What Happened on April 12. 1937 and how it Shaped Our Government.

I have written several articles on postings related to politics. A list of links has been provided at the bottom of this article for your convenience. This article will, however, address different aspects of these political events.

On April 12, 1937, the Supreme Court upheld the National Labor Relations Act (NLRA), a landmark decision in labor relations, declaring that the federal government had the power to regulate labor relations under the Commerce Clause.

Here’s a more detailed breakdown:

NLRB v. Jones & Laughlin Steel Corp.:The Supreme Court case, decided on April 12, 1937, involved a challenge to the NLRA, which aimed to address the unequal bargaining power between employers and employees.
The Wagner Act:The NLRA, also known as the Wagner Act, prohibited employers from punishing employees for organizing or joining a union and required them to engage in collective bargaining with unionized workers.
Landmark Ruling:The Supreme Court’s decision in NLRB v. Jones & Laughlin Steel Corp. was a major victory for industrial and factory workers, ushering in a new era of labor relations where unions had more power in negotiations with industry.
Commerce Clause:The Court’s reasoning granted far more authority to Congress to regulate economic relations than previously allowed, expanding the interpretation of the Commerce Clause.

This Day in Supreme Court History—April 12, 1937

On this day in 1937, the Supreme Court handed down NLRB v. Jones & Laughlin Steel, a cornerstone of what became known as the “Constitutional Revolution of 1937.”

In National Labor Relations Board v. Jones & Laughlin Steel Corporation, ten former workers of Jones & Laughlin Steel brought a suit against the company, asserting that they were illegally fired after they attempted to unionize and join the Steel Workers Organizing Committee. The recently created National Labor Relations Board ordered Jones & Laughlin Steel to rehire the employees and compensate them for any back pay owed them.

The law that created the NLRB, the National Labor Relations Act of 1935, also known as the Wagner Act, was a critical component of President Franklin D. Roosevelt’s New Deal program of legislative reforms. An unprecedented attempt to address the unequal bargaining power dynamic between employers and employees, the Wagner Act prohibited employers from punishing employees for organizing or joining a union and required them to engage in collective bargaining with unionized workers.

Congress claimed authority to pass the Wagner Act under its power to regulate interstate commerce, enumerated in Article I of the Constitution. In challenging the law, Jones & Laughlin argued that its provisions regulating the bargaining relationship between employees and employers went beyond Congress’s commerce power.

After a string of controversial decisions striking down New Deal legislation, the Supreme Court changed course. In a 5-4 decision, the Supreme Court upheld the bargaining provisions of the Wagner Act. Chief Justice Charles Evans Hughes delivered the opinion of the Court, arguing that the commerce power extended to regulations designed to prevent a potential strike at Jones & Laughlin, since a work stoppage would have an “immediate, direct, and paralyzing effect upon interstate commerce.” “Collective bargaining is often an essential condition of industrial peace,” Hughes asserted, and a “refusal to confer and negotiate has been one of the most prolific causes of strife.”

The decision was a landmark ruling on the meaning of the Commerce Clause. Its reasoning granted far more authority to Congress to regulate economic relations than the Court had previously allowed. It was also a major victory for industrial and factory workers across the country. The Wagner Act helped usher in a new era of labor relations, one in which union power, backed by the authority of the federal government, entered into negotiations with industry on far more equal footing than before.

National Labor Relations Board v. Jones & Laughlin Steel Corporation is a case decided on April 12, 1937, by the United States Supreme Court that interpreted the Commerce Clause to give Congress authority over intrastate activities if they were substantially related to interstate commerce. The case concerned the constitutionality of the National Labor Relations Act of 1935, which established regulations on relations between employees and industrial employers. The Supreme Court reversed the ruling of the United States Court of Appeals for the Fifth Circuit, holding that the Act and the National Labor Relations Board (NLRB) it established were constitutional under the Commerce Clause.

HIGHLIGHTSThe case: Jones & Laughlin Steel Corporation filed suit against the NLRB after the board ordered the corporation to rehire employees who were fired for attempting to unionize.The issue: Did Congress have the authority under the Commerce Clause to regulate labor relations under the National Labor Relations Act of 1935?The outcome: The Supreme Court held that the Commerce Clause granted Congress the authority to regulate intrastate labor relations because such issues directly and indirectly affected interstate commerce.

