COPYRIGHT MATERIAL OMITTED David C. Frederick (Argued), Kellogg, Huber, Hansen, Todd, Evans & Figel, Washington, DC, R.C. Westmoreland, Kathleen F. Beers, Westmoreland, Vesper, Schwartz & Quattrone, West Atlantic City, NJ, Attorneys for Appellants.
John P. Mandler (Argued), Bruce Jones, Kristin R. Eads, Faegre & Benson, LLP, Minneapolis, MN, Robert Machi Morgan, Melhuish, Monaghan, Arvidson, Arbutyn & Lisowski, Livingston, NJ, Attorneys for Appellee.
Before FUENTES, ROSENN,* and ROTH,** Circuit Judges.
Plaintiffs are New Jersey blueberry farmers who filed suit against a pesticide company for damages to their crops based on theories of products liability, negligence, consumer fraud, and breach of express warranty. In two separate orders, the District Court granted summary judgment in favor of defendant Novartis 1) based on releases that some of the plaintiffs had signed before filing suit, and 2) based on its holding that the remaining plaintiffs' claims were preempted by the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA").
The principal issue on appeal is whether Plaintiffs' claims are preempted by FIFRA. We conclude that, under Bates v. Dow Agrosciences LLC, 544 U.S. 431, 125 S. Ct. 1788, 161 L. Ed. 2d 687 (2005), decided after the District Court's rulings in this case, Plaintiffs' claims for defective design, defective manufacture, negligent testing, negligent misrepresentation, and fraud are not preempted because those claims do not impose labeling requirements in addition to or different from those required by FIFRA. Accordingly, we vacate the District Court's judgment as to those claims and remand for further proceedings. We also remand for the District Court to consider whether, under Bates, FIFRA preempts Plaintiffs' failure-to-warn claim.
Plaintiffs also appeal the District Court's granting of summary judgment against the claims of seven farmers who signed releases with Novartis. For the reasons that follow, we affirm the District Court's dismissal of those claims.
For several years, Plaintiffs (the "farmers") treated the blueberry plants on their farms with two insecticides manufactured by defendant Novartis Crop Protection, Inc. ("Novartis"): Diazinon 50 WP ("50 WP") and Diazinon AG 500 ("AG 500"). Before applying the insecticide to the plants, the farmers engaged in the practice of "tank mixing," whereby they would mix these insecticides with the fungicides Captan or Captec (the "fungicides"). The farmers allege that tank mixing is a common and well-known practice among virtually all farmers that dates back to the introduction of pesticides. For several years, the farmers safely mixed the fungicides with Diazinon 50 WP or Diazinon AG 500 and experienced no crop damage.
This changed, however, when Novartis produced and marketed to the farmers a new insecticide known as Diazinon AG 600 ("AG 600"). The company distributed advertising literature claiming that its new product was safer and more effective than AG 500 or 50 WP. The farmers began buying and using AG 600 in the Spring of 1997, mixing the new product with the fungicides as they had done with previous Novartis insecticides. Unbeknownst to the farmers, however, AG 600 contained an additional ingredient known as a "surfactant," which was not found in 50 WP or AG 500.1 The farmers allege that the surfactant, when mixed with the fungicides, caused systematic injury to their blueberry plants, such as blotches, depressions, and spots on the plants, as well as plant death. The farmers also allege that Novartis failed to reveal the addition of the surfactant to Novartis field personnel and failed to include this information in any of its marketing materials.
In response to the damages to their 1997 blueberry crop, the farmers hired Dr. William Sciarappa ("Sciarappa"), a plant pathologist, to investigate the farmers' crop damage. Novartis sent its representative, Dr. Neil Lapp ("Lapp"), also a plant pathologist. Almost all contact between the farmers and Novartis between August 1997 and December 1997 was conducted by Lapp on behalf of Novartis and Sciarappa on behalf of the farmers. Sciarappa's investigations concluded that AG 600 can cause plant damage when mixed with the fungicides.
in full satisfaction and extinguishment of all claims and causes of action against [Novartis] ... arising out of any damage or loss, present or future, to crops, plants, animals, fish or land, direct or indirect, known or unknown, allegedly sustained by the [settling plaintiff] as a result of the use of [AG 600].
The releases also provided that " [i]t is agreed that this is a business decision in compromise of a disputed claim and that the making of this payment is not an admission of liability on the part of [Novartis]."
The following year, the farmers noticed continuing damage to their blueberry crop, including continued inhibition of plant growth, from their use of AG 600 in 1997. When the farmers contacted Novartis, Novartis informed them that it would not compensate the farmers for any damages to their 1998 crop because the releases signed by the settling farmers precluded any future claims.
The farmers commenced this action seeking damages based on claims of strict products liability, negligence, negligent misrepresentation, fraud, breach of express warranty, and breach of the New Jersey Consumer Fraud Act. The thirteen farmers who signed settlement agreements bring additional claims of fraud in the inducement and breach of the covenant of good faith and fair dealing.
FIFRA is comprehensive regulatory statute that covers, among other things, the use, sale, and labeling of pesticides. FIFRA requires a manufacturer seeking to register a pesticide to submit a proposed label to the EPA along with supporting data. 7 U.S.C. § 136a(c) (1) (C), (F). The EPA will register the pesticide if it determines that the pesticide is efficacious and will not cause unreasonable adverse effects on humans and the environment, and that its label complies with FIFRA's prohibition on misbranding. A pesticide is "misbranded" under FIFRA if its label contains a statement that is "false or misleading in any particular," does not contain adequate instructions for use, or omits necessary warnings or cautionary statements. 7 U.S.C. § 136(q) (1) (A), (F), (G). FIFRA also provides that states "shall not impose or continue in effect any requirements for labeling or packaging in addition to or different from those required under this Act." 7 U.S.C. § 136v(b).
The District Court held that FIFRA preempts the farmers' claims of strict products liability, negligence, breach of express warranty, negligent misrepresentation, fraud, and breach of the New Jersey Consumer Fraud Act. In determining that § 136v(b) preempted the farmers' claims, the District Court applied the "inducement test" used by the majority of circuits at the time, whereby claims are preempted by FIFRA "`if a judgment against [the defendant] would induce [the defendant] to alter its product label.'" Mortellite, 278 F. Supp. 2d at 398 (quoting Dow Agrosciences LLC v. Bates, 332 F.3d 323, 331 (5th Cir. 2003)).
The District Court determined that, although the farmers' claims are purportedly based on other theories, they in fact "relate directly or indirectly to the fact that Novartis did not warn on its product label that [AG 600] should not be tank mixed with Captan or Captec." Id. Because the current label on Novartis had been approved by the EPA pursuant to FIFRA, the District Court concluded that " [a]llowing these claims to proceed would be, in effect, permitting State law damages claims to impose label requirements in addition to or different from the federally approved label and FIFRA," contrary to FIFRA's preemption component. Id. (internal quotation marks omitted). Thus, the District Court held that the claims were preempted by FIFRA.
