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NLRB v. Jones & Laughlin Steel Corp. (1937)

National Labor Relations Board v. Jones & Laughlin Steel Corporation (1937)

301 U.S. 1; 57 S.Ct. 615; 81 L.Ed. 893 (1937)

Vote: 5-4

The facts of the case are these: “In this case the Court considers the constitutionality of the National Labor Relations Act of 1935, which recognized the right of workers to organize and bargain collectively with management. The act also created the National Labor Relations Board (NLRB), which was empowered to issue ‘cease and desist’ orders to prevent unfair labor practices by corporations.”

The issue in this case is 1. Did the National Labor Relations Board, have the constitutional authority to submit a ‘cease and desist’ order to the Jones & Laughlin Steel Corporation?

The holding in this case is that 1. Yes, the National Labor Relations Board, had the constitutional authority to submit the order.

Mr. Chief Justice Hughes wrote the majority opinion in this case, stating in part: “In a proceeding under the National Labor Relations Act of 1935, the National Labor Relations Board found that the respondent, Jones & Laughlin Steel Corporation, had violated the Act by engaging in unfair labor practices affecting commerce. …The unfair labor practices charged were that the corporation was discriminating against members of the union with regard to hire and tenure of employment, and was coercing and intimidating its employees in order to interfere with their self-organization. The discriminatory and coercive action alleged was the discharge of certain employees. The National Labor Relations Board, sustaining the charge, ordered the corporation to cease and desist from such discrimination and coercion, to offer reinstatement to ten of the employees named, to make good their losses in pay, and to post for thirty day notices that the corporation would not discharge or discriminate against members, or those desiring to become members of the labor union. As the corporation failed to comply, the Board petitioned the Circuit Court of Appeals to enforce the order. The court denied the petition, holding that the order lay beyond the range of federal power. …We grant certiorari. Contesting the ruling of the Board, Jones & Laughlin argues (1) that the Act is in reality a regulation of labor relations and not of interstate commerce; and (2) that the act can have no application to the respondent’s relations with its production employees because they are not subject to regulation by the federal government. … First. The scope of the Act.—The Act is challenged in its entirety as an attempt to regulate all industry, this invading the reserved powers of the States over their local concerns. It is asserted that the references in the Act to interstate and foreign commerce are colorable at best; that the Act is not a true regulation of commerce or of matters which directly affect it but on the contrary has the fundamental object of placing under the compulsory supervision of the federal government all industrial labor relations within the nation. … We think it clear that the National Labor Relations Act may be construed so as to operate within the sphere of constitutional authority…. There can be no question that the commerce … contemplated by the Act … is interstate and foreign commerce in the constitutional sense. The Act also defines the term ‘affecting commerce.’… Second. The unfair labor practices in question. In its present application, the statute goes no further than to safeguard the right of employees to self-organization and the select representatives of their own choosing for collective bargaining or other mutual protection without restraint or coercion by their employer. Third. The application of the Act to employees engaged in production.—The principle involved.—Respondent Jones & Laughlin Steel Corporation says that whatever may be said of employees engaged in interstate commerce, the industrial relations and activities in the manufacturing department … are not subject to federal regulation. The argument rests upon the proposition that manufacturing in itself is not commerce. … Fourth. Effects of the unfair labor practice in respondent’s enterprise.--… The stoppage of Jones & Laughlin’s operations by industrial strife would have a most serious effect upon interstate commerce… Experience has abundantly demonstrated that the recognition of the right of employees to self-organization and to have representatives of their own choosing for the purpose of collective bargaining is often an essential condition of industrial peace. Refusal to confer and negotiate has been one of the most prolific causes of strife. This is such an outstanding fact in the history of labor disturbances that it is a proper subject of judicial notice and requires no citation of instances… These questions have frequently engaged the attention of Congress and have been the subject of many inquires. The steel industry is one of the great basic industries of the United States, with ramifying activities affecting interstate commerce at every point. … It is not necessary to again detail the facts as to respondent’s enterprise. Instead of being beyond the pale, we think that it presents in a most striking way the close and intimate relation which a manufacturing industry may have to interstate commerce and we have no doubt that Congress had the constitutional authority to safeguard the right of Jones & Laughlin’s employees to self-organization and freedom in the choice of representatives for collective bargaining. … Our conclusion is that the order of the Board was within its competency and that the act is valid as here applied. The judgment of the Circuit Court of Appeals is reversed and the cause is remanded for further proceedings in conformity with this opinion.”

Mr. Justice McReynold, joined by Mr. Justice Van Devanter, Mr. Justice Sutherland, and Mr. Justice Butler deliver a dissenting opinion in the case, they write in part: “… Considering the statute’s far-reaching import. …, the departure from what we understand has been consistently ruled here, and the extraordinary power confirmed to a Board of three [the NLRB], the obligation to present our views becomes plain…. Any effect on interstate commerce by the discharge of employees shown here, would be indirect and remote in the highest degree, as consideration of the facts will show… The Constitution still recognizes the existence of states with indestructible powers; the Tenth Amendment was supposed to put them beyond controversy. We are told that Congress may protect the ‘stream of commerce’ and that one who buys raw material without the state, manufactures it therein, and ships the output to another state is in that stream. Therefore it is said he may be prevented from doing anything which may interfere with its flow… …Moreover, since Congress has intervened, are labor relations between most manufactures and their employees removed from all control by the State? …There is no ground on which reasonably to hold that refusal by a manufacturer, whose raw materials come from states other than that of his factory and whose products are regularly carried to other states, to bargain collectively with employees in his manufacturing plant, directly affects interstate commerce… It is unreasonable and unprecedented to say the commerce clause confers upon Congress power to govern relations between employers in these local activities. …In Schecther’s case we condemned as unauthorized by the commerce clause the assertion of federal power in respect of commodities which had come to rest after interstate transportation. And, in Carter’s case, we held Congress lacked power to regulate labor relations in respect of commodities before interstate commerce has begun…. Therefore Congress may inhibit the discharge. Whatever effect any cause of discontent may ultimately have upon commerce is far too indirect to justify Congressional regulations. Almost anything—marriage, birth, death—may in some fashion affect commerce. That Congress has power by appropriate means, not prohibited by the Constitution, to prevent direct and material interference with the conduct of interstate commerce is settled doctrine… The right to contract is fundamental and includes the privilege of selecting those with whom on is willing to assume contractual relations. This right is unduly abridged by the act not upheld. A private owner is deprived of power to manage his own property by freely selecting those to whom his manufacturing operations are to be entrusted. We think this cannot lawfully be done in circumstances like those here disclosed. It seems clear to us that Congress has transcended the powers granted.

The significance of this case is all around us today, this is more of the invasion that the Congress took on, under the Roosevelt administration. Recently, we had a board put into law in the 1930s say that Boeing Aircraft Company could not move its operations to North Carolina, because it would be an unfair labor practice. When we have an unelected board of regulators, regulating the business habits of businesses in this country, yes I would agree with the dissenters in this case, Congress has transcended the powers granted, and the laws and regulations we see today, is what these four men, saw as the future.

Work’s Cited: American Constitutional Law: Sources of power and restraint, Volume I, Fourth Edition, Pg. 135-139, Chapter 2: Congress and the Development of National Power. Otis H. Stephens, Jr. and John M. Scheb II.

Legal Brief by: David A.W. Hittle

July 5, 2013