Facts of the Case
To combat the effects of the Great Depression, New York adopted a Milk Control Law in 1933 which established a board to set a minimum retail price for milk. It set the price of a quart of milk at nine cents. Nebbia, a store owner, violated the law by offering two quarts of milk and a five-cent loaf of bread for a total of 18 cents.
Did the regulation violate the Due Process Clause of the Fourteenth Amendment?
Following a lengthy discussion of the Due Process Clause, the Court held that since the price controls were not "arbitrary, discriminatory, or demonstrably irrelevant" to the policy adopted by the legislature to promote the general welfare, the regulation was constitutional. In an opinion authored by Justice Owen Roberts, the Court reasoned that regulations are not an inappropriate way to serve the public interest. When industry is particularly tied into a public interest, it is more subject to the state police powers. Courts may not override policy decisions by states in this area on the grounds of due process unless rational basis review is not satisfied. Rational basis review, which is used for economic regulations, requires that the law is not unreasonable or arbitrary and also that there is a reasonable relationship between the law and the interest that it serves. Price regulations are not per se beyond the framework of due process.
Justice McReynolds wrote a dissenting opinion, which was joined by Justices Van Devanter, Sutherland, and Butler.
Federalist Society Review, Volume 18
Note from the Editor: This article discusses the history of interpretation of the Contract Clause and...
A landmark decision against bureaucratic browbeating has advocates for limited government, free markets, and shapely...