National Labor Relations Board v. Reed

• Decision Date: 12 August 1953
• Docket Number: No. 13310.,13310.
• Citation: 206 F.2d 184
• Parties: NATIONAL LABOR RELATIONS BOARD v. REED et al.
• Court: U.S. Court of Appeals — Ninth Circuit

206 F.2d 184 (1953)

NATIONAL LABOR RELATIONS BOARD v. REED et al.

No. 13310.

United States Court of Appeals Ninth Circuit.

June 22, 1953.

As Amended August 12, 1953.

George J. Bott, Gen. Counsel, N. L. R. B., David P. Findling, Asso. Gen. Counsel, A. Norman Somers, Asst. Gen. Counsel, Fannie M. Boyls and Ruth C. Goldman, Attorneys, N. L. R. B., Washington, D. C., for petitioner.

Gardiner Johnson and Thomas E. Stanton, Jr., San Francisco, Cal., for respondent George W. Reed.

Watson A. Garoni, San Francisco, Cal., for respondent In. Hod Carriers, etc.

Before STEPHENS and POPE, Circuit Judges, and McCORMICK, District Judge.

STEPHENS, Circuit Judge.

Congress, in enacting the National Labor Relations Act, 49 Stat. 499, as amended by the Labor Management Relations Act of 1947, 61 Stat. 136; 29 U.S.C.A. § 141 et seq., exercised its power to regulate commerce among the states by providing for the regulation of labor disputes which affect commerce. The Supreme Court sustained the constitutionality of the Congressional action by construing the law to exclude any attempt to interfere with strictly local activities.¹

Prior to 1947, the Board, in its discretion, did not attempt to take jurisdiction over labor disputes in the building and construction industry. However, certain provisions of the Taft-Hartley Act were directed toward the correction of abuses prevalent in that field;² and probably for this reason the Board decided to end its policy of nonintervention. The Board's decision to take jurisdiction over a particular industry may not be challenged unless in so doing it has abused its discretion or exceeded its authority under the Act or under the Constitution.³

The scope of the Board's power is limited by the language of the Labor Act to the prevention of unfair labor practices "affecting commerce". Section 10(a). The term "affecting commerce" is defined by the Act to mean:

"in commerce, or burdening or obstructing commerce or the free flow of commerce, or having led or tending to lead to a labor dispute burdening or obstructing commerce or the free flow of commerce." Section 2(7).

"This definition is one of exclusion as well as inclusion. The grant of authority to the Board does not purport to extend to the relationship between all industrial employees and employers. Its terms do not impose collective bargaining upon all industry regardless of effects upon interstate or foreign commerce. It purports to reach only what may be deemed to burden or obstruct that commerce, and thus qualified, it must be construed as contemplating the exercise of control within constitutional bounds. * * * Whether or not particular action does affect commerce in such a close and intimate fashion as to be subject to federal control, and hence to lie within the authority conferred upon the Board, is left by the statute to be determined as individual cases arise. We are thus to inquire whether in the instant case the constitutional boundary has been passed." Labor Board v. Jones & Laughlin, 1937, 301 U.S. 1, 31, 32, 57 S.Ct. 615, 621.

The Board's entry into the supervision of labor-management relations in the construction industry is challenged in this proceeding as a federal invasion of strictly local matters. However, it has been established that, although the construction of a building is by its nature a local activity, the importation from another state of a substantial amount of the materials used in it affects interstate commerce sufficiently to create jurisdiction in the Board.⁴

Reed, whom the Board found guilty of unfair labor practices along with the International Hod Carriers, Building & Common Laborers Union, and who is here as respondent to the Board's petition for enforcement of its order, challenges the Board's jurisdiction on the ground that he was at the time of the alleged unfair practices engaged in construction work which was of a strictly local nature and which had no effect upon commerce since he was using only materials manufactured within the state of California from local resources.

There is evidence that during the two and one-half year period prior to the acts complained of, Reed had bought only a little over $1900 worth of materials from outside California, all in 1949 for jobs other than the one in suit. The total out-of-state purchases amounted to two and one-half to three per cent of Reed's total purchases of materials for that year. Under the doctrine of de minimis, the small out-of-state purchases, alone, would seem to be insufficient to justify the Board in assuming jurisdiction of this case. See N.L.R.B. v. Fainblatt, 1939, 306 U.S. 601, 607, 307 U.S. 609, 59 S.Ct. 668, 83 L.Ed. 1014.

