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Beer Institute v. Healy

decided: June 13, 1988.

THE BEER INSTITUTE (FORMERLY NAMED UNITED STATES BREWERS ASSOCIATION, INC.) AS AN ASSOCIATION, AND ON BEHALF OF ITS FOLLOWING MEMBERS SELLING BEER IN THE STATE OF CONNECTICUT AND THE BORDERING STATES OF MASSACHUSETTS, NEW YORK AND RHODE ISLAND: ANHEUSER-BUSCH, INC., MILLER BREWING COMPANY, LATROBE BREWING COMPANY, PABST BREWING COMPANY, THE STROH BREWERY COMPANY. ANHEUSER-BUSCH, INC.; G. HEILEMAN BREWING COMPANY; THE GENESEE BREWING COMPANY INC., MILLER BREWING COMPANY; ALL BRAND IMPORTERS, INC.; DRIBECK IMPORTERS, INC., GUINESS-HARP CORP.; LABATT IMPORTERS, INC., MARTLETT IMPORTING COMPANY, INC.; MONTEREY BAY COMPANY, INC.; AND VAN MUNCHING COMPANY, INC., PLAINTIFFS-APPELLANTS,
v.
JOHN F. HEALY AND DAVID L. SNYDER, AS COMMISSIONERS OF THE DEPARTMENT OF LIQUOR CONTROL; AND CHARLES KASMER, AS SECRETARY OF THE DEPARTMENT OF LIQUOR CONTROL, DEFENDANTS-APPELLEES, WINE AND SPIRITS WHOLESALERS OF CONNECTICUT, INC., AS AN ASSOCIATION, AND ON BEHALF OF ITS FOLLOWING MEMBERS SELLING ALCOHOLIC LIQUOR IN THE STATE OF CONNECTICUT: JOHNNY BARTON, INC.; THE BRESCOME DISTRIBUTORS CORPORATION; CONNECTICUT DISTRIBUTORS, INC.; EDER BROS., INC.; GALLO WINE MERCHANTS INC.; ALLAN S. GOODMAN, INC.; AND HARTLEY & PARKER LIMITED, INC., INTERVENORS DEFENDANTS-APPELLEES



Appeal from a summary judgment in favor of appellees entered in the United States District Court for the District of Connecticut (Dorsey, J.), holding that the amended beer price affirmation provisions of the Connecticut Liquor Control Act did not violate the commerce clause. Reversed.

Timbers, Pratt and Miner, Circuit Judges.

Author: Miner

MINER, Circuit Judge:

Plaintiffs-appellants The Beer Institute (formerly United States Brewers Association), an industry association of beer brewers and importers, et al., commenced an action in the United States District Court for the District of Connecticut (Dorsey, J.) against defendants-appellees John F. Healy and David L. Snyder, as Commissioners of the Connecticut Department of Liquor Control, and Charles Kasmer, as Secretary of the Department. The complaint asserted that the amended beer price affirmation provisions of the Connecticut Liquor Control Act, 1984 Conn. Acts 332, 432, and § 30-63a(b) of that Act violate the commerce clause, U.S. Const. art. I, § 8, cl. 3, and the supremacy clause, id. art. VI, cl. 2. Plaintiffs sought declaratory and injunctive relief to prevent enforcement of these provisions.

Upon cross-motions for summary judgment, the district court granted judgment for the defendants, holding that the challenged provisions were constitutional. See United States Brewers Ass'n v. Healy, 669 F. Supp. 543 (D. Conn. 1987). Plaintiffs appeal from this judgment. Because we find that the amended beer price affirmation provisions place an unconstitutional burden on interstate commerce, we reverse.

BACKGROUND

In United States Brewers Ass'n v. Healy, 692 F.2d 275 (2d Cir. 1982) ("Healy I"), aff'd, 464 U.S. 909, 78 L. Ed. 2d 248, 104 S. Ct. 265 (1983) (per curiam), we found that the original beer price affirmation provisions of the Connecticut Liquor Control Act placed an unconstitutional burden on interstate commerce. The Act, now as then, requires "posting" of prices, whereby brewers and out-of-state beer importers "file a schedule stating the per-unit price that [they] will charge Connecticut wholesalers for [beer] products in the following month," id. at 276 (footnote omitted); see Conn. Gen. Stat. Ann. § 30-63c (West 1975 & Supp. 1988). Posted prices become effective on the first day of the calendar month following the posting. See Conn. Agencies Regs. § 30-6-B12(b). We noted that "[h]istorically the retail price of beer has been generally higher in Connecticut than in its neighboring states, i.e., Massachusetts, New York, and Rhode Island," 692 F.2d at 276.

