Rice v. Norman Williams Co.

Last updated
Rice v. Norman Williams Co.
Seal of the United States Supreme Court.svg
Argued April 21, 1982
Decided July 1, 1982
Full case nameRice, Director, Department of Alcoholic Beverage Control of California v. Norman Williams Company, et al.; Bohemian Distributing Co. v. Norman Williams Co. et al.; Wine & Spirits Wholesalers of California v. Norman Williams Co. et al.
Citations458 U.S. 654 ( more )
102 S. Ct. 3294; 73 L. Ed. 2d 1042; 1982 U.S. LEXIS 156; 50 U.S.L.W. 5052; 1982-2 Trade Cas. (CCH) ¶ 64,816; Fed. Sec. L. Rep. (CCH) ¶ 64,816
Case history
PriorNorman Williams Co. v. Rice, 108 Cal. App. 3d 348, 166 Cal. Rptr. 563 (App. 3d Dist. 1980); cert. granted, 454 U.S. 1080(1981).
Holding
The Sherman Act did not invalidate a California law prohibiting the importing of spirits not authorized by the brand owner.
Court membership
Chief Justice
Warren E. Burger
Associate Justices
William J. Brennan Jr.  · Byron White
Thurgood Marshall  · Harry Blackmun
Lewis F. Powell Jr.  · William Rehnquist
John P. Stevens  · Sandra Day O'Connor
Case opinions
MajorityRehnquist, joined by Burger, Brennan, Marshall, Blackmun, Powell, O'Connor
ConcurrenceStevens, joined by White
Laws applied
Sherman Antitrust Act

Rice v. Norman Williams Co., 458 U.S. 654 (1982), was a decision of the U.S. Supreme Court involving the preemption of state law by the Sherman Act. The Supreme Court held, in a 9-0 decision, that the Sherman Act did not invalidate a California law prohibiting the importing of spirits not authorized by the brand owner. [1]

In the United States, state law refers to the law of each separate U.S. state.

California State of the United States of America

California is a state in the Pacific Region of the United States. With 39.6 million residents, California is the most populous U.S. state and the third-largest by area. The state capital is Sacramento. The Greater Los Angeles Area and the San Francisco Bay Area are the nation's second- and fifth-most populous urban regions, with 18.7 million and 9.7 million residents respectively. Los Angeles is California's most populous city, and the country's second-most populous, after New York City. California also has the nation's most populous county, Los Angeles County, and its largest county by area, San Bernardino County. The City and County of San Francisco is both the country's second-most densely populated major city after New York City and the fifth-most densely populated county, behind only four of the five New York City boroughs.

Contents

Background

The case involved a statute which provided that a licensed importer, through whom alone alcoholic beverages could be brought into California, "shall not purchase or accept delivery of any brand of distilled spirits unless he is designated as an authorized importer of such brand by the brand owner or his authorized agent." Calif. Bus. & Prof. Code § 23672 (Supp. 1984). The California laws required that importers of alcoholic beverages be licensed, and allowing only importers designated by a particular distiller to import that distiller's products into the state.

The California Court of Appeal for the Third District held that the statute was per se illegal under the Sherman Act and thus was invalid on its face.

Opinion of the Court

The Court rejected due process and equal protection challenges to the California laws. The Court rejected the former claim because the importers challenging the statute had no liberty or property interest in obtaining a distiller's permission to import, and because due process did not authorize it to assess the wisdom of economic regulations. The Court rejected an equal protection challenge to the statute's distinction between designated and nondesignated importers because that restriction on intrabrand competition was rationally related to the state's interest in promoting interbrand competition. The statute may have enhanced interbrand competition because it enabled distillers to control which wholesalers could import their products into the state.

The Supreme Court set out two separate and distinct analyses to be made before preemption by Section 1 can be found.

First, a court must decide whether the statute contemplates conduct that will always violate Section 1.
If so, the statute is preempted unless the statutory conduct is determined, under the second analysis, to be state action (under the State action immunity doctrine)

The majority of the Court, in an opinion by Justice Rehnquist, held that a California Alcoholic Beverage statute was not preempted by the Sherman Act and that therefore state action analysis was not required to determine the validity of the statute. The Court reconciled Midcal with this shift in emphasis by observing that the California statute in question in Midcal "mandated resale price maintenance, an activity that has long been regarded as a per se violation of the Sherman Act." This observation implies that the statute found to be lacking active state supervision in Midcal and incapable of being shielded by Parker immunity also would have been preempted by the Sherman Act, thus leading to the same result.

