SUPREME COURT OF THE UNITED STATES
_________________
No. 22–859
_________________
Securities and Exchange Commission, PETITIONER
v. George R. Jarkesy, Jr., et al.
on writ of certiorari to the united states
court of appeals for the fifth circuit
[June 27, 2024]
Justice Sotomayor, with whom Justice Kagan and
Justice Jackson join, dissenting.
Throughout our Nation’s history, Congress has
authorized agency adjudicators to find violations of statutory
obligations and award civil penalties to the Government as an
injured sovereign. The Constitution, this Court has said, does not
require these civil-penalty claims belonging to the Government to
be tried before a jury in federal district court. Congress can
instead assign them to an agency for initial adjudication, subject
to judicial review. This Court has blessed that practice
repeatedly, declaring it “the ‘settled judicial
construction’ ” all along; indeed, “ ‘from the
beginning.’ ”
Atlas Roofing Co. v.
Occupational
Safety and Health Review Comm’n,
430 U.S.
442, 460 (1977). Unsurprisingly, Congress has taken this
Court’s word at face value. It has enacted more than 200 statutes
authorizing dozens of agencies to impose civil penalties for
violations of statutory obligations. Congress had no reason to
anticipate the chaos today’s majority would unleash after all these
years.
Today, for the very first time, this Court holds
that Congress violated the Constitution by authorizing a federal
agency to adjudicate a statutory right that inheres in the
Government in its sovereign capacity, also known as a public right.
According to the majority, the Constitution requires the Government
to seek civil penalties for federal-securities fraud before a jury
in federal court. The nature of the remedy is, in the majority’s
view, virtually dispositive. That is plainly wrong. This Court has
held, without exception, that Congress has broad latitude to create
statutory obligations that entitle the Government to civil
penalties, and then to assign their enforcement outside the regular
courts of law where there are no juries.
Beyond the majority’s legal errors, its ruling
reveals a far more fundamental problem: This Court’s repeated
failure to appreciate that its decisions can threaten the
separation of powers. Here, that threat comes from the Court’s
mistaken conclusion that Congress cannot assign a certain
public-rights matter for initial adjudication to the Executive
because it must come only to the Judiciary.
The majority today upends longstanding precedent
and the established practice of its coequal partners in our
tripartite system of Government. Because the Court fails to act as
a neutral umpire when it rewrites established rules in the manner
it does today, I respectfully dissent.
I
The story of this case is straightforward. The
Securities and Exchange Commission (SEC or Commission) investigated
respondents George Jarkesy and his advisory firm Patriot28, LLC,
for alleged violations of federal-securities laws in connection
with the launch of two hedge funds.
In deciding how and where to enforce these laws,
the SEC could have filed suit in federal court or adjudicated the
matter in an administrative enforcement action subject to judicial
review. See 15 U. S. C. §§77h–1, 77t, 78u, 78u–2, 78u–3,
80b–3, 80b–9. The SEC opted for the latter. In 2013, the SEC
initiated an administrative enforcement action against respondents,
alleging violations of the Securities Act of 1933, the Securities
Exchange Act of 1934, and the Investment Advisers Act of 1940.
Specifically, the SEC alleged that respondents falsely told brokers
and investors that: (1) a prominent accounting firm would audit the
hedge funds; (2) a prominent investment bank would serve as the
funds’ prime broker; and (3) one of the funds would invest 50% of
its capital in certain life-insurance policies. In reality, the
audit never took place, the bank never opened a prime brokerage
account, and the hedge fund invested less than 20% of its capital
in the life-insurance policies. In addition to misrepresenting the
funds’ investment strategies, respondents allegedly overvalued the
funds’ holdings to charge higher management fees.
The SEC assigned the action to one of its
administrative law judges, who held an evidentiary hearing and
issued a lengthy initial decision, concluding that respondents in
fact had violated the three securities laws. The full Commission
reviewed the initial decision and reached the same determination.
The Commission also denied respondents’ constitutional challenges
to the order, including that the agency’s in-house adjudication
violated respondents’ Seventh Amendment right to a jury trial in
federal court. Ultimately, the SEC ordered respondents to pay a
civil penalty of $300,000 and to cease and desist from violating
the federal-securities laws. It also barred Jarkesy from doing
certain things in the securities industry and ordered Patriot28 to
disgorge $685,000 in illicit profits.
Respondents filed a petition for review in the
Fifth Circuit. 34 F. 4th 446, 466 (2022). A divided panel granted
the petition and vacated the SEC’s order. The panel held, over the
dissent of Judge Davis, that respondents were entitled to a jury
trial in federal court under the Seventh Amendment because the
federal-securities antifraud provisions were similar to common-law
fraud claims to which the jury-trial right would attach. See
id., at 451–459. Because the SEC forced respondents to
proceed within the agency, the Court of Appeals held that the SEC
violated respondents’ Seventh Amendment rights and thus vacated the
SEC’s order.
Id., at 465–466.[
1]
The majority affirms the Fifth Circuit’s
decision, notwithstanding the mountain of precedent against it. A
faithful application of our precedent would have led, inexorably,
to upholding the statutory scheme that Congress enacted for the
SEC’s in-house adjudication of federal-securities claims.
II
The majority did not need to break any new
ground to resolve respondents’ Seventh Amendment challenge. This
Court’s longstanding precedent and established government practice
uniformly support the constitutionality of administrative schemes
like the SEC’s: agency adjudications of statutory claims for civil
penalties brought by the Government in its sovereign capacity. See
Part II–B (
infra, at 7–14). In assessing the
constitutionality of such adjudications, the political branches’
“ ‘[l]ong settled and established practice,’ ” which this
Court has upheld and reaffirmed time and again, is entitled to
“ ‘great weight.’ ”
Chiafalo v.
Washington,
591 U.S. 578, 592–593 (2020) (quoting
The Pocket Veto Case,
279 U.S.
655, 689 (1929)); accord,
Vidal v.
Elster, 602
U.S. 286, 323 (2024) (Barrett, J., concurring in part);
id.,
at 330 (Sotomayor, J., concurring in judgment);
Consumer
Financial Protection Bureau v.
Community Financial Services
Assn. of America, Ltd., 601 U.S. 416, 442 (2024) (Kagan, J.,
concurring).
A
There are two key constitutional provisions at
issue here. One is the Seventh Amendment, which “preserve[s]” the
“right of trial by jury” in “Suits at common law, where the value
in controversy shall exceed twenty dollars.” The other is Article
III’s Vesting Clause, which provides that the “judicial Power of
the United States . . . shall be vested” in federal
Article III courts. This case presents the familiar interplay
between these two provisions.
Although this case involves a Seventh Amendment
challenge, the principal question at issue is one rooted in Article
III and the separation of powers. That is because, as the majority
rightly acknowledges, the Seventh Amendment’s jury-trial right
“applies” only in “an Article III court.”
Ante, at 7. That
conclusion follows from both the text of the Constitution and this
Court’s precedents.
As to the text, the Amendment is limited to
“Suits at common law.” That means two things. First, that the right
applies only in judicial proceedings. The term “suit,” after all,
refers to “the prosecution of some demand in a Court of justice,”
Cohens v.
Virginia, 6 Wheat. 264, 407 (1821)
(Marshall, C. J.), or a “proceeding in a court of justice,”
Weston v.