Following the District Court's decision, the Supreme Court clarified the scope of FIFRA preemption in Bates. v. Dow Agrosciences LLC, 544 U.S. 431, 125 S. Ct. 1788, 161 L. Ed. 2d 687 (2005). In Bates, Plaintiffs were Texas peanut farmers who brought actions against a pesticide manufacturer based on alleged injuries to their crops. Id. at 435, 125 S. Ct. 1788. The pesticide's label stated that it was recommended for use in the areas where the peanut farmers experienced crop damage. Id. The farmers alleged that, in reality, the pesticide was unsafe for crops grown in soil with a pH level of 7.0 or greater and that, as a result, it injured their peanut crops, which were grown in soil with pH levels of 7.2 or higher. Id. The farmers brought claims based on theories of strict liability and negligence, and claims of fraud, breach of warranty, and violation of the Texas Deceptive Trade Practices-Consumer Protection Act. The District Court dismissed one of the plaintiffs' claims on state law grounds and rejected the others under FIFRA's preemption provision. The Court of Appeals affirmed, concluding that the plaintiffs' claims were preempted by FIFRA because those claims, if successful, "would give Dow a `strong incentive' to change its label." Id. at 436, 125 S. Ct. 1788 (quoting Dow Agrosciences, 332 F.3d at 331-32).
The Supreme Court reversed, rejecting the inducement test as a means of determining preemption by FIFRA. Id. at 444-46, 125 S. Ct. 1788. The Court stated that an "event, such as a jury verdict, that might `induce' a pesticide manufacturer to change its label" should not be viewed as imposing a new labeling requirement in conflict with FIFRA. Id. at 443-45, 125 S. Ct. 1788. Such an event "merely motivates an optional decision" to change a label and therefore "does not qualify as a requirement" to change a label. Id. Moreover, the Court reasoned that, even where a claim would impose a requirement to change a label, such a claim is not preempted by FIFRA unless it imposes a requirement in addition to or different from those under FIFRA. Id. at 444, 125 S. Ct. 1788.
In place of the inducement test, the Supreme Court set forth a two-part test for determining whether a state statute or common law claim is preempted by FIFRA. First, the statute or common law rule must create a requirement for labeling or packaging. Id. Second, the labeling or packaging requirement must be in addition to or different from those required under FIFRA. Id. An action is preempted by FIFRA only if it fulfills both requirements of the test. Id.
Under the Bates test, the farmers' claims of strict liability, negligent testing, and breach of warranty are not preempted by FIFRA. In Bates, the Supreme Court faced an almost identical question and concluded that the plaintiffs' claims for strict liability, negligent testing, and breach of warranty were not preempted by FIFRA because such claims do not require the manufacturer to label or package the products in any particular manner. Id. at 444-46, 125 S. Ct. 1788. The Supreme Court reasoned that " [r]ules that require manufacturers to design reasonably safe products, to use due care in conducting appropriate testing of their products, to market products free of manufacturing defects, and to honor their express warranties or other contractual commitments plainly do not qualify as requirements for `labeling or packaging.'" Id. at 444, 125 S. Ct. 1788. The Court added that, " [n]one of these common-law rules requires that manufacturers label or package their products in any particular way." Id. Although the express warranty in Bates was located on the product's label, the state express warranty rule would not impose a labeling requirement because the cause of action asked "only that a manufacturer make good on the contractual commitment that it voluntarily undertook by placing that warranty on its product." Id. Because an express warranty rule does not "require the manufacturer to make an express warranty, or in the event that the manufacturer elects to do so, to say anything in particular in that warranty, the rule does not impose a requirement for labeling or packaging." Id. (internal quotation marks and citation omitted).
Extending this reasoning to the case at hand, we conclude that FIFRA does not preempt claims based on theories of strict liability, negligent testing, and breach of express warranty. As the Supreme Court explained, such common law claims plainly do not impose labeling requirements, and therefore cannot conflict with FIFRA. While success on these claims may induce Defendant to change the label, this "attenuated pressure" does not amount to a "requirement" within the meaning of FIFRA's preemption provision. In other words, a manufacturer may change its label as a result of a verdict against it, but it is not required to do so. We therefore vacate the District Court's judgment dismissing Plaintiffs' claims of strict liability, negligent testing, and breach of express warranty.
Plaintiffs allege their claims of negligent misrepresentation, fraud, and breach of the New Jersey Consumer Fraud Act are primarily based on oral misrepresentations made to them by representatives of Novartis while marketing AG 600. In Bates, the Supreme Court determined that claims for negligent misrepresentation, fraud, and breach of a statutory consumer fraud act were not preempted to the extent that they were based on oral representations made by Defendant. Id. at 444 n. 17, 125 S. Ct. 1788. The Court reasoned that, " [b]ecause FIFRA defines labeling as `all labels and all other written, printed, or graphic matter' that accompany a pesticide, § 136(p) (2), any requirement that applied to a sales agent's oral representations would not be a requirement for `labeling or packaging'" and therefore would not fulfill the first requirement of the Bates test. Id. We conclude that, to the extent that Plaintiffs claims for negligent misrepresentation, fraud, and breach of the statutory consumer fraud act are based on oral misrepresentations, the claims are not preempted by FIFRA.
Plaintiffs' claims of negligent misrepresentation, fraud, and breach of the New Jersey Consumer Fraud Act are also based on written misrepresentations in brochures and marketing materials that Novartis used to market AG 600 to Plaintiffs. In determining that FIFRA preempted these claims, the District Court relied on Kuiper v. American Cyanamid Company, 131 F.3d 656 (7th Cir. 1997), in which the Seventh Circuit held that claims challenging off-label statements about product safety that merely reiterate information found on the label are preempted because such challenges indirectly challenge the label. Id. at 662-63. This holding is inconsistent with Bates, which holds that causes of action which do not directly involve a label but which merely induce a company to change its label are not preempted under FIFRA. Bates, 544 U.S. 431 at 444, 125 S. Ct. 1788, 161 L. Ed. 2d 687. We conclude that Plaintiffs' claims of negligent misrepresentation, fraud, and statutory consumer fraud are preempted only to the extent that those claims rely on written misrepresentations that qualify as "labels" or "labeling" as defined by FIFRA.
7 U.S.C. § 136(p) (2). Because the question of whether the alleged written misstatements fall within this definition was not fully briefed and argued on appeal, we remand to the District Court so that it may consider the issue under Bates.
Unlike the previous claims, Plaintiffs' failure-to-warn claim clearly fulfills the first requirement of the Bates test by creating a labeling requirement for a product. Id. at 444, 125 S. Ct. 1788. That said, preemption applies only to those claims which, if successful, would create labeling requirements additional to or different from those already set forth in FIFRA. Id. Claims that result in requirements that are consistent with FIFRA requirements and which only provide new remedies are not preempted. Id. at 447-48, 452, 125 S. Ct. 1788.
Plaintiffs allege that Novartis was negligent in its failure to warn Plaintiffs that AG 600 could be harmful to their crops if mixed with a fungicide. The issue of whether Plaintiffs' failure-to-warn claims would, if successful, create requirements in addition to or different from those under FIFRA has not been fully briefed and argued on appeal. We therefore remand that issue to the District Court.
The farmers also appeal the District Court's holding that seven of the settling farmers (the "dismissed farmers") could not, as a matter of law, establish the reasonable reliance on a statement by Novartis required for a claim of fraud in the inducement.4 Here, the settling farmers allege that Novartis made material misrepresentations that, notwithstanding the language of the releases, if future crops suffered damage as a result of the farmers' use of AG 600 in 1997, Novartis would pay for this damage when it manifested. The settling farmers allege that they relied on this misrepresentation when signing the releases.
Under New Jersey law, a settlement agreement is a form of contract, and courts must look to the general rules of contract law to resolve disputes over a settlement agreement. See Borough of Haledon v. Borough of N. Haledon, 358 N.J.Super. 289, 817 A.2d 965, 975 (2003). Generally, the plain language of a settlement agreement is entitled to a presumption of validity. Peter W. Kero, Inc. v. Terminal Constr. Corp., 6 N.J. 361, 78 A.2d 814, 817-18 (1951); see also Jannarone v. W.T. Co., 65 N.J.Super. 472, 168 A.2d 72, 74 (1961) (explaining that settlement agreement should be enforced given high value judicial system places on settlement). There is an exception to this presumption of validity where one party alleges fraud in the inducement of the contract. See Kero, 78 A.2d at 818.
