National Labor Relations Board v. Fainblatt

Background

Benjamin Fainblatt runs a small contract clothing shop in Somerville, New Jersey, doing work for Lee Sportswear of New York. The factory processed cloth sent in from other states and returned finished garments out of state. It employed about sixty people, later rising to about two hundred, and regularly shipped goods across state lines. The National Labor Relations Board found the employer had committed unfair labor practices that led to a strike and a large drop in output; the Board ordered reinstatements and back pay. The Third Circuit refused to enforce the Board’s order, holding the employer was not engaged in interstate commerce.

Reasoning

The Court asked whether the National Labor Relations Act covers a local business that processes materials moving in interstate commerce and whose labor disputes threaten interstate shipments. The Court held that transportation across state lines is commerce, that the volume of shipments does not prevent federal regulation, and that Congress intended the Board to act when unfair practices have led or tend to lead to labor disputes burdening commerce. The Court accepted the Board’s findings that the employer’s unfair practices caused a strike and sharply reduced shipments, and it reversed the court of appeals to enforce the Board’s order.

Real world impact

The decision lets the Labor Board regulate unfair labor practices at small factories that process goods shipped across state lines when those practices lead or tend to lead to strikes that obstruct shipments. That means many contract shops and small manufacturers whose work is integrated into interstate supply chains may be subject to federal labor law enforcement.

Dissents or concurrances

Justice McReynolds dissented, warning that this reasoning vastly expands federal control over local business and erodes state authority, citing earlier cases that limited commerce power.