Santa Cruz Fruit Packing Co. v. Labor Board
303 U.S. 453 (1938)

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U.S. Supreme Court

Santa Cruz Fruit Packing Co. v. Labor Board, 303 U.S. 453 (1938)

Santa Cruz Fruit Packing Co. v. National Labor Relations Board

No. 536

Argued March 7, 1938

Decided March 28, 1938

303 U.S. 453

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

1. A corporation was engaged, in California, in the business of canning fruits and vegetables, raised in the State, and in disposing of its large output locally and in interstate and foreign commerce, 37% going to destinations beyond the State, partly on f.o.b. shipment and much of it by water. The goods shipped by boat were carried to the wharves on trucks loaded at the plant by warehousemen employed there. Many of these, upon being locked out by the company for having joined a labor union, formed a picket line, and this was so maintained that eventually the movement of trucks from warehouse to wharves ceased entirely. The teamsters refused to haul, the warehousemen at the dock warehouses declined to handle, and the stevedores between dock and ship refused to load, the company's goods. The National Labor Relations Board found that the discharge of the employees and the refusal to reinstate them constituted an unlawful discrimination under the National Labor Relations Act, and that the acts of the company tended to lead, and had led, to labor disputes burdening and obstructing interstate commerce. It ordered the company to desist from such practices, to reinstate, with back pay, the discharged employees, and to post notices, etc. Held that the case was within the jurisdiction of the Board, and that the order was properly sustained by the Circuit Court of Appeals. Pp. 303 U. S. 463et seq.

Page 303 U. S. 454

2. Sales to purchasers in another State are not withdrawn from federal control because the goods are delivered f.o.b. at stated points within the origin for transportation. P. 303 U. S. 463.

3. The federal power to protect interstate commerce in commodities does not depend upon their kind, and has been applied to the practices of manufacturers, processors, and labor unions. Carter v. Carter Coal Co.,298 U. S. 238, did not establish a different principle, or overrule the earlier decisions. P. 303 U. S. 466.

4. The power of Congress to protect interstate commerce in manufactured articles from burdens and obstructions springing from labor disputes in the factory is not dependent upon an origin outside of the the raw materials used in the manufacturing process, nor is the place where the manufacturer makes his sales a controlling element if the sales in fact are in interstate commerce. Labor Board v. Jones & Laughlin Steel Corp.,301 U. S. 1. P. 303 U. S. 464.

5. Cases respecting the state power to tax goods which have not begun to move in interstate commerce, or have come to rest within the State, or to adopt local police measures affecting them, do not deal with the extent of the power of Congress over interstate commerce, but are concerned with the question whether a particular exercise of state power, in view of its nature and operation, must be deemed to be in conflict with that paramount authority. P. 303 U. S. 466.

6. Where federal control is sought to be exercised over activities which, separately considered, are intrastate, it must appear that there is a close and substantial relation to interstate commerce in order to justify the federal intervention for its protection. P. 303 U. S. 466.

7. This principle is essential to the maintenance of our constitutional system. Id.

8. 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. And what is reasonably clear in a particular application is not to be overborne by the simple and familiar dialectic of suggesting doubtful and extreme cases. P. 303 U. S. 467.

9. The question whether the labor practices of an employer are practices "affecting commerce," as defined by § 2(6) of the National Labor Relations Act, cannot be answered by mere reference to the percentage of the product sold in interstate and foreign commerce. The question that must be faced under the Act upon particular facts is whether the unfair labor practices involved have such a

Page 303 U. S. 455

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. P. 303 U. S. 467.

91 F.2d 790 affirmed.

Certiorari, 302 U.S. 680, to review the affirmance of a judgment affirming in part an order of the National Labor Relations Board.

Page 303 U. S. 460

MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.

The National Labor Relations Board on April 2, 1936, after hearing, found that petitioner Santa Cruz Fruit Packing Company, a California corporation, had been engaged in unfair labor practices affecting commerce within the meaning of § 8, subdivisions (1) and (3) and § 2, subdivisions (6) and (7), of the National Labor Relations Act, and ordered petitioner to desist from such practices, to reinstate with back pay certain employees who had been discharged, and to post appropriate notices. 1 N.L.R.B. 454. Upon petition of the Board, the Circuit Court of Appeals affirmed the order so far as it related to petitioner's employees at its Oakland plant. 91 F.2d 790. In view of the importance of the question with respect to the application of the National Labor Relations Act, this Court granted certiorari.