In order to prove equitable fraud in the inducement of the contract, the plaintiff must demonstrate: 1) a material misrepresentation of a presently existing or past fact, 2) reasonable reliance on the misrepresentation by the plaintiff, and 3) resulting damages to the plaintiff. See Jewish Ctr. of Sussex County v. Whale, 86 N.J. 619, 432 A.2d 521, 524 (1981); Weil v. Express Container Corp., 360 N.J.Super. 599, 824 A.2d 174, 182 (2003).
None of the dismissed farmers allege that Novartis, either directly or through a representative such as Lapp, told them that they would or could receive damages for the 1998 crop. Rather, the dismissed farmers allege that they heard through Sciarappa and other farmers that Novartis would pay for damage to the 1998 crop, and that they relied on this representation when signing their settlements and releases. Specifically, Bill Augustine, Lou Condo, and Jeffrey Whalen allege that they were told by both Sciarappa and other farmers, and David Rizzotte, Carmen Merlino, Joseph Berenato, and Anthony Vaccarella allege that they were told only by other farmers and not by Sciarappa.
[i]f a party to a transaction makes a false statement to another party, intending or knowing that the other party in the transaction will hear it and rely on it, and the second party to the transaction actually hears the substance of the misrepresentation, by means however attenuated, and considers the actual content of that misrepresentation when making the decision to complete the transaction, then that person has established indirect reliance to support a fraud claim.
Summary judgment was appropriate on the dismissed farmers' claims because they cannot demonstrate that their reliance on the statements of Sciarappa or other farmers was reasonable. See Kaufman v. I-Stat Corp., 324 N.J.Super. 344, 735 A.2d 606, 609 (1999) ("The maker of a fraudulent misrepresentation is subject to liability for pecuniary loss to another who acts in justifiable reliance upon it if the misrepresentation, although not made directly to the other, is made to a third person and the maker intends or has reason to expect that its terms will be repeated or its substance communicated to the other, and that it will influence his conduct in the transaction or type of transaction involved.") (emphasis added) (quoting Restatement (Second) of Torts § 533 (1977)), judgment reversed on other grounds, Kaufman, 754 A.2d at 1201. It is clear from their deposition testimony that the dismissed farmers were aware of the possibility of future damages. Moreover, Sciarappa testified that each individual farmer was responsible for negotiating his or her own settlement with Novartis.5 Based on this evidence, no reasonable juror could find that the settling farmers reasonably relied on the statements of Sciarappa or other farmers in disregarding the plain language of the releases pertaining to future damages.
Moreover, the theory of indirect reliance requires that the fraudulent statement either be made by the defendant's agent directly to the victims, or by the defendant to a third person with the intention that the victim hear it. See Kaufman, 754 A.2d at 1195. In this case, neither Sciarappa nor any of the farmers was an agent of Novartis. Furthermore, the dismissed farmers put forth no evidence that Novartis made the allegedly fraudulent statements to Sciarappa or the other farmers with the intention that the dismissed farmers hear the statements. Thus, the dismissed farmers cannot demonstrate an essential element of indirect reliance.
The dismissed farmers argue that, even if the theory of indirect reliance is inapplicable, their claims should survive summary judgment because Sciarappa was their agent and thus all representations made to him by Novartis were representations made to them as Sciarappa's principal.6 Although Sciarappa performed extensive work for the farmers with regard to calculating their damages, he was not their agent for the purposes of negotiating their settlement. Sciarappa's deposition testimony explicitly states that he was an "independent person" and it was each farmer's responsibility to negotiate his or her own settlement. Indeed, Sciarappa was not even aware of the releases until months after all the settlements had been signed.
In sum, because plaintiffs Augustine, Berenato, Condo, Merlino, Rizzotte, Vaccarella, and Whalen cannot demonstrate the necessary elements for their claims of fraud, we affirm the District Court's grant of summary judgment enforcing the releases. Because the plain language of the releases bars these farmers' remaining claims, we affirm the District Court's grant of summary judgment as to those remaining claims.
The Third Amended Complaint lists as John Doe plaintiffs "fictitious farmers not yet identified" in order to "protect those plaintiffs' interests." There is no allegation or evidence of the citizenship of these fictitious farmers. John Doe parties destroy diversity jurisdiction if their citizenship cannot truthfully be alleged. See Kiser v. Gen. Elec. Corp., 831 F.2d 423, 426 n. 6 (3d Cir. 1987). However, the Supreme Court has held that courts of appeals have the authority to dismiss dispensable John Doe parties in order to preserve diversity jurisdiction. See Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 827, 109 S. Ct. 2218, 104 L. Ed. 2d 893 (1989). Here, the named plaintiffs can obtain complete relief without the presence of the John Doe plaintiffs, and any claims arising between the John Doe plaintiffs and Novartis can be adjudicated in a subsequent action. We conclude that the John Doe plaintiffs are dispensable parties, and we will therefore dismiss their claims.
For the reasons stated above, we vacate the District Court's judgment dismissing the plaintiffs' claims as preempted by FIFRA and remand for further proceedings consistent with this opinion. We also remand to the District Court to determine whether, under Bates, FIFRA preempts 1) Plaintiffs' negligent misrepresentation, fraud, and statutory fraud claims to the extent they are based on written misrepresentations and 2) Plaintiffs' failure-to-warn claim. We affirm the District Court's grant of summary judgment dismissing the claims of plaintiffs Augustine, Berenato, Condo, Merlino, Rizzotte, Vaccarella, and Whalen, and we dismiss the claims of the John Doe plaintiffs.
The District Court had diversity jurisdiction over this case pursuant to 28 U.S.C. § 1332. We have jurisdiction over the District Court's final order pursuant to 28 U.S.C. § 1291. We exercise plenary review over the District Court's grant of summary judgment See Turner v. Hershey Chocolate U.S., 440 F.3d 604, 611 (3d Cir. 2006). Our review must determine whether "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c).
Sciarappa testified that he never informed any of the farmers that Novartis would be discussing settlement for any damages that occurred in 1998 because it was not his responsibility, as he was "not speaking for Novartis" and "it was up to [the farmers] to discuss [future damages] with Novartis."


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[239 U.S. 486, 487] Mr. O. M. Brockett for appellants.
[239 U.S. 486, 489] Messrs. Eskil C. Carlson, H. W. Byers, and Earl M. Steer for appellees.
The Northwestern Laundry and T. R. Hazard, its president, filed a bill in the district court of the United States for the southern district of Iowa, against the city of Des Moines, Iowa; James R. Hanna, mayor; W. A. Needham, commissioner; Zell G. Roe, commissioner; F. T. Van Liew, commissioner; J. I. Myerly, commissioner; W. H. Byers, commerce counsel; R. O. Brennan, city solicitor; Eskil C. Carlson, assistant city solicitor; Harry McNutt, smoke inspector; and Paul Beer, W. H. Harwood, L. Harbach, B. S. Walker, and Geo. France, members smoke abatement commission. The purpose of the bill was to enjoin the enforcement of an ordinance of the city of Des Moines, effective September 6th, 1911, which provided that the emission of dense smoke in por- [239 U.S. 486, 490] tions of that city should be a public nuisance and prohibited the same. To that end the ordinance authorized the appointment of a smoke inspector, and otherwise dealt with the subject with a view to effecting the prohibited purpose declared. The case was heard upon the bill and a motion practically amounting to a demurrer.