Why it matters: The Supreme Court’s decision interpreted the Commerce Clause to give Congress the authority to regulate intrastate activities that were closely related to interstate commerce. Writing for the court, Chief Justice Charles Hughes argued, “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.”

Background

Congress passed the National Labor Relations Act of 1935 and established the NLRB to resolve disputes and regulate the relationships between industrial employers and their workers. The law created a right of unionization and collective bargaining for workers and prohibited companies from discriminating against unionized workers.

Jones & Laughlin Steel Corporation fired ten employees who attempted to unionize. The employees appealed to the NLRB, which determined the corporation had violated the National Labor Relations Act and ordered the rehiring of the employees with back pay.

The company sued, claiming the Act exceeded Congress’ authority under the Commerce Clause. The United States Court of Appeals for the Fifth Circuit sided with Jones & Laughlin, citing Supreme Court precedent from Carter v. Carter Coal Company, Utah Power & L. Co. v. Pfost, and Chassaniol v. Greenwood, which supported a more limited understanding of the Commerce Clause. The NLRB appealed the decision to the Supreme Court, arguing that Congress could regulate industrial labor relations because they affected interstate commerce.

Oral argument

Oral argument was held on February 10-11, 1937. The case was decided on April 12, 1937.

Decision

The Supreme Court decided 5-4 that the National Labor Relations Act was constitutional under Commerce Clause because industrial labor relations affected interstate commerce.

Opinions

Opinion of the court

Chief Justice Charles Hughes argued that the Commerce Clause granted Congress authority to regulate matters that affected interstate commerce. Hughes determined industrial labor relations regulated under the National Labor Relations Act of 1935 were substantially related to interstate commerce and could be constitutionally regulated.

The congressional authority to protect interstate commerce from burdens and obstructions is not limited to transactions which can be deemed to be an essential part of a “flow” of interstate or foreign commerce. Burdens and obstructions may be due to injurious action springing from other sources. The fundamental principle is that the power to regulate commerce is the power to enact “all appropriate legislation” for “its protection and advancement” (The Daniel Ball, 10 Wall. 557, 77 U. S. 564); to adopt measures “to promote its growth and insure its safety” (Mobile County v. Kimball, 102 U. S. 691, 102 U. S. 696, 102 U. S. 697); “to foster, protect, control and restrain.” Second Employers’ Liability Cases, supra, p. 223 U. S. 47. See Texas & N.O. R. Co. v. Railway Clerks, supra. That power is plenary, and may be exerted to protect interstate commerce “no matter what the source of the dangers which threaten it.” Second Employers’ Liability Cases, p. 223 U. S. 51; Schechter Corp. v. United States, supra. 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.

…
Giving full weight to respondent’s contention with respect to a break in the complete continuity of the “stream of commerce” by reason of respondent’s manufacturing operations, the fact remains that the stoppage of those operations by industrial strife would have a most serious effect upon interstate commerce.

Dissent

Justice James C. McReynolds, joined in dissent by Justices Willis Van Devanter, George Sutherland, and Pierce Butler, stated his disagreement with the opinion on the grounds outlined in Labor Board v. Friedman-Harry Marks Clothing Company. McReynolds argued Congress had exceeded the authority granted under the Commerce Clause, which he said only applied to interstate commerce itself, not direct or indirect influences on interstate commerce. He also claimed, contrary to the majority’s opinion, that the discharge of 10 employees would not substantially or directly affect interstate commerce.

Any effect on interstate commerce by the discharge of employees shown here would be indirect and remote in the highest degree, as consideration of the facts will show. In No. 419, ten men out of ten thousand were discharged; in the other cases, only a few. The immediate effect in the factor may be to create discontent among all those employed, and a strike may follow which, in turn, may result in reducing production, which ultimately may reduce the volume of goods moving in interstate commerce. By this chain of indirect and progressively remote events, we finally reach the evil with which it is said the legislation under consideration undertakes to deal. A more remote and indirect interference with interstate commerce or a more definite invasion of the powers reserved to the states is difficult, if not impossible, to imagine.

…
There is no ground on which reasonably to hold that refusal by a manufacturer, whose raw materials come from states other than that of his factory and whose products are regularly carried to other states, to bargain collectively with employees in his manufacturing plant directly affects interstate commerce. In such business, there is not one, but two, distinct movements or streams in interstate transportation. The first brings in raw material, and there ends. Then follows manufacture, a separate and local activity. Upon completion of this, and not before, the second distinct movement or stream in interstate commerce begins, and the products go to other states. Such is the common course for small as well as large industries. It is unreasonable and unprecedented to say the commerce clause confers upon Congress power to govern relations between employers and employees in these local activities.

