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U.S. Supreme Court
N.L.R.B. v. JONES & LAUGHLIN STEEL CORP.,
301 U.S. 1 (1937) 301 U.S. 1 NATIONAL LABOR RELATIONS BOARD
v.
JONES & LAUGHLIN STEEL CORPORATION.
No. 419.
Argued Feb. 10, 11, 1937.
Decided April 12, 1937.
(Source: www.findlaw.com) [301 U.S. 1, 5] Messrs.
Homer S. Cummings, Atty. Gen., and Stanley F. Reed, Sol. Gen., and J. Warren
Madden, both of Washington, D.C., for petitioner.
Mr. Earl F. Reed, of Pittsburgh, Pa., for respondent. [301 U.S. 1, 22]
Mr. Chief Justice HUGHES delivered the opinion of the Court. In a proceeding under the National Labor Relations Act of 19351 the National
Labor Relations Board found that the respondent, Jones & Laughlin Steel
Corporation, had violated the act by engaging in unfair labor practices
affecting commerce. The proceeding was instituted by the Beaver Valley Lodge No.
200, affiliated with the Amalgamated Association of Iron, Steel and Tin Workers
of America, a labor organization. The unfair labor practices charged were that
the corporation was discriminating against members of the union with regard to
hire and tenure of employment, and was coercing and intimidating its enployees
in order to interfere with their self-organization. The discriminatory and
coercive action alleged was the discharge of certain employees.
The National Labor Relations Board, sustaining the charge, ordered the
corporation to cease and desist from such discrimination and coercion, to offer
reinstatement to ten of the employees named, to make good their losses in pay,
and to post for thirty days notices that the corporation would not discharge or
discriminate against members, or those desiring to become members, of the labor
union. As the corporation failed to comply, the Board petitioned the Circuit
Court of Appeals to enforce the order. The court denied the petition holding
that the order lay beyond the range of federal power. 83 F.(2d) 998. We granted
certiorari. 299
U.S. 534 , 57 S. Ct. 119, 81 L.Ed. --.
The scheme of the National Labor Relations Act-which is too long to be quoted
in full-may be briefly stated. The first section (29 U.S.C.A. 151) sets forth
findings with respect to the injury to commerce resulting from the denial by
employers of the right of employees to organize and from the refusal of
employers to accept the procedure of col- [301
U.S. 1, 23] lective bargaining. There follows a declaration
that it is the policy of the United States to eliminate these causes of
obstruction to the free flow of commerce. 2 The act [301
U.S. 1, 24] then defines the terms it uses, including the
terms 'commerce' and 'affecting commerce.' Section 2 (29 U.S.C.A. 152). It
creates the National Labor Relations Board and prescribes its organization.
Sections 3- 6 (29 U.S.C.A. 153-156). It sets forth the right of employees to
self- organization and to bargain collectively through representatives of their
own choosing. Section 7 (29 U.S.C.A. 157). It defines 'unfair labor practices.'
Section 8 (29 U.S.C.A. 158). It lays down rules as to the representation of
employees for the purpose of collective bargaining. Section 9 (29 U.S.C.A. 159).
The Board is empowered to prevent the described unfair labor practices affecting
commerce and the act prescribes the procedure to that end. The Board is
authorized to petition designated courts to secure the enforcement of its order.
The findings of the Board as to the facts, if supported by evidence, are to be
conclusive. If either party on application to the court shows that additional
evidence is material and that there were reasonable grounds for the failure to
adduce such evidence in the hearings before the Board, the court may order the
additional evidence to be taken. Any person aggrieved by a final order of the
Board may obtain a review in the designated courts with the same procedure as in
the case of an application by the Board for the enforcement of its order.
Section 10 (29 U.S.C.A. 160). The Board has broad powers of investigation.
Section 11 (29 U.S.C.A. 161). Interference with members of the Board or its
agents in the performance of their duties is punishable by fine and
imprisonment. Section 12 (29 U.S.C. A. 162). Nothing in the act is to be
construed to interfere with the right to strike. Section 13 (29 U.S.C.A. 163).
There is a separability clause to the effect that, if any provision of the act
or its application to any person or circumstances shall be held invalid, the
remainder of the act or its application to other persons or circumstances shall
not be affected. Section 15 (29 U.S.C.A. 165). The particular provisions which
are involved in the instant case will be considered more in detail in the course
of the discussion.
The procedure in the instant case followed the statute. The labor union filed
with the Board its verified charge. [301
U.S. 1, 25] The Board thereupon issued its complaint against
the respondent, alleging that its action in discharging the employees in
question constituted unfair labor practices affecting commerce within the
meaning of section 8, subdivisions (1) and (3), and section 2, subdivisions (6)
and (7), of the act. Respondent, appearing specially for the purpose of
objecting to the jurisdiction of the Board, filed its answer. Respondent
admitted the discharges, but alleged that they were made because of inefficiency
or violation of rules or for other good reasons and were not ascribable to union
membership or activities. As an affirmative defense respondent challenged the
constitutional validity of the statute and its applicability in the instant
case. Notice of hearing was given and respondent appeared by counsel. The Board
first took up the issue of jurisdiction and evidence was presented by both the
Board and the respondent. Respondent then moved to dismiss the complaint for
lack of jurisdiction and, on denial of that motion, respondent in accordance
with its special appearance withdrew from further participation in the hearing.
The Board received evidence upon the merits and at its close made its findings
and order.