City Council of Charleston, 2 Pet. 449, 464
(1829) (same) (“The modes of proceeding may be various, but if a
right is litigated between parties in a court of justice, the
proceeding by which the decision of the court is sought, is a
suit”). Consistent with that understanding, this Court has held
repeatedly that “the Seventh Amendment is not applicable to
administrative proceedings.”
Tull v.
United States,
481
U.S. 412, 418, n. 4 (1987); accord,
Atlas Roofing, 430
U. S., at 454–455;
Curtis v.
Loether,
415 U.S.
189, 195 (1974). Factfinding by a jury is “incompatible with
the whole concept of administrative adjudication,” which empowers
executive officials to find the relevant facts and apply the law to
those facts like juries do in a courtroom.
Pernell v.
Southall Realty,
416 U.S.
363, 383 (1974) (collecting cases).
Second, the requirement that the
“ ‘[s]uit’ ” must be one “ ‘at common law’ ”
means that the claim at issue must be “ ‘legal in
nature.’ ”
Ante, at 8. So, whether a defendant is
entitled to a jury under the Seventh Amendment depends on both the
forum and the cause of action. If the claim is in an Article III
proceeding, then the right to a jury attaches if the claim is
“legal in nature” and the amount in controversy exceeds $20.
Granfinanciera, S. A. v.
Nordberg,
492 U.S.
33, 53 (1989);
Atlas Roofing, 430 U. S., at 454,
n. 12, 461, n. 16. Yet when, as here, the claim proceeds
in a non-Article III forum, the relevant question becomes whether
“Congress properly assign[ed the] matter” for decision to that
forum consistent with Article III and the separation of powers.
Oil States Energy Services, LLC v.
Greene’s Energy Group,
LLC, 584 U.S. 325, 345 (2018). In other words, the question is
whether Congress improperly bestowed federal judicial power on a
non-Article III forum. See
id., at 334 (Congress cannot
“ ‘confer the Government’s “judicial Power” on entities
outside Article III’ ” (quoting
Stern v.
Marshall,
564
U.S. 462, 484 (2011))).[
2]
The conclusion that Congress properly assigned a
matter to an agency for adjudication therefore necessarily
“resolves [any] Seventh Amendment challenge.”
Oil States,
584 U. S., at 345 (explaining that if non-Article III
adjudication is permissible, then “ ‘the Seventh Amendment
poses no independent bar to the adjudication of that action by a
nonjury factfinder’ ” (quoting
Granfinanciera, 492
U. S., at 53–54)); see W. Baude, Adjudication Outside Article
III, 133 Harv. L. Rev. 1511, 1571 (2020) (“The Article III
analysis should be conducted first, on its own. And then
. . . if the non-Article III adjudication is permissible,
the Seventh Amendment should be ignored”). When executive power is
at stake, Congress does not violate Article III or the Seventh
Amendment by authorizing a nonjury factfinder to adjudicate the
dispute.
So, the critical issue in this type of case is
whether Congress can assign a particular matter to a non-Article
III factfinder.
B
For more than a century and a half, this Court
has answered that Article III question by pointing to the
distinction between “private rights” and “public rights.” See
Murray’s Lessee v.
Hoboken Land & Improvement
Co., 18 How. 272, 284 (1856) (recognizing public-rights
exception). The distinction is helpful because public rights always
can be assigned outside of Article III. They “ ‘do not require
judicial determination’ ” under the Constitution, even if they
“ ‘are susceptible of it.’ ”
Crowell v.
Benson,
285 U.S.
22, 50 (1932) (quoting
Ex parte Bakelite Corp.,
279 U.S.
438, 451 (1929)).
The majority says that aspects of the
public-rights doctrine have been confusing. See
ante, at 17.
That might be true for cases involving wholly private disputes, but
not for cases where the Government is a party.[
3] It has long been settled and undisputed that,
at a minimum, a matter of public rights arises “between the
government and persons subject to its authority in connection with
the performance of the constitutional functions of the executive or
legislative departments.”
Crowell, 285 U. S., at 50;
Oil States, 584 U. S., at 335 (describing the “Court’s
longstanding formulation of the public-rights doctrine”); accord,
Granfinanciera, 492 U. S., at 51, and n. 8;
Atlas Roofing, 430 U. S., at 452, 457;
Ex parte
Bakelite Corp., 279 U. S., at 451. Indeed, “from the time
the doctrine of public rights was born, in 1856,” everyone
understood that public rights “ ‘arise “between the government
and others,” ’ ” and refer to “rights
of the
public—that is, rights pertaining to claims brought by or
against the United States.”
Granfinanciera, 492 U. S.,
at 68–69 (Scalia, J., concurring in part and concurring in
judgment); see
ibid. (collecting sources). So, while this
Court has recognized public rights in certain disputes between
private parties, see
infra, at 19–20, the doctrine’s
heartland consists of claims belonging to the Government.
When a claim belongs to the Government as
sovereign, the Constitution permits Congress to enact new statutory
obligations, prescribe consequences for the breach of those
obligations, and then empower federal agencies to adjudicate such
violations and impose the appropriate penalty. See
Atlas
Roofing, 430 U. S., at 450–455 (collecting
cases).[
4] This Court has
repeatedly emphasized these unifying principles through an unbroken
series of cases over almost 200 years.
1
Start at the beginning, with
Murray’s
Lessee in 1856. In that case, the Government issued a warrant
to compel a federal customs collector to produce public funds that
the Government determined the collector had unlawfully withheld.
See 18 How., at 274–275. The Government executed the warrant to
seize and sell a plot of the collector’s land to make up for the
withheld funds. See
id., at 274. In upholding the sale of
the seized property, this Court concluded that the Government’s
in-house assessment and collection of taxes and penalties based on
a federal official’s adjudication of the facts did not violate
Article III. The scheme was constitutional, the Court said, because
“public rights” were at issue.
Id., at 284. In other words,
the dispute arose between the Government and the customs collector
in connection with the Government’s exercise of its constitutional
power to collect revenue. Congress could have brought such claims,
if it wanted, “within the cognizance of the courts of the United
States, as it may deem proper.”
Ibid. The Court thus
endorsed that constitutional balance: Congress could decide whether
to assign a public-rights dispute to the Executive for initial
adjudication subject to judicial review or to an Article III
federal court for resolution.
Fast forward half a century. In
Oceanic Steam
Nav. Co. v.
Stranahan,
214 U.S.
320, 338–340 (1909), the Court upheld a customs official’s
imposition of a penalty on a steamship company that violated
immigration laws barring the entry of certain classes of people
into the country. The customs official determined the facts,
adjudicated the violation, and enforced the statutory prohibition
on immigration through the assessment of a monetary penalty. See
id., at 329. The Court noted the breadth of Congress’s
immigration power and held that the civil-penalty statutory scheme
at issue was “beyond all question constitutional.”
Id., at
342. Yet, far from restricting the public-rights doctrine to this
particular exercise of congressional power or to specific
prerogatives, the
Stranahan Court went out of its way to
explain that the “settled judicial construction” that civil-penalty
claims brought by the Government could be assigned to the Executive
for initial adjudication extended “not only as to tariff, but as to
internal revenue, taxation, and other subjects,” including the
regulation of foreign commerce.
Id., at 339; see also
id., at 334–335.
Importantly,
Stranahan rejected the
“proposition” that, in “cases of penalty or punishment,
. . . enforcement must depend upon the exertion of
judicial power, either by civil or criminal process.”
