CALIFORNIA v. WASHINGTON

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Argument of Wallace Howland

Chief Justice Earl Warren: Number 12, State of California, Plaintiff, versus the State of Washington.

Mr. Howland, you may proceed.

Mr. Wallace Howland: May it please the Court.

I speak on behalf of the motion made by the State of California.

California, as leave of the Court, with permission to file a complaint in the original jurisdiction of this Court, the defendant is in the State of Washington.

The two States are the only parties to the proceeding.

The case involves trade barriers between those two States.

Washington has discriminated and thus discriminate against interstate commerce in wine.

In so doing, Washington denies the citizens of other States, trade privileges, in the sale and distribution of wine, which it freely accords to its own citizens.

It does so in order to protect its own wine industry against the competition of out-of-state and foreign wines.

And for this, we submit, there is no sanction in the Constitution of the United States.

Violated by these statutes, another official acts of the State of Washington, are the constitutional rights of the State of California itself, as a State, in addition to the constitutional rights of its citizens and industry.

The purpose of this action is to enjoin official acts of the State of Washington which, we submit, violate the Federal Constitution.

Supporting the position taken by California in this case, the State of New York has filed a brief, amicus curiae.

This was (Inaudible) from a significant source, because second only to the State of California, the State of New York is the next largest wine-producing state in the union.

Washington opposes the filing of this complaint.

The principle argument is that California has no standing to sue, that it is not a proper plaintiff.

And that in filing -- this seeking to file its complaint, the California is acting only as a nominal plaintiff on behalf of its wine industry and the members of its wine industry.

Issue has been joined on this point in the briefs which have been filed.

And with the Court's permission, my main effort, in this oral argument, will be addressed to the proposition that -- that California thus have standing to sue.

Indeed, I shall show that California is the only plaintiff legally capable of bringing this action.

And the reason is that the complaint amongst other things, alleges an injury to the State as -- that is to say to the executive branch of the State Government.

The complaint in this case discloses two aspects to the case.

On the one hand, it is a case of the type which is some -- has previously been before the Court, where a State sues his plaintiff in the role of parens patriae to assert its -- to assert an injury to its quasi-sovereign rights and where it is suing on cause of -- causes of action, which it derives from its citizens.

That is one aspect of the case.

But also very much in the case and which bears directly upon this question of California standing to sue is the fact that California alleges its own cause of action.

California has searched that it, as a State, independently of its citizens, has been denied constitutional rights which it enjoys.

Justice Felix Frankfurter: Did I understand you to say that you were -- you do not intend to address yourself to the merits of the complaint?

Mr. Wallace Howland: No, sir.

I said that my -- my principal effort in this argument, with the Court's permission, would be to demonstrate California standing to sue.

Justice Felix Frankfurter: Yes, but I gathered that -- that the merits are going to be strikingly treated the argument?

Mr. Wallace Howland: No, sir.

Justice Felix Frankfurter: You will be moved.

Mr. Wallace Howland: I will do it if he reminds.

Justice Felix Frankfurter: I beg your pardon.

Mr. Wallace Howland: Yes.

Justice Felix Frankfurter: (Inaudible)

Mr. Wallace Howland: In the -- in -- in establishing California standing to sue, I think that there's no great disagreement concerning the applicable law.

In order to invoke the -- the original jurisdiction of this Court, the complaint state must establish two things.

And I'm speaking now, particularly about the -- the parens patriae aspects of this case.

The complainant's state must show that it has an interest in the subject matter of the litigation which is independent of an -- in -- in addition to for whatever rights of its citizens maybe involved.

And, of course, complainant's state must also show that there is an injury to the state interest, although which there is a judicial remedy.

If these two tests are met, then the complainant's state has standing to invoke the original jurisdiction.

Justice William O. Douglas: Well, at the present time, the State -- the California wine is the -- is the wine that is sold in the state stores in Washington, isn't that right?

Mr. Wallace Howland: That is correct.

Yes, sir.

Justice William O. Douglas: You're not -- it's the only wine, I think, that's sold, is it not, in the state stores of Washington?

Mr. Wallace Howland: The Washington State stores also deal in New York wine, the wine of other states and the wine of our nations.

Justice William O. Douglas: You know what percentage of the market in the -- the state stores of Washington that California has?

Mr. Wallace Howland: Yes, sir.

I (Voice Overlap) --

Justice William O. Douglas: It's a very large percentage, isn't it?

Mr. Wallace Howland: In -- in order that the Court may understand the interest that the State has in this, I should like, for the next few moments, to explain the rather extraordinary situation or which exists in the State of Washington and I will deal directly --

Justice William O. Douglas: The -- the only wines I've seen in the state stores in Washington are California wines.

And there'd be others.

Mr. Wallace Howland: There are others, sir.

Justice Felix Frankfurter: Is -- Is Ohio an important state of production line?

Mr. Wallace Howland: May I answer that this way, Your Honor, California produces 85% of all the wine that is consumed in this country including foreign wine.

In the remaining 15 --

Justice Felix Frankfurter: All the wines consumed?

Mr. Wallace Howland: Yes, sir.

Including in the remaining 15%, the non-California 15%, New York, Ohio and Michigan and the State of Washington are the principal wine-producing states.

Justice Felix Frankfurter: I'm -- you think it describes me and I heard, you -- I understood you to say that of all the wines consumed in Continent of the United States, of all the wines, importation from the plants is relief (Inaudible) itself of all the wines.

85% of the total is California product.

Mr. Wallace Howland: Yes, sir, approximately that rate.

Justice William O. Douglas: Your complaint here is that you can't sell in the grocery stores and -- and other retail outlets in Washington, isn't that right?

Mr. Wallace Howland: Our -- our complaint of all three broad types of discrimination, one of them is the battle that you've touched on and that is that Washington wine is distributed in Washington entirely by private enterprise.

Justice William O. Douglas: In grocery stores.

Mr. Wallace Howland: From wholesaler, to -- from -- from winery to private wholesaler, to grocery store, tavern, hotel --

Justice William O. Douglas: As I -- as I remember in the State of Washington, you can buy Washington wine in your corner grocery store, but you can't buy California wine there.

Is that right?

Mr. Wallace Howland: You've can buy California wine, if your grocery store has gone to state liquor store and paid the same retail price per bottle, as if you went there yourself.

Then -- and there are grocery stores in Washington, of course, that do carry California wine having purchased it already at a consumer price.

Justice William O. Douglas: If -- if the retail stores in the same basis as Washington state wine, is that right?

It can't -- it can't be carried by the retail grocery on the same basis as he can carry --

Mr. Wallace Howland: That is correct, sir.

Justice William O. Douglas: Washington --

Mr. Wallace Howland: Washington law places no restriction --

Justice William O. Douglas: Is that your --

Mr. Wallace Howland: -- on the wine which a -- any of the 4800 retailers can sell.

Justice William O. Douglas: Is that the complaint?

Is that the basis of the complaint here?

Mr. Wallace Howland: The complaint is, sir, that we cannot -- that California wine does not have the same access to these 4800 licensed retail out -- outlets that is freely accorded to Washington wine and its distribution.

Justice William O. Douglas: That -- that it can't -- it doesn't have the same access to the state liquor stores as --

Mr. Wallace Howland: No, sir.

That it doesn't have the same access to the retail outlet.

Justice William O. Douglas: To the retail outlet?

Mr. Wallace Howland: Yes, sir.

California -- pardon me.

Washington consumes about one million -- about two million gallons of wine a year.

Chief Justice Earl Warren: Are all the other states, New York, Michigan, Ohio and the foreign wines in the same --

Mr. Wallace Howland: They are in precisely --

Chief Justice Earl Warren: (Voice Overlap) --

Mr. Wallace Howland: -- the same situation as the California wine is, yes, sir.

The -- the only distinction made in Washington law is between what they called domestic wine which is wine produced in the State of Washington from Washington ground fruits and all other wines.

Washington consumes about two million gallons a year and about half of it is Washington wines produced in that State.

The other half of it comes from out of the State.

Justice Felix Frankfurter: Is Washington -- is Washington exporters, so to speak, for the other states?

Mr. Wallace Howland: For all practical purposes, no, sir.

Justice Felix Frankfurter: It's all that the State consumes?

Mr. Wallace Howland: There is about 2500 gallons of certain types of fruit brandies that are -- that are exported, but it's -- it's miniscule.

Of the million gallons a year that is lawfully imported into the State of Washington, about 90% is California wine in excess of 900,000 gallons a year.

Justice Charles E. Whittaker: When you say California wine, you mean wine from California?

Mr. Wallace Howland: That is correct.

Justice Charles E. Whittaker: California doesn't own its part of it?

Mr. Wallace Howland: No, sir.

By California wine, I mean wine that is produced in the State of California by private producers.

The State of California does not manufacture or sell or deal in any of these products in any capacity.

After this California wine has been lawfully transported into Washington, it is then subjected to three principal types of discrimination.

One is the discrimination of the channels of distribution by which it reaches the consumer.

The second is discrimination in the state controls which are exercised over the pricing of wine.

And the third is discrimination in the Washington laws and policies in connection with the promotion of the sale of the wine to retailers, who are authorized to sell it to the public.

At the wholesale level, Washington has two distinct and separate discriminatory economic systems, as I call them, for the distribution of wine and I call them different economic systems.

Because it's not only the rules and the regulations which are different, but under Washington law it is the very nature of the corporate entities and the business -- business establishments which are permitted to exist.

This discrimination -- this first discrimination has to do, as I said, over the channels of distribution.

Washington wine, the distribution and sale or marketing within that State is entirely a function of private enterprise, from winery, to wholesaler, to retailer to consumer.

The State of Washington does not deal in Washington wines at any level of its marketing or distribution.

There are 13 wineries in Washington.

And each one of them is given of a free choice by Washington law in two respects.

The Washington winery can choose its own channels of distribution.

It may decide -- the winery may decide to sell directly to the 4800 licensed retailers, or the Washington winery may decide to use the -- the services of private wholesalers.

And through the private wholesalers have distribution made on a statewide basis.

But --

Justice William O. Douglas: Can't sell to the state liquor stores.

Mr. Wallace Howland: They are prohibited by law from doing so, Justice Douglas.

But since prior to 1948, at least, the state liquor stores have never dealt in Washington wine.

Justice Felix Frankfurter: Mr. Howland, would you be here if Washington decided to be a dry state?

In other words, to ban all liquors --

Mr. Wallace Howland: No.

Justice Felix Frankfurter: -- domestically created or brought in from without?

Mr. Wallace Howland: No, sir.

I would not.

Justice Felix Frankfurter: But you say that if she -- if she allows -- if she (Inaudible) the liquor traffic, and she -- then she can pay (Inaudible) are all producers, if we're taking California and New York (Voice Overlap) --

Mr. Wallace Howland: I -- I believe that Justice Frankfurter is almost paraphrasing his own words from the concurring opinion in Frankfurt Distilleries.

I quite agree.

Justice Felix Frankfurter: It would be my memory versus yours.

Chief Justice Earl Warren: Mr. Howland, how does it happen that they sell California wines in the state stores, but not Washington wine?

Mr. Wallace Howland: That is a direct function of the Washington statute.

The Washington statute provides expressly as follows and I should like to read this, Mr. Chief Justice, because the discrimination to which we complain about is right -- there's apparent right on the face of the statutes.

All wines manufactured or produced in domestic wineries, that means Washington wineries, maybe sold by the manufacturer or producer thereof, direct to persons holding licenses entitling them to sell wine at retail, under the provisions of this title or to license domestic wine wholesalers or to license domestic wineries.

