H.P. Hood and Sons v. DuMond (1949)
Friday, November 27, 2009 at 4:29PM Read the opinion here.
Issue. Did a New York law that allowed the State to not issue a license to a new milk processing facility if it would be destructive of competition in a market already served violate the commerce clause?
Background. In order to protect the price of milk, New York passed a law that allowed the Commissioner of Agriculture and Markets to deny a license to any new milk plant if it would destroy local competition.
H.P. Hood and Sons was a Boston milk distributor that obtained milk from New York producers. It had three receiving depots within New York and had sought a license for a fourth. The State rejected the license and Hood sued on the grounds that the denial violated the commerce clause. The case made it to the Supreme Court which held that the law indeed did violate the commerce clause.
Court's Analysis. While the Court acknowledged that States have great latitude to protect the people against menaces to their health or safety and from fraud, the Court has constantly rebuffed attempts by States to advance their own commercial interests by curtailing the movement of articles of commerce. This regulation curtailed such movement.
If States were allowed to hoard their natural resources, there would be greater rivalries, dislocations and reprisals among States. That is contrary to the Constitution's vision of the country as a single economic unit. Such activity cannot be allowed and it was not allowed in this case, even though Hood had access to milk from his three other facilities. The rejection of the fourth plant prevented Hood access to additional supplies.
Afterword. If Hood was going to ship the milk from the fourth facility out of New York, how would its existence harm competition in New York? Is there the fear that if more milk left the state, prices would rise in New York? Still, was that the purpose of the law? Wasn't the law enacted to prevent over-supply and a crash in the price of milk? If so, how would Hood's fourth facility harm competition in New York?