On the Liggett decision, that involved the Pennsylvania statute which required 100% ownership by a pharmacist and both, the North Dakota Supreme Court on the Liggett decision were based entirely on a Due Process Clause of the Fourteenth Amendment.

We feel that the basic issue here is whether the Liggett versus Baldridge decision is proper authority for the North Dakota Supreme Court to rely on or if it has been reversed or if it should be reversed.

Now, there has been a large change in the philosophy of the Supreme Court in regard to what legal writers have referred to as Economic Due Process since the Liggett versus Baldridge decision.

In our briefs, we traced this history citing the Lochner, Adkins and Coppage on the later cases which have rejected those cases.

In examining the later cases such as Griswold versus Connecticut, Ferguson versus Skrupa, Williamson versus Lee Optical, Daniel versus Family Security, Savion versus Hostetler.

It’s very clear in my examination at least that the doctrine that prevailed in Coppage, Adkins and Lochner cases has been abandoned by this Court.

This Court has stated we emphatically refused to go back to the time when we used the Due Process Clause to strike down state laws, regulatory or business in economic affairs because we feel they are unwise and prudent or out of harmony with some particular school of thought.

The Court has stated we do not set as a superlegislature to judge the wisdom need reasonable on us or merits of state laws that touch economic problems or business affairs or social conditions that under our system of government, these issues are properly left to the legislative branch of government.

Now, in the Daniel versus Family Security Life case, specific reference was made to the Liggett case and has said that the rational followed in that case did not find expression in the Liggett versus Baldridge decision and that there has been a pronounced shift of emphasis since the Liggett versus Baldridge decision.

Also, I have stated various State Court decisions that have said that Collins and Liggett have been seriously limited if not completely undermined.

Now based on these decisions, we feel there is an extreme presumption of constitutionality and validity of state legislation in this particular area that if the North Dakota legislature determined that there was an evil present and this was a rational way to prevent this evil or to correct the exposure to this evil that this is efficient to sustain the constitutionality and validity of the statute that if any set of facts can reasonably justify the statute, we feel that is efficient.

Now, the respondent, in their brief that raised also the Equal Protection Clause and amicus brief for the National Association of Chain Drug Stores devoted more time to this.

I think this basically is governed by the same standard of review as the Due Process Clause that only invidious discrimination is prohibited and the states have wide latitude in this regard.

I think it’s got the same standard as the Due Process Clause and in effect, it should be also left after the states in their own wisdom and judgment as far as the a passage of such legislation.

Now, the amicus of National Association of Chain Drug Stores also raised the Commerce Clause issue and this was raised for the first time on appeal and I don’t think it’s properly raised or should be under consideration here when it is raised for the first time on appeal.

However, the case as I cite had to do mainly with the State’s attempt to protect local industry at the exclusion of national industry or some outside national commerce depot and that the case as they say such as Dean versus City of Madison where case is where the state attempted to protect the local industry such as requiring that milk process within five miles.

It had to be a process within five miles in the City of Madison.

And this particular statute applies at what we have in this case equally to local corporations, local chain stores — we have local chain stores or chain stores within the State of North Dakota and this law applies equally to those as well as any national chain stores that they might refer to.

Also, we do not feel that this statute has anything to do with interstate commerce.

I think it’s safe to say that there are no prescription drugs manufactured in the State of North Dakota.

And I think, I can also say that all prescription drugs that are properly approved by the Federal Government are available in North Dakota.

And that the volume in sale of prescription drugs of course is governed by prescriptions from doctors.

And if for example, we led a hundred more chain stores or a hundred more stores opened in the state, theoretically, there will be no greater sale of prescription drugs because they are limited to prescriptions and I think they would have to point out that there are — it’s the demand for prescription drugs which are not being filled in the state and there is no evidence of course in that regard.

Mr. Lucas, what is, in your opinion, is the real purpose behind the statute?

A. William Lucas:

Well, we feel it is related to the public health and welfare.

Do you want me to cover that point, I would do it at this time.

Well historically, you know what the impetus was and its enactment in North Dakota or Minnesota or South Dakota?

A. William Lucas:

Well, the primary purpose at the time, I think one of the main purposes was to prohibit physician ownership of drugstores.

Precisely.

And what has that therefore to do with public health?

I think you’re quite correct when you made that statement and I —

A. William Lucas:

In California, there is a medical clinic case and they had hearings in there and the decision is documented and there is an inherent conflict to interest in positions only in a pharmacy.

I can imagine a more — what a tragic situation.

It’s ethical not a public health approach, is it not?

A. William Lucas:

Well, it’s related to the public health physician of course.

He can call the prescriptions.

They don’t have to go through his store.

He can charge higher prices.

He can carry a lower inventory of items and he can limit his prescriptions to certain items which make it more profitable for him.

The public may end up using more drugs.

On this approach, however, what justifies then the hospital exemption on the statute?

A. William Lucas:

Well, mainly because their — a physician can make or dispense his own prescriptions I suppose in a hospital that feel it will be supervised properly by physicians in the hospitals.

