NLRB v Jones & Laughlin Steel Corporation was a U.S. Supreme Court case that brought into question the constitutionality of the National Labor Relations Act of 1935. The court ruled in favor of the NLRB with claims that Commerce Clause allowed the government to regulate interstate commerce. Because Jones & Laughlin Steel Corporation were conducting unfair labor practices, they were in violation of the Act.
The National Relations Board (NLRB) is an independent federal agency whose purpose is conduct labor union representation elections and remedy unfair labor practices. They passed the National Labor Relations Act of 1935, also known as the Wagner Act for New York Senator Robert Wagner, to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy. Jones and Laughlin Steel Corporation was the nation’s largest steel producer at the time of the case. They became connected when Jones and Laughlin’s Pennsylvania location fired ten employees who attempted to create a union. The NLRB quickly became involved with claims that the plants refusal to negotiate with its workers was an act of discrimination on employment and thus was a direct violation of National Labor Relations Act. The sanctioned the company, but they refused to comply and raised question the entire Act’s constitutionality. This lead to JLSC bringing the case to court where the lower courts also agreed and deemed the Act unconstitutional. The NLRB then appealed the case and took it to the Supreme Court.
When the Laughlin Steel Corporation (LSC) fired ten workers for the attempt to unionize, they were ordered by the National Labor Relations Board to reinstate the workers under the National Labor Relations Act (NLRA). This act gave Congress the ability to regulate and investigate any unfair business practices in commercial activity that affected interstate commerce. LSC, in turn, held their position in deeming the NLRA unconstitutional on the grounds of exceeding the government’s reach of power under the commerce clause. The NLRB then petitioned the Circuit Court of Appeals, which ruled that under Supreme Court precedent, the NLRA did, in fact, exceed the government’s power. The Supreme Court granted certiorari, and in a 5-4 decision, ruled a reversal of the decision of the lower court: the NLRA was declared constitutional, and the LSC did not have the right to fire their workers for their efforts to unionize.
The issue in this particular case arises from the actions of the Laughlin Steel Corp (LSC). Despite company policy, ten LSC employees attempted to unionize, resulting in their termination. Because of the authorization of the National Labor Relations Act under the commerce clause, this brought the case to the Supreme Court. The main arguments of the case called into question the government’s authority to regulate both actions related to manufacturing, and actions between the workforce and administration. These actions were investigated and judged according to their corresponding, collective effect on interstate commerce. In result, SCOTUS ruled in favor of Congress on both accounts, in that they were granted the ability to regulate these actions if their effect on interstate commerce were of sizeable nature.
The final decision read that the National Labor Relations Act of 1935 was indeed constitutional under the guidelines specified in the Commerce Clause that they could regulate activities carried out by industries that had the potential of restricting interstate commerce. And since there was a federal interest in allowing workers to unionize, the justices changed their opinion that labor relations only had an indirect effect on interstate commerce. In this finding, the decision of the lower courts was reversed.
Majority Opinion (Hughes)
Chief Justice Charles Evans Hughes wrote the majority opinion on the case, with a 5-4 decision that reversed the rulings of lower courts: “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.”  He was joined in this reasoning by Justices Louis Brandeis, Harlan F. Stone, Owen J. Roberts, and Benjamin N. Cardozo.
Dissenting Opinion (McReynolds)
Justice Reynolds wrote for the dissenting opinion, questioning the grounds of which the other decision was made that appeared to increase the power of Congress under the commerce clause. He did agree that Congress had the power to regulate interstate commerce between states, but he believed Congress only had the right to get involved in circumstances where the violation is “direct and material”. He was joined in this reasoning by Justices Willis Van Devanter, George Sutherland, and Pierce Butler.
Full Text of Opinions
Significance / Impact
NLRB v. Jones and Laughlin Steel Corporation was the first time that the court had to question the difference in direct v indirect effect and whether certain indirect activities would affect interstate commerce; for the first time, the decision showed that they were both interlinked activities and could not be completely polarized. The National Labor Relations Act was finally declared as constitutional and could now be applied to many cases that fell under this category of workers and their right to unionize.
- Article 1, Section 8, Clause 3[Congress shall have the power] “To regulate commerce with foreign nations, and among the several states, and with the Indian tribes.”
Major Statute(s) Under Review
- Standard Oil Co. of New Jersey v. United States (1911)
- Stafford v. Wallace (1922)
- Schechter Poultry Corp. v. United States (1935)
- Carter v. Carter Coal Co. (1936)
Important Subsequent Cases
- Wickard vs. Filburn
- National League of Cities v. User
- Garcia v. San Antonio Metropolitan Transit Authority
- U.S. v. Lopez
- U.S. v. Morrison
- Gonzalez v. Raich
- NFIB v. Sebelius
Academic Books, Articles and Law Reviews