SCOTUS: Jarkesy v. SEC - agency courts

Issue before or regarding the Supreme Court of The United States

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The U.S. Supreme Court today agreed to hear Jarkesy v. SEC, a case that challenges the constitutionality of administrative courts staffed with agency employees. In Jarkesy, the 5th U.S. Circuit Court of Appeals held that the Securities and Exchange Commission’s use of in-house agency judges to impose fines and penalties violates the Seventh Amendment. The Institute for Justice (IJ) is currently pursuing similar challenges to Department of Labor (DOL) in-house agency courts on behalf of small business owners in New Jersey and Maryland.

“The Constitution guarantees the right to trial by jury, not trial by bureaucrat,” said IJ Senior Attorney Rob Johnson. “But, too often, federal agencies impose fines and penalties in agency courts, where agency employees serve as prosecutor, judge, and jury. That should frighten all Americans, but it is particularly frightening for small businesses, who, with limited resources, are forced to defend themselves for years in agency courts against potentially crushing fines. Now, with the Supreme Court poised to consider these issues, small businesses ensnared in agency courts can hope for relief.”

In 2021, IJ sued the DOL on behalf of Sun Valley Farms, a family-owned farm in New Jersey. In that case, a DOL agency judge imposed over half a million dollars in fines and penalties, most of it based on a simple paperwork mistake, eventually leading the family to sell what had been one of the largest family-owned farms in New Jersey. Earlier this year, IJ launched a similar lawsuit on behalf of C.S. Lawn & Landscape, Inc., a Maryland small business challenging $55,000 in liability imposed by a DOL agency judge. The cases are currently pending in the U.S. District Court for the District of New Jersey and the U.S. District Court for the District of Columbia.

Under Article III of the U.S. Constitution, Sun Valley, C.S. Lawn, and George Jarkesy should have been entitled to make their defenses in real federal courts. But they all got agency “courts” instead.

“Agency courts arose in the 1970s, and their use to impose fines and take people’s property expanded rapidly, but the Supreme Court has never really addressed whether all that should instead happen in a real court,” said IJ Attorney Bob Belden. “Agency judges constitutionally can do things like process claims for social security benefits, but if a federal agency wants to fine you tens of thousands of dollars, it should have to prove its case in a real court with a real judge and a jury.”

IJ is a national treasure.

Supreme Court considers constitutionality of administrative law judges in U.S. agencies​

WASHINGTON, Nov. 29 (UPI) -- The Supreme Court heard oral arguments on Wednesday in a case that questions the constitutionality of using administrative law judges in federal agencies.

In Security Exchange Commission vs. Jarkesy, the U.S. Court of Appeals for the Fifth Circuit ruled SEC's administrative law judges are unconstitutional and that Congress violated the nondelegation doctrine by empowering the SEC to use these judges to enforce securities laws.



Nov 29 (Reuters) - The U.S. Supreme Court on Wednesday heard arguments on whether the U.S. Securities and Exchange Commission (SEC) has the power to pursue defendants in its own in-house tribunal rather than in federal court. The outcome of the case could affect how the SEC and other U.S. federal agencies enforce regulations.

Here's a look at some of the current cases that are awaiting the Supreme Court's decision, which is expected by the end of June.


The campaign to gut Washington’s power over corporate America​

A yearslong legal crusade to hobble Wall Street’s top cop could have repercussions across the government.

A decade-long conservative crusade against financial regulators will come to a head soon with a crucial Supreme Court ruling, part of a legal strategy that has spread across multiple Washington agencies into a broad attack on a core power of the federal government.

The court’s ruling on Securities and Exchange Commission v. Jarkesy, a case challenging the power of in-house federal judges, could hobble a whole range of agencies in unpredictable ways, cutting the powers of antitrust enforcers, labor regulators and consumer finance watchdogs.

Driven by an alliance of tech billionaires, conservative legal activists and the business lobby, the legal campaign that has arisen around Jarkesy is a little-appreciated but significant version of the “war on the administrative state” that Donald Trump promised but largely failed to deliver.

The decision is one of three Supreme Court fights this term over efforts to undermine key powers of the federal government. On Thursday, the justices came down in favor of regulators by upholding the funding of the Consumer Financial Protection Bureau. Another pair of cases awaiting decision could overturn a crucial 40-year precedent that allows agencies to broadly interpret federal law.

Jarkesy itself is a challenge to the legal legitimacy of the SEC’s internal system of judges and courts, which hear cases and impose fines. Such internal courts are key to enforcement at many federal agencies. Critics say they give bureaucrats an unchecked, almost shadowy power when cracking down on business malfeasance — a power they believe properly belongs with the U.S. court system.

Read it all:


Explainer: What is the US SEC's in-house court under Supreme Court review?​

WASHINGTON/NEW YORK, June 13 (Reuters) - The U.S. Supreme Court is due to rule in coming days on whether to curtail the Securities and Exchange Commission's use of in-house judges to adjudicate enforcement actions, with potentially big implications for other agencies.

The court last year decided to take up the Biden administration's appeal of a lower court's ruling that deemed the SEC's in-house tribunal proceedings unconstitutional.

Here are more details on the case and its implications.


Whoa. Pleasant surprise this morning.
Ok, so they want you to get a trial in this case. What about civil asset forfeiture cases? Time for them to act on that thieving bull shit.
Ok, so they want you to get a trial in this case. ...

This case is telling 3 letter administrative agencies that if they want to fine you, they need to win a verdict in a real court (jury trial) and not one of their own kangaroo courts.
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