Contesting the ruling of the Board, the respondent argues (1) that the act is
in reality a regulation of labor relations and not of interstate commerce; (2)
that the act can have no application to the respondent's relations with its
production employees because they are not subject to regulation by the federal
government; and (3) that the provisions of the act violate section 2 of article
3 and the Fifth and Seventh Amendments of the Constitution of the United States. The facts as to the nature and scope of the business of the Jones &
Laughlin Steel Corporation have been found by the Labor Board, and, so far as
they are essential to the determination of this controversy, they are not in
dispute. The Labor Board has found: The corporation is [301
U.S. 1, 26] organized under the laws of Pennsylvania and has
its principal office at Pittsburgh. It is engaged in the business of
manufacturing iron and steel in plants situated in Pittsburgh and nearby
Aliquippa, Pa. It manufactures and distributes a widely diversified line of
steel and pig iron, being the fourth largest producer of steel in the United
States. With its subsidiaries-nineteen in number-it is a completely integrated
enterprise, owning and operating ore, coal and limestone properties, lake and
river transportation facilities and terminal railroads located at its
manufacturing plants. It owns or controls mines in Michigan and Minnesota. It
operates four ore steamships on the Great Lakes, used in the transportation of
ore to its factories. It owns coal mines in Pennsylvania. It operates towboats
and steam barges used in carrying coal to its factories. It owns limestone
properties in various places in Pennsylvania and West Virginia. It owns the
Monongahela connecting railroad which connects the plants of the Pittsburgh
works and forms an interconnection with the Pennsylvania, New York Central and
Baltimore & Ohio Railroad systems. It owns the Aliquippa & Southern
Railroad Company, which connects the Aliquippa works with the Pittsburgh &
Lake Erie, part of the New York Central system. Much of its product is shipped
to its warehouses in Chicago, Detroit, Cincinnati and Memphis,-to the last two
places by means of its own barges and transportation equipment. In Long Island
City, New York, and in New Orleans it operates structural steel fabricating
shops in connection with the warehousing of semifinished materials sent from its
works. Through one of its wholly-owned subsidiaries it owns, leases, and
operates stores, warehouses, and yards for the distribution of equipment and
supplies for drilling and operating oil and gas wells and for pipe lines,
refineries and pumping stations. It has sales offices in [301
U.S. 1, 27] twenty cities in the United States and a
wholly-owned subsidiary which is devoted exclusively to distributing its product
in Canada. Approximately 75 per cent. of its product is shipped out of
Pennsylvania.
Summarizing these operations, the Labor Board concluded that the works in
Pittsburgh and Aliquippa 'might be likened to the heart of a self- contained,
highly integrated body. They draw in the raw materials from Michigan, Minnesota,
West Virginia, Pennsylvania in part through arteries and by means controlled by
the respondent; they transform the materials and then pump them out to all parts
of the nation through the vast mechanism which the respondent has elaborated.' To carry on the activities of the entire steel industry, 33,000 men mine ore,
44,000 men mine coal, 4,000 men quarry limestone, 16,000 men manufacture coke,
343,000 men manufacture steel, and 83,000 men transport its product. Respondent
has about 10,000 employees in its Aliquippa plant, which is located in a
community of about 30,000 persons.
Respondent points to evidence that the Aliquippa plant, in which the
discharged, men were employed, contains complete facilities for the production
of finished and semifinished iron and steel products from raw materials; that
its works consist primarily of a by-product coke plant for the production of
coke; blast furnaces for the production of pig iron; open hearth furnaces and
Bessemer converters for the production of steel; blooming mills for the
reduction of steel ingots into smaller shapes; and a number of finishing mills
such as structural mills, rod mills, wire mills, and the like. In addition,
there are other buildings, structures and equipment, storage yards, docks and an
intraplant storage system. Respondent's operations at these works are carried on
in two distinct stages, the first being the conversion of raw materials into pig
[301 U.S. 1, 28] iron
and the second being the manufacture of semifinished and finished iron and steel
products; and in both cases the operations result in substantially changing the
character, utility and value of the materials wrought upon, which is apparent
from the nature and extent of the processes to which they are subjected and
which respondent fully describes. Respondent also directs attention to the fact
that the iron ore which is procured from mines in Minnesota and Michigan and
transported to respondent's plant is stored in stock piles for future use, the
amount of ore in storage varying with the season but usually being enough to
maintain operations from nine to ten months; that the coal which is procured
from the mines of a subsidiary located in Pennsylvania and taken to the plant at
Aliquippa is there, like ore, stored for future use, approximately two to three
months' supply of coal being always on hand; and that the limestone which is
obtained in Pennsylvania and West Virginia is also stored in amounts usually
adequate to run the blast furnaces for a few weeks. Various details of
operation, transportation, and distribution are also mentioned which for the
present purpose it is not necessary to detail.
Practically all the factual evidence in the case, except that which dealt
with the nature of respondent's business, concerned its relations with the
employees in the Aliquippa plant whose discharge was the subject of the
complaint. These employees were active leaders in the labor union. Several were
officers and others were leaders of particular groups. Two of the employees were
motor inspectors; one was a tractor driver; three were crane operators; one was
a washer in the coke plant; and three were laborers. Three other employees were
mentioned in the complaint but it was withdrawn as to one of them and no
evidence was heard on the action taken with respect to the other two. [301
U.S. 1, 29] While respondent criticizes the evidence and the
attitude of the Board, which is described as being hostile toward employers and
particularly toward those who insisted upon their constitutional rights,
respondent did not take advantage of its opportunity to present evidence to
refute that which was offered to show discrimination and coercion. In this
situation, the record presents no ground for setting aside the order of the
Board so far as the facts pertaining to the circumstances and purpose of the
discharge of the employees are concerned. Upon that point it is sufficient to
say that the evidence supports the findings of the Board that respondent
discharged these men 'because of their union activity and for the purpose of
discouraging membership in the union.' We turn to the questions of law which
respondent urges in contesting the validity and application of the act.
First. The Scope of the Act.-The act is challenged in its entirety as an
attempt to regulate all industry, thus invading the reserved powers of the
States over their local concerns. It is asserted that the references in the act
to interstate and foreign commerce are colorable at best; that the act is not a
true regulation of such commerce or of matters which directly affect it, but on
the contrary has the fundamental object of placing under the compulsory
supervision of the federal government all industrial labor relations within the
nation. The argument seeks support in the broad words of the preamble (section
13) and in the sweep of the provisions of the act, and it is further insisted
that its legislative history shows an essential universal purpose in the light
of which its scope cannot be limited by either construction or by the
application of the separability clause. If this conception of terms, intent and consequent inseparability were sound,
the act would necessarily fall [301
U.S. 1, 30] by reason of the limitation upon the federal power
which inheres in the constitutional grant, as well as because of the explicit
reservation of the Tenth Amendment. Schechter Corporation v. United States, 295
U.S. 495, 549 , 550 S., 554, 55 S.Ct. 837, 851, 853, 97 A.L.R. 947. The
authority of the federal government may not be pushed to such an extreme as to
destroy the distinction, which the commerce clause itself establishes, between
commerce 'among the several States' and the internal concerns of a state. That
distinction between what is national and what is local in the activities of
commerce is vital to the maintenance of our federal system. Id.