The protection of the due process and equal protection clauses of the 14th Amendment is invoked. It is insisted that the ordinance is void because its standard of efficiency requires the remodeling of practically all furnaces which were in existence at the time of its adoption; it forbids remodeling or substituted equipment without a prescribed license; it forbids new construction without such license; it fails to specify approved equipment, and instead delegates, first to the inspector, and second, to the smoke abatement commission, the unregulated discretion to arbitrarily prescribe the requirements in each case, without reference to any other as to the required character of smoke prevention device, thus making the right of complainants and their class to own and operate such furnaces subject to the pleasure of the inspector and commission. It is averred that the ordinance exceeds the authority delegated to the city by the legislature; that it attempts to substitute its own definition of the crime and nuisance committed by the emission of dense smoke for that enacted by the legislature in the act under the pretended authority of which the ordinance is adopted; that it is unreasonable and tyrannical and exceeds the authority delegated for want of uniformity as to the whole city and because the exceptions specified are not natural and just. It is alleged that the ordinance prescribes arbitrary tests of degrees of density, and enables the inspector to present irrebutta- [239 U.S. 486, 491] ble proof of violation; that it provides for unlimited prosecutions and successive fines, constituting excessive punishment in the aggregate, without adequate remedy or relief, and undertakes to deprive the courts of power to determine whether the nuisances have in fact been committed or maintained.
The decree was a general one on the merits, and, as the bill charged a violation of the 14th Amendment not so frivolous as to fail to give original jurisdiction, the appeal to this court from the final decree brings the whole case here. Holder v. Aultman, M. & Co. 169 U.S. 81, 88 , 42 S. L. ed. 669, 671, 18 Sup. Ct. Rep. 269; Field v. Barber Asphalt Paving Co. 194 U.S. 618, 620 , 48 S. L. ed. 1142, 1152, 24 Sup. Ct. Rep. 784; Boise Artesian Hot & Cold Water Co. v. Boise City, 230 U.S. 84, 91 , 57 S. L. ed. 1400, 1406, 33 Sup. Ct. Rep. 997.
That such emission of smoke is within the regulatory power of the state has been often affirmed by state courts. Harmon v. Chicago, 110 Ill. 400, 51 Am. Rep. 698; Bowers v. Indianapolis, 169 Ind. 105, 81 N. E. 1097, 13 Ann. Cas. 1198; People v. Lewis, 86 Mich. 273, 49 N. W. 140; St. Paul v. Haugbro, 93 Minn. 59, 66 L.R.A. 441, 106 Am. St. Rep. 427, 100 N. W. 470, 2 Ann. Cas. 580; State v. Tower, 185 Mo. 79, 68 L.R.A. 402, 84 S. W. 10; Rochester v. Macauley-Fien Mill Co. 199 N. Y. 207, 32 L.R.A.(N.S.) 554, 92 N. E. 641. And such appears to be the law in Iowa. McGill v. Pintsch Compressing Co. 140 Iowa, 429, 20 L.R.A.(N.S.) 466, 118 N. W. 786.
An Act Declaring the Emission of Smoke within the Corporate Limits of Certain Cities to be a Public Nuisance, and Conferring upon Such Cities Additional Powers for the Abatement of Such Nuisances. . . .
Section 1. Declared a nuisance.-The emission of dense smoke within the corporate limits of any of the [239 U.S. 486, 493] cities of this state now or hereafter having a population of sixty-five thousand (65,000) inhabitants or over, including cities acting under the commission plan of government is hereby declared to be a public nuisance.
Section 2. Abatement.-Every such city is hereby empowered to provide by ordinance for the abatement of such nuisance either by fine or imprisonment or by action in the district court of the county in which such city is located, or by both, such action to be prosecuted in the name of the city. They may also by ordinance provide all necessary rules and regulations for smoke inspection and the abatement and prevention of the smoke nuisance. 34 Laws of Iowa, chap. 37, p. 27.
An Act Declaring the Emission of Smoke within the Corporate Limits of Certain Cities, Including Cities Acting under Special Charter, to be a Public Nuisance and Conferring upon Such Cities Additional Powers for the Abatement of Such Nuisances and Repealing Chapter Thirty-seven (37) of the Laws of the Thirty-fourth General Assembly. . . .
Section 1. Declared a nuisance.-The emission of dense smoke within the corporate limits of the cities of the state, including cities acting under commission form of government, now or hereafter having a population of thirty thousand or over and in cities acting under special charter or hereafter having a population of sixteen thousand or over, is hereby declared a nuisance.
Section 2. Abatement.-Every such city is hereby empowered to provide by ordinance for the abatement of [239 U.S. 486, 494] such nuisance either by fine or imprisonment, or by action in the district court of the county in which such city is located, or by both; such action to be prosecuted in the name of the city. They may also by ordinance provide all necessary rules and regulations for smoke inspection and the abatement and prevention of the smoke nuisance.
Section 3. Repeal.-That chapter thirty-seven (37) of the laws of the thirty-fourth general assembly be and the same is hereby by repealed. 35 Laws of Iowa, p. 43.
The former statute was repealed by the new one. The effect of this repeal upon the validity of the ordinance is a state question, and as we understand the Iowa decisions, the authority of the ordinance here in question remained unimpaired. The statutory change did not have the effect to annul the ordinance passed under the former identical grant of authority. Allen v. Davenport, 107 Iowa, 90, 77 N. W. 532; State v. Prouty, 115 Iowa, 657, 84 N. W. 670.
It is further contended that, conceding the statutory authority, the ordinance is in excess of the legislative grant. This question does not seem to have been passed upon specifically in any Iowa case called to our attention. The statute, after declaring the emission of dense smoke within the corporate limits of such cities as Des Moines to be a nuisance, authorizes the city to provide by ordinance for the abatement of such nuisance by fine or imprisonment or by action in the district court of the county, or both, such action to be prosecuted in the name of the city; and, furthermore, municipalities are authorized to provide by ordinance all necessary rules and regulations for smoke inspection and the abatement or prevention of the smoke nuisance. The smoke inspector must be qualified by training and experience to understand the theory and practice of smoke inspection. He has the benefit of counsel of the smoke abatement commis- [239 U.S. 486, 495] sion, consisting of five members to be appointed by the city council, at least one of whom must have had experience in the installation and conduct of power and heating plants. From the smoke inspector there is an appeal to the smoke abatement commission in case of disagreement over plans for newly constructed plants or reconstruction of old ones. This grant of authority would seem to be sufficient to authorize the passage of an ordinance of a reasonable nature, such as we believe the one now under consideration to be. It delegates authority to carry out details to boards of local commissioners. That such rules and regulations are valid, subject as they are to final consideration in the courts, to determine whether they are reasonably adapted to accomplish the purpose of a statute, has been frequently held. 2 Dill. Mun. Corp. 5th ed. 574. We find nothing in the Iowa cases to indicate that the supreme court of that state has laid down any different rule upon this question. That the courts of Iowa may be resorted to in case of an abuse of the powers vested in the inspector and commission seems to follow from the decision of the supreme court of that state in Hubbell v. Higgins, 148 Iowa, 36, 126 N. W. 914, Ann. Cas. 1912B, 822.
As to the attack upon the ordinance because of arbitrary classification, this question has been so often discussed that nothing further need be said. The ordinance applies equally to all coming within its terms, and the fact that other businesses might have been included does not make such arbitrary classification as annuls the legislation. Nor does it make classification illegal because certain cities are included and others omitted in the statute. Eckerson v. Des Moines, 137 Iowa, 452, 115 N. W. 177.

