The Supreme Court's Jarkesy decision is about keeping promises

John Roberts’s opinion of the Court in Jarksey correctly describes its application of law as a “straightforward question.” It follows clear precedent (Granfinanciera “decides this case”), distinguishes irrelevant precedent (Atlas Roofing), and admirably confines the erroneous expansion of “public rights” doctrine to its narrow origins so that it no longer would be the exception that swallowed the rule. Decades of sloppy jurisprudence got cleaned up.

Its holding? When the government sues you for monetary penalties or imperils other private rights, you have a constitutional right to be tried before “a jury of [your] peers before a neutral adjudicator.” Both parts of that last statement are critical to understanding the decision’s impact.

Not as depicted by the media

You wouldn’t recognize that this is a simple application of constitutional law from the hysterical reporting by the media. The AP headline screams: “The Supreme Court strips the Securities and Exchange Commission of a critical enforcement tool in fraud cases.” The Hill echoes apocalyptically: “The Supreme Court claws back SEC’s enforcement power.”

None of this is true. Not even close. The SEC has exactly the same laws and enforcement powers it had before the decision--the only difference is that now a defendant has a fair shot at a fair trial before a jury and factfinder that is not employed by the very same agency that is prosecuting him. Because as Justice Neil Gorsuch’s concurrence notes, agencies win nearly all of their cases before such in-house and institutionally biased judges.

This right to a fair and impartial forum was essential to the Founders, as both the majority opinion and Gorsuch’s concurrence painstakingly set forth with impressive historical support. The whole point of every one of the Bill of Rights is to guarantee that not even Congress can take away these protections of our liberties. This is a basic principle of law that the dissent feels licensed to ignore.

Roberts takes a direct shot at the dissent

“Rather than recognize that right, the dissent would permit Congress to concentrate the roles of prosecutor, judge, and jury in the Executive Branch,” John Roberts wrote. “That is the very opposite of the separation of powers that the Constitution demands.”

The topsy-turvy world according to the dissent

The dissenters have somehow convinced themselves that they are the ones defending the separation of powers: “Today’s ruling is part of a disconcerting trend: When it comes to the separation of powers, this Court tells the American public and its coordinate branches that it knows best.”

But it is the Court’s job to ensure that the other branches observe the Constitution’s provisions that provide that Congress can’t take away Americans’ rights to a jury trial. Constitutional Law I teaches that.

The dissent’s policy blinkers are even more disturbing: “There are good reasons for Congress to set up a scheme like the SEC’s. It may yield important benefits over jury trials in federal court, such as greater efficiency and expertise, transparency and reasoned decision making, as well as uniformity, predictability, and greater political accountability.”

Sorry, dissenters. Wrong on almost all counts. Gorsuch’s dissent lays out in devastating detail how George Jarkesy was trapped in the administrative maze for over a decade, bombarded with agency document-dumping, and given cruelly foreshortened time to defend himself. Federal trials average 2-2.5 years to resolution. So much for efficiency.

The expertise emperor has no clothes. SEC’s administrative law judges are hired out of the Social Security and other unrelated agency ranks, and routinely display ignorance of the securities laws and industry practice. So much for expertise.

Justice Gorsuch also notes that the ALJ’s decision in favor of SEC came as no surprise to its enforcement staff, since that staff was caught accessing the judge’s files prior to the decision. SEC has refused to comply with Jarkesy’s counsel’s FOIA requests for documents relevant to this scandalous breach of trust and procedural protections for years. So much for transparency.

Both the ALJ and the Commission’s decisions in Jarkesy’s case read like boilerplate recitations of unchecked agency power that knew it would receive unthinking deference under the established standards for judicial review. So much for reasoned decision-making. (And, are the dissenters suggesting that courts are somehow deficient in reasoned decision-making?)

You’ve got to give the dissenter’s points for uniformity and predictability, as agencies such as the SEC and FTC find for the Commissions 90-100% of the time. Point conceded here to the dissent.

As for greater political accountability, that is the whole objection to ALJs. These are tenure-protected bureaucrats subject to no effective review by anyone and no political accountability whatsoever.

This is not a policy debate – it’s a matter of constitutional law and keeping the promise made by the Founders

The dissent plows forward scolding the majority: “This Court’s job is not to decide who wins the debate. These are policy considerations for Congress in exercising its legislative judgment and constitutional authority to decide how to tackle today’s problems.”

It is not a policy debate whether defendants have a right to a jury trial. That is the whole point of a constitutional right! Justice Sotomayor describes the majority opinion as prescribing “artificial constraints on what modern-day adaptable governance must look like” whatever that means. Veering further into incoherence, the dissenters charge:

“[The majority’s] decision offends the Framers’ constitutional design so critical to the preservation of individual liberty: the division of our Government into three coordinate branches to avoid the concentration of power in the same hands.”

Are the dissenters so blind that they do not see that that is exactly what George Jarkesy and thousands of others have faced in administrative adjudication?

The Seventh Amendment and jury trials protect our individual liberties. SEC retains all of the enforcement powers it ever had. This great decision just fulfills the Founders’ promises that the protections that jury trials give to our civil liberties cannot be taken away by Congress. It is all about fidelity to the text and keeping the original promise made to Americans in the Seventh Amendment.