Impact

The Supreme Court’s holding in NLRB that the Commerce Clause gave Congress the authority to regulate activities with a “close and substantial relation to interstate commerce” has been cited in a number of Supreme Court cases expanding Congress’ power under the clause.

The majority in Wickard v. Filburn (1942) referenced NLRB in the opinion, which explicitly rejected the relevance of the distinction between direct and indirect effects on interstate commerce in determining Congress’ power under the Commerce Clause. The court held in Wickard that Congress could regulate wheat production because the activities of farmers could affect national wheat prices and the national wheat market. William Rehnquist later said that Wickard v. Filburn signaled a trend of expansion of Congress’ power over interstate commerce.

The Commerce Clause and precedent from NLRB and Wickard were also the claimed legal bases for the passage of the Gun-Free School Zones Act. In United States v. Lopez (1995) the federal government claimed that, since guns were articles of commerce, Congress could regulate their use. Chief Justice William Rehnquist’s opinion ruling the Act unconstitutional marked the first major restriction of Congress’ commerce power since the NLRB decision.

The National Labor Relations Act of 1935, also known as the Wagner Act, is a federal law signed by President Franklin D. Roosevelt (D) as part of the New Deal on July 5, 1935, that established the legal right for workers to join labor unions and enter into collective bargaining agreements with their employers. The Wagner Act also strengthened the National Labor Relations Board (NLRB) to oversee collective bargaining activities, resolve labor disputes, ensure transparent union elections, and prohibit workplace discrimination against union members, among other provisions.

Background

During the 1930s, President Roosevelt sought to mitigate the growing unrest between American workers and employers, which had resulted in strikes across the country. The National Industrial Recovery Act (NIRA) passed in 1933 and provided workers with the right to bargain collectively. However, the collective bargaining protections were weak, and other provisions of the law pertaining to industrial codes were struck down as unconstitutional in 1935. Employers subverted the remaining collective bargaining protections by breaking strikes and establishing non-independent company unions, which allowed employers to maintain their influence while ostensibly fulfilling the requirements of the law. Though the National Labor Relations Board (NLRB) was established in 1934, it lacked the enforcement authority to ensure employer compliance with the NIRA’s collective bargaining protections.

The National Labor Relations Act, also known as the Wagner Act for its sponsor, U.S. Senator Robert F. Wagner (D-N.Y.), passed in 1935 and reestablished the legal right for workers to join labor unions and enter into collective bargaining agreements with their employers. The Wagner Act also created a stronger NLRB to oversee collective bargaining activities—allowing the board to arbitrate labor disputes, ensure transparent union elections, and prohibit workplace discrimination against union members, among other provisions. According to the Roosevelt Institute, the legislation also “defined and prohibited five unfair labor practices by employers, including interfering with, restraining, or coercing employees against their rights; interfering with the formation of a labor organization; discriminating against employees to encourage or discourage forming a union; discriminating against employees who file charges or testify; and refusing to bargain collectively with the employees’ representative.”

Upon signing the legislation on July 5, 1935, President Roosevelt stated:

A better relationship between labor and management is the high purpose of this Act. By assuring the employees the right of collective bargaining it fosters the development of the employment contract on a sound and equitable basis. By providing an orderly procedure for determining who is entitled to represent the employees, it aims to remove one of the chief causes of wasteful economic strife. By preventing practices which tend to destroy the independence of labor, it seeks, for every worker within its scope, that freedom of choice and action which is justly his.

The Wagner Act applied to all employers engaged in interstate commerce, except for those involved in railroads, airlines, domestic work, agriculture, or government. Following the passage of the Wagner Act, union membership in the United States grew to an estimated 9 million workers by 1940, including roughly 800,000 women.

Provisions

Enforcement

The Wagner Act strengthened the National Labor Relations Board (NLRB) to serve in an enforcement capacity. The Act charged the NLRB with investigating and arbitrating labor disputes as well as certifying union elections to determine labor representatives.^[7]

Collective bargaining

The Wagner Act guarantees employees the right to enter into collective bargaining agreements with their employers. Section 157 states:

Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title.