They want…

Presumably, a physician own a pharmacy would be supervised by a physician?

A. William Lucas:

But in the hospital, it won’t be owned by the physician.

It will be owned by the hospital.

Well, or some place hospitals are owned by physicians.

A. William Lucas:

That is correct.

I don’t know that there are any in North Dakota but apparently, the physician is that they will be probably supervised and will not result in a danger to the public account.

I have one last question.

Suppose a pharmacist owning a drug store sells his stock down to 49%, what happens as a practical matter?

Does he have to go out of business?

Does the place have to go out of business?

A. William Lucas:

If a pharmacist sells his stock down to 49%?

Yes, to a non-pharmacist.

A. William Lucas:

Yes.

You would not be in compliance then with the statute.

That is correct.

He could not do that.

A. William Lucas:

And still —

Would your Board then put the put them on a business?

A. William Lucas:

That has never happened to my knowledge.

I suppose it would have to be a determination of Board at that time but that is the way the statute reads.

I might add up that Pennsylvania and Maryland also have the anti-physician prohibition of ownership with pharmacies.

And also, in the United States Senate, there is a HART (ph) bill in the various hearings in the Senate and I think that it was determined that the abusers were shown in that record as well as the California case.

Well, it was distinct, ethical problem at one time perhaps still is.

You’ve heard of the California situation.

A. William Lucas:

I think it is.

Also, we feel that non-pharmacist ownership was resolved in a subordination of professional responsibility and professional service to commercial motives.

Now, we feel they might emphasize profit and there’s lot of ways that they can emphasize profit and the investors and non-pharmacist on stores of course are looking for a return on their investment.

And they can do such thing as using drugs for legislators to bring traffic into sell their other products, branch builders and grass seeds and this other thing.

They can keep their inventory down and only carry fast moving items so you can understaff a pharmacy so that the pharmacist has to work long hours with very little or brief rest or time off their lunch which results in mental fatigue and the possibility of an error in filling a prescription.

But isn’t all of that equally true with pharmacist’s own pharmacy?

A. William Lucas:

We’ll we feel that a pharmacist — a professional would have to be more sensitive to these problems.

And what i realized that public service and public responsibility more of a police within a profession, similar to perhaps the law provision that we have laws that may protect these problems in some areas but it’s an enforcement problem.

And in North Dakota, we have only one inspector of these, perhaps in the state board and he’s got all these other duties and he simply can’t enforce these problems and we feel that this in some way would resolve any internal policy in other profession if the pharmacists have control.

How can we be sure in one fact?

If your opponents prevail here, I take it they do not object to any provision that the pharmacy itself shall be run by a registered pharmacist?

A. William Lucas:

No.

They have no objection in that regard.

In their brief, they admitted that prohibition and physician ownership is a valid purpose.

They recognized that in their briefs.

Warren E. Burger:

Going back a minute to these propositions that Mr. Justice Blackmun was inquiring about.

Even if it isn’t demonstrable or provable that these premises on which the legislation was enacted are actually true, isn’t the constitutional question whether a state legislator has the right to think that they have an impact on public health?

A. William Lucas:

I think that’s the plan I am trying to make is that if the believe and that they bought it in, they did believe it to be a rational basis that statute for protection.

I think if this is true, that is all that is required that the Court’s are not going to try to second guess the legislature and why they did this.

That is a presumption that it’s a valid purpose and a valid statute.

Mr. Lucas, how many states have statutes as rigorous as this requiring that only pharmacists may own drugstores?

A. William Lucas:

North Dakota is the only one with majority requirement.

A. William Lucas:

Michigan has a 25% requirement.

It’s gone to the Supreme Court three times and it has not to date by majority decision been declared unconstitutional.

It’s a very unusual situation there and two or three of the Justices wrote that they thought it was unconstitutional.

One wrote that was his opinion as first and it’s — every Judge wrote his own opinion.

The Justice wrote his own opinion and there’s no majority decision in that Court.

And New York, I understand passed this legislation of a recent session and it was vetoed by the Governor based upon the Liggett versus Baldridge decision and Alaska I believe has this recently which was —

Are you saying, the State of New York does not allow chain drug stores?

A. William Lucas:

They do.

Oh!

A. William Lucas:

Just a provision — a statute similar to ours was passed recently and was vetoed.

Vetoed.

Oh!

Well, the arguments you make in support of a rational basis for this statute are not in the record, are they?

A. William Lucas:

They are not in the record because this was decided on a motion for summary judgment.

We did not have the opportunity to present evidence in this regard.

In Michigan, they had various hearings and this is a well-documented testimony from pharmacologists and practicing pharmacists in Michigan and various other individuals.

We may have wanted that opportunity but we did not have it.

You think you could produce evidence?

A. William Lucas:

Yes.

Despite the experience in 48 other states?

A. William Lucas:

I’m certain that we can present the evidence.

