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Consolidated Edison Co. v. National Labor Relations Board.

March 14, 1938


Appeal from the National Labor Relations Board.

Author: Swan

Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

SWAN, Circuit Judge.

In May, 1937, United Electrical & Radio Workers of America, Local 1212, a labor organization which we shall call United, filed with the National Labor Relations Board a charge that Consolidated Edison Company of New York and its affiliated companies (together referred to as petitioners) were engaging in unfair labor practices. On May 12th the Board issued its complaint against the petitioners. Appearing specially, they challenged the Board's jurisdiction, and moved that the jurisdictional question be decided prior to hearings on the merits. This request was denied. The petitioners then answered, reserving their jurisdictional objections, and hearings were had before a trial examiner designated by the Board. Before the trial examiner had made findings of fact or filed a report, the case was transferred to the Board. On November 10, 1937, the Board issued a cease and desist order based on its finding of violations of section 8(1) and (3) of the National Labor Relations Act, 29 U.S.C.A. § 158(1, 3). Pursuant to section 10(f), 29 U.S.C.A. § 160(f), the petitioners brought the order to this court for review. A similar petition for review was also filed by the International Brotherhood of Electrical Workers and numerous local unions (together referred to as the Brotherhood). The Brotherhood is affiliated with the American Federation of Labor, while United is connected with the Committee for Industrial organization. The Brotherhood had not intervened before the Board but regards itself as a "person aggrieved" by provisions of the order which affect it. In its answers to the petitions the Board prays for enforcement of its said order. United has appeared as an intervener in support of the Board's order.

The first question to be considered is that of the Board's jurisdiction. Section 10(a) of the act, 29 U.S.C.A. § 160(a), empowers the Board "to prevent any person from engaging in any unfair labor practice (listed in section 158) affecting commerce." The terms "commerce" and "affecting commerce" are defined in section 2(6) and (7), 29 U.S.C.A. § 152(6, 7). It is not contended that the petitioners are themselves engaged in commerce as so defined. They are local public utility corporations and their production and distribution of electricity, gas, and steam are carried on solely within the city of New York and adjacent Westchester county. The contention of federal jurisdiction over the labor relations of such employers is rested upon the argument that an interruption of their business by an industrial labor dispute would vitally affect commerce, because (1) in producing electric energy, gas, and steam they use large quantities of raw materials originating outside the state of New York, and (2) some of their customers are engaged in interstate or foreign commerce or are instrumentalities of such commerce.

The facts are not in dispute; they were stipulated in great detail. A brief summary will suffice for present purposes. Consolidated Edison Company of New York is both an operating and a holding company; it owns between 90 and 100 per cent. of the voting stock of each of six affiliates, its copetitioners. The parent corporation and each of its subsidiaries, with one exception, is a public utility company within the meaning of the Public Service Law of New York, Consol. Laws, c. 48, and is subject to regulation by the state commission. The one exception is Consolidated Telegraph & Electrical Subway Company, which maintains and leases to others of the petitioners space in subsurface ducts.The petitioners' labor relations are also subject to state regulation under a recent statute, chapter 443, Laws N.Y. 1937, unless jurisdiction of the state labor relations board must yield to that of the national board. The petitioners are operated as a unitary system. A few figures will indicate the magnitude of the system's business. In 1936 it supplied 97.5 per cent. of all electric energy sold in New York City, and practically 100 per cent. of that sold in Westchester county; it supplied 55.3 per cent. of the total gas sold in New York City, and is the only utility supplying gas in Westchester county. It is the only central-station steam utility in New York City. Its employees number more than 40,000 and its total pay roll in 1936, including annuities and separation allowances, was nearly $82,000,000. It used almost 5,000,000 tons of coal and more than 114,000,000 gallons of oil in the year 1936. All of the oil and all but an insignificant portion of the coal moved to the petitioners' plants from states other than New York. The out-of-state purchases are made from independent dealers and are delivered by independent carriers. Although the bulk of the petitioners' business, in respect to both the quantity of service and the number of consumers, is supplying electricity and gas for residential and local commercial uses, they also have numerous consumers who are engaged in interstate or foreign commerce. The most striking illustrations of this class of consumers are the railroads. Thus, electric energy supplied to the New York Central, the New York, New Haven & Hartford, and the Hudson & Manhattan is used for the lighting and operation of their passenger and freight terminals and for the movement of interstate trains; and steam supplied to the Pennsylvania Railroad Company is used to operate switches in its tunnel under the Hudson river.

The construction and validity of the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., was extensively discussed in National Labor Relations Board v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S. Ct. 615, 81 L. Ed. 893, 108 A.L.R. 1352. As the Chief Justice there pointed out, the act does 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 obstruct or burden such commerce. At page 37 of 301 U.S., 57 S. Ct. 615, 624, 81 L. Ed. 893, 108 A.L.R. 1352, the opinion states: "Although activities may be intrastate in character when separately considered, if they have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, Congress cannot be deneid the power to exercise that control. Schechter Corp. v. United States, supra [295 U.S. 495, 55 S. Ct. 837, 79 L. Ed. 1570, 97 A.L.R. 947]. Undoubtedly the scope of this power must be considered in the light of our dual system of government and may not be extended so as to embrace effects upon interstate commerce so indirect and remote that to embrace them, in view of our complex society, would effectually obliterate the distinction between what is national and what is local and create a completely centralized government. Id. The question is necessarily one of degree."