No wines except domestic wines shall be sold within the State except to the Liquor Control Board or by the Board or through the state liquor stores.

The exception for domestic wines, no wines except domestic wines, shall be sold within the State except to the State Liquor Control Board.

Justice William O. Douglas: I thought it was the -- that it is -- that the pressure of the interest of the Washington State wine liquors restrict California to the state liquor stores.

That was the reason.

Mr. Wallace Howland: Well, if I follow you, sir, I think it's a very fair assumption that the pressure for this legislature and the -- the legislation that did emanate in the Washington wine Industry.

Washington wine Industry is trying to isolate California wine from the lawful Washington market where different brands of Washington wine are competing on a private industry competitive business basis for the trade -- the trade and custom of Washington consumers.

There are 135 private wholesalers of Washington wine.

There are wholesalers in the ordinary sense of the word.

They do not handle California wine or any out-of-state wine.

The very terms of their license calls them a domestic wine wholesaler.

These are the only private enterprise wholesalers of wine in the whole State of Washington, 135 of them.

And the wineries -- that the Washington wineries have a free choice in selecting which of these wholesalers they want to distribute their respective brands and trade names of -- of wine.

These wholesalers operate in limited areas of the State.

They have a territorial franchise from the winery that they represent.

And all of these wholesalers have substantial sales organizations.

They employ wine salesman who go out on regular routes and contact the retail trade and actively solicit the purchase of their Washington wine and promote it -- promote its sale in other ways which I will also mention.

Then you have the 4800 licensed retailers, these -- these private retailers, I'm not speaking now about the state liquor stores.

These are envisioned.

There are 4800 private businessmen in Washington, who are licensed to sell wine at retail, some are licensed to sell by the bottle.

These would be the grocery stores, the -- the grocery stores, the supermarkets, the hotels and there are others license to sell wine by the drink.

These would be the taverns, the bars, and some types of licensee, or both types of license.

These 4800 retailers are solicited by salesmen representing every brand of Washington wine that is produced to please buy of these brands of Washington wine and can I take your order this morning.

Note that there is no restriction on the wine which the 4800 retail licensees are authorized to sell.

The retail licensee who is the man dealing with the consuming public, can sell California wine, Washington wine, New York wine, or foreign wine one, without any restriction based upon its source placed upon him or by the State of Washington.

And that's why I say that the discriminations which we complain are all discriminations that bear on the wholesale distribution, because after the wine has reached the point of the retailer, then so far as the retailer is concerned, the State of Washington exercises no further control upon him.

The second type of discrimination involved in this case is the discriminatory of policies and laws of the State of Washington concerning the place of wine.

Concerning Washington wine, the State exercises no control over the level of the prices at which Washington wine is sold at any stage of its distribution, winery, wholesaler, retailer.

No control over the price of Washington wine.

There is one requirement that is significant, Washington law requires that Washington wineries post and specify a delivered price.

A price of Washington wine delivered to the retailer and that price must be uniform throughout the State.

The fact is that Washington wine is actually delivered to retailers' establishments by the wholesaler.

The -- the salesman and the delivery people come into the retail establishment.

They service the shelves.

They arrange the bottles of Washington wine on the retailer shelf.

They go in the back room, open up the cartons from the stock and bring it out and keep fresh and full stock on the retailer shelves.

The Washington winery set the price of their wine to the retailer by their own individual judgment and in the light of the market conditions from day-to-day -- or that they find in the competitive situation in which they are brand-for-brand amongst the Washington wines.

And this privilege too, is denied of the California producers of wine.

California producers or any out-of-state producer of wine has nothing to say about the price at which his product shall be sold within the State of Washington.

Justice William J. Brennan: Mr. Howland, in your position that California has standing to maintain these actions, there's no suggestion you say that the California wine industry or members of it could not also maintain an action of their own and they challenge to these Washington statutes?

Mr. Wallace Howland: Oh, so far as the law is concerned, this is -- this is quite true, Justice Brennan.

Their constitutional rights have been violated.

As far as the law is concerned, they are legally entitled to bring their own action.

Justice William J. Brennan: But what else is concerned beside the law?

Mr. Wallace Howland: The fact that the Washington State Liquor Control Board is the only lawful customer for Washington wine anywhere in the State of Washington.

The threat of administrative reprisal just about getting to this, that so far as California wine is concerned, the Washington State Liquor Board has non-reviewable authority.

It used its own discretion as to what level or on what price it will put on every bottle of California wine with that it -- that it imports and for which -- which the State Liquor Board, of course, being the only lawful outlet in the State of Washington for California wine.

And so you have the -- the remarkable situation that the -- the regulatory agency against whose regulations as you might expect some form of protest, also happens to be the only lawful customer for your product in the whole State.

Justice William J. Brennan: Well, Mr. Howland, if there were an action by members of the California wine industry which were successful on an attack on both of these statutes and the regulations in Washington, would there remain any other -- anything else of the State of California be vindicated, any other interest?

Mr. Wallace Howland: That would depend entirely upon the details of the relief that were obtained in -- in that kind of a (Inaudible) --

Justice William J. Brennan: Well, I'm assuming that the relief on the merits that you're insisting upon --

Mr. Wallace Howland: Well --

Justice William J. Brennan: -- obtained -- that could be obtained, I take it, could it not, in a -- an action by the members of the California --

Mr. Wallace Howland: It is possible.

Justice William J. Brennan: And if so, then there'd be no remaining interests to California to vindicate this.

Mr. Wallace Howland: That is possible.

Justice Felix Frankfurter: Why do you say that?

In the Georgia -- Georgia and Tennessee Copper.

I suppose the individual concern that were affected by the fumes Tennessee Copper would've brought some -- assuming there was -- could've bought suit against the Tennessee Copper on the --

Mr. Wallace Howland: The individual property owners who (Voice Overlap) --

Justice Felix Frankfurter: Yes.

Mr. Wallace Howland: Yes, certainly, they could.

Certainly they could've.

Justice Felix Frankfurter: The nuisance against them and individual --

Mr. Wallace Howland: Yes.

Justice Felix Frankfurter: Well, I suppose, indeed, the river in New Jersey and the case involving Delaware River, I suppose, the misuse of the river in individual riparian owner might as if the cause of action --

Mr. Wallace Howland: I don't think there's any question about it.

Justice Felix Frankfurter: That wouldn't necessarily displace through either the State to sue, because of pervasive effect upon the state interest.

I'm not saying that this is this case, but I do not think the mere fact that individuals may impose rights to preclude the States from having an interest.

It exceeded those of the individuals put together.

Mr. Wallace Howland: Well, I -- I quite agree with that because your -- in your parens patriae case, the Court has insisted that the State must demonstrate an interest of its own.

And, of course, if the State has an interest of its own, it is -- it is entitled to sue.

And actually in the -- in the nuisance cases that you refer to, the air pollution case, Georgia and Tennessee Cooper and the sewage cases.

The causes of action of the State in those cases were technical point of view.

The legal cause of action is really the cause of action of the individual citizens.

We take the cases where the Court has said that the -- that the State or the complaining state has an interest in the health, comfort, and welfare of its citizens.

It's perfectly obvious that the State has no health.

This -- you can't be the health of the -- of State Government.

State Government can't have health.

State Government can't have comfort.

What the cause of action that is sued upon is the injury to the health of the citizens, the injury to the comfort of the citizens, the interest -- the injury to the prosperity of the citizens.

And what the Court has said in those cases is that the State -- the complainant state has an interest of its own in presenting or pursuing these derivative causes of action.

Justice Hugo L. Black: I'd suppose prior with that, the fact the suits could be brought as they bring complete relief might be relevant consideration from the Court in determining whether (Inaudible) would it not (Inaudible)

Mr. Wallace Howland: Well, as I shall show, Mr. Justice Black, the -- in this case when I get to the third of these discriminations, in the matter of -- of the sales promotion program, the State of California has a -- a direct interest of its own.

It has certain official functions which its law requires that if it discharge and there is no other plaintiff that is capable of getting relief to the State of California for the injury to -- for the -- for the frustration of its public policies for the restraints and the restrictions put upon its employees and officials in the pursuit of their -- of their duties.

It might be that the -- a private case, if a private case were brought, would in some way result in an injunction that would afford some relief to a practical point of view to the State of California.

But this is not securing redress to the legal injuries which the State of California itself had suffered and which gives rise to a controversy between two States of the very type that the original jurisdiction of this Court was created to determine.

The -- I've mentioned that the authority of the Washington State Liquor Control Board gives a complete discretion over the prices of California wine.

And the Board has only one price and that is a retail price per bottle at which they sell to all commerce, be they retailers purchasing for resale, hotels, taverns or whether it'd be the individual consumer.

There is no trade discount on wine.

And I think it fairly significant that although Washington law prohibits the trade discount on wine, Washington law requires that the Board give not less than 15% trade discount on distilled spirits to what are known as Class H licensees, which are hotels, restaurants and other bars of that type, who sell mixed drinks.

But where -- where they -- they are mandated by the statute to give a 15% discount to a hotel who owns a bottle of whiskey to use for serving mixed drinks, the law forbid -- forbids the State Liquor Board to give any trade discount on a bottle of wine to a hotel that wants to sell and has the authority to sell a wine by the Director.

The price levels which the Liquor Board has set before -- for California and other out-of-state wines over a long period of time have been, according to the allegations of the complaint, arbitrary and unreasonably high.

The Board has purchased California wine at prices which is -- have resulted in a markup of over 100% at the -- taking into account of this -- the -- the price at which it was then put on the shelves of the retail stores for sale.

The board price is FOB state liquor store.

There is no delivery service for California wine from the state store.

The Washington retailers who want California wine must not only pay cartage from the state liquor store, but he has to go to the added inconvenience of arranging for cartage.

Whereas, as I've already said in connection with Washington wine, the -- the Washington law requires that the Washington winery specify a delivered price -- a price delivered at the retailer's establishment.

The net effects of these pricing policies are simply this, that there are two retail markups, not one, but two retail markups on California wine.

First is the -- the markup of anywhere from 68% to 100% which State Liquor Board puts on the wine as it goes through its store.

And the second is the markup that anyone of the 4800 retail licensees must necessarily put under his cost, if he wants to avoid selling at a loss and if he wants to even breakeven on his cost of doing business.

The retailer --

Chief Justice Earl Warren: We'll recess now, Mr. Howland.

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Argument of Wallace Howland

Chief Justice Earl Warren: Number 12, Original, State of California, Plaintiff, versus the State of Washington.

Mr. Howland, had you completed your opening argument?

If not, you may proceed.

Mr. Wallace Howland: No, Your Honor, I have not.

May it please the Court.

Last evening at the recess, I have just completed my demonstration of the manner in which Washington, the State of Washington in a discriminatory manner that does everything possible to destroy the economic incentive of the 4800 retail licensees in that State who are authorized to sell at California as well as the wines of other origins.

I turn now to the matter on which directly affects the interest of the State of California and the cause of action which the State of California has in its own right.

And this has to do with the discriminations practiced by the State of Washington in connection with sales promotion work, having to do, of course, with the sale of wine.

Now, if I may, I would like to define what I mean by sales promotion.

I am not talking about advertising.

By advertising, I mean the use of newspapers and other printed media, television, radio for advertising purposes.

By sales promotion, I mean essentially, personal contact work with prospective buyers.

I mean the dissemination of product information in such form that it can be used in retail stores.

This product information is sometimes known in this trade as point of sale material, graphic sales aids, posters, displays, bottle holders, racks for the display of merchandise.

It also -- wine being of the nature that it is, it also includes such things as wine selection charts, showing the proper use or the preferred use of various types of wine.