I’m sure there’ll be contrary evidence too, but certainly it will be very debatable questions.

When was the statute enacted?

A. William Lucas:

1963.

Is there any documentary legislative history that one can get from your state legislature, Mr. Lucas?

A. William Lucas:

I think it all as in the respondent’s brief.

They have a short synopsis of the reasons given at that time but it’s just in one branch.

Either the Senate or Congress it doesn’t cover both hearings.

But I believe that hearings were held in both Houses and this was their judgment after the hearings.

I think one of them.

Without hearings transcribed in?

A. William Lucas:

No, they’re not.

Just shortened notes or notes by whoever is employed at that time.

How far back was it for this kind of law to go in your state?

A. William Lucas:

Until 1963 as when it was passed.

But we thought it was one in 1920?

A. William Lucas:

Not in North Dakota.

The Pennsylvania and New York statute were 1920 and 1929.

Mr. Lucas, I am not sure I could hear Mr. Justice Powell’s question and I may be repetitious here.

If you should prevail, would you wish to have the case remanded for the development of a record on the issue of public health?

A. William Lucas:

Well, we’ve asked for that before and that would be fine.

Basically, they just like to have Liggett versus Baldridge if it is to be reversed –clearly reversed at this time and North Dakota’s Supreme Court relied to completely on Liggett Versus Baldridge so that would result in the reversal of North Dakota’s Supreme Court we believe.

William H. Rehnquist:

Well ordinarily, the way that the rational basis test is applied isn’t by testimony and hearings in the lower court or it’s that if any state or facts can be conceived by the Court.

You don’t generally rely on live witnesses in that sort of —

A. William Lucas:

Well, that’s true that’s why I’m throwing out these arguments as relating it to the public account.

You said earlier that the constitutional question was closed?

A. William Lucas:

If it was reversed — it was in the North Dakota Supreme Court and that’s why we feel fear.

And if this Court would reverse that decision, that would close at one point.

Well, I don’t understand why this should be opened or closed been right?

A. William Lucas:

Well, the question on the physical facility is still open whether they have proper receiving areas so we don’t have carry and the drugs coming down the same conveyor belt, things of this type.

And a security measure is around the facility is open.

But the constitutional question is closed against the —

Do you also stop the drugstore from selling attract us too, while they have it?

A. William Lucas:

[Laughter] Well, that’s what’s happened.

They got into all these other areas.

Warren E. Burger:

If Snyder’s Drug prevails here, in other words if the Supreme Court of North Dakota decision remain standing.

Under your North Dakota Statute, could the Red Owl Supermarket have one side of the market for groceries and all the other things they sell and the other side of the same room for the drug store?

Or are there prohibitions against that?

A. William Lucas:

It could.

We require a certain physical safeguard such as a chain door or a barrier of some kind which can secure the area from the rest of the areas so when they stock — when they are stocking in shelves.

A. William Lucas:

They’re not walking in and out of the pharmacy too.

But they could chain off an area of some type as long as they are secured.

Now, let’s assume that the Supreme Court of your State had affirmed on both grounds that these people were entitled — let’s assume that they affirmed on both grounds, would you come here?

A. William Lucas:

That they would have declared our statute in constitution, you mean?

Yes.

But they also said that they were not entitled for another reason.

A. William Lucas:

No, I don’t believe we could have come here.

Well, the — why did you come here now then?

A. William Lucas:

Well, I think that —

Because both grounds were before the — before your Supreme Court.

A. William Lucas:

Well basically, I think it’s because they relied entirely on Liggett versus Baldridge and so as my position on this Court, we think it reverse that issue.

I know, but they still may not be entitled to the license.

A. William Lucas:

Because of physical safeguards?

Yes.

A. William Lucas:

But it would still mean that our statute was constitutional, the ownership statute.

That may be so.

But let us just say, if the Supreme Court had said when the statute is unconstitutional, but these people are not entitled to do it anyway for another reason based on state law.

You couldn’t have come here just because they declared your statute unconstitutional.

A. William Lucas:

Well, we think that raise us a constitutional question which would allow us to come here.

There is an adequate state ground for that kind of decision that Justice White is talking about that whether they win or lose on the constitutional question, they’ll still be barred by a decision that’s adequately based on state grounds.

So, I don’t — is that the difference been than the case– then the case comes to us narrow or it doesn’t seem to me to be very much different?

A. William Lucas:

Well, I think it’s basically just whether this is a proper decision of the Court of the — in Liggett versus Baldridge since they relied entirely on Liggett versus Baldridge.

We are talking about our jurisdiction, that’s what we’re talking about.

A. William Lucas:

Yes, sir.

Well, isn’t this just another way of uttering Mr. Justice Rehnquist’s question about the finality of your judgment and it’s obvious that the Justices in either side of me have some questions about it.

A. William Lucas:

Well, our statute is declared about each of the Due Process Clause the U.S. Constitution had — I think it’s jurisdiction to be here.

Warren E. Burger:

But that wouldn’t forever bar you from getting here on the constitutional question.

