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Supreme Court casts doubt on agency enforcement actions without juries

Michael Macagnone, CQ-Roll Call on

Published in Political News

WASHINGTON — The Supreme Court appeared ready Wednesday to disrupt the process that federal agencies use to police federal law violations, in a case that challenges enforcement actions at the Securities and Exchange Commission.

Conservative justices expressed skepticism during oral arguments about the constitutionality of the current process at the SEC, where administrative law judges adjudicate violations and the defendants can’t get a trial by jury. But several members of the court questioned how they could agree on a new set of rules for systems that Congress created decades ago, which cover agencies across the federal government that enforce laws such as securities fraud, environmental pollution and immigration.

Justice Amy Coney Barrett and other Republican appointees, who hold a 6-3 majority, pushed the Biden administration to defend the distinction in federal law that allows agencies to bring enforcement actions either in internal agency proceedings or federal courts when defendants only have the right to a trial by jury in the latter.

“So it seems to me if you have an entitlement to a jury if you’re in federal court, I don’t understand then how you not have that right, how it can go to an agency,” Barrett said.

Brian H. Fletcher, arguing for the Biden administration, said the SEC process did not violate the Constitution because it dealt with a public interest, policing fraud in the securities markets, rather than a private right the jury trial was meant to protect.

Fletcher argued that the court decided decades ago that Congress could create “public rights” such as a fraud-free securities market or safe workplaces, and then set up administrative courts to defend those rights without the requirement of a jury trial.

 

“Securities laws serve different purposes from common law of fraud,” Fletcher said.

Justice Neil M. Gorsuch questioned whether the current process violated the Constitution by slapping a different name on a fraud or other violation to dodge defendants’ right to a jury trial.

“We don’t usually say the government can avoid a constitutional mandate merely by relabeling or moving things around,” Gorsuch said.

The back-and-forth over the jury trial right formed much of the oral arguments that stretched more than two hours. A decision, expected by the conclusion of the term at the end of June, could determine the future of federal civil law enforcement in numerous agencies, including the Environmental Protection Agency, Consumer Financial Protection Bureau and U.S. Postal Service, the Biden administration said in court papers.

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