Parke, Davis & Company, A Michigan Corporation v. Health Cross Stores, Inc., and White Cross Health and Beauty Aid Discount Centers, Inc., 364 F.2d 214, 4th Cir. (1966)
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Scribd Government DocsParke, Davis & Company, A Michigan Corporation v. Health Cross Stores, Inc., and White Cross Health and Beauty Aid Discount Centers, Inc., 364 F.2d 214, 4th Cir. (1966)
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Scribd Government Docs364 F.
2d 214
PARKE, DAVIS & COMPANY, a Michigan corporation,
Appellee,
v.
HEALTH CROSS STORES, INC., and White Cross Health
and Beauty
Aid Discount Centers, Inc., Appellants.
No. 9733.
United States Court of Appeals Fourth Circuit.
Argued March 2, 1965.
Decided July 28, 1966.
Joseph L. Nellis and James Michael Bailey, Washington, D.C. (Stanley B.
Frosh and Camalier, Frosh, Nellis & Dorsey, Washington, D.C., on the
brief) for appellants.
James C. McKay, Washington, D.C. (Gerhard A. Gesell and Covington &
Burling, Washington, D.C., on the brief) for appellee.
Before HAYNSWORTH, Chief Judge, and BOREMAN and BRYAN,
Circuit Judges.
HAYNSWORTH, Chief Judge:
In their appeal, the defendants ask us to hold invalid the 'nonsigner' provisions
of the Maryland Fair Trade Act and the authorizing provisions of the McGuire
Act because of asserted conflict with the constitutions of Maryland and of the
United States. The tendered questions are settled. The answers have been
proclaimed. We affirm the injunctive order proscribing sales of the branded
products at prices below those specified in the fair trade agreements.
The plaintiff, a manufacturer and distributor of prescription drugs and
medicines, entered into 'fair trade' agreements with some Maryland retailers
fixing retail prices for some of its branded and labeled products. The
defendants, retailers who have not signed the agreement, sold some of those
products at lower prices. Their defense is the purely legal one that application
of the statutes to nonsigners such as they is not constitutionally permissible.
3
The defendants earnestly contend that, as to nonsigners, the Maryland Fair
Trade Act is in violation of Maryland's constitutional guaranty of due process
and her prohibition of delegations of legislative authority. The Court of Appeals
of Maryland, however, in the face of both branches of the attack, has clearly
and repeatedly held that the Act is not invalid under Maryland's constitution.
Goldsmith v. Mead Johnson & Co., 176 Md. 682, 7 A.2d 176, 125 A.L.R.
1339; Schill v. Remington Putnam Book Co., 179 Md. 83, 17 A.2d 175, 22
A.2d 128; Hutzler Bros. Co. v. Remington Putnam Book Co., 186 Md. 210, 46
A.2d 101, 163 A.L.R. 884; Home Utilities Company v. Revere Copper and
Brass, 209 Md. 610, 122 A.2d 109; G.E.M., Inc. v. Plough, Inc., 228 Md. 484,
180 A.2d 478.
The interpretations of Maryland's constitution by her highest court are binding
upon us under the Rules of Decision Act.1 The existence of the parallel
contention that the same statutes are inconsistent with the federal constitution
gives us no leave to rewrite Maryland's constitution or to give its provisions a
construction at odds with that of Maryland's Court of Appeals. That court's
construction and application of federal constitutional principles would not bind
us, but its declarations of the requirements of Maryland's constitution are final
and completely authoritative.
Federal questions are asserted, however. It is contended that the nonsigner
provisions of the relevant statutes, the Miller-Tydings Act,2 the McGuire Act 3
and Maryland's Fair Trade Act,4 are in violation of the due process clauses of
the Fifth and Fourteenth Amendments, and that the federal statutes delegate
legislative authority in violation of Art. I, 1 and 8 Clause 18) of the Constitution
of the United States.
The defendants' due process argument was answered long ago in Old Dearborn
Distributing Co. v. Seagram Distillers Corp., 299 U.S. 183, 57 S.Ct. 139, 81
L.Ed. 109, 106 A.L.R. 1476. That case cannot be distinguished on the ground
that officers of the retailer there had signed a price-fixing agreement, for the
retailer asserted, and the Supreme Court assumed, that the retailer's subscription
to the agreement was ineffective. See 299 U.S. at 187, 57 S.Ct. 139. Such an
assumption was essential before the court reached the basic question posed by
'the challenge * * * directed against 2,' the nonsigner provision of the Illinois
statute. See 299 U.S. at 193, 57 S.Ct. 139 et seq. Expressly and necessarily, the
case is a refutation of the nonsigners' due process contention. The opinion's
discussion of the immediate problem cannot be ignored; the holding cannot be
dismissed as dictum.
