Consolidated Edison Co. v. Labor Board
305 U.S. 197 (1938)

Annotate this Case

U.S. Supreme Court

Consolidated Edison Co. v. Labor Board, 305 U.S. 197 (1938)

Consolidated Edison Co. v. National Labor Relations Board

No. 19

Argued October 14, 17, 1938

Decided December 5, 1938*

305 U.S. 197

Syllabus

1. The power of the Federal Government and the provisions of the National Labor Relations Act extend to the labor relations of public utilities engaged in supplying electrical energy, gas, and steam where the business and activities of the utilities are wholly within a State and where the quantum of service rendered to customers for strictly intrastate uses is vast and greatly preponderant, but where, nevertheless, a part of that service, of much importance in itself, is to railroads, steamships, telegraphs,

Page 305 U. S. 198

telephones, etc., engaged in interstate or foreign commerce, and where that commerce would be seriously affected if such service were cut off by industrial strife between the utilities and their employees resulting from unfair labor practices. P. 305 U. S. 219.

Petitioners, an integrated system of public utilities, are engaged in supplying electric energy, gas, and steam (and certain byproducts) within New York City and adjacent Westchester County. They serve over 3,500,000 customers with electricity and gas, largely for residential and domestic purposes. In 1936, they supplied about 97.5 percent. of the total electric energy sold in the City, and about 100 percent. of that sold in the County. They do not sell for resale without the State. They have about 42,000 employees, their total payrolls in 1936, with retirement annuities and separation allowances, amounting to nearly $82,000,000. There is also impressive evidence of the dependence of interstate and foreign commerce upon the continuity of the service of the petitioning companies. Upon that service depend: three railroad companies for the lighting and operation of passenger and freight terminals, and for the movement of interstate trains; the Port of New York Authority for the operation of its terminal and a tunnel between New York and New Jersey; a majority of the piers of transatlantic and coastwise steamship companies along the North and East Rivers, within the City of New York, for lighting, freight handling and related uses; two telegraph companies and a telephone company for power for transmitting and receiving messages, local and interstate; also a transatlantic radio service; an airport, and the Federal Government, for operation of lighthouses, beacons, and harbor lights and for light, heat and power in various federal buildings in New York City. In passing upon the status of these petitioners with respect to the federal power of regulation, the Court does not consider supplies of oil, coal, etc., although very large, which come from without the State and are consumed in the generation and distribution of electric energy and gas.

2. The criterion of the federal constitutional power to suppress unfair labor practices under the National Labor Relations Act is the injurious effect upon interstate and foreign commerce, rather than the source of the injury. P. 305 U. S. 222.

3. Whether or not particular action in the conduct of intrastate enterprises affects interstate or foreign commerce in such a close and intimate fashion as to be subject to federal control depends upon the particular case. P. 305 U. S. 222.

4. The fact that a State has the power, and has enacted a statute, to regulate the labor relations of intrastate enterprises in order

Page 305 U. S. 199

to prevent interruption of their services through industrial disputes cannot affect the constitutional power of the Federal Government to regulate those relations in order to protect interstate and foreign commerce from the injury due to such interruption. P. 305 U. S. 222.

5. But where, in such cases, the authority of the National Labor Relations Board is invoked to protect interstate and foreign commerce from interference or injury arising from the employers' intrastate activities, the question whether the alleged unfair labor practices do actually threaten interstate or foreign commerce in a substantial manner is necessarily presented. And, in determining that factual question, regard should be had to all the existing circumstances, including the bearing and effect of any protective action to the same end already taken under state authority. The justification for the exercise of federal power should clearly appear. But the question in such a case would relate not to the existence of the federal power, but to the propriety of its exercise on a given state of facts. P. 305 U. S. 223.

The present proceeding was begun before the New York Labor Relations Act became effective, and there was no exertion of state authority which could be taken to remove the need for the exertion of federal authority to protect interstate and foreign commerce. The exercise of the federal power to protect interstate and foreign commerce from injury does not depend upon a clash with state action, and need not await the exercise of state authority.

6. Amendments to the complaint in a proceeding before the National Labor Relations Board held discretionary rulings affording no ground for challenging the validity of the hearing. P. 305 U. S. 224.

7. A refusal by the National Labor Relations Board to permit the respondent employers to adduce certain additional testimony, highly important, which could have been received without undue delay held unreasonable and arbitrary. P. 305 U. S. 225.

8. Where the National Labor Relations Board, in abuse of its discretion, refuses to receive important additional testimony which could have been received without undue delay of the proceeding, the injured party has his remedy by application to the Circuit Court of Appeals, upon review of the order, for leave to adduce the additional evidence under § 10(e)(f) of the Act. P. 305 U. S. 226.

9. After the taking of the evidence by a trial examiner, in a case under the National Labor Relations Act, the employers filed a brief with him. Several weeks later, the case was transferred to the Board. The examiner made no tentative report or findings,

Page 305 U. S. 200

and there was no opportunity for a hearing before the Board itself before the Board made its decision.

Held:

(1) That it must be assumed that the Board received and considered the brief. P. 305 U. S. 226.

(2) Under the rules of the Board, the employers desiring an oral hearing should have requested it after the transfer to the Board. P. 305 U. S. 228.

(3) Though it cannot be said on this record that the Board did not consider the evidence or the petitioner's brief or failed to make its own findings in the light of that evidence and argument, it would have been better practice for the Board to have directed the examiner to make a tentative report with an opportunity for exceptions and argument thereon. P. 305 U. S. 228.

