WAGNER ACT CASES NLRB v. Jones & Laughlin Steel Corp. 301 U.S. 1 (1937) NLRB v. Fruehauf Trailer Co. 301 U.S. 49 (1937) NLRB v. Friedman-Harry Marks Clothing Co. 301 U.S. 58 (1937) Associated Press Co. v. NLRB 301 U.S. 103 (1937)

The reinvigoration of the commerce clause as a source of congressional power began with the first cases to reach the Supreme Court under the wagner (national labor relations) act. That statute had been passed in 1935 in an effort to preserve the rights of employees in interstate industries to choose their own representatives and to bargain collectively with their employers. In 1930 the Supreme Court had held that the Railway Labor Act gave such rights to railroad employees. The national industrial recovery act (NIRA) of 1933 sought to extend such rights to other employees by requiring all codes of fair competition for other industries to contain similar provisions. The code system collapsed when the NIRA was invalidated in schechter poultry corp. v. united states in May 1935. The President and Congress believed that the denial of collective bargaining rights would lead to industrial unrest and strikes, which would necessarily obstruct interstate commerce, and would also aggravate the Great Depression by depressing wage rates and the purchasing power of wage earners. As a result the National Labor Relations Act became law less than six weeks after the Schechter decision.

The act authorized the newly created National Labor Relations Board (NLRB), which succeeded similar boards created under the NIRA, to prevent employers from engaging in unfair labor practices "affecting [interstate] commerce," which was defined to mean "in commerce, or burdening or obstructing commerce," or which had led or might lead to a labor dispute burdening or obstructing commerce. These definitions were designed to embody the decisional law upholding the authority of Congress to regulate acts that "directly" obstructed interstate commerce. Congress assumed, correctly as it turned out, that the courts would construe the statute as "contemplating the exercise of control within constitutional bounds."

The NLRB's first cases were brought against employers engaged in interstate transportation and communication (bus lines and the Associated Press) and manufacturers who purchased their supplies and sold their products across state lines. Before these cases were decided, the Supreme Court, in carter v. carter coal co. (1936), held that the substantially identical provisions of the Guffey-Snyder (Bituminous Coal Conservation) Act, enacted shortly after the Labor Relations Act, did not fall within the commerce power of Congress. In the Carter case the government had proved that coal strikes would burden not merely the interstate commerce of the immediate employers but also the interstate rail system and many other industries dependent upon coal. No stronger showing could be made under the Wagner Act for employers engaged in mining or manufacturing. As was to be expected, the courts of appeals, though sustaining the act as to companies engaged in interstate transportation and communication, deemed themselves bound by Carter, as well as Schechter and united states v. butler (1936) to hold that the act did not extend to manufacturers.

The first five NLRB cases to reach the Supreme Court involved a bus line, the Associated Press, and three manufacturers. The cases were argued together, beginning on February 8, 1937. Three days before, President franklin d. roosevelt had announced his plan to appoint up to six new Supreme Court Justices, one for each justice over 70 years of age. On April 12, the Court affirmed the NLRB's rulings in all five cases. The opinions on the commerce clause issue in the bus and press cases were unanimous, although in the press case, four Justices dissented on first amendment grounds. The cases against manufacturers—the Jones & Laughlin Steel Corporation, the Fruehauf Trailer Co., and a medium-size men's clothing manufacturer—were decided by a 5–4 vote. The membership of the Court had not changed since Schechter and Carter. But Chief Justice charles evans hughes and Justice owen roberts, who had been part of the majority of six who had rejected the labor relations provisions of the Guffey Act in Carter, now joined with Justices louis d. brandeis, harlan fiske stone, and benjamin n. cardozo. The Chief Justice wrote the opinions in the manufacturers' cases.

In the Carter case, the majority opinion of Justice george sutherland had not denied the magnitude of the effect of coal strikes upon interstate commerce. The question, he held, was whether the effect was "direct," and that did not turn upon the "extent of the effect" or its "magnitude," but "entirely upon the manner in which the effect has been brought about"; "it connotes the absence of an efficient intervening agency or condition." The effect must "operate proximately—not mediately, remotely, or collaterally." Why "direct" should be so defined was not otherwise explained, except by the need for preserving the power of the states over production, even in interstate industries in which interstate competition would preclude state regulation. (See effects on commerce.)

