National Labor Relations Board v. Bradford D. Ass'n, 3343.

Citation106 F.2d 119
Decision Date02 August 1939
Docket NumberNo. 3343.,3343.
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

Lawrence Hunt, of Washington, D. C. (Charles Fahy, Robert B. Watts, Samuel Edes, and Julius Schlezinger, all of Washington, D. C., on the brief), for the Board.

George Paul Slade and Harry Parsons Cross, both of Providence, R. I. (T. Dexter Clarke and Greenough, Lyman & Cross, all of Providence, R. I., on the brief), for Bradford Ass'n.

John Ferguson, of Westerly, R. I., for intervenor-respondent.

Before WILSON and MORTON, Circuit Judges, and BREWSTER, District Judge.

WILSON, Circuit Judge.

This is a petition brought by the National Labor Relations Board, hereinafter referred to as the Board, to enforce its order against the Bradford Dyeing Association, hereinafter referred to as the Association, which is a Rhode Island corporation, having its principal office and place of business at Bradford, a village in the town of Westerly in Rhode Island. The employees of the Association, organized during the course of the proceedings as the B. D. A. Employees' Federation, which will hereinafter be referred to as the Federation, were permitted on order of the Board to intervene as respondents with certain restrictions as to the examination of witnesses, and which entered into an agreement for collective bargaining with the Association.

Its plant is a medium-sized plant, as such plants go, employing about 750 hands. It processes or finishes during a year approximately 57,000,000 yards of goods and has a monthly payroll of about $75,000.

The business of the Association consists solely of the dyeing and finishing of cotton, rayon and acetate piece goods, which are brought to its plant by converters, as they are termed in the trade, in an unfinished state, being designated as "gray goods" when it comes off the looms after manufacture.

Its entire business is transacted at its plant in Bradford. It has no other offices except it maintains an office in New York City as headquarters for solicitors, so called, who have no authority to take orders from customers, but merely to contact them. They perform similar services to those of advertising mediums. The principal purpose for maintaining headquarters for so-called solicitors, however, is for obtaining information as to the probable character of the goods which may later be received at the plant, and the kind of processing required. These so-called solicitors, however, have nothing to do directly with interstate commerce, or with initiating it as between the respondent and its customers. Materials are forwarded from time to time to the Association at its mill in Bradford by customers without reference to any inducements or activities of the so-called solicitors, and so far as the evidence in the case discloses, upon the sole initiative of the customers.

According to the uncontradicted testimony, contracts for dyestuffs, chemicals, starches and other materials used in dyeing and finishing to the amount of $356,856 annually are made only at Bradford, 60 percent of which are furnished within Rhode Island and 40 percent of which are shipped by the parties supplying them to the respondent's plant from outside the state; but the contract of purchase in such cases is completed at Bradford. In other words, as far as this respondent or its activities are directly concerned, there is no substantial evidence to warrant a finding that the transportation of these materials by the respondent was ever in interstate commerce. The respondent owns no trucks and carries no goods in or out of the state. All dyestuff materials are delivered at the plant by the seller, free of any shipping charge to the respondent. All fuel oil used in the plant is also purchased in Rhode Island and delivered from storage tanks in Rhode Island.

The method of doing business in this case is for a customer, known in the trade as a converter, who purchases "gray goods" where he pleases, at his own expense, without any direction from the respondent, to ship the goods to the respondent's plant for processing or finishing, as it is called. The freight and all expense of transportation are borne by the customer. The respondent receives it and places it in its storage houses awaiting the customer's order as to the nature of the processing desired. It is not disputed that the title to the goods remains through all the processing in the customer. If insured, the insurance is taken out by the customer. When the processing is finished, which may be in less than five or eight weeks, with occasional exceptions, the respondent awaits directions from the customer for the shipping out of the processed goods. The customer directs and assumes all expense of shipment. Any service performed by the respondent in this respect is solely that of an agent of the customer and within the limits of the state.

