Schechter Poultry Corp. v. United States

A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S. Ct. 837, 79 L. Ed. 1570 (1935), is one of the most famous cases from the Great Depression era. The case tested the legality of certain methods used by Congress and President FRANKLIN D. ROOSEVELT to combat the devastating economic effects of the depression. After the U.S. Supreme Court declared the methods unconstitutional, Roosevelt publicly scolded the Court and later used the decision as one justification for a controversial plan to stock the Court with justices more receptive of Roosevelt's programs.

At the heart of the Schechter case was legislation passed by Congress in 1933. The NATIONAL INDUSTRIAL RECOVERY ACT (NIRA) (48 Stat. 195) was passed in response to the unemployment and poverty that swept the nation in the early 1930s and provided for the establishment of local codes for fair competition in industry. The codes were written by private trade and industrial groups. If the president approved the codes, they became law. Businesses were required to display a Blue Eagle insignia from the NATIONAL RECOVERY ADMINISTRATION to signify their compliance with the codes. Typical local codes set minimum wages and maximum hours for workers and gave workers the right to organize into unions and engage in COLLECTIVE BARGAINING with management. Codes also prescribed fair trade practices, and many codes set minimum prices for the sale of goods.

The Schechter Poultry Corporation, owned and operated by Joseph, Martin, Alex, and Aaron Schechter, was in the business of selling chickens at wholesale. The corporation purchased some of the poultry from outside the state of New York. It bought the poultry at markets and railroad terminals in New York City and sold the poultry to retailers in the city and surrounding environs. In April 1934 President Roosevelt approved the code of fair competition for the live poultry industry of the New York City metropolitan area (Live Poultry Code). In July 1934 the Schechters were arrested and indicted on 60 counts of violating the Live Poultry Code. The indictment included charges that Schechter Poultry had failed to observe the MINIMUM WAGE and maximum hour provisions applicable to workers and that it had violated a provision of the Live Poultry Code prohibiting the sale of unfit chickens. The case became popularly known as the Sick Chicken case.

The Schechters pleaded not guilty to the charges. At trial, the Schechters were convicted on 18 counts of violating the Live Poultry Code and two counts of conspiring to violate the Live Poultry Code. An appeals court affirmed their convictions, but the U.S. Supreme Court agreed to hear their appeal.

The Schechters presented several arguments challenging the Live Poultry Code. According to the Schechters, the code system of the NIRA was an unconstitutional ABDICATION of the legislative power vested in Congress by Article I, Section 1, of the U.S. Constitution. The Schechters argued further that their intrastate wholesale business was not subject to congressional authority under the COMMERCE CLAUSE of Article I, Section 8, Clause 3, of the Constitution and that the procedures for enforcing the NIRA codes violated the DUE PROCESS CLAUSE of the FIFTH AMENDMENT.

In support of the Live Poultry Code, the federal government argued that the code was necessary for the good of the nation. According to the government, the Live Poultry Code ensured the free flow of chickens in interstate commerce. This arrangement kept chicken prices low and helped ease, however slightly, the financial burden on the general public. The government also argued that it was within the power of Congress to enact the NIRA regulatory scheme that gave rise to the Live Poultry Code because codes such as the Live Poultry Code applied only to businesses engaged in interstate commerce.

The Court unanimously disagreed with the federal government. Under the Commerce Clause, Congress had the power to regulate commerce between the states, not intrastate commerce. The power to enact legislation on intrastate commerce was reserved to the states under the TENTH AMENDMENT to the Constitution. According to the Court, the business conducted by the Schechters was decidedly intrastate. Their business was licensed in New York, they bought their poultry in New York, and they sold it to retailers in New York. Because it was intended to reach intrastate businesses like Schechter Poultry, the Live Poultry Code regulated intrastate commerce, and it was therefore an unconstitutional exercise of congressional power. The Court reversed the Schechters' convictions and declared the Live Poultry Code unconstitutional.

The Schechter decision was decided around the same time as other, similar Supreme Court decisions striking down federal attempts to address the economic crises of the depression. However, the Schechter decision was a particularly troublesome setback for the Roosevelt administration. The NIRA was the centerpiece of Roosevelt's plan to stabilize the national economy (the NEW DEAL), and the government's loss in the Sick Chicken case marked the end of the NIRA and its fair trade codes. Less than one week after the Schechter decision was announced, Roosevelt publicly condemned the Court. Roosevelt declared that the Court's "horse-and-buggy definition of interstate commerce" was an obstacle to national health.

Roosevelt's remarks were controversial because they appeared to cross the line that separated the powers of the EXECUTIVE BRANCH from those of the judicial branch. They sparked a national debate on the definition of interstate commerce, the role of the U.S. Supreme Court, and the limits of federal power. Several citizens and federal legislators began to propose laws and constitutional amendments in an effort to change the makeup of the Supreme Court. At first, Roosevelt refused to back any of the plans, preferring instead to wait and see if the Court would reconsider its stand and reverse the Schechter holding. After the Supreme Court delivered another series of opinions in 1936 that nullified New Deal legislation, Roosevelt began to push for legislation that would modify the makeup of the Court. In 1937 the Supreme Court began to issue decisions upholding New Deal legislation. Congress never enacted Roosevelt's so-called court-packing plan.