What if the next time around with another drug operation, they found them qualified and then rested on this prior holding? You could come up – presumably, you could try to come up here again, couldn’t you?

A. William Lucas:

If our statute was still determined to be constitutional, it’s still an event.

I could speak and use it again, but I don’t think that that would be —

What we would have to do in the meantime would be to try to enforce the statute in the face of the adverse decision of the Supreme Court of your own states.

A. William Lucas:

Which we can’t do at this point.

William H. Rehnquist:

Or in this particular case, I take it that if the thing went back to the Pharmacy Board and the Pharmacy Board decides that the space requirements are met, you could still appeal that through the North Dakota Supreme this system, you may lose on that issue, you’ll certainly lose on the constitutional issue because there’s no indication that the Supreme Court of North Dakota will change its mind.

But then, you will have a genuinely final judgment where the issuance vel non of the license turns on the constitutional question and nothing else.

I suppose you’d also have a final judgment since if you conceded — if the board not conceded, otherwise these people are entitled to others aside from the stock ownership that these people are entitled the license?

A. William Lucas:

That’s correct.

Do you, yes you don’t or do you?

A. William Lucas:

No, we don’t.

We think there’s still a physical safeguard problem but I don’t think it’s as serious as the constitutional problem.

We feel that professional pharmacies are going to offer certain services that non-professional pharmacies may not.

A lot of these services don’t resolve in any volume or profit or anything to the pharmacy.

Drug consultation is one item which we feel that professionals will give by counseling patients on interaction of drugs or incompatibilities or abuse of this type.

A new area is not too very new but in New Jersey, they require a medication profile monitor and a pharmacy then keeps track of all drugs prescribed and dispensed to a particular patient.

And if he sees two or three or four different doctors, the pharmacy has a record of all items dispensed that that patient is receiving.

We can monitor these prescriptions and then tell if there are any incompatibilities or abuse or other date prescriptions things of this type.

It also offers delivery, emergency hours and that open charged accounts which a lot of these larger chain store drugs don’t.

And we feel that these are professional services that are related to public health and welfare and should be offered.

Now, we feel that pharmacy is a profession that’s been decided by case law and statute and we don’t feel that it should be treated any differently than a professional law, medicine, optometry or dentistry that we had two cases in the U.S. Supreme Court on Optometry and Dentistry which state that a corporation cannot practice through licensed individuals.

Those particular professions do we feel that the profession of pharmacy should be treated the same way.

We submit that the philosophy of Liggett has been abandoned and we ask that it’d be clearly reversed to this time and that therefore the North Dakota Supreme Court should also be reversed.

Subject to question cited —

Mr. Lucas, may I ask you just one question? I think that we’d all agree that practicing the profession of pharmacy could be accomplished only by a licensed pharmacist.

But here, we are talking about ownership.

Would you not accomplish of the essential objectives of your law?

A. William Lucas:

We don’t think so.

We want the people in the position on making a policy to be professionals.

A pharmacist has to yield to a non-professional if that non-professional owns the place.

He either says, you do this or you lose your job.

And we don’t want a professional yielding in being in that position and we want the policy makers to be professionals so that they will offer all these services that we think are necessary.

Well, isn’t the pharmacist himself drawn by the rules of the Pharmacist Association of the State?

A. William Lucas:

He is but when —

Is it offensive from doing such thing?

A. William Lucas:

It is Your Honor.

But if non-owner says you do this or you lose your job, what are you going to do?

Well, you have a choice of losing your license or your job?

A. William Lucas:

Right.

But —

It’s your choice.

A. William Lucas:

We feel that the professionals to be more sensitive —

It is your choice to make.

A. William Lucas:

Right.

We feel that the professional pharmacist to be more sensitive in this area of professional responsibility and professional service.

And he will not subordinate these objectives to commercial motives.

And the pharmacists in North Dakota, they have enough money to run these thing?

A. William Lucas:

Well, they’re doing it, yes sir.

Yes, Your Honor.

Warren E. Burger:

Well, your point on that square must be that a if a pharmacist was a subordinate to a manager of the establishment and someone tried to get a prescription illegally or use an expired prescription, and he was put under the pressure that you speak of.

Number one, if he committed the illegal act, he wouldn’t be likely to report it to anybody, I assume that’s reasonable.

A. William Lucas:

That’s correct Your Honor.

If he refused to commit the illegal act, someone, not a pharmacist might carry out the illegal act.

Give a prescription that should not be given.

Give a medicine without a prescription which should not have been done and thereby the public health is injured.

A. William Lucas:

We feel that it is, Your Honor.

Also, I placed on the responsibility a non-pharmacist is not competent to really determine the competency of a particular pharmacist.

And if he is incompetent and there is a misconduct, he will say, “Well, how could I know? I’m not a pharmacist.”

I have big problem about this stockholders running to pharmacist.

I would think the stockholder wants to return on his money.

He is not doing if you can have it whether you filled this prescription or not, the stockholders are not going to supervise the pharmacist about it.