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Afternoon POWER-HOUR Total (Won Yday's!) ~ *RED HOT* 19-6 L25 MLB! 7-1 L8!
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MLB Money Line on White Sox v. Tigers *247-191 Run*!
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During the Gilded Age, America developed its mass production, scientific management, and managerial skills.
Large corporations or trusts managed the manufacturing of raw materials such as coal, iron, and oil.
The Bessemer process for manufacturing steel led to America’s first billion-dollar corporation, United States Steel.
Improvements in workflow, such as mass production and scientific management, contributed greatly to economic growth.
Second Industrial Revolution: The Second Industrial Revolution, also known as the “Technological Revolution,” was a phase of the larger Industrial Revolution corresponding to the latter half of the nineteenth century until World War I. It is considered to have begun with Bessemer steel in the 1860s and culminated in mass production and the production line.
Bessemer process: The first inexpensive industrial process for the mass production of steel from molten pig iron.
The Second Industrial Revolution, also known as the “Technological Revolution,” was a phase of rapid industrialization in the final third of the nineteenth century and the beginning of the twentieth century. The First Industrial Revolution, which ended in the early-mid 1800s, was punctuated by a slowdown in macroinventions before the Second Industrial Revolution in 1870. Though a number of its characteristic events can be traced to earlier innovations in manufacturing, such as the invention of the Bessemer process in 1856, the Second Industrial Revolution is generally dated between 1870 and 1914 up to the start of World War I.
Advancements in manufacturing and production technology enabled the widespread adoption of preexisting technological systems such as telegraph and railroad networks, gas and water supply, and sewage systems, which had earlier been concentrated to a few select cities. The enormous expansion of rail and telegraph lines after 1870 allowed unprecedented movement of people and ideas, which culminated in a new wave of globalization. In the same period, new systems were introduced, most significantly electrical power and telephones.
A synergy between iron and steel, and railroads and coal developed at the beginning of the Second Industrial Revolution. Railroads allowed cheap transportation of materials and products, which in turn led to cheap rails to build more roads. Railroads also benefited from cheap coal for their steam locomotives. This synergy led to the laying of 75,000 miles of track in the United States in the 1880s, the largest amount anywhere in world history.
By 1900, the process of economic concentration had extended into most branches of industry—a few large corporations, some organized as “trusts” (e.g., Standard Oil), dominated in steel, oil, sugar, meatpacking, and the manufacturing of agriculture machinery. Other major components of this infrastructure were the new methods for manufacturing steel, especially the Bessemer process. The first billion-dollar corporation was United States Steel, formed by financier J. P. Morgan in 1901, who purchased and consolidated steel firms built by Andrew Carnegie and others.
Diagram of the Bessemer converter: Air blown through holes in the converter bottom creates a violent reaction in the molten pig iron that oxidizes the excess carbon, converting the pig iron to pure iron or steel, depending on the residual carbon.
Increased mechanization of industry and improvements to worker efficiency increased the productivity of factories while undercutting the need for skilled labor. Mechanical innovations such as batch and continuous processing began to become much more prominent in factories. This mechanization made some factories an assemblage of unskilled laborers performing simple and repetitive tasks under the direction of skilled foremen and engineers. In some cases, the advancement of such mechanization substituted for low-skilled workers altogether. Both the number of unskilled and skilled workers increased, as their wage rates grew. Engineering colleges were established to feed the enormous demand for expertise. Together with rapid growth of small business, a new middle class was quickly growing, especially in northern cities.
The period from 1870 to 1890 saw the greatest increase in economic growth in such a short period as ever in previous history. Living standards improved significantly as the prices of goods fell dramatically due to the increases in productivity. This caused unemployment and great upheavals in commerce and industry, with many laborers being displaced by machines and many factories, ships, and other forms of fixed capital becoming obsolete in a very short time span. Crop failures no longer resulted in starvation in areas connected to large markets through transport infrastructure. By 1870, the work done by steam engines exceeded that done by animal and human power. Horses and mules remained important in agriculture until the development of the internal combustion tractor near the end of the Second Industrial Revolution. Improvements in steam efficiency, such as triple-expansion steam engines, allowed ships to carry much more freight than coal, resulting in greatly increased volumes of international trade.
The Second Industrial Revolution continued into the twentieth century with early factory electrification and the production line, and ended at the start of the World War I.
Completed in 1869, the Transcontinental Railroad served as a vital link for trade, commerce, and travel between the East and West of the United States.
Railroads replaced stagecoach lines and wagon trains, and provided safer, faster, and cheaper transportation for goods and passengers.
Many of the workers on the railroad were army veterans and Irish and Chinese immigrants.
Known as the “Pacific Railroad” when it opened, the railroad served as a vital link for trade, commerce, and travel and opened up vast regions of the North American heartland for settlement.
First Transcontinental Railroad: A term for a contiguous railroad line constructed in the United States between 1863 and 1869 west of the Mississippi and Missouri Rivers to connect the Pacific coast at San Francisco Bay with the existing eastern U.S. rail network at Council Bluffs, Iowa.
Great American Desert: A term used in the nineteenth century to describe the western part of the Great Plains east of the Rocky Mountains in North America to about the 100th meridian. The area is now usually referred to as the “High Plains,” and the original term is now sometimes used to describe the arid region of the Southwest, which includes parts of northern Mexico and the four deserts of North America.
Stagecoach: A type of covered wagon for passengers and goods, strongly sprung and drawn by four horses, usually four-in-hand. Widely used before the introduction of railway transport, it made regular trips between stages or stations, which were places of rest provided for wagon travelers.
The First Transcontinental Railroad was built between 1863 and 1869 to join the eastern and western halves of the United States. Begun right before the American Civil War, its construction was considered to be one of the greatest American technological feats of the nineteenth century. Known as the “Pacific Railroad” when it opened, it served as a vital link for trade, commerce, and travel and opened up vast regions of the North American heartland for settlement. Shipping and commerce could thrive away from navigable watercourses for the first time since the beginning of the nation. Much of this line is still used by the California Zephyr, although some parts were rerouted or abandoned.
Many army veterans and Irish emigrants were the main workers on the Union Pacific, while most of the engineers were ex-army men who had learned their trade keeping the trains running during the American Civil War. The Central Pacific Railroad, facing a labor shortage in the more sparsely settled West, relied on Chinese laborers who did prodigious work building the line over and through the Sierra Nevada mountains and then across Nevada to northern Utah. The Chinese were commonly referred to at the time as “Celestials” and China as the “Celestial Kingdom.” Labor-saving devices in those days consisted primarily of wheelbarrows, horse- or mule-pulled carts, and a few railroad-pulled gondolas. The construction work involved an immense amount of manual labor. Initially, Central Pacific had a hard time hiring and keeping unskilled workers on its line, as many would leave for the prospect of far more lucrative gold or silver mining options elsewhere. Most of these Chinese workers were represented by a Chinese “boss” who acted as a translator, collected salaries for his crew, enforced discipline, and relayed orders from an American general supervisor. Most Chinese workers spoke only rudimentary or no English, and the supervisors typically only learned rudimentary Chinese. Most of the men received between $1 and $3 per day, the same as unskilled white workers; but the workers imported directly from China sometimes received less.
