295 U.S. 495 (1935)
A.L.A. Schechter Poultry Corporation and Schechter Live Poultry Market, along with individual operators Joseph, Martin, Alex, and Aaron Schechter, operated wholesale poultry slaughterhouse markets in Brooklyn, New York City.1 They purchased live poultry from commission men at the West Washington Market in New York City or at railroad terminals serving the city, where ninety-six percent of the poultry had arrived by rail from other states.2 The poultry was trucked to the defendants' slaughterhouses, slaughtered by schochtim employees within twenty-four hours, and sold to local retail dealers and butchers who sold directly to consumers in New York City and surrounding counties.3
The Live Poultry Code was proposed by the New York Live Poultry Chamber of Commerce and approved by President Roosevelt on April 13, 1934, under section 3 of the National Industrial Recovery Act.4 The Code set rules for the live poultry industry in the New York metropolitan area covering maximum work hours of forty per week, minimum wages of fifty cents per hour, a minimum number of employees graduated by sales volume, straight killing requirements that prohibited customer selection of individual birds from coops, sales only to licensed dealers, verified weekly price and volume reports, and maintenance of complete books and records.5
An indictment in the District Court for the Eastern District of New York charged the defendants with one count of conspiracy and twenty-nine counts of Code violations, including sales below minimum prices, sales to unlicensed dealers, failure to file accurate daily reports, sales of unfit poultry, permitting customer selections from coops, failure to employ the required number of workers, failure to pay minimum wages or overtime, and failure to pay the code fee.6 The defendants demurred on constitutional grounds, pleaded not guilty after the demurrer was overruled, and moved to dismiss at trial; the government introduced evidence of violations while the defendants presented none.7
The jury convicted on all counts.8 The Circuit Court of Appeals sustained the conviction on the conspiracy count and on sixteen counts for violation of the Code, but reversed the conviction on two counts which charged violation of requirements as to minimum wages and maximum hours of labor.9 The Supreme Court granted writs of certiorari on April 15, 1935, in both the defendants' appeal (No. 854) and the government's cross-appeal (No. 864), and heard the cases together on May 2 and 3, 1935.10
Whether the National Industrial Recovery Act unconstitutionally delegates legislative power to the President?11
Article I, Section 1 of the Constitution vests all legislative powers in Congress, and Congress may not abdicate its essential legislative functions by delegating to the Executive unfettered discretion to determine the content of the law without adequate standards.12
Yes. The National Industrial Recovery Act supplies no standards for any trade or industry and instead authorizes the President to determine what the policy of the statute shall be.13 Section 3 permits the President to approve codes of fair competition upon finding only that they tend to effectuate the broad policy declared in section 1, yet the Act itself does not define fair competition, obstructions to commerce, or the conditions necessary for approval.14 The Live Poultry Code was proposed by the New York Live Poultry Chamber of Commerce and approved by President Roosevelt on April 13, 1934, establishing maximum hours of forty per week, minimum wages of fifty cents per hour, straight killing requirements, and reporting obligations for the metropolitan New York poultry industry.15 These provisions were adopted under the Act's grant of authority to the President to prescribe whatever rules he deemed necessary to rehabilitate industry, without any legislative definition limiting the scope of that authority.16 The Act therefore transfers to the Executive the power to enact codes that function as laws binding on the industry, a delegation unknown to the constitutional structure.17
The absence of standards is evident in the President's ability to impose conditions, modify codes, or cancel approval based solely on his assessment of consistency with the general policy of industrial recovery.18 No administrative procedure analogous to that under the Federal Trade Commission Act constrains the exercise of this power.19 The result is that the President, rather than Congress, determines the rules governing wages, hours, trade practices, and record-keeping across trades and industries throughout the country.20
The National Industrial Recovery Act unconstitutionally delegates legislative power to the President.21
Related opinions on this issue
Joined by Justice Stone
Justice Cardozo, joined by Justice Stone, agreed that the delegation is unlawful but characterized it as unconfined and vagrant, granting the President a roving commission to inquire into evils and correct them without any definite standard.22 He observed that the code extends beyond suppression of unfair methods to comprehensive rules promoting industry welfare, rendering the delegation excessive and incapable of severance.23 Cardozo noted that if codes of fair competition are limited to eliminating unfair methods ascertained upon inquiry, delegation might be permissible, but the statute aims at something far broader.
