Nebbia v. New York

Brief Fact Summary. New York’s Milk Control Board’s price control regulation survived a Constitutional attack because it was not found to be arbitrary, discriminatory, or demonstrably irrelevant to the policy adopted by the legislature.

Synopsis of Rule of Law. Price controls that are arbitrary, discriminatory, or demonstrably irrelevant to the policies of the legislature, are unconstitutional because they are unnecessary and unwarranted interferences with individual liberty.

Facts. The New York legislature established a Milk Control Board that was vested with the power to “fix minimum and maximum retail prices” for milk sold within the state. Appellant, Mr. Nebbia, an owner of a New York grocery store, was convicted of selling milk for prices in excess of the price set by the Board.

Issue. Whether the Constitution prohibits a state from fixing the selling price of milk?

Held. No. Judgment affirmed. The production and distribution of milk is a paramount industry of the state and largely affects the health and prosperity of its people. Property rights and contract rights are not absolute in nature and may be subject to limitations. Since the price controls were not “arbitrary, discriminatory, or demonstrably irrelevant” to the policy adopted by the legislature to promote the general welfare, it was consistent with the Constitution.

Dissent. This statute not only interferes arbitrarily with the rights of the little grocer to conduct his business, but it also takes away the liberty of twelve million consumers to buy a necessity of life in an open market.

Discussion. This decision marked a significant shift from the Lochner era by reducing the judicial role in scrutinizing the means employed in economic regulations – both in its announced standard that “the means selected shall have a real and substantial relation to the object sought to be attained” and in its examination of the background of the legislation.