To encourage Connecticut residents to buy beer in-state rather than in the neighboring states, the legislature added beer price affirmation provisions to the Act. These provisions required that: (1) brewers adhere to the posted prices during the one-month period for which they were posted, Conn. Gen. Stat. Ann. § 30-63(c); (2) brewers file a sworn affirmation that their posted per-unit prices would be no higher than their prices in the border states for the same period, id. § 30-63b(b); (3) Connecticut wholesalers be charged per-unit prices by each brewer no higher than the lowest wholesale price the brewer charges in any border state, id. § 30-63a(b); (4) adjustments for rebates, discounts, allowances and any other inducements offered to out-of-state wholesalers be considered in calculating the "lowest" price, id. § 30-63c(b); and (5) brewers offer to Connecticut wholesalers all the sizes and packages of their brands offered to border state wholesalers, id. Because there are no breweries in Connecticut and all beer is shipped into Connecticut from other states, only out-of-state brewers and importers are affected by the Connecticut price affirmation law.

In striking down the price affirmation provisions as facially invalid, this court observed that they told "a brewer that for any given month when it sells beer to a wholesaler in Massachusetts, New York, or Rhode Island, it may not do so at a price lower than that it has previously announced it will charge to Connecticut wholesalers," Healy I, 692 F.2d at 282. "Thus," we concluded, "the obvious effect of the Connecticut statute is to control the minimum price that may be charged by a non-Connecticut brewer to a non-Connecticut wholesaler in a sale outside of Connecticut," id., in violation of the commerce clause.

Thereafter, the Connecticut Legislature amended the affirmation provisions with the stated purpose of remedying the constitutional problem. Section 30-63b(b) was amended to provide that the "lowest" price charged to border-state wholesalers is determined "at the time of posting," 984 Conn. Acts 332 ("84-332").*fn1 At the same time, section 30-63b(e)*fn2 was added, providing that § 30-63b did not prohibit brewers from changing prices in other states "at any time during the calendar month covered by such posting." However, § 30-63a(b),*fn3 which prevents brewers from charging Connecticut wholesalers more than their lowest border-state price during the posted period, was not amended. Section 30-63c(b), which establishes how price will be determined under the statute, also was amended by 84-332 to refer to "price . . . at the time of posting." Another amendment applicable to § 30-63c(b) contained a conflicting description of price. This amendment permits only differentials in state taxes and actual delivery costs to be excluded from the determination of "the lowest price" charged to any border-state wholesaler "during such posted period," 1984 Conn. Acts 432 ("84-432")*fn4 (emphasis added), despite the "time of posting" amendment made by 84-332.

Appellants commenced this action on July 25, 1984. In their complaint appellants alleged that "'the interaction of the posting and affirmation provisions'" of 84-332 and § 30-63a(b) "'not only limits the price at which out-of-state shippers may sell to Connecticut wholesalers, but also sets the lowest price which an out-of-state shipper may charge anywhere in the Border States during the succeeding month,'" 669 F. Supp. at 547 (quoting Complaint at 14). "'Thus,'" they alleged, "'as under the original price affirmation scheme, an out-of-state shipper is not free to lower any Border State price below the previously affirmed Connecticut price,'" id. This, they claimed, violated not only the commerce clause, but the supremacy clause as well, "by requiring out-of-state shippers to establish and maintain minimum prices for each item of beer in the four-state area and by precluding them from dealing with any of their customers except on the same or more favorable terms as they dealt with other of their customers," id.

The state recognized that § 30-63a(b) "'standing alone'" seemingly would prevent brewers from lowering the out-of-state prices of products they also sold in Connecticut during the entire month after posting. The state argued, however, that 84-332 made it clear that the price affirmed as the lowest price in the border states need only be effective at the moment of posting: Brewers are free both before and after posting to raise or lower their prices outside Connecticut. (The posted Connecticut price remains in effect for the following calendar month.) The state submitted a Declaration and Ruling of the Connecticut Liquor Control Commission, made pursuant to the Commission's discretionary authority to "issue declaratory rulings as to the applicability of any statutory provision or of any regulation or order of the agency," Conn. Gen. Stat. Ann. § 4-176, providing, inter alia:

"[W]e must interpret [§ 30-63a(b)] in light of the obvious intention of the Connecticut General Assembly . . . . Accordingly, we determine and declare that C.G.S. § 30-63a(b) mandates only that the brewer in a sale to a Connecticut wholesaler not exceed its previously posted price in Connecticut, but that a sale at a price lower in a border state, during the calendar month covered by such posting, does not contravene this section . . . . To the extent . . . that C.G.S. § 30-63a(b) is inconsistent with [Conn. Pub. Act 84-332], it must be considered impliedly repealed since the latest expression of the legislature controls. Thus under the new affirmation scheme an out-of-state shipper is free to lower any border state price below the previously affirmed Connecticut price."

669 F. Supp. at 547 n.9 (quoting Affidavit of the Liquor Commission at 3-4). Thereafter, appellants withdrew their ...


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