Jasper Finke, Crisis and Law - New York University School of Law

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2. From Schechter Poultry to Jones & Laughlin In order to evaluate the developments that let from Schechter Poultry in 1935 to Jones & Laughlin in 1937, we must first challenge the result-focused dichotomy of ‘striking down New Deal legislation’ versus ‘sustaining New Deal legislation’. That matters might be more complicated than the outcomes suggest, is already illustrated if we turn to the majorities by which the cases were decided. Jones & Laughlin (sustaining) was decided by a 5:4 majority, Carter (invalidating) by 6:3. But the judgment in Schechter Poultry – even though it invalidated New Deal legislation like Carter – was unanimously. Six Justices – among them Justices that were unlikely to agree on a lot of issues, like Justice Brandeis on the one hand and Justices Van Devanter, McReynolds and Butler on the other – joined Chief Justice Hughes in his opinion. And even the concurrence by Justice Cordozo, joined by Justice Stone, did not add a new perspective to the Commerce Clause aspects of the case. Quite on the contrary: there was consensus among all Justices. 60 The simple explanation is that, against the doctrinal background of that time and the way the case was presented by the government, NIRA was plainly unconstitutional. As already pointed out, when the government defended NIRA’s constitutionality, it relied predominantly on arguments of necessity, which it merged with a factual approach to direct effects doctrine. The necessary incidents and facilities when considered alone and without reference to their association with the movement of which they were an essential but subordinate part. 60 Even though Cardozo concurred the main difference concerned the question of how much of the power that a statute delegates to the President, he could again delegate to largely independent agencies that had not been set up by the statute itself. But with regard to the commerce clause Justice Cardozo held that “little can be added to the opinion of the court. … Activities local in their immediacy do not become interstate and national because of distant repercussions. What is near and what is distant may at times be uncertain. There is no penumbra of uncertainty obscuring judgment here. To find immediacy or directness here is to find it almost everywhere.” Schechter Poultry, 195, U.S. 554 (Cardozo concurring) [internal references omitted].
Court rejected this proposition in unison: first, out of principal, because economic crises do not enlarge constitutional powers, and second, because the government could not demonstrate the specific connection between overproduction and excessive competition on the one hand and their direct effect on interstate commerce on the other hand – and how fair labor standards would remedy the problem. Thus, the Court was united, but only in this case. Only a year later Carter Coal revealed the fundamental doctrinal differences that divided the nine Justices: Did the direct effects doctrine and, arguably, the current of commerce concept constitute matters of degree or matters of principle? The “Four Horseman” took an E.C. Knight- like stance by holding that what is local cannot have a direct effect, whereas the remaining five Justices agreed, at least on an abstract level, that whether or not some economic activity had direct effect on interstate commerce was also determined by the circumstances of the case. Still, there existed a reason why Hughes, instead of upholding the Bituminous Coal Conservation Act, concurred with the ‘Four Horsemen’, and this reason was: statutory limitations. Even though the facts of Carter Coal lent themselves more favorably towards arguing that the economic activity of the Carter Coal Company had indeed a direct effect on interstate commerce, the act itself did not contain any language that limited its application to such situations. The NLRA that was under scrutiny in Jones v. Laughlin, however, had added such a restriction. 61 Therefore Chief Justice Hughes regarded the statute to be within the limitations on Congressional power as established by the Commerce Clause. “The critical words […], prescribing the limits of the Board’s authority in dealing with the labor practices, are “affecting 61 The NLRA’s application was limited to conditions “affecting commerce”. Commerce was defined by the statute as “trade, traffic, commerce, transportation, or communication among the several States…” (§ 2 (6)) and “affecting commerce “ as "in commerce, or burdening or obstructing commerce or the free flow of commerce, or having led or tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce” (§ 2 (7)).
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Jasper Finke, Crisis and Law - New York University School of Law

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