Schechter Poultry Corp. v. United States

t Hughes1935. At issue was the validity of the National Industrial Recovery Act(NIRA). The NIRA authorized the President to adopt “codes of air competition” for various trades or industries; the codes regulated such items as minimum wages and prices, maximum hours, collective bargaining, etc.

t Facts. This case involved the conviction of Schechter Poultry Corp. on charges of violating the wage and hour provisions of the NY Metropolitan Area Live Poultry Industry Fair Competition Code. Although the vast majority of poultry sold in NY came from other states, Schechter itself bought within NY City, and resold its stock exclusively to local dealers. The government argued hat Schechter’s conduct could constitutionally be reached under the Commerce Clause, on the alternative theories that: (1) Schechter’s activities were within the “stream of commerce” of the chicken trade (rationale of Stafford v. Wallace; and (2) Schechter’s activities, though themselves completely local, substantially “affected commerce” (the rationale of the Shreveport Rate Case).

t Act held unconstitutional. SCt unanimously rejected both of the government’s arguments, and held the NIRA unconstitutional as applied to Schechter.

n Not in “current of commerce.” Schecter’s activities were not within the “current” or “stream” of commerce, because the interstate transactions ended when the shipments reached Schecter’s NY City slaughter-houses (unlike the cattle in Stafford, which were ultimately reshipped out of state after being slaughtered).

n Not “affecting commerce” (established direct/indirect effects distinction). Nor was the “affecting commerce” rationale applicable; what was required was a direct, not indirect, effect on commerce. Although Schechter’s wage and price policies might have forced interstate competitors to lower their own prices, this impact was much too indirect to allow for Congressional control – if wage policies of an intrastate enterprise were deemed to have a sufficiently direct impact upon interstate competitors, so would all other cost components of the intrastate enterprise, so that no facet of intrastate enterprises would be beyond congressional control, or left for state control. Hughesargued that extraordinary conditions do not enlarge constitutional power. Even Cardozo(Palsgraf), who was more prepared than majority to use balancing test, concurred, arguing degree of causation was too weak here.

Date: 2015-01-02; view: 824