There is no dispute as to the pertinent facts. The findings of the Board, supported by evidence, show the following:

Petitioner is engaged at its plant at Oakland in canning, packing, and shipping fruit and vegetables, the bulk of

Page 303 U. S. 461

which are grown in that state. During the "peak" season, petitioner employs from 1,200 to 1,500 persons, of whom about 30 are warehousemen. The total "pack" in the year 1935 amounted to about 1,699,270 cases. Of this amount, about 37 percent were shipped in interstate or foreign commerce, 9.02 percent being sent to foreign countries, and approximately 473,620 cases, or about 27.89 percent, to various points in the United States outside California. The sales to purchasers outside the state were under either f.o.b. or c.i.f. San Francisco Bay Point contracts.

The methods of transportation are by water, rail, and truck. Export shipments go by water, and this is also the chief sort of carriage to points within the United States outside California, about 20 percent being shipped by rail and an undetermined amount by truck directly to the point of destination. "There is a constant stream of loading and shipping of products" out of petitioner's plant throughout the entire year. From 3,000 to 4,000 cases are loaded daily in the various vehicles of conveyance. That loading is a substantial and regular part of the work of the warehousemen in petitioner's employ. When the shipments are by rail or overland trucks, these employees load directly into the equipment of the principal carriers. When shipments are by boat, the warehousemen load the cases into the trucks which carry the goods to the docks.

Weighers, Warehousemen, and Cereal Workers Local 38-44, International Longshoremen's Association, is a labor organization affiliated with the American Federation of Labor. Its efforts to organize the Oakland plant were begun in July, 1935, and many of the permanent warehousemen made application for membership. When this came to the attention of petitioner early in August, the general manager announced that he would not permit a union in the plant, because of competitive conditions. On their return from a union meeting at which the men

Page 303 U. S. 462

were to be initiated, members of the night shift were prevented from entering the plant, and, the next morning, the members of the day crew were similarly excluded. A picket line then formed, on the morning of August 8th, was maintained until September 27th with such effectiveness that eventually the movement of trucks from warehouses to wharves ceased entirely. The Board found:

"The teamsters refused to haul Santa Cruz merchandise; the warehousemen at the dock warehouses who ordinarily unload the canned goods from the cars prior to their reloading into the ships, since they were members of the same union as the Santa Cruz warehousemen, also declined to handle Santa Cruz cargo. As members of the sister union, I.L.A. 38-79, the stevedores who move the goods from dock to ship also refused to move Santa Cruz cargo both at the East Bay and San Francisco docks during the entire period that the picket line was maintained. Other unions whose members refused to move 'hot' Santa Cruz cargo were those members of the Sailors who comprised the crews of steam schooners and whose duties include the handling of cargo."

Petitioner points out that the refusal of the other unions to handle petitioner's goods was a violation of an arbitration award made in October, 1934, following the San Francisco maritime strike of that year.

The Board found that interference with the activities of employees in forming or joining labor organizations results in strikes and industrial unrest which habitually have had the effect in the canning industry of impeding the movement of canned products in interstate and foreign commerce. Reference was made to official statistics of the United States Department of Labor in relation to the canning and preserving industries from which it appeared that, of the fifteen strikes and lockouts in 1934 and the first six months of 1935, eight were the outcome of difficulties in regard to union recognition and discrimination

Page 303 U. S. 463

for union activities, 7,484 workers being involved in those stoppages.

The Board concluded that the discharge of the employees named, and the refusal to reinstate them, constituted an unlawful discrimination under the National Labor Relations Act, and that the acts of petitioner had led and tended to lead to labor disputes burdening and obstructing commerce.

Petitioner contends that the manufacturing and processing in which petitioner is engaged are local activities, and that the Board was without jurisdiction over the labor dispute involved in this case.

First. There is no question that petitioner was directly and largely engaged in interstate and foreign commerce. We have often decided that sales to purchasers in another state are not withdrawn from federal control because the goods are delivered f.o.b. at stated points within the state of origin for transportation. See Savage v. Jones,225 U. S. 501, 225 U. S. 520; Texas & N.O. R. Co. v. Sabine Tram Co.,227 U. S. 111, 227 U. S. 114, 227 U. S. 122; Pennsylvania R. Co. v. Clark Bros. Coal Mining Co.,238 U. S. 456, 238 U. S. 465-468. A large part of the interstate commerce of the country is conducted upon that basis, and the arrangements that are made between seller and purchaser with respect to the place of taking title to the commodity, or as to the payment of freight, where the actual movement is interstate does not affect either the power of Congress or the jurisdiction of the agencies which Congress has established. Pennsylvania R. Co. v. Clark Bros. Coal Mining Co., supra.