7
In a second line of defense, it is suggested that Old Dearborn was undone by
Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95
L.Ed. 1035, 19 A.L.R.2d 1119. The suggestion is unprovocative. Schwegmann,
with no discussion of the constitutional problem resolved in Old Dearborn,
construed the Miller-Tydings Act as sanctioning state statutes authorizing the
fixing of retail prices of branded or labeled goods moving in interstate
commerce only to the extent of the contractual obligations of the retailer. The
authority of Schwegmann was promptly overturned by the enactment of the
McGuire Act which made plain the congressional intention to authorize and
exempt from the antitrust laws, the nonsigner, as well as the signer, provisions
of state fair trade statutes. The Supreme Court's divisive, narrow construction of
the far from explicit language of Miller-Tydings, cannot be converted into a
constitutional proscription of congressional power to enact the McGuire Act
and a reversal or retraction, sub silentio, of Old Dearborn.
Since then, the Courts of Appeals have consistently declared the
constitutionality of the nonsigner provisions of the McGuire Act and
implementing state statutes against both the due process and excessive
legislative delegation contentions.5 More importantly, the Supreme Court has
declared its own reaffirmation of its holding in Old Dearborn. This was done
explicitly in Hudson Distributors, Inc. v. Eli Lilly & Co., 377 U.S. 386, 84 S.Ct.
1273, 12 L.Ed.2d 394. It was done implicitly in the dismissal of several appeals
for the want of a substantial federal question under such circumstances that the
dismissals were adjudications of the merits.6
It remains to be said only that the McGuire Act, in no sense, represents a
delegation of congressional authority.
10
The plenary powers which the Congress derives from the Commerce Clause
include the broad discretionary power to prohibit or to authorize state
legislation regulating or affecting interstate commerce in designated areas or
facets.7 The Miller-Tydings and McGuire Acts authorize state legislation, but
their authorization with their limited exemption from the antitrust acts is not of
such legislation as a state may wish to fashion for itself in the area of fair trade.
The federal statutes define with care and specificity the state legislation they
authorize and sanction. While a state legislature may decide whether it wishes
to enact any fair-trade statute affecting transactions in interstate commerce, if it
wishes to do so, it must observe the congressional stipulations if its enactment
is to be effective. In light of the scope and particularity of those stipulations, the
authorizing federal statutes cannot reasonably be said to be a delegation of any
congressional authority, much less an unreasonable and impermissive one.8
11
We conclude that the District Court properly enjoined further wilful sales by
these nonsigning defendants of the plaintiff's labeled products at prices below
those specified in the plaintiff's Maryland fair-trade agreement.
12
Affirmed.
28 U.S.C.A. 1652
15 U.S.C.A. 1 et seq
15 U.S.C.A. 45
Art. 83, 102-110, Code of Maryland
Lee-Wilson, Inc. v. General Electric Co., 1 Cir., 222 F.2d 850; Norman M.
Morris Corp. v. Hess Bros., Inc., 3 Cir., 243 F.2d 274, 64 A.L.R.2d 750;
Schwegmann Bros. Giant Super Markets v, Eli Lilly & Co., 5 Cir., 205 F.2d
788; Sunbeam Corp. v. Richardson, 6 Cir., 243 F.2d 501; G.E.M. Sundries Co.
v. Johnson & Johnson, Inc., 9 Cir., 283 F.2d 86
Masters, Inc. v. General Electric Co., 348 U.S. 892, 75 S.Ct. 215, 99 L.Ed. 701;
S. Klein on the Square, Inc. v. Lionel Corp., 348 U.S. 860, 75 S.Ct. 88, 99
L.Ed. 677; Grayson-Robinson, Stores, Inc. v. Lionel Corp., 348 U.S. 859, 75
S.Ct. 87, 99 L.Ed. 677. In those cases, the retailers appealed from decisions of
the New York Court of Appeals (the Masters and S. Klein cases, 307 N.Y. 229,
120 N.E.2d 802) and of the Supreme Court of New Jersey (the Grayson
Robinson case, 15 N.J. 191, 104 A.2d 304), which held the McGuire Act to be
authorized by the federal constitution. The Supreme Court's dismissals of those
appeals from state courts, for want of a substantial federal question, was
necessarily a ruling on the merits of the federal constitutional issues. Beck v.
McLeod, E.D.S.C. (Three-Judge Court), 240 F.Supp. 708; Wright, Federal
Courts (1963 ed.) 430; Stern and Gressman, Supreme Court Practice 251; Hart
and Wechsler, The Federal Courts and the Federal System 573-576; Robertson
and Kirkham, Jurisdiction of the Supreme Court of the United States, 58, pp.
104-105
Prudential Insurance Co. v. Benjamin, 328 U.S. 408, 424, 66 S.Ct. 1142, 90
L.Ed. 1342, 164 A.L.R. 476
Schwegmann Bros. Giant Super Markets v. Eli Lilly & Co., 5 Cir., 205 F.2d
788
