SECURITIES AND EXCHANGE COMMISSION v. JARKESY ET AL.
No. 22–859
SUPREME COURT OF THE UNITED STATES
Decided June 27, 2024
603 U. S. ____ (2024)
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
Argued November 29, 2023
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
In the aftermath of the Wall Street Crash of 1929, Congress passed a suite of laws designed to combat securities fraud and increase market transparency. Three such statues are relevant: The
To enforce these Acts, Congress created the Securities and Exchange Commission. The SEC may bring an enforcement action in one of two forums. It can file suit in federal court, or it can adjudicate the matter itself. The forum the SEC selects dictates certain aspects of the litigation. In federal court, a jury finds the facts, an Article III judge presides, and the Federal Rules of Evidence and the ordinary rules of discovery govern the litigation. But when the SEC adjudicates the matter in-house, there are no juries. The Commission presides while its Division of Enforcement prosecutes the case. The Commission or its delegee—typically an Administrative Law Judge—also finds facts and decides discovery disputes, and the SEC‘s Rules of Practice govern.
One remedy for securities violations is civil penalties. Originally, the SEC could only obtain civil penalties from unregistered investment advisers in federal court. Then, in 2010, Congress passed the
Shortly after passage of the Dodd-Frank Act, the SEC initiated an enforcement action for civil penalties against investment adviser George Jarkesy, Jr., and his firm, Patriot28, LLC for alleged violations of the “antifraud provisions” contained in the federal securities laws. The SEC opted to adjudicate the matter in-house. As relevant, the final order determined that Jarkesy and Patriot28 had committed securities violations and levied a civil penalty of $300,000. Jarkesy and Patriot28 petitioned for judicial review. The Fifth Circuit vacated the order on the ground that adjudicating the matter in-house violated the defendants’ Seventh Amendment right to a jury trial.
Held: When the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial. Pp. 6–27.
(a) The question presented by this case—whether the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties for securities fraud—is straightforward. Following the analysis set forth in Granfinanciera, S. A. v. Nordberg, 492 U. S. 33, and Tull v. United States, 481 U. S. 412, this action implicates the Seventh Amendment because the SEC‘s antifraud provisions replicate common law fraud. And the “public rights” exception to Article III jurisdiction does not apply, because the present action does not fall within any of the distinctive areas involving governmental prerogatives where the Court has concluded that a matter may be resolved outside of an Article III court, without a jury.
(b) The Court first explains why this action implicates the Seventh Amendment.
(1) The right to trial by jury is “of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right” has always been and “should be scrutinized with the utmost care.” Dimick v. Schiedt, 293 U. S. 474, 486. When the British attempted to evade American juries by siphoning adjudications to juryless admiralty, vice admiralty, and chancery courts, the Americans protested and eventually cited the British practice as a justification for declaring Independence. In the Revolution‘s aftermath, concerns that the proposed Constitution lacked a provision guaranteeing a jury trial right in civil cases was perhaps the “most success[ful]” critique leveled against the document during the ratification debates. The Federalist No. 83, p. 495. To fix that flaw, the Framers promptly adopted the Seventh Amendment. Ever since, “every encroachment upon [the jury trial right] has been watched with great jealousy.” Parsons v. Bedford, 3 Pet. 433, 446. Pp. 7–8.
(2) The Seventh Amendment guarantees that in “[s]uits at common law . . . the right of trial by jury shall be preserved.” The right
The close relationship between federal securities fraud and common law fraud confirms that conclusion. Both target the same basic conduct: misrepresenting or concealing material facts. By using “fraud” and other common law terms of art when it drafted the federal securities laws, Congress incorporated common law fraud prohibitions into those laws. This Court therefore often considers common law fraud principles when interpreting federal securities law. See, e.g., Dura Pharmaceuticals, Inc. v. Broudo, 544 U. S. 336, 343–344. While federal securities fraud and common law fraud are not identical, the close relationship between the two confirms that this action is “legal in nature.” Granfinanciera, 492 U. S., at 53. Pp. 8–13.