Consistently with these principles it can scarcely be doubted that the labor disputes of a local merchant will not normally fall within the Board's jurisdiction, even though some part of his stock in trade originates outside the state or some of his local customers are engaged in interstate commerce. In such a case the closing of the merchant's store by a strike of his employees would undoubtedly affect interstate commerce, but the effects would be too remote and indirect to bring his activities within the range of federal regulation. We need not say whether the same conclusion would follow if the merchant's importations from without the state ran into figures comparable to the petitioners' importations of coal and oil. Nor need we decide whether their importations of raw materials are alone enough to bring them under the Board's jurisdiction. It is the use which some of their customers make of the electric energy and steam purchased from the petitioners that furnishes the Board its main ground for claiming jurisdiction. The petitioners argue that they should not be chargeable for the independent acts of customers whom, by state law, they are compelled to serve. But the problem is not to be approached from the standpoint of vicarious liability. It is to be approached as a question of fact, namely, what will be the result upon commerce of a labor dispute between the petitioners and their employees. Should such a dispute result in interrupting the petitioners' service, the effects upon commerce would be catastrophic. We mention only some of them. Instantly, the terminals and trains of three great interstate railroads would cease to operate; interstate communication by telegraph, telephone, and radio would stop; lights maintained as aids to navigation would go out; and the business of interstate ferries and of foreign steamships, whose docks are lighted and operated by electric energy, would be greatly impeded. Such effects we cannot regard as indirect and remote.

It is true that the local consequences of a cessation of the petitioners' services would be equally, if not more, disastrous. It is argued that considerations of the health, safety, and convenience of the millions of people who live and work in New York City outweigh the national interest in protecting interstate commerce from disruption; that local public utilities have always been regarded as exclusively within the jurisdiction of the states; and that to extend the federal jurisdiction to include them is to obliterate pro tanto our dual system of government, contrary to the admonition of the Chief Justice in the Jones & Laughlin Case. We are not unmindful of the persuasive force of these arguments. Nevertheless, we cannot doubt the power of Congress to legislate with respect to local utilities the disruption of whose service would have a direct effect upon interstate commerce; cf. Appalachian Elec. Power Co. v. National Labor Rel. Board, 4 Cir., 93 F.2d 985; nor can we doubt that the act under consideration was intended to exert federal power under the commerce clause, Const. art. 1, § 8, cl. 3, to the full extent of constitutional limits. This is not to say that all utilities are within the act."The question is necessarily one of degree." In the case at bar the effect of disrupting service would be of such magnitude and so immediate that we think the petitioners are within the Board's jurisdiction, even though only a small percentage of their total business is used in interstate or foreign commerce.

None of the Labor Board cases decided by the Supreme Court has presented a situation like that at bar. In three of them the Board's order ran against an employer whose business, though local in respect to manufacturing, was plainly interstate in respect to sales of a very large percentage of its manufactured product. National Labor Relations Board v. Jones & Laughlin Steel Corp. 301 U.S. 1, 57 S. Ct. 615, 81 L. Ed. 893, 108 A.L.R. 1352; National Labor Board v. Fruehauf Co., 301 U.S. 49, 57 S. Ct. 642, 81 L. Ed. 918; National Labor Board v. Friedman Harry Marks Clothing Co., 301 U.S. 58, 57 S. Ct. 645, 81 L. Ed. 921. In one case the employer was engaged in a business of interstate communication (Associated Press v. National Labor Board, 301 U.S. 103, 57 S. Ct. 650, 81 L. Ed. 953); in others the business was interstate transportation of passengers (Washington V. & M. Coach Co. v. National Labor Board, 301 U.S. 142, 57 S. Ct. 648, 81 L. Ed. 965; National Labor Relations Board v. Pennsylvania Greyhound Lines, 58 S. Ct. 571, 82 L. Ed. ; National Labor Relations Board v. Pacific Greyhound Lines, 58 S. Ct. 577, 82 L. Ed. ). We recognize that these cases are not decisive of the case at bar, but we think that the principles they have announced point to the conclusion we have reached.

The petitioners contend that the Board denied them a full and fair hearing according to due process of law. This complaint is based upon four grounds. The first relates to the Board's direction that the proceeding be transferred to it pursuant to Rule 37. The result was that the trial examiner made no intermediate report, as contemplated by Rule 32, and the petitioners had no opportunity to file exceptions to his report as contemplated by Rule 34. Nor were they accorded oral argument before the Board, although it must be presumed that their brief submitted to the trial examiner came to the Board's attention. This procedure is not one likely to inspire confidence in the impartiality of the proceedings. It results in the findings of fact being made by persons who did not see the witnesses - a matter which may have farreaching consequences in view of the very limited power conferred upon the courts to review the Board's findings of fact. But, though we do not commend such procedure, we cannot say that it has deprived the petitioners of due process of law. Const. Amend. 14. It is familiar practice for a court to decide issues on testimony wholly taken by deposition; and section 10(c) of the act, 29 U.S.C.A. § 160(c), places upon the Board the duty of stating its findings of fact "upon all the testimony taken." Nor do we think the Board is bound to hear oral argument if it prefers to take a brief. Morgan v. United States, 298 U.S. 468, 56 S. Ct. 906, 80 L. Ed. 1288, presented a very different situation.

The second ground of complaint is that the trial examiner permitted amendments, thereby introducing issues which necessitated the presence of an absent party, namely, the Brotherhood.As will appear from subsequent discussion, we do not regard the Brotherhood as a necessary party.

The third ground relates to the examiner's refusal to accept testimony relating to the petitioners' reasons for discharging an employee named Solosy. This will also be discussed later.

Finally, complaint is made that remote hearsay dominated the testimony. This court has already ruled that hearsay is admissible in hearings before the Board. National Labor Relations Board v. Remington-Rand, 2 Cir., 94 F.2d 862, February 14, 1938. Whether some of the hearsay was too remote to be entitled to credence goes to the correctness of the Board's findings rather than to the constitutional validity of its proceedings. For ...

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