And it also because wine is -- is used to a large extent in cooking, it also includes recipe books and that sort of thing.

Now, so far as Washington wine is concerned, the State of Washington places no limitation on sales promotion activity on behalf of the sale of Washington wine.

But with respect to California wine, again, Washington law is completely merciless in the flatness of its prohibition against sales promotion work on behalf of California wine.

And again, because this discrimination is so apparent on the face of the statutes of the State and the regulations of the State Liquor Board, I should like to read a brief excerpt.

Justice Felix Frankfurter: Is there any conflict between you and the Attorney General of Washington that Washington in fact purposed discrimination against California wine?

Is that contested in this case? Or is the question merely whether Washington can promote its own wine industry?

Mr. Wallace Howland: Well, the issue -- the -- our contention, sir, is that the State of Washington may not discriminate --

Justice Felix Frankfurter: I understand that but --

Mr. Wallace Howland: Yes.

Justice Felix Frankfurter: -- is it -- have we started at the fact that Washington is seeking to exclude at least to the extent that it is California wines?

Mr. Wallace Howland: Well, for purposes of this argument, the -- my friend, the Attorney General conceives that purposes of this argument, the allegations of the complaint must be taken to be true.

Justice Felix Frankfurter: I just wondered therefore whether it's necessary --

Mr. Wallace Howland: Yes.

Justice Felix Frankfurter: -- to prove it.

Mr. Wallace Howland: I don't think, Your Honor, that there is any substantial dispute concerning factual issues in this case.

Justice Felix Frankfurter: But you can start off from there, couldn't you?

Mr. Wallace Howland: Very nearly.

Justice Hugo L. Black: Are you going to discuss the Twenty-first Amendment in connection with that?

Mr. Wallace Howland: Very briefly, Your Honor.

Justice Hugo L. Black: So what -- what constitutional provision do you rely on?

Mr. Wallace Howland: We're -- we rely on the violation of Commerce Clause, the violation of the Privilege and Immunities Clause of Article IV, Section 2 and we say that there is no sanction for those violations to be found in the Twenty-first Amendment.

Justice Hugo L. Black: No sanction?

Mr. Wallace Howland: No, sir.

Justice Hugo L. Black: Well, does the Twenty-first Amendment give Washington the right and power to dispose of liquors and wines that it sees fit?

Is that the issue between you?

Mr. Wallace Howland: No, sir.

The -- the issue on that point is, as far as I'm concerned, the Twenty-first Amendment simply has no application to this case because we do not protest against any regulation or other Act of the State of Washington having to do with the transportation or the importation of liquor into the State of Washington.

And this, of course, is the entire subject matter of the Twenty-first Amendment.

The Twenty-first Amendment as Your Honor knows says that the transportation or importation of intoxicating liquor into a State in violation of its laws is prohibited.

Justice Felix Frankfurter: Well, doesn't --

Mr. Wallace Howland: (Inaudible)

Justice Felix Frankfurter: -- California wine had to be transported into to get in to Washington?

Mr. Wallace Howland: This is true.

But the discriminations that we complain of, sir, occur only after California wine has been lawfully imported into Washington by the State Liquor Control Board.

Justice Felix Frankfurter: Does Washington keep it out altogether?

Keep -- keep out California wine and allow the vending, to sale, exclusively, of Washington wine?

Mr. Wallace Howland: Well, sir that is not this case.

If it were this case, I would take the position that that was not authorized by the Congress --

Justice Felix Frankfurter: No?

Mr. Wallace Howland: No, sir.

Justice Hugo L. Black: Why isn't it very near this case if -- if Washington has -- was granted power by the Twenty-first Amendment to have a liquor business as it saw fit without regard of the liquor from any other place or any other town, how could it not be limited to its own people, production or limited to production -- any production (Inaudible) if they're given exclusive power by that Amendment to control the liquor ban without regard with the Commerce Clause and the other clauses?

Mr. Wallace Howland: Well, I -- I'm not prepared to concede, Justice Black, that the Twenty-first Amendment does what you say.

Justice Hugo L. Black: Well, I understand that.

Mr. Wallace Howland: Yes.

Justice Hugo L. Black: But it seems to me frankly from my view point, that's the issue.

I -- I have some familiarity with that with that (Voice Overlap) --

Mr. Wallace Howland: I'm quite sure, Your Honor, it does.

Justice Hugo L. Black: From the -- the time it started -- before it started --

Mr. Wallace Howland: Yes.

But fundamentally, this will be one of the substantive issues on -- on the merits of this case.

Justice Felix Frankfurter: That s why, Mr. (Inaudible) you said you're going to address yourself to it briefly.

That implies that it's so obvious or so predominantly obvious that you don't have to pay much attention to it.

Mr. Wallace Howland: Well, I think that the -- the -- we have referred to these matters in our -- in our opening brief.

But, so far as the -- as the substantive law of the case is concerned, I think we have demonstrated that on the language of the Amendment, in the light of the Court's decisions to date, that we have here presented the Court with an open question for which there is no precedent to be found in the decisions of this Court.

This is a question of -- of the utmost constitutional gravity.

As I shall demonstrate in a moment, it is of the utmost consequence to the State of California and its economy.

The matters cannot be summarily treated.

Justice Hugo L. Black: But it's decisive, is it not, if it decided one more here, it disposes of any reason to go any further, was that not true?

Mr. Wallace Howland: It -- in the broad sense of the word, that is correct.

And when I say in the broad sense of the word, there are a number of related questions.

It is not just one question.

The --

Justice Hugo L. Black: But the question, so far as I'm concerned at this time in that -- on that Amendment, the question whether the -- the Twenty-first Amendment was designedly intended.

The -- it was -- whether it was intended to leave the States, free to handle liquor ban to keep the Federal Government out of it entirely on any -- any score on any basis.

Mr. Wallace Howland: Well, I'm quite confident, sir, that that was not the intendment.

The intendment of the Twenty-first Amendment as -- was nicely -- it was concisely put in the brief of the State of New York was to make dry States dryer not wet States wetter.

The intendment of --

Justice Hugo L. Black: Who said that?

Mr. Wallace Howland: That's in the brief of the State of New York in describing the effect in the intendment of --

Justice Hugo L. Black: Did I recall that New York within the State was the most insistent that before that Amendment was adopted through the effect that everything that -- that should be able to appeal, everything should be left to the State to decide the matters if so fit.

Mr. Wallace Howland: Well --

Justice Hugo L. Black: -- that State I think came to the main arguments in favor of that claim.

Mr. Wallace Howland: In this case, may I say, the State of California makes no argument for any limitation on the power of any State to exclusively determine its own policy with respect to liquor, whether that be a policy of prohibition, of partial prohibition or of no prohibition.

Whatever policy a State sees fit to make, we will defend the right of the States to adopt their policy free from interference from other States and free from interference from the Federal Government.

The question about the Twenty-first Amendment very briefly is simply this, that for 60 years, this Court was confronted by a series of cases in which it appeared that the Commerce Clause, what this Court has called the immunity characteristic of the Commerce Clause was used to prevent dry States or States that were partially dry from preventing the influx of liquor from other States into their jurisdiction.

It was consistently held right down to the -- the adoption of The Webb-Kenyon Act in 1913.

Then, when the Twenty-first Amendment came along, the intendment of the Twenty-first Amendment, I don't think there's any question about this, the intendment of the Twenty-first Amendment was to assist dry States or States that had a policy of partial or total exclusion of liquor to aid them and to make that policy effective.

Justice Hugo L. Black: (Inaudible) a little more than that.

The intendment was to do away with prohibition as a national doctrine, and as a national law and to leave it up to the State to determine wholly for itself what would happen in its boundaries of reference to the sale of intoxicating liquors if anything.

Mr. Wallace Howland: I would prefer to -- to state it this way Mr. Justice Black, the Twenty-first Amendment did not accept in its precise phraseology, in any way detract from the power of Congress to regulate interstate commerce.

The Twenty-first Amendment had to the peculiar effect of make it -- making it impossible for Congress to repeal its Webb-Kenyon Act.

The prohibition against Congress in 1913 had said that the transportation of liquor into a State in violation of the laws of that State shall be unlawful It said that in statute.

The Twenty-first Amendment elevated that to a constitutional status.

Justice Felix Frankfurter: But isn't that the essential nature of the -- isn't that the essence of the question namely, whether the Twenty-first Amendment limited itself to the old cases -- I'm doing the old cases In re Rahrer and so on or whether, and it's so often of a case, when Congress begins to deal with the subject either by statute or submission of an amendment, it goes beyond the cases of this Court which it seeks to affect.

Isn't that the real question in this case?

Mr. Wallace Howland: That could be a question.

Justice Felix Frankfurter: Well, it -- not could be, isn't it?

I'm not saying -- I'm not suggesting the (Inaudible)

Mr. Wallace Howland: No.

It is -- it is --

Justice Felix Frankfurter: (Voice Overlap) --

Mr. Wallace Howland: -- it is a question in the case, yes, sir.

Justice Felix Frankfurter: And if the --

Mr. Wallace Howland: (Inaudible)

Justice Felix Frankfurter: -- and if the Amendment goes beyond those cases, then, it is enough to show that what Washington did was to go beyond those cases.

Mr. Wallace Howland: No, but then we have -- we have -- but that would raise the further problem of how far beyond those cases and in what respect it goes beyond those cases.

Take for example the -- it has been said that since the Twenty-first Amendment, the Equal Protection Clause no longer applies to liquor legislation.

Well, this is obviously not the law.

Justice Hugo L. Black: Why?

Mr. Wallace Howland: Because this Court in Goesaert against Cleary debated and decided a question in which the sole issue was equal protection of the laws or the -- of the fourth -- the application of the Fourteenth Amendment to certain liquor regulations of the State of Michigan.

So that if your statute has to do that with the internal liquor administration of the State's laws, there is equal protection.

Justice William O. Douglas: But if Washington wanted to --

Mr. Wallace Howland: That's --

Justice William O. Douglas: -- if Washington provided that California wine could be admitted only for say, religious purposes or medicinal purposes, would you have any question here?

Mr. Wallace Howland: Not if that were on a non-discriminatory basis, no, sir.

We honor the policies of the dry States.

There are two bone-dry States still in this country.

Justice Felix Frankfurter: Is Washington treating California differently than it's treating Ohio and New York?

Mr. Wallace Howland: No, sir.

But it's treating --

Justice Felix Frankfurter: So that the discrimination -- I'm not using that legal term but the differentiation that Washington makes is between wine from Washington and wine coming from any other 47 States?

Mr. Wallace Howland: That is precisely correct.

Justice Felix Frankfurter: So, the question whether she can make that discrimination is the heart of this case, isn't it?

Mr. Wallace Howland: Yes, sir.

Justice Felix Frankfurter: I'm not -- I'm not pleading myself --

Mr. Wallace Howland: No, sir.

Justice Felix Frankfurter: -- of course, if my previous opinion in the (Inaudible) I've had my difficulty.

Mr. Wallace Howland: That -- that --

Justice Felix Frankfurter: (Voice Overlap) I should like to join Justice Black has indicating that at least for one more member of this Court, that seems to me the crucial question --

Mr. Wallace Howland: That is the --

Justice Felix Frankfurter: -- what you hurdle, the question of standards.

Mr. Wallace Howland: That is correct.

Justice Felix Frankfurter: (Inaudible) the -- the threshold query so that's -- that's not a constitutional question.

Mr. Wallace Howland: No --

Justice Felix Frankfurter: Now, I'm -- I'm surprised -- or rather I was surprised that we've talked about it (Inaudible) that you're remarking -- address yourself to the Twenty-first Amendment briefly.

