The Hughes Court unanimously (9–0) ruled that the National Industrial Recovery Act (NIRA) was unconstitutional in Schecter Poultry Corp. v. United States (1935). The NIRA empowered business groups to draw up fair codes of competition in various industries that set wages and established work hours. The codes would have to be approved by the president. One such code dealt with the poultry trade in New York City. The four Schecter brothers—Joe, Martin, Aaron, and Alex—ran a Brooklyn-based wholesale poultry business that sold chickens and poultry to retail shops in the city. The Schecter brothers violated the code by paying lower wages and by selling diseased chickens (hence, the “sick chicken” name) at reduced prices. The government charged the Schecter brothers with violating the federal law. The brothers contended that the law was unconstitutional because it gave too much power to the president in overseeing the various business codes and because the Schecter business did not affect interstate commerce and, thus, Congress exceeded its Commerce Clause powers in regulating an intracommerce business.

The Hughes Court ruled that the NIRA was unconstitutional for several reasons. First, it said that the NIRA gave too much power to the president. “We think that the code-making authority thus conferred is an unconstitutional delegation of legislative power,” Chief Justice Hughes wrote. Second, the Court ruled that the Schecter business did not affect interstate commerce and thus the law reached too far: “Where the effect of intrastate transactions upon interstate commerce is merely indirect, such transactions remain within the domain of state power,” Hughes wrote.