A. William Lucas:

Well, majority ownership means control.

That gives you the majority and the board of directors which determine policy and they want —

As to provide the new comer or a new batlle wise it or what have you but I would assume that every stockholder wouldn’t even know what a drug was, right?

A. William Lucas:

But we think that if they are pharmacists, they are going to know.

If they’re —

How many pharmacists do you have now at the Court?

A. William Lucas:

I’m not sure, Your Honor. I mention to do that.

Because one, whether you don’t limit the number of pharmacists that way.

A. William Lucas:

Well, they would be limited to — Well, one pharmacist could own more than one pharmacy under this law if he has majority of control of each pharmacy.

We have a local chain which probably has six locations in six major cities and it could be owned by one individual if he had majority ownership.

Now, we want a policy that —

And it could be that the pharmacies under the owner has given up his pharmacy just to collect his money, couldn’t it be?

A. William Lucas:

Well, it could be.

But at least this one would ensure that you would have some understanding of the profession and —

But wouldn’t be sure that he practice it, would it?

A. William Lucas:

No.

But it would be more likely that he would watch it and understand the professional objectives.

Warren E. Burger:

Again, does it not come back to whether it is rational for the North Dakota Legislature to believe that it’s more likely, not whether you can prove that it’s more likely?

A. William Lucas:

That’s our point that if any state can be conceived that that is just a bias.

If he voted it, they must have thought that they were against.

Warren E. Burger:

Very well, Mr. Lucas.

A. William Lucas:

Thank you.

Warren E. Burger:

Mr. Vogel.Mr. Mart R. Vogel

Mart R. Vogel:

Mr. Chief Justice and may it please the Court.

In response to the several questions that were raised on the jurisdictional issue, this is not a final judgment.

The judgment entered in the case on the admit to our by the trial judge specified or directed the Pharmacy Board to hold a hearing on the issues raised by the board in connection with the space for the pharmacy within 60 days.

William H. Rehnquist:

That was in response to the Supreme Court’s order?

Mart R. Vogel:

Yes, Your Honor.

If I may, I would like to take off a few minutes to discuss the chronology of the —

Well, may I ask before anything.

Are you suggesting there is no jurisdictional question in line to which you just said?

Mart R. Vogel:

I am merely answering the question that Mr. Justice Rehnquist first raised and that is whether or not it is a final judgment.

Mart R. Vogel:

I don’t believe that it gets —

Well, if it’s not?

What if it’s not, what happen to jurisdiction?

Mart R. Vogel:

Well, it’s the question —

I noticed, in your response in the petition per se, in jurisdiction, you simply have a sentence.

This panel does not question the jurisdiction of the said court.

Mart R. Vogel:

That is correct.

We did not in our brief say it.

Yes.

Mart R. Vogel:

My own opinion is, I would like to see a final decision out of this Court under constitutional issue.

Of course, even though — I know everyone who comes here would like I can do that.

But we do have limitations of jurisdiction to the Court.

Warren E. Burger:

You would acknowledge that you can’t control a jurisdiction by stipulation.

Mart R. Vogel:

Yes, Mr. Chief Justice.

While we —

What if there’s no jurisdiction here, the dismissal still got the benefit of their own State Supreme Court having declared unconstitutional on the statute.

You won’t declare that?

Mart R. Vogel:

Indeed, sir.

We do.

Warren E. Burger:

Is there any question about the rights if that — of course, were followed the rights of the states to try to get back here again after they resolved the factual issues in your state court?

Mart R. Vogel:

I should think that they could based upon a final judgment, assuming for example that the board’s finding with respect to the space requirement were not supported before the trial judge affirmed on appeal to the Supreme Court.

I assume that they could take the appeal then if you were or not the appeal, but could I apply again for a writ and if you granted it, then we would be back here.

Want us through say it work, it right?

Mart R. Vogel:

We want you to say our court.

Even though you — we have the jurisdiction?

Mart R. Vogel:

I am merely answering a question, Mr. Justice, about whether or not the judgment was a final one.

And honestly, it isn’t.

Warren E. Burger:

You don’t have to justify being here because you didn’t here on your own, didn’t you want it? [Laughter]

Mart R. Vogel:

In fact, we were very surprised, to tell you the truth, you’re your writ came down.

Warren E. Burger:

All of these factors and not always disclosed in the petitions on that position.

Warren E. Burger:

Did you — I don’t recall, but did you challenge that in any way?

Mart R. Vogel:

No, we did not.

Warren E. Burger:

I think as Justice Brennan said, you’d rather consider jurisdiction which would perhaps allow the further examination into that subject.

Mart R. Vogel:

Yes, I am sure that it would allow it and — well, we overlooked it.

We used to be honest about it.

I would like to go into this history a little further than it has already been dealt out.

Because if — I think establishes a real purpose, the object that the legislature had in passing this Act.

The law in 1963 came into being after an unsuccessful attempt by the Board of Pharmacy was made to eliminate by regulation doctor-owned pharmacies.