Mr. Wallace Howland: Yes, sir.

Justice Felix Frankfurter: And that implied to me that you thought that was an easy aspect of this case.

Mr. Wallace Howland: No.

Justice Felix Frankfurter: To me, it's the most difficult.

Mr. Wallace Howland: No, it is – it is the most difficult and it will require the most extended treatment.

Justice Felix Frankfurter: All right.

Would you prefer to leave it on the brief?

(Inaudible)

Mr. Wallace Howland: I prefer to -- to leave it on the brief.

Justice Felix Frankfurter: (Inaudible)

Mr. Wallace Howland: It has no application to this case.

The decisions of this Court to date of the four cases, Young's Market, the Triner case, the retaliation cases, all have to do with state laws that directly regulated or prohibited the importation of liquor.

Now, in this case, we don't even refer in our complaint.

Justice Felix Frankfurter: What you're saying --

Mr. Wallace Howland: -- through the Washington statute, that makes the Washington State Liquor Board the only lawful transporter or importer of liquor into that State.

Justice Felix Frankfurter: I am saying that the Twenty-first Amendment isn't so all-inclusive that no other provisions of Constitution, such as when treating New York and California different, in showing the preference from New York and against California is within the scope of the Twenty-first Amendment, that is your position?

Mr. Wallace Howland: That is my position.

Yes, sir.

The Washington wineries, if I may return to the matter of the sales promotion program, the Washington wineries not only promote the sale of their own respective brands of Washington wine, they also do institutional promotion.

And by institutional promotions, I mean, promoting the sale of Washington wine generically, without respect to any particular brand or trade name.

And the promotion work that is in fact done in the State of Washington, is done at the wholesale level through the 135 private wholesalers of Washington wine.

This actually is the only efficient way to conduct this type on operation.

There are only a 135 wholesalers as against 4800 retailers.

And the key to this type of promotional work, of course, is the manpower of the wholesaler's organizations, the personal and frequent contacts which the salesmen have are with the retailers.

And it's the economic existence of these Washington retailers that makes possible the kind of sales promotion that Washington does.

Now, that is precisely the kind of an activity that the State of California through its own official agencies has been carrying on for 20 years.

To date, the State has spent about $25,000,000 in this activity and its current activity is at the rate of about $2,700,000 a year.

California maintains representatives all over the United States, 19 of them outside the State of California.

We have an office in New York City, one in Chicago and in this promotion work, the State devices promotional programs to use a commercial term.

These are -- these are very frequently seasonal in their nature.

The State has a contract with -- with the advertising agency.

And these graphic sales aids, posters, colored photographs, store displays and so forth are all designed for a particular promotion.

When one of these comes on, the state representatives contact every wholesaler in their area.

They instruct the wholesaler's salesmen in the use of this particular promotional material and the wholesaler's salesmen then in the -- their routine contact with the retailers take this material around, distribute it, set it up in the stores and so on.

This is exactly what Washington wineries do in the State of Washington.

This is exactly what the State of California does all over the United States except in Washington.

And the reason we cannot do it in Washington is, of course, the practical effect of these Washington statutes which I have referred to yesterday.

It is this projection of the official functions of California beyond its borders.

This actual interstate activity or interstate intercourse in which California is engaged, is what gives California undeniable standing to sue in this case.

In the brief of the State of Washington, the point is made that while this activity is conducted actually by an agency of the State of California, that actually a -- the Washington position is that it is on behalf of -- of the -- the California wine industry.

And I should like to address myself to this point for a moment because that is not true.

The California sales promotion program is exclusively in aid of the State's own statewide policy.

Justice Felix Frankfurter: Why do you as a practical fact, why do you take that position.

Why is it -- do you not say, I'm asking.

But, of course, it affects the wine industry and the money that's made by private people who own it but the relation to the wine industry to the economy of the whole State as such, that it has deeper significance.

Mr. Wallace Howland: That's just about what I was to say, Your Honor.

Justice Felix Frankfurter: And then you say if you can't take (Inaudible)

Mr. Wallace Howland: Well, I -- I was about to differentiate the difference between the State's own interest and the obvious benefits from the state program, which in your -- to the wine industry.

No one, it would be silly to deny that the wine industry benefits from this activity of the State.

But the State's motivation is not simply to help a few private businessmen.

The State's motivation principally, is to protect its own unique agricultural structure.

Agriculture is not only the biggest business in California.

It is peculiarly dependent upon free access to the markets of the country.

I think that there is no State in the United States that is so peculiarly dependent for -- for at least in the food stuffs in the kind of agricultural products that is directly consumed by humans.

There is no State comparable to California in its dependence upon free markets.

California produces a third of all the commercial fruits, a quarter of all the commercial vegetables.

It's quite true that in recent months, we in California, as well as our friends in Texas have had to take the back seat, statistically, so far as the size of a State is concerned.

Alaska has got us both (Inaudible)

But so far as the question of the disposal of our agricultural surpluses are concerned, California yields to no State, when we have 90% of all the peaches that are produced in this country, 90% of all the carloads of lettuce that are shipped commercially.

Justice Potter Stewart: California has been (Inaudible)

Mr. Wallace Howland: We have under our marketing act a program for peaches.

There have -- have been at times programs concerning lettuce.

And I -- I cannot answer your question as to whether there is a lettuce program in effect at the moment.

But under this statute --

Justice Potter Stewart: (Inaudible)

Mr. Wallace Howland: That's on the wine promotion program.

Justice Potter Stewart: And does that money -- what's the source of that?

General taxes or some --

Mr. Wallace Howland: That -- that is -- that is raised by a special excise tax on wine which is readied for market, under the --

Justice Potter Stewart: So the industry itself makes the money, is the source of money.

Mr. Wallace Howland: The industry itself is the source of the money.

But this is true in a great deal of -- of state government activities in California.

Justice Felix Frankfurter: Roads --

Mr. Wallace Howland: Sir?

Justice Felix Frankfurter: Do roads -- the upkeep of roads derive largely from --

Mr. Wallace Howland: For highway taxes.

Justice Felix Frankfurter: For highway taxes.

Chief Justice Earl Warren: Mr. Howland, is the -- does the magnitude of this business greatly affect your argument here or would -- or would the same thing apply to -- to anyone of the 207 commercial, agricultural products that -- that California has?

Could they -- would California have a program of this kind in -- in everyone of those 212 commercial products and thus -- thus make itself a plaintiff in an original action in this Court to -- against discrimination as you have done here?

Mr. Wallace Howland: I think that in view of the -- the decisions of the -- the prior decisions of the Court, that say that in parens patriae action that the injury must be of great magnitude.

There may be some question arise to some of the lesser industries where if -- that whether or not that would be true.

In this case, it is not a question because of all the products that California raises, grapes are the largest and most valuable single crop produced for human consumption.

Chief Justice Earl Warren: Yes, but there are only about -- there are only three other States that -- that really produce any -- any wine, Washington, Michigan, Ohio, and New York, four, I would say.

Well now, let me ask you this.

How -- what would this mean monetarily to the State -- to the vendors of California if they sold all of the -- the wine in Washington that -- that they are not now selling?

Mr. Wallace Howland: In a -- in a --

Chief Justice Earl Warren: If they have the monopoly of all the wine -- wine in Washington, how much would it mean in dollars?

Mr. Wallace Howland: In a free economy, that -- that's impossible to predict.

Chief Justice Earl Warren: Well, how much -- how -- what percentage of the wine -- wines that are sold in Washington are California wines?

Mr. Wallace Howland: Roughly, 45%.

Chief Justice Earl Warren: 45%?

And roughly, what is the total value of -- of the wine sold in Washington?

Mr. Wallace Howland: The California wine sold in Washington at the present time is worth about $2,500,000 at the winery level.

Chief Justice Earl Warren: At the winery level.

Well, then -- then this would probably amount to about $3,000,000

Mr. Wallace Howland: Or it would go --

Chief Justice Earl Warren: Would go 55%.

Mr. Wallace Howland: Statistically, we have shown in our complaints, sir, that the traffic in wine in the State of Washington has actually been curtailed as a result of these discriminations.

Based upon the -- the experience in the other monopoly States where there is no discrimination, the amount will be considerably more than -- than the figures you mentioned would indicate.

Chief Justice Earl Warren: And all -- all States don't consume the same amount of wine per capita, do they?

Mr. Wallace Howland: Sir?

Chief Justice Earl Warren: All States did not use the same --

Mr. Wallace Howland: No.

Chief Justice Earl Warren: -- amount of wine per capita.

Mr. Wallace Howland: No.

Chief Justice Earl Warren: That's --

Mr. Wallace Howland: No.

Chief Justice Earl Warren: -- pretty hard to --

Mr. Wallace Howland: There's -- there's a --

Chief Justice Earl Warren: -- determine (Inaudible)

Mr. Wallace Howland: -- a wide -- wide variation there.

But I would like to close with -- with a -- a reference to a point that was brought up yesterday.

And that was a question of whether or not, a hypothetical question, of whether or not if a suit were brought by a different plaintiff, on a different cause of action, from a practical point of view, there would be some relief to the State of California.

This is a legal possibility.

Anything is possible.

The practical point of view, it is most unlikely, and I should like to briefly say why.

In all of the Court's prior decisions dealing with its original jurisdiction, the question has not been, “Can this plaintiff get relief at the instance of suit by another plaintiff?”

The question before that this Court has previously considered was whether or not there was an alternative for a different trial court for this particular plaintiff to take his cause of action to.

There are a great many situations in the law where an injury, a fact, results in common injury to many and simply because one injured party doesn't or hasn't sued, has never been considered to be a reason why an -- the -- another injured party could not sue on his own cause of action.

Justice Felix Frankfurter: But couldn't you -- couldn't California start the litigation even in the state court of Washington or in the District Court of the United States, District Court in California?

Mr. Wallace Howland: No, sir.

We are barred by an Act of Congress.

Justice Felix Frankfurter: Which says what?

Mr. Wallace Howland: From bringing this cause in the District Court.

This is Section 1251 (a) (1) of Title 28, which states that in controversies between two or more States --

Justice Felix Frankfurter: It must come here.

Mr. Wallace Howland: -- the -- the original jurisdiction of this Court is exclusive.

Justice William J. Brennan: I suppose though California could have curiae amicus in any action brought by California business that are not against Washington.

Mr. Wallace Howland: There is a serious question, Justice Brennan, in my mind --

Justice William J. Brennan: Well, it's been --

Mr. Wallace Howland: -- as to --

Justice William J. Brennan: - done recently, has it?

Mr. Wallace Howland: There's no private litigation in this field pending.

Justice William J. Brennan: What?

And I don't mean in this field.

What -- what --

Mr. Wallace Howland: In any Court.

Justice William J. Brennan: The one in Texas, the District Court allowed that one of the States, one of the federal states, was it?

Mr. Wallace Howland: I'm not familiar --

Justice William J. Brennan: (Inaudible)

Mr. Wallace Howland: I'm not familiar with that.

Justice Felix Frankfurter: But could you --

Mr. Wallace Howland: The point -- the point I -- I should like to make is that there -- there -- that a California wine producer seeking to bring that action against the State of Washington has really got problems.

If he is a California wine producer, whose wine is now being sold in Washington, having disposed of his complete right, title and interest when he sells that wine to the Washington State Liquor Board, does he have any standing to sue as to what the State Liquor Board does with that wine after he has voluntarily committed it to them?

If the California winery was one of the many who does not have any of its wine sold in the State of Washington, then on what can it complain?

In what respect has it been injured?