10. In providing that "the findings of the Board as to the facts, if supported by evidence, shall be conclusive," the Act means supported by substantial evidence -- such evidence as a reasonable mind might accept as adequate to support a conclusion. P. 305 U. S. 229.

The statute provides that "the rules of evidence prevailing in courts of law and equity shall not be controlling." The obvious purpose of this and similar provisions is to free administrative boards from the compulsion of technical rules, so that the mere admission of matter which would be deemed incompetent in judicial proceedings would not invalidate the administrative order. But this assurance of a desirable flexibility in administrative procedure does not go so far as to justify orders without a basis in evidence having rational probative force. Mere uncorroborated hearsay or rumor does not constitute substantial evidence.

11. The National Labor Relations Board is authorized to bar the resumption of an unfair labor practice which has lately been abandoned. P. 305 U. S. 230.

The Court is satisfied from the evidence in this case that the order of the Board, insofar as it required employer companies to desist from certain discriminating and coercive practices, and to reinstate certain employees, with back pay, and to post notices assuring freedom from discrimination and coercion, rested upon findings sustained by the evidence, and that the decree of the Court of Appeals enforcing the order in these respects should be affirmed.

12. In a proceeding in which the National Labor Relations Board found employer companies guilty of unfair labor practices violating § 8(1) and (3) of the National Labor Relations Act, but exculpated them from alleged violation of § 8(2), which makes it an

Page 305 U. S. 201

unfair labor practice "to dominate or interfere with the formation or administration of any labor organization or contribute financial support to it," the Board nevertheless attempted, in its order, to set aside agreements which had been made, pending the proceeding, between the companies and a Brotherhood of workers and its local unions, all independent organizations not under the companies' control. These agreements stipulated that the Brotherhood should be the collective bargaining agency of those of the companies' employees who were its members (comprising 80% of all the companies' employees out of 38,000 eligible for membership), and that the Brotherhood and its members would not intimidate or coerce employees into membership in the Brotherhood or solicit membership on the time or property of the employers. They also provided against strikes or lockouts, and for the adjustment and arbitration of labor disputes, thus insuring against the disruption of the service of the companies to interstate or foreign commerce through an outbreak of industrial strife. It was conceded that the contracts were fair to both employer and employee.

Held, that so much of the Board's order as forbade the companies to give effect to such agreements was beyond its authority. Pp. 305 U. S. 231, 305 U. S. 238.

(1) The Brotherhood and its locals, having valuable and beneficial interests in the contracts, were entitled to notice and hearing before they could be set aside. Labor Board v. Pennsylvania Greyhound Lines,303 U. S. 261, distinguished. P. 305 U. S. 232.

(2) Notice of the complaint, in which the legality of the companies' "relations" with the Brotherhood was attacked, but not the validity of the contracts, did not place the unions under a duty to intervene before the Board in order to safeguard their interests in the contracts. P. 305 U. S. 234.

(3) The rule that due process does not require an opportunity to be heard before judgment if defenses may be presented upon appeal assumes that the appellate review affords opportunity to present all available defenses, including lack of proper notice to justify the judgment or order complained of. P. 305 U. S. 234.

(4) The validity of the contracts was not necessarily in issue because of the charges of unfair labor practices in the Board's complaint, and amendment of the companies' answer, stating that the contracts had made the proceeding moot, did not put them in issue before the Board. P. 305 U. S. 234.

(5) The Act gives no express authority to the Board to invalidate contracts with independent labor organizations. The authority

Page 305 U. S. 202

granted by § 10(c) to require that an employer guilty of unfair labor practices desist from such practices, and "take such affirmative action, including reinstatement of employees with or without back pay, as will effectuate the policies of this Act," is remedial, not punitive, and is to be exercised in aid of the Board's authority to restrain violations and as a means of removing or avoiding the consequences of violation where those consequences are of a kind to thwart the purposes of the Act. P. 305 U. S. 235.

Here, there is no basis for a finding that the contracts with the Brotherhood and its locals were a consequence of the unfair labor practices found by the Board, or that these contracts, in themselves, thwart any policy of the Act, or that their cancellation would in any way make the order to cease the specified practices any more effective.

(6) The contracts were not invalid because made during the pendency of the Board's proceeding. P. 305 U. S. 237.

The effect of such pendency extends to the practices of the employers to which the complaint was addressed. It did not suspend the right of the employees to self-organization, or preclude the Brotherhood, as an independent organization chosen by its members, from making fair contracts on their behalf.

(7) The contention of the Board that the contracts were the fruit of the unfair labor practices of the employers -- "a device to consummate and perpetuate" the companies' illegal conduct, and constituted its culmination -- is rejected as entirely too broad and as not within the complaint and proof, but based on mere conjecture. P. 305 U. S. 238.

(8) A provision of the Board's order requiring the companies to cease recognizing the Brotherhood "as the exclusive representative of their employees" is construed as merely providing that there shall be no interference with an exclusive bargaining agency if one other than the Brotherhood should be established in accordance with the provisions of the Act, and is sustained as merely an application of existing law. P. 305 U. S. 239.

95 F.2d 390 affirmed with modification.

Certiorari, 304 U.S. 555, to review a judgment enforcing an order of the National Labor Relations Board. See 4 N.L.R.B. 71. The case was before the court below upon a petition to set aside the order, brought by the Consolidated Edison Company of New York and its affiliates, and a like petition by the International Brotherhood

Page 305 U. S. 203

of Electrical Workers and its locals, which intervened in that court, and upon the Board's petition to enforce, supported by the United Electrical and Radio Workers of America, which also intervened in that court.

Page 305 U. S. 217

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