Second. The power of Congress extends not only to the making of rules governing sales of petitioner's products in interstate commerce, as, for example, with respect to misbranding under the Federal Food and Drugs Act (21 U.S.C. §§ 1 to 26), or with respect to forbidden discriminations

Page 303 U. S. 464

in prices under the Clayton Act (15 U.S.C. § 13), but also to the protection of that interstate commerce from burdens, obstructions, and interruptions, whatever may be their source. Second Employers' Liability Cases,223 U. S. 1, 223 U. S. 51. The close and intimate effect which brings the subject within the reach of federal power may be due to activities in relation to productive industry, although that industry, when separately viewed, is local. It is upon this well established principle that the constitutional validity of the National Labor Relations Act has been sustained. Labor Board v. Jones & Laughlin Steel Corp.,301 U. S. 1, 301 U. S. 38.

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, 258 U. S. 516; Chicago Board of Trade v. Olsen,262 U. S. 1, 262 U. S. 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. 301 U. S. 36.

Page 303 U. S. 465

Such injurious action burdening and obstructing interstate trade in manufactured articles may spring from labor disputes irrespective of the origin of the materials used in the manufacturing process. And the place where the manufacturer makes his sales is not controlling if the sales in fact are in interstate commerce. A few illustrations from our many decisions will suffice. In Loewe v.Lawlor,208 U. S. 274, 208 U. S. 302, the conspiracy of the "United Hatters" to compel the plaintiffs to unionize their factory was held to fall within the Federal Anti-Trust Act because it was aimed at the destruction of the interstate trade in the manufactured hats. In United Mine Workers v. Coronado Coal Co.,259 U. S. 344, 259 U. S. 407-408, the Court said that "Coal mining is not interstate commerce, and the power of Congress does not extend to its regulation as such," but that,

"if Congress deems certain recurring practices, though not really part of interstate commerce, likely to obstruct, restrain, or burden it, it has the power to subject them to national supervision and restraint."

And in the second Coronado case, 268 U. S. 295, 268 U. S. 310, the Court held that the evidence was adequate to show that the purpose was to stop the production of nonunion coal and prevent its shipment to markets of other states, and that a combination to that end would constitute a direct violation of the Anti-Trust Act. Another illustration is found in Bedford Cut Stone Co. v. Journeyman Stone Cutters; Assn,274 U. S. 37, 274 U. S. 48, where a conspiracy of stonecutters was held to have "the immediate purpose and necessary effect of restraining future sales and shipments in interstate commerce" of the building stone which was quarried at petitioners' plants.

With respect to the federal power to protect interstate commerce in the commodities produced, there is obviously no difference between coal mined, or stone quarried, and fruit and vegetables grown. The same principle must apply, and has been applied, to injurious restraints of

Page 303 U. S. 466

interstate trade which are caused by the practices of manufacturers and processors. Standard Oil Co. v. United States,221 U. S. 1; United States v. American Tobacco Co.,221 U. S. 106. The case of Carter v. Carter Coal Co.,298 U. S. 238, did not establish a different principle, or overrule the decisions which we have cited. See Labor Board v. Jones & Laughlin Steel Corp., supra, p. 301 U. S. 41. Nor are the cases in point which are cited by petitioner with respect to the exercise of the power of the state to tax goods which have not begun to move in interstate commerce or have come to rest within the state, or to adopt police measures as to local matters. In that class of cases, the question is not with respect to the extent of the power of Congress to protect interstate commerce, but whether a particular exercise of state power, in view of its nature and operation, must be deemed to be in conflict with that paramount authority. Bacon v. Illinois,227 U. S. 504, 227 U. S. 516; Stafford v. Wallace, supra, p. 258 U. S. 526; Minnesota v. Blasius,290 U. S. 1, 290 U. S. 8.

Third. It is also clear that, where federal control is sought to be exercised over activities which separately considered are intrastate, it must appear that there is a close and substantial relation to interstate commerce in order to justify the federal intervention for its protection. However difficult in application, this principle is essential to the maintenance of our constitutional system. The subject of federal power is still "commerce," and not all commerce, but commerce with foreign nations and among the several states. The expansion of enterprise has vastly increased the interests of interstate commerce, but the constitutional differentiation still obtains. Schechter Poultry Corp. v. United States,295 U. S. 495, 295 U. S. 546. "Activities local in their immediacy do not become interstate and national because of distant repercussions." Id., p. 295 U. S. 554.

To express this essential distinction, "direct" has been contrasted with "indirect," and what is "remote" or "distant"

Page 303 U. S. 467

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 dialectic 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. Section 2(7). 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.