I simply suggest that there are greater problems here in formulating a suit by a private litigant.

Justice Felix Frankfurter: Couldn't you -- couldn't California sue the Washington State of officials on the basis of Ex parte Young?

If your claim is right, then -- then the - the (Inaudible) of Washington are null and void and as for the officials of Washington are acting out -- they are acting illegally.

Mr. Wallace Howland: This is the --

Justice Felix Frankfurter: So these are the questions of this Mr. Howland.

But, of course, either -- either in a controversy between the State and the State, this Court (Inaudible) evidence is required.

All your argument is based on the assumption, I think, (Inaudible) judicial notice of economics, facts and the consequences of those facts.

Mr. Wallace Howland: I don't -- I don't think that there is any disputed question of fact in this case.

I think that this case if it couldn't be submitted on the pleadings that we would be able to stipulate with our friends from Washington upon facts.

And I should like to call the Court's attention to the opinion of the Court in the Pennsylvania Railroad case, Georgia against Pennsylvania Railroad, where in the dissenting opinion it was pointed out that the reason why this Court is concerned about its original jurisdiction, and the reason why a Court looks at the possibility of an alternative forum is because of the relatively heavy demands upon the time of this Court in cases where it must evaluate the evidence even if it's been referred out to (Inaudible)

And I simply suggest that in this case where there is no substantial issue of fact that that reason or -- or that line of reason has no application.

Chief Justice Earl Warren: Mr. Howland, one -- one thing that bothers me is this that as you know, there are a tremendous number of trade barriers throughout the country.

Mr. Wallace Howland: Yes, sir.

Chief Justice Earl Warren: And I suppose there are very few States that are not affected adversely by one or another or maybe many of those trade barriers or so.

Now, does your argument lead us to the conclusion that if any trade barrier raised by a State adversely affects any segment of the economy of another, does that gives the State the right to bring an original action against the other in this Court?

Mr. Wallace Howland: Not in all circumstances.

Chief Justice Earl Warren: Now, would you differentiate and -- and just try to tell me where the -- where the line is drawn because that -- that does bother me.

Mr. Wallace Howland: In -- well, in this – in this case, it can be drawn on the basis of the -- this extraordinary thing in the American economy of a State through its own official agencies going out and itself engaging in interstate commerce with its activities being intermeshed and intertwined with those of private industry.

So that in this case, we actually have the State's own cause of action.

Now, this does not occur very often.

Chief Justice Earl Warren: But, it could occur in -- in any -- any State or in any -- any product, could it not?

Mr. Wallace Howland: Certainly.

And this -- this Court has more than once rejected the -- the task of trying to definitively define its original jurisdiction.

There could be other cases.

But I say that -- that this is not opening up Pandora's box because this is the first time in the history of this Court that the case with the State's own cause of action built into it, that we have here, has never been submitted.

The -- that is where this case differs from the parens patriae cases.

This is a parens patriae case but we also have the State of California being denied its own constitutional rights because of the effect of the Washington statutes, the Washington discriminatory system upon the State's trade promotion program.

And this -- this is a fact in this case.

It's a situation of that -- well, I can say that it's never been presented to the Court before.

Chief Justice Earl Warren: Well, we have or did -- or did have in California a number of marketing orders --

Mr. Wallace Howland: Yes, sir.

Chief Justice Earl Warren: -- that were somewhat in the same relationship as this.

Is it your belief that in any of those instances, California, because it had evolved these marketing orders, would have the right to represent that segment of the industry and original action?

Mr. Wallace Howland: Many -- many, in fact, most of our marketing orders have nothing to do with sales promotion programs.

Chief Justice Earl Warren: Yes, but that's an incident that it could -- it could very, very easily, couldn't it?

Mr. Wallace Howland: The -- the State does not have the extraterritorial activity.

The State does not inject itself into interstate commerce in the types of marketing order that are concerned with other things than trade promotion.

Chief Justice Earl Warren: I know.

But wouldn't it -- wouldn't it be a very easy step to -- to put a clause of that kind in each marketing order where -- wherein would it be different with any -- any industry, take the -- take the peach industry or any other industry.

Why couldn't we do the same thing there as we do here?

Mr. Wallace Howland: The -- as far as the law is concerned, the State of California could promote the sale of California peaches --

Chief Justice Earl Warren: Then I --

Mr. Wallace Howland: (Voice Overlap) statute but we don't.

Chief Justice Earl Warren: Then the mere -- do you rest your case then on the fact that the State has adopted this program?

Is that -- if -- if you didn't have this program, would the State be in here as if in the position of --

Mr. Wallace Howland: If we didn't have the program, we would then be here in the same situation of the State of Georgia was in the Pennsylvania Railroad case.

Chief Justice Earl Warren: Yes, properly here you say?

Mr. Wallace Howland: There's got to be a straight -- a straight parens patriae type of situation.

Chief Justice Earl Warren: And you think properly here because of the importance of the --

Mr. Wallace Howland: And I think you would properly be here because of the importance of this industry to the economy of the State, yes, sir.

Chief Justice Earl Warren: Yes.

I see.

Mr. Wallace Howland: But -- but we have a stronger case for this --

Chief Justice Earl Warren: Yes.

Mr. Wallace Howland: -- because --

Justice Hugo L. Black: Is there any similarity between your raisin program and the Washington wine program?

Mr. Wallace Howland: The -- the -- there is a raisin -- you mean the State's --

Justice Hugo L. Black: The one we had up some years ago.

Mr. Wallace Howland: You mean the prorate case?

Justice Hugo L. Black: Yes.

Mr. Wallace Howland: There is direct similarity in the operation of -- within California.

In -- in that case, this Court decided that that raisin prorate program was an official function of the State of California.

And under this Act, our state procedures are so similar that what the Court said in that case -- that was in Parker against Brown I believe.

What the Court said in that case is fully applicable here.

This is the -- the program of the State of California; it is not a program of California --

Justice Felix Frankfurter: Except -- you would say except (Inaudible) because -- unless I'm wrong, the wine industry is more important than the raisin industry.

Is it in California?

Mr. Wallace Howland: They are both -- they are both from grapes.

Justice Felix Frankfurter: Yes, I understand.

Mr. Wallace Howland: What we're talking about is our tremendous vineyard industry where we produce five times the number of grapes of all the rest of the United States put together.

And where wine is a more important outlet for grapes than raisins is.

But raisin is --

Justice Felix Frankfurter: The relation to economy is different.

The relation to economy is different.

Mr. Wallace Howland: That is correct.

Justice William J. Brennan: Mr. Howland, is the Sunkist program a privately-financed or is that state-financed?

And (Inaudible) Sunkist program out of California for years?

Mr. Wallace Howland: Yes.

Justice William J. Brennan: On oranges?

Mr. Wallace Howland: Yes.

Justice William J. Brennan: Is that privately or was that state-financed promotion program?

Mr. Wallace Howland: There are elements of both, Justice Brennan and I -- I cannot accurately answer your question.

I'm just not familiar with it.

Chief Justice Earl Warren: Attorney General O'Donnell or O'Connell, I beg your pardon, sir.

Argument of John J. O'connell

Mr. John J. O'connell: Chief Justice, may it please the Court, distinguished counsel.

To answer first an inquiry by Justice Brennan in regards to the Attorney General as amicus, in our brief, we cite verbatim -- report verbatim a case called (Inaudible) versus --

Justice William J. Brennan: (Inaudible) potatoes, it was milk, though, wasn't it?

Mr. John J. O'connell: It was milk.

And it's cited in our brief where the Attorney General appeared as amicus.

If I might just capsulize the facts of each, California produces more than --

Justice William J. Brennan: Will it --

Mr. John J. O'connell: -- 85% --

Justice William J. Brennan: -- will it bother you if I ask you first to say whether you deny that Washington has a program designed further, the sale of Washington wine, and that in carrying out that program, one of the means is to curtail the use of California wine?

Is there a dispute of fact on that issue?

Mr. John J. O'connell: I do not recall, Your Honor, exactly what the precise allegations of the plaintiff's complaint are in that regard.

I do not know whether he specifically alleges that Washington is in a conspiracy --

Justice Hugo L. Black: I'm not talking about it.

Mr. John J. O'connell: Well, whether Washington specifically does that or not, I don't know whether he still alleges but of course, if he does, we would have to admit it for the purpose of this argument.

But, were we allowed or would this matter proceed further, we would make certain affirmative allegations in that and attempt to show otherwise.

Does Your Honor understand me?

Justice Hugo L. Black: Well, I -- I just thought you'd know whether that was -- what your program did so if we could -- if that's the case, it gets down probably to a question of whether the Twenty-first Amendment controlled it which might have to be decided or might probably be decided at this time.

If -- if Washington is doing it and says it's doing it.

Mr. John J. O'connell: I practically couldn't say, Your Honor.

I imagine that one could get varying opinions from the effect of Washington's statutes.

I know privately, I thought, that Washington discriminated against its own wine and found out later that it was alleged in many sources that Washington in fact discriminated it against California wine.

And that's because, if I should go to a state liquor store, I couldn't buy Washington wine but I could buy California.

Justice Felix Frankfurter: The answer to Justice Black's question may be important at least to some of us because if you can't state that, that is a question of fact whether there is discrimination, and we may not have to reach the constitutional question whether discrimination is permitted under -- under the Twenty-first Amendment.

Mr. John J. O'connell: Well, for that purpose, Your Honor, perhaps we would say, for the purpose of this argument, we admit as true California's allegations and we will assume they go that far.

Justice Felix Frankfurter: But I, for one, don't want the consent of admission which may be contrary to fact on the basis of which a constitutional opinion should be elicited.

Mr. John J. O'connell: I'm not sure whether the precise allegations to California contain that fact or not.

But I assume the entire purport and intent of California's allegations are in that direction.

Justice Hugo L. Black: Or that one of the consequences might result from not knowing whether that is a bonafide issue of opinions, that is, if the Court might do (Inaudible) that -- but should not the right kind of case to decide here.

Mr. John J. O'connell: Well, California does allege that Washington treats California wine differently than it does Washington wine or domestic wine and that the effects of these treatment is to damage the State in its governmental interests and it's private citizens in their economic interests.

What California does definitely make that allegation that the effects of Washington's statute are discriminatory to California's interest.

Justice William J. Brennan: Well, Mr O'Connell, I noticed at page 5, subdivision (c) of paragraph (2) of the complaint, the purpose and effect of this discriminatory scheme of regulation is unreasonably distress competition.

Mr. John J. O'connell: Then if that is in the complaint, Your Honor, we admit it to be true for this purpose that the purpose was discrimination.

Then it is admitted for the purpose of this argument.

Justice Tom C. Clark: I thought your defense was one, no standing and two, the (Inaudible)

Mr. John J. O'connell: That is precisely our defense, Your Honor.

Justice Tom C. Clark: So you admit the facts are true?

Mr. John J. O'connell: We have to.

Justice Felix Frankfurter: Yes, but counsel, not even the Attorney General of two States can agree on -- on a hypothetical case in order to elicit from this Court a constitutional adjudication.

As Justice Black has indicated, we have refused --

Mr. John J. O'connell: We did not bring this complaint.

Justice Felix Frankfurter: I know you didn't.

Mr. John J. O'connell: -- Your Honor.

And --

Justice Felix Frankfurter: I'm not --

Mr. John J. O'connell: -- we are required to take this position.

Justice Felix Frankfurter: I'm not suggesting any -- any action or pleading on your part not within your appropriate powers.

I'm merely suggesting the difficulty of a ourt bounded in -- this Court is in dealing with hypothetical cases.

