West Lynn Creamery, Inc. v. Healy case brief

West Lynn Creamery, Inc. v. Healy case brief summary

512 U.S. 186 (1994)

CASE SYNOPSIS

Petitioner milk buyers appealed an order of the Supreme Judicial Court of Massachusetts, which upheld an order by respondent Massachusetts Department of Food and Agriculture to tax all the raw milk sold by dealers to Massachusetts retailers and to distribute the proceeds to Massachusetts dairy farmers. Petitioners argued that the order violated the Commerce Clause.

CASE FACTS
Petitioner milk buyers, a creamery and a dairy, purchased raw milk outside of Massachusetts, but did business in Massachusetts. After milk prices plummeted, respondent Massachusetts Department of Food and Agriculture issued a pricing order that taxed all the raw milk sold by dealers to Massachusetts retailers. This amounted to about 97 percent of the state's supply. The resulting revenue was then disbursed as a subsidy to Massachusetts dairy farmers. Petitioners filed an action to challenge the pricing order as a violation of the Commerce Clause. The state's supreme court upheld the pricing order.

DISCUSSION

• On appeal, the Court reversed. Negative Commerce Clause jurisprudence had long forbidden state tariffs because they discriminated against interstate commerce by burdening out-of-state competitors to the benefit of in-state businesses. 
• The Court explained that a state could not use its legitimate powers to tax and to subsidize state businesses to effect the illegitimate aim of imposing what was in effect a tariff. 
• The Court held that a nondiscriminatory tax had been coupled with a legitimate subsidy to create an effect that nonetheless violated the Commerce Clause.

CONCLUSION

The Court reversed the state supreme court's order, which had upheld a pricing order by the Massachusetts Department of Food and Agriculture to tax milk produced out-of-state and to distribute the proceeds to in-state dairy farmers. The Court held that the order violated the negative Commerce Clause because, like a tariff, it benefitted in-state economic interests by burdening out-of-state competitors, such as the milk buyers.