The question of degree is constantly met in other relations. It is met whenever the Interstate Commerce Commission is required to find whether an intrastate rate or practice of an interstate carrier causes an undue and unreasonable discrimination against interstate or foreign commerce. 49 U.S.C. § 13(4). The Shreveport Case,234 U. S. 342, 234 U. S. 351. It is met under the Federal Employers' Liability Act, where the question is whether the

Page 303 U. S. 468

employee's occupation at the time of his injury is "in interstate transportation, or in work so closely related to such transportation as to be practically a part of it." Chicago & N.W. Ry. Co. v. Bolle,284 U. S. 74, 284 U. S. 78-79; New York, N.H. & H. R. Co. v. Bezue,284 U. S. 415, 284 U. S. 420. It is met in the enforcement of the Clayton Act in determining whether the effect of the described provisions in contracts for the sale of commodities is "to substantially lessen competition." 15 U.S.C. §§ 13, 14. Standard Fashion Co. v. Magrane-Houston Co.,258 U. S. 346, 258 U. S. 356-357; Federal Trade Comm'n v. Raladam Co.,283 U. S. 643, 283 U. S. 647-648.

Such questions cannot be escaped by the adoption of any artificial rule.

Fourth. The direct relation of the labor practices and the resulting labor dispute in the instant case to interstate commerce and the injurious effect upon that commerce are fully established. The warehousemen in question were employed by petitioner in loading its goods either into the cars of carriers or into the trucks which transported the goods to the docks for shipment abroad or to other states. The immediacy of the effect of the forbidden discrimination against these warehousemen is strikingly shown by the findings of the Board. When the men found themselves locked out because of their joining the union, they at once formed a picket line, and this was maintained with such effectiveness that eventually "the movement of trucks from warehouse to wharves ceased entirely." The teamsters refused to haul, the warehousemen at the dock warehouses declined to handle, and the stevedores between dock and ship refused to load, petitioner's goods. These became, in the parlance of the men, "hot" cargo. Petitioner says that this was an unlawful conspiracy of those sympathizing with its discharged warehousemen, but it was the discrimination against them which led directly to the interference

Page 303 U. S. 469

with the movement from the plant and elicited the support so effectively given.

It would be difficult to find a case in which unfair labor practices had a more direct effect upon interstate and foreign commerce.

The relief afforded by the Board, in requiring petitioner to desist from the unfair labor practices condemned by the act and to reinstate the discharged employees with back pay, was properly sustained by the Circuit Court of Appeals, and its order is

Affirmed.

MR. JUSTICE CARDOZO and MR. JUSTICE REED took no part in the consideration and decision of this case.

MR. JUSTICE BUTLER, dissenting.

Carter v. Carter Coal Co.,298 U. S. 238, decided that Congress lacks power to regulate terms and conditions of employment of those engaged in local production of commodities sold and about to be shipped in interstate commerce. The Circuit Court of Appeals found two questions for solution. One was whether, upon that point, the Carter case, in 1936, has been overruled by our decision in 1937 in Labor Board v. Jones & Laughlin Steel Corp.,301 U. S. 1. The second was whether the power extends to cases where only 39 percent of goods locally produced are shipped in interstate commerce. The court, one judge dissenting, upheld the order. Each of the judges wrote an opinion; two held this Court has overruled the Carter case.

If the decision of the Carter case upon the point stated stands, the Board's order cannot be upheld. The lower court made its decision depend upon that question. Save authoritatively to decide it here, there was no reason for granting the writ. But the opinion just announced does not refer to the question.

Page 303 U. S. 470

In the Jones & Laughlin and companion cases, Labor Board v. Fruehauf Trailer Co.,301 U. S. 49, Labor Board v. Friedman-Harry Marks Clothing Co.,301 U. S. 58, Associated Press v. Labor Board,301 U. S. 103, Washington, Virginia & Maryland Coach Co. v. Labor Board,301 U. S. 142, four dissenting Justices thought the Court then departed from well established principles followed in the Carter case, and quoted (p. 301 U. S. 96) a passage from it expounding what it meant by "direct" effect on interstate commerce as distinguished from what is "indirect." And the dissenting opinion insisted (p. 301 U. S. 97) that, under the Carter decision, the facts in those cases did not disclose any direct effect upon interstate commerce, and said:

"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."

But the dissent failed to elicit from the Court any statement as to whether it meant to overrule the Carter case. The opinion does not discuss that case. It does, however, contain the following (p. 301 U. S. 41):

"In the Carter case . . . , the Court was of the opinion that the provisions of the statute relating to production were invalid upon several grounds -- that there was improper delegation of legislative power and that the requirements not only went beyond any sustainable measure of protection of interstate commerce, but were also inconsistent with due process. These [meaning the Schechter and Carter] cases are not controlling here."

The later decisions of this Court involving the power of Congress to deal with labor relations in local production do not refer to the Carter case. At least until this Court definitely overrules that decision, it should be followed.

Upon the authority of that case, I would reverse the order of the Circuit Court of Appeals on the ground that, as applied here, the act is unconstitutional.

MR. JUSTICE McREYNOLDS concurs in this opinion.

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