Source: https://www.legalcrystal.com/case/103754/fry-vs-united-states
Timestamp: 2018-06-21 16:21:55
Document Index: 635420613

Matched Legal Cases: ['§ 1904', '§ 202', '§ 1904', '§ 203', '§ 203', '§ 1904', '§ 203']

Fry Vs United States - Citation 103754 - Court Judgment | LegalCrystal
Fry Vs. United States - Court Judgment
LegalCrystal Citation legalcrystal.com/103754
Case Number 421 U.S. 542
Appellant Fry
fry v. united states - 421 u.s. 542 (1975) u.s. supreme court fry v. united states, 421 u.s. 542 (1975) fry v. united states no. 73-822 argued november 11, 1974 decided may 27, 1975 421 u.s. 542 certiorari to the temporary emergency court of appeals of the united states syllabus the economic stabilization act of 1970 authorized the president to stabilize wages and salaries at certain levels, and the pay board was created to oversee the controls. the government filed this action to enjoin ohio and its officials from paying state statutory wage and salary increases to state employees above the amount authorized by the pay board. the temporary emergency court of appeals, on certification from the district court,.....
Fry v. United States - 421 U.S. 542 (1975)
U.S. Supreme Court Fry v. United States, 421 U.S. 542 (1975)
1. The Act's language contemplating general stabilization of "prices, rents, wages, salaries, dividends, and interest" and providing that the controls should "call for generally comparable sacrifices by business and labor as well as other segments of the economy," and its legislative history showing that Congress had rejected an amendment exempting state employees, make it clear that the Act was intended to apply to employees generally, including state employees. That the Act did not expressly refer to the States warrants no inference that controls could not extend to their employees. Pp. 421 U. S. 545 -546.
2. The Act was constitutional as applied to state employees. Pp. 421 U. S. 547 -548.
(a) General raises to state employees, even though purely intrastate in character, could significantly affect interstate commerce, and thus could be validly regulated by Congress under the Commerce Clause. P. 421 U. S. 547 .
(b) States are not immune from all federal regulation under the Commerce Clause merely because of their sovereign status. Maryland v. Wirtz, 392 U. S. 183 . Here, where the Act did not appreciably intrude on state sovereignty, but was an emergency measure to counter severe inflation, the effectiveness of federal action would have been drastically impaired if wage increases to state and local governmental employees (who, at the time the wage freeze was activated, composed 14% of the Nation's workforce) were left outside the Act's reach. Pp. 421 U. S. 547 -548.
(c) Since the Ohio wage legislation conflicted with the Pay Board's ruling, the State must yield under the Supremacy Clause to the federal mandate. P. 421 U. S. 548 .
MARSHALL, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, STEWART, WHITE, BLACKMUN, and POWELL, JJ., joined. DOUGLAS, J., filed a separate statement, post, p. 421 U. S. 549 . REHNQUIST, J., filed a dissenting opinion, post, p. 421 U. S. 549 .
The Economic Stabilization Act of 1970 [ Footnote 1 ] authorized the President to issue orders and regulations to stabilize wages and salaries at levels not less than those prevailing
on May 25, 1970. By Executive Order, the President created the Pay Board to oversee wage and salary controls imposed under the Act's authorization. Exec.Order No. 11627, 3 CFR 218 (1971 Comp.), note following 12 U.S.C. § 1904 (1970 ed., Supp. I). In implementing the wage stabilization program, the Pay Board issued regulations that limited annual salary increases for covered employees to 5.5% and required prior Board approval for all salary adjustments affecting 5,000 or more employees. [ Footnote 2 ] The State of Ohio subsequently enacted legislation providing for a 10.6% wage and salary increase, effective January 1, 1972, for almost 65,000 state employees. [ Footnote 3 ] The State applied to the Pay Board for approval of the increases, and a public hearing was held. In March, 1972, the Board denied the application for an exemption to the extent that it exceeded salary increases of 7% for the 1972 wage year. [ Footnote 4 ] Petitioners, two state employees, sought a writ of mandamus in state court to compel Ohio officials to pay the full increases provided in the state pay act. The Ohio Supreme Court granted the writ and ordered the increases to be paid. State ex rel. Fry v. Ferguson, 34 Ohio St.2d 252, 298 N.E.2d 129 (1973).