They attempted to do that by the passing of a somewhat similar statute except by regulation as we have now aimed at the positions.

And of course, the expressed purpose of the statute from the minutes of the Senate Committee where this law originated established that it was to prevent doctors from taking over pharmacies and to supply the means or the legal remedy to prevent that from being done.

Now, Mr. Lucas made the statement that we agree that doctor-owned pharmacy is or could be an evil.

We don’t admit that, we don’t concede it and we’ve never said that.

We merely indicated that there might be assuming that there were evidence to establish it.

There might be a legitimate purpose in preventing physicians from also owning or operating pharmacies.

Then in 1968, the family centered drugstore applied for a permit and this was rejected by the Board of Pharmacy upon the same grounds that the board utilized in the instant case.

It’s been difficult for me to sit here and imagine that Liggett is still good law.

I’ve been here quite a while and never been here as I recalled before asking for reaffirmation of it, reaffirmation of the principle.

It belongs to some I’ve cover it. [Laughter Attempt]

It passed into the limbo.

Mart R. Vogel:

Yes.

Why doesn’t the state have the right to control corporations doing business in the state?

Mart R. Vogel:

They do have.

I don’t understand it.

Mart R. Vogel:

They do have the right.

But if I may —

Because this is the old substantive due process.

This is the old cases.

Well you know it.

You’re familiar with them.

Mart R. Vogel:

Yes, I am familiar with the old cases.

Counsel for Liggett was Owen J. Roberts.

Owen J. Roberts later sit on this Court.

Owen J. Roberts was a great advocate of substantive due process which is alright.

I mean, that is a permissible — but I just can’t imagine.

I might Shepardize this thing to see if this actually still exists.

Have you Shepardize it?

Mart R. Vogel:

Yes Your Honor, we have.

Aren’t you astounded that it’s still around? [Laughter]

Mart R. Vogel:

No, you’ve never overruled it and you have the opportunity of overruling.

I personally have?

Mart R. Vogel:

I refer to the Court in the plural.

In fact, I believe, it was in 1949 that — was it Mr. Justice Clark who referred to the Liggett case indicating that it had been narrowed but not stating that it had been overruled and —

Why couldn’t the state say that the corporations can’t be use at all in this peddling of drugs?

Mart R. Vogel:

The state —

Pardon?

Mart R. Vogel:

Possibly, the state could do it then.

Warren E. Burger:

Just as they do — to pass it to the practice of medicine for example.

Practice the law.

Mart R. Vogel:

Perhaps that’s right.

Corporation, foreign corporation coming into this —

Then what’s — how can you justify this in terms of modern points or reference to the constitution as we know?

Mart R. Vogel:

Because we say that the standard is still the same as it was in Liggett.

Well, the Due Process Clause of the Fourteenth Amendment is still on the constitution.

Mart R. Vogel:

And so is Equal Protection.

William H. Rehnquist:

What about Vlandis against Kline, do you think that lands any support?

Mart R. Vogel:

I beg your pardon sir?

William H. Rehnquist:

Do you think Court’s decision last term in Vlandis against Kline, the residency requirement for out of state tuition lands some support to your position?

Mart R. Vogel:

Yes, I think there are several cases from this Court that lands support.

The recent cases, the Eisenstadt case for example, the Lynch case, I think they both came down in 1972.

I think there’s the, is it the Goldberg case that came down in 1971.

There’s Griswold against Connecticut and there’s Rowe and there’s Doe.

Mart R. Vogel:

I think there are a number of cases that indicate that there could be at least some changing turnaround in the Court’s deal of property rights as compared to the Court’s view of liberty in the Fourteenth Amendment.

Warren E. Burger:

In which category do you put the operation of a pharmacy by a corporation?

Mart R. Vogel:

I would put the operation under both due process and equal protection and as Mr. Lucas —

Warren E. Burger:

In the property you’re talking about.

Interferes with the property law?

Mart R. Vogel:

Yes, the right own to property.

And not only corporations, Mr. Chief Justice, but also, this law strikes it in individual.

An individual account if he is not a pharmacist owned a pharmacy.

And not only that, but our law is more restricted even in the Pennsylvania statute license.

Warren E. Burger:

But, you can’t practice medicine in North Dakota.

I assume, without meeting North Dakota’s standards, isn’t that right?

Mart R. Vogel:

That of course is true.

And you can’t practice pharmacy without meeting North Dakota standards.

Warren E. Burger:

Well that’s really what it comes down to is the legislature had said that the — in effect that the operation of a pharmacy establishment is something for pharmacists primarily.

That’s the real contention here, isn’t it?

Mart R. Vogel:

Oh, yes.

As they put it on an ownership basis, they say that due is not really the operation of the pharmacy.

The pharmacy must still be operated by a licensed pharmacist.

It must be run and managed by a licensed pharmacist and we propose to do that so that when the state comes in and says that no one except the pharmacist may own a drugstore.