(c) Because the claims at issue here implicate the Seventh Amendment, a jury trial is required unless the “public rights” exception applies. Under this exception, Congress may assign the matter for decision to an agency without a jury, consistent with the Seventh Amendment. For the reasons below, the exception does not apply. Pp. 13–27.
(1) The Constitution prevents Congress from “withdraw[ing] from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law.” Murray‘s Lessee v. Hoboken Land & Improvement Co., 18 How. 272, 284. Once such a suit “is brought within
The Court also recognizes a class of cases concerning “public rights.” Such matters “historically could have been determined exclusively by [the executive and legislative] branches.” Id., at 493 (internal quotation marks omitted). No involvement by an Article III court in the initial adjudication of public rights claims is necessary. Certain categories that have been recognized as falling within the exception include matters concerning: the collection of revenue; aspects of customs law; immigration law; relations with Indian tribes; the administration of public lands; and the granting of public benefits. The Court‘s opinions governing this exception have not always spoken in precise terms. But “even with respect to matters that arguably fall within the scope of the ‘public rights’ doctrine, the presumption is in favor of Article III courts.” Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U. S. 50, 69, n. 23 (plurality opinion). Pp. 13–18.
(2) In Granfinanciera, this Court previously considered whether the Seventh Amendment guarantees the right to a jury trial “in the face of Congress’ decision to allow a non-Article III tribunal to adjudicate” a statutory “fraud claim.” 492 U. S., at 37, 50. There the issue was whether Congress‘s designation of fraudulent conveyance actions as “core [bankruptcy] proceedings” authorized non-Article III bankruptcy judges to hear them without juries. Id., at 50. The Court held that the designation was not permissible, even under the public rights exception. To determine whether the claim implicated the Seventh Amendment, the Court applied the principles distilled in Tull. Surveying English cases and considering the remedy these suits provided, the Court concluded that fraudulent conveyance actions were “quintessentially suits at common law.” Granfinanciera, 492 U. S., at 56. Because these actions were akin to “suits at common law” and were not “closely intertwined” with the bankruptcy process, the Court held that the public rights exception did not apply, and a jury was required. Id., at 54, 56. Pp. 19–20.
(3) Granfinanciera effectively decides this case. The action here was brought under the “anti-fraud provisions” of the federal securities laws and provide civil penalties that can “only be enforced in courts of law.” Tull, 481 U. S., at 422. They target the same basic conduct as common law fraud, employ the same terms of art, and operate pursuant to similar legal principles. In short, this action involves a “matter[ ] of private rather than public right.” Granfinanciera, 492 U. S., at 56. Pp. 20–21.
(4) The SEC claims that the public rights exception applies because Congress created “new statutory obligations, impose[d] civil penalties for their violation, and then commit[ted] to an administrative agency the function of deciding whether a violation ha[d] in fact occurred.” Brief for Petitioner 21. Granfinanciera does away with much of the SEC‘s argument. Congress cannot “conjure away the Seventh Amendment by mandating that traditional legal claims be . . . taken to an administrative tribunal.” 492 U. S., at 52. The SEC‘s argument that Granfinanciera does not apply because the Government is the party bringing this action also fails. What matters is the substance of the suit, not where it is brought, who brings it, or how it is labeled. Northern Pipeline Constr. Co., 458 U. S., at 69 n. 23 (plurality opinion). Pp. 21–22.
(5) The Court‘s opinion in Atlas Roofing Co. v. Occupational Safety and Health Review Comm‘n, 430 U. S. 442, is not to the contrary. The litigation in that case arose under the
The Court does not reach the remaining issues in this case.
34 F. 4th 446, affirmed and remanded.
ROBERTS, C. J., delivered the opinion of the Court, in which THOMAS, ALITO, GORSUCH, KAVANAUGH, and BARRETT, JJ., joined. GORSUCH, J., filed a concurring opinion, in which THOMAS, J., joined. SOTOMAYOR, J., filed a dissenting opinion, in which KAGAN and JACKSON, JJ., joined.