The track laying was divided up into various parts. In advance of the track layers, surveyors consulting with engineers determined where the track would go. Workers then built and prepared the roadbed; dug or blasted through hills; filled in washes; built trestles, bridges, or culverts across streams or valleys; made tunnels if needed; and laid the ties. The actual track-laying gang would then lay rails on the previously laid ties positioned on the roadbed, drive the spikes, and bolt the fishplate bars to each rail. At the same time, another gang would distribute telegraph poles and wire along the grade, while the cooks prepared dinner and the clerks busied themselves with accounts and records, using the telegraph line to relay requests for more materials and supplies or to communicate with supervisors. Usually the workers lived in camps built near their work site.
Tunnels were blasted through hard rock by drilling holes in the rock face by hand and filling them with black powder. Sometimes cracks were found which could be filled with powder and blasted open. The loosened rock would be collected and hauled out of the tunnel for use in a fill area or as roadbed, or else dumped over the side as waste. A foot or so advance on a tunnel face was a typical day’s work. Some tunnels took almost a year to finish; the Summit Tunnel, the longest, took almost two years. In the final days of working in the Sierras, the recently invented nitroglycerin explosive was introduced and used on the last tunnels including Summit Tunnel.
Finishing the First Transcontinental Railroad: Workers celebrating the completion of the First Transcontinental Railroad on May 10, 1869.
The mechanization of the manufacturing process allowed workers to be more productive in less time and factories to operate more efficiently.
Many of the new workers were unskilled laborers who performed simple, repetitive tasks.
New systems of management with clear chains of command and complex bureaucratic systems began with railroad companies and spread throughout American businesses.
Many new blue-collar jobs appeared in manufacturing, as well as white-collar jobs for managers.
By the beginning of the 1900s, the United States had the highest per capita income and industrial production in the world, with per capita incomes double those of Germany and France, and 50 percent higher than those of Britain.
mechanization: The use of machinery to replace human or animal labor, especially in agriculture and industry.
management: Administration; the process or practice of running an organization.
efficiency: The extent to which time is well used for the intended task.
Frederick Winslow Taylor: Frederick Winslow Taylor, a mechanical engineer by training, is often credited with inventing scientific management and improving industrial efficiency.
The Gilded Age was marked by increased mechanization in manufacturing. Businesses searched for cheaper and more efficient ways to create products. Corporate officials used various techniques, such as timing their workers with stopwatches and using stop-motion photography, to study the production process and improve efficiency. Frederick Winslow Taylor observed that the use of more advanced machinery could improve efficiency in steel production by requiring workers to make fewer motions in less time. His redesign increased the speed of factory machines and the productivity of factories while undercutting the need for skilled labor. Factories became an assemblage of unskilled laborers performing simple and repetitive tasks under the direction of skilled foremen and engineers. Machine shops, comprised of highly skilled workers and engineers, grew rapidly. The number of unskilled and skilled workers increased as their wage rates grew. Engineering colleges were established to feed the enormous demand for expertise.
Railroads gave rise to the development of modern management techniques, such as the use of clear chains of command, statistical reporting, and complex bureaucratic systems. Railroad companies systematized the roles of middle managers and set up explicit career tracks. They hired young men at age 18–21 and promoted them internally until a man reached the status of locomotive engineer, conductor, or station agent at age 40 or so. Career tracks were offered to skilled blue-collar workers and white-collar managers, starting in railroads and expanding into finance, manufacturing, and trade. Together with rapid growth of small business, a new middle class was rapidly growing, especially in northern cities. Extensive national networks for transportation and communication were created. The corporation became the dominant form of business organization, and a managerial revolution transformed business operations. By the beginning of the 1900s, the United States had the highest per capita income and industrial production in the world, with per capita incomes double those of Germany and France, and 50 percent higher than those of Britain.
The telephone and electric lightbulb are perhaps the two most influential nineteenth-century inventions.
Alexander Graham Bell invented the first workable telephone, basing his invention on a series of previous primitive examples.
Thomas Edison, commonly credited with inventing the lightbulb, actually experimented with previous inventors’ ideas to create the first commercially successful lightbulb by perfecting the filament material.
Edison founded the successful Menlo Park research lab to produce innovation.
Edison and Nikola Tesla both advocated different systems of electricity delivery; eventually, Tesla’s alternating current (AC) system proved more practical.
alternating current: An electric current in which the direction of flow of the electrons reverses periodically having an average of zero, with positive and negative values; especially such a current produced by a rotating generator or alternator.
Nikola Tesla: (July 10, 1856–January 7, 1943) A Serbian-American inventor, physicist, mechanical engineer, electrical engineer, and futurist who was an important contributor to the use of commercial electricity, and is best known for his contributions to the modern alternating current (AC) electrical supply system.
direct current: An electric current in which the electrons flow in one direction, but may vary with time.
Alexander Graham Bell is commonly credited as the inventor of the first practical telephone. He was the first to obtain a patent, in 1876, for an, “apparatus for transmitting vocal or other sounds telegraphically,” after experimenting with many primitive sound transmitters and receivers.
Patent drawing for Alexander Graham Bell’s telephone, March 7, 1876: Bell’s telephone was the first apparatus to transmit human speech via machine. His work culminated in one of the most profitable and contested of all nineteenth-century patents.
Bell’s telephone transmitter (microphone) consisted of a double electromagnet, in front of which a membrane, stretched on a ring, carried an oblong piece of soft iron cemented to its middle. A funnel-shaped mouthpiece directed the voice sounds upon the membrane, and as it vibrated, the soft iron “armature” induced corresponding currents in the coils of the electromagnet. After traversing the wire, these currents passed through the receiver, which consisted of an electromagnet in a tubular metal can that had one end partially closed by a thin circular disc of soft iron. When the undulatory current passed through the coil of this electromagnet, the disc vibrated, thereby creating sound waves in the air.
The first long-distance telephone call was made on August 10, 1876, by Bell from the family homestead in Brantford, Ontario, to his assistant located in Paris, Ontario, some 10 miles away. In June 1876, Bell exhibited a telephone prototype at the Centennial Exhibition in Philadelphia.
The telephone was instrumental to modernization and labor. It aided in the development of suburbs and the separation of homes and businesses, but also became the reason for the separation between women occupying the private sphere and men in the public sphere. This would continue to isolate women and the home.
Women were regarded as the most frequent users of the telephone. As a means of liberation, it enabled women to work in the telecommunications sector as receptionists and operators. The autonomy was celebrated as women were able to develop new relationships and nurture preexisting ones in their private lives. Social relations are essential to the access and usage of telephone networks.
Thomas Edison’s major innovation was the first industrial research lab, which was built in Menlo Park, New Jersey, and was the first institution set up for the specific purpose of producing constant technological innovation. Most of the inventions produced there were legally attributed to Edison, though many employees carried out research and development under his direction.
Edison did not invent the first electric lightbulb, but rather the first commercially practical incandescent light. Many earlier inventors had previously devised incandescent lamps, including Henry Woodward and Mathew Evans. Others such as Humphry Davy, James Bowman Lindsay, Moses G. Farmer, William E. Sawyer, Joseph Swan, and Heinrich Göbel had developed early and commercially impractical incandescent electric lamps. These early bulbs had an extremely short life, were expensive to produce, or drew a high electric current, making them difficult to produce on a large commercial scale.
By 1879, Edison had produced a new concept: a high resistance lamp in a very high vacuum, which would burn for hundreds of hours. While earlier inventors had produced electric lighting in laboratory conditions, dating back to a demonstration of a glowing wire by Alessandro Volta in 1800, Edison concentrated on commercial application. He was able to sell the concept to homes and businesses by mass-producing relatively long-lasting lightbulbs and creating a complete system for the generation and distribution of electricity.