The opinion of Chief Justice Hughes in the Jones & Laughlin case flatly rejected the Butler approach:

Giving full weight to respondent's contention with respect to a break in the complete continuity of the " stream of commerce " by reason of respondent's manufacturing operations, the fact remains that the stoppage of those operations by industrial strife would have a most serious effect upon interstate commerce. In view of respondent's far-flung activities, it is idle to say that the effect would be indirect or remote. It is obvious that it would be immediate and might be catastrophic. We are asked to shut our eyes to the plainest facts of our national life and to deal with the question of direct and indirect effects in an intellectual vacuum.… When industries organize them selves on a national scale, making their relation to interstate commerce the dominant factor in their activities, how can it be maintained that their industrial labor relations constitute a forbidden field into which Congress may not enter when it is necessary to protect interstate commerce from the paralyzing consequences of industrial war? We have often said that interstate commerce itself is a practical conception. It is equally true that interferences with that commerce must be appraised by a judgment that does not ignore actual experience.

The Chief Justice also met head on the argument that the federal power did not extend to activities in the course of production or manufacturing. Citing many antitrust cases, he declared: "The close and intimate effect which brings the subject within the reach of Federal power may be due to activities in relation to productive industry although the industry when separately viewed is local.… It is thus apparent that the fact that the employees here concerned were engaged in production is not determinative."

"The fundamental principle," Hughes stated, "is that the power to regulate commerce is the power to enact "all appropriate legislation' for "its protection and advancement'; to adopt measures "to promote its growth and insure its safety'; "to foster, protect, control and restrain.' That power is plenary and may be exerted to protect interstate commerce "no matter what the source of the dangers which threatened it." Hughes also invoked the shreveport doctrine he had announced in houston east and west texas railway v. united states (1914): "Although activities may be intrastate in character when separately considered, if they have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, Congress cannot be denied the power to exercise that control."

In deference to his own opinion in Schechter, the Chief Justice declared that "undoubtedly the scope of this power must be considered in the light of our dual system of government" so as not to "obliterate the distinction between what is national and what is local." In Schechter the effect upon commerce had been too "remote"; "to find "immediacy or directness' there was to find it "almost everywhere', a result inconsistent with the maintenance of our Federal system." With little explanation Hughes added that Carter was "not controlling."

Within a few weeks the Court sustained the constitutionality of the social security act. Soon after Justices willis van devanter and Sutherland retired. And President Roosevelt's court-packing plan, not very surprisingly, got nowhere.

Subsequent Labor Board cases extended the application of the Labor Act far beyond the three manufacturers in the center of the interstate movement; it was sufficient that a strike would interfere with interstate movement of products (for example, Santa Cruz Fruit Packing Co. v. NLRB, 1938; NLRB v. Fainblatt, 1939; Consolidated Edison Co. v. NLRB, 1938). The unanimous opinion of the Court speaking through Justice Stone, with Hughes and Roberts still on the bench, in united states v. darby (1941) explicitly rejected the concept that the Tenth Amendment limited the powers granted Congress by the Constitution. And other cases by now have extended the commerce power "almost everywhere." Nevertheless, the opinion in Jones & Laughlin remains a landmark in the interpretation of the commerce clause, as the definitive acceptance of the modern theories which recognize the power of Congress to control all aspects of the nation's integrated economic system.

Robert L. Stern
(1986)

Bibliography

Cortner, Richard C. 1964 The Wagner Act Cases. Knoxville: University of Tennessee Press.

——1970 The Jones & Laughlin Case. New York: Knopf.

Dodd, E. Merrick 1945 The Supreme Court and Organized Labor, 1941–1945. Harvard Law Review 58:1018–1071.

Gross, James A. 1974 The Making of the National Labor Relations Board: A Study in Economics, Politics, and the Law, Vol. 1 (1933–1937). Albany: State University of New York Press.

Stern, Robert L. 1946 The Commerce Clause and the National Economy, 1933–1946. Harvard Law Review 59:645–693, 888–947.