But we are not at liberty to deny effect to specific provisions, which
Congress has constitutional power to enact, by superimposing upon them
inferences from general legislative declarations of an ambiguous character, even
if found in the same statute. The cardinal principle of statutory construction
is to save and not to destroy. We have repeatedly held that as between two
possible interpretations of a statute, by one of which it would be
unconstitutional and by the other valid, our plain duty is to adopt that which
will save the act. Even to avoid a serious doubt the rule is the same. Federal
Trade Commission v. American Tobacco Co., 264
U.S. 298, 307 , 44 S.Ct. 336, 337, 32 A.L.R. 786; Panama R.R. Co. v.
Johnson, 264
U.S. 375, 390 , 44 S.Ct. 391, 395; Missouri Pacific R.R. Co., v. Boone, 270
U.S. 466, 472 , 46 S.Ct. 341, 343; Blodgett v. Holden, 275
U.S. 142 , 148, 276
U.S. 594 , 48 S.Ct. 105, 107; Richmond Screw Anchor Co. v. United States, 275
U.S. 331, 346 , 48 S.Ct. 194, 198. We think it clear that the National Labor Relations Act may be construed so
as to operate within the sphere of constitutional authority. The jurisdiction
conferred upon the Board, and invoked in this instance, is found in section
10(a), 29 U.S.C.A. 160(a), which provides:
'Sec. 10(a). The Board is empowered, as hereinafter provided, to prevent any
person from engaging in any unfair labor practice (listed in section 8
(section 158)) affecting commerce.' [301
U.S. 1, 31] The critical words of this provision,
prescribing the limits of the Board's authority in dealing with the labor
practices, are 'affecting commerce.' The act specifically defines the
'commerce' to which it refers ( section 2(6), 29 U.S.C.A. 152(6):
'The term 'commerce' means trade, traffic, commerce, transportation, or
communication among the several States, or between the District of Columbia or
any Territory of the United States and any State or other Territory, or
between any foreign country and any State, Territory, or the District of
Columbia, or within the District of Columbia or any Territory, or between
points in the same State but through any other State or any Territory or the
District of Columbia or any foreign country.'
There can be no question that the commerce thus contemplated by the act
(aside from that within a Territory or the District of Columbia) is interstate
and foreign commerce in the constitutional sense. The act also defines the term
'affecting commerce' section 2(7), 29 U.S.C.A. 152(7):
'The term 'affecting commerce' means 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.'
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. It is a familiar principle
that acts which directly burden or obstruct interstate or foreign commerce, or
its free flow, are within the reach of the congressional power. Acts having that
effect are not [301 U.S. 1, 32]
rendered immune because they grow out of labor disputes. See Texas &
N.O.R. Co. v. Railway & S.S. Clerks, 281
U.S. 548, 570 , 50 S.Ct. 427, 433, 434; Schechter Corporation v. United
States, supra, 295
U.S. 495 , at pages 544, 545, 55 S.Ct. 837, 849, 97 A.L.R. 947; Virginian
Railway Co. v. System Federation No. 40, 300
U.S. 515 , 57 S.Ct. 592, decided March 29, 1937. It is the effect upon
commerce, not the source of the injury, which is the criterion. Second
Employers' Liability Cases (Mondou v. New York, N.H. & H.R. Co.), 223
U.S. 1, 51 , 32 S.Ct. 169, 38 L.R.A.(N.S.) 44. 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.
Second. The Unfair Labor Practices in Question.-The unfair labor practices
found by the Board are those defined in section 8, subdivisions ( 1) and (3).
These provide:
'Sec. 8. It shall be an unfair labor practice for an employer-
'(1) To interfere with, restrain, or coerce employees in the exercise of the
rights guaranteed in section 7 (section 157 of this title). ...
'(3) By discrimination in regard to hire or tenure of employment or any term
or condition of employment to encourage or discourage membership in any labor
organization.' 4 [301
U.S. 1, 33] Section 8, subdivision (1), refers to section 7,
which is as follows:
'Section 7. Employees shall have the right to self-organization, to form,
join, or assist labor organizations, to bargain collectively through
representatives of their own choosing, and to engage in concerted activities
for the purpose of collective bargaining or other mutual aid or protection.'
Thus, in its present application, the statute goes no further than to
safeguard the right of employees to self-organization and to select
representatives of their own choosing for collective bargaining or other mutual
protection without restraint or coercion by their employer. That is a fundamental right. Employees have as clear a right to organize and
select their representatives for lawful purposes as the respondent has to
organize its business and select its own officers and agents. Discrimination and
coercion to prevent the free exercise of the right of employees to
self-organization and representation is a proper subject for condemnation by
competent legislative authority. Long ago we stated the reason for labor
organizations. We said that they were organized out of the necessities of the
situation; that a single employee was helpless in dealing with an employer; that
he was dependent ordinarily on his daily wage for the maintenance of himself and
family; that, if the employer refused to pay him the wages that he thought fair,
he was nevertheless unable to leave the employ and resist arbitrary and unfair
treatment; that union was essential to give laborers opportunity to deal on an
equality with their employer. American Steel Foundries v. Tri-City Central
Trades Council, 257
U.S. 184, 209 , 42 S.Ct. 72, 78, 27 A.L.R. 360. We reiterated these views
when we had under consideration the Railway Labor Act of 1926, 44 Stat. 577.
Fully recognizing the legality of collective action on the part of employees in [301
U.S. 1, 34] order to safeguard their proper interests, we said
that Congress was not required to ignore this right but could safeguard it.
Congress could seek to make appropriate collective action of employees an
instrument of peace rather than of strife. We said that such collective action
would be a mockery if representation were made futile by interference with
freedom of choice. Hence the prohibition by Congress of interference with the
selection of representatives for the purpose of negotiation and conference
between employers and employees, 'instead of being an invasion of the
constitutional right of either, was based on the recognition of the rights of
both.' Texas & N.O.R. Co. v. Railway & S.S. Clerks, supra. We have
reasserted the same principle in sustaining the application of the Railway Labor
Act as amended in 1934 (45 U.S.C.A. 151 et seq.). Virginian Railway Co. v.
