1. Lecture 28 The Commerce Power
Part 5: The New Deal- II

2. This lecture
The last of the New Deal Cases
Pages 449,

3. The Stitch in Time that Saved Nine
West Coast Hotel v. Parrish (1937)
The initial vote was 4-4  Justice Stone had been ill  in December 1936
Justice Roberts had voted with the liberals for a sweeping opinion
He was never a doctrinaire conservative, he grew tired of their rulings
This case was handed down on March 29
Along with a couple of other cases in FDR’s favor
Known as White Monday
We will read this case in Chapter 10
But was this an aberration or a fundamental change in judicial philosophy by Roberts?
NLRB will answer that

4. National Labor Relations Board v
National Labor Relations Board v. Jones & Laughlin Steel Corporation (1937)
National Labor Relations Board v. Jones & Laughlin Steel Corporation (1937)
Background
This deals with the constitutionality of the Wagner Act
The goal of this legislation was to promote the create of labor unions
It sets up the National Labor Relations Board, who could hear and rule on complaints of unfair labor practices
The basis for regulation under interstate commerce was to prevent industrial strife
The plaintiff was a large steel producer in Pennsylvania charged with discrimination against workers trying to join a union- those workers were ordered reinstated
The company refused on grounds that the Wagner Act was unconstitutional
The company won, the NRLB appealed

5. National Labor Relations Board v
National Labor Relations Board v. Jones & Laughlin Steel Corporation- II
Question
Arguments
For the NRLB (uphold the Wagner Act)
This is preventive: to avoid industrial strife
They take a broad view of what affects commerce
This is distinguishable because this does have a direct effect on commerce, not an indirect effect

6. National Labor Relations Board v
National Labor Relations Board v. Jones & Laughlin Steel Corporation- III
Argument:
For Jones & Laughlin (strike down the law)
The commerce clause cannot be used to regulate labor relations
The law is broad enough to apply to every employment relationship in the country
There is at best an indirect connection here
This is only indirectly in the stream of commerce
Did the lower court rule correctly under existing precedent?

7. National Labor Relations Board v
National Labor Relations Board v. Jones & Laughlin Steel Corporation- IV
Chief Justice Hughes writes for a 5-4 Court
It turns out Roberts’ change was not an aberration
You may note that Hughes’ opinions are very readable
Scope of the Act
Commerce is contemplated by the act
The act defines affecting commerce in terms of exclusion and inclusion, so it does not extend to all employment relationships- it must affect interstate commerce
Unfair Labor Practices
This is a very pro-union message hear on the right to organize a union
Workers have the right to collective bargaining
The national government was justified in penalizing corporations engaging in interstate commerce which "refuse to confer and negotiate" with their workers”

8. National Labor Relations Board v. Jones & Laughlin Steel Corporation- V
More from Chief Justice Hughes
Application of the Act to Employees Engaged in Production
The company says manufacturing is not subject to regulation
Manufacturing is not commerce
Steel is sent all over the country
 "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.“
This is clearly an abandonment of past precedent

9. National Labor Relations Board v
National Labor Relations Board v. Jones & Laughlin Steel Corporation- VI
A little more from the Chief
Effects of the Unfair Labor Practice to the Company
A labor stoppage would clearly effect interstate commerce
Refusal to negotiate is a cause of industrial strife
He points to the Steel Strike
There is a close relationship between the manufacturing industry and interstate commerce

10. National Labor Relations Board v
National Labor Relations Board v. Jones & Laughlin Steel Corporation- VII
Justice McReynolds, dissenting
Joined by Van Devanter, Sutherland and Butler
He is not pleased that past precedent is being overruled
He cites all the past precedent that should act to overturn this law
He does not think this meets the stream of commerce test
He raises many potential questions on this
He takes the segmented approach rather than the entirety approach
He thinks this interpretation of the commerce clause may lead to federal regulation of almost everything- he is right on this (for a while)

11. After this case
Justice Van Devanter announces his retirement on May 18
FDR ends up appointing his close ally, Sen. Hugo Black (D-Alabama), who takes office in August
With this, there really wasn’t the need for the Court packing plan
The Court began to rule consistently in favor FDR (see Box 7-6, page 459)
By early 1941, all of the Four Horsemen were gone
1937 Van Devanter  Black (Alabama Senator)
1938 Sutherland  Reed (The Solicitor General)
1939 Cardozo  Frankfurter (ACLU Director)
1939 Brandeis  Douglas (SEC Chairman)
1940 Butler  Murphy (Attorney General)
1941 McReynolds  Byrnes (South Carolina Senator)
Stone becomes Chief Justice

