Nebbia v. New York

Background

A New York law created a Milk Control Board in 1933 after a lengthy legislative investigation that found milk prices had fallen below production costs, causing surplus milk and severe hardship for dairy farmers. A small grocer in Rochester sold two quarts of milk (with a loaf) at a price the Board’s order forbade; he was tried, convicted, and appealed on equal protection and due process grounds. Lower courts upheld the conviction and the case reached the Court.

Reasoning

The Court examined the legislature’s factual record (extensive hearings and a long report) and concluded the state may act to protect health and the public welfare. The majority said the Fourteenth Amendment does not forbid states from regulating businesses’ prices so long as the regulation is not arbitrary, discriminatory, or without real relation to the public purpose. The Court rejected the grocer’s equal protection claim for lack of adverse showing and held the price order was a reasonable use of the state’s police power to prevent destructive competition in the milk trade.

Real world impact

The decision affirms that a state may create a temporary board to set minimum retail prices for milk and enforce those orders criminally. Stores may be barred from selling below the board price even if they bought milk cheaper, and the ruling preserves a legislature’s power to address an industry crisis if the regulation reasonably advances public welfare. The Board in this law was temporary (set to expire March 31, 1934), so some measures were expressly time-limited.

Dissents or concurrances

A separate opinion argued the emergency justification was insufficient, that no competent trial evidence proved an emergency, and that the order arbitrarily burdened consumers without reliably helping producers; that view was urged by Justice McReynolds and joined by three other Justices.