System Federation, No. 40, supra.
Third. The application of the Act to Employees Engaged in Production.- The
Principle Involved.-Respondent says that, whatever may be said of employees
engaged in interstate commerce, the industrial relations and activities in the
manufacturing department of respondent's enterprise are not subject to federal
regulation. The argument rests upon the proposition that manufacturing in itself
is not commerce. Kidd v. Pearson, 128
U.S. 1, 20 , 21 S., 9 S.Ct. 6; United Mine Workers v. Coronado Co., 259
U.S. 344, 407 , 408 S., 42 S.Ct. 570, 581, 582, 27 A.L.R. 762; Oliver Iron
Co. v. Lord, 262
U.S. 172, 178 , 43 S.Ct. 526, 529; United Leather Workers' International
Union v. Herkert & Meisel Trunk Co., 265
U.S. 457, 465 , 44 S.Ct. 623, 625, 33 A.L.R. 566; Industrial Association v.
United States, 268
U.S. 64, 82 , 45 S.Ct. 403, 407; Coronado Coal Co. v. United Mine Workers, 268
U.S. 295, 310 , 45 S.Ct. 551, 556; Schechter Corporation v. United States,
supra, 295
U.S. 495 , at page 547, 55 S.Ct. 837, 850, 97 A.L.R. 947; Carter v. Carter
Coal Co., 298
U.S. 238, 304 , 317 S., 327, 56 S.Ct. 855, 869, 875, 880 The government distinguishes these cases. The various parts of respondent's
enterprise are described as interdependent and as thus involving 'a great
movement of [301 U.S. 1, 35]
iron ore, coal and limestone along well-defined paths to the steel mills,
thence through them, and thence in the form of steel products into the consuming
centers of the country-a definite and well-understood course of business.' It is
urged that these activities constitute a 'stream' or 'flow' of commerce, of
which the Aliquippa manufacturing plant is the focal point, and that industrial
strife at that point would cripple the entire movement. Reference is made to our
decision sustaining the Packers and Stockyards Act. 5 Stafford
v. Wallace, 258
U.S. 495 , 42 S.Ct. 397, 23 A.L.R. 229. The Court found that the stockyards
were but a 'throat' through which the current of commerce flowed and the
transactions which there occurred could not be separated from that movement.
Hence the sales at the stockyards were not regarded as merely local
transactions, for, while they created 'a local change of title,' they did not
'stop the flow,' but merely changed the private interests in the subject of the
current. Distinguishing the cases which upheld the power of the state to impose
a nondiscriminatory tax upon property which the owner intended to transport to
another state, but which was not in actual transit and was held within the state
subject to the disposition of the owner, the Court remarked: 'The question, it
should be observed, is not with respect to the extent of the power of Congress
to regulate interstate commerce, but whether a particular exercise of state
power in view of its nature and operation must be deemed to be in conflict with
this paramount authority.' Id., 258
U.S. 495 , at page 526, 42 S.Ct. 397, 405, 23 A.L.R. 229. See Minnesota v.
Blasius, 290
U.S. 1, 8 , 54 S.Ct. 34, 36. Applying the doctrine of Stafford v. Wallace,
supra, the Court sustained the Grain Futures Act of 19226 with respect to
transactions on the Chicago Board of Trade, although these transactions were
'not in and of themselves interstate commerce.' Congress had found [301
U.S. 1, 36] that they had become 'a constantly recurring
burden and obstruction to that commerce.' Board of Trade of City of Chicago v.
Olsen, 262
U.S. 1, 32 , 43 S.Ct. 470, 476. Compare Hill v. Wallace, 259
U.S. 44, 69 , 42 S.Ct. 453, 458. See, also, Tagg Bros. & Moorhead v.
United States, 280
U.S. 420 , 50 S.Ct. 220.
Respondent contends that the instant case presents material distinctions.
Respondent says that the Aliquippa plant is extensive in size and represents a
large investment in buildings, machinery and equipment. The raw materials which
are brought to the plant are delayed for long periods and, after being subjected
to manufacturing processes 'are changed substantially as to character, utility
and value.' The finished products which emerge 'are to a large extent
manufactured without reference to pre-existing orders and contracts and are
entirely different from the raw materials which enter at the other end.' Hence
respondent argues that, 'If importation and exportation in interstate commerce
do not singly transfer purely local activities into the field of congressional
regulation, it should follow that their combination would not alter the local
situation.' Arkadelphia Milling Co. v. St. Louis, Southwestern R. Co ., 249
U.S. 134, 151 , 39 S.Ct. 237; Oliver Iron Co. v. Lord, supra. We do not find it necessary to determine whether these features of
defendant's business dispose of the asserted analogy to the 'stream of commerce'
cases. The instances in which that metaphor has been used are but particular,
and not exclusive, illustrations of the protective power which the government
invokes in support of the present act. The congressional authority to protect
interstate commerce from burdens and obstructions is not limited to transactions
which can be deemed to be an essential part of a 'flow' of interstate or foreign
commerce. Burdens and obstructions may be due to injurious action springing from
other sources. The fundamental principle is that the power to regulate commerce
is [301 U.S. 1, 37] the
power to enact 'all appropriate legislation' for its 'protection or advancement'
(The Daniel Ball, 10 Wall. 557, 564); to adopt measures 'to promote its growth
and insure its safety' (County of Mobile v. Kimball, 102
U.S. 691, 696 , 697 S.); 'to foster, protect, control, and restrain.'
(Second Employers' Liability Cases, supra, 223
U.S. 1 , at page 47, 32 S.Ct. 169, 174, 38 L.R.A.(N.S.) 44). See Texas &
N.O.R. Co. v. Railway & S.S. Clerks, supra. That power is plenary and may be
exerted to protect interstate commerce 'no matter what the source of the dangers
which threaten it.' Second Employers' Liability Cases, 223
U.S. 1 , at page 51, 32 S.Ct. 169, 176, 38 L.R.A.( N.S.) 44; Schechter
Corporation v. United States, supra. 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
denied the power to exercise that control. Schechter Corporation v. United
States, supra. 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. As the Court said in
Board of Trade of City of Chicago v. Olsen, supra, 262
U.S. 1 , at page 37, 43 S.Ct. 470, 477, repeating what had been said in
Stafford v. Wallace, supra: 'Whatever amounts to more or less constant practice,
and threatens to obstruct or unduly to burden the freedom of interstate commerce
is within the regulatory power of Congress under the commerce clause, and it is
primarily for Congress to consider and decide the fact of the danger and to meet
it.'
