Nebbia v. New York, 291 U.S. 502; 54 S. Ct. 505; 78 L. Ed. 940 (1934)

Facts—Nebbia, the proprietor of a grocery store in Rochester, New York, was convicted of violating an order of the New York Milk Control Board fixing the selling price of milk by selling two quarts of milk and a loaf of bread for 18¢, whereas the board had fixed the price of a quart of milk at 9¢. The New York Court of Appeals rejected Nebbia’s argument that the order and the statute authorizing the order contravene the equal protection and due process clauses of the Fourteenth Amendment.

Question—Does a state violate the Fourteenth Amendment when it fixes the minimum and maximum prices of articles such as milk?

Decision—No.

Reasons—J. Roberts (5–4). The milk industry in New York has been the subject of long-standing and drastic regulation in the public interest. Unrestricted competition in this industry aggravated existing evils, and the normal law of supply and demand was inadequate to correct maladjustments detrimental to the community. An inquiry disclosed the trade practices that resulted in retail price- cutting, which reduced the income of the farmer below the cost of production. In light of this, the price fixing of the control board appeared not to be unreasonable, arbitrary, or without relation to the purpose of preventing ruthless competition from destroying the wholesale price structure on which the farmer depends for his livelihood and the community for an assured supply of milk.

The milk industry is of vital public interest since milk is a basic food in our diet, and the legislature of New York, realizing this, passed this law to safeguard the public interest. The Constitution does not secure to anyone the liberty to conduct his business in such a fashion as to inflict injury upon the public at large or a substantial group of the public.

“The phrase ‘affected with a public interest’ can, in the nature of things, mean no more than that an industry, for adequate reason, is subject to control for the public good.      

So far as the requirement of due process is concerned, and in the absence of other constitutional restriction, a state is free to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by legislation adapted to its purpose. If the laws passed are seen to have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied. Times without number we have said that the Legislature is primarily the judge of the necessity of such an enactment, that every possible presumption is in favor of its validity, and that though the court may hold views inconsistent with the wisdom of the law, it may not be annulled unless palpably in excess of legislative power.”

In dissent, J. McReynolds described this law as an arbitrary interference with due process and feared that the emergency rationale was being used to undermine long-standing constitutional rights.