Thе appellant, Eby-Brown Company LLC (“Eby-Brown”), a distributor of to *752 bacco products in the state of Wisconsin, appeals the district court’s grant of summary judgment against it. According to Eby-Brown, a Wisconsin statute that prohibits unfair pricing violates the equal protection, due process, and commerce clauses of the Constitution. For the reasons stated bеlow, we affirm the district court’s decision.
I. BACKGROUND
Eby-Brown is a wholesale distributor of tobacco products, food items and sundries. It sells its products to individual retailers, such as gas stations, convenience stores and larger retail establishments. Eby-Brown claims that tobacco products form an important part of its business with these entities, such that if Eby-Brown’s tobacco рrices are more competitive than other wholesale distributors, it will gain the lion’s share of the food item and sundry business.
Wisconsin statutes recognize two distinct types of cigarette wholesalers: permit holders and jobbers. 1 A permit holder is licensed to affix revenue stamps upon cigarette packages. Wis. Stat. § 139.30(3). Jobbers are not permitted to аffix such stamps and must instead purchase stamped products from permit holders. Wis. Stat. § 139.30(6). Eby-Brown is a permit holder. The state of Wisconsin also makes a distinction between “retailers” and “multiple retailers.” Under statutory definitions, a “retailer” is any person who acquires stamped cigarettes with the intent to sell them to consumers. A “multiple-retailer” is any persоn who acquires stamped cigarettes and “stores ... and sells them to consumers through 10 or more retail outlets which he or she owns and operates within or without this state.” Wis. Stat. § 139.30(8). Eby-Brown markets cigarettes to both “retailers” and “multi-retailers.”
Eby-Brown, and indeed all wholesalers doing business in Wisconsin, are subject to that state’s Unfair Sales Act (“Act”). Wis. Stat. § 100.30. The stated policy bеhind the Act is to disallow “[t]he practice of selling certain items of merchandise below cost in order to attract patronage ...” because such conduct “diverts business from dealers who maintain a fair price policy.” Wis. Stat. § 100.30(1). In essence, the Act prohibits retailers and wholesalers from selling products below the minimum price defined by the statutе, which the Act refers to as the “the cost to wholesaler.” In determining the minimum price at which they may sell products, wholesalers may not deduct any rebates given to them by manufacturers for the payments they made in cash 2 or any other manufacturer’s discount.
The Act also creates distinctions between general wholesalers and those entities that sell tobacco (and in certаin circumstances liquor and gasoline). For example, licensed cigarette wholesalers, like Eby-Brown, who are permitted to affix stamps to cigarette packages, are not permitted to deduct any trade discount from their “cost to wholesaler” figure. Wis. Stat. § 100.30(2)(c)l.b. Other wholesalers, including those wholesalers of tobacco that are not authorized to affix revenue stamps, are permitted to deduct trade discounts from their “cost to *753 wholesaler” figure. 3 Additionally, all tobacco wholesalers must include a markup for the “cost[s] of doing business.” M 4 Generally, this mark-up amounts to three percent of the total costs to the manufacturer. Wholesalers of other products are not obligated to include suсh a mark-up in tabulating their minimum prices.
For several years prior to the commencement of this litigation, Eby-Brown participated in a program with the manufacturers of tobacco products whereby it was required to pay for the items it received through an electronic fund transfer system. For its use of this electronic transfer system, Eby-Brown, as well as the оther wholesalers who participated in the program, was given across-the-board discounts off the invoice price ranging from 2.0% to 3.5%. In selling its products to retailers in Wisconsin, Eby-Brown sought to incorporate this discount (as well as others) when it tabulated its statutorily permissible “cost to wholesaler.” Since January of 1994, the state of Wisconsin has receivеd over one hundred complaints that distributors were selling tobacco at a statutorily proscribed cost. Several of these complaints were referred to the appropriate district attorneys for prosecution; while many others are still being investigated.
As a result of these complaints, Eby-Brown filed suit against the state of Wisconsin seeking a declaration that the Act violates its rights to equal protection and substantive due process. Eby-Brown further sought to enjoin the state of Wisconsin from the enforcement of the Act. According to Eby-Brown, the Act violates equal protection because licensed cigarette wholesalers, and only licensed cigarette wholesalers, аre forbidden from deducting trade discounts from their “cost to wholesaler” figure. Eby-Brown claims an additional breach of equal protection because the Act requires only wholesalers of tobacco, liquor and gasoline to add a cost of doing business mark-up to their statutorily defined “cost to wholesaler.” Eby-Brown also advanced severаl substantive due process claims. Lastly, Eby-Brown alleged that the Act impermissibly interfered with interstate commerce.
After initial proceedings and discovery, both parties filed motions for summary judgment. The district court ruled in favor of the state of Wisconsin. According to the district court, a rational basis existed for the state’s enactment (and application) of the Act. Therefore, the district court found that the Act did not violate Eby-Brown’s right to equal protection or substantive due process and that it did not unnecessarily burden interstate commerce.
Eby-Brown now appeals the district court’s decision.
II. DISCUSSION
In reviewing the district court’s grant of summary judgment, we exercise
de novo
review, viewing all the facts and inferences in a light most favorable to the nonmoving party.
Johnson v. Nordstrom, Inc.,
A. Equal Protection and Substantive Due Process Claims
Eby-Brown argues thаt several provisions of the Act violate both its right
*754
to equal protection and its rights to substantive due process. However, many of these arguments are more properly considered claims under the equal protection clause alone. When “a particular amendment [like the equal protection clause] ‘provides an explicit textual source of constitutional protection’ against a particular source of government behavior, ‘that amendment and not the more generalized notion of substantive due process, must be the guide for analyzing these claims.’”
