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May 22, 1985

JOSEPH E. SEAGRAM & SONS, INC., an Indiana Corporation on behalf of its division General Wine & Spirits Company and all other divisions, Plaintiff,
ANTHONY V. GAZZARA, Chairman, HUGH B. MARIUS, ROBERT DOYLE, TERRENCE FLYNN and FREDERICK T. PANNOZO, as Commissioners, and BARBARA JOANNI LORD, as Secretary of the State Liquor Authority, Division of Alcoholic Beverage Control, State of New York, Defendants

The opinion of the court was delivered by: SAND


Plaintiff, Joseph E. Seagram & Sons, Inc., challenges the constitutionality of New York's liquor price affirmation statute, N.Y.ABC Law § 101-b(3), contending that it is violative on its face of the Commerce Clause. Plaintiff seeks a judgment declaring the statute unconstitutional and enjoining the defendant officials of the State Liquor Authority (hereinafter "SLA") from enforcing it. Both sides have moved for summary judgment. *fn1" The New York State Wholesale Liquor Association, together with various individual liquor suppliers, have intervened on behalf of the defendants. For the reasons set forth below, we conclude that the statute does not, on its face, offend the Commerce Clause. *fn2"

Under New York's affirmation statute, distillers who sell liquor to New York wholesalers must file a monthly schedule of the prices that will be charged for their products in New York State. N.Y. ABC Law § 101-b(3)(a). Those products may not be sold in New York except at the prices listed in the schedule "unless prior written permission of the [SLA] is granted for good cause shown and for reasons not inconsistent with the purpose" of the statute. Id. In addition, the schedule must be accompanied by an affirmation "that the ... price of liquor to wholesalers set forth in such schedule is no higher than the lowest price at which such items of liquor will be sold ... in any other state or in the District of Columbia ... at any time during the calendar month for which such schedule shall be in effect ..." Section 101-b(3)(d). The making of a false statement in an affirmation filed pursuant to § 101-b(3)(d) is a misdemeanor, punishable by fine or imprisonment or both. Section 101-b(3)(h). Failure or refusal to comply with any other aspect of the scheduling and affirmation requirements may result in revocation, cancellation or suspension of any license issued pursuant to that statute, and in the imposition of a fine. Section 101-b(6).

 The statute, in its present form, has been in effect since 1967. An earlier version of the statute, which required the filing of an affirmation based on the preceding month's prices, was upheld by the Supreme Court in Seagram & Sons, Inc. v. Hostetter, 384 U.S. 35, 16 L. Ed. 2d 336, 86 S. Ct. 1254, reh'g denied, 384 U.S. 967, 16 L. Ed. 2d 679, 86 S. Ct. 1583 (1966). Until recently, it was assumed that the amendment of the statute in 1967 did not affect its constitutionality. See, e.g., Affiliated Distillers Brands Corp. v. State Liquor Authority, 32 A.D.2d 336, 301 N.Y.S.2d 316, 319 (lst Dept. 1969), aff'd, 26 N.Y.2d 982, 311 N.Y.S.2d 24, 259 N.E.2d 492 (N.Y. 1970). *fn3"

 Plaintiff now raises two challenges to the statute's validity under the Commerce Clause. The first is directed toward the statute as amended, and is based upon the recent decision of the Court of Appeals for this Circuit in United States Brewers Ass'n v. Healy, 692 F.2d 275 (2d Cir. 1982), aff'd w/o op., 464 U.S. 909, 104 S. Ct. 265, 78 L. Ed. 2d 248 (1983). The second challenge is, in essence, a challenge to the current validity of Seagram v. Hostetter, supra, a 1966 decision of the Supreme Court which held that liquor price affirmation statutes are a permissible exercise of the regulatory authority granted to the states by the Twenty-First Amendment. The basis for this challenge is the Supreme Court's recent decision in Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 104 S. Ct. 3049, 82 L. Ed. 2d 200 (1984). We consider each challenge in turn.

 The Statute As Amended

 Plaintiff first contends that the decision in United States Brewers Ass'n v. Healy, supra, which invalidated the beer price affirmation provision of the Connecticut Liquor Control Act, requires invalidation of the current version of New York's affirmation statute.

 The statute at issue in Healy required the filing of a monthly beer price schedule together with an affirmation that the prices listed in the schedule were no higher than the lowest prices at which beer would be sold in the three states adjoining Connecticut during that month. The schedule was not subject to amendment, nor could beer be sold except at the price listed in the schedule. 692 F.2d at 276-78.

 The Second Circuit held that the Connecticut statute effectively set a minimum price for beer in a four-state area, and that in doing so, it ran afoul of the Commerce Clause. The Court noted that "it has been held repeatedly that where the practical effect of a state's legislation is to control conduct in other states, the regulation violates the Commerce Clause," id. at 279 (citations omitted), and that while the Twenty-First Amendment gives states broad powers to regulate importation and in-state traffic in alcoholic beverages, "nothing in the Twenty-First Amendment suggests that a state may regulate the sale of liquor outside of its own territory." Id. at 281.

 The Court in Healy distinguished Seagram v. Hostetter, supra, finding that the statute upheld there:

 differed significantly from the Connecticut statute, because, unlike Connecticut's beer price affirmation provisions which control brewers' future conduct in the states surrounding Connecticut, the New York law in Seagram merely required that New York prices reflect what had been charged elsewhere in the past. Thus, the New York law, although it affected the prices that manufacturers would choose to set in other states, did not limit the freedom of a manufacturer at any given time to raise or lower prices in any other state.

 Id. at 283

 Plaintiff suggests that Healy represents a holding that all "prospective affirmation" statutes -- that is, those requiring an affirmation as to the prices that will be charged in other states -- are invalid under the Commerce Clause. We do not read Healy so broadly. The Healy Court itself noted that "[g]iven the latitude allowed a state under the Twenty-First Amendment to regulate the sale of liquor within its own borders, the holding in Seagram might well validate beer price regulation less intrusive then the present Connecticut statute, such as a requirement simply that a brewer set its Connecticut prices at the lowest levels it chooses to set in the surrounding states ... leaving those out-of-state prices unregulated by Connecticut." 692 F.2d at 283-84 (citation omitted). Cf. United States Brewers Ass'n v. Rodriguez, 465 U.S. 1093, 104 S. Ct. 1581, 80 L. Ed. 2d 115 (1984) (Stevens, J., concurring in dismissal of appeal) (Healy does not undermine the validity of Seagram v. Hostetter).

 We understand Healy to require invalidation of a prospective affirmation statute only when the practical effect of the statutory scheme is to prohibit a manufacturer from raising or lowering prices in another state for a given period of time. We are not persuaded that the New York statute has such ...

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