Facts
- New York created a Milk Control Board during a dairy-industry crisis and authorized it to set minimum and maximum retail milk prices.
- The Board set a minimum retail price of nine cents per quart for milk sold by stores for off-premises consumption.
- Leo Nebbia, a Rochester grocer, sold two quarts of milk and a loaf of bread for eighteen cents, effectively pricing the milk below the minimum.
- Nebbia was convicted in a New York trial court for violating the price order; the conviction was affirmed by the New York Court of Appeals.
- Nebbia challenged the statute and order under the Fourteenth Amendment’s Due Process and Equal Protection Clauses.
Issues
- Whether New York’s minimum retail milk price regulation violated the Fourteenth Amendment’s Due Process Clause as an arbitrary interference with liberty of contract and property use.
- Whether the regulatory scheme violated the Fourteenth Amendment’s Equal Protection Clause by treating classes of sellers differently.
Decision
- The Supreme Court affirmed Nebbia’s conviction and upheld the statute and price order.
- The Court held the regulation did not violate due process because it was not unreasonable, arbitrary, or without a real relation to the legislative purpose.
- The Court rejected the equal protection challenge because the classifications had a reasonable basis and Nebbia did not show unconstitutional discriminatory injury.
Legal Principles
- States may regulate prices under the police power when the regulation is reasonable and bears a real and substantial relation to a legitimate public welfare objective.
- The Fourteenth Amendment does not constitutionalize a general rule against economic regulation; property and contract rights are subject to regulation to meet public needs.
- Price control is not unconstitutional per se; judicial review asks whether the regulation is arbitrary, capricious, or lacking a rational connection to the lawful end.
- Equal protection permits economic classifications if distinctions between classes are reasonable and the challenger shows adverse, constitutionally cognizable discrimination.
Conclusion
Nebbia sustained broad state authority to regulate private economic activity, including price controls, so long as the measure is not arbitrary and is reasonably connected to a legitimate public purpose, and it approved reasonable classifications among market participants under equal protection.