Landmark Supreme Court Case: Nebbia v. New York (1934)
Nebbia v. New York (1934) is the 60th landmark Supreme Court case, the 24th in the Economics module, featured in the KTB Prep American Government and Civics series designed to acquaint users with the origins, concepts, organizations, and policies of the United States government and political system. The goal is greater familiarization with the rights and obligations of citizenship at the local, state, national, and global levels and the history of our nation as a democracy. While there is overlap, these landmark cases are separated into cases addressing:
- Foreign Policy
- Science & Technology
- Public Safety
- Death Penalty
- Speech, Press, and Protest
- Criminal Justice
- Politics, Society, Freedom, and Equality
The Supreme Court
The Supreme Court is the highest court in the United States. Article III of the U.S. Constitution created the Supreme Court and authorized Congress to pass laws establishing a system of lower courts. The Constitution elaborated neither the exact powers and prerogatives of the Supreme Court nor the organization of the Judicial Branch as a whole. Thus, it has been left to Congress and to the Justices of the Court through their decisions to develop the Federal Judiciary and a body of Federal law.
The number of Justices on the Supreme Court changed six times before settling at the present total of nine in 1869. Since the formation of the Court in 1790, there have been only 17 Chief Justices* and 102 Associate Justices, with Justices serving for an average of 16 years. On average a new Justice joins the Court almost every two years.
The Supreme Court of the United States hears about 100 to 150 appeals of the more than 7,000 cases it is asked to review every year. That means the decisions made by the 12 Circuit Courts of Appeals across the country and the Federal Circuit Court are the last word in thousands of cases.
Court of Appeals
In the federal court system’s present form, 94 district level trial courts and 13 courts of appeals sit below the Supreme Court. The 94 federal judicial districts are organized into 12 regional circuits, each of which has a court of appeals. The appellate court’s task is to determine whether or not the law was applied correctly in the trial court. Appeals courts consist of three judges and do not use a jury.
The appellate courts do not retry cases or hear new evidence. They do not hear witnesses testify. There is no jury. Appellate courts review the procedures and the decisions in the trial court to make sure that the proceedings were fair and that the proper law was applied correctly.
A court of appeals hears challenges to district court decisions from courts located within its circuit, as well as appeals from decisions of federal administrative agencies. In addition, the Court of Appeals for the Federal Circuit has nationwide jurisdiction to hear appeals in specialized cases, such as those involving patent laws, and cases decided by the U.S. Court of International Trade and the U.S. Court of Federal Claims.
The nation’s 94 trial courts are called U.S. District Courts. At a trial in a U.S. District Court, witnesses give testimony and a judge or jury decides who is guilty or not guilty — or who is liable or not liable. District courts resolve disputes by determining the facts and applying legal principles to decide who is right.
Trial courts include the district judge who tries the case and a jury that decides the case. Magistrate judges assist district judges in preparing cases for trial. They may also conduct trials in misdemeanor cases.
There is at least one district court in each state, and the District of Columbia. Each district includes a U.S. bankruptcy court as a unit of the district court.
Federal courts have exclusive jurisdiction over bankruptcy cases involving personal, business, or farm bankruptcy. This means a bankruptcy case cannot be filed in state court. Bankruptcy Appellate Panels (BAPs) are 3-judge panels authorized to hear appeals of bankruptcy court decisions. These panels are a unit of the federal courts of appeals, and must be established by that circuit. Five circuits have established panels: First Circuit, Sixth Circuit, Eighth Circuit, Ninth Circuit, and Tenth Circuit.
Nebbia v. New York (1934)
To combat the effects of the Great Depression, the state of New York established a Milk Control Board in 1933 that was empowered to set maximum and minimum retail prices. The board set the price of a quart of milk at 9¢. The price reflected the market price at some point in the past and the order was designed to prevent price cutting; nevertheless, the public suspected that the board’s intent was to benefit dairy dealers, instead of farmers, because the minimum prices for the two sides were not the same.
Tensions ran so high that violent milk strikes took place throughout the state, with two deaths and a great amount of property damage. Every public hearing of the Milk Control Board resulted in a “tumultuous, popular assemblage” and its every action was “Statewide news.” A search began for a case that would challenge the constitutional basis of the statute.
Leo Nebbia, the owner of a grocery store, sold two quarts of milk and a 5¢ loaf of bread for 18¢. He was found guilty of violating the price regulations and was fined $25. He challenged the conviction, arguing the statute and order violated the Equal Protection Clause and Due Process Clause of the Fourteenth Amendment.
The county court and the Court of Appeals affirmed the conviction, and the case was appealed to the Supreme Court.
Q: Did the regulation violate the Due Process Clause of the Fourteenth Amendment?
A: No. Price regulations are not per se beyond the framework of due process.
5-4 ruling the Constitution does not prohibit states from regulating the price of milk for dairy farmers, dealers, and retailers. Since the price controls were not “arbitrary, discriminatory, or demonstrably irrelevant” to the policy adopted by the legislature to promote the general welfare, the regulation was constitutional. Regulations are not an inappropriate way to serve the public interest for when industry is tied into a public interest, it is more subject to the state police powers.
Courts may not override policy decisions by states for economic regulations on the grounds of due process unless rational basis review is not satisfied meaning the law is unreasonable or arbitrary and also that there is an unreasonable relationship between the law and the interest that it serves.
Next Economics Case: Schecter Poultry v. U.S. (1935)
Previous Economics Case: Home Building and Loan Association v. Blaisdell (1934)