That is where we say in view of the showing that we made before the trial court.

And although Mr. Lucas says he had no opportunity of introducing any evidence to the contrary, he had every opportunity of doing it.

He could have presented by deposition of course, by affidavit and he was required to do so under our rule with respect to summary judgment and also by the decisions of our Supreme Court.

That would be only.

But you wouldn’t say that no corporation can own a pharmacy?

Mart R. Vogel:

I beg your pardon?

Could North Dakota pass a law saying that a pharmacy cannot be owned by a corporations?

And I am going to combine that law and medicine, right after you answer.

Mart R. Vogel:

Well, Your Honor, given this criteria, if such a statute, there is a real substantial relation to public health safety and morals, then yes, I’d say that it can.

Well, why can the — say a lawyer cannot practice as a corporation?

Mart R. Vogel:

Well, the state does so.

And my view is, our view and I think we’ve suggested it in the brief is that a lawyer and his client is entirely or represents an entirely different relationship.

Like a physician —

Mart R. Vogel:

It is like a physician and patient but it is not like a physician and pharmacist or a physician and drugstore.

William H. Rehnquist:

Mr. Vogel, your statement a moment ago about Mr. Lucas being under an obligation to supply affidavits under North Dakota summary judgment procedure.

That would be limited to the situation where there was a disputed issue of fact.

Mart R. Vogel:

It would be.

And Mr. Lucas in his return to our motion for summary judgment flatly stated that with respect to the constitutional issue, it is solely when at law and he produced no evidence which he couldn’t.

William H. Rehnquist:

Can I — I suppose that the ordinary way, under the rational basis test that you justify a statute isn’t by a parade of witnesses but by arguments as to conceivable states of facts that are really considered by courts pretty much in the abstract, aren’t they?

Mart R. Vogel:

Well, under our rule as I remember, it must be more than mere argument.

Well, under your law.

But under the federal constitution law of the state, it directly says that there’s no need for evidence if is using a gradual basis.

Mart R. Vogel:

Well, perhaps that I guess is right.

But before the lower court, there is no indication whatsoever of any factual situations which could result in upholding the statute as being one bearing substantially upon public health, safety or welfare.

There wasn’t the slightest indication.

And as the Supreme Court of North Dakota pointed out, there was no assurance.

But if the Court had sent this back for an evidentiary hearing, what evidence would or could be produced?

In reading the briefs submitted by the appellant and the amicus, these imaginary situations which they call attention to as text are the credulity.

I would think of an impartial judge –I’m not being [Laughter Attempt] of course, but my — to contend that the chain store drug business is interested only in commercialization that the drugs that they put out could be poor drugs.

Warren E. Burger:

Well, what would you say about the language I think in McGowan against Maryland and perhaps some other cases that if any conceivable basis can be imagined by this Court, then we must support and sustain the state action.

Mart R. Vogel:

Well —

Warren E. Burger:

Do you say it’s not conceivable on any of these fears.

It could be warranted by the legislature?

Mart R. Vogel:

That’s what I think.

Surely, if the recent expressions of this Court in the cases that I quoted from that you handed down last term our indication.

We are still on the proposition of the statute cannot be based upon imaginary ills that could be dredged up.

But the statute must bear a substantial relationship to the public health, safety and morals.

And furthermore, we have pointed out that this statute, the object of it, and I think that’s indicated in the appendix to our brief.

The only committee minutes which could be located, the object was to prevent doctors from taking over the pharmacy business and to the detriment of the local drugstore owner.

Warren E. Burger:

Wouldn’t it almost follow that if they didn’t want doctors doing it, they would much less want businessmen doing it?

Warren E. Burger:

If you reach out a little bit?

Mart R. Vogel:

I think the argument is made and I think it was raised in California that if a doctor owns a drugstore, when a patient comes to him, he’s going to see to it that the drug business is funneled into his own drugstore.

And he may be over prescribing drugs.

I guess probably that was contended in the California case too because he has an interest in the drugstore.

I —

Your client is hooked up with a big chain?

Mart R. Vogel:

Yes.

The Snyder Drug, Your Honor, have I think something like 35 or 37 drugstores.

They operate in five Midwestern states, Minnesota, Iowa and so on, and they’ve been in the business for a long time.

I think they employ something like 120 pharmacists.

They are very highly and reputable organization, and very efficient one.

Warren E. Burger:

Well, does this record not show that Snyder Drug in turn is owned by Red Owl?

Mart R. Vogel:

Oh, Yes!

Supermarket chain?

Mart R. Vogel:

Yes, Your Honor.

All of the stock is.

Mr. Vogel, perhaps you’ve answered this.

If so, I missed it and of course, this isn’t your case.

But what would be your position if the Pharmacy Boards Regulation was nearly directed at physicians owning pharmacies?

Mart R. Vogel:

From my own knowledge, and I think it’s common knowledge in North Dakota, there are a number.

In fact, in Fargo, I think all three of the large medical groups have their own pharmacies.

