United States Brewers Ass'n v. Healy

669 F. Supp. 543, 56 U.S.L.W. 2203, 1987 U.S. Dist. LEXIS 8216
CourtDistrict Court, D. Connecticut
DecidedSeptember 11, 1987
DocketCiv. H-84-816 (PCD)
StatusPublished
Cited by5 cases

This text of 669 F. Supp. 543 (United States Brewers Ass'n v. Healy) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States Brewers Ass'n v. Healy, 669 F. Supp. 543, 56 U.S.L.W. 2203, 1987 U.S. Dist. LEXIS 8216 (D. Conn. 1987).

Opinion

RULING ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

DORSEY, District Judge.

Plaintiffs are the United States Brewers Association (“USBA”) — an industry association of thirty-nine domestic brewers and twenty-three importers of beer — and those of its member companies who sell beer in Connecticut and in the bordering states of Massachusetts, New York and Rhode Island.

Defendants are the Commissioners and Secretary of the Connecticut Department of Liquor Control.

Intervening defendant Wine & Spirits Wholesalers of Connecticut is a trade association of seven companies which sell alcoholic beverages, including beer, at wholesale within Connecticut.

Plaintiffs’ complaint seeks a declaratory judgment that the beer price affirmation provisions of Conn.Pub.Act 84-332, 1 84- *545 432 2 and § 30-63a(b) of the Connecticut Liquor Control Act 3 violate the commerce clause 4 and the supremacy clause 5 of the United States Constitution. Plaintiffs also seek a permanent injunction to restrain defendants from enforcing these statutes.

Currently pending are cross-motions for summary judgment, which have been exhaustively and intelligently briefed and re-briefed by the USBA, the intervening defendants and the State Attorney General’s Office. For the reasons that follow, USBA’s motion is denied, and the motion of defendants and intervening defendants is granted.

I. Background,

A. The Beer Industry 6

The beer industry in Connecticut is divided into three marketing levels: (1) brewers and importers; (2) wholesalers; and (3) retailers. Each market participant must hold a valid Connecticut license to sell, in Connecticut, alcoholic beverages to the tier below and, ultimately, to consumers.

The brewers and importers market national brands such as Budweiser or Miller High Life, and regional or local brands such as Genesee Cream Ale or Piels. There are no breweries in Connecticut. All beer — national or regional — is shipped into *546 Connecticut by brewers and importers designated as “out-of-state shippers” under Connecticut law.

Plaintiffs contend that prices charged and package configurations offered to wholesalers in Connecticut and the bordering states vary in the several markets within the four state area. (Market areas do not always coincide with state borders.) In certain markets, regional brewers or importers price their beers to allow sales to consumers at the lowest prices possible in those markets. Other brewers or importers competing in these areas must consider this competitive pricing in pricing their own product. It is agreed by all parties that the New York City market is the most competitive and prices there are the lowest in the four-state region. Other factors which have an impact on pricing and marketing decisions, such as consumer tastes, packaging, costs and freight, vary from area to area even within these states. Thus, according to plaintiffs, a variable pricing and marketing structure has emerged in Connecticut and the bordering states which results in substantial interstate competition in retail beer sales.

In Connecticut, typically more than one wholesaler sells an out-of-state shipper’s products. Each wholesaler generally handles products of more than one out-of-state shipper but is restricted by law from selling to retailers outside its assigned geographical territory.

The primary retail outlets for off-premise consumption of beer in Connecticut are package and grocery stores. Retailers, particularly near the borders, face substantial competition from retail beer outlets in the bordering states. Although prices charged to Connecticut wholesalers are neither the highest nor the lowest in the four-state region, retail prices historically have been higher in Connecticut. Accordingly, many Connecticut residents have purchased beer at lower retail prices in New York, Massachusetts or Rhode Island.

B. Price Affirmation

In 1981, Connecticut amended its Liquor Control Act by adding beer price affirmation provisions. The Act required out-of-state shippers to post, each month, the bottle, can and case price for the brands of beer each sells in Connecticut. The amendment required shippers to execute written affirmations under oath certifying that the posted prices “will be no higher than the lowest price at which each such item of beer is or will be sold ... to any wholesaler in any state bordering this state, at any time during the calendar month covered by such posting.” Liquor Control Act § 30-63b(b), as originally amended by Section 12 of Conn.Pub.Act 81-294 (emphasis added). No brewer or importer could sell beer to a wholesaler in Connecticut at a price higher than the lowest price then charged any wholesaler in any state bordering Connecticut. Liquor Control Act § 30-63a(b), as originally amended by Section 11 of Conn. Pub.Act 81-294. Once posted, the affirmed price became the controlling or fixed price for the ensuing month for the out-of-state shipper’s products in Connecticut. Rebates, discounts, special promotions and other inducements which lowered the price of beer in the border states required the price to be lowered in Connecticut, but differentials in price were permitted for different state taxes and delivery costs. No allowance was made for different package configurations (e.g., a case of six-packs versus a case of loose cans or bottles), yet for any brand a brewer offered for sale in Connecticut, it had to offer Connecticut wholesalers all the units of that brand offered to wholesalers in the border states.

Thus brewers and importers in the four-state area had the following alternatives: (1) lower their Connecticut prices to equal the lowest price in any bordering state; (2) raise prices in border states to the Connecticut levels; (3) withdraw from Connecticut the brands of beer sold at lower prices in the border states; or (4) withdraw from the border states the brands of beer sold at lower prices than the Connecticut price.

The 1981 amendments were upheld by the district court, United States Brewers Ass’n v. Healy, 532 F.Supp. 1312 (D.Conn.1982), but declared unconstitutional by the *547 Second Circuit, United States Brewers Ass’n v. Healy, 692 F.2d 275 (2d Cir.1982) (hereinafter “Healy I”), aff'd without opinion, 464 U.S. 909, 104 S.Ct. 265, 78 L.Ed.2d 248 (1983). The Court of Appeals held that the price affirmation provisions impermissibly burdened interstate commerce and that the twenty-first amendment 7 did not authorize Connecticut to set minimum prices of beer in any other state.

Thereafter, Connecticut enacted the different version of beer price affirmation set out in notes 1-2, supra.

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Related

Healy v. Beer Institute
491 U.S. 324 (Supreme Court, 1989)
Anheuser-Busch, Inc. v. Healy
849 F.2d 753 (Second Circuit, 1988)
In Re The Beer Institute
849 F.2d 753 (Second Circuit, 1988)

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Bluebook (online)
669 F. Supp. 543, 56 U.S.L.W. 2203, 1987 U.S. Dist. LEXIS 8216, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-brewers-assn-v-healy-ctd-1987.