Mr. John J. O'connell: Well --

Justice Felix Frankfurter: And you don't care on what ground this (Inaudible)

Mr. John J. O'connell: No, we don't, Your Honor.

Justice Felix Frankfurter: [Laughs]

Justice Tom C. Clark: And your position is you don't have to plead from the case to get through this.

Mr. John J. O'connell: Exactly, Your Honor.

Justice Tom C. Clark: (Inaudible)

Justice Felix Frankfurter: But if questions from the bench elicit that it's a hypothetical case, then the Court regards that in arguments and that, I take it, is the inference drawn from your answer to Justice Black's question.

You're in a comfortable position if I may say so.

[Laughter]

Mr. John J. O'connell: Yes, Your Honor, but I would like to be perfectly fair in this regard too and not take undue advantage to California because it is substantially alleged partly that this is the effect of Washington's regulations.

Justice Hugo L. Black: And you do argue the substantive questions in the third subdivision of your brief with reference to the Twenty-first Amendment.

Mr. John J. O'connell: We do, we do.

And as the Court can clearly see, there are not -- there are two issues in this case and I would hesitate to say which of the two is the most important or the more important and with the indulgence of the Court in this brief time, I will address myself to the first, that of original jurisdiction and my associate Mr. Garrington will address himself fully to the second, that of the Twenty-first Amendment and other constitutional involvements.

Justice John M. Harlan: Could I ask you one question?

Mr. John J. O'connell: Yes.

Justice John M. Harlan: Do you agree -- do you treat New York the same way you treat California?

Mr. John J. O'connell: Exactly.

Our statutory distinction is between domestic --

Justice John M. Harlan: And --

Mr. John J. O'connell: -- and non-domestic.

Justice John M. Harlan: All -- all wine-growing States are treated the same way.

Mr. John J. O'connell: That's correct.

Justice John M. Harlan: Wine-producing States.

Mr. John J. O'connell: It has been pointed out, California has 85% of the national market including wines from other countries.

There are four States that engage in some wine-producing activity, New York, Ohio, Michigan, Washington, roughly in that order.

California sells 45% of the wine consumed in the State of Washington.

The domestic winery sell 50%, other wine in the States and foreign wine from out of the United States comprise 5%.

The total consumption is slightly in excess of 2,000,000 million gallons per year.

Chief Justice Earl Warren: Do you know what the dollar volume is Mr. Attorney General?

Mr. John J. O'connell: I do not, Your Honor.

I have it some place but it isn't immediately available.

Washington by statute and regulations confined, first of all, it's a monopoly State.

All liquor is involved with the State of Washington.

Hard liquor, if I might use that expression, distilled spirits have to be sold through a state monopoly store.

Beer can be sold anywhere without regard to the state monopoly store.

The statutes make a distinction on domestic and non-domestic wine.Domestic wine can be sold directly through a wholesaler to a retail.

Non-domestic wine has to be sold through the State Monopoly Board.

The only purchaser directly of non-domestic wine in the State of Washington is the State Liquor Control Board.

In this instance, it buys California wine in California F.O.B.

It ships it to its warehouse within the State of Washington.

It disperses without further costs to its various retail store outlets around the State from which it is purchased by the eventual consumer.

The argument of California in regard to original jurisdiction is basically threefold.

Number one, they say that the pure governmental interest of the State of California is restrictive.

Number two, they say they have the responsibility by the declarations of their legislature to commence and initiate actions of this kind.

Number three, they say because of the possible damage to their private citizens by the activities of the State of Washington, they have the duty to bring suit in a quasi-sovereign capacity.

California urges that this case in regard to original jurisdiction is unique.

It's unique in its factual pattern as perhaps all cases are.

But it is certainly not unique to this Court in its question of original jurisdiction.

In answer to California's argument, number one, that they had a pure governmental interest involved in this case, it is our position that the agency of the State of California created through its agricultural code and a marketing order which sort of puts the State, if you please, in the wine business.

We contend that our statutes and our regulations have nothing to do with the official arm of the State of California.

All of our regulations are directed to manufacturers, seller, wholesalers.

They can't do this or that in regard to non-domestic wine.

California by its very constitution prohibits the State of California from being a manufacturer or a seller of wine.

How in the world then, if California contends that this arm of the State of California is the State of California in its sovereign capacity, how in the world then does the State of Washington restrict the activities of the State of California?

Of course, we do not.

Nor is this quibbling on our part.

We do believe if the State is suing in a purely proprietary or government capacity it must stand and fall as an individual, integral party plaintiff in that regard.

However, California alleges that because of the effect of our regulations on its private businessmen, they are somewhat affected because their whole program is disturbed by our specific regulations or statutes that refer to their private citizens.

We have cited to Your Honors to many cases in this regard specifically if California has any interest because of that indirect connection at all.

We have cited the Georgia versus Tennessee Copper case, where the State of Georgia claimed it had some interest because its rules were being eroded by the action of the noxious gases of the Tennessee Company.

This Court calls such interest to make way similarly, in Georgia versus Pennsylvania.

The interest of the State as the owner of a railroad or of many -- the owner of many institutions needing railroad services this Court also called such an alleged direct interest make way.

We have referred Your Honors to the case in this regard of Oklahoma versus Cook which we think somewhat directly parallels this instant case.

In the case of Oklahoma versus Cook, by the Oklahoma statutes, the State itself brought an action following the insolvency of a bank against the shareholders of the bank for the benefit of creditors.

California, in its briefs states this, the wine sales promotion activities of the State are those of a commercial or industrial organization promoting nationwide sales of its products.

In the Oklahoma case, the Court said the protection of depositors of insolvent state banks as a distinct economic policy of the State Oklahoma.

And our court said this, “We must look beyond the mere legal title of the complaining State to the cause of action asserted into the nature of the State's interest further.

But this principle does not go so far as to permit resort to our original jurisdiction in the name of the State, but in reality, for the benefit of particular individuals.”

Albeit, the State assert economic interest in the claims and declare their enforcement to be a matter of state policy.

California's second argument can be quickly disposed of, in our opinion.

The legislative declarations of the legislature of California have urged the proper officials of California and the Attorney General of California to bring actions to a limit -- to eliminate trade barriers with -- with specific reference to the wine industry, now under consideration.

Of course, this argument has been early answered and often answered by this Court.

An individual state legislature cannot give it state power of its state powers that would cause it to have an original jurisdiction of the United States Supreme Court.

This Court is the decider of that issue.

The early case was that of New Hampshire versus Louisiana, a case again similar was the case just cited the case of Oklahoma versus Cook.

California must have this power or this right of original jurisdiction directly in her own right and not because of anything, her legislature however, impelling that might be to the people of California.

The third argument of California is that it has original jurisdiction because of the economic interest of its citizens.

We have done a little mathematics in our brief in regard to the amount or the quantum of this interest affected.

And we assume but that by some wizardry, the State of California would gather in the entire Washington State wine market.

And we compared the amount that would be in comparison to the general farming economy of the State of California and the economic impact assuming this unlikely fact of total appropriation of the Washington wine industry or the Washington wine market is 18 thousands of 1%.

That is the impact on the farm economy of the State of California.

Justice Felix Frankfurter: How many States doing that which Washington is argumentatively doing?

Mr. John J. O'connell: I have not made a thorough study, Your Honor of other States.

But I think that Michigan does somewhat, similar activity to the State of Washington, but exactly what other States do this, in what regard, I am not prepared to answer.

Justice Felix Frankfurter: Can you state that Mr. Attorney, what percentage of California wine goes outside of California, roughly?

Mr. John J. O'connell: I don't --

Justice Felix Frankfurter: (Inaudible)

Mr. John J. O'connell: Oh, by all means.

If California sold 85% of the National Wine Market, it can be readily seen how much wine goes out of California.

Although, as Mr. Chief Justice pointed out, the consumption ratio of States is different.

California's rate of consumption, for example, is twice that of the State of Washington.

Justice Felix Frankfurter: So the problem before us may be beyond Washington in isolation vis-à-vis California.

Mr. John J. O'connell: Oh, yes.

Unknown Speaker: (Inaudible)

Mr. John J. O'connell: In relation to the same question, the economic interest of the State of California, suing a quasi-sovereign capacity as parens patriae, there are many cases as the Court well knows.

These cases generally have three requirements Number one; the injury or threatened injury must be to all the, or a substantial portion of the State's citizens.

Number two the threat must be to the health, safety and general welfare of those citizens.

Number three; the invasion must be of serious magnitude.

The Court well knows that most of these cases divide themselves into three groups boundary, disputes, water diversion cases and cases of pollution or public nuisance.

In all of these of cases, the Court explored the facts thoroughly in order to find a genuine sovereign interest, a fact that would seem to be lacking in this case.

The two cases --

Justice Hugo L. Black: Why do you say that?

Mr. John J. O'connell: The genuine sovereign interest --

Justice Hugo L. Black: Well it --

Mr. John J. O'connell: -- because --

Justice Hugo L. Black: -- if you take the words, you use there as the standard, which one of three would you say is not met by --

Mr. John J. O'connell: Two.

Justice Hugo L. Black: -- the allegations (Inaudible)

Mr. John J. O'connell: The injury is not to all or a substantial portion --

Justice Hugo L. Black: Not to a substantial portion?

Mr. John J. O'connell: That's right.

I do not think so, Your Honor --

Justice Hugo L. Black: Why?

Mr. John J. O'connell: -- although, that again could be a matter of opinion.

Justice Hugo L. Black: Well, what would you think substantial (Inaudible) if that's the standard or the keyword?

Mr. John J. O'connell: Well, I think the substantial portion means a great deal more than the wineries in the State of California.

Justice Hugo L. Black: But they say the grapes people -- all the people that raise grapes which is the biggest farm crop they have.

Mr. John J. O'connell: That's true, but it isn't as big as it would appear.

Justice Hugo L. Black: As what?

Mr. John J. O'connell: It isn't as big as it would appear.

I think, if I'm not mistaken, it represents 4% of agriculture economy of the State of California.

Justice Hugo L. Black: Would you think the automobile industry, for instance, would be -- affect the substantial number of people in Michigan?

Mr. John J. O'connell: It might under some circumstances.

If I might point this out a little further, Your Honor, and take the two cases that are a little bit different than the standard, quasi-sovereign cases, that's Pennsylvania versus West Virginia and Georgia versus Pennsylvania.

In Pennsylvania versus West Virginia, West Virginia restricted the interstate transportation of its natural gas, to Pennsylvania and Ohio, States that had been using that natural gas in their industry and then their homes for many, many years.

And this is what this Court said about the magnitude or the impact of that invasion.

The private consumers in each State not only include most of the inhabitants of many urban communities but constitute a substantial portion of the State's population.

Their health, comfort and welfare are seriously jeopardized by the threatened withdrawal of the gas from the interstate stream.

This is a matter of grave public concern in which the State as the representative of the public has an interest apart from that of the individuals affected.

And in Georgia versus Pennsylvania Railroad, this is what the Court said in regard to the magnitude of the matter involved.Georgia as a representative of the public is complaining of her role which they have proven limits the opportunities of her people, shackles her industries, retards her development and relegates her to an inferior economic position among her sister States.

These are matters of grave public concern in which Georgia has an interest apart from that of the particular individuals who may be affected.

And indeed, in these two somewhat extensions of the basic quasi-sovereign cases, the Court can readily see how strong the impact of the invasion laws on those two cases.

In the instant case if I submit, this invasion -- this impact, this magnitude does not exist.

We say that the real parties and interest in this case is not the State of California.

The real party and interest is the private wine industry of California and I submit, perhaps only the larger or the most important, of these particular wine.