Unfair labor practices

The Wagner Act prohibits certain activities by employers that the law defined as unfair labor practices (ULPs). The Taft-Hartley Act of 1947 amended the Wagner Act to include a series of ULPs by labor organizations.^[9]^[10]

Unfair labor practices by employers

According to the Legal Information Institute, the Wagner Act established the following ULPs by employers:

Section 158(a)(1) prohibits an employer from interfering with employees as they engage in concerted activity.Section 158(a)(2) prohibits an employer from dominating or assisting a labor union.Section 158(a)(3) prohibits an employer from discriminating against any worker because of union activity.Section 158(a)(4) prohibits an employer from punishing a work [sic] for filing charges with the Labor Board.Section 158(a)(5) requires the employer to bargain collectivity in good faith with the union.

Unfair labor practices by labor organizations

According to the Legal Information Institute, the Taft-Hartley Act of 1947 amended the Wagner Act to include the following ULPs by labor organizations:

Section 158(b)(1) prohibits a union from restraining or coercing employees as they exercise their Section 7 rights, such as the right to refrain from concerted activity.Section 158(b)(2) makes it illegal for a union to cause an employer to discriminate in violation of Section 8(a)(3).Section 158(b)(3) requires a union to bargain in good faith with the employer.

Amending statutes

Below is a partial list of subsequent laws that amended provisions of the Wagner Act:^[11]

Taft-Hartley Act of 1947 amended the Wagner Act to include unfair labor practices (ULPs) by labor organizations and prohibit secondary boycotts—situations in which a union puts pressure on an employer for conducting business with a separate entity engaged in a dispute with the union.
Landrum-Griffin Act of 1959 amended the Wagner Act and the Taft-Hartley Act in response to what the NLRB describes as a time when “the labor movement was under intense Congressional scrutiny for corruption, racketeering, and other misconduct.” Amendments included provisions to strengthen the ban on secondary boycotts and limit certain picketing activities, among other modifications.

Noteworthy events

U.S. Supreme Court upholds employer arbitration agreements, declines to apply Chevron deference

On Monday, May 21, 2018, the U.S. Supreme Court ruled 5-4 that arbitration agreements between employers and employees are enforceable under the Federal Arbitration Act (FAA). The Supreme Court ruling reversed and remanded a decision from the U.S. Court of Appeals for the Seventh Circuit, which had ruled that the agreement violated the National Labor Relations Act (NLRA) and was not enforceable under the FAA.

The case involved a dispute between Epic Systems Corporation and a group of its employees regarding an arbitration agreement for wage-and-hour claims. In writing for the majority, Justice Neil Gorsuch observed that the case did not qualify for Chevron deference—a principle of judicial review in which a federal court defers to a federal agency’s interpretation of an ambiguous statute that the agency administers. Chevron did not apply, according to Gorsuch, because no ambiguity existed in the NLRA statute, which is administered by the National Labor Relations Board (NLRB). Instead, Gorsuch wrote that the NLRB had sought to “interpret [the NLRA] in a way that limits the work of the Arbitration Act, which the agency does not administer.”

Gorsuch further stated that Congress had put forth clear instructions for the enforcement of arbitration agreements in the NLRA and that any effort to change the policy must come from Congress itself. He wrote, “The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written. While Congress is of course always free to amend this judgment, we see nothing suggesting it did so in the NLRA—much less that it manifested a clear intention to displace the Arbitration Act.”

Resources

ballotpedia.org, “National Labor Relations Board v. Jones & Laughlin Steel Corporation.”; ballotpedia.org, “National Labor Relations Act.”; blogs.kentlaw.iit.edu, “This Day in Supreme Court History—April 12, 1937.” By Chris Schmidt;

Common Sense and Ramblings In America

What Happened on April 12. 1937 and how it Shaped Our Government.

Background

Oral argument

Decision

Opinions

Opinion of the court

Dissent

Impact

Background

Provisions

Enforcement

Collective bargaining

Unfair labor practices

Unfair labor practices by employers

Unfair labor practices by labor organizations

Amending statutes

Noteworthy events

U.S. Supreme Court upholds employer arbitration agreements, declines to apply Chevron deference

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Background

Oral argument

Decision

Opinions

Opinion of the court

Dissent

Impact

Background

Provisions

Enforcement

Collective bargaining

Unfair labor practices

Unfair labor practices by employers

Unfair labor practices by labor organizations

Amending statutes

Noteworthy events

U.S. Supreme Court upholds employer arbitration agreements, declines to apply Chevron deference

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