Nebbia v. New York
Nebbia v. New York is a significant Supreme Court case decided in 1934 that addressed the regulation of milk prices during the Great Depression. In response to falling milk prices, New York enacted the Milk Control Law of 1933, establishing a board to set retail prices. Leo Nebbia, a grocery store owner, was convicted for selling milk below the mandated price. The Supreme Court, in a closely contested 5-4 decision, upheld both Nebbia's conviction and the constitutionality of the law. Justice Owen J. Roberts, writing for the majority, emphasized the state's right to implement economic policies that serve public welfare, marking a departure from prior constraints on state regulation. Conversely, dissenting Justice James C. McReynolds argued that the law infringed upon the freedoms of small business owners and consumers to engage in free market negotiations. This case is often referenced in discussions about the balance between economic regulation and individual liberties, particularly in the context of the Fourteenth Amendment.
Nebbia v. New York
Date: March 5, 1934
Citation: 291 U.S. 502
Issue: Regulation of business
Significance: Reversing several precedents, the Supreme Court held that the Fourteenth Amendment did not prohibit the states from regulating most aspects of any business open to the public.
Responding to the decline of milk prices during the Great Depression, the New York legislature passed the Milk Control Law of 1933, which created a board to fix the retail prices of milk. Leo Nebbia, proprietor of a small grocery store in Rochester, was convicted for selling two quarts of milk below the established price of nine cents each. By a 5-4 vote, the Supreme Court upheld both the conviction and the constitutionality of the law. Writing for the majority, Justice Owen J. Roberts abandoned the “affected with a public interest” doctrine, which had prevented states from regulating numerous categories of business establishments. Although Roberts wrote that “a state is free to adapt whatever economic policy may reasonably be deemed to promote public welfare,” the decision did not reject the freedom of contract doctrine in regard to labor policy.
In dissent, Justice James C. McReynolds invoked the doctrine of substantive due process, and he argued that the New York statute interfered arbitrarily with the liberty of small businesspeople and consumers to negotiate prices in an open market.