New York Law Review

Tag: Fair Trade Agreements

  • Austin, Nichols & Co. v. Goldberg, 26 N.Y.2d 146 (1970): Impact of Liquor Price Controls on Fair Trade Agreements

    Austin, Nichols & Co. v. Goldberg, 26 N.Y.2d 146 (1970)

    New York’s liquor price control laws limit the enforcement of fair trade agreements under the Feld-Crawford Act to ensure that consumers benefit from mandated price reductions to wholesalers and retailers.

    Summary

    This case addresses the interplay between New York’s Feld-Crawford Act (allowing resale price maintenance agreements) and subsequent legislation aimed at lowering liquor prices for consumers. Austin, Nichols sought to enjoin Goldberg from selling its liquor brands below the prices stipulated in a fair trade agreement. The court held that while the Feld-Crawford Act wasn’t entirely repealed, its application is limited. Injunctions enforcing resale prices can’t be used to frustrate the legislative intent of lowering prices to consumers through mandated price reductions to wholesalers and retailers. The plaintiff must demonstrate that the prices sought reflect these mandated reductions to be entitled to equitable relief.

    Facts

    Austin, Nichols & Co. was the exclusive distributor of Carstairs whiskey and Wolfschmidt vodka.

    The company sought an injunction against Goldberg, a retailer, for selling these brands below the prices fixed in a fair trade agreement, pursuant to the Feld-Crawford Act.

    New York had enacted Chapter 531 of the Laws of 1964, which aimed to eliminate price discrimination against New York consumers in the liquor industry.

    This legislation sought to end the “exclusive price-fixing power in the hands of the distillers”.

    Procedural History

    The case originated in the Supreme Court, which granted the injunction.

    The Appellate Division affirmed.

    The New York Court of Appeals initially heard the case, leading to this opinion on reargument.

    Issue(s)

    Whether New York’s 1964 liquor legislation, designed to lower consumer prices, affects the application of the Feld-Crawford Act, which permits resale price maintenance agreements in the context of retail liquor sales.

    Holding

    No, but the act’s effect is limited. The Feld-Crawford Act is not wholly forbidden by the 1964 legislation, but it is necessarily conditioned and qualified so as not to conflict with these underlying provisions, because the retailer’s price reductions should reflect the mandated discounts.

    Court’s Reasoning

    The Court reasoned that allowing Feld-Crawford injunctions without considering the 1964 legislation would frustrate the latter’s purpose of eliminating price-fixing power by distillers and benefiting consumers. The Court highlighted that the Supreme Court, in Seagram & Sons v. Hostetter, 384 U.S. 35 (1966), recognized the legislative intent to eliminate discrimination against consumers.

    The court emphasized that a plaintiff seeking an injunction under the Feld-Crawford Act must demonstrate that the prices they seek to enforce reflect the price reductions mandated by the 1964 legislation to wholesalers and retailers. They wrote that injunctions cannot issue to frustrate the public policy of the State as solemnly formulated and declared by the Legislature. As we said in Seagram & Sons v. Hostetter (16 Y 2d, supra, p. 55), “section 9 of the 1964 statute set up means which sought to keep down the prices of brand liquors to the consumer”.

    The Court acknowledged the argument that the Feld-Crawford Act might have been repealed by implication due to the enactment of mandatory price-fixing legislation. However, it concluded that there was not such complete repugnance between them, noting, “Fair-trading agreements can be made under the Feld-Crawford Act fixing retail prices for the sale of liquor, but only on plaintiff’s establishing the extent to which, in the language of the Supreme Court (384 U. S., suyra, p. 50), reductions in “consumer prices would adequately reflect the reductions in prices to wholesalers and retailers accomplished by § 9 ”.

    The case was remitted to the Supreme Court for further proceedings consistent with this opinion, placing the burden on the plaintiff to demonstrate the extent to which the prices fixed by the Feld-Crawford agreement reflect the mandated price reductions.

