Case Name: NATIONAL LABOR RELATIONS BOARD v. SANTA CRUZ FRUIT PACKING CO.
Court: United States Court of Appeals for the Ninth Circuit
Jurisdiction: United States
Decision Date: 1937-07-31
Citations: 91 F.2d 790
Docket Number: No. 8432
Parties: NATIONAL LABOR RELATIONS BOARD v. SANTA CRUZ FRUIT PACKING CO.
Judges: Before WILBUR, DENMAN, and HANEY, Circuit Judges.
Reporter: Federal Reporter 2d Series
Volume: 91
Pages: 790–801

Head Matter:
NATIONAL LABOR RELATIONS BOARD v. SANTA CRUZ FRUIT PACKING CO.
No. 8432.
Circuit Court of Appeals, Ninth Circuit.
July 31, 1937.
Charles Fahy, Gen. Counsel, Robert B. Watts, Associate Gen. Counsel, Jerome I. Macht, Joseph Rosenfarb, A. Norman Somers, and Philip Levy, Attys., Nat. Labor Relations Board, all of Washington, D. G, for petitioner.
J. Paul St. Sure and E. H. Moore, both of Oakland, Cal., for respondent.
Before WILBUR, DENMAN, and HANEY, Circuit Judges.

Opinion:
DENMAN, Circuit Judge.
The National Labor Relations Board by its orders of April 2, 1936, required the respondent to "Cease and desist:
"(a) From discouraging membership in Weighers, Warehousemen and Cereal Workers, Local 38-44, International Longshoremen's Association, or in any other labor organization of its employees, by discharging or threatening to discharge any of its employees for joining Weighers, Warehousemen and Cereal Workers, Local 38-44, International Longshoremen's Association, or any other labor organization of its employees; and
"(b) From in any other manner discriminating against any of its employees in regard to hire or tenure of employment or any term or condition of employment for joining Weighers, Warehousemen and Cereal Workers, Local 38-44, International Longshoremen's Association, or any other labor organization of its employees; and
"(c) From in any other manner interfering with, restraining, or coercing its employees in the exercise of their rights of self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection, as guaranteed in Section 7 of the National Labor Relations Act [29 U.S.C.A. § 157],"
and to take affirmative action, which the Board finds "will effectuate the policies of the Act," (a) to offer to several discharged employees "immediate and full reinstatement, respectively, to their former positions, without prejudice to any rights and privileges previously enjoyed"; and (b) to make whole said discharged employees "for any loss of pay they have suffered by reason of their discharge by payment to each of them, respectively, of a sum of money equal to that which each would normally have earned as wages during the period from the date of his discharge to the date of such offer of reinstatement, computed at the wage rate each was paid at the time of his discharge, less the amount earned subsequent to his discharge"; and to "post immediately notices to its employees in conspicuous places in its various offices, stating (1) that respondent will cease and desist in the manner aforesaid, and (2) that such notices will remain posted for a period of at least thirty (30) consecutive days from-the date of posting."
The Board has filed its petition in this court for the enforcement of the orders. Respondent Packing Company appears and contests the enforcement.
The respondent admits it is engaged in the canning and packing of fruits and vegetables, 39 per cent, of which are processed to be sold to persons in other states and foreign countries and shipped to them there. Its total pack in 1935 was in excess of 1,600,-000 cases. It consisted of tomatoes and tomato products, peaches, apricots, spinach, pears, asparagus, and pork and beans, in volume, in the order named.
The respondent, relying solely on the unconstitutionality of the Labor Relations Act (29 U.S.C.A. § 151-166) and the proceedings of the Board, does not question that the employees were dismissed by it be-* cause some of them had engaged in the formation of the local of the union in question and all had joined it. Upon the lockout, the local caused the Oakland plant to be picketed. Violence ensued, causing hospitalization of some of the participants. The product of the plant was declared "hot" and other locals of unions — teamsters, dock clerks, scalers, seamen, and longshoremen — failed or refused to handle it. Blacklisting of respondent's products was attempted.