Id.,
at 338. In words that could have been written in response to
today’s ruling, the Court explained that such a “proposition
magnifies the judicial to the detriment of all other departments of
the Government, disregards many previous adjudications of this
court, and ignores practices often manifested and hitherto deemed
to be free from any possible constitutional question.”
Ibid.
For that reason, the validity of legislation authorizing the
non-Article III adjudication of civil-penalty claims does not turn
on the Judiciary’s assessment of whether it is necessary for
executive officials “to enforce designated penalties without resort
to the courts.”
Id., at 339. Whether or not such legislation
violates Article III depends on whether Congress acted pursuant to
a “grant of power made by the Constitution,” and not on whether it
“relate[s] to subjects peculiarly within the authority of the
legislative department of the Government” or on the circumstances
that might have “caused Congress to exert a specified power.”
Id., at 339–340.
By the time
Stranahan was decided,
Congress already routinely “impose[d] appropriate obligations and
sanction[ed] their enforcement by reasonable money penalties,
giving to executive officers the power to enforce such penalties
without the necessity of invoking the judicial power.”
Id.,
at 339. Far from limiting the public-rights doctrine to the
particular context in
Stranahan and prior cases, this Court
has expressly rejected the notion that the public-rights doctrine
is so confined. See
infra, at 18–19. This Court has
repeatedly approved Congress’s assignment of public rights to
agencies in diverse areas of the law, reflecting Congress’s varied
constitutional powers.[
5] A
nonexhaustive list includes “interstate and foreign commerce,
taxation, immigration, the public lands, public health, the
facilities of the post office, pensions, and payments to veterans,”
Crowell, 285 U. S., at 51, and n. 13 (collecting
cases); see also,
e.
g.,
Helvering v.
Mitchell,
303 U.S.
391, 401–404 (1938) (administrative penalty for underpayment of
taxes);
NLRB v.
Jones & Laughlin Steel Corp.,
301 U.S.
1, 22–24, 48–49 (1937) (reinstatement of dismissed employee and
backpay in adjudication of unfair-labor-practices claim under the
National Labor Relations Act);
Phillips v.
Commissioner,
283 U.S.
589, 591–592 (1931) (deficiency assessments for unpaid taxes);
Lloyd Sabaudo Societa Anonima per Azioni v.
Elting,
287 U.S.
329, 334–335 (1932) (fines for violation of immigration law
barring entry of certain classes of individuals);
Ex parte
Bakelite Corp., 279 U. S., at 446–447, 451, 458
(adjudication of unfair-methods-of-competition and unfair-acts
claims, and imposition of additional duties under customs law);
Passavant v.
United States,
148
U.S. 214, 215–216, 220 (1893) (penalty for undervaluation of
imported merchandise).
The list could go on and on. That is because, in
every case where the Government has acted in its sovereign capacity
to enforce a new statutory obligation through the administrative
imposition of civil penalties or fines, this Court, without
exception, has sustained the statutory scheme authorizing that
enforcement outside of Article III.
2
A unanimous Court made this exact point nearly
half a century ago in
Atlas Roofing. That was the last time
this Court considered a public-rights case where the
constitutionality of an in-house adjudication of statutory claims
brought by the Government was at issue. That case presented the
same question as this one: Whether the Seventh Amendment permits
Congress to commit the adjudication of a new cause of action for
civil penalties to an administrative agency. 430 U. S., at
444. The Court said it did.
In
Atlas Roofing, the Court explained how
Congress identified a national problem, concluded that existing
legal remedies were inadequate to address it, and then created a
new statutory scheme that endorsed Executive in-house enforcement
as a solution. Specifically, Congress found “that work-related
deaths and injuries had become a ‘drastic’ national problem,” and
that existing causes of action, including tort actions for
negligence and wrongful death, did not adequately “protect the
employee population from death and injury due to unsafe working
conditions.”
Id., at 444–445. In response, Congress enacted
the Occupational Safety and Health Act of 1970 (OSHA) to require
employers “to avoid maintaining unsafe or unhealthy working
conditions.”
Id., at 445. OSHA in turn “empower[ed] the
Secretary of Labor to promulgate health and safety standards,” and
the Occupational Safety and Health Review Commission to impose
civil penalties on employers maintaining unsafe working conditions,
regardless of whether any worker was in fact injured or killed.
Id., at 445–446.
Two employers that had been assessed civil
penalties for OSHA violations resulting in the death of employees
challenged the constitutionality of the statute’s enforcement
procedures. They observed that “a suit in a federal court by the
Government for civil penalties for violation of a statute is a suit
for a money judgment[,] which is classically a suit at common law.”
Id., at 449. Therefore, the employers claimed, the Seventh
Amendment right to a jury attached and Congress could not assign
the matter to an agency for resolution. See
ibid.
This Court upheld OSHA’s statutory scheme. It
relied on the long history of public-rights cases endorsing
Congress’s now-settled practice of assigning the Government’s
rights to civil penalties for violations of a statutory obligation
to in-house adjudication in the first instance. See
id., at
450–455. In light of this “history and our cases,” the Court
concluded that, where Congress “create[s] a new cause of action,
and remedies therefor, unknown to the common law,” it is free to
“plac[e] their enforcement in a tribunal supplying speedy and
expert resolutions of the issues involved.”
Id., at 460–461.
“That is the case even if the Seventh Amendment would have required
a jury where the adjudication of those rights is assigned to a
federal court of law.”
Id., at 455; see
id., at 461,
n. 16.
The “new rule” and “legally unsound principle”
that the majority accuses this dissent of “unfurl[ing]” today,
ante, at 17–18, n. 2, is the one that this Court declared
“ ‘settled judicial construction’ . . . ‘from the
beginning’ ”: “[T]he Government could commit the enforcement
of statutes and the imposition and collection of fines
. . . for administrative enforcement, without judicial
trials,” even if the same action would have required a jury trial
if committed to an Article III court.
Atlas Roofing, 430
U. S., at 460 (collecting cases); accord,
Elting, 287
U. S., at 334 (Congress “may lawfully impose appropriate
obligations, sanction their enforcement by reasonable money
penalties, and invest in administrative officials the power to
impose and enforce them”);
Stranahan, 214 U. S., at 339
(Congress may “impose appropriate obligations and sanction their
enforcement by reasonable money penalties, giving to executive
officers the power to enforce such penalties without the necessity
of invoking the judicial power”).
C
It should be obvious by now how this case
should have been resolved under a faithful and straightforward
application of
Atlas Roofing and a long line of this Court’s
precedents. The constitutional question is indistinguishable. The
majority instead wishes away
Atlas Roofing by burying it at
the end of its opinion and minimizing the unbroken line of cases on
which
Atlas Roofing relied. That approach to precedent
significantly undermines this Court’s commitment to
stare
decisis and the rule of law.
This case may involve a different statute from
Atlas Roofing, but the schemes are remarkably similar. Here,
just as in
Atlas Roofing, Congress identified a problem;
concluded that the existing remedies were inadequate; and enacted a
new regulatory scheme as a solution. The problem was a lack of
transparency and accountability in the securities market that
contributed to the Great Depression of the 1930s. See
ante,
at 1. The inadequate remedies were the then-existing state
statutory and common-law fraud causes of action. The solution was a
comprehensive federal scheme of securities regulation consisting of
the Securities Act of 1933, the Securities Exchange Act of 1934,
and the Investment Advisers Act of 1940. See
ibid. In
particular, Congress enacted these securities laws to ensure “full
disclosure” and promote ethical business practices “in the
securities industry,”
SEC v.