That intrastate activities, by reason of close and intimate relation to
interstate commerce, may fall within federal control is demonstrated in the case
of carriers who [301 U.S. 1, 38]
are engaged in both interstate and intrastate transportation. There
federal control has been found essential to secure the freedom of interstate
traffic from interference or unjust discrimination and to promote the efficiency
of the interstate service. The Shreveport Case ( Houston, E. & W.T.R. Co. v.
United States), 234
U.S. 342 , 351. 352, 34 S. Ct. 833; Railroad Commission of Wisconsin v.
Chicago, B. & Q.R. Co., 257
U.S. 563, 588 , 42 S.Ct. 232, 237, 22 A.L.R. 1086. It is manifest that
intrastate rates deal primarily with a local activity. But in rate making they
bear such a close relation to interstate rates that effective control of the one
must embrace some control over the other. Id. Under the Transportation Act,
1920,7 Congress went so far as to authorize the Interstate Commerce Commission
to establish a state-wide level of intrastate rates in order to prevent an
unjust discrimination against interstate commerce. Railroad Commission of
Wisconsin v. Chicago, B. & Q.R.R. Co., supra; Florida v. United States, 282
U.S. 194, 210 , 211 S., 51 S.Ct. 119, 123. Other illustrations are found in
the broad requirements of the Safety Appliance Act (45 U.S.C.A. 1-10) and the
Hours of Service Act (45 U.S.C.A. 61-64). Southern Railway Co. v. United States,
222
U.S. 20 , 32 S.Ct. 2; Baltimore & Ohio R.R. Co. v. Interstate Commerce
Commission, 221
U.S. 612 , 31 S.Ct. 621. It is said that this exercise of federal power has
relation to the maintenance of adequate instrumentalities of interstate
commerce. But the agency is not superior to the commerce which uses it. The
protective power extends to the former because it exists as to the latter.
The close and intimate effect which brings the subject within the reach of
federal power may be due to activities in relation to productive industry
although the industry when separately viewed is local. This has been abundantly
illustrated in the application of the Federal Anti-Trust Act (15 U.S.C.A. 1-7,
15 note). In the Standard Oil and American Tobacco Cases (Standard Oil Co. v.
United States), 221
U.S. 1 , 31 S.Ct. 502, 34 L.R.A.(N.S.) 834, Ann.Cas.1912D, 734; (United
States v. American Tobacco Co.) 221
U.S. 106 , 31 S.Ct. 632), that statute was applied to combinations of
employers engaged in productive industry. [301
U.S. 1, 39] Counsel for the offending corporations strongly
urged that the Sherman Act had no application because the acts complained of
were not acts of interstate or foreign commerce, nor direct and immediate in
their effect on interstate or foreign commerce, but primarily affected
manufacturing and not commerce. 221
U.S. 1 , at page 5, 31 S.Ct. 502, 34 L. R.A.(N.S.) 834, Ann.Cas.1912D, 734; 221
U.S. 106 , at page 125, 31 S.Ct. 632. Counsel relied upon the decision in
United States v. E. C. Knight Co., 156
U.S. 1 , 15 S.Ct. 249. The Court stated their contention as follows: 'That
the act, even if the averments of the bill be true, cannot be constitutionally
applied, because to do so would extend the power of Congress to subject dehors
the reach of its authority to regulate commerce, by enabling that body to deal
with mere questions of production of commodities within the states.' And the
Court summarily dismissed the contention in these words: 'But all the structure
upon which this argument proceeds is based upon the decision in United States v.
E.C. Knight Co., 156
U.S. 1 , 15 S.Ct. 249. The view, however, which the argument takes of that
case, and the arguments based upon that view have been so repeatedly pressed
upon this court in connection with the interpretation and enforcement of the
Anti-trust Act, and have been so necessarily and expressly decided to be unsound
as to cause the contentions to be plainly foreclosed and to require no express
notice' ( citing cases). 221
U.S. 1 , at pages 68, 69, 31 S.Ct. 502, 519, 34 L.R.A.(N.S.) 834,
Ann.Cas.1912D, 734.
Upon the same principle, the Anti-Trust Act has been applied to the conduct
of employees engaged in production. Loewe v. Lawlor, 208
U.S. 274 , 28 S.Ct. 301, 13 Ann.Cas. 815; Coronado Coal Co. v. United Mine
Workers, supra; Bedford Cut Stone Co. v. Stone Cutters' Association, 274
U.S. 37 , 47 S.Ct. 522, 54 A.L.R. 791. See, also, Local 167, International
Brotherhood of Teamsters v. United States, 291
U.S. 293, 297 , 54 S.Ct. 396, 398; Schechter Corporation v. United States,
supra. The decisions dealing with the question of that application illustrate
both the principle and its limitation. Thus, in the first Coronado Case, the
Court held that mining was not interstate commerce, that the power of Congress
did not extend to its regulation as such, [301
U.S. 1, 40] and that it had not been shown that the activities
there involved-a local strike-brought them within the provisions of the
Anti-Trust Act, notwithstanding the broad terms of that statute. A similar
conclusion was reached in United Leather Workers' International Union v. Herkert
& Meisel Trunk Co., supra, Industrial Association v. United States, supra,
and Levering & Garrigues v. Morrin, 289
U.S. 103, 107 , 53 S.Ct. 549, 550. But in the first Coronado Case the Court
also said that 'if Congress deems certain recurring practices though not really
part of interstate commerce, likely to obstruct, restrain or burden it, it has
the power to subject them to national supervision and restraint.' 259
U.S. 344 , at page 408, 42 S.Ct. 570, 582, 27 A.L.R. 762. And in the second
Coronado Case the Court ruled that, while the mere reduction in the supply of an
article to be shipped in interstate commerce by the illegal or tortious
prevention of its manufacture or production is ordinarily an indirect and remote
obstruction to that commerce, nevertheless when the 'intent of those unlawfully
preventing the manufacture or production is shown to be to restrain or control
the supply entering and moving in interstate commerce, or the price of it in
interstate markets, their action is a direct violation of the Anti-Trust Act.' 268
U.S. 295 , at page 310, 45 S.Ct. 551, 556. And the existence of that intent
may be a necessary inference from proof of the direct and substantial effect
produced by the employees' conduct. Industrial Association v. United States, 268
U.S. 64 , at page 81, 45 S.Ct. 403, 407. What was absent from the evidence
in the first Coronado Case appeared in the second and the act was accordingly
applied to the mining employees.
