Central Lumber Co. v. South Dakota

Background

A business was convicted under a 1907 South Dakota law and fined $200 plus costs after selling the same commodity at different prices in different parts of the State. The statute made it a crime for anyone in the production, manufacture, or distribution of commonly used goods to sell at a lower rate in one section than another if done to destroy or prevent the competition of a regular, established dealer, after equalizing distance. The conviction was sustained on appeal in state court and reviewed here after the business argued the law violated the Fourteenth Amendment because it singled out sellers who operate in two places and favored established local dealers.

Reasoning

The Court affirmed the conviction and rejected the constitutional challenges. It explained that a State may direct its laws against particular trade practices it deems harmful without covering every possible similar act. The Fourteenth Amendment does not forbid special laws unless they are purely arbitrary, and the legislature may reasonably target a class it sees as a conspicuous example of the problem. The opinion noted that the law could be aimed at repeated practices by larger firms or multiple-yard operators and that courts should not substitute their economic judgments for the legislature’s choice about what harms competition or risks monopoly.

Real world impact

The decision lets states criminally punish intentional regional undercutting meant to destroy local rivals and protects regular local dealers from that practice. Businesses operating in multiple locations can face fines for coordinated price cuts across areas. The judgment was affirmed, so the conviction and fine stood under the reviewed law.