VIII. JURISDICTION

In section 10 of the act Congress entrusted the Board with jurisdiction "to prevent any person from engaging in any unfair labor practice (listed in sec. 8) affecting commerce." i Issues before the Courts involving the jurisdiction of the Board have been of two separate types: first, those involving the right of the Board to determine in the first instance whether a controversy before it is one "affecting commerce," and second, those relating to the question whether the Board in issuing an order to prevent an unfair labor practice has correctly found that such unfair labor practice is one "affecting commerce." We will take up in order the cases bearing upon these issues.

A. THE EXCLUSIVE JURISDICTION OF THE BOARD TO DETERMINE IN THE FIRST INSTANCE WHETHER AN ALLEGED UNFAIR LABOR PRACTICE IS ONE AFFECTING COMMERCE

On January 5, 1938, the Supreme Court in Myers et al v. Bethlehem Shipbuilding Corporation, 303 U. S. 41, and in Newport News Shipbuilding & Dry Dock Co. v. Schauffler et al, 303 U. S. 54, sustained the position of the Board, maintained from the time of its creation, that the authority conferred upon it by the act of determining whether an employer had engaged in an unfair labor practice affecting commerce, was exclusive, subject to subsequent judicial review after Board decision by the appropriate Circuit Court of Appeals of the United States. In two unanimous opinions in the above cases the Court held that a Federal district court is without jurisdiction to enjoin the Board from holding a hearing upon a complaint filed by it against an employer alleged to be engaged in unfair labor practices prohibited by the act. In the Myers case, the Court pointed out:

The District Court is without jurisdiction to enjoin hearings because the power "to prevent any person from engaging in any unfair labor practice affecting commerce" has been vested by Congress in the Board and the Circuit Court of Ap peals, and Congress has declared: "This power shall be exclusive, and shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement, code, law, or otherwise." The grant of that exclusive power is constitutional, because the act provided for appropriate procedure before the Board and in the review by the Circuit Court of Appeals an adequate opportunity to secure judicial protection against possible illegal action on the part of the Board."

* *

The corporation contends that, since it denies that interstate or foreign commerce is involved and claims that a hearing would subject it to irreparable damage, rights guaranteed by the Federal Constitution will be denied unless it be held that the District Court has jurisdiction to enjoin the holding of a hearing by the Board. So to hold would, as the Government insists, in effect substitute the District Court for the Board as the tribunal to hear and determine what Con

1 The term "commerce" is defined in sec. 2 (6) of the act to include trade, traffic, com merce, transportation, or communication among the several States and foreign countries, and in the District of Columbia and the Territories. The term "affecting commerce" is defined to mean "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" (sec. 2 (7)).

2303 U. S. 41, at 48.

gress declared the Board exclusively should hear and determine in the first instance. The contention is at war with the long settled rule of judicial administration that no one is entitled to judicial relief for a supposed or threatened injury until the prescribed administrative remedy has been exhausted.3 * *

The above decisions in substance closed the controversies involved in the great wave of injunction proceedings inaugurated shortly after the passage of the act in the effort to destroy the statutory method provided by Congress for the orderly conduct of the work of the Board. The exclusive jurisdiction of the Board to determine in the first instance whether an employer has engaged in unfair labor practices affecting commerce is now well settled in the law. Its decisions, as the statute provides, are reviewable by the Circuit Courts of Appeals, and finally by the Supreme Court on writ of certiorari.

B. THE SCOPE OF THE BOARD'S JURISDICTION TO PREVENT UNFAIR LABOR PRACTICES

As pointed out above (p. 216) the jurisdiction of the Board to prevent unfair labor practices is limited to unfair labor practices "affecting commerce." The first 2 years of the act's operations were marked by a long legal contest to sustain its application in the field laid out for it by Congress. This contest reached a successful conclusion on April 12, 1937, when the Supreme Court in National Labor Relations Board v. Jones & Laughlin Steel Corporation, 301 U. S. 1, and four companion cases, upheld the authority of the Board not only over operations or instrumentalities of commerce, but also over manufacturing and production activities whenever a stoppage of such operations by industrial strife would result in burdens and obstructions to interstate or foreign commerce, though such operations when separably viewed are local.

The decisions of the Supreme Court in the Labor Board Cases decided April 12, 1937, resulted in an almost general acceptance of the jurisdiction of the Board over manufacturing enterprises receiving a large proportion of their raw materials from without the State of manufacture and shipping a large proportion of their finished products to points outside such State. Many concerns, however, misunderstanding the principle laid down by the Supreme Court, still contended that where the flow of commerce was in only one direction, the act was inapplicable and the jurisdiction of the Board did not apply.

On March 28, 1938, the Supreme Court, in Santa Cruz Fruit Packing Co. v. National Labor Relations Board, 303 U. S. 453, reasserted the principles announced in the Jones & Laughlin case, and set at rest the contention that unfair labor practices of enterprises whose products are not part of a continuous flow of interstate commerce are beyond the reach of congressional control under the commerce power. In this case, the Court sustained the jurisdiction of the

303 U. S. 41, at 50.

For a full discussion of the Board's injunctive litigation during the present fiscal year, see ch. IX, infra.