Electric lighting in factories greatly improved working conditions, eliminating the heat and pollution caused by gas lighting, and reducing the fire hazard to the extent that the cost of electricity for lighting often was offset by the reduction in fire insurance premiums. Electric light was much brighter than that of oil or gas lamps, and there was no soot. Although early electricity was very expensive compared to today, it was far cheaper and more convenient than oil or gas lighting.
In 1831 and 1832, Michael Faraday discovered the operating principle of electromagnetic generators. The principle, later called “Faraday’s Law,” is that an electromotive force is generated in an electrical conductor that is subjected to a varying magnetic flux, as for example, in a wire moving through a magnetic field.
The improvements in electrical-generation technology increased the efficiency and reliability greatly in the nineteenth century. The first magnetos only converted a few percent of mechanical energy to electricity. By the end of the nineteenth century, the highest efficiencies were more than 90 percent.
In the early days of commercial electric power, transmission of electric power at the same voltage as used by lighting and mechanical loads restricted the distance between generating plant and consumers. In 1882, generation was with direct current (DC), which could not easily be increased in voltage for long-distance transmission. Different classes of loads (for example, lighting, fixed motors, and traction/railway systems) required different voltages, and so used different generators and circuits.
Due to this specialization of lines and because transmission was inefficient for low-voltage high-current circuits, generators needed to be near their loads. It seemed, at the time, that the industry would develop into what is now known as a “distributed generation system,” with large numbers of small generators located near their loads.
The transmission of electric power with alternate current (AC) became possible in 1881 after Lucien Gaulard and John Dixon Gibbs built what they called the “secondary generator,” an early transformer provided with 1:1 turn ratio and open magnetic circuit.
Edison’s true success, like that of his friend Henry Ford, was in his ability to maximize profits by establishing mass-production systems and obtaining intellectual-property rights. George Westinghouse became an adversary of Edison when he promoted the direct current (DC) for electric power distribution instead of the more easily transmitted alternating current (AC) system invented by Nikola Tesla and promoted by Westinghouse. Unlike DC, AC could be stepped up to very high voltages with transformers, sent over thinner and cheaper wires, and stepped down again at the destination for distribution to users.
The problem with DC was that power plants could only deliver DC electricity economically to customers within about one and a half miles (about 2.4 km) from the generating station, so that it only was suitable for central business districts. When George Westinghouse suggested using high-voltage AC instead, as it could carry electricity hundreds of miles with only marginal loss of power, Edison waged a “War of Currents” to prevent the adoption of the AC system.
The war against AC involved Edison in the development and promotion of the electric chair (using AC) as an attempt to portray AC as having greater lethal potential than DC. Edison continued to carry out a brief but intense campaign to ban the use of AC or to limit the allowable voltage for safety purposes. As part of this campaign, Edison’s employees publicly electrocuted animals to demonstrate the dangers of AC. On one of the more notable occasions, Edison’s workers electrocuted Topsy the elephant at Luna Park, near Coney Island, after she had killed several men and her owners wanted her put to death.
AC eventually replaced DC in most instances of generation and power distribution, enormously extending the range and improving the efficiency of power distribution. Though widespread use of DC ultimately lost favor for distribution, it exists today primarily in long-distance high-voltage direct current (HVDC) transmission systems.
During the Lochner Era, the Supreme Court advocated a laissez-faire economic policy.
Lochner v. New York (1905), was a landmark U.S. Supreme Court case that held a “liberty of contract” that was implicit in the Due Process Clause of the Fourteenth Amendment.
By a five to four vote, the Supreme Court rejected the argument that the contested New York law limiting a baker’s working hours was necessary to protect the health of bakers, deciding instead that it was a labor law attempting to regulate the terms of employment.
In the 30-year Lochner Era, the Supreme Court issued several controversial decisions invalidating progressive federal and state statutes that sought to regulate working conditions during the Progressive Era and the Great Depression.
“Laissez-faire” is an economic environment in which transactions between private parties are free from tariffs, government subsidies, and enforced monopolies, with only enough government regulations sufficient to protect property rights against theft and aggression.
Lochner v. New York: A landmark U.S. Supreme Court case which held that “liberty of contract” was implicit in the Due Process Clause of the Fourteenth Amendment. The case involved a New York law that limited the number of hours that a baker could work each day to 10, and limited the number of hours that a baker could work each week to 60.
laissez-faire: An economic environment in which transactions between private parties are free from tariffs, government subsidies, and enforced monopolies, with only enough government regulations sufficient to protect property rights against theft and aggression.
Lochner v. New York (1905), was a landmark U.S. Supreme Court case that held that the notion of a “liberty of contract” was implicit in the Due Process Clause of the Fourteenth Amendment. The case involved a New York law called the “Bakeshop Act” that limited the number of hours that a baker could work each day to 10, and limited the number of hours that a baker could work each week to 60.
In 1899, Joseph Lochner, owner of Lochner’s Home Bakery in Utica, New York, was indicted on a charge that he violated the Bakeshop Act, in that he wrongfully and unlawfully permitted an employee working for him to work more than 60 hours in one week. Lochner was fined twice for the offense and decided to appeal his second conviction.
Justice Rufus Wheeler Peckham: Rufus Wheeler Peckham, associate justice of the U.S. Supreme Court (1895–1909), and author of the Court’s opinion in Lochner v. New York.
Lochner’s appeal was based on the Fourteenth Amendment to the Constitution, which provides the following: “… nor shall any State deprive any person of life, liberty, or property, without due process of law.” In a series of cases starting with Dred Scott v. Sandford (1857), the Supreme Court established that the Due Process Clause (found in both the Fifth and Fourteenth Amendments) is not merely a procedural guarantee, but also a substantive limitation on the type of control the government may exercise over individuals. Although this interpretation of the Due Process Clause is a controversial one, it had become firmly embedded in American jurisprudence by the end of the nineteenth century. Lochner argued that the right to freely contract was one of the rights encompassed by substantive due process.
By a five to four vote, the Supreme Court rejected the argument that the law was necessary to protect the health of bakers, deciding it was a labor law attempting to regulate the terms of employment, and calling it an, “unreasonable, unnecessary, and arbitrary interference with the right and liberty of the individual to contract.” Seven years earlier, the Supreme Court had accepted the argument that the Due Process Clause protected the right to contract in Allgeyer v. Louisiana (1897). Justice Rufus Peckham wrote for the majority, while Justices John Marshall Harlan and Oliver Wendell Holmes, Jr., filed dissents.
Justice Harlan’s dissent argued that the Court gave insufficient weight to the state’s argument that the law was a valid health measure addressing a legitimate state interest. Justice Holmes’s famous dissent criticized the decision for discarding sound constitutional interpretation in favor of personal beliefs. Although it was only three paragraphs long, Holmes’s dissent is well remembered and often quoted. In it, Holmes accused the majority of judicial activism, claiming that the case was, “decided upon an economic theory which a large part of the country does not entertain.” He also attacked the idea that the Fourteenth Amendment protected the unbridled liberty of contract, writing that, “[t]he Fourteenth Amendment does not enact Mr. Herbert Spencer ‘s Social Statics.” This was a reference to a book in which Spencer advocated a strict laissez-faire economic philosophy.
The term “laissez-faire” refers to an economic environment in which transactions between private parties are free from government interference such as regulations, privileges, tariffs, and subsidies. The term is part of a larger French phrase and literally translates to “let (it/them) do,” but in this context, usually means to “let go.” Laissez-faire, a product of the Enlightenment, was, “conceived as the way to unleash human potential through the restoration of a natural system, a system unhindered by the restrictions of government.” In a similar vein, Adam Smith viewed the economy as a natural system and the market as an organic part of that system. Smith saw laissez-faire as a moral program, and the market its instrument to ensure men the rights of natural law. By extension, free markets become a reflection of the natural system of liberty.