It is thus apparent that the fact that the employees here concerned were
engaged in production is not determinative. The question remains as to the
effect upon interstate commerce of the labor practice involved. In the Schechter
Case, supra, we found that the effect there was so remote as to be beyond the
federal power. To find 'immediacy or directness' there was to find it 'almost [301
U.S. 1, 41] everywhere,' a result inconsistent with the
maintenance of our federal system. In the Carter Case, supra, the Court was of
the opinion that the provisions of the statute relating to production were
invalid upon several grounds,-that there was improper delegation of legislative
power, and that the requirements not only went beyond any sustainable measure of
protection of interstate commerce but were also inconsistent with due process.
These cases are not controlling here.
Fourth. Effects of the Unfair Labor Practice in Respondent's
Enterprise.-Giving full weight to respondent's contention with respect to a
break in the complete continuity of the 'stream of commerce' by reason of
respondent's manufacturing operations, the fact remains that the stoppage of
those operations by industrial strife would have a most serious effect upon
interstate commerce. In view of respondent's far-flung activities, it is idle to
say that the effect would be indirect or remote. It is obvious that it would be
immediate and might be catastrophic. We are asked to shut our eyes to the
plainest facts of our national life and to deal with the question of direct and
indirect effects in an intellectual vacuum. Because there may be but indirect
and remote effects upon interstate commerce in connection with a host of local
enterprises throughout the country, it does not follow that other industrial
activities do not have such a close and intimate relation to interstate commerce
as to make the presence of industrial strife a matter of the most urgent
national concern. When industries organize themselves on a national scale,
making their relation to interstate commerce the dominant factor in their
activities, how can it be maintained that their industrial labor relations
constitute a forbidden field into which Congress may not enter when it is
necessary to protect interstate commerce from the paralyzing consequences of
industrial war? We have often said that interstate commerce itself is a
practical [301 U.S. 1, 42]
conception. It is equally true that interferences with that commerce must
be appraised by a judgment that does not ignore actual experience.
Experience has abundantly demonstrated that the recognition of the right of
employees to self-organization and to have representatives of their own choosing
for the purpose of collective bargaining is often an essential condition of
industrial peace. Refusal to confer and negotiate has been one of the most
prolific causes of strife. This is such an outstanding fact in the history of
labor disturbances that it is a proper subject of judicial notice and requires
no citation of instances. The opinion in the case of Virginia Railway Co. v.
System Federation No. 40, supra, points out that, in the case of carriers,
experience has shown that before the amendment, of 1934, of the Railway Labor
Act, 'when there was no dispute as to the organizations authorized to represent
the employees, and when there was willingness of the employer to meet such
representative for a discussion of their grievances, amicable adjustment of
differences had generally followed and strikes had been avoided.' That, on the
other hand, 'a prolific source of dispute had been the maintenance by the
railroads of company unions and the denial by railway management of the
authority of representatives chosen by their employees.' The opinion in that
case also points to the large measure of success of the labor policy embodied in
the Railway Labor Act. But, with respect to the appropriateness of the
recognition of self-organization and representation in the promotion of peace,
the question is not essentially different in the case of employees in industries
of such a character that interstate commerce is put in jeopardy from the case of
employees of transportation companies. And of what avail is it to protect the
facility of transportation, if interstate commerce is throttled with respect to
the commodities to be transported! [301
U.S. 1, 43] These questions have frequently engaged the
attention of Congress and have been the subject of many inquiries. 8
The steel industry is one of the great basic industries of the United
States, with ramifying activities affecting interstate commerce at every point.
The Government aptly refers to the steel strike of 1919-1920 with its
far-reaching consequences. 9 The fact that there
appears to have been no major disturbance in that industry in the more recent
period did not dispose of the possibilities of future and like dangers to
interstate commerce which Congress was entitled to foresee and to exercise its
protective power to forestall. It is not necessary again to detail the facts as
to respondent's enterprise. Instead of being beyond the pale, we think that it
presents in a most striking way the close and intimate relation which a
manufacturing industry may have to interstate commerce and we have no doubt that
Congress had constitutional authority to safeguard the right of respondent's
employees to self- organization and freedom in the choice of representatives for
collective bargaining.
Fifth. The Means Which the Act Employs.-Questions under the Due Process
Clause and Other Constitutional Restrictions.-Respondent asserts its right to
conduct its business in an orderly manner without being subjected to arbitrary
restraints. What we have said points to the fallacy in the argument. Employees
have their correlative [301 U.S. 1,
44] right to organize for the purpose of securing the redress
of grievances and to promote agreements with employers relating to rates of pay
and conditions of work. Texas & N.O.R. Co. v. Railway S.S. Clerks, supra;
Virginian Railway Co. v. System Federation No. 40. Restraint for the purpose of
preventing an unjust interference with that right cannot be considered arbitrary
or capricious. The provision of section 9(a)10 that representatives, for the
purpose of collective bargaining, of the majority of the employees in an
appropriate unit shall be the exclusive representatives of all the employees in
that unit, imposes upon the respondent only the duty of conferring and
negotiating with the authorized representatives of its employees for the purpose
of settling a labor dispute. This provision has its analogue in section 2,
Ninth, of the Railway Labor Act, as amended (45 U.S.C.A. 152, subd. 9), which
was under consideration in Virginian Railway Co. v. System Federation No. 40,
supra. The decree which we affirmed in that case required the railway company to
treat with the representative chosen by the employees and also to refrain from
entering into collective labor agreements with any one other than their true
representative as ascertained in accordance with the provisions of the act. We
said that the obligation to treat with the true representative was exclusive and
hence imposed the negative duty to treat with no other. We also pointed out
that, as conceded by the government,11 the injunc- [301
U.S. 1, 45] tion against the company's entering into any
contract concerning rules, rates of pay and working conditions except with a
chosen representative was 'designed only to prevent collective bargaining with
any one purporting to represent employees' other than the representative they
had selected. It was taken 'to prohibit the negotiation of labor contracts,
generally applicable to employees' in the described unit with any other
representative than the one so chosen, 'but not as precluding such individual
contracts' as the company might 'elect to make directly with individual
employees.' We think this construction also applies to section 9(a) of the
National Labor Relations Act (29 U.S.C.A. 159(a).
