On Thursday, the court handed down a 6-3 decision on a party-line vote, which could render unenforceable a bewildering array of federal laws. “The constitutionality of hundreds of statutes could now be in jeopardy, and dozens of agencies could be stripped of their power to enforce laws enacted by Congress,” Justice Sonia Sotomayor wrote in the dissent.
conflict between Securities and Exchange Commission v. Zerkesi It turns on whether a hedge fund manager accused of defrauding investors is entitled to a jury trial to determine whether he violated federal securities laws or whether the government acted properly in trying him before an officer known as an “administrative law judge” (ALJ). .
The charges against this hedge fund manager, George Zarkesy, are civil and not criminal, which is important because the Constitution treats civil trials separately from criminal proceedings. when Sixth Amendment provides that “in all criminal cases” the defendant is entitled to a jury trial, Seventh Amendment Granting a more limited jury trial right, they are required “in cases at common law” (more on this later).
If the question of whether Zerkesi is entitled to a jury trial arises in the absence of precedent, he will have a reasonably strong case that he should prevail. But, as Sotomayor points out in his dissent, almost 170 years of precedent have passed against Jersey’s position.
Congress, moreover, has enacted broad statutes presuming that many enforcement proceedings may be brought before administrative law judges, not judges. According to a somewhat dated review of federal statutes cited by Sotomayor, “by 1986, there were over 200” federal statutes that called for trials before ALJs.
Some of these laws give governments a choice, including allowing the SEC to bring enforcement actions against people like Jerkes. That is, they allow federal agencies to bring a proceeding before an ALJ or a federal district court that can conduct a jury trial. So the SEC, at least, has the option of retrying Zerkes in a district court.
But, as Sotomayor warns, many federal agencies — including “the Occupational Safety and Health Review Commission, the Federal Energy Regulatory Commission, the Federal Mine Safety and Health Review Commission, the Department of Agriculture and many others” — can only seek civil penalties in administrative proceedings. This means that broad laws to guarantee workplace safety and advance other important federal goals may stop working. Jerks.
The Jerks The case, in other words, is an example of the Roberts Court at its most arrogant. If the court was tasked with resolving the dispute on a blank slate, there is a perfectly reasonable argument that Mr. Jerkesy should be entitled to a jury trial. But that ship sailed years ago, and the federal government has long operated under the assumption that many disputes could be adjudicated by ALJs.
By ignoring this long-standing assumption, the Court may have thrown the federal government’s massive shakedown — particularly the one implemented by Sotomayor’s listed companies — into disarray.
So when does a civil defendant have the right to a jury trial?
The Seventh Amendment provides that civil litigants generally have the right to a jury trial “in cases at common law,” but what does that mean?
Broadly speaking, common law refers to the body of judge-made law developed by English courts, much of which was imported into American law and which still governs many American cases involving matters such as contract and tort. Common law courts generally had the power to award money damages to successful plaintiffs, which distinguished them from Courts of “Equity”. which had power to issue injunctions and other non-pecuniary relief.
Majority opinion by Chief Justice John Roberts Jerks Leans heavily on the type of remedy available to the SEC if it prevails in a case before an ALJ. Like a case before a common law court, the SEC sought monetary damages from Zerkesy and thus the case is like a case at common law. As Roberts writes, “money damages are the prototypical common law remedy.”
Additionally, Roberts noted that common law courts also historically had jurisdiction to hear cases alleging fraud. Thus, the case against Jerksey resembles a common law case in that way.
Much of this part of Roberts’ opinion is controversial. His disagreement with Sotomayor led to a long-standing exception to jury trials known as the “public rights” doctrine.
The term “common law” refers to judge-made law over the centuries, as distinct from law created by a state legislature or act of Congress. The somewhat unhelpfully named public rights doctrine provides that many cases arising under federal law are not subject to the Seventh Amendment, and thus the government is free to try these cases in administrative proceedings without a jury.
The first Supreme Court case was an application of this civil rights doctrine Transferred in 1856, so it is not a concept invented by 20th century Progressive Era reformers who wanted to remove barriers to law enforcement. As the court explained Atlas Roofing v. OSHA (1977), this doctrine applies when Congress passes a statute authorizing litigation by the federal government that is “unknown to the common law.”
“In cases where the government sues in its sovereign power to exercise public rights created by law within the powers of Congress,” Atlas roof Held, “The Seventh Amendment does not prohibit Congress from conferring factfinding functions and preliminary rulings on an administrative forum with which a jury would be inconsistent.”
Thus, this public right doctrine has limits. It applies only to suits brought by the federal government, and only when the government sues to enforce a federal statute that authorizes a suit that did not already exist under the common law. But, in those circumstances, a hearing before an ALJ is permitted.
Although Roberts’ opinion denies that this is invalid Atlas roof And in similar cases, he spoke of that decision in disparaging terms. And his opinion placed such an extraordinary amount of weight on the fact that the SEC sought money damages against Mr. Jerksey that it is unclear how much, if any, of the public rights doctrine.
This is the first time that such a problem has come up, it may not be a big deal. If Congress had known a century ago that the Supreme Court would someday eliminate the power to assign certain cases to ALJs, it could have written hundreds of laws differently so that they applied to jury trials. It can allocate sufficient funds to federal agencies to hire trial counsel who can bring proceedings in federal district courts.
But Congress has instead operated for decades under the assumption that it prefers cases Atlas roof Good law. And now the Supreme Court has pulled the rug out from under many federal laws.
This Court generally does not care so much about the Seventh Amendment
In light of the Court’s new understanding of civil jury trials, it is worth noting that the Court’s Republican appointees have historically read the Seventh Amendment very narrowly in cases not involving hedge fund managers.
Courts have long held that companies can force their workers and consumers to sign away their right to sue the company in a real court — one that can conduct a jury trial — and have the case heard by a private arbitrator instead. Courts, at times, have held that forced arbitration is legal because workers and consumers nominally consent to arbitration when they decide to do business with a company. But many of the courts’ arbitration decisions raise very serious questions about whether judges understand what the word “consent” means.
inside Epic Systems vs Lewis (2018), for example, the Court held that an employer could only order its employees to waive their right to a jury trial, under pain of termination.
The Court’s approach to the Seventh Amendment is therefore inconsistent, and later JerksIt can arbitrarily strike down dozens or even hundreds of federal laws.
