'Jarkesy' Ruling Could Affect Agencies Beyond the SEC, Administrative Law Professors Say
July 1, 2024, National Law Journal
Kevin King’s commentary was included in a National Law Journal article covering the U.S. Supreme Court’s Jarkesy decision, which ruled that the Securities and Exchange Commission’s (SEC) practice of using in-house tribunals overseen by an administrative judge to adjudicate securities fraud cases was unconstitutional.
According to Kevin, concerns that bottlenecks will be created now that agency proceedings will be moved to federal courts is “unfounded.” “Federal courts are handling far fewer cases now than they were 10 years or 20 years ago. The federal courts are capable of handling more work than they are today,” he said. Kevin added the high court’s decision will not stop any federal agency from enforcing federal law but it will ensure that agencies “comply with the Seventh Amendment and pursue their enforcement proceedings in federal court with the jury.”
Kevin noted that the Jarkesy decision expressly chose not to address two issues of congressional authority also presented in the case, including, “Whether statutory provisions that authorize the SEC to choose to enforce the securities laws through an agency adjudication instead of filing a district court action violate the nondelegation doctrine” and “whether Congress violated Article II [of the Constitutuion] by granting for-cause removal protection to administrative law judges in agencies whose heads enjoy for-cause removal protection.”
Kevin believed that if the Supreme Court had decided to address one or both of these other issues, that would have had a more “sweeping effect.” The high court’s decision in Jarkesy is “much narrower than it could have been,” Kevin observed. That “reflects the pattern of the Roberts Court, which is that the chief justice is often looking for narrow ways to proceed and to tackle constitutional questions in an incremental, one step at a time fashion,” he added.
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