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California law requires that all wine producers, wholesalers, and rectifiers must file fair trade contracts or price schedules with the State. If a wine producer has not set prices through a fair-trade contract, wholesalers must post a resale price schedule for that producer's brands. No state-licensed wine merchant may sell wine to a retailer at other than the price set 'either in an effective price schedule or in an effective, fair trade contract. A licensee selling below the established prices faces fines, license suspension, or outright license revocation. P is a wholesale distributor of wine, and the Department of Alcoholic Beverage Control charged P with selling 27 cases of wine for less than the prices set by the effective price schedule of the E. & J. Gallo Winery. P agreed with the charges and then filed a writ of mandate asking for an injunction against the State's wine pricing system. The Court of Appeal ruled that the wine pricing scheme restrains trade in violation of the Sherman Act. The court ordered D not to enforce the resale price maintenance and price posting statutes for the wine trade. The California Supreme Court declined to hear the case, and P sought certiorari.

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