## Facts

- New York required liquor distillers to sell to in-state wholesalers only according to a monthly price schedule filed with the New York State Liquor Authority.
- The schedule had to include an “affirmation” that New York prices were no higher than the lowest prices the distiller would charge wholesalers anywhere else in the United States during the same month.
- The Liquor Authority construed the affirmation to cover not only posted prices but also “effective” price reductions created by promotional allowances given to wholesalers in other states.
- The Authority determined Brown-Forman’s out-of-state promotional allowances violated the affirmation requirement and initiated license revocation proceedings.
- Brown-Forman challenged the requirement in state court; New York appellate courts upheld the law against a facial Commerce Clause challenge.
- The U.S. Supreme Court noted probable jurisdiction and reviewed the facial validity of the affirmation provision.

## Issues

1. Whether New York’s prospective affirmation requirement facially violates the dormant Commerce Clause by directly regulating prices and transactions in other states.
2. Whether the Twenty-First Amendment authorizes the challenged pricing requirement despite its effect on interstate commerce.

## Decision

- The Supreme Court reversed and held the affirmation provision facially unconstitutional under the Commerce Clause.
- The Court concluded the provision directly regulated out-of-state transactions by tying New York’s current-month prices to prices the distiller would charge in other states during the same month.
- Because a distiller that posted its New York price could not lower its prices elsewhere without risking a violation (or obtaining state approval), the law effectively imposed a national price floor.
- The Court rejected the argument that the Twenty-First Amendment saved the law, finding that New York’s alcohol regulatory authority did not justify a direct restraint on interstate commerce.
- A dissent would have treated the law as a permissible condition on in-state liquor sales within the state’s Twenty-First Amendment authority.

## Legal Principles

- A state law is invalid under the dormant Commerce Clause when its practical effect is to control commerce occurring wholly outside the state’s borders.
- Prospective price-affirmation schemes that link in-state prices to prices that will be charged in other states during the same period can constitute direct extraterritorial regulation.
- A state may not secure local consumer advantages by forcing producers or consumers in other states to forgo competitive advantages available under other states’ market conditions.
- The Twenty-First Amendment does not confer authority to impose alcohol regulations that directly restrain interstate commerce through extraterritorial price control.

## Conclusion

The Court invalidated New York’s prospective alcohol price-affirmation requirement because it compelled distillers to structure out-of-state pricing around New York’s rules, amounting to impermissible extraterritorial regulation under the dormant Commerce Clause, and the Twenty-First Amendment did not provide a defense.


Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573 (1986)