William Rehnquist Chief Justice of the United States

William Hubbs Rehnquist was an American lawyer and jurist who served on the Supreme Court of the United States for 33 years, first as an Associate Justice from 1972 to 1986, and then as the 16th Chief Justice of the United States from 1986 until his death in 2005. Considered a conservative, Rehnquist favored a conception of federalism that emphasized the Tenth Amendment's reservation of powers to the states. Under this view of federalism, the court, for the first time since the 1930s, struck down an act of Congress as exceeding its power under the Commerce Clause.

Justice Rehnquist began his opinion for the Court by laying down the governing standards, 458 U.S. at 659:

As in the typical pre-emption case, the inquiry is whether there exists an irreconcilable conflict between the federal and state regulatory schemes. The existence of a hypothetical or potential conflict is insufficient to warrant the pre-emption of the state statute. A state regulatory scheme is not pre-empted by the federal antitrust laws simply be-cause in a hypothetical situation a private party's compliance with the statute might cause him to violate the antitrust laws. A state statute is not pre-empted by the federal antitrust laws simply be-cause the state scheme might have an anti-competitive effect.

He then characterized Midcal as involving a statute that required members of the California wine industry "to file fair trade contracts or price schedules with the State, and provided that if a wine producer had not set prices through a fair trade contract, wholesalers must post a resale price schedule for that producer's brands." Id. (emphasis in original). The Midcal Court had held that "the statute facially conflicted with the Sherman Act because it mandated resale price maintenance, an activity that has long been regarded as a per se violation of the Sherman Act." Id. at 659-60 (emphasis in original). After referring to Joseph E. Seagram & Sons, Inc. v. Hostetter, 384 U.S. 35, he elaborated as follows, 458 U.S. at 661:

Our decisions in this area instruct us, therefore, that a state statute, when considered in the abstract, may be condemned under the antitrust laws only if it mandates or authorizes conduct that necessarily constitutes a violation of the antitrust laws in all cases, or if it places irresistible pressure on a private party to violate the antitrust laws in order to comply with the statute. Such condemnation will follow under § 1 of the Sherman Act when the conduct contemplated by the statute is in all cases a per se violation. If the activity addressed by the statute does not fall into that category, and therefore must be analyzed under the rule of reason, the statute cannot be condemned in the abstract. Analysis under the rule of reason requires an examination of the circumstances underlying a particular economic practice, and therefore does not lend itself to a conclusion that a statute is facially inconsistent with federal antitrust laws.

Addressing the statute there challenged, he referred to the holding in Continental Television v. GTE Sylvania , 433 U.S. 36 (1977), that a manufacturer's use of vertical non-price restraints was not per se illegal but rather should be scrutinized under the rule of reason since "restraints on intrabrand competition may promote interbrand com-petition." 458 U.S. at 661. He regarded the California statute as merely enforcing "the distiller's decision to restrain intraband competition", leaving him free to designate as few or as many licensed importers as he pleased. Id. The statute thus was not facially invalid, although "the manner in which a distiller utilizes the designation statute and the arrangements a distiller makes with its wholesalers will be subject to Sherman Act analysis under the rule of reason", id. at 662-63 n.9, that because of the Court's resolution of the preemption issue, it was not necessary "to consider whether the statute may be saved from invalidation under the doctrine of Parker v. Brown, 317 U.S. 341 (1943), or under the Twenty-first Amendment."

Norman Williams implies that a state statute can have an anticompetitive effect and still be upheld; it will not be preempted by the Sherman Act unless "there exists an irreconcilable conflict between federal and state regulatory schemes. The existence of a hypothetical or potential conflict is insufficient to warrant the preemption of the state statute." [2] In attempting to define the threshold of preemption better, the Court concluded that a state statute "may be condemned under the antitrust laws only if it mandates or authorizes conduct that necessarily constitutes a violation of the antitrust laws in all cases, or if it places irresistible pressure on a private party to violate the antitrust laws in order to comply with the statute." [3] As an example of the type of statute that would be preempted, the Court pointed out that the statute challenged in Midcal, whereby the state enforced retail prices set by producers, had a "pernicious effect on competition and lack[ed] ... any redeeming virtue," [4] thus requiring preemption by the Sherman Act.

