The Supreme Court just lit a match and tossed it into dozens of federal agencies
On Thursday, the Court handed down a 6-3 decision, on a party-line vote, that could render a simply astonishing array of federal laws unenforceable. As Justice Sonia Sotomayor writes in dissent, “the constitutionality of hundreds of statutes may now be in peril, and dozens of agencies could be stripped of their power to enforce laws enacted by Congress.” The dispute in Securities and Exchange Commission v. Jarkesy turns on whether a hedge fund manager accused of defrauding investors is entitled to a jury trial to determine whether he violated federal securities law, or whether the government acted properly when it tried him before an official known as an “administrative law judge” (ALJ). The charges against this hedge fund manager, George Jarkesy, are civil and not criminal, which matters because the Constitution treats civil trials very differently from criminal proceedings. While the Sixth Amendment provides that “in all criminal prosecutions” the defendant is entitled to a jury trial, the Seventh Amendment provides a more limited jury trial right, requiring them “in suits at common law” (more on what that means later).
If the question of whether Jarkesy is entitled to a jury trial arose in the absence of any precedent, then he’d have a reasonably strong case that he should prevail. But, as Sotomayor lays out in her dissent, nearly 170 years of precedent cut against Jarkesy’s position. Congress, moreover, has enacted a wide range of laws on the presumption that many enforcement proceedings may be brought before administrative law judges and not juries. According to one somewhat dated review of federal law cited by Sotomayor, “by 1986, there were over 200” federal statutes calling for trials before ALJs. Some of these laws, including the one allowing the SEC to bring enforcement actions against people like Jarkesy, give the government a choice.
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