Nlrb V. Jones & Laughlin Steel Corp. - Expanded “substantial economic effect”

• Hughes 1937. In pre-1937 cases, SCt had insisted upon a “direct” and “logical” relationship between the intrastate activity being regulated and interstate commerce. However, beginning in NLRB v. Jones, the SCt substantially relaxed the nexus required between intrastate activity being regulated and interstate commerce.

• Facts. This case tested the constitutionality of the National Labor Relations Act of 1935 (NLRA). The case involved the NLRB’s attempt to prevent Jones & Laughlin (a large integrated steel producer) from engaging in “unfair labor practices” by the discriminatory firing of employees for union activity.

• NLRA upheld. Majority held that NLRA, as applied to Jones & Laughlin, lay within the commerce power. The SCt noted that while Jones & Laughlin manufactured iron and steel only in Pennsylvania, it owned mines in two other states, operated steamships on the Great Lakes, held warehouses in four states, and sent 75% of its product out of Pennsylvania.

• Conclusion. Because of this multi-state network of operations, the SCt concluded, a labor stoppage of the Pennsylvania intrastate manufacturing operations would have a substantial effect on interstate commerce. Therefore, labor relations at the Pennsylvania plants could constitutionally be regulated by Congress. [this was essentially Cardozo’s dissent in Carter]

• “Current of commerce” rationale not needed: SCt expressly declined to rely on the “current of commerce” theory. SCt indicated that “current of commerce” cases were merely particular, not exclusive, illustrations of the commerce power.

• 10th Amendment rejected as limitation. SCt also rejected the “manufacture” vs. “commerce” distinction (previously made in Knight). SCt implied, though it did not expressly state, that the 10th Amendment would no longer act as an independent limitation on federal commerce-clause powers.

• Koppelman. SCt did not abandon doctrinal notion that CC imposed limits, but argued that industrial-labor relations 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.”

• This case was decided two weeks after West Coast Hotel v. Parrish (and two months after FDR announced court-packing plan), reversing itself and upholding minimum wage laws.

• Good confusion. How broad is Congressional power? Was it labor industrial relations generally, or steel industry in particular, that prompted decision?

Wickard V. Filburn - The “cumulative effect” theory

• Jackson 1942. This theory provides that Congress may regulate not only acts which taken alone would have a substantial economic effect on interstate commerce, but also an entire class of acts, if the class has a substantial economic effect (even though one act within it might have virtually no interstate impact at all). As a result of this “cumulative effect” principle, it is not only the type of regulation sustained in Jones & Laughlin (regulation of a large steel producer, where that producer’s labor problems would by themselves have a substantial effect on interstate commerce) which may be regulated. Wickard is the furthest the SCt has gone in sustaining Commerce-Clause powers, at least in the economic, as opposed to “police power,” area.

• Facts. This case involved the Agricultural Adjustment Act of 1938, which permitted the Secretary of Agriculture to set quotas for the raising of wheat on every farm in the country. The Act allowed not only the setting of quotas on wheat that would be sold interstate and intrastate, but also quotas on wheat which would be consumed on the very farm where it was raised. Wheat raised in excess of the quota was subject to a per-bushel penalty.

• Home consumption. Filburn (P) owned a small farm in Ohio. He challenged the government’s right to set a quota on the wheat which he raised and consumed on his own farm, on the grounds that this was a purely local activity beyond the scope of federal control.

• Statute upheld. But a unanimous (SCt (whose composition had changed radically since days of Carter Coal case just six year before) upheld the Act, even as it applied to home-consume wheat. SCt reasoned as follows:

• SCt abandoned here both commerce/manufacturing and direct/indirect distinctions.

• Consumption has market effect: First, the consumption of home-grown wheat is a large and variable factor in the economics of the wheat market. The more wheat that is consumed on the farm where it is grown, the less wheat that is bought in commerce (e.g. from other farmers), whether interstate or not.

• Cumulative effect: SCt argued that “class of similarly situated people” of which Filburn was part has substantial aggregate effect on price of wheat and interstate commerce. P’s own effect on the market, by his decision to consume wheat grown himself, might be trivial. But this decision, “taken together with that of many others similarly situated, is far from trivial.” That is, homegrown wheat “supplies a need of the man who grew it which would otherwise be reflected by purchases in the open market,” and the home-grown wheat thus “completes with wheat in commerce.” Protection of the interstate commercial trade in what clearly falls within the commerce power, and the regulation of home-grown wheat is reasonably related to protecting that commerce.

• Koppelman.

• SC consciously abdicated and gave Congress power to regulate anything it wanted to under CC, at least until Lopez. If this was allowable, then what isn’t?

• Jackson had been FDR’s attorney general and solicitor general.

• Marshall likely would not have supported this opinion.