  • Seagram & Sons v. Sherwin, 18 N.Y.2d 1 (1966): Limits on Injunctive Relief When Conflicting with Legislative Policy

    Seagram & Sons v. Sherwin, 18 N.Y.2d 1 (1966)

    A court of equity should not grant injunctive relief to enforce fair trade agreements in a manner that thwarts the expressed purpose of the Legislature, especially when such relief would undermine a statute designed to lower consumer prices.

    Summary

    Seagram & Sons sought an injunction to compel a retail liquor store to comply with fair trade pricing under the Feld-Crawford Act. The defendant argued that granting the injunction would contradict the policy of the 1964 amendments to the Alcoholic Beverage Control Law, which aimed to lower consumer liquor prices. The Court of Appeals affirmed the grant of the injunction, but the dissent argued that the injunction should be denied because it would allow distillers to circumvent the legislative intent of the 1964 statute and maintain high retail prices, thereby benefiting retailers rather than consumers. The dissent emphasized the inequitable position of the plaintiff in seeking to thwart legislative policy.

    Facts

    Seagram & Sons, a liquor distiller, sought a temporary injunction against Sherwin, a retail liquor store, to enforce fair trade pricing agreements under the Feld-Crawford Act.

    Sherwin argued that Seagram was selling liquor at lower prices to retailers in other states, contradicting the intent of the 1964 amendments to the Alcoholic Beverage Control Law, which aimed to lower liquor prices for New York consumers.

    Sherwin presented evidence that Seagram sold Bellows Partners Choice and Old Crow whiskey in Washington, D.C., and elsewhere at prices lower than those charged to Sherwin in New York.

    Procedural History

    The Supreme Court initially denied Seagram’s motion for a preliminary injunction, citing a pending case (Joseph E. Seagram & Sons, Inc., et al. v. Donald S. Hostetter et al.) concerning the constitutionality of the 1964 legislation.

    The Appellate Division reversed this decision and granted the injunction.

    The New York Court of Appeals affirmed the Appellate Division’s order, but a dissenting opinion was filed.

    Issue(s)

    Whether a court of equity should grant injunctive relief to a distiller seeking to enforce fair trade agreements when doing so would frustrate the legislative intent of the 1964 amendments to the Alcoholic Beverage Control Law, which aimed to reduce consumer liquor prices?

    Holding

    The majority affirmed the grant of the injunction. However, the dissent argued that No, because granting the injunction would allow distillers to circumvent the purpose of the 1964 statute and maintain artificially high retail prices, benefiting retailers instead of consumers, which would be an inequitable outcome.

    Court’s Reasoning

    The dissenting judge, Van Voorhis, argued that the injunction should be denied based on the equitable principle that a plaintiff lacking equitable standing should not receive affirmative equitable relief. He emphasized that Seagram was attempting to use the injunction to thwart the avowed policy of the Legislature by frustrating the purpose intended under cover of a restraining order. The dissent cited Weiss v. Mayflower Doughnut Corp., 1 N.Y.2d 310, 316, stating that the plaintiff’s inequitable status is directly related to the matter in issue. He noted the legislative intent behind the 1964 amendments, stating, “that consumers of alcoholic beverages in this state should not be discriminated against or disadvantaged by paying unjustifiably higher prices for brands of liquor than are paid by consumers in other states, and that price discrimination and favoritism are contrary to the best interest and welfare of the people of this state.” The dissent contended that the injunction sought by Seagram would allow retailers to benefit from the price advantages intended for consumers, effectively nullifying the legislative purpose. He argued that the court should consider the impact of the 1964 legislation on trade before granting equitable relief that could render those provisions ineffective. The dissent further argued that granting the injunction pendente lite without considering the price reduction provisions of the 1964 legislation was an error of law. He concluded that while Feld-Crawford injunctive relief was not entirely forbidden, it should be conditioned and qualified so as not to conflict with the underlying provisions of the 1964 amendments.