In 1950 the Board clarified by its so-called "yardstick" decisions⁵ the criteria under which it exercised its jurisdiction in the construction field. The Board announced that it would exercise jurisdiction over enterprises which furnish services or materials necessary to the operation of types of businesses over which the Board would exercise jurisdiction,⁶ i. e., (1) any construction firm doing $50,000 worth of business annually in services⁷ for (a) an instrumentality or channel of interstate commerce,⁸ (b) a public utility or transit system,⁹ (c) an establishment which produces or handles goods for out-of-state shipment or which performs out-of-state services valued at over $25,000 a year;¹⁰ (d) an establishment which operates as an integral part of a multi-state enterprise;¹¹ (2) any construction firm having a flow of $500,000 in materials from out-of-state or a flow of $1,000,000 annually in materials originating out-of-state but purchased from local dealers;¹² and (3) any construction firm whose work affects national defense.¹³

Although the above criteria were announced subsequent to the acts alleged in this case, we shall refer to them as a measure of the Board's proper exercise of jurisdiction. To do so is not to give them retroactive application, since the Board's exercise of jurisdiction had already been extended to the construction industry. See, e. g., NLRB v. Denver Building and Construction Trades Council, not note 4 supra, in which the Board took jurisdiction over an unfair labor practice which occurred in 1948.

There is inherent difficulty in applying the National Labor Relations Act to the building and construction business. By way of comparison, we refer to the well known fact that manufacturing companies, over which the Board has exercised jurisdiction, have sufficient continuity and identity in their businesses to preclude the necessity of re-examination with each change of product, market, or source of raw materials, while general constructing companies, by their very nature, lack these qualities in their job-to-job operations. Such lack of continuity is caused by the differences in size and requirements of each job and results in an unstable labor force both in the identity and quantity of the personnel employed. Then, too, a builder may purchase materials from out of the state in one job or do work for a company which is engaged in interstate commerce in another job; a third job may be done for a local enterprise with local materials. Nevertheless, when a builder so conducts his activities that his undertakings include both strictly local jobs and jobs affecting commerce, he is in no different position from that of a manufacturer who engages in both local and interstate activities. The employer in both instances is engaged in commerce. That part of the work force may be engaged solely on the local aspects does not deprive the over-all activities of an employer of their interstate character. It would be so highly impractical for the Board to keep tab on every separate job of a going construction business in order to determine whether one or the other or both are in commerce that frustration of the Congressional command would follow. See N.L.R.B. v. Speer, 94 N.L.R.B. 317. But even if the Board could "keep books" on the activities of a construction business, there is further reason for the Board's assuming jurisdiction over the whole business. A general contractor could hardly conduct his going business so as to avoid the influence of one job, not in commerce, upon another job, which is in commerce.

The Board based its assumption of jurisdiction in the instant case upon two grounds: First — since it was established that in both 1948 and 1949 Reed did over $50,000¹⁴ worth of business in services for public utilities and for establishments which produce or handle goods for out-of-state shipment, the Board determined that Reed was subject to its jurisdiction independently of his work for Stoneson. Cf. subhead (1) of the Board's criteria, supra. Second — during the year 1949 Reed was doing work under a subcontract in the sum of $110,239 for Stoneson Construction Company which organization was constructing a large apartment and commercial enterprise in San Francisco amounting in value to approximately $10,000,000 for which large quantities of materials were brought from out-of-state. The Board determined that Reed's activities for Stoneson were alone enough to bring him within its jurisdiction, since Reed was a builder doing $50,000 worth of business annually in services for a corporation "engaged in commerce within the meaning of the Act * * *."

Reed's activities in 1948 and 1949, other than for Stoneson, show a substantial effect upon interstate commerce. In the absence of a showing that Reed had completely abandoned the interstate aspects of his business prior to the time of the herein-alleged unfair labor practices, the Board was justified in concluding that his over-all activities retained their interstate complexion.

The Board's jurisdiction is also gained upon another basis, for Reed's activities in connection with Stoneson had in themselves a sufficient effect on interstate commerce to warrant it. And this is true because the Board found that, as a consequence of Stoneson's...