The code sets up a comprehensive body of rules to promote the welfare of the industry without reference to standards that could be known in advance, making the delegation run riot. He concluded that no such plenitude of power is susceptible of transfer from Congress.
Whether the Live Poultry Code provisions on wages, hours, straight killing, record-keeping, and local sales apply to the defendants' intrastate slaughterhouse operations?24
Congress may regulate transactions in interstate commerce and those that directly affect it, but the commerce power does not extend to intrastate activities whose effects on interstate commerce are only indirect.25
No. The defendants operated wholesale poultry slaughterhouse markets in Brooklyn where they purchased live poultry from commission men at New York City markets or terminals after the poultry had arrived from other states, trucked it locally, slaughtered it within twenty-four hours, and sold the dressed poultry to retail dealers and butchers in New York City and surrounding counties.2627 These local slaughtering and sales transactions occurred after the interstate movement had ended and the poultry had come to permanent rest within the state.28 The Code provisions fixing wages and hours, requiring straight killing, mandating reports and records, and restricting sales to licensed dealers governed only these intrastate operations and had at most an indirect effect on interstate commerce through possible influence on costs and prices.29 The distinction between direct and indirect effects preserves the constitutional line between national and local authority; applying federal power here would obliterate that line and permit regulation of virtually all local business.30
The government's argument that wages and hours affect prices and thereby interstate commerce proves too much, as the same logic would allow federal control over every element of cost in intrastate enterprise.31 The poultry handled by the defendants was not in a current or flow of interstate commerce at the time of the regulated conduct, and the violations charged did not involve any conspiracy to restrain interstate movement.32
The Live Poultry Code provisions do not validly apply to the defendants' intrastate slaughterhouse operations.33
Related opinions on this issue
Joined by Justice Stone
Justice Cardozo, joined by Justice Stone, concurred on this ground as well, noting that wages and hours are the very bone and sinew of the statutory plan and that their regulation in predominantly local transactions cannot be sustained under the commerce clause.34 He emphasized that activities local in their immediacy do not become interstate merely because of distant repercussions and that the code's wage and hour provisions destroy any possibility of severance.35 Cardozo explained that if a trade or industry is so predominantly local as to be exempt from regulation by Congress in respect of wages and hours, there can be no code for it at all.
He stressed that the law is not indifferent to considerations of degree and that to find immediacy or directness here is to find it almost everywhere, which would end the federal system. The code collapses utterly with its essential provisions removed.
Whether the defendants' convictions on the conspiracy count and multiple Code violation counts should be sustained?36
Convictions obtained under an unconstitutional statute or invalid code provisions cannot stand.37
No. Because the National Industrial Recovery Act unconstitutionally delegates legislative power and because the Live Poultry Code provisions exceed the commerce power as applied to the defendants' local business, the convictions on the conspiracy count and the counts charging violations of wages, hours, straight killing, reporting, and related requirements must be reversed.3839 The District Court overruled the defendants' demurrer and motions challenging constitutionality, the jury convicted on all counts after the government introduced evidence of violations, and the Circuit Court of Appeals sustained most convictions while reversing only the wage-and-hour counts.40 The Supreme Court granted certiorari in both the defendants' appeal and the government's cross-appeal and heard the cases together.41 With the underlying Code provisions held invalid on two independent grounds, no basis remains for sustaining any of the convictions.42
The defendants' convictions on the conspiracy count and multiple Code violation counts should not be sustained.43