At the outset, it is contended that Congress did not intend to include state employees within the reach of the Economic Stabilization Act, and that the Pay Board therefore did not have the authority to regulate the compensation due state employees. [ Footnote 5 ] We disagree. The language and legislative history of the Act leave no doubt
that Congress intended that it apply to employees throughout the economy, including those employed by state and local governments. The Act contemplated general stabilization of "prices, rents,'wages, salaries, dividends, and interest," § 202, note following 12 U.S.C. § 1904 (1970 ed., Supp. I), and it provided that the controls should "call for generally comparable sacrifices by business and labor, as well as other segments of the economy." § 203(b)(5). It contained no exceptions for employees of any governmental bodies, even at the federal level. [ Footnote 6 ] The failure of the Act to make express reference to the States does not warrant the inference that controls could not be extended to their employees. See Case v. Bowles, 327 U. S. 92 , 327 U. S. 99 (1946); United States v. California, 297 U.S. at 297 U. S. 186 . Indeed, in framing the Act, Congress specifically rejected an amendment that would have exempted employees of state and local governments. 117 Cong.Rec. 43673-43677 (1971). And the Senate Committee Report makes it plain that the Committee considered and rejected a proposed exemption for the same group. S.Rep. No. 92-507, p. 4 (1971). It is clear, then, that Congress intended to reach state and local governmental employees. The only remaining question is whether it could do so consistent with the constitutional limitations on its power.
Petitioners acknowledge that Congress' power under the Commerce Clause is very broad. Even activity that is purely intrastate in character may be regulated by Congress, where the activity, combined with like conduct by others similarly situated, affects commerce among the States or with foreign nations. See Heart of Atlanta Motel, Inc. v. United States, 379 U. S. 241 , 379 U. S. 255 (1964); Wickard v. Filburn, 317 U. S. 111 , 317 U. S. 127 -128 (1942). There is little difficulty in concluding that such an effect could well result from large wage increases to 65,000 employees in Ohio and similar numbers in other States; e.g., general raises to state employees could inject millions of dollars of purchasing power into the economy and might exert pressure on other segments of the workforce to demand comparable increases.
Petitioners do not appear to challenge Congress' conclusion that unrestrained wage increases, even for employees of wholly intrastate operations, could have a significant effect on commerce. Instead, they contend that applying the Economic Stabilization Act to state employees interferes with sovereign state functions, and, for that reason, the Commerce Clause should not be read to permit regulation of all state and local governmental employees. [ Footnote 7 ]
On the facts of this case, this argument is foreclosed by our decision in Maryland v. Wirtz, 392 U. S. 183 (1968), where we held that the Fair Labor Standards Act could constitutionally be applied to schools and hospitals run by a State. Wirtz reiterated the principle that States are not immune from all federal regulation under the Commerce Clause merely because of their sovereign status. 392 U.S. at 392 U. S. 196 -197. We noted, moreover, that the statute at issue in Wirtz was quite limited in application. The federal regulation in this case is even less intrusive. Congress enacted the Economic Stabilization Act as an emergency measure to counter severe inflation that threatened the national economy. H.R.Rep. No. 91-1330, pp. 9-11 (1970). The method it chose, under the Commerce Clause, was to give the President authority to freeze virtually all wages and prices, including the wages of state and local governmental employees. In 1971, when the freeze was activated, state and local governmental employees composed 14% of the Nation's workforce. Brief for United States 20. It seems inescapable that the effectiveness of federal action would have been drastically impaired if wage increases to this sizeable group of employees were left outside the reach of these emergency federal wage controls.
We conclude that the Economic Stabilization Act was constitutional as applied to state and local governmental employees. Since the Ohio wage legislation conflicted with the Pay Board's ruling, under the Supremacy Clause, the State must yield to the federal mandate. See Public Utilities Comm'n of California v. United States, 355 U. S. 534 , 355 U. S. 542 -545 (1958); Murphy v. O'Brien, 485 F.2d 671, 675 (Temp.Emerg.Ct.App. 1973).
Congress did provide for the exemption of certain categories of employees, such as members of the working poor, those earning substandard wages, and those entitled to wage increases under the Fair Labor Standards Act. §§ 203(d) and (f), note following 12 U.S.C. § 1904 (1970 ed., Supp. I). See also §§ 203(c)(1)-(3), (f)(2)(3), and (g). The various stabilization agencies have uniformly interpreted the Act to include the States within its scope, see 36 Fed.Reg. 21790, 25428 (1971); 37 Fed.Reg. 1240, 24961, 24989-24991 (1972). We have long recognized that the interpretation of a statute by an implementing agency is entitled to great weight. Udall v. Tallman, 380 U. S. 1 , 380 U. S. 16 -18 (1965).
Petitioners have stated their argument not in terms of the Commerce power, but in terms of the limitations on that power imposed by the Tenth Amendment. While the Tenth Amendment has been characterized as a "truism," stating merely that "all is retained which has not been surrendered," United States v. Darby, 312 U. S. 100 , 312 U. S. 124 (1941), it is not without significance. The Amendment expressly declares the constitutional policy that Congress may not exercise power in a fashion that impairs the States' integrity or their ability to function effectively in a federal system. Despite the extravagant claims on this score made by some amici, we are convinced that the wage restriction regulations constituted no such drastic invasion of state sovereignty.