12. United States v. Darby Lumber Company (1941)
Background
This also involves the Wagner Act
Companies engaged in interstate commerce had to pay a quarter an hour and time and a half for hours beyond 40 hours per week
Darby was indicted for not paying those wages
He did not dispute the charges, but cited Hammer v. Dagenhart and other cases in the Industrial Revolution era before West Coast Hotel
Question:
Was the act a legitimate exercise of Congress under the Commerce Clause?

13. United States v. Darby Lumber Company- II
Arguments
For the United States (law constitutional)
Interstate commerce was mean to include manufacturing and the entire economy
Therefore Congress can regulate both
Interstate competition means that no state can require higher labor standards in the absence of a uniform federal law
Ones with lower standards have an advantage- race to the bottom?
The Commerce Clause should be assessed by what it regulates, not what it affects
Congress need not wait for intrastate commerce to hit transportation to regulate
McCulloch v. Maryland is still good law and the 10th Amendment is not a limit on the powers of the federal government

14. United States v. Darby Lumber Company- III
Arguments
For Darby (overturn the law)
Production of goods is not within the power to regulate commerce
This would be a direct attack on federalism and make the 10th Amendment irrelevant
The mere fact that a state cannot adequately protect the markets outside its borders does not give the Congress unqualified powers to regulate competition in those interstate markets

15. United States v. Darby Lumber Company- IV
Justice Stone rules for a unanimous Court
All the four Horsemen are gone- five of the justices appointed by FDR
This case directly overrules Hammer v. Dagenhart
Prohibition of the shipment of goods in interstate commerce
They uses the Gibbons v. Ogden language that this is an expansive federal power
“The motive and purpose of a regulation of interstate commerce are matters for the legislative judgment over which the courts are given no control.“
Hammer v. Dagenhart was wrongly decided
More or less, if the end was legitimate, it was going to be a valid exercise of the commerce power

16. United States v. Darby Lumber Company- V
More from Justice Stone
Validity of the wage and hour requirements
Is it related to commerce and affecting it?
Some of the lumber would stay in the state, but other would go out of state
Uniformity may be needed when a state regulation effects interstate commerce even if the activity is intrastate
The Shreveport Doctrine
This was to stop states from having substandard conditions and wages
They limit Carter v. Carter Coal
They seem to limit application of the 10th Amendment
“The amendment states but a truism that all is retained which has not been surrendered”

17. Wickard v. Filburn (1942) Wickard v. Filburn (1942) Background
The 1938 version of the Agricultural Adjustment Act allows the Secretary of Agriculture the authority to set particular quota- which are assigned to each farmer
Filburn had a farm outside of Dayton, raising cattle, poultry, eggs, plus winter wheat, some of which he sold
He was allowed to produce a certain amount of wheat, but he planted more acres than allotted and more bushels than allowed
He was fined for this and refused to pay, saying this act violated the commerce clause
Question: Does Congress have the authority to regulate this local activity under the Commerce Clause?

18. Wickard v. Filburn- II Arguments
For Wickard (Secretary of Agriculture- uphold the law)
It penalizes only excess wheat- which effects prices
The quota system is feasible because the government needs to know all wheat production
Congress chooses when it acts as appropriate to regulate interstate commerce
For Filburn (strike down the law)
This in no way involves interstate commerce
This never moves beyond the state (or even the farm?)  it is private property
What a farmer produces on his own farm for his own purposes is his business
There is not competition with anyone

19. Wickard v. Filburn- III Justice Jackson rules for a unanimous Court
All but two of the justices were FDR appointees
He also points to Gibbons v. Ogden
Marshall described the federal commerce power with a breadth never exceeded
This was a sign of near total deference to Congress on the Commerce Clause
May be direct or indirect
Whether the activity "exerts a substantial economic effect on interstate commerce":
Regulation of the price of wheat means sustaining or increasing the demand as by limiting the supply
His amount of wheat may be trivial but not when you allow many others to do the same
This is about Congress having the power to regulate commodity prices
Homegrown wheat competes with the wheat in commerce

20. Next lecture It will shorter than usual
We will only cover the expansive era
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