Capital Gains Research
Bureau, Inc.,
375 U.S.
180, 186 (1963), as well as to “protect investors against
manipulation of stock prices,”
Ernst & Ernst v.
Hochfelder,
425 U.S.
185, 195 (1976).
The prophylactic nature of the statutory regime
also is virtually indistinguishable from the OSHA scheme at issue
in
Atlas Roofing. Among other things, these securities laws
prohibit the misrepresentation or concealment of various material
facts through the imposition of federal registration and disclosure
requirements. See
ante, at 2. Critically, federal-securities
laws do not require proof of actual reliance on an investor’s
misrepresentations or that an “investor has actually suffered
financial loss.”
Ante, at 4; see also
SEC v.
Life
Partners Holdings, Inc. 854 F.3d 765, 779 (CA5 2017);
SEC v.
Blavin, 760 F.2d 706, 711 (CA6 1985) (
per
curiam). OSHA too prohibits conduct that could, but does not
necessarily, injure a private person.
Atlas Roofing, 430
U. S., at 445 (OSHA remedies “exis[t] whether or not an
employee is actually injured or killed as a result of the [unsafe
or unhealthy working] condition”). The employer’s failure to
maintain safe and healthy working conditions violates OSHA even if
there is no actionable harm to an employee, just as a
misrepresentation to investors in connection with the buying or
selling of securities violates federal-securities law even if there
is no actual injury to the investors.
Moreover, both here and in
Atlas Roofing,
Congress empowered the Government to institute administrative
enforcement proceedings to adjudicate potential violations of
federal law and impose civil penalties on a private party for those
violations, all while making the final agency decision subject to
judicial review. In bringing a securities claim, the SEC seeks
redress for a “violation” that “is committed against the United
States rather than an aggrieved individual,” which “is why, for
example, a securities-enforcement action may proceed even if
victims do not support or are not parties to the prosecution.”
Kokesh v.
SEC, 581 U.S. 455, 463 (2017). Put
differently, the SEC seeks to “ ‘remedy harm to the public at
large’ ” for violation of the Government’s rights.
Ibid. The Government likewise seeks to remedy a public harm
when it enforces OSHA’s prohibition of unsafe working
conditions.
Ultimately, both cases arise between the
Government and others in connection with the performance of the
Government’s constitutional functions, and involve the Government
acting in its sovereign capacity to bring a statutory claim on
behalf of the United States in order to vindicate the public
interest. They both involve, as
Atlas Roofing put it, “new
cause[s] of action, and remedies therefor, unknown to the common
law.” 430 U. S., at 461. Neither Article III nor the Seventh
Amendment prohibits Congress from assigning the enforcement of
these new “Governmen[t] rights to civil penalties” to non-Article
III adjudicators, and thus “supplying speedy and expert resolutions
of the issues involved.”
Id., at 450, 461. In a world where
precedent means something, this should end the case. Yet here it
does not.
III
The practice of assigning the Government’s
right to civil penalties for statutory violations to non-Article
III adjudication had been so settled that it become an undisputable
reality of how “our Government has actually worked.”
Consumer
Financial Protection Bureau, 601 U. S., at 445 (Kagan, J.,
concurring). That is why the Court has had no cause to address this
kind of constitutional challenge since its unanimous decision in
Atlas Roofing. The majority takes a wrecking ball to this
settled law and stable government practice. To do so, it misreads
this Court’s precedents, ignores those that do not suit its thesis,
and advances distinctions created from whole cloth.
The majority’s treatment of the public-rights
doctrine is not only incomplete, but is gerrymandered to produce
today’s result. See Part III–A (
infra, at 17–21). Unable to
explain that doctrine, the majority effectively ignores the Article
III threshold question to focus instead on two Seventh Amendment
cases:
Tull v.
United States,
481
U.S. 412 (1987), and
Granfinanciera, S. A. v.
Nordberg,
492 U.S.
33 (1989). Neither involved the in-house adjudication of
statutory claims brought by the Government pursuant to its
sovereign powers, which is the critical fact under this Court’s
precedent. See Part III–B–1 (
infra, at 22–24) (discussing
Tull); Part III–B–2 (
infra, at 24–29) (discussing
Granfinanciera). The majority and the concurrence then
predictably fail to distinguish
Atlas Roofing, which
resolved the Seventh Amendment question for cases like this one
implicating that critical fact. See Part III–C (
infra, at
29–32).
A
To start, it is almost impossible to discern
how the majority defines a public right and whether its view of the
doctrine is consistent with this Court’s public-rights cases. The
majority at times seems to limit the public-rights exception to
areas of its own choosing. It points out, for example, that some
public-rights cases involved the collection of revenue, customs
law, and immigration law, see
ante, at 14–17, and that
Atlas Roofing involved OSHA and not “civil penalty suits for
fraud,”
ante, at 22.[
6]
Other times, the majority highlights a particular practice
predating the founding, such as the “unbroken tradition” in
Murray’s Lessee of executive officials issuing warrants of
distress to collect revenue.
Ante, at 15; see also
ante, at 13–14 (Gorsuch, J., concurring). Needless to say,
none of these explanations for the doctrine is satisfactory. What
is the legal principle behind saying only these areas and no
further? This Court has rejected that kind of arbitrary
line-drawing in cases like
Stranahan and
Atlas
Roofing. How does the requirement of a historical practice
dating back to the founding, or “flow[ing] from centuries-old
rules,”
ante, at 17, account for the broad universe of
public-rights cases in the United States Reporter? The majority
does not say.
The majority’s only other theory fares no
better. The majority seems to suggest that a common thread
underlying these cases is that “the political branches had
traditionally held exclusive power over th[ese] field[s] and had
exercised it.”
Ante, at 16–17. To the extent the majority
thinks this is a distinction, it fails for at least two
reasons.
First,
Atlas Roofing expressly rejected
the argument that the public-rights doctrine is limited to
particular exercises of congressional power. The employers in
Atlas Roofing argued “that cases such as
Murray’s
Lessee,
Elting, [
Stranahan],
Phillips, and
Helvering all deal with the exercise of sovereign powers
that are inherently in the exclusive domain of the Federal
Government and critical to its very existence—the power over
immigration, the importation of goods, and taxation.” 430
U. S., at 456. Cabining the cases in that way, the employers
argued that “[t]he theory of those cases is inapplicable where the
Government exercises other powers that [they] regard[ed] as less
fundamental, less exclusive, and less vital to the existence of the
Nation, such as the power to regulate commerce among the several
States, the latter being the power Congress sought to exercise in
enacting [OSHA].”
Ibid. The Court rejected the employers’
argument, explaining that nothing in those cases turned on those
particular exercises of the Government’s authority. See
id.,
at 456–457; cf.
Crowell, 285 U. S., at 51 (offering a
list of “[f]amiliar illustrations of . . . exercise[s]”
of Congress’s constitutional authority that have fallen within the
public-rights exception to Article III).