The Board found that the "bulk of" the agricultural products processed by the respondent came from the State of California, and the respondent contends, and we accept the contention, that substantially all of the products were produced by growers in the state. Respondent further contends, and we agree with the Contention for the purposes of this decision, that the processing of the respondent, including the loading of its product in cars, is an intrastate activity as that is held to be in the Coe v. Errol Case, 116 U.S. 517, 518, 525, 6 S.Ct. 475, 29 L.Ed. 715.
The contention also was raised that under the agreements for the sale of the products, title was transferred to the purchaser prior to the actual entry of the goods into carriage by an interstate carrier, which contention we also accept for the purposes of this decision.
It appears that the respondent had two plants; one at Oakland, California, known as the "Santa Cruz plant," and one at Sea-bright, near Santa Cruz, Cal. The case as presented here concerns only the employees engaged at the Oakland plant and there is no showing that any of the products of the Seabright plant ever left the State of California.
We hold that so far as concerns the manufacture and shipping activities of the respondent and its employees at the Oakland plant, the labor dispute leading to the discharge of the employees, the declaration of the products as "hot," and the sympathetic refusal of other unions to handle them, "throttled" the flow of interstate commerce and "put in jeopardy" its future flow, to the extent of the 39 per cent, of respondent's products manufactured to be shipped into that commerce.
The respondent relies on the decisions of Carter v. Carter Coal Co., 298 U.S. 238, 56 S.Ct. 855, 80 L.Ed. 1160; United Mine Workers v. Coronado Coal Co., 259 U.S. 344, 42 S.Ct. 570, 66 L.Ed. 975, 27 A.L.R. 762; Oliver Iron Mining Co. v. Lord, 262 U.S. 172, 43 S.Ct. 526, 67 L.Ed. 929; and others holding that manufacture, lumbering, and mining processes, including the loading on to the cars of the product, and all activities up to actual movement out of the state, as in the Coe Case, constitute intrastate production. Hence, the respondent contends, the Labor Relations Act is an attempt by the Congress to control the labor relations in such an intrastate activity and violates the provisions of the Tenth Amendment to the Constitution.
The questions for our solution are:
(1) Is the Carter v. Carter Coal Co. decision overruled by the decision of the Supreme Court in National Labor Relations Board v. Jones & Laughlin Steel Corporation, 57 S.Ct. 615, 81 L.Ed. —, 108 A.L.R. 1352, so far as the former holds that the Constitution gives no power to the Congress to regulate intrastate production and manufacture of goods with respect to its labor disputes, which diminish or throttle the flow of goods intended to be and which would be shipped into interstate commerce ?
(2) Granting the Congress has such power, can it be exercised where 39 per cent, of the goods produced by the labor employed are shipped in interstate commerce and 61 per cent, remain within the state of manufacture ?
(1) Carter v. Carter Coal Co. and similar cases are overruled by National Labor Relations Board v. Jones & Laughlin Steel Corporation.
Respondent's contention that the Carter Case is not overruled by the Jones & Laugh-lift decision is squarely' presented to this court and it would be an evasion of our judicial obligation to deny it a full consideration or attempt to evade it by asserting that it is here "not controlling."
Three circuits, the Second, Fifth, and Sixth, relied upon the principle established in the Carter Case in holding that the National Labor Relations Act was unconstitutional. National Labor Relations Board v. Friedman-Harry Marks Clothing Co. (C.C.A.2) 85 F.(2d) 1, 2; National Labor Relations Board v. Jones & Laughlin Steel Corp. (C.C.A.5) 83 F.(2d) 998, 999; Fruehauf Trailer Co. v. National Labor Relations Board (C.C.A.6) 85 F.(2d) 391, 392.
In all three of these cases there was an antecedent import of raw materials entering into the production, over which the Labor Relations Board 'asserted the right to regulate the employer and employee. Here, the respondent asserts, is a case identical with the Carter Coal Case, in what, it in sists, is the controlling fact that, as in mining coal, both the fruit and vegetables and the canned and packed product are produced in the state.
It is patent that the Carter case is identical in fact and relevant principle with that of respondent.
Unless overruled it clearly is controlling in so far as it denies the constitutional .right of the Congress to regulate labor disputes affecting substantially the volume of a manufacturer's output which is "to be" transported in interstate commerce and which may be throttled from that transport and ultimate sale in another state unless so regulated.
