Reeves Inc. v. Stake

LOCATION: Rincon Island

DOCKET NO.: 79-677
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Eighth Circuit

CITATION: 447 US 429 (1980)
ARGUED: Apr 16, 1980
DECIDED: Jun 19, 1980

Dennis M. Kirven - Argued the cause for the petitioner
William J. Janklow - Argued the cause for the respondent

Facts of the case

The state of South Dakota operated a cement plant. A substantial percentage of the plant's production was sold to buyers outside the state. One such customer was Reeves, Inc., a concrete distributor in Wyoming that obtained over 90 percent of its cement from the state-run plant. In 1978, for economic reasons, the South Dakota plant began supplying in-state customers before honoring other commitments. Reeves, Inc. challenged South Dakota's "hoarding" of resources.


Did South Dakota's preferential system violate the Commerce Clause?

Media for Reeves Inc. v. Stake

Audio Transcription for Oral Argument - April 16, 1980 (Part 2) in Reeves Inc. v. Stake

Audio Transcription for Oral Argument - April 16, 1980 (Part 1) in Reeves Inc. v. Stake

Warren E. Burger:

The case is submitted.

We'll hear arguments next in Reeves, Incorporated against Stake.

Mr. Kirven, I think you may proceed when you are ready now.

Dennis M. Kirven:

Mr. Chief Justice and may it please the Court.

I represent Reeves, Inc., plaintiff, in the action below and petitioner before this Court.

The issue presented in this case concerns the application of the Commerce Clause of the United States Constitution of a state policy favoring its own citizens over citizens of other States in a sale of products owned and manufactured by that State.

The petitioner is here on a writ of certiorari from the United States Court of Appeals Eighth Circuit which held that this preferential state policy did not violate the Commerce Clause.

The State of South Dakota owns and operates a cement plant in Rapid City, South Dakota, which manufactures, sells and distributes cement.

This cement plant was authorized by the citizens of South Dakota by constitutional amendment in 1918.

William H. Rehnquist:

Mr. Kirven, are there -- is there any North rather South Dakota law or constitutional provision which would prevent a private cement plant from operating in South Dakota?

Dennis M. Kirven:

I do not know of any law which would prevent private cement plant from operating in South Dakota.

William H. Rehnquist:

So, that in -- in effect, you have the state-owned one, but you could also have a private one in competition with it?

Dennis M. Kirven:

There could be a private manufacturer.

In 1920, the -- there is published a 1920 report of the South Dakota Cement Commission, published document, which was the study made at that time concerning the availability of cement and the feasibility of building a cement plant in South Dakota.

And that report indicates that there'd been two attempts by private industry to build a cement plant in the State of South Dakota.

That's just -- and that they had both failed.

And the one plant was -- was built and the -- the report is not clear, but it indicated that it ran out of funds and closed its doors.

There was cement being supplied to the State of South Dakota by a manufacturer located out of the State at that time.

William H. Rehnquist:

But so far as you know, there's no statutory prohibition against another private plant making another effort even though it might be unsuccessful.

Dennis M. Kirven:

None that I'm aware of.

Warren E. Burger:

Suppose these two private operations having gone out of business, this is hypothetical now, and the State had a lot of road building to carry on, and so, they've set up their own cement plant for their own road construction, not for commercial purposes, not for proprietary purposes, do you think they'd have to sell cement to non-South Dakota residents just because they were maintaining a plant for their own purposes?

Dennis M. Kirven:

I don't think --

Warren E. Burger:

Or is it -- is it because they have entered the commercial stream of commerce that you'd make your point?

Dennis M. Kirven:

In the case where the cement plant wasn't exclusively in-state process for the State itself and not for the State citizens, but for the public roads that are required to the State normally supplies though as a governmental service, then that would not be -- they were no be -- no requirement that a resident who comes from, say the State of Wyoming, would have a right to purchase any cement or be treated in the marketplace as any other competitor, because the State really has never placed the cement in the interstate commerce at that point.

It's not involved as a participant in the market as they are today, because they participate in the marketplace, they solicit sales in a sevens, eight-state area.

In 1977, 48% of the shipments of this plant went outside of the State.

Now, Reeves can say, Wyoming Corporation, it has purchased cement from the South Dakota Cement Commission for a period of over 20 years and during that period of time, it has received salesmen who have asked for about the needs of the cement plant and orders have been placed and the cement has been either picked up by Reeves itself or delivered to the cement plant by trucks from the plant or hired by the company.

Harry A. Blackmun:

But you didn't have a -- a long-term contract for delivery.

Dennis M. Kirven:

No, there's no -- there was no longterm contract.

There is no written contract period.