Second, even if
Atlas Roofing had not
explicitly rejected the proposed distinction here, the majority
cannot reconcile its restrictive view of the public-rights doctrine
with
Atlas Roofing and other precedents. For example, it is
unclear how OSHA, or the National Labor Relations Act at issue in
Jones & Laughlin, would fit the majority’s view of the
public-rights doctrine, or why the exercise of interstate-commerce
power to enact those statutes would be any different from the
exercise of that same power to enact the federal-securities laws at
issue here. See
Atlas Roofing, 430 U. S., at 457 (“It
is also apparent that
Jones & Laughlin,
Pernell,
and
Curtis are not amenable to the limitations suggested by
[the employers]”).
The majority’s description of the doctrine also
fails to account for public rights that do not belong to the
Federal Government in its sovereign capacity. See
Granfinanciera, 492 U. S., at 54 (“[T]he Federal
Government need not be a party for a case to revolve around ‘public
rights’ ”). This Court, after all, has rejected the
confinement of public rights to that heartland. See
ibid.
(“[W]e [have] rejected the view that ‘a matter of public rights
must at a minimum arise “between the government and
others” ’ ”). Conspicuously absent from the majority’s
discussion are, for example, cases in which this Court held that
Congress could assign a private federally created action that was
“closely integrated into a public regulatory scheme” for
adjudication in a non-Article III forum.
Thomas v.
Union
Carbide Agricultural Products Co.,
473
U.S. 568, 594 (1985). These cases include, for example, an
agency’s adjudication of state-law counterclaims to an investor’s
federal action against its broker,
Commodity Futures Trading
Comm’n v.
Schor,
478 U.S.
833, 835–836, 847–850 (1986), and the arbitration of
data-compensation disputes among participants in the Environmental
Protection Agency’s pesticide registration scheme,
Thomas,
473 U. S., at 571, 589–592. Both
Thomas and
Schor thus upheld the non-Article III adjudication of
disputes between private parties, which naturally did not involve
the Government in its sovereign capacity.
Even accepting the majority’s
public-rights-are-confusing defense, its “strategy for dealing with
the confusion is not to offer a theory for rationalizing this body
of law,” but to provide an incomplete and unprincipled account of
the doctrine.
Haaland v.
Brackeen, 599 U.S. 255, 279
(2023). The majority references, but does not explain,
“distinctions our cases have drawn,”
ante, at 18, n. 2, also
cherry-picking some cases and ignoring others. Indeed, in lieu of a
coherent theory, all the majority has to offer is a list of five
“historic categories of adjudications [that] fall within the
exception,”
ante, at 14–17, and maybe (just maybe) OSHA,
which the majority reluctantly adds to the mix at the end of its
opinion for good measure, see
ante, at 22–24. The majority
ignores countless public-rights cases and entire strands of the
doctrine, and fails to heed its own admonition that “close
attention” must be paid “to the basis for each asserted application
of the doctrine.”
Ante, at 17.[
7]
The majority also attacks a strawman when it
asserts that “precedents foreclose th[e] argument” that the
public-rights doctrine “applies whenever a statute increases
governmental efficiency.”
Ante, at 26; see also
ante,
at 19 (Gorsuch, J., concurring). No one has made that argument in
this case; not the Government and certainly not this dissent. The
fact that certain rights might be susceptible to speedy and expert
resolution through non-Article III adjudication is not what makes
them “rights
of the public—that is, rights pertaining to
claims brought by or against the United States.”
Granfinanciera, 492 U. S., at 68–69 (Scalia, J.,
concurring in part and concurring in judgment).
It is not clear what else, if anything, might
qualify as a public right, or what is even left of the doctrine
after today’s opinion. Rather than recognize the long-settled
principle that a statutory right belonging to the Government in its
sovereign capacity falls within the public-rights exception to
Article III, the majority opts for a “we know it when we see it”
formulation. This Court’s precedents and our coequal branches of
Government deserve better.
B
Rather than relying on
Atlas Roofing or
the relevant public-rights cases, the majority instead purports to
follow
Tull and
Granfinanciera. The former involved a
suit in federal court and the latter involved a dispute between
private parties. So, just like that, the majority ventures off on
the wrong path. Indeed, as explained below, both the majority and
the concurrence miss the critical distinction drawn in this Court’s
precedents between the non-Article III adjudication of
public-rights matters involving the liability of one individual to
another and those involving claims belonging to the Government in
its sovereign capacity.
According to the majority, respondents are
entitled to a jury trial in federal court because, as here,
Tull involved a Government claim for civil penalties, and
Granfinanciera looked to the common law to determine if a
statutory cause of action was legal in nature. By focusing on the
remedy in this case, and the perceived similarities between the
statutory cause of action and a common-law analogue, the majority
elides the critical distinction between those cases and this one:
Whether Congress assigned the Government’s sovereign rights to
civil penalties to a non-Article III factfinder for
adjudication.
1
The majority bafflingly proclaims that “the
remedy is all but dispositive” in this case,
ante, at 9,
ignoring that
Atlas Roofing and countless precedents before
it rejected that proposition. Not content to take just a page from
the employers’ challenge in
Atlas Roofing, the majority has
taken their whole brief, resuscitating yet another theory that this
Court has long foreclosed. The employers in
Atlas Roofing
argued that the Seventh Amendment prohibited Congress from
assigning to an agency the same remedy at issue here: civil
penalties. See 430 U. S., at 450 (“Petitioners . . .
claim that . . . assign[ing] the function of adjudicating
the Government’s rights to civil penalties for [a statutory]
violation . . . deprive[s] a defendant of his Seventh
Amendment jury right”). This Court rejected that argument outright,
citing a long line of cases involving the Executive’s adjudication
of statutory claims for civil penalties brought by the Government
in its sovereign capacity.
Id., at 450–455 (collecting
cases).
As discussed above, this Court has long endorsed
statutory schemes authorizing agency adjudicators to find
violations and award civil penalties to the Government. See
supra, at 9–12. Long before
Atlas Roofing, this Court
held that the Constitution permits Congress to enact statutory
obligations and then “sanction their enforcement by reasonable
money penalties” by government officials “without the necessity of
invoking the judicial power.”
Stranahan, 214 U. S., at
339; see
id., at 338–339 (collecting cases). That the SEC
imposed civil penalties on respondents therefore has little, if
any, bearing on the resolution of this case.
Again, even if over a century of precedent did
not foreclose the majority’s argument, it fails on its own terms.
The majority relies almost entirely on
Tull, which held that
statutory claims for civil penalties were “a type of remedy at
common law” that entitled a defendant to a jury trial. 481
U. S., at 422; see
id., at 425. Critically, however,
the
Tull Court’s analysis took place in an entirely
different context: federal court. See
ante, at 8–9 (“In
[
Tull], the Government sued a real estate developer for
civil penalties [under the Clean Water Act]
in federal
court” (emphasis added)).
Tull did not present the
question at issue in
Atlas Roofing and other cases involving
non-Article III adjudication of Government claims in the first
instance. Rather,
Tull stands for the unremarkable
proposition that, when the Government sues an entity for civil
penalties in federal district court, the Seventh Amendment entitles
the defendant “to a jury trial to determine his liability on the
legal claims.” 481 U. S., at 425.
That conclusion says nothing about the
constitutionality of the SEC’s in-house adjudicative scheme.
Atlas Roofing and its predecessors could not have been
clearer on this point: Congress can assign the enforcement of a
statutory obligation for in-house adjudication to executive
officials, “even if the Seventh Amendment would have required a
jury where the adjudication of those rights is assigned to a
federal court of law instead of an administrative agency.” 430
U. S., at 455. Although “the Government could commit the
enforcement of statutes and the imposition and collection of fines
to the judiciary, in which event jury trial would be required,” the
Government “could also validly opt for administrative enforcement,
without judicial trials.”