It’s a very efficient way of handling the drug problem to have physician’s clinics or individual doctors.

So that in your state then, there is no Pharmacy Board barrier against that kind of thing?

Mart R. Vogel:

Other than this statute?

The ownership one.

If the Board has turn around and do away with this one but say that physicians should not own pharmacies, then what would be your attitude?

Again, I say this isn’t your case.

I understand an unanswered question.

Mart R. Vogel:

Well, California as you know has sustained the constitutionality of such a statute.

I very seriously question its constitutionality.

Mart R. Vogel:

I have seen some definite proof that out of our way, the physician that doesn’t operate ethically and would do the kind of act which the — such a statute would be aimed at.

So, I’d still say that there would have to be some indication once the statute is attacked that it does not — or rather that it does, I withdraw that.

Rather that it does, there are real and substantial relationship to the public health safety and the morals of the public.

Mr. Lucas did not respond to the issue on the Commerce Clause that was raised by the National Association of Chain Drugstores in his brief.

He now says that it shouldn’t be considered because it wasn’t raised in the lower court.

We hope that you do consider it because we think that it is applicable.

We’re sorry that we did overlook it in the lower court proceeding.

But surely, where an institution such as Snyder Drugs with its large area of operation in these five different states that I’ve mentioned to be prevented from crossing state lines for the purpose of distributing its product.

Our judgment or in the judgment of the amicus which we adapt, there is a very definite interference with the Commerce Clause of the Constitution.

And in fact, in the same note of the committee meetings, I think one of the legislators referred to this statute, this fence legislation.

Put up the fence around North Dakota so that outsiders’ chain drugstores could not enter.

Well, that would be a legitimate statement.

I like your state very much, there are many times.

I don’t know its problems.

But I could just see how people live in there, you don’t have many people, how North Dakota might become a subject of exploitations by Delaware Corporation around the country using little vacuum cleaner to suck out from North Dakota all the money possible and leaving nothing behind by which a tax base can be laid and the schools built and so on.

I can see a state to saying we are going to stop that.

I don’t see why that would not follow that.

A good category is health, certain welfare, welfare in the sense of welfare of the people, don’t you agree?

Mart R. Vogel:

No.

Your Honor, I can’t agree.

I think that that very definitely would be interfering with interstate commerce.

Aside from the drugstore business chains —

I was not talking about stopping — removing the good.

I was talking about requiring every druggist in the state.

Every merchant in the state to could be a single entrepreneur.

Mart R. Vogel:

Well, I can only go back to the standard.

You got some big revolutions in North Dakota.

Our Court sustained in 1920 here.

Mart R. Vogel:

Yes, sir.

Remember that?

Mart R. Vogel:

Yes, I do.

We also had a proposal by one legislature during the early 30’s at North Dakota see sead from the union.

Have you considered that recently? [Laughter]

Mart R. Vogel:

A bill — honestly was introduced to that effect.

That might have solved Turtle Mountain problem in the last case. [Laughter]

Mart R. Vogel:

Well, it would’ve solved this problem obviously.

We wouldn’t be here.

But with just several minutes left, I really want to say that we’re not contending that the Fourteenth Amendment was intended to interfere with a reasonable exercise or the police power.

We do contend that the act here is unreasonable and that the evidence produced by Snyder’s at the time of the hearing before the trial court to the effect that it’s conducted a drug business would be under North Dakota Pharmacist strictly for the people’s benefit and not because of the post regulation by federal state statutes and the regulation promulgated under those statutes that there just is no reason for this law because there isn’t any evil.

And we don’t think that you have abandoned entirely the — and you haven’t abandoned this proposition of Liggett that the legislative means must substantially further legislative ends.

Or at the very least, we say that there must be a showing made by the state of a minimal rational means and relationship to that — the object of the statute.

We just maintained that the statute makes no sense.

In so far as the public health welfare does make sense, if the purpose was to keep the druggist in business, it could make some sense assuming proof again that the physician should not own a drugstore.

Thank you.

Warren E. Burger:

Thank you, Mr. Vogel.

Mr. Lucas, so your time has expired but we took a considerable amount at the end.

Do you have anything urgent that you wish to say for a minute or two?

A. William Lucas:

Mr. Chief Justice and may it please the Court.

I don’t have anything real urgent.

I’d like to say that in my return to the motion, I admitted that there was no question or fact in regard to the basic ownership as to who on the stock.

I think there’s an obvious question of fact whether the statute is related to the public health and safety.

And one point as far as relating it, I didn’t mention.

In North Dakota of course, we need small town pharmacies.

And when you get to interstate highways in ease of chance — getting to the bigger cities, when these chain stores advertise by of course a motor oil for a dollar and they all run this mart to get their motor oil and pick up their prescriptions, this hurts the small town pharmacies.

And as a public health requirement and necessity, I think that the small towns have their pharmacies, and this is another basis that could be used to justify it.

Thank you.

Warren E. Burger:

Thank you gentlemen.

The case is submitted.