Lochner v. New York was one of the most controversial decisions in the Supreme Court’s history, giving its name to what is known as the “Lochner Era.” During the Lochner Era, the Supreme Court issued several controversial decisions invalidating progressive federal and state statutes that sought to regulate working conditions during the Progressive Era and the Great Depression. Thus, this era could be characterized as laissez-faire. The Lochner era often is considered to have ended with West Coast Hotel Co. v. Parrish (1937), in which the Supreme Court took a much broader view of the government’s power to regulate economic activities.
The term “robber baron” was applied to powerful nineteenth-century industrialists who were viewed as having used questionable practices to amass their wealth. On the other hand, “captains of industry” were business leaders whose means of amassing a personal fortune contributed positively to the country in some way.
Robber barons were accused of eliminating competition through predatory pricing and then overcharging when they had a monopoly.
The term combines the concept of a criminal robber with an illegitimate aristocrat baron.
The term “robber baron” contrasted with the term “captain of industry,” which described industrialists who also benefitted society.
Nineteenth-century robber barons included J.P. Morgan, Andrew Carnegie, Andrew W. Mellon, and John D. Rockefeller.
In order to prevent single companies from developing a monopoly over an entire industry, public officials during this era put passing and enforcing strong antitrust laws high on their agenda.
captains of industry: Business leaders whose means of amassing a personal fortune contributes positively to the country in some way.
Robber baron: A derogatory metaphor of social criticism originally applied to certain late nineteenth-century American businessmen who used unscrupulous methods to get rich.
Sherman Antitrust Act of 1890: A law that prohibits certain business activities that federal government regulators deem to be anticompetitive, and that requires the federal government to investigate and pursue trusts.
“Robber baron” is a derogatory term used for some powerful nineteenth-century American businessmen. By the 1890s, the term was typically applied to businessmen who were viewed as having used questionable practices to amass their wealth. These “questionable practices” usually included a perception that they offered their products at extremely low prices as to pay their workers very poorly and buying out the competitors that couldn’t keep up. Once there was no competition, the businessmen would hike prices far above the original level. It combines the notions of criminality (“robber”) and illegitimate aristocracy (“baron”).
The term derives from the medieval German lords who legally charged tolls on ships traversing the Rhine without adding anything of value. U.S. political and economic commentator Matthew Josephson popularized the term during the Great Depression in a 1934 book by the same title. He attributed the phrase to an 1880 antimonopoly pamphlet about railroad magnates. Josephson alleged that like the German antecedents, American big businessmen amassed huge fortunes immorally, unethically, and unjustly. The theme was popular during the Great Depression, a time of public scorn for the abuses of big business.
Robber barons were contrasted with “captains of industry,” a term originally used in the United Kingdom during the Industrial Revolution describing a business leader whose means of amassing a personal fortune contributes positively to the country in some way. This might have been through increased productivity, expansion of markets, providing more jobs, or acts of philanthropy. Some nineteenth-century industrialists who were called “captains of industry” overlap with those called “robber barons,” however. These include people such as J.P. Morgan, Andrew Carnegie, Andrew W. Mellon, and John D. Rockefeller. The positive term was coined by Thomas Carlyle in his 1843 book, Past and Present.
John Davison Rockefeller was an American industrialist and philanthropist. He was the founder of the Standard Oil Company, which dominated the oil industry and was the first great U.S. business trust. Rockefeller revolutionized the petroleum industry and defined the structure of modern philanthropy. In 1870, he founded the Standard Oil Company and aggressively ran it until he officially retired in 1897. As kerosene and gasoline grew in importance, Rockefeller’s wealth soared, and he became the world’s richest man and first American worth more than a billion dollars. Adjusting for inflation, he is often regarded as the richest person in American history.
Andrew Carnegie was a Scottish-American industrialist who led the enormous expansion of the American steel industry in the late nineteenth century. He was also one of the most important philanthropists of his era. With the fortune he made from the steel industry, he built Carnegie Hall; later he turned to philanthropy and interests in education, founding the Carnegie Corporation of New York, Carnegie Endowment for International Peace, Carnegie Institution of Washington, Carnegie Mellon University and the Carnegie Museums of Pittsburgh. Carnegie gave most of his money to establish many libraries, schools, and universities in the United States, the United Kingdom, Canada, and other countries, as well as to establish a pension fund for former employees. He often is regarded as the second-richest man in history after John D. Rockefeller.
John Pierpont Morgan was an American financier, banker, and art collector who dominated corporate finance and industrial consolidation during his time. In 1892, Morgan arranged the merger of Edison General Electric and Thomson-Houston Electric Company to form General Electric. After financing the creation of the Federal Steel Company, he merged in 1901 with the Carnegie Steel Company and several other steel and iron businesses, including Consolidated Steel and Wire Company, to form the United States Steel Corporation. At the height of Morgan’s career during the early 1900s, he and his partners had financial investments in many large corporations and were accused by critics of controlling the nation’s high finance. He directed the banking coalition that stopped the Panic of 1907. He was the leading financier of the Progressive Era, and his dedication to efficiency and modernization helped transform American business.
During the late nineteenth century, hundreds of small short-line railroads were being bought up and consolidated into giant systems. Separate laws and policies emerged regarding railroads and financial concerns such as banks and insurance companies. The railroads soon discovered that their pools lacked enforcement power. Those who nominally agreed to be bound by the pooling arrangement could—and often did—cheat. So leaders within the railroad business and beyond began looking for ways to control and manage their increasingly large industry holdings.
The corporate form of business enterprise allowed for potentially immense accumulations of capital to be under the control of a small number of managers; but in the 1870s and 1880s, the corporation was not yet established as the dominant legal form of operation. To overcome these disadvantages, clever lawyers for John D. Rockefeller organized his Standard Oil of Ohio as a common-law trust. Trustees were given corporate stock certificates of various companies; by combining numerous corporations into the trust, the trustees could effectively manage and control an entire industry. Within a decade, the Cotton Trust, Lead Trust, Sugar Trust, and Whiskey Trust—along with oil, telephone, steel, and tobacco trusts—had become, or were in the process of becoming, monopolies.
Consumers howled in protest. The political parties got the message: In 1888, both Republicans and Democrats put an antitrust plank in their platforms. In 1889, the new president, Republican Benjamin Harrison, condemned monopolies as “dangerous conspiracies” and called for legislation to address the tendency of monopolies to “crush out” competition.
The result was the Sherman Antitrust Act of 1890, sponsored by Senator John Sherman, of Ohio. Its two key sections forbade combinations in restraint of trade and monopolizing. The purpose of the Sherman Antitrust Act is not to protect competitors from harm from legitimately successful businesses, nor to prevent businesses from gaining honest profits from consumers, but rather to preserve a competitive marketplace to protect consumers from abuses. Senator Sherman and other sponsors declared that the act had roots in a common-law policy that frowned on monopolies. To an extent, it did, but it added something quite important for the future of business and the U.S. economy: the power of the federal government to enforce a national policy against monopoly and restraints of trade. Nevertheless, passage of the Sherman Antitrust Act did not end the public clamor; 15 years passed before a national administration began to enforce the act, when President Theodore Roosevelt, known as “the Trustbuster,” sent his attorney general after the Northern Securities Corporation, a transportation holding company.

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