Id., at 460 (citing
Stranahan, 214 U. S., at 339;
Hepner v.
United States,
213 U.S.
103 (1909);
United States v.
Regan,
232 U.S.
37 (1914);
Helvering, 303 U. S., at 402–403;
Crowell, 285 U. S., at 50–51);
Curtis, 415
U. S., at 195 (explaining that Congress can “entrust [the]
enforcement of statutory rights to an administrative process
. . . free from the strictures of the Seventh Amendment,”
but must abide by the Amendment when it does so “in an ordinary
civil action in the district courts”).
It would have been quite remarkable for
Tull, which involved a claim in federal court, to overrule
silently more than a century of caselaw involving non-Article III
adjudications of the Government’s rights to civil penalties for
statutory violations. Of course,
Tull did no such thing.
Tull even reaffirmed
Atlas Roofing by emphasizing
that the Seventh Amendment depends on the forum, not just the
remedy, because it “is not applicable to administrative
proceedings.” 481 U. S., at 418, n. 4 (citing
Atlas
Roofing, 430 U. S., at 454;
Pernell, 416
U. S., at 383). For the majority to pretend otherwise is
wishful thinking at best.
2
The majority next argues that the “close
relationship” between the federal-securities laws and common-law
fraud “confirms that this action is ‘legal in nature,’ ” and
entitles respondents to a jury trial.
Ante, at 13. That
argument does not fare any better than the argument on remedy.
Again, the majority bends inapposite case law to an illogical
thesis.
Granfinanciera, on which the majority relies to make
its cause-of-action argument, set forth the public-rights analysis
only for “disputes to which the Federal Government is not a party
in its sovereign capacity.” 492 U. S., at 55, n. 10. For
cases that, as here, involve the Government in its sovereign
capacity, the
Granfinanciera Court plainly stated that
“Congress may fashion causes of action that are closely
analogous to common-law claims and [still] place them beyond
the ambit of the Seventh Amendment by assigning their resolution to
a [non-Article III] forum in which jury trials are unavailable.”
Id., at 52 (citing
Atlas Roofing, 430 U. S., at
450–461).[
8]
The Court held in
Granfinanciera that “a
person who has not submitted a claim against a bankruptcy estate
has a right to a jury trial when sued by the trustee in bankruptcy
to recover an allegedly fraudulent monetary transfer.” 492
U. S., at 36. In doing so, the Court noted that actions to
recover such transfers through a claim of fraudulent conveyance
were traditionally available at common law. See
id., at
43–49. That did not resolve the case, however. Unlike in
Tull, the proceeding at issue in
Granfinanciera was
in a non-Article III forum (
i.
e., a bankruptcy
court). So, to answer whether Congress could assign the
fraudulent-conveyance claim to a bankruptcy judge for decision,
Congress needed to decide whether the “legal cause of action
involve[d] ‘public rights.’ ” 492 U. S., at 53.
Granfinanciera explains that there are
two ways to identify a “public right.” First, there are the matters
in which Congress enacts a statutory cause of action that “inheres
in, or lies against, the Federal Government in its sovereign
capacity.”
Id., at 53 (citing
Atlas Roofing, 430
U. S., at 458). These matters necessarily arise between the
Government and the people in connection with the Government’s
exercise of its constitutional authority. See
supra, at 7–8.
In these cases, the Court said,
Atlas Roofing controls the
public-rights analysis. See
Granfinanciera, 492 U. S.,
at 51, 53. The Court explained that “Congress may effectively
supplant a common law cause of action carrying with it a right to a
jury trial with a statutory cause of action shorn of a jury trial
right if that statutory cause of action inheres in, or lies
against, the Federal Government in its sovereign capacity.”
Id., at 53 (citing
Atlas Roofing, 430 U. S., at
458).
The second kind of public right that
Granfinanciera recognized involves “disputes to which the
Federal Government is not a party in its sovereign capacity,” 492
U. S., at 55, n. 10, that is, usually “[w]holly private”
disputes,
id., at 51. The public-rights analysis in these
private-dispute cases looks different: “The crucial question,
in
cases not involving the Federal Government, is whether
‘Congress, acting for a valid legislative purpose pursuant to its
constitutional powers under Article I, has created a seemingly
“private” right that is so closely integrated into a public
regulatory scheme as to be a matter appropriate for agency
resolution with limited involvement by the Article III
judiciary.’ ”
Id., at 54 (quoting
Thomas, 473
U. S., at 593–594; emphasis added; alterations omitted).
These two approaches together stand for the
proposition that “[i]f a statutory right is not closely intertwined
with a federal regulatory program Congress has power to enact,
and if that right neither belongs to nor exists against the
Federal Government, then it must be adjudicated by an Article III
court.” 492 U. S., at 54–55 (emphasis added). Once in federal
court, “[i]f the right is legal in nature, then it carries with it
the Seventh Amendment’s guarantee of a jury trial.”
Id., at
55.
Because
Granfinanciera did not involve a
statutory right that belonged to the Government in its sovereign
capacity,
Atlas Roofing did not control the outcome.
Instead, the Court applied the private-disputes test to determine
whether fraudulent-conveyance “actions were ‘closely intertwined’
with the bankruptcy regime.”
Ante, at 20 (quoting
Granfinanciera, 492 U. S., at 54). The Court held that
the fraudulent-conveyance actions “were not inseparable from the
bankruptcy process,” and thus the public-rights exception did not
apply.
Ante, at 20 (citing
Granfinanciera, 492
U. S., at 54, 56).
The majority brushes aside this critical
distinction between
Atlas Roofing and
Granfinanciera
in one sentence. That “the Government is the party prosecuting this
action,” the majority writes, is meaningless because this Court has
“never held that the ‘presence of the United States as a proper
party to the proceeding is . . . sufficient’ by itself to
trigger the exception.”
Ante, at 22 (quoting
Northern
Pipeline Constr. Co. v.
Marathon Pipe Line Co.,
458 U.S.
50, 69, n. 23 (1982) (plurality opinion)). Here, too, the
majority attacks a strawman. The SEC does not claim that the mere
presence of the United States as a proper party necessarily means
that a public right is at issue. See Reply Brief 8, n. 2
(disclaiming this argument).[
9]
Of course “what matters is the substance” of the claim.
Ante, at 21.
By no means, though, does this case involve a
“purely taxonomic change.”
Granfinanciera, 492 U. S.,
at 61. Congress did not just repackage a common-law claim under a
new label. It created new statutory obligations and an entire
federal scheme. See
supra, at 14–16.[
10] Perhaps most importantly, Congress created a
new right unknown to the common law that, unlike common-law fraud,
belongs to the public and inheres in the Government in its
sovereign capacity. That is why, when the SEC seeks to enforce the
federal-securities laws, it does so to remedy the harm to the
United States. See
supra, at 16. It seeks to protect the
integrity of the securities market as a whole through the
imposition of new and distinct remedies like civil penalties and
orders barring violators from holding certain positions and
performing certain activities in the industry. See 15
U. S. C. §§77h–1(f ), and (g), 78u–2,
78u–3(f ).
For these reasons, “[a]n action brought by an
Executive Branch agency to enforce federal securities laws is not
the same as an action brought by one individual against another for
monetary or injunctive relief of the sort that law courts (with
juries) in England or the States have traditionally heard.” Brief
for Professor John Golden et al. as
Amici Curiae 3.
