National Labor Relations Board v. Jones & Laughlin Steel Corp

301 U.S. 1 (1937), argued 10–11 Feb. 1937, decided 12 Apr. 1937 by vote of 5 to 4; Hughes for the Court, Sutherland, Van Devanter, McReynolds, and Butler in dissent. The Jones & Laughlin case was one of the five cases decided on 12 April 1937 that sustained the constitutionality of the National Labor Relations Act (NLRA) and proved to be a crucial turning point in the New Deal constitutional crisis. Passed by Congress in 1935, the NLRA guaranteed the right of workers to organize unions both in businesses operating in interstate commerce and in businesses whose activities affected interstate commerce and prohibited employers from dismissing or otherwise discriminating against their employees because of union membership or activities.

Commonly regarded as the most radical of the legislation enacted by Congress during President Franklin D. Roosevelt's New Deal, the NLRA was regarded at its passage as being of dubious constitutionality. In previous cases, the Court had held that liberty of contract (see Contract, Freedom of) was protected by the Due Process Clause of the Fifth Amendment and that under liberty of contract employers and employees had the right to bargain free of governmental interference. The Court had also held that labor relations associated with manufacturing or production enterprises only affected interstate commerce indirectly and were thus beyond the legitimate scope of congressional power under the Commerce Clause. The NLRA had been applied to employer‐employee relations at Jones & Laughlin's Aliquippa, Pennsylvania, plant, where steel and steel products were manufactured.

Frustrated by the Supreme Court's invalidation of much of the New Deal legislation passed by Congress from 1933 to 1936, President Roosevelt in early 1937 sought legislation authorizing him to appoint additional justices to the Court in order to obtain a pro‐New Deal majority. The key issue that spurred the introduction of this so‐called court‐packing plan was the disagreement between the Supreme Court and the president and Congress over the scope of national power to regulate the economy, with the Court construing such power narrowly, while the President and Congress construed it broadly (see Delegation of Powers). The issue was presented to the Court in the Jones & Laughlin case, which was argued less than a week after Roosevelt had proposed the court‐packing plan.

Dissenting in the Jones & Laughlin cases, Justices George Sutherland, Pierce Butler, Willis Van Devanter, and James McReynolds called for invalidation of the NLRA on both liberty of contract and Commerce Clause grounds. Only a year previously, both Chief Justice Charles Evans Hughes and Justice Owen Roberts had also endorsed the view that labor relations associated with production enterprises were local in nature and affected interstate commerce only indirectly. Yet both Hughes and Roberts voted to uphold the NLRA in the Jones & Laughlin case, and many observers felt that they had shifted their views because of the court‐packing plan.

In his opinion for the Court, Hughes brushed aside the due process and liberty of contract objections to governmental protection of the right of workers to organize unions. Hughes additionally held that the national government could legitimately protect the right of workers in manufacturing and production enterprises to organize and join unions as a means of preventing strikes in those enterprises that would affect interstate commerce. In effect, the Court abandoned the indirect effects test of the validity of Commerce Clause measures and instead adopted what is still the accepted view that, under the Commerce Clause, Congress can reach and regulate not only interstate commerce itself but also any activity affecting commerce, whether directly or indirectly. By upholding the validity of the NLRA on this basis, the Court signaled that it would no longer veto the national government's attempts to regulate the economy, thereby removing the principal reason for the Roosevelt court‐packing plan, which was eventually defeated in the Congress.

See also Commerce Power; History of the Court: The Depression and the Rise of Legal Liberalism; Labor.

Bibliography

• Richard C. Cortner, The Wagner Act Cases (1964)

— Richard C. Cortner

• 301 U.S. 1 (1937)
• Vote: 5–4
• For the Court: Hughes
• Dissenting: Sutherland, Van Devanter, McReynolds, and Butler

In July 1935 the Jones & Laughlin Steel Corporation fired 10 workers at its Aliquippa, Pennsylvania, plant. They were leaders of a local unit of the American Federation of Labor (AFL), a national labor union. The managers of the steel company wanted to stop their workers from joining the labor union.

On July 5, 1935, four days before Jones & Laughlin dismissed the 10 labor union leaders, President Franklin D. Roosevelt signed into law the National Labor Relations Act, often called the Wagner Act after New York senator Robert Wagner, the law's major sponsor in Congress. This new federal law made it illegal for an employer to fire or otherwise harass a worker because he belonged to a labor union. The law also protected the right of workers at a company to designate, by majority vote, a labor union to represent them as their sole bargaining agent with their employer. The Wagner Act applied to all businesses either engaged directly in interstate commerce or whose operations affected interstate commerce. Thus, the law could be applied to a business such as Jones & Laughlin Steel Corporation, which shipped steel across state lines.

The government set up the National Labor Relations Board (NLRB) to enforce the Wagner Act. On April 9, 1936, the NLRB charged Jones & Laughlin with violating the Wagner Act by discharging the 10 workers because they were labor union leaders. The company was ordered to reinstate the men and to give them back pay for the period they were not permitted to work. Jones & Laughlin's response was to challenge the NLRB and the Wagner Act as unconstitutional.

The Issue

Lawyers for Jones & Laughlin argued that the Wagner Act was based on an excessively broad interpretation of the commerce powers of Congress specified in Article 1, Section 8, of the U.S. Constitution. According to Jones & Laughlin, Congress did not have power under the commerce clause to regulate the relationships of managers and workers of a private corporation. Furthermore, the company claimed, the Wagner Act violated the due process clause of the 5th Amendment, which had been held in previous decisions of the Supreme Court to protect the “liberty of contract” between employers and employees. The federal government had no power, said the Jones & Laughlin lawyers, to interfere with the rights of private property owners and workers to bargain about wages, hours of work, and working conditions.

Opinion of the Court

The Court sustained the Wagner Act as a constitutional exercise of Congress's commerce power and ruled that it did not violate the 5th Amendment's due process clause. Chief Justice Charles Evans Hughes wrote that the Wagner Act's purpose was to reduce the possibility of strikes, which could disrupt the production and distribution of products and thereby increase the bargaining power to achieve satisfactory working conditions. Strikes could be prevented, Hughes said, by protecting the right of workers to organize labor unions. Hughes also rejected the “liberty of contract” argument based on the due process clause of the 5th Amendment. He emphasized that the Wagner Act in fact enhanced workers' power to bargain through a democratically elected representative of a labor union.

Significance

In this decision, the Court affirmed President Roosevelt's position that the federal government has the power under the Constitution to regulate the economic system. The Jones & Laughlin decision was a departure from several decisions between 1933 and 1937 in which the Court had firmly rejected President Roosevelt's New Deal programs.

The Court's opposition had so angered the President that, following his landslide victory in the 1936 election, he threatened to change the membership of the Court in his favor. On February 5, 1937, Roosevelt announced that he would ask Congress to enact legislation to enable the President to add up to six additional justices to the Court. With such a law, he could immediately add new justices to the Court who would be likely to vote for his economic regulation policies. This Court-packing plan was abandoned by President Roosevelt after the Court made decisions he agreed with in Jones & Laughlin and other 1937 cases.

The upholding of the Wagner Act by the Court greatly changed labor management relations throughout the United States. It led to an enormous growth in the membership and power of labor unions, which were influential in improving wages, hours of work, and working conditions.

See also Commerce power; Court-Packing Plan (1937)

Sources

• Richard C. Cortner, The Jones & Laughlin Case (New York: Knopf, 1970)