Finally --

Justice Hugo L. Black: Do you think they would have standing in the New York or State Court?

Mr. John J. O'connell: I do indeed, sir.

And in that regard, we argue that this Court is not the proper forum to decide the matters in this case.

In Louisiana versus Texas, this Court said jurisdictions, they gave original jurisdiction is a so delicate and grave in character that it was not contemplated that it would be exercised, save when the necessity was absolute.

The original jurisdiction of this Court is sparingly, carefully and gravely given.

I am not one to speak with authority on the dockets of this Court but may I say this, commodity commissions of the type involved here are a growing thing.

The number runs in my mind in the State of California in the amount of 47.

I don't claim that to be wholly accurate but I know that there are dozens of these commissions engaged in the trade promotion, advertising and research activities of the various products they are designed to promote.

These products are principally in interstate commerce particularly with respect to California.

These products in the main, will go outside the State of California.

I can speak for our State which is new in this commodity commission way of doing business.

We already, although we started much later than in California, have seven of these commissions.

I could imagine if jurisdiction were granted in this instance that any group of citizens engaged in the business of any kind can find a denying State to act in a so -- somewhat governmental capacity towards them.

And finding, thereby, some discrimination in some State of the Union to which they export, come to this Court and on the basis of finding an original jurisdiction, herein, ask the Court for an original jurisdiction.

Justice Felix Frankfurter: But it does make a difference in life than an industry plays a major part in the well being and the economic well being of a State as against some industry (Inaudible) part and if it plays that important part in life, why shouldn't in law?

Mr. John J. O'connell: Again, Your Honor, the matter is just one of magnitude.

Justice Felix Frankfurter: That's what these questions usually are questions (Inaudible)

Mr. John J. O'connell: And if the Court desires to open up these gates to this type of activity toward a course as its own desire in that regard.

Justice Felix Frankfurter: If --if you open a gate, you don't have to let everybody in.

Mr. John J. O'connell: Although -- yes, Your Honor.

Justice Charles E. Whittaker: (Inaudible)

Mr. John J. O'connell: I beg your pardon?

Justice Charles E. Whittaker: If this is the way (Inaudible)

Mr. John J. O'connell: If it isn't, it should be.

And certainly, we would have a right to rely on the consistency in that regard and I could think in our own State of two or three suits that we would be interested in exploring possibilities of instituting in regard to our commodity commissions.

Justice Felix Frankfurter: What West Virginia against Pennsylvania, the other way around (Inaudible) the question of quantity if it (Inaudible)

Mr. John J. O'connell: That's correct, that's correct.

Justice Felix Frankfurter: And that the quantity is a -- is a function of this exercise of jurisdiction.

Mr. John J. O'connell: It certainly is, Your Honor.

I agree with that wholeheartedly and in the West Virginia case, the impact was of a substantial nature involving a great many of the citizens of both States.

Although counsel for California has indicated that there might not be a factual dispute in this regard, I think Your Honors can clearly see that there very possibly would be such a factual dispute.

Justice Hugo L. Black: Why?

Mr. John J. O'connell: The question of temperance in the State of California or in the State of Washington --

Justice Hugo L. Black: Question of what?

Mr. John J. O'connell: Temperance, the promotion of temperance by these regulations.

Justice Felix Frankfurter: Do you mean that California wine is (Inaudible)

Mr. John J. O'connell: That is a matter of opinion, if Your Honor, please.

But I don't think it's without the realm of possibility that should these restrictions be dissolved, the State of Washington would be deluge by highly competitive cheap wine that would certainly increase the per capita consumption of our citizens.

That is a --

Justice William J. Brennan: Are there restrictions in the hard liquor field?

Mr. John J. O'connell: There are none.

Do you mean there are no discriminatory restrictions in that sense?

But, of course, our law was always monopoly for distilled spirits or hard liquor and we have no comparable area with which to compare the consumption in that regard.

Justice William J. Brennan: You would hardly describe this program and Washington as being a temperance program.

Mr. John J. O'connell: But, I think if Your Honor will find many of these cases in the Twenty-first Amendment field, that is one of the matters in which the Court has seen fit to be interested.

We'll be interested in the quality of the non-domestic wine, the reasonableness of our regulations, matters of that kind.

The -- this case can be totally disposed as it was mentioned somewhat yesterday where the fact that there was another form available, had any effect upon this Court granting jurisdiction originally.

Every allegation in California's complaint and every remedy which California seeks can be obtained at one suit.

This isn't the case like Georgia versus Tennessee proper where there were a numerous -- or there were numerous citizens that would have to bring a multiplicity of suits.

One suit could answer this.

We submit that that suit can be brought either in the courts of the State of Washington or in the federal courts within its boundaries and every issue therein can be decided.

Washington is not going to run away.

It is servable and it is suable in either of the courts that I refer to.

And every matter raised in this complaint of California can be resolved (Voice Overlap) --

Justice Hugo L. Black: Does the Washington Constitution permit suits to be brought against the State?

Mr. John J. O'connell: Yes, it does, Your Honor.

Justice Hugo L. Black: You do not even have to go through the suit of the (Inaudible) officially --

Mr. John J. O'connell: (Voice Overlap)

Justice Hugo L. Black: -- be direct.

Mr. John J. O'connell: We submit, you can do that also.

Justice Hugo L. Black: We can do either?

Mr. John J. O'connell: Yes.

Thank you, Your Honors.

Chief Justice Earl Warren: Mr. Garlington.

Argument of Thomas R. Garlington

Mr. Thomas R. Garlington: Mr. Chief Justice and may it please the Court.

I shall address myself to the question of whether or not California has stated the cause of action.

This assumes that somehow, the Court has determined there is original jurisdiction, so far as their capacity is concerned.

It is our position she has not stated the cause of action.

Now, of course, the complaint of the State of California is that the particular statutes and regulations, restricting her wine in our State, violate two constitutional provisions, the Privileges and Immunities Clause of Article IV, Section 2 and the Commerce Clause.

If I may first briefly address myself to the first of these points the Privileges and Immunities Clause.

So as far as we can see, this clause is -- or provision is simply not available to the State of California.

As Your Honors know, the Eleventh Amendment prohibits all suits against the State by or for citizens of other States, New Hampshire versus Louisiana.

Therefore, California has been put in a position of bringing this action in a quasi-sovereign capacity.

Now, this is important and material to the question of privileges and immunities because we have to examine the capacity in which California brings this suit to see if it's a person or a citizen within the protection of the Privileges and Immunities Clause.

What is the capacity, that of California?

She has likened her capacity to that of Georgia.

In Georgia versus Tennessee Copper Company where -- Mr. Justice Holmes described it, in that capacity the State has an interest independent of and behind the title of its citizens in all the air, earth and within its domain.

And again and again, the Court has defined this quasi-sovereign interest as being an interest apart from that of the individual's concern.

So clearly, California, as a sovereign State, is bringing this as a State, not as a group of citizens.

Now, accordingly, the Privileges and Immunities Clause is not applicable to this suit.

It is a protection afforded only natural persons.

I think an interesting case in this regard is Bank of Augusta versus Earle.

There, the Bank of Georgia Corporation was seeking to sustain its right to exercise corporate powers in another State, namely Alabama.

And that right to exercise these corporate powers outside its own State was challenged.

It invoked the Privileges and Immunities Clause.

And it was there held -- well first, the argument on behalf of the bank was that if all it's members of the corporation were rather than of Georgia and they were within the protection of the Privileges and Immunities Clause then the corporation should be, too.

That was rejected and it was held there that the corporation, not being a natural person was not within the protection of the clause.

And excellent discussion of the nature of the clause is contained against Paul versus Virginia, decided in 1868 where the Court said, “The term citizens as used applies only to natural persons, members of the body politic owing allegiance to the State, not to artificial persons created by the legislature possessing only the attribute -- attributes which the legislature has prescribed.”

In Blake against McClung, a case involving an insolvency statute where residents of the State were preferred over non-residents.

The Court held that it -- there was a violation of the Privileges and Immunities Clause with respect to natural persons residing out of Tennessee but the foreign corporation could not avail itself of that provision.

Accordingly, it would seem that through this clear line of authority, California, not being a natural person, may not invoke the Privileges and Immunities Clause.

And on authority of Hill versus District of Columbia which we have cited in our brief, we would suggest that she cannot invoke it, invoke this provision since she is not within the class of persons with respect to whom the alleged acts of Washington are unconstitutional.

Now, I will discuss the Twenty-first Amendment.

I wish only to add before leaving the Privileges and Immunities Clause that what I shall say of the Twenty-first Amendment with respect to the Commerce Clause, applies equally to the Privileges and Immunities Clause namely the Twenty-first Amendment has taken the restrictive and regulatory acts of a State with respect to imported liquor outside these provisions of the Constitution.

Now, with respect to the Commerce Clause, it is said that not only is our legislation and regulations a burden but it is discriminatory with respect to California wine which squarely presents the question of the effect of the Twenty-first Amendment.

In it's brief, and as I understand it today, California has contended that the true meaning of the Twenty-first Amendment is still in doubt.

Suggested that what courts -- what this Court has said in the past with respect to the Twenty-first Amendment is mostly dicta.

It implied that this Court has never adequately considered the Twenty-first Amendment or it's economic significance.

Well, this is certainly not so.

The Amendment has been carefully and fully considered by this Court.

The arguments of California in this case, as many of Your Honors know, are mere repetitions of ones that have been made many times before.

In the course of its brief, California has contended, as I understand its contentions, that the Twenty-first Amendment should apply only to imports into dry States.

That the Amendment prohibits imports of liquor into a State only when, in violation of proper or reasonable state laws, rather than state laws, as the Amendment reads.

That finally, that somehow the Webb-Kenyon Act was overlooked by this Court when it first construed the Twenty-first Amendment.

Now, I find the complete answer to all of these contentions in the State Border of Equalization of California versus Young's Market Company.

Therein, Justice Brandeis did a remarkable thing in that he set up each of these contentions in concise language and answered each in concise, clear, understandable language.

I can't improve on his language and if the Court will indulge me, I should like to refer to some of it because it is so completely applicable to this case.

There, the Court held -- what the plaintiff's complaint of is the refusal to let them import beer.

Now, of course, this case involved a license fee for the privilege of importing beer into the State of California.

It squarely presented the meaning of the Twenty-first Amendment to the Court.

The Court held, what the plaintiff's complaint of is the refusal to let them import beer without paying for the privilege of importation.

Prior to the Twenty-first Amendment, it would obviously been unconstitutional to impose a fee for that privilege.

The position would have been -- would have been void, not because it resulted in discrimination but -- but because that he was a direct burden on commerce.

The Amendment which prohibited the transportation or importation of intoxicating liquors into any State in violation of the laws ,thereof, abrogated the right to import free, so far as concerns intoxicating liquor.

Now, Justice Brandeis gave the basic construction to the Amendment.

He said, “The words used are apt to confer upon the State the power to forbid all importations which do not comply with the conditions which it prescribes.”

I think the word, “conditions” are important.

Then, he analyzed the contentions of the plaintiff.

He said the plaintiffs asked us to limit this broad command.

They request us to construe the Amendment, they're saying in effect, the State may prohibit the importation of liquors, providing it prohibits the manufacture and stay within its borders.

That's one of the contentions that I understand, of California.

It only applies to the dry States.

But if it permits such manufacture and sale, then it must compete on equal terms with the domestic intoxicants.

To say this would involve not a construction of the Amendment but a rewriting of it.

Then he answers the question that the -- the contention that the state regulation must be reasonable.

Plaintiff argued that, despite the Amendment, the State may not regulate importations except for the purpose of protecting the public health, safety or morals.

