Darby Lumber Company, United States v. 312 U.S. 100 (1941)

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DARBY LUMBER COMPANY, UNITED STATES v. 312 U.S. 100 (1941)

This decision held the fair labor standards act of 1938 to be a valid exercise of federal power under the commerce clause. That was no surprise after the 1937 decisions upholding the wagner (national labor relations) act and after the retirement of the four Justices who had voted consistently for a narrow interpretation of the commerce clause. The opinion of Justice harlan fiske stone was nevertheless of great significance. For instead of speaking in terms of such nonconstitutional concepts as "direct" and "indirect," it returned to basic constitutional principles as to the scope of the power of Congress.

The commerce clause itself precluded states with high labor standards from protecting their wage levels by forbidding the entry of goods produced elsewhere at lower wages. This meant that in the absence of federal legislative action, states with the lowest labor standards could drive the standards down throughout the country. In 1916 Congress first sought to meet this problem by barring the interstate transportation of goods produced by children. Although that statute was clearly a regulation of interstate commerce the Supreme Court held it unconstitutional by a vote of 5–4 in hammer v. dagenhart (1918) because the purpose of the act was to control what occurred during the course of intrastate production. Five years later, in adkins v. children ' s hospital (1923), the Court ruled, 6–3, that the due process clause forbade the fixing of minimum wages by either federal or state governments.

The downward spiral of prices and wages during the Great Depression of the 1930s forced employers seeking to survive to reduce wages to incredibly low levels. Congress sought to deal with this problem by requiring the codes of fair competition under the national industrial recovery act to prescribe maximum hours and minimum wages. schechter poultry corp. v. united states (1935), holding the NRA unconstitutional, brought this program to a halt, and carter v. carter coal company (1936), holding that Congress lacked power to regulate labor conditions and relations in the coal industry, seemed to create an insurmountable impediment. Unpredictably, this lasted for only a year, when Carter was in substance overruled in the wagner act cases (1937) and Adkins was overruled in west coast hotel co. v. parrish (1937). The result was passage of the Fair Labor Standards Act in June 1938.

That statute prescribed a minimum wage of twenty-five cents per hour for employees engaged in interstate commerce or in producing goods for such commerce. Payment of fifty percent more for overtime was required for all hours over forty-four per week (to be reduced to forty after two years). The act penalized violation of those standards or interstate shipment of goods produced in violation of them.

The lumber industry was typically afflicted with depressed wage rates; wages ranged from ten to twenty-seven and one-half cents per hour. The annual average wage for all lumber industry employees in Georgia in 1937 was $389. Fred Darby was paying his employees twelve and one-half to seventeen cents per hour; he devised a scheme to continue doing so after the Fair Labor Standards Act became effective, and he was indicted.

Although the other federal lower courts had seen the light after the Labor Board cases and sustained the new statute, the Georgia district judge deemed himself bound to follow hammer v. dagenhart and carter until the Supreme Court explicitly overruled them. Accordingly, he dismissed the indictment as an invalid regulation of manufacture, not interstate commerce, and the government appealed directly to the Supreme Court.

In upholding the statute Justice Stone spoke for a unanimous Court—undoubtedly because Justice james c. mcreynolds had retired three days before. The Court first held that the prohibition against the interstate shipment of goods produced under substandard labor conditions was "indubitably a regulation of [interstate] commerce." And this was none the less so because the motive or purpose may have been to control the "wages and hours of persons engaged in manufacture." The commerce power of Congress, as defined in gibbons v. ogden (1824), "may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution." "The motive and purpose of a regulation of interstate commerce are matters for the legislative judgment upon which the courts are given no control." The contrary decision in hammer v. dagenhart "by a bare majority of the Court over the powerful and now classic dissent of Mr. Justice [ oliver wendell ] holmes " was accordingly overruled.

In determining the validity of the regulation of wages and hours for manufacturers, the Court adopted the approach approved in mcculloch v. maryland (1819), the initial pronouncement on the scope of the enumerated powers. The test was whether a regulation of intrastate activities was an "appropriate means to the attainment of a legitimate end, the exercise of the granted power of Congress to regulate interstate commerce." The directness or indirectness of the effect on such commerce was not mentioned, although the substantiality of the effect was. (See effects on commerce). The Court noted that legislation under other powers had often been sustained "when the means chosen, although not themselves within the granted power, were nevertheless deemed appropriate aids to the accomplishment of some purpose within an admitted power.…" The policy of excluding from interstate commerce goods produced under substandard labor conditions could reasonably be effectuated by prohibiting such conditions for manufacturers producing for interstate distribution. That would suppress a method of interstate competition Congress deemed unfair.

The opinion flatly rejected the contention that the tenth amendment restricted the enumerated powers. That amendment, which provides that "the powers not delegated to the United States by the Constitution nor prohibited by it to the states are reserved to the states respectively or to the people," did not deprive the federal government of "authority to resort to all means for the exercise of a granted power which are appropriate and plainly adapted to the permitted end." "The amendment states but a truism that all is retained which has not been surrendered."

Darby was followed a year later by wickard v. filburn in which the Court alluded to the necessary and proper clause, which mcculloch v. maryland had emphasized, as the source of the power of Congress to regulate intrastate transactions. It also identified the cases which Darby had disapproved by implication, among others Hammer, Schechter, and Carter. Darby and Wickard together have provided the foundation for commerce clause interpretation thereafter. They firmly establish that the national economic system is subject to the control of the only entity that can possibly control it, the federal government.

Robert L. Stern
(1986)