291 U.S. 502 (1934)
In 1932, prices received by New York dairy farmers for milk fell substantially below the cost of production amid overproduction and destructive competition.1 A joint legislative committee investigated the industry through public hearings and expert studies, producing a detailed report that recommended price regulation to stabilize the market and ensure an adequate supply of wholesome milk.2
The Legislature responded by enacting Chapter 158 of the Laws of 1933, which established a Milk Control Board empowered to fix minimum and maximum wholesale and retail prices for milk.3 The Board issued an order setting a minimum price of nine cents per quart for milk sold by stores to consumers in cities and villages over one thousand population.4
Leo Nebbia, the proprietor of a grocery store in Rochester, sold two quarts of milk and a five-cent loaf of bread for eighteen cents on April 19, 1933, thereby charging less than the prescribed minimum.5 He was prosecuted for violating the order, convicted in the County Court of Monroe County, and sentenced to pay a fine.6
The conviction was affirmed by the Appellate Division of the Supreme Court and by the Court of Appeals of New York.7 Nebbia maintained throughout that the statute and the order contravened the equal protection and due process clauses of the Fourteenth Amendment.8
Whether the New York Milk Control Act and the Milk Control Board's order fixing minimum retail prices for milk deny equal protection of the laws under the Fourteenth Amendment when applied to a storekeeper convicted of selling below the minimum?9
The equal protection clause of the Fourteenth Amendment requires that legislative classifications be reasonable and not arbitrary, and that similarly situated persons be treated alike.10
No. The classification of milk dealers into wholesale and retail categories with different minimum prices is reasonable because there are obvious distinctions between the two sorts of merchants which may well justify a difference of treatment.11 Applied to the facts, Nebbia as a store proprietor in Rochester sold below the nine cent minimum set for stores, while distributors had different prices, but there is no showing that the order placed him at a disadvantage since he could have procured milk from a farmer as do distributors.12
The Act and order do not deny equal protection of the laws.13
Whether the Act and order deprive a milk dealer of property without due process of law under the Fourteenth Amendment by fixing prices charged for milk?14
The due process clause of the Fourteenth Amendment demands only that the law shall not be unreasonable, arbitrary, or capricious, and that the means selected shall have a real and substantial relation to the object sought to be attained.15 The police power extends to the regulation of economic conditions, including prices, when necessary to protect the public interest.16
No. The milk industry is subject to regulation in the public interest because of its direct relation to public health and welfare.17 The Legislature found that unbridled competition led to prices so low as to imperil the supply of pure milk.18 The means of fixing minimum prices has a real and substantial relation to preventing destructive competition and ensuring adequate supply, as shown by the legislative investigation and report.19 Applied to the facts, Nebbia's sale of milk below the fixed price violated the order.20
The statute and order are a valid exercise of police power and do not deprive him of property without due process.21
The Act and order do not deprive a milk dealer of property without due process of law.22
Related opinions on this issue
Joined by Justices Van Devanter, Sutherland, And Butler
Justice McReynolds dissented on the ground that the due process clause protects the fundamental right to contract.23 The statute directly interferes with liberty by fixing prices by legislative fiat rather than by agreement of the parties.24 Such price fixing is not justified by concerns of health or safety.25
The police power cannot be invoked to take property from one person and give it to another.26 Sanitary inspection and regulations suffice to protect public health without resorting to economic controls on prices.27