The importer's license fee was not imposed to that end.

Same contention that California has made here.

Surely, the State may adopt the lesser degree of regulations said Justice Brandeis, than total prohibition.

Can it be doubted that a State might establish a state monopoly of the manufacture and sale of beer and either prohibit all competing importations or discourage importation by levying a heavy impost or channelize desired importations by confining them to a single consignee.

And in that last language, of course, he identified the practices of the State of Washington in confining our imports to the single consignee, of namely, the State Liquor Board.

Then with respect to the charge that the Court had overlooked the Webb-Kenyon Act, Justice Brandeis said, “As we think the language of the Amendment is clear, we do not discuss these matters.”

Referring to the prior interpretations given the Webb-Kenyon Act which being an Act of Congress, was not subject to the same rules of construction as the constitutional amendment.

He said, the claim that the statutory provisions and the regulations are void under the Equal Protection Clause may be briefly disposed of, classification recognized by the Twenty-first Amendment cannot be deemed forbidden by the Fourteenth.

Well, since this case, Young's Market case, involved and required the construction of the meaning of the Twenty-first Amendment, it did not constitute dicta, merely because the principles announced in construing this Amendment governed other fact patterns certainly does not mean that it was dicta.

These determinations were given in response to contentions made in the case and were necessary to the case.

And the principles laid down there by Justice Brandeis are the law and not dicta.

Now, California in the face of Young's Market case says our case is different in that it involved discrimination whereas Young's Market case did not.

But California has, in this respect, overlooked Indianapolis Brewing Company versus the Liquor Control Commission.

That case involved a Michigan Act which prohibited local dealers from selling beer manufactured in another State that discriminated against Michigan.

This was clearly a discrimination type law and the very worst type with respect to the Commerce Clause.

It was a clear burden and a discrimination on interstate commerce.

It was contended that it did violate the Commerce Clause, the Due Process Clause, and the Equal Protection Clause of the Fourteenth Amendment.

The Court held for whatever its character, the law is valid.

Since the Twenty-first Amendment was held in the Young's Market Company case, the right of a State to prohibit or regulate the importation of intoxicating liquor is not limited by the Commerce Clause.

Another clear case of discrimination was that involved in Joseph S. Finch and Co. versus McKittrick, also decided in 1939 by District Justice Brandeis, involving the Michigan's and Missouri's statute, which is similar to the other -- at which I described prohibited imports from States that discriminated against Missouri.

Again, it was attacked on the basis of violating the Commerce Clause and the several clauses of the Fourteenth Amendment.

The Court said, “The claim for the unconstitutionality has rested in this Court, substantially on the contention that the statute violates the Commerce Clause.”

It's urged that the Missouri law does not relate to the protection of health, safety, and morality or the promotion of their social welfare, but it is merely an economic weapon of retaliation.

And hence, the Twenty-first Amendment should not be interpreted as granting power to enact it.”

Since that Amendment, the right of a State to prohibit or regulate the importation of intoxicating liquor is not limited by the Commerce Clause, and it was citing Young's Market case.

Justice Potter Stewart: (Inaudible) the other one.

It involved the impact of the Twenty-first Amendment upon the Commerce Clause on certain parts of the Fourteenth Amendment.

None of them were involved in the impact of the Twenty-first Amendment (Inaudible)

Mr. Thomas R. Garlington: That is correct, Your Honor.

I think this is a noble contention raised for the first time in this case by the State of California.

Of course, as Your Honor will readily apprehend, the language and the scope of the language as it has referred to the Commerce Clause and to the Equal Protection Clause of the Fourteenth Amendment, can -- is indistinguishable from its operations upon the Privileges and Immunities Clause, and that is our second contention with respect to that clause which you cannot distinguish the protection of that Privileges and Immunities Clause over the Protection of the Equal Protection Clause of the Fourteenth Amendment for these purposes.

And the case in point, which particularly discussed the matter of the Equal Protection Clause is Mahoney versus Joseph Triner Corporation decided in 1938, again, by Justice Brandeis.

In that case, the State of Minnesota passed a clearly discriminatory law which prevented the -- the sale of liquor in Minnesota if it contained more than 25% alcohol, unless it would register with the Patent Office.

The particular economic purpose of the status at the time, but it obviously had no relationship to any police power purpose.

It was challenged under the Fourteenth Amendment and with particular emphasis on the Equal Protection Clause.

The Court held the statute clearly discriminates in favor of liquor process within the State as against liquor process (Inaudible)

But only the locally processed may be sold regardless of whether the brand has been registered, that under the Amendment, discrimination against imported liquor is permissible, although it is not an incident of reasonable regulation of the liquor traffic, was settled by State Board of Equalization versus Young's Market case.

Now, California has made another contention in its reply brief which I feel must answered.

And that is that, and again, in the argument today, that the Twenty-first Amendment applies only to incidents of regulations at the border apparently, at the importation.

So -- as soon as that liquor is within the State, the Twenty-first Amendment is no longer applicable.

Well, first of all, let us understand the operation of the Washington statutes as set out.

It does prohibit the importation of wine into the State of Washington, except that purchased by the Liquor Board.

The wine purchased by the State Liquor Control Board is purchased pursuant to statutes, which governs its sale and distribution and so forth inside the State of Washington.

And that is the condition upon which any California wine comes into the State.

And it is a condition which is rightfully imposed by the State of Washington under the Twenty-first Amendment.

Now, this Court, I am sure, has never understood the operation of the Twenty-first Amendment to apply only to the act of importation, but ceasing to have effect after the liquor became -- came inside the territory of the State.

The understanding of Mr. Justice Black is set out in United States versus Frankfort Distilleries, decided in 1945.

This case, you may recall, involved the application of the Sherman Act against price conspiracy by liquor companies.

It was contended by the defendants that since the Sherman Act derived its power from the Commerce Clause, the Commerce Clause no longer operated with respect to liquor that they had a defense.

And, of course, the Court decided that that was true only if the States had indicated they approved of the price regulation.

But for our purposes here, as to whether or not the Twenty-first Amendment applies to the control of liquor within a State, Mr. Justice Black said, it is argued, the Twenty-first Amendment to the Constitution bars its prosecution.

That Amendment bestowed upon the States broad regulatory power over the liquor traffic within their territories.

It has not given the States plenary and exclusive power to regulate the conduct of persons doing an interstate liquor business outside their boundaries.

Granting the States -- this is the important language, granting the State's full authority to determine the conditions upon which liquor can come into its territory and what will be done with it after it gets there, it does not follow from this the fact that the United States is without power to regulate the conduct of those engaged in interstate trade outside the jurisdiction of the State of Colorado.

And, Mr. Justice Frankfurter, in his concurring opinion, indicated his understanding in this respect, if a State, for its own sufficient reasons, deems that the desirable policy to standardize the price of liquor within its borders, either by direct price fixing statute or by permissive sanction, the Twenty-first Amendment gives it the power and the Commerce Clause as not being said.

The understanding being that this applied equally to regulation within the State after the liquor had arrived as well as the act of importation.

And I think the case of Ziffrin versus Reeves, decided in 1939, wherein the Court speaking through Mr. Justice McReynolds held that the Twenty-first Amendment actually freed the States of restrictions on the export of liquor as well as the import, again, an activity that was commencing within the State.

There is no basis, of course, for the proposition that it must -- that the Twenty-first Amendment applies only to the act of passing the liquor across the border.

It does apply, of course, with respect to regulations within the border.

Now, the interpretation placed upon the Twenty-first Amendment by this Court has been criticized by some as being unrealistic, permitting trade discrimination and yet, it's been praised by many, too.

And certainly, there are very sound policy reasons as well as simply interpreting the Amendment as it was written or interpreting it as it has been.

Those are contained in Carter versus Virginia and had been written in the concurring opinion of Justice Frankfurter.

I see it had (Inaudible)

Justice Felix Frankfurter: Is there anything -- Mr. Attorney, is there anything in the available legislative history meaning by that the (Inaudible) statements by those who spoke to the -- submitted the Amendment either in the Senate or House or where there reports which give any light on this?

Mr. Thomas R. Garlington: Yes, Your Honor.

Justice Felix Frankfurter: What are they?

Mr. Thomas R. Garlington: I -- I might comment on those.

We have conflicting quotations in the plaintiff and the defendant's briefs.

One statement by Senator Blaine indicated that --

Chief Justice Earl Warren: Where are you reading from, Mr. --

Mr. Thomas R. Garlington: I have -- insofar as the plaintiff's brief is concerned, I believe it's page 47, the yellow one.

Yes, page 48.

Senator Blaine was quoted as saying --

Justice Felix Frankfurter: Was he in charge of the proposed amendment?

Mr. Thomas R. Garlington: I believe he was the Chairman of the Judiciary Committee, my recollection is, Your Honor.

His language was -- I thought his language is quoted in the plaintiff's brief.

In any case, there is some --

Justice Hugo L. Black: It is quoted --

Mr. Thomas R. Garlington: -- language which has (Voice Overlap) --

Justice Hugo L. Black: It is quoted at the bottom of page 47, top of page 48 (Inaudible)

Mr. Thomas R. Garlington: Oh, yes.

They said to ensure this so called dry States against the importation of intoxicating liquors into those States, the language which has been quoted in the law review articles.

Then he also said, which we have quoted on page --

Justice Felix Frankfurter: If that's true -- if that is true, certainly, isn't it?

Mr. Thomas R. Garlington: Well, that is true.

That -- that's sort of an a fortiori situation.

That is included within the greater --

Justice Felix Frankfurter: What do you rely on?

What does Washington rely on?

What (Voice Overlap) --

Mr. Thomas R. Garlington: Well --

Justice Felix Frankfurter: (Voice Overlap) by --

Mr. Thomas R. Garlington: -- our --

Justice Felix Frankfurter: -- the responsible spokesman --

Mr. Thomas R. Garlington: Well --

Justice Felix Frankfurter: -- for submission of the Amendment does Washington rely on, a shedding light?

Any?

Mr. Thomas R. Garlington: None.

Justice Felix Frankfurter: All right.

Mr. Thomas R. Garlington: Flatly, none.

We -- we thought we would counter their language, perhaps that was superfluous.

But of course, the language of a senator with respect to a constitutional amendment has no bearing, whatsoever, upon its construction.

Justice John M. Harlan: (Inaudible)

Mr. Thomas R. Garlington: Yes, Your Honor.

I -- Justice Frankfurter more or less disposed of the point with his question.

Well, certainly the interpretation, by this Court, of the Twenty First Amendment is reasonable.

And it stemmed from a history of very great difficulty in trying to adjust the extensive and admitted police powers of a State in regulating liquor with the Commerce Clause and the Equal Protection Clause.

And so this language is asked by Mr. Justice Frankfurter in Carter versus Virginia.

It is now suggested that a State must keep within the limits of reasonable necessity and this Court must judge whether or not Virginia has adopted regulations reasonably necessary to enforce its local liquor laws.

Such canons of adjudication open wide the door of conflict and confusion, which have in the past characterized the liquor controversies in this Court and in no small measure form part of the unedifying history which led first to the Eighteenth and then to the Twenty-first Amendment.

Less than six years ago, this Court rejected the impossible task of deciding instead of leaving it for legislatures to decide what constitutes a reasonable regulation of the liquor traffic.

The issue was fairly presented in Mahoney-Triner Corporation, and that was the holding.

Therefore, the State of Washington first, because California has not demonstrated a capacity to maintain this action, secondly, because she has not stated the cause of action in view of the Twenty-first Amendment.

I respectfully ask this Court that her -- her petition to file her original complaint be denied.