RESPONDENT: United States
LOCATION: Bay County Circuit Court
DOCKET NO.: 19
DECIDED BY: Warren Court (1962-1965)
CITATION: 371 US 245 (1963)
ARGUED: Oct 17, 1962 / Oct 18, 1962
DECIDED: Jan 14, 1963
Facts of the case
Media for Paul v. United StatesAudio Transcription for Oral Argument - October 18, 1962 in Paul v. United States
Audio Transcription for Oral Argument - October 17, 1962 in Paul v. United States
Number 19, Charles Paul, Director of Agriculture of California, et al., Appellants, versus United States.
Mr. Fourt you may proceed now with your argument.
Mr. Chief Justice, may it please the Court.
The Appellant State Officers appealed in this case from a District Court injunction permanently closing the state courts to the state's efforts to enforce its Milk Stabilization Act against independent contractors selling milk to commissary grocery stores, officers' clubs, post exchanges and to troop messes.
Strictly the essentials, there are two basic issues here.
The first is the Government’s request that this Court's decision in Penn Dairies versus Milk Control Commission in 318 of United States be overruled.
That case held that the State of Pennsylvania could enforce its Milk Stabilization Act similar to California's against independent contractors selling to the United States and that it's statute as so applied was constitutional and was consistent with federal procurement policy.
The second issue in this case among many but primary, is whether the Government acquired exclusive jurisdiction over three particular installations in California without complying with the state statutory condition that the Government inform us just which processors were being taken into federal jurisdiction.
Following the entry of this injunction closing the state courts of the state, prices received by dairy farmers in California dropped sharply.
They dropped to the extent that dairy farmers were suffering losses at the rate of nearly $7 million a year based on Federal Government purchases of 29 million gallons of milk in fresh form.
The District Court held the complete California statutory scheme unconstitutional.
Insofar as the issues in this case are concerned, California establishes the price at which a distributor must pay the dairy farmer for milk received by him and it also fixes the price at which the distributor may sell that milk.
As construed by the California Supreme Court, the statute goes no further than the distributor and does not apply to the United States.
The three installations here involved are Castle Air Force Base, Travis Air Force Base and the Oakland Army Terminal.
The state statute was held unconstitutional on two grounds.
First, that delivery of the milk occurred to these three bases and that these three bases were subject to the power in Congress to exercise the power of exclusive legislation under Article I, Section 8, Clause 17 of the Constitution.
In a second equally pervasive ground holding the state statute unconstitutional was that the state statute imposed a prohibition on the Government and its contracting officers in their purchase of milk.
We believe that both of these constitutional issues were posed in the Government's complaints and adopted by the District Court for the Northern District of California.
There being present, two constitutional issues in the case, it was proper then that a three-judge Federal District Court be convened, a three-judge court being properly convened then this Court has direct appellate jurisdiction.
Both the Government and California agreed to this proposition.
Following the Court's reservation of the question of jurisdiction to the time of oral argument, California filed also a petition for certiorari to the Court of Appeals for the Ninth Judicial Circuit before judgment in that court, if this Court cannot reach the merits of this case by appeal, then we ask and the Government joins us in asking that this Court hear the merits by certiorari.
Turning to the merits, the purpose of the Milk Stabilization Act of California and of the 23 other states who have similar laws is to protect the state supply of a vital food by regulating the prices for milk.
The state establishes minimum prices after public hearings and often after litigation.
This public setting of prices is to be distinguished and indeed was intended to prevent collusive price setting by combinations of sellers.
We think that this then emphasis or legislative objective of the California statute in and of itself shows that there's no conflict with the congressional objectives and the federal procurement statutes which are designed to prevent private collusive setting of prices by its emphasis on pre-competition.
Minimum wholesale prices and the said fixing of it by the state was found necessary by the legislature because of internal and unique competitive problems in the industry which require that distributors be assured of a adequate return and a regular return money which would allow them to cover their own expenses and have enough left to pay the dairy farmers.
And obviously, if the dairy farmers do not receive their cost production in the long run, our supply of a vital food will be impaired.
The Government contends that the California law is unconstitutional because it imposes a direct prohibition on the Government.