Schechter Corp. v. United States

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Plaintiff

United States

Defendant

A. L. A. Schechter Poultry Corp

Procedure

  1. Defendants were convicted in Eastern District of NY on 18 counts of violations for the "Live Poultry Code" and conspiracy to commit such violations.
  2. Circuit court of appeals sustained conviction on the conspiracy count and on the sixteen counts for violation of the code, but reversed conviction on two counts which charged violation of requirements as to the minimum wages and maximum hours of labor b/c these were not within congressional power of regulation. (2 for violation of minimum wage, 2 for maximum hours provision, 10 for violation of "straight killing", sale to butcher of unfit chicken, 2 for making sales without inspection, 2 for making false reports, 1 for selling without licences).

Facts

Defendants

Defendants are corporations conducting wholesale poultry slaughterhouse markets in Brooklyn, NYC. Defendants buy meat from outside of the state but do not sell poultry in interstate commerce.

Live Poultry Code

This code is part of the National Industrial Recovery Act. It has eight articles:

  1. Purpose - "a code of fair competition for the live poultry industry of the metropolitan area in and about the City of New York."
  2. Definition
    1. Industry - "every person engaged in the business of selling, purchasing for resale, transporting, or handling... live poultry form the time such poultry first comes in NY to the time is is first sold in slaughtered form."
    2. Employees - anyone in the industry no matter how compensated
  3. Hours
  4. Wages
  5. General Labor provisions
  6. Administration - industry advisory committee to be selected by trade association members of the industry and code supervisor be appointed by the executive branch
  7. Trade practice provisions
  8. Allows for verified reports such as the Secretary of Administrator might require for protection of consumers

The President approved the Code by executive order.

Issues

  1. The Live Poultry Code has been adopted "pursuant to an unconstitutional delegation by Congress of legislative power"
  2. Attempted regulation of intrastate transactions which lay outside the authority of Congress
  3. Provisions of the code are repugnant to the due process clause of the 5th Amendment.

Discussion

The court first makes two preliminary points:

  1. Despite this being a time of a grave national crisis, the constitutional power of the federal government is not any larger.
  2. This is also not a voluntary code because a violation of it is punishable as crimes.

Delegation of Legislative Power

The court sums up 15 pages in one paragraph: "The summarize and conclude upon this point: Section 3 of the Recovery Act is without precedent. It supplies no standards for trade, industry or activity. It does not undertake to prescribe rules of conduct to be applied to particular states of fact determined by appropriate administrative procedure. Instead of prescribing rules of conduct, it authorizes the making of codes to prescribe them. For that legislative undertaking, section 3 sets up no standards, aside from the statement of the general aims of rehabilitation, correction and expansion described in section one. In view of the scope of that broad declaration, and of the nature of the few restrictions that are imposed, the discretion of the President in approving or prescribing codes, and thus enacting laws for the government of trade and industry throughout the country, is virtually unfettered." Therefore there is an unconstitutional delegation of power.

Regulation of Interstate Commerce

The court asks two questions

  1. Were these transactions "in" interstate commerce? The court concludes that once the poultry arrived in New York State, it was "commingled with the mass property within the State and is there held solely for local disposition and use." For this reason, since the regulation of the Act is aimed at activities after the poultry has arrived, the Act aims to regulate activity that is not "in" interstate commerce?
  2. Did the defendants' transactions directly "affect" interstate commerce so as to be subject to federal regulation? The court says that even if all conduct is done intrastate, Congress can still regulate it if the conduct affects interstate commerce. However, the court says that if it allowed any conduct that even indirectly affects interstate commerce, Congress would be able to regulate any activity. It limits Congress to regulate intrastate activity only if it directly effects interstate commerce. The court further concludes that the provisions of this Act do not directly effect interstate commerce.

Due Process

The court decides not to discuss this question because the Act has already been declared unconstitutional on two other grounds.