Maryland v. Wirtz, 392 U. S. 183 (1968), held that Congress could impose the provisions of the Fair Labor Standards Act upon state entities, so as to regulate the maximum number of hours and minimum wages received by state employees of hospitals, institutions, and schools. The Court's opinion in this case not unreasonably relies on Wirtz in holding that Congress may impose across-the-board limitations on salary increases for all state employees. In their briefs and arguments to this Court, petitioners sought to distinguish Wirtz on the ground that the employees there regulated were performing primarily "proprietary" functions. The Government countered this argument with language from United States v. California, 297 U. S. 175 (1936), a case which is not discussed by the Court but which was critical to the development of the doctrine which the Court today applies. There, the Court held that the State of California, in
Yet the danger to our federal system which is emphasized by these three cases taken together, as it is not by any one taken separately, seems to me quite manifest. The Tenth Amendment, the Court's opinion in this case insists, does have meaning; but the critical question is how much meaning is left to it and the basic constitutional principles which it illumines. As stated by MR. JUSTICE DOUGLAS, dissenting in Maryland v. Wirtz, supra, at 392 U. S. 205 :
United States v. California, supra, stated a principle of Congress' Commerce Clause power over state activities which was deemed "controlling" in Maryland v. Wirtz, supra, at 392 U. S. 198 . It is thus necessary to begin this analysis with Mr. Chief Justice Stone's opinion for a unanimous
297 U.S. at 297 U. S. 184 . But this familiar doctrine of The Shreveport Rate Cases, 234 U. S. 342 (1914), that, under the Supremacy
The Court in California went on to consider the analogy of constitutional immunity of state instrumentalities from federal taxation, but rejected it as "not illuminating." 297 U. at 297 U. S. 184 . Apparently conceding that, if the principles relating to tax immunity were applied, the State would prevail, the Court rejected their relevance, saying:
"But there is no such limitation upon the plenary power to regulate commerce. The state can no more deny the power if its exercise has been authorized by Congress than can an individual. "
Id. at 297 U. S. 185 . (Emphasis added.)
The italicized statement seems to me demonstrably wrong, and I believe it is recognized as being wrong by the Court's opinion today, with its reference to the fact that the Tenth Amendment "is not without significance." Ante at 421 U. S. 547 n. 7. In explaining why it is wrong, it is useful to explore further the situation of an individual confronted with Commerce Clause regulation. Such an individual who attacks an Act of Congress on the ground
In this case, as well as in Wirtz and United States v. California, the State is not simply asserting an absence of congressional legislative authority, but rather is asserting an affirmative constitutional right, inherent in its capacity as a State, to be free from such congressionally asserted authority. Whether such a claim on the part of a State should prevail against congressional authority is quite a different question, but it is surely no answer to the claim to say that a "state can no more deny the power if its exercise has been authorized by Congress than can an individual." United States v. California, supra, at 297 U. S. 185 . Such an answer is simply a denial of the inherent affirmative constitutional limitation on congressional power which I believe the States possess.
It is not apparent to me why a State's immunity from the plenary authority of the National Government to tax, United States v. Butler, 297 U. S. 1 (1936), should
Much of the law of intergovernmental tax immunity to which the Court referred in United States v. California, supra, has gone the way of all flesh, and the scope of the then-prevalent doctrine that the Federal Government might not impose a tax on an "instrumentality" of a State was shortly modified. See Graves v. New York ex rel. O'Keefe, 306 U. S. 466 (1939), which made clear that today's Congress may impose an income tax on state employees. [ Footnote 2/1 ] Several years after the Graves decision,
326 U.S. at 326 U. S. 586 . MR. JUSTICE DOUGLAS, joined by Mr. Justice Black, dissented outright, and thought that the authority of Congress to tax revenues obtained by New York from the business of selling its mineral water could not
". . . [I]t is plain that there may be nondiscriminatory taxes which, when laid on a State, would nevertheless impair the sovereign status of the State quite as much as a like tax imposed by a State on property or activities of the national government. Mayo v. United States, 319 U. S. 441 , 319 U. S. 447 -448. This is not because the tax can be regarded as discriminatory, but because a sovereign government is the taxpayer, and the tax, even though nondiscriminatory, may be regarded as infringing its sovereignty."
