## Facts

- California enacted the Agricultural Prorate Act to stabilize agricultural markets and prevent economic waste.
- Under the Act, state officials implemented a 1940 raisin marketing program regulating the handling, disposition, and prices of California raisins.
- The program limited competition among producers on terms of sale, including price, and restricted sales to buyers who shipped raisins in interstate and foreign commerce.
- Most U.S. raisins (and nearly half the world crop) were produced in the covered zone, and about 90–95% of California raisins ultimately moved in interstate or foreign commerce.
- Brown, a California raisin producer and packer in the regulated zone, sued state officials in federal court to enjoin enforcement, alleging violations of the Sherman Act, the Agricultural Marketing Agreement Act of 1937 (AMAA), and the Commerce Clause.
- A three-judge district court enjoined enforcement, finding an illegal interference with and undue burden on interstate commerce.

## Issues

1. Whether a state-administered raisin proration and price program is invalid under the Sherman Act.
2. Whether the program conflicts with, and is displaced by, the Agricultural Marketing Agreement Act of 1937 when no federal marketing order for raisins is in effect.
3. Whether the program violates the Commerce Clause given its substantial effects on interstate commerce.
4. Whether federal jurisdiction and equitable relief are available to enjoin a state program challenged as conflicting with federal antitrust law without regard to the amount in controversy.

## Decision

- The Supreme Court reversed the injunction and upheld the California program.
- The Court held the suit arose under a law regulating commerce and could be maintained in federal court without regard to the amount in controversy; the allegations of threatened business injury and prosecutions supported equity jurisdiction.
- The Court held the Sherman Act did not reach anticompetitive restraints imposed as state policy through state officials acting under state law.
- The Court held the AMAA did not invalidate the state program because the Secretary of Agriculture had not issued an applicable federal marketing order for raisins.
- The Court held the program was a regulation of local industry not barred by the Commerce Clause absent conflicting congressional legislation.

## Legal Principles

- The Sherman Act does not apply to restraints imposed by a state acting in its sovereign capacity through its legislative and executive machinery (state-action antitrust immunity).
- Federal antitrust preemption requires an actual conflict with operative federal regulation; a federal statute authorizing regulation does not alone displace state regulation when no applicable federal order has been issued.
- A state may regulate local production and marketing conditions even when the regulation substantially affects interstate commerce, unless Congress has prohibited the state regulation or enacted inconsistent regulation.
- A challenge seeking to enjoin a state program as conflicting with federal antitrust law is a suit arising under a law regulating commerce and is not defeated by the absence of a jurisdictional amount; threatened business injury and prosecutions may support equitable jurisdiction.

## Conclusion

The Court upheld California’s raisin proration program, ruling that the Sherman Act does not condemn anticompetitive restraints imposed as state policy, and that neither the AMAA nor the Commerce Clause barred the program in the absence of an applicable and conflicting federal regulatory scheme.


Parker v. Brown, 317 U.S. 341 (1943)