Hunt v. Washington State Apple Advertising Comm’n

t Burger1977. Invalidated NC’s law requiring that closed containers of apples shipped to state from elsewhere to bear either USDA grade or no grade at all.

t Facts. North Carolina required that all closed containers of apples shipped into or sold within the state bear the applicable U.S. grade or no grade at all. A group of Washington state apple growers attacked the North Carolina statute, since it prohibited the display in NC of Washington’s stringently-policed apple grades. The Washington manufacturers had to either obliterate the printed labels on containers shipped to North Carolina, or repack apples bound for NC in special containers.

t Holding:

n SCt found that NC statute unconstitutionally burdened interstate commerce. Here, like Exxon, SC declined to attribute a protectionist motive to the law (355). However, SC had three objections:

i. NC’s statute discriminated against Washington apple growers in that Washington apple growers, but not NC apple growers, have to bear additional costs by altering their marketing practices. Washington growers had to repack their apples or obliterate their labels, whereas NC growers were unaffected.

(1) C/A. However, this is precisely the disparate impact argument rejected by SC in Exxon.

ii. Regulation stripped away Washington’s “competitive and economic advantage that it has earned for itself.” Whereas NC had no grading requirements at all, Washington State had very strict ones; the NC statute hurt Washington by stripping from it the competitive advantages it had earned through its rigorous and well-known inspection and grading system.

(1) C/A. What is “earned” about Washington’s advantage? If there is national acceptance of Washington standard, why hasn’t FDA regulation changed?

iii. The law has an “insidious” leveling effect on the heretofore “free market forces at work.”

(1) C/A. But why is the market created by Washington state’s participation “free,” while NC regulation isn’t.

n Intentional. SCt attached substantial weight to the fact that the NC scheme was apparently intentionally discriminatory. There was evidence that it was the NC apple growers who were responsible for the passage of the statute. Also, the state’s declared purpose for the statute (to safeguard consumers against fraud) was suspect, since (1) the statute applied only to labels of closed shipping containers, and retail sales are generally not made while the apples are still in their shopping containers; and (2) the state permitted the sale of apples with no grading at all. [note: this differs form AK’s analysis above. Check this out!!]

n Balancing test. Finally, SCt applied a balancing test, and concluded that the burdens on interstate commerce far outweighed the limited benefit to NC consumers. As part of this balancing, the SCt considered the availability of non-discriminatory alternatives (e.g. permitting out-of-state growers to utilize their state grades only if they also mark the applicable federal labels on the containers).

n Significance of discrimination. SCt claimed that the probably intentional nature of the discrimination was not dispositive of SCt’s analysis, and that the same result would have followed even if the hardship on Washington producers was truly an incidental by-product of a scheme intended to protect consumers (which the SCt doubted). Nonetheless, it seems clear that the presence of an intent to discriminate weighed heavily in the SCt’s balancing process.

Date: 2015-01-02; view: 1072