Congress did not unlawfully “siphon” a traditional legal action
“away from an Article III court” when it enacted the
federal-securities laws and provided for their enforcement within
the SEC.
Ante, at 21.
The majority asserts that “
Granfinanciera
effectively decides this case.”
Ante, at 20. That can only
be true, though, if one ignores what
Granfinanciera actually
says: Its public-rights analysis of whether an action is closely
intertwined with a federal regulatory program only applies “in
cases not involving the Federal Government.” 492 U. S., at 54.
The analysis from
Atlas Roofing controls where, as here,
“ ‘the Government is involved in its sovereign capacity under
an otherwise valid statute.’ ” 492 U. S., at 51 (quoting
Atlas Roofing, 430 U. S., at 458).
C
Both cases relied on by the majority,
Tull and
Granfinanciera, reaffirm that
Atlas
Roofing controls precisely in circumstances like the ones at
issue in this case. That is why the majority’s late-stage attempt
to distinguish
Atlas Roofing fails. The majority’s principal
argument that the OSHA scheme in
Atlas Roofing “did not
borrow its cause of action from the common law” and was instead a
“self-consciously novel” scheme that “resembled a detailed building
code,”
ante, at 23–24, is flawed on multiple fronts.
First, OSHA’s cause of action should be largely
irrelevant under the majority’s view that the remedy of civil
penalties is effectively dispositive under
Tull.
Atlas
Roofing, and many other cases involving non-Article III
adjudications, also involved civil penalties designed to punish and
deter, and yet the majority does not expressly disavow them.
Logically, then, either
Atlas Roofing and countless other
cases were wrongly decided, or the majority’s view on civil
penalties is wrong.
Second, because the majority elides the critical
distinction between
Atlas Roofing and
Granfinanciera,
it fails to grapple with the fact that this case, like
Atlas
Roofing and unlike
Granfinanciera, involves the
Government acting in its sovereign capacity to enforce a statutory
violation. That makes the right at issue a “public right” that
Congress can take outside the purview of Article III, even when the
new cause of action is analogous to a common-law claim.
Third, the relationship between the
federal-securities laws (including their antifraud provisions) and
common-law fraud is materially indistinguishable from the
relationship between OSHA and the common-law torts of wrongful
death and negligence. Unlike their common-law comparators, neither
statute requires actionable harm to an individual. See
supra, at 15. In arguing that OSHA’s scheme was
“self-consciously” novel in ways unknown to the common law, the
majority points to the granularity of OSHA standards.
Ante,
at 23–24. Yet lawyers and regulated parties in the securities
industry would be surprised to hear that this could be a
distinguishing feature. Anyone familiar with the industry knows
securities laws are replete with specific and exceedingly detailed
requirements implementing the statute’s disclosure and antifraud
provisions. See,
e.
g., 17 CFR §275.206(4)–1(b) (2023)
(prohibiting testimonials and endorsements that do not satisfy
requirements without meeting complex disclosure requirements);
§275.206(4)–2(a) (prohibiting investment advisers from having
custody of client funds or securities unless specific requirements
are met, including qualifications, notices, and account
statements).
The majority further rests on the notion that
Congress drew inspiration from the common law in enacting the
antifraud provisions of the federal-securities laws, whereas OSHA’s
new statutory duty did not bring any common-law soil with it. See
ante, at 23–24. Yet both statutes share elements with claims
at common law that Congress deemed inadequate to address the
national problems that prompted it to legislate. See
supra,
at 14–15. Still, even accepting that federal-securities laws bring
common-law soil with them and OSHA does not, the majority does not
explain why that is a constitutionally relevant
distinction.[
11]
In sum, all avenues by which the majority
attempts to distinguish
Atlas Roofing fail. The majority
cannot escape the entrenched principle that a “legal cause of
action involves ‘public rights’ ” that can be taken outside of
Article III if the “statutory right is . . . closely
intertwined with a federal regulatory program Congress has power to
enact”
or if it “belongs to [o]r exists against the Federal
Government.”
Granfinanciera, 492 U. S., at
53–54.[
12] In both
Atlas
Roofing and this case, a public right exists. In both statutory
schemes, regardless of any perceived resemblance to the common law,
Congress enacted a new cause of action that created a statutory
right belonging to the United States for the Government to enforce
pursuant to its sovereign powers.
IV
A faithful and straightforward application of
this Court’s longstanding precedent should have resolved this case.
Faithful “[a]dherence to precedent is ‘a foundation stone of the
rule of law.’ ”
Kisor v.
Wilkie, 588 U.S. 558,
586 (2019) (quoting
Michigan v.
Bay Mills Indian
Community,
572 U.S.
782, 798 (2014)). It allows courts to function, and be
perceived, as courts, and not as political entities. “ ‘It
promotes the evenhanded, predictable, and consistent development of
legal principles, fosters reliance on judicial decisions, and
contributes to the actual and perceived integrity of the judicial
process.’ ” 588 U. S., at 586–587 (quoting
Payne
v.
Tennessee,
501 U.S.
808, 827 (1991); alterations omitted). That is why, “even in
constitutional cases, a departure from precedent ‘demands special
justification.’ ”
Gamble v.
United States, 587
U.S. 678, 691 (2019) (quoting
Arizona v.
Rumsey,
467 U.S.
203, 212 (1984)).
Today’s decision disregards these foundational
principles.[
13] Time will
tell what is left of the public-rights doctrine. Less uncertain,
however, are the momentous consequences that flow from the
majority’s insistence that the Government’s rights to civil
penalties must now be tried before a jury in federal court. The
majority’s decision, which strikes down the SEC’s in-house
adjudication of civil-penalty claims on the ground that such claims
are legal in nature and entitle respondents to a federal jury,
effects a seismic shift in this Court’s jurisprudence. Indeed,
“[i]f you’ve never heard of a statute being struck down on that
ground,” and you recall having read countless cases approving of
that arrangement, “you’re not alone.”
Seila Law LLC v.
Consumer Financial Protection Bureau, 591 U.S. 197, 294
(2020) (Kagan, J., concurring in judgment with respect to
severability and dissenting in part).
The majority pulls a rug out from under Congress
without even acknowledging that its decision upends over two
centuries of settled Government practice. The United States, led by
then-Solicitor General Robert Bork and then-Assistant Attorney
General for the Civil Division Rex Lee, told this Court in
Atlas
Roofing that “during the whole of our history, regulatory fines
and penalties have been collected by non-jury procedures pursuant
to . . . legislative decisions,” and that “[i]t would be
most remarkable if, at this late date, the Seventh Amendment were
construed to outlaw this consistent rule of government followed for
two centuries.” Brief for Respondents in
Atlas Roofing, O.
T. 1976, No. 75–746, etc., pp. 81–82. This Court agreed and upheld
that practice, it seemed, once and for all.
Following this Court’s precedents and the
recommendation of the Administrative Conference of the United
States, Congress has enacted countless new statutes in the past 50
years that have empowered federal agencies to impose civil
penalties for statutory violations. See 2 P. Verkuilm, D. Gifford,
C. Koch, R. Pierce, & J. Lubbers, Administrative Conference of
the United States, Recommendations and Reports, The Federal
Administrative Judiciary 861, and nn. 350–351 (1992). These
statutes are sometimes enacted in addition to, but often instead
of, “the traditional civil enforcement statutes that permitted
agencies to collect civil penalties only after federal district
court trials.”