National Labor Relations Act, sec. 10. The jurisdiction is more extensive in the District of Columbia and the Territories (sec. 2 (6)).

The history of the Board's early struggle in the courts is considered at length in the Second Annual Report, ch. XI, pp. 52–57.

In all three of the cases involving production employees decided by the Supreme Court on April 12, 1937, the enterprises involved were manufacturing concerns receiving a substantial proportion of their raw materials in interstate commerce and shipping a substantial proportion of their finished products into interstate commerce.

Board over a California concern which obtained all of its raw materials from within California and shipped 37 percent of its finished products outside the State. Pointing out that the test for applicability of the act enunciated in the Jones & Laughlin decision was whether a stoppage of operations by industrial strife would result in substantial interruption to the flow of interstate commerce, the Court said:

Petitioner urges that the principle is inapplicable here as the fruits and vegetables which petitioner prepares for shipment are grown in California and petitioner's operations are confined to that State. It is not a case where the raw materials of production are brought into the State of manufacture and the manufactured product is handled by the manufacturer in other States. In view of the interstate commerce actually carried on by petitioner, the conclusion sought to be drawn from this distinction is without merit. The existence of a continuous flow of interstate commerce through the State may indeed readily show the intimate relation of particular transactions to that commerce. Stafford v. Wallace, 258 U. S. 495, 516; Chicago Board of Trade v. Olsen, 262 U. S. 1, 33. But, as we said in the Jones & Laughlin case, the instances in which the metaphor of a "stream of commerce" has been used are but particular, and not exclusive, illustrations of the protective power which Congress may exercise. 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 actions springing from other sources. Id., p. 36.

The Court rejected the argument that an arbitrary rule of 50 percent be established as the dividing line between State and Federal power, and that persons transmitting less than that percentage of their total products into interstate commerce were beyond the scope of the Board's jurisdiction. The Court stated:

To express this essential distinction, "direct" has been contrasted with "indirect," and what is "remote" or "distant" with what is "close and substantial." Whatever terminology is used, the criterion is necessarily one of degree and must be so defined. This does not satisfy those who seek for mathematical or rigid formulas. But such formulas are not provided by the great concepts of the Constitution such as "interstate commerce,' "due process," "equal protection." In maintaining the balance of the constitutional grants and limitations, it is inevitable that we should define their applications in the gradual process of inclusion and exclusion.

There is thus no point in the instant case in a demand for the drawing of a mathematical line. And what is reasonably clear in a particular application is not to be overborne by the simple and familiar dialetic of suggesting doubtful and extreme cases. The critical words of the provision of the National Labor Relations Act in dealing with the described labor practices are "affecting commerce," as defined. § 2 (6). It is plain that the provision cannot be applied by a mere reference to percentages and the fact that petitioner's sales in interstate and foreign commerce amounted to 37 percent, and not to more than 50 percent, of its production cannot be deemed controlling. The question that must be faced under the act upon particular facts is whether the unfair labor practices involved have such a close and substantial relation to the freedom of interstate commerce from injurious restraint that these practices may constitutionally be made the subject of federal cognizance through provisions looking to the peaceable adjustment of labor disputes.10

The various circuit courts of appeals, applying the principles of the Jones & Laughlin decision, have sustained the jurisdiction of the Board over a wide variety of industrial activities during the present

8 303 U. S. 453, at 464.

The Court also rejected the contention that an employer shipping goods into interstate commerce can withdraw himself from Federal control by delivering the goods f. o. b. at stated points within the State of origin for transportation (303 U. S. 453, at 463).

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fiscal year. The jurisdictional questions presented in cases coming before the Courts for enforcement of Board orders are, for the most part, readily divisible into three categories; first, those involving concerns which are themselves directly engaged in interstate commerce; second, those involving concerns which both receive and transmit materials in interstate commerce; 12 and third, those involving concerns which obtain all or practically all of their raw materials in the State of manufacture but ship a substantial proportion of their finished products to points in other States.13 The jurisdictional problem in this last group of cases is similar to that dealt with in the Santa Cruz case, where all of the products to be packed were obtained within the state of packing but a substantial proportion of the finished products were shipped to other states, and in mining.15

In addition to the above situations, the act was held applicable to the employees of a daily newspaper in National Labor Relations Board v. Star Publishing Co., 97 F. (2d) 465 (C. C. A. 9th).

Consolidated Edison Company v. National Labor Relations Board, 95 F. (2d) 390 (C. C. A. 2d), cert. granted, 58 S. Ct. 1038, is perhaps the best illustration of the principle that the effect upon interstate commerce of a labor dispute, if one should occur, in a particular industrial enterprise, and not the percentage of materials received or transmitted in interstate commerce, is the test by which Board jurisdiction is determined. In that case, the Circuit Court of Appeals for the Second Circuit sustained the jurisdiction of the Board with respect to New York public utility companies which confined all of their operations within the State of New York, made no shipments into interstate commerce, and supplied no light or energy beyond the State's boundaries. The companies did, however, supply electric energy to three interstate railroads for the lighting and operation of

11 Black Diamond Steamship Corporation v. National Labor Relations Board, 94 F. (2d) 18 (C. C. A. 2d), cert. denied 304 U. S. 579 (steamship company engaged in interstate and foreign commerce); Appalachian Electric Power Company v. National Labor Relations Board, 93 F. (2d) 985 (C. C. A. 4th) (public utility transmitting electric power across State lines); National Labor Relations Board v. Bell Oil & Gas Co., 91 F. (2d) 509 (C. C. A. 5th) (oil company transporting oil and gas in two States).

