Commerce Clause, NLRB v. Jones & Laughlin Steel Corp.

[A18]

NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937)

This was a watershed case.

Just two years earlier, in Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935), the Court struck down regulations that fixed the hours and wages of individuals employed by an intrastate business because the activity being regulated had only an indirect relationship to interstate commerce. In doing so, the Court characterized the distinction between direct and indirect effects of intrastate actvities on interstate commerce as "a fundamental one, essential to the maintenance of our constitutional system."

In NLRB v. Jones & Laughlin Steel Corp., the Court departed from the distinction between "direct" and "indirect" effects upon interstate commerce, instead holding that intrastate activites that "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" are within Congress's reach.

OPINION: Mr. Chief Justice HUGHES delivered the opinion of the Court.

 In a proceeding under the National Labor Relations Act of 19351 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 proceeding was instituted by the Beaver Valley Lodge No. 200, affiliated with the Amalgamated Association of Iron, Steel and Tin Workers of America, a labor organization. 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 enployees 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 days 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. 83 F.(2d) 998. We granted certiorari. ...

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. It is so ordered. ...

[Emsworth]

The decision was very unsound.

Congress may regulate only three kinds of commerce: commerce with foreign countries, commerce with Indian tribes, and commerce among the states. Trade carried out entirely within a single state does not fall within any of these branches, and is therefore subject wholly to the authority of the state government.

In this case, the Supreme Court took the appalling view that any activity that has even an indirect "effect upon interstate commerce" is subject to congressional authority. But what doesn't have an effect on interstate commerce? Everything one can imagine, either directly or indirectly, affects commerce in some way. Does it follow that federalism is meaningless, and that the federal government may regulate whatever it pleases? Of course not.

It is also important to note that, historically, the commerce power was viewed as being exclusive in the federal government. If a particular commercial activity was subject to federal regulation, then it was not subject to state regulation, and vice versa. When, the Supreme Court concludes that minimum wages may be set by the federal government, the logical corollary would be that they may not be set by state governments. (Conveniently, the Supreme Court has ignored this point.) This argument alone should demonstrate the absurdity of such a broad interpretation of the commerce clause.