Great stress is laid on the fact that the Congress has not before exercised such a power over labor relations in production of goods to be transported into interstate commerce. It is argued that if it may regulate labor disputes because it will affect the volume of goods to be transported in interstate commerce, it may regulate the volume itself of, say, shoes or clothing or furniture or food products, or the material used in the construction of housing, produced for use in other states. It is urged that all such production generally has been conceived as a matter of state control, and there are pointed out dangers of political control of such matters by bureaus in Washington. It is suggested that the Constitution was framed to meet a pioneer agricultural economy in which nearly everything consumed was grown or made on the farms or in the neighboring towns. Hence it is further urged that the framers of the Constitution never would have lodged in the Congress its powers over interstate commerce if it had envisioned an economy in which practically all the clothing wc judges wear, every object contained in the chambers in which we sit, and the major part of the material entering the construction of the building in which the court is housed, come from some state other than California.
The answer to these contentions we have made in our decision in Edwards v. U. S., 91 F.(2d) 767, decided by this court on July 22, 1937. It is that the Carter Case is overruled by the Jones & Laughlin decision; that the Constitution did give the Congress the power so to regulate interstate commerce; and that that power is plenary as to all productive activities which substantially affect or tend to throttle the volume of goods to be transported in commerce outside the state of production.
Conventional historic attitudes towards states' rights are highly important in the political world when faced with the practicability of novel proposals of the exercise of congressional power. It may or may not be politically wise at any particular time for the Congress to proceed with caution, but this in no way concerns the judicial question of the extent of the power. To refrain from or to hesitate in decision when the question is fairly presented well may cause the paralysis and frustration of efficient legislative and executive action.
The reasoning and holding of the Edwards Case, supra, answers in the negative the first of respondent's contentions.
(2) The specific constitutional grant of power to the Congress by article 1, section 8, to regulate commerce among the states and with foreign nations is paramount to the exercise by the states of the power of regulation of the intermingled intrastate commerce, included in the general reservation of state powers by the Tenth Amendment.
Hence, if any substantial percentage of a product produced in a state is produced to enter interstate or foreign commerce, the Congress may regulate its production, in so far as it affects the volume to enter such commerce, though such regulation also regulates a larger percentage of product which does not leave the state.
Section 8 of article 1 of the Constitution makes a specific grant of power over interstate commerce. The Tenth Amendment is a general reservation of all powers not granted. There is no limit placed on the grant, no proviso that because the states also have exercised certain powers over manufacture and other production, the Congress is to be in any way hampered in the full exercise of its regulation. The Supreme Court has repeatedly held the contrary.
Construing the general reservation of state powers by the Tenth Amendment, as affected by the specific grant of power to regulate interstate commerce of article first, § 8, of the Constitution, the Supreme Court held: "This reservation to the states manifestly is only of that authority which is consistent with, and not opposed to, the grant to Congress. There is no room in our scheme of government for the assertion of state power in hostility to the authorized exercise of Federal power. The authority of Congress extends to every part of interstate commerce, and to every instrumentality or agency by which it is carried on; and the full control by Congress of the subjects committed to its' regulation is not to be denied or thwarted by the commingling of interstate and intrastate operations. This is not to say that the nation may deal with the internal concerns of the state, as áuch, but that the execution by Congress of its constitutional power to regulate interstate commerce is not limited by the fact that intrastate transactions may have become so interwoven therewith that the effective government of the former incidentally controls the latter. This conclusion necessarily results from the supremacy of the national power within its appointed sphere." The Minnesota Rate Case (Simpson v. Shepard), 230 U.S. 352, 399, 33 S.Ct. 729, 739, 57 L.Ed. 1511, 48 L.R.A.(N.S.) 1151, Ann.Cas.1916A, 18.
The Jones & Laughlin Case holds that the disorganization and disturbance of labor affecting interstate commerce does not have to be of railway employees to bring it within the control of Congress. The interference as well may come from labor conditions in the intrastate business entirely different from transportation.