Excerpts

  • [A] state statute, when considered in the abstract, may be condemned under the antitrust laws only if it mandates or authorizes conduct that necessarily constitutes a violation of the antitrust laws in all cases, or if it places irresistible pressure on a private party to violate the antitrust laws in order to comply with the statute. Such condemnation will follow under § 1 of the Sherman Act when the conduct contemplated by the statute is in all cases a per se violation. If the activity addressed by the statute does not fall into that category, and therefore must be analyzed under the rule of reason, the statute cannot be condemned in the abstract.
  • Analysis under the rule of reason requires an examination of the circumstances underlying a particular economic practice, and therefore does not lend itself to a conclusion that a statute is facially inconsistent with federal antitrust laws." 102 S. Ct. 3294, 3300 (1982).
  • A party may successfully enjoin the enforcement of a state statute only if the statute on its face irreconcilably conflicts with federal antitrust policy." Id.. at 3299. A motion picture licensing act will thus be facially invalid "only if it mandates or authorizes conduct that necessarily constitutes a violation of the antitrust laws in all cases, or if it places irresistible pressure on a party to violate the antitrust laws in order to comply with the statute ... [T]he conduct contemplated by the statute [must] in all cases [be] a per se violation." Id. at 3300.

Related Research Articles

Sherman Antitrust Act of 1890 US antitrust Congress Act of 1890

The Sherman Antitrust Act of 1890 was a United States antitrust law that regulates competition among enterprises, which was passed by Congress under the presidency of Benjamin Harrison.

Clayton Antitrust Act of 1914 US antitrust Congress Act of 1914

The Clayton Antitrust Act of 1914, was a part of United States antitrust law with the goal of adding further substance to the U.S. antitrust law regime; the Clayton Act sought to prevent anticompetitive practices in their incipiency. That regime started with the Sherman Antitrust Act of 1890, the first Federal law outlawing practices considered harmful to consumers. The Clayton Act specified particular prohibited conduct, the three-level enforcement scheme, the exemptions, and the remedial measures.

United States antitrust law collection of federal and state government laws, which regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers

In the United States, antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. The main statutes are the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. These Acts, first, restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade. Second, they restrict the mergers and acquisitions of organizations that could substantially lessen competition. Third, they prohibit the creation of a monopoly and the abuse of monopoly power.

Hartford Fire Insurance Co. v. California, 509 U.S. 764 (1993), was a controversial United States Supreme Court case which held that foreign companies acting in foreign countries could nevertheless be held liable for violations of the Sherman Antitrust Act if they conspired to restrain trade within the United States, and succeeded in doing so.

Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963), was a 1963 decision of the United States Supreme Court in which the Court declined to invalidate a California law that imposed minimum fat content standards on avocados sold in the state, including those imported from other states. The law prohibited the sale of avocados that did not contain at least 8% oil by weight. Florida, a major avocado producer, employed, for wholesale marketing purposes, a federal standard unrelated to oil content. Most Florida avocados that were marketable at home failed to meet the California standard, because they were a different variety from those sold in California, with a lower fat content. Accordingly, Florida avocado growers brought this suit, arguing (unsuccessfully) that the California law (1) was preempted by federal law, (2) violated equal protection, and (3) unduly burdened and interfered with their right to engage in interstate commerce. The case is widely used in law school casebooks on constitutional law and federal jurisdiction as illustrative of preemption issues.

The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, is a United States federal law that exempts the business of insurance from most federal regulation, including federal antitrust laws to a limited extent. The McCarran–Ferguson Act was passed by the 79th Congress in 1945 after the Supreme Court ruled in United States v. South-Eastern Underwriters Association that the federal government could regulate insurance companies under the authority of the Commerce Clause in the U.S. Constitution and that the federal antitrust laws applied to the insurance industry.

Altria Group v. Good, 555 U.S. 70 (2008), was a United States Supreme Court case in which the Court held that a state law prohibiting deceptive tobacco advertising was not preempted by a federal law regulating cigarette advertising.

Wyeth v. Levine, 555 U.S. 555 (2009), is a United States Supreme Court case holding that Federal regulatory approval of a medication does not shield the manufacturer from liability under state law.

Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), is a United States Supreme Court case that involved issues concerning statutory standing in antitrust law. The Court's opinion established the rule that indirect purchasers of goods or services along a supply chain cannot seek damages for antitrust violations committed by the original manufacturer or service provider, but permitted such claims by direct purchasers. Several courts recognize exceptions to the rule. The decision has become known as the "Illinois Brick doctrine" and is applied to determine whether a plaintiff has standing to bring claims under various federal antitrust statutes.

Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), was a U.S. Supreme Court decision. It stated that lawyers engage in "trade or commerce" and hence ended the legal profession's exemption from antitrust laws.

Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947), is a case dealing with "field preemption": the United States Supreme Court held that when a federal law regulates a field traditionally occupied by the states, the police powers of the States in that area of law are not necessarily preempted; Congress must also manifest a clear and manifest purpose to do so.

In the law of the United States, federal preemption is the invalidation of a U.S. state law that conflicts with federal law.

California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S. 97 (1980), was a United States Supreme Court case in which the Court created a two-part test for the application of the state action immunity doctrine that it had previously developed in Parker v. Brown.

<i>Tritent International Corp. v. Kentucky</i>

Tritent International Corp. v. Commonwealth of Kentucky, 467 F.3d 547, is a US antitrust law case decided by the Court of Appeals on the Sixth Circuit. The case is notable, inter alia, because it provides a summary of the difficult terms of the Tobacco Master Settlement Agreement.

The Parker immunity doctrine is an exemption from liability for engaging in antitrust violations. It applies to the state when it exercises legislative authority in creating a regulation with anticompetitive effects, and to private actors when they act at the direction of the state after it has done so. The doctrine is named for the Supreme Court of the United States case in which it was initially developed, Parker v. Brown.

To determine whether the Sherman Antitrust Act preempts a state law, courts will engage in a two-step analysis, as set forth by the Supreme Court in Rice v. Norman Williams Co..

Gade v. National Solid Wastes Management Association, 505 U.S. 88 (1992), is a US labor law case of the United States Supreme Court. The Court determined that federal Occupational Safety and Health Administration regulations preempted various Illinois provisions for licensing workers who handled hazardous waste materials.

The Supremacy Clause, Article VI, Clause 2 of the United States Constitution, establishes that the Constitution, federal laws made pursuant to it, and treaties made under its authority, constitute the supreme law of the land. It provides that state courts are bound by the supreme law; in case of conflict between federal and state law, the federal law must be applied. Even state constitutions are subordinate to federal law. In essence, it is a conflict-of-laws rule specifying that certain federal acts take priority over any state acts that conflict with federal law. In this respect, the Supremacy Clause follows the lead of Article XIII of the Articles of Confederation, which provided that "Every State shall abide by the determination of the United States in Congress Assembled, on all questions which by this confederation are submitted to them." A constitutional provision announcing the supremacy of federal law, the Supremacy Clause assumes the underlying priority of federal authority, at least when that authority is expressed in the Constitution itself. No matter what the federal government or the states might wish to do, they have to stay within the boundaries of the Constitution. This makes the Supremacy Clause the cornerstone of the whole American political structure.

<i>Gordon v. Virtumundo, Inc.</i>

Gordon v. Virtumundo, Inc., 575 F.3d 1040, is a 2009 court opinion in which the United States Court of Appeals for the Ninth Circuit addressed the standing requirements necessary for private plaintiffs to bring suit under the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or CAN-SPAM Act of 2003, 15 U.S.C. ch. 103, as well as the scope of the CAN-SPAM Act's federal preemption. Prior to this case, the CAN-SPAM Act's standing requirements had not been addressed at the Court of Appeals level, and only the Fourth Circuit had addressed the CAN-SPAM Act's preemptive scope.

Pfizer Inc. v. Government of India, 434 U.S. 308 (1978), decision of the Supreme Court of the United States in which the Court held that foreign states are entitled to sue for treble damages in U.S. courts, and should be recognized as "persons" under the Clayton Act.

References

  1. ↑ Rice v. Norman Williams Co., 458 U.S. 654 (1982).
  2. ↑ Id. at 3299 (citing California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. at 102-03). In this context the Court further stated:
    A state regulatory scheme is not preempted by the federal antitrust laws simply because in a hypothetical situation a private party's compliance with the statute might cause him to violate antitrust laws. A state statute is not preempted simply because the state scheme might have an anticompetitive effect. [citations omitted].
    A party may successfully enjoin the enforcement of a state statute only if the statute on its face irreconcilably conflicts with federal antitrust policy.
    Id.
  3. ↑ Id. at 3300.
  4. ↑ Id. at 3299 n.5 (quoting Continental T.V. Inc. v. GTE Sylvania Inc., 433 U.S. 36, 50 (1977))
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.