The act does not compel agreements between employers and employees. It does
not compel any agreement whatever. It does not prevent the employer 'from
refusing to make a collective contract and hiring individuals on whatever terms'
the employer 'may by unilateral action determine.' 12 The
act expressly provides in section 9(a) that any individual employee or a group
of employees shall have the right at any time to present grievances to their
employer. The theory of the act is that free opportunity for negotiation with
accredited representatives of employees is likely to promote industrial peace
and may bring about the adjustments and agreements which the act in itself does
not attempt to compel. As we said in Texas & N.O.R. Co. v. Railway &
S.S. Clerks, supra, and repeated in Virginian Railway Co. v. System Federation
No. 40, the cases of Adair v. United States, 208
U.S. 161 , 28 S.Ct. 277, 13 Ann.Cas. 764, and Coppage v. Kansas, 236
U.S. 1 , 35 S.Ct. 240, L.R.A.1915C, 960, are inapplicable to legislation of
this character. The act does not interfere with the normal exercise of the right
of the employer to select its employees or to discharge them. The employer may
not, under cover of that right, intimidate or coerce its employees with respect
to their [301 U.S. 1, 46]
self-organization and representation, and, on the other hand, the Board
is not entitled to make its authority a pretext for interference with the right
of discharge when that right is exercised for other reasons than such
intimidation and coercion. The true purpose is the subject of investigation with
full opportunity to show the facts. It would seem that when employers freely
recognize the right of their employees to their own organizations and their
unrestricted right of representation there will be much less occasion for
controversy in respect to the free and appropriate exercise of the right of
selection and discharge.
The act has been criticized as one-sided in its application; that it subjects
the employer to supervision and restraint and leaves untouched the abuses for
which employees may be responsible; that it fails to provide a more
comprehensive plan,-with better assurances of fairness to both sides and with
increased chances of success in bringing about, if not compelling, equitable
solutions of industrial disputes affecting interstate commerce. But we are
dealing with the power of Congress, not with a particular policy or with the
extent to which policy should go. We have frequently said that the legislative
authority, exerted within its proper field, need not embrace all the evils
within its reach. The Constitution does not forbid 'cautious advance, step by
step,' in dealing with the evils which are exhibited in activities within the
range of legislative power. Carroll v. Greenwich Insurance Co., 199
U.S. 401, 411 , 26 S.Ct. 66; Keokee Coke Co. v. Taylor, 234
U.S. 224, 227 , 34 S.Ct. 856; Miller v. Wilson, 236
U.S. 373, 384 , 35 S.Ct. 342, L.R.A.1915F, 829; Sproles v. Binford, 286
U.S. 374, 396 , 52 S.Ct. 581, 588. The question in such cases is whether the
Legislature, in what it does prescribe, has gone beyond constitutional limits. The procedural provisions of the act are assailed. But these provisions, as
we construe them, do not offend against the constitutional requirements
governing the [301 U.S. 1, 47]
creation and action of administrative bodies. See Interstate Commerce
Commission v. Louisville & Nashville R. Co., 227
U.S. 88, 91 , 33 S.Ct. 185. The act establishes standards to which the Board
must conform. There must be complaint, notice and hearing. The Board must
receive evidence and make findings. The findings as to the facts are to be
conclusive, but only if supported by evidence. The order of the Board is subject
to review by the designated court, and only when sustained by the court may the
order be enforced. Upon that review all questions of the jurisdiction of the
Board and the regularity of its proceedings, all questions of constitutional
right or statutory authority are open to examination by the court. We construe
the procedural provisions as affording adequate opportunity to secure judicial
protection against arbitrary action in accordance with the well-settled rules
applicable to administrative agencies set up by Congress to aid in the
enforcement of valid legislation. It is not necessary to repeat these rules
which have frequently been declared. None of them appears to have been
transgressed in the instant case. Respondent was notified and heard. It had
opportunity to meet the charge of unfair labor practices upon the merits, and by
withdrawing from the hearing it declined to avail itself of that opportunity.
The facts found by the Board support its order and the evidence supports the
findings. Respondent has no just ground for complaint on this score.
The order of the Board required the reinstatement of the employees who were
found to have been discharged because of their 'union activity' and for the
purpose of 'discouraging membership in the union.' That requirement was
authorized by the act. Section 10(c), 29 U.S.C.A. 160(c). In Texas & N.O.R.
Co. v. Railway & S.S. Clerks, supra, a similar order for restoration to
service was made by the court in contempt proceedings for the violation of an
injunction issued by the court to restrain an interference with [301
U.S. 1, 48] the right of employees as guaranteed by the
Railway Labor Act of 1926. The requirement of restoration to service of
employees discharged in violation of the provisions of that act was thus a
sanction imposed in the enforcement of a judicial decree. We do not doubt that
Congress could impose a like sanction for the enforcement of its valid
regulation. The fact that in the one case it was a judicial sanction, and in the
other a legislative one, is not an essential difference in determining its
propriety.