"The opinion in that case [Virginian Ry. Co. v. System Federation, 57 S.Ct. 592, 81 L.Ed. 789] also points to the large measure of success of the labor policy embodied in the Railway Labor Act. But, with respect to the appropriateness of the recognition 0of self-organization and representation in the promotion of peace, the question is not essentially different in the case of employees in industries of such a character that interstate commerce is put in jeopardy from the case of employees of transportation companies. And of what avail is it to protect the facility of transportation, if interstate commerce is throttled with respect to the commodities to be transported." (Emphasis supplied.) National Labor Relations Board v. Jones & Laughlin Steel Corp., 57 S.Ct. 615, 627, 81 L.Ed. —, 108 A.L.R. 1352.
The Shreveport Case (Houston, E. & W. T. R. Co.) 234 U.S. 342, 34 S.Ct. 833, 58 L.Ed. 1341, relied upon by the Supreme Court for its decision in the Jones & Laughlin Case, holds that a company, by the rate charge of its intrastate business, may affect the rates of its interstate business in such a way that the intrastate business rate comes within congressional regulation. The fact that both of the businesses happen to be transportation is not relevant.
The analogy between the Shreveport Case and the Santa Cruz Fruit Packing Company is complete. In each the conduct of the intrastate business, the one as to its rates and the other as to its labor, affects the interstate business arising from the activities of the respective companies. In one this is-accomplished by producing an unfair rate upon the commodities "to be" transported, and in the other by throttling the interstate business in the commodities "to be" transported. In both the intrastate business puts "in jeopardy" the proper and fair conduct of the commerce among the states. The acceptance by the Supreme Court of the doctrine of the Shreveport Case again demonstrates the overruling of the Carter Case.
The Shreveport Case does not determine the right of Congress to control the intrastate activity in rate making upon any ratio between the volume of business under the intrastate rates and under the interstate rates. In the Jones & Laughlin Case no significance is attached to the fact that 75 per cent, of the steel and other manufactured products entered interstate commerce, or that but 25 per cent, of intrastate manufacture was regulated.
Respondent is the fifth or sixth largest of the California companies processing and packing fruits and vegetables. The 39 per cent, of its business which enters into interstate commerce is a sufficiently substantial amount to warrant the Congress to make effective its regulation, even though thereby the 61 per cent, which is intrastate business is regulated with reference to labor disputes. The intermingling of the two activities does not take from the Congress the right to regulate that substantial portion over which the Constitution has specifically granted the control to the federal government.
The suggestion that we should make an academically arbitrary 50 per cent, as the boundary line between the two jurisdictions ignores the practical necessities of industry. Shall it be 50 per cent, in volume or price ? What happens when for the first 6 months of the year 60 per cent, is exported and 40 per cent, is domestic, and for the rest of the year the percentages are reversed? Does the federal control end on June 30th? On which is the burden of proof, the state interest or the federal ? How unfair may be the competition between the industry producing the 60 per cent, for export under federal regulation and its competitor with 40 per cent, under state regulation or no regulation at all!
Industry and business cannot thrive, in some cases it could not exist, in the uncertainty oí such an abstract mathematical solution of the problem. It cannot be inferred that the Congress intended to create a situation so confusing alike to employer and employee.
What are the sufficient minima of producers' contributions to the flow of commerce to warrant congressional regulation must be decided as the questions arise. We have no doubt that the Santa Cruz Company's contribution, both as to volume added, to interstate and foreign commerce and percentage of its output, is "affecting commerce" within the meaning of the act.
We therefore hold that the Constitution granted to the Congress the power to regulate respondent's labor relations with reference to all of its employees at its Oakland plant engaged in the production of canned and packed fruits and vegetables, the processing of 39 per cent, of which was intended for interstate commerce and had been throttled for a considerable period from entering that commerce, although the remaining 61 per cent, remain within the state of production.
The Board's orders to cease and desist applied to all of the employees of the respondent, but the evidence shows no shipments by respondent into interstate commerce from its Seabright plant. The orders should be modified to apply only to the employees of the Oakland plant; otherwise they should be enforced.
The orders of the National Labor Relations Board, so modified with respect to confining their effect to the employees of the Oakland plant of the respondent, are ordered enforced.