Brown-Forman Distillers Corp. v. New York State Liquor Authority

476 U.S. 573 (1986)

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Nature of the Case

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Facts

New York (P) extensively regulates the sale and distribution of alcoholic beverages within its borders. P prohibits the manufacture and sale of alcoholic beverages within the State without the appropriate licenses and regulates the terms of all sales. Companies such as D or its agents may not sell to wholesalers in New York except in accordance with a price schedule filed with P. The schedule must contain a precise description of each item the distiller intends to sell, and a per-bottle and per-case price. All sales to any wholesaler in New York during the month for which the schedule is in effect must be at those prices. P also requires any distiller or agent that files a schedule of prices to include an affirmation that 'the bottle and case price of liquor to wholesalers set forth in such schedule is no higher than the lowest price at which such item of liquor will be sold by such [distiller] to any wholesaler anywhere in any other state of the United States or in the District of Columbia, or to any state (or state agency) which owns and operates retail liquor stores' during the month covered by the schedule. A violation may lead to the revocation of a distiller's license and the forfeiture of the bond posted by the distiller in connection with the license. D is a distiller that sells in New York and other states. Beginning in 1978, D offered its wholesalers cash payments, or 'promotional allowances,' to use for advertising. The amount of the allowance a wholesaler receives is not tied to the quantity either of the wholesaler's advertising or of its purchases of D's products. Accepting the allowance does not constitute an agreement to purchase any particular quantity of D products. The allowances are unconditional, lump-sum payments to all wholesalers, in every state except New York, that purchase D brands. D offered the allowance to those in New York but P determined that the ABC Law prohibited such payments. P also determined that the payment of promotional allowances to wholesalers in other States lowered the effective price of D's brands to those wholesalers, and thus violated the ABC Law. P instituted license revocation proceedings against D. Because of the inconsistent net effect on the allowances, it was almost impossible to comply with P's law. In short, P's demands would force D to discontinue a promotional program in other States where that program was legal. D argued that this violated the Commerce Clause. The New York courts rejected this argument. The Supreme Court granted certiorari.