Respondent complaints that the Board not only ordered reinstatement but
directed the payment of wages for the time lost by the discharge, less amounts
earned by the employee during that period. This part of the order was also
authorized by the act. Section 10(c). It is argued that the requirement is
equivalent to a money judgment and hence contravenes the Seventh Amendment with
respect to trial by jury. The Seventh Amendment provides that 'In suits at
common law, where the value in controversy shall exceed twenty dollars; the
right of trial by jury shall be preserved.' The amendment thus preserves the
right which existed under the common law when the amendment was adopted. Shields
v. Thomas, 18 How. 253, 262; In re Wood, 210
U.S. 246, 258 , 28 S.Ct. 621; Dimick v. Schiedt, 293
U.S. 474, 476 , 55 S.Ct. 296, 95 A.L.R. 1150; Baltimore & Carolina Line
v. Redman, 295
U.S. 654, 657 , 55 S.Ct. 890, 891. Thus it has no application to cases where
recovery of money damages is an incident to equitable relief even though damages
might have been recovered in an action at law. Clark v. Wooster, 119
U.S. 322, 325 , 7 S.Ct. 217; Pease v. Rathbun-Jones Engineering Co., 243
U.S. 273, 279 , 37 S.Ct. 283, Ann.Cas.1918C, 1147. It does not apply where
the proceeding is not in the nature of a suit at common law. Guthrie National
Bank v. Guthrie, 173
U.S. 528, 537 , 19 S.Ct. 513. The instant case is not a suit at common law or in the nature of such a suit.
The proceeding is one unknown to the common law. It is a statutory proceeding.
Reinstatement of the employee and payment for time lost are [301
U.S. 1, 49] requirements imposed for violation of the statute
and are remedies appropriate to its enforcement. The contention under the
Seventh Amendment is without merit.
Our conclusion is that the order of the Board was within its competency and
that the act is valid as here applied. The judgment of the Circuit Court of
Appeals is reversed and the cause is remanded for further proceedings in
conformity with this opinion. It is so ordered. Reversed and remanded.
Footnotes
[ Footnote 1 ] Act of July 5, 1935, 49 Stat. 449,
29 U.S.C. 151 et seq. (29 U.S. C.A. 151 et seq.).
[ Footnote 2 ] This section is as follows:
'Section 1. The denial by employers of the right of employees to organize and
the refusal by employers to accept the procedure of collective bargaining lead
to strikes and other forms of industrial strife or unrest, which have the
intent or the necessary effect of burdening or obstructing commerce by (a)
impairing the efficiency, safety, or operation of the instrumentalities of
commerce; (b) occurring in the current of commerce; (c) materially affecting,
restraining, or controlling the flow of raw materials or manufactured or
processed goods from or into the channels of commerce, or the prices of such
materials or goods in commerce; or (d) causing diminution of employment and
wages in such volume as substantially to impair or disrupt the market for
goods flowing from or into the channels of commerce.
'The inequality of bargaining power between employees who do not possess full
freedom of association or actual liberty of contract, and employers who are
organized in the corporate or other forms of ownership association
substantially burdens and affects the flow of commerce, and tends to aggravate
recurrent business depressions, by depressing wage rates and the purchasing
power of wage earners in industry and by preventing the stabilization of
competitive wage rates and working conditions within and between industries.
'Experience has proved that protection by law of the right of employees to
organize and bargain collectively safeguards commerce from injury, impairment,
or interruption, and promotes the flow of commerce by removing certain
recognized sources of industrial strife and unrest, by encouraging practices
fundamental to the friendly adjustment of industrial disputes arising out of
differences as to wages, hours, or other working conditions, and by restoring
equality of bargaining power between employers and employees.
'It is hereby declared to be the policy of the United States to eliminate the
causes of certain substantial obstructions to the free flow of commerce and to
mitigate and eliminate these obstructions when they have occurred by
encouraging the practice and procedure of collective bargaining and by
protecting the exercise by workers of full freedom of association,
self-organization, and designation of representatives of their own choosing,
for the purpose of negotiating the terms and conditions of their employment or
other mutual aid or protection.' 29 U.S. C.A. 151.
[ Footnote 3 ] See note 2.
[ Footnote 4 ] What is quoted above is followed
by this proviso-not here involved-' Provided, That nothing in this Act
(chapter), or in the National Industrial Recovery Act (U.S.C., Supp. VII, title
15, Secs. 701-712), as amended from time to time (sections 701 to 712 of Title
15), or in any code or agreement approved or prescribed thereunder, or in any
other statute of the United States, shall preclude an employer from making an
agreement with a labor organization (not established, maintained, or assisted by
any action defined in this Act (chapter) as an unfair labor practice) to require
as a condition of employment membership therein, if such labor organization is
the representative of the employees as provided in section 9(a) (section 159(a)
of this title), in the appropriate collective bargaining unit covered by such
agreement when made.'
[ Footnote 5 ] 42 Stat. 159 (7 U.S.C.A. 181 et
seq.).
[ Footnote 6 ] 42 Stat. 998 (7 U.S.C.A. 1-17).
[ Footnote 7 ] Sections 416, 422, 41 Stat. 484,
488 (49 U.S.C.A. 13, 15a); Interstate Commerce Act, 13(4), 49 U.S.C.A. 13(4).
[ Footnote 8 ] See, for example, Final Report of
the Industrial Commission (1902), vol. 19, p. 844; Report of the Anthracite Coal
Strike Commission (1902), Sen.Doc. No. 6, 58th Cong., Spec.Sess.; Final Report
of Commission on Industrial Relations (1916), Sen.Doc. No. 415, 64th Cong., 1st
Sess., vol. 1; National War Labor Board, Principles and Rules of Procedure
(1919), p. 4; Bureau of Labor Statistics, Bulletin No. 287 (1921), pp. 52-64;
History of the Shipbuilding Labor Adjustment Board, U.S. Bureau of Labor
Statistics, Bulletin No. 283.
[ Footnote 9 ] See Investigating Strike in Steel
Industries, Sen.Rep. No. 289, 66th Cong., 1st Sess.
[ Footnote 10 ] The provision is as follows:
'Sec. 9(a). Representatives designated or selected for the purposes of
collective bargaining by the majority of the employees in a unit appropriate for
such purposes, shall be the exclusive representatives of all the employees in
such unit for the purposes of collective bargaining in respect to rates of pay,
wages, hours of employment, or other conditions of employment: Provided, That
any individual employee or a group of employees shall have the right at any time
to present grievances to their employer.' 29 U.S.C.A. 159(a).
[ Footnote 11 ] See Virginian Railway Co. v.
System Federation No. 40, 300
U.S. 515 , 57 S.Ct. 592, 600, note 6, decided March 29, 1937.
[ Footnote 12 ] See note 11.
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