A. L. A. Schechter Poultry Corp. v. United States
The Court struck down the National Industrial Recovery Act's code-making scheme as an unconstitutional handoff of Congress's lawmaking power to the President and private trade groups, and ruled that a Brooklyn poultry company's local wage, hour, and sales practices were not close enough to interstate commerce for Congress to regulate.
The decision voided the wage-and-hour and trade-practice provisions of the 'Live Poultry Code' and marked one of the most significant checks the Court placed on New Deal economic recovery programs.
“Extraordinary conditions do not create or enlarge constitutional power.”
The Court rejected the argument that the economic emergency justified stretching Congress's constitutional authority.
How it got here: A federal trial court convicted the defendants; the Second Circuit affirmed most counts but reversed two; both sides sought Supreme Court review.
The Case in Depth
What happened
A.L.A. Schechter Poultry Corporation and a related company ran wholesale live-poultry slaughterhouses in Brooklyn. They bought poultry already shipped in from other states, slaughtered it, and sold it locally to retail dealers and butchers. They were charged with violating the "Live Poultry Code," a federal industry code covering wages, hours, and sales practices like requiring buyers to accept whole coops of chickens rather than picking individual birds.
The question before the Court
Could Congress let the President approve industry-written "codes of fair competition," like the one setting wages, hours, and sales rules for New York's live poultry slaughterhouses?
Why it matters
Businesses that operated purely within a single state, buying goods that had already arrived from out of state, could no longer be regulated by federal codes covering their wages, hours, and local sales practices. The ruling also stripped the President of broad power to approve industry-drafted rules as binding federal law, forcing Congress to write more specific standards itself.
What changes now
The convictions under the Live Poultry Code were reversed because the underlying code provisions were held unconstitutional, both for exceeding Congress's power to delegate lawmaking authority and for regulating activity too remote from interstate commerce. This was a final merits decision, not a remand for further factual proceedings, and it effectively ended enforcement of the National Industrial Recovery Act's code system, prompting Congress to seek different, more specific approaches to economic regulation.
What this does not decide
The Court expressly did not reach the defendants' separate due process challenge to certain code provisions under the Fifth Amendment, since its rulings on improper delegation and the limits of federal commerce power were enough to decide the case.
Concurrences and dissents
Concurrence — Justice Cardozo
“This is delegation running riot.”Cardozo's description of how far the code-making scheme let the President act without any real legislative standard.
Justice Cardozo agreed the delegation here was unlawful, but wrote separately to explain that not all delegation to the President is invalid—Congress may direct the President to root out practices already recognized as unfair, much like the Federal Trade Commission does. Here, though, the code went further, letting the President enact virtually any measure helpful to an industry's welfare with no defined standard, which he called 'delegation running riot.' He also agreed the wage-and-hour provisions exceeded Congress's commerce power and could not be severed from the rest of the code.
How the Court got there
The legal reasoning, step by step
- The Court first asked whether Congress had performed its own essential lawmaking function or had simply handed that job to others, since the Constitution vests all legislative power in Congress and does not allow it to transfer that power away.
- It found that the statute's key term, 'fair competition,' had no fixed legal meaning and was not limited to practices already condemned by existing law, unlike the narrower 'unfair methods of competition' standard enforced by the Federal Trade Commission through hearings and evidence.
- Because the statute let code-drafters and the President pursue almost any measure that might 'effectuate' the broad, general goals listed in the Act's declaration of policy, with only weak restrictions against monopolies, the Court concluded the President's discretion in approving or writing codes was essentially unlimited, making this an unlawful delegation of Congress's lawmaking power.
- Turning to the commerce question, the Court held that once the poultry arrived in Brooklyn and came to rest at the slaughterhouses for local sale, the interstate transportation had ended and the resulting local slaughtering and selling were not themselves transactions in interstate commerce.
- Applying the established distinction between direct and indirect effects on interstate commerce, the Court reasoned that the wages, hours, and sales practices of local slaughterhouse workers affected interstate commerce only indirectly, through their influence on costs and prices, and indirect effects are not enough to bring intrastate activity under federal control.
- Because treating such indirect effects as sufficient would let the federal government regulate nearly all local business activity and erase the constitutional line between national and local concerns, the Court held that Congress lacked power to regulate these particular wage, hour, and trade-practice provisions as applied to the defendants.
Doctrinal impact
Cases affected by this decision
Reaffirms Panama Refining Co. v. Ryan (293 U.S. 388)
The Court relied on this recent decision's principles limiting how much lawmaking power Congress may hand to the President.