There is also lacking substantial evidence that 40 percent of the supplies consisting of chemicals and dyes, which were contracted for in Rhode Island and delivered by the sellers to the respondent's plant in Bradford, were transported by the respondent in interstate commerce, or that they were used by the respondent except at Bradford, though the Board assumed without evidence that they were shipped by the respondent in interstate commerce, but its assumption lacks substantial evidence on which to rest, that would compel this court to accept it as a fact.

At the time of the hearing less than half of the entire capacity of the dyeing and finishing industry in Rhode Island outside the respondent's plant was in use. If its plant had then been closed by reason of a strike, the converters, viz.: the owners of the goods awaiting processing by it, could readily have had their goods dyed and finished without any difficulty by other dyeing and finishing plants in Rhode Island, which at that time had a great deal of spare capacity, and at lower prices than those charged by the respondent.

The respondent, according to uncontroverted testimony, neither sells, transports nor arranges for transportation of the goods into or out of Rhode Island in interstate commerce, which is done in each instance by the customer, who delivers the "gray goods" at the respondent's plant and gives orders for shipment of his goods, after they are finished, to certain points where the customer disposes of them outside of Rhode Island. Every step by the respondent prior to the shipment of the goods out of Rhode Island is a transaction local to Rhode Island, a transaction in intrastate commerce. Chassaniol v. City of Greenwood, 291 U.S. 584, 587, 54 S.Ct. 541, 78 L.Ed. 1004.

These are the facts that may properly be drawn from the uncontroverted evidence presented to this court, or which are supported by substantial evidence as against a mere scintilla and unwarranted inferences.

The respondent appeared specially in order to plead to the jurisdiction. In support of its plea it claims that the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., does not apply to its plant, because it is not engaged in interstate commerce. It has repeatedly been decided that the Labor Act has no application unless the respondent's business, in whole or in some degree, is directly conducted in or through interstate commerce; or that in some way by its forced closing, as by a strike of its employees, the free flow of interstate commerce in which it was then directly engaged would be directly obstructed or interrupted. Only acts that directly affect, burden or obstruct interstate or foreign commerce or its free flow are within the reach of congressional control, see cases cited infra.

The Constitution and the National Labor Relations Act do not impose collective bargaining upon all industry regardless of its indirect effect upon interstate commerce. It is a well-settled rule that only acts which directly burden or obstruct interstate or foreign commerce, or its free flow, are within the reach of the control of Congress under Clause 3 of Section 8 of Article I of the Federal Constitution, U.S.C.A.; only as thus qualified may an act of Congress be construed as exercising that control within constitutional bounds. Acts which only indirectly affect the flow of commerce between the states are not within the control of Congress, but are left to the control of the several states. Direct in respect to sequence, either in point of time or result, means mediate, nothing intervening.

Whether or not a particular action affects commerce in such close and intimate relations as to subject it to federal control, and hence lies within the authority conferred on the Board by Congress under the Labor Relations Act, is left by the statute to be determined in each individual case. National Labor Relations Board v. Jones & Laughlin Steel Corporation, 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352; Schechter Poultry Corp. et al. v. United States, 295 U.S. 495, 546, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947; Carter v. Carter Coal Company, 298 U.S. 238, 56 S.Ct. 855, 80 L.Ed. 1160; Heisler v. Thomas Colliery Co., 260 U.S. 245, 259, 260, 43 S.Ct. 83, 67 L.Ed. 237.

In the cases cited by the Board, the respondent was clearly engaged at the time of the hearing in transporting goods in interstate commerce. There was therefore no real issue of jurisdiction. In the case of Santa Cruz Fruit Packing Co. v. National Labor Relations Board, 303 U.S. 453, 58 S.Ct. 656, 82 L.Ed. 954, for example, the produce when held by the producer was not in transportation, yet it clearly appeared that it was continually being transported in large quantities in interstate commerce and the free flow of such commerce would obviously be materially affected and obstructed by a strike of the warehousemen at the wharves.

The Board's contention is that a shutting down of the respondent's operations by industrial strife would result in the interruption of the...

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