Id., at 861. “By 1986, there were over 200
such statutes” and “[t]he trend has, if anything, accelerated”
since then.
Id., at 861, and n. 351.
Similarly, there are, at the very least, more
than two dozen agencies that can impose civil penalties in
administrative proceedings. See Tr. of Oral Arg. 78–79 (Principal
Deputy Solicitor General) (recognizing two dozen agencies with
administrative civil-penalty authorities); see also,
e.
g., 5 U. S. C. §1215(a)(3)(A)(ii) (Merit
Systems Protection Board); 7 U. S. C. §§9(10)(C), 13a
(Commodity Futures Trading Commission); §§499c(a), 586, 2279e(a)
(Department of Agriculture); 8 U. S. C. §§1324c, 1324d
(Department of Justice); 12 U. S. C. §§5563(a)(2), (c),
(Consumer Financial Protection Bureau); 16 U. S. C.
§823b(c) (Federal Energy Regulatory Commission); 20
U. S. C. §1082(g) (Department of Education); 21
U. S. C. §335b (Department of Health and Human
Services/Food and Drug Administration); 29 U. S. C.
§666(j) (Occupational Safety and Health Review Commission); 30
U. S. C. §§820(a) and (b) (Federal Mine Safety and Health
Review Commission); 31 U. S. C. §5321(a)(2) (Department
of the Treasury); 33 U. S. C. §§1319(d) and (g)
(Environmental Protection Agency); 39 U. S. C. §3018(c)
(Postal Service); 42 U. S. C. §3545(f ) (Department
of Housing and Urban Development); 46 U. S. C. §41107(a)
(Federal Maritime Commission); 47 U. S. C. §503(b)(3)
(Federal Communications Commission); 49 U. S. C. §521
(Federal Railroad Administration); §46301 (Department of
Transportation).
Some agencies, like the Consumer Financial
Protection Bureau, the Environmental Protection Agency, and the
SEC, can pursue civil penalties in both administrative proceedings
and federal court. See,
e.
g., 12 U. S. C.
§§5563(a), 5564(a), 5565(a)(1), (2)(H), and (c) (Consumer Financial
Protection Bureau); 33 U. S. C. §§1319(a), (b), and (g)
(Environmental Protection Agency);
supra, at 2 (SEC). Others
do not have that choice. As the above-cited statutes confirm, 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 pursue civil penalties only in agency enforcement proceedings.
For those and countless other agencies, all the majority can say is
tough luck; get a new statute from Congress.
Against this backdrop, our coequal branches will
be surprised to learn that the rule they thought long settled, and
which remained unchallenged for half a century, is one that,
according to the majority and the concurrence, my dissent just
announced today. Unfortunately, that mistaken view means that 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. Rather than acknowledge the earthshattering
nature of its holding, the majority has tried to disguise it. The
majority claims that its ruling is limited to “civil penalty suits
for fraud” pursuant to a statute that is “barely over a decade
old,”
ante, at 18, n. 2, 22, an assurance that is in
significant tension with other parts of its reasoning. That
incredible assertion should fool no one. Today’s decision is a
massive sea change. Litigants seeking further dismantling of the
“administrative state” have reason to rejoice in their win today,
but those of us who cherish the rule of law have nothing to
celebrate.
* * *
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.
See,
e.
g.,
Collins v.
Yellen, 594 U.S.
220, 227 (2021) (concluding that the Federal Housing Finance
Agency’s “structure violates the separation of powers” because the
Agency was led by a single Director removable by the President only
“ ‘for cause’ ”);
United States v.
Arthrex,
Inc., 594 U.S. 1, 6, 23 (2021) (holding that “authority wielded
by [Administrative Patent Judges] during inter partes review is
incompatible with their appointment by the Secretary to an inferior
office”);
Seila Law, 591 U. S., at 202–205 (holding
that “the structure of the [Consumer Financial Protection Bureau]
violates the separation of powers” because it was led by a single
Director removable by the President only “for cause”);
Free
Enterprise Fund v.
Public Company Accounting Oversight
Bd.,
561 U.S.
477, 483–484, 492 (2010) (holding “that the dual for-cause
limitations on the removal of [Public Company Accounting Oversight]
Board members contravene the Constitution’s separation of powers”).
The Court tells Congress how best to structure agencies, vindicate
harms to the public at large, and even provide for the enforcement
of rights created for the Government. It does all of this despite
the fact that, compared to its political counterparts, “the
Judiciary possesses an inferior understanding of the realities of
administration” and how “political power . . . operates.”
Free Enterprise Fund, 561 U. S., at 523 (Breyer, J.,
dissenting).
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 decisionmaking, as well as uniformity,
predictability, and greater political accountability. See,
e.
g., Brief for Administrative Law Scholars as
Amici Curiae 30–32. Others may believe those benefits are
overstated, and that a federal jury is a better check on government
overreach. See,
e.
g., Brief for Cato Institute as
Amicus Curiae 11–25. Those arguments take place against the
backdrop of a philosophical (and perhaps ideological) debate on
whether the number of agencies and authorities properly corresponds
to the ever-increasing and evolving problems faced by our
society.
This Court’s job is not to decide who wins this
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 the electorate, and the Executive
to some degree, not this Court, that can and should provide a check
on the wisdom of those judgments.
Make no mistake: Today’s decision is a power
grab. Once again, “the majority arrogates Congress’s policymaking
role to itself.”
Garland v.
Cargill, 602 U.S. 406,
442 (2024) (Sotomayor, J., dissenting). It prescribes artificial
constraints on what modern-day adaptable governance must look like.
In telling Congress that it cannot entrust certain public-rights
matters to the Executive because it must bring them first into the
Judiciary’s province, the majority oversteps its role and
encroaches on Congress’s constitutional authority. Its 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. The Federalist No. 51, p. 349 (J. Cooke ed.
1961) (J. Madison). Judicial aggrandizement is as pernicious to the
separation of powers as any aggrandizing action from either of the
political branches.
Deeply entrenched in today’s ruling is the
erroneous belief that any “mistaken or wrongful exertion by the
legislative department of its authority” can lead to “grave abuses”
and “it behooves the judiciary to apply a corrective by exceeding
its own authority” through requiring civil-penalty claims to
proceed before a federal jury.
Stranahan, 214 U. S., at
340. As this Court said over a century ago in this public-rights
context, that belief “mistakenly assumes that the courts can alone
be safely intrusted with power, and that hence it is their duty to
unlawfully exercise prerogatives which they have no right to exert,
upon the assumption that wrong must be done to prevent wrong being
accomplished.”
Ibid.
By giving respondents a jury trial, even one
that the Constitution does not require, the majority may think that
it is protecting liberty. That belief, too, is deeply misguided.
The American People should not mistake judicial hubris with the
protection of individual rights. Our first President understood
this well. In his parting words to the Nation, he reminded us that
a branch of Government arrogating for itself the power of another
based on perceptions of what, “in one instance, may be the
instrument of good . . . is the customary weapon by which
free governments are destroyed.” Farewell Address (1796), in 35 The
Writings of George Washington 229 (J. Fitzpatrick ed. 1940)
(footnote omitted). The majority today ignores that wisdom.
Because the Court disregards its own precedent
and its coequal partners in our tripartite system of Government, I
respectfully dissent.