Albright v.
Oliver,
In any event, the scrutiny that we exercise in examining Eby-Brown’s allegations (under either the equal protection or substantive due process clauses) remains the same. When we review the constitutionality of state legislation, we must ask whether' the act in question impacts a fundamental right or targets a suspect class. When no suspect class or fundamental right is involved, we employ a rational basis test to determine whether the legislative act is constitutional.
See Heller v. Doe,
1. Equal Protection
Eby-Brown has conceded that it is not a member of a suspect class. Therefore, in analyzing its equal protection claims, we employ the highly dеferential rational basis test articulated above. Under that standard, we find that the state of Wisconsin acted rationally and that the relevant portions of the Act should be upheld.
Eby-Brown contends that the Act violates equal protection because licensed wholesalers of tobacco are forbidden from deducting “trade discounts” whеn they calculate their “cost to wholesaler,” whereas all other wholesalers (including unlicensed tobacco wholesalers) are permitted to deduct such discounts in calculating their minimum costs. While one may question whether the distinctions made by the Wisconsin legislature are the most desirable, a “governmental action [satisfies] the rationаl basis test if a sound reason may be hypothesized” for the classification.
Northside Sanitary Landfill v. Indianapolis,
Eby-Brown’s other claims of unequal treatment must also fail in the face of the deferential rational basis test. For example, Eby-Brown claims that the “cost of doing business” mark-up, which wholesalers of gasoline, tobacco, and alcohol must include in calculating their minimum prices, violates equal protection. However, thе state of Wisconsin could have rationally drawn a distinction between wholesalers of these products and other vendors. For example, tobacco, alcohol and gasoline are products that are heavily regulated, costly to insure, and generally considered dangerous. By requiring wholesalers of these products to include а “cost of doing business” mark-up, the state could be. attempting to discourage these individuals from cutting corners when it comes to warehousing and insuring their products. This hypothetical rationale, in and of itself, would support the constitutionality of this portion of the Act.
2. Substantive Due Process
Eby-Brown has also conceded ’ that its remaining substantive due process claims should be examined under the deferential rational basis test. When we employ that level of scrutiny, we find that these claims must also fail.
Eby-Brown asserts that the Act, in prohibiting all wholesalers from deducting manufacturers’ discounts from “the cost to wholesaler” figure, operates in an arbitrary and irrational matter. Similarly, Eby-Brown contends that the state of Wisconsin’s refusal to allow wholesalers to deduct rebates that they receive from manufacturers for participating in electronic payment programs from the “cost to wholesaler” figure, violates substantive due process.
With respect to both measures, Eby-Brown claims that they transform Act from’ a piece of legislation aimed at curbing unfair and predatory pricing, to a price fixing mechanism. The truth of this assertion matters little — -as the state of Wisconsin could have had a rational objective in taking the above course. With respect to the exclusion of manufacturers’ discounts, the state of Wisconsin could have concluded that such discounts can be employed to artificially deflate prices, allowing certain wholesalers to gain a competitive advantage over others. In addition, the exclu *756 sion of manufacturers’ discounts from the “cost to wholesaler” calculus might promote a more efficient administration of the Act. Manufacturers’ discounts can take many forms and may be tied to many variables {e.g., quantity of goods sold over a certain period of time by a particular wholesaler). The complex nature of such discounts might make it difficult for the relevant enforcement agencies to determine what was the actual minimum price paid by the wholesalers for certain goods.
With respect to electronic transfers, the state of Wisconsin could have determined that discounts premised, upon such payment methods opеrate as discounts for “cash payment.” Under the Act, wholesalers are prohibited from deducting discounts for “cash payments” from the “cost to wholesaler” figure. The primary purpose of excluding such discounts is that a cash discount is generally considered to be a reward for prompt payment (and therefore, part of the parties’ financing terms) and not a reduction in price.
See E & H Wholesale, Inc. v. Glaser Bros.,
B. Commerce Clause
Finally, Eby-Brown contends that the Act violates the commerce clause in that it unfairly burdens interstate commerce. The commerce clause of the Constitution delegates to Congress the power regulate commerce among the states. U.S. Const. Art I, § 8. This “affirmative grant of authority to Congress also encompasses an implicit or ‘dormant’ limitation on .the authority of the states to enact legislation affecting interstate commerce.”
Healy v. The Beer Institute,
First and foremost, the Act applies to both in-state and out-of-state cigarette wholesalers that dо business in Wisconsin. It does not attempt to tie the price wholesalers are permitted to charge in Wisconsin with out-of-state prices.
See Healy,
III. CONCLUSION
For the foregoing reasons, we find that the Wisconsin Unfair Sales Act does not violate the Constitution and we therefore AffiRM the decision of the district court.
Notes
. Permit holdеrs are also referred to as licensed cigarette distributors or wholesalers.
. For example, if Eby-Brown was required to pay $100 for a quantity of merchandise and received a $15 discount for having made its payment in cash, its statutorily defined "cost to wholesaler" remains $100.
. A trade discount is “calculated on the basis of the quantity or dollar amount of merсhandise actually purchased or sold” and "is not a customary discount for cash.” Wis. Admin. Code. § ATCP 105.007(3)(b). A trade discount essentially operates as a way for manufacturers to offer a reduced price for higher volume or more successful wholesalers.
. Wholesalers of liquor and gasoline must also include a mark-up for the "cost[s] of doing business” when they calculate their statutory minimum price.