326 U.S. at 326 U. S. 587 .
The Court's decision in Hans v. Louisiana, 134 U. S. 1 (1890), offers impressive authority for the principle that the States as such were regarded by the Framers of the Constitution as partaking of many attributes of sovereignty quite apart from the provisions of the Tenth Amendment. The familiar history of this Court's
decision in Chisholm v. Georgia, 2 Dall. 419 (1793), and the subsequent reaction which gave rise to the enactment of the Eleventh Amendment, has been told and retold. Monaco v. Mississippi, 292 U. S. 313 , 292 U. S. 323 -325 (1934); Edelman v. Jordan, 415 U. S. 651 , 415 U. S. 660 -662 (1974). But the Eleventh Amendment, by its terms, forbade the federal courts only to entertain suits by the citizens of one State against another State. Hans v. Louisiana involved a suit by citizens of Louisiana against Louisiana, and was therefore not within the literal language of the Eleventh Amendment. Nevertheless this Court, after canvassing the understanding of the Framers of the Constitution and the controversial decision in Chisholm, unanimously concluded that such an action would not lie, saying:
134 U.S. at 134 U. S. 21 .
I would hold that the activity of the State of California
in operating a railroad was so unlike the traditional governmental activities of a State that Congress could subject it to the Federal Safety Appliance Act. But the operation of schools, hospitals, and like facilities involved in Maryland v. Wirtz is an activity sufficiently closely allied with traditional state functions that the wages paid by the State to employees of such facilities should be beyond Congress' commerce authority. Such a distinction would undoubtedly present gray areas to be marked out on a case-by-case basis, as is true in applying any number of other constitutional principles. But today's case, in which across-the-board wage and salary ceilings are sustained with respect to virtually all state employees, is clearly on the forbidden side of that line. [ Footnote 2/2 ] Congress may well, in time of declared war, have extraordinary authority to regulate activities in the national interest which could not be reached by the commerce power alone. Cf. Yakus v. United States, 321 U. S. 414
The overruling of a case such as Maryland v. Wirtz quite obviously should not be lightly undertaken. But we have the authority of Mr. Chief Justice Taney, dissenting, in The Passenger Cases, 7 How. 283, 48 U. S. 470 (1849); of Mr. Justice Brandeis, dissenting, in Burnet v. Coronado Oil & Gas Co., 285 U. S. 393 , 285 U. S. 405 (1932); and of MR. JUSTICE DOUGLAS, dissenting, in New York v. United States, 326 U.S. at 326 U. S. 590 -591, for the proposition that important decisions of constitutional law are not subject to the same command of stare decisis as are decisions of statutory questions. Surely there can be no more fundamental constitutional question than that of the intention of the Framers of the Constitution as to how authority should be allocated between the National and State Governments. I believe that reexamination of the issue decided in Maryland v. Wirtz would lead us to the conclusion that the judgment of the Temporary Emergency Court of Appeals in this case should be reversed.
It may seem but a short step from Congress' requiring the employee of a State to pay a percentage of his salary to the Federal Government in the form of an income tax, on the one hand, to Congress' using its Commerce Clause authority to direct the State to pay its employees no more than a certain amount of money in the form of salaries and wages. But rough similarities in practical effect do not necessarily lead to similar holdings on the question of constitutional power. Where Congress taxes the income of a state employee, its command is addressed to the employee alone after he has performed his work for the State and received his pay therefor. Under the regulations which the Court upholds today, the State of Ohio is itself told that it may not pay more than specified amounts to its various employees. Though the economic effect of the two measures on the State may be, in some respects, similar, the fact that the command of Congress operates directly upon the State in the latter situation is of significance in a system of constitutional federalism such as ours. The Court in Helvering v. Gerhardt, 304 U. S. 405 , 304 U. S. 424 (1938), was careful to distinguish between the imposition of a federal income tax on the New York Port Authority, a question which it reserved, and such a tax upon an employee of the Authority, a question which it decided in favor of taxability.
As noted earlier in this dissent, the Government contends that United States v. California, 297 U. S. 175 (1936), makes it impossible to distinguish Wirtz on the basis that the employees in that case were performing primarily "proprietary" functions. California may certainly be read as rejecting not only this distinction, but also any other among activities conducted by a State, and as enunciating a rule that all state activities may be regulated by Congress. But such a sweeping doctrine is rejected even by the Court's present opinion, which, if it means what it says, must concede that a line will have to be drawn somewhere. It is conceivable that the traditional distinction between "governmental" and "proprietary" activities might in some form prove useful in such linedrawing. The distinction suggested in New York v. United States, 326 U. S. 572 (1946), between activities traditionally undertaken by the State and other activities, might also be of service, although it too was specifically rejected in California. See 297 U.S. at 297 U. S. 185 . Here, of course, it is unnecessary to engage in the business of linedrawing, since the regulation in question sweeps within its ambit virtually all state employees regardless of their tasks.