National Labor Relations Board v. Remington Rand, Inc.. 94 F. (2d) 862 (C. C. A. 2d), cert. denied, 304 U. S. 576; rehearing denied 304 U. S. 590 (office equipment manufacturer with plants all over the world); Jeffery-DeWitt Insulator Co. v. National Labor Relations Board, 91 F. (2d) 134 (C. C. A. 4th), cert. denied, 302 U. S. 731 (insulator manufacturer); National Labor Relations Board v. J. Freezer & Son, 95 F. (2d) 840 (C. C. A. 4th) (shirt manufacturer): Memphis Furniture Mfg. Co. v. National Labor Rela tions Board, 96 F. (2d) 1018 (C. C. A. 6th), cert. denied October 10, 1938 (furniture manufacturer); National Labor Relations Board v. Sands Mfg. Co., 96 F. (2d) 721 (C. C. A. 6th), cert. granted October 10, 1938, 59 S. Ct. 91 (manufacturer of water heaters); National Labor Relations Board v. Thompson Products, Inc., 97 F. (2d) 13 (C. C. A. 6th) (automobile accessory manufacturer); National Labor Relations Board v. Columbian Enameling & Stamping Co., 96 F. (2d) 948 (C. C. A. 7th), cert. granted October 10, 1938, 59 S. Ct. 86 (enameling manufacturer). Although this report does not extend beyond the end of the fiscal year, we have noted, for the convenience of Congress, the cases in which certiorari was granted or denied by the Supreme Court prior to November 1, 1938. Sands Mfg. Co. and Columbian Enameling & Stamping are cases in which the jurisdiction of the Board was upheld although Board orders were set aside (see ch. IX, infra). Jurisdictional issues were not involved in the applications for certiorari.

13 National Labor Relations Board v. Lion Shoe Co., 97 F. (2d) 448 (C. C. A. 1st) (shoe manufacturer); Mooresville Cotton Mills v. National Labor Relations Board, 94 F. (2d) 61 (C. C. A. 4th) (towel manufacturer); National Labor Relations Board v. Wallace Mfg. Co., 95 F. (2d) 818 (C. C. A. 4th) (textile manufacturer): National Labor Relations Board v. Kentucky Firebrick Company, 99 F. (2d) 89 (C. C. A. 6th), (firebrick refractory); National Labor Relations Board v. Carlisle Lumber Co., 94 F. (2d) 138 (C. C. A. 9th), cert. denied 304 U. S. 575 (lumber company); National Labor Relations Board v. American Potash and Chemical Corp., 98 F. (2d) 488 (C. C. A. 9th) (potash and borax manufacturer). 14 Santa Cruz Fruit Packing Co. v. National Labor Relations Board, 303 U. S. 453. 15 Clover Fork Coal Co. v. National Labor Relations Board, 97 F. (2d) 331 (C. C. A. 6th). This case, as well as the Santa Cruz case, supra, involved the distinction between the National Labor Relations Act, as a regulation of commerce, and the statute involved in the case of Carter v. Carter, 298 U. S. 238, in which the regulation of coal mining as attempted in the Bituminous Coal Conservation Act of 1935 was held invalid.

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their passenger and freight terminals and for the movement of interstate trains, to the Pennsylvania Railroad for the operation of switches in its tunnel under the Hudson River, and to numerous other consumers engaged in interstate and foreign commerce, including telegraph, telephone, and radio companies. The Court pointed out that, although only a small percentage of their total business was done with such interstate or foreign enterprises, the effect upon interstate commerce of a labor dispute disrupting service would be "catastrophic," and accordingly ruled that the Board had properly assumed jurisdiction. It is true that in this case the Board proved that the companies purchased large supplies of materials in interstate commerce, but the Court did not ground its decision upon this aspect of the case.

The above decisions leave no doubt that neither the character of the enterprise involved nor its size, nor the number of men employed, nor the nature of the commodities produced or service rendered, is a controlling factor in determining whether the act may be constitutionally applied in any given situation. The test, as laid down in the Jones & Laughlin case and reaffirmed in the Santa Cruz case, is whether stoppage of operations by industrial strife would result in substantial interruption to or burden upon interstate or foreign commerce. Where such interruption would occur, unfair labor practices on the part of employers, shown by long experience to be "prolific causes of strife," have a close and intimate relation to such commerce and are subject to Federal regulation under the act.

The Board has been careful to exercise its authority only within constitutional limits. This is best exemplified by the fact that in no case during the present fiscal year has an order of the Board been set aside for lack of jurisdiction.