SECURITIES AND EXCHANGE COMMISSION, PETITIONER v. GEORGE R. JARKESY, JR., ET AL.
No. 22–859
SUPREME COURT OF THE UNITED STATES
June 27, 2024
603 U. S. ____ (2024)
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT
In 2013, the Securities and Exchange Commission initiated an enforcement action against respondents George Jarkesy, Jr., and Patriot28, LLC, seeking civil penalties for alleged securities fraud. The SEC chose to adjudicate the matter in-house before one of its administrative law judges, rather than in federal court where respondents could have proceeded before a jury. We consider whether the Seventh Amendment permits the SEC to compel respondents to defend themselves before the agency rather than before a jury in federal court.
I
A
In the aftermath of the Wall Street Crash of 1929, Congress passed a suite of laws designed to combat securities fraud and increase market transparency. Three such statues are relevant here: The
The three antifraud provisions are Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act, and Section 206 of the Investment Advisers Act. Section 17(a) prohibits regulated individuals from “obtain[ing] money or property by means of any untrue statement of a material fact,” as well as causing certain omissions of material fact.
To enforce these Acts, Congress created the SEC. The SEC may bring an enforcement action in one of two forums. First, the Commission can adjudicate the matter itself. See
Procedurally, these forums differ in who presides and makes legal determinations, what evidentiary and discovery rules apply, and who finds facts. Most pertinently, in federal court a jury finds the facts, depending on the nature of the claim. See
Conversely, when the SEC adjudicates the matter in-house, there are no juries. Instead, the Commission presides and finds facts while its Division of Enforcement prosecutes the case. The Commission may also delegate its role as judge and factfinder to one of its members or to an administrative law judge (ALJ) that it employs. See
When a Commission member or an ALJ presides, the full Commission can review that official‘s findings and conclusions, but it is not obligated to do so. See §201.360;
The remedy at issue in this case, civil penalties, also originally depended upon the forum chosen by the SEC. Except in cases against registered entities, the SEC could obtain civil penalties only in federal court. See Insider Trading
Civil penalties rank among the SEC‘s most potent enforcement tools. These penalties consist of fines of up to $725,000 per violation. See
B
Shortly after passage of the Dodd-Frank Act, the SEC began investigating Jarkesy and Patriot28 for securities fraud. Between 2007 and 2010, Jarkesy launched two investment funds, raising about $24 million from 120 “accredited” investors—a class of investors that includes, for example, financial institutions, certain investment professionals, and high net worth individuals. App. to Pet. for Cert. 72a–73a, 110a, n. 72; see 17 CFR §230.501. Patriot28, which Jarkesy managed, served as the funds’ investment adviser. According to the SEC, Jarkesy and Patriot28 misled investors in at least three ways: (1) by misrepresenting the investment strategies that Jarkesy and Patriot28 employed, (2) by lying about the identity of the funds’ auditor and prime broker, and (3) by inflating the funds’ claimed value
Relying on the new authority conferred by the Dodd-Frank Act, the SEC opted to adjudicate the matter itself rather than in federal court. In 2014, the presiding ALJ issued an initial decision. Id., at 155a–225a. The SEC reviewed the decision and then released its final order in 2020. Id., at 71a–154a. The final order levied a civil penalty of $300,000 against Jarkesy and Patriot28, directed them to cease and desist committing or causing violations of the antifraud provisions, ordered Patriot28 to disgorge earnings, and prohibited Jarkesy from participating in the securities industry and in offerings of penny stocks. Id., at 152a–154a.
Jarkesy and Patriot28 petitioned for judicial review. 34 F. 4th 446, 450 (CA5 2022). A divided panel of the Fifth Circuit granted their petition and vacated the final order. Id., at 449–450. Applying a two-part test from Granfinanciera, S. A. v. Nordberg, 492 U. S. 33 (1989), the panel held that the agency‘s decision to adjudicate the matter in-house violated Jarkesy‘s and Patriot28‘s Seventh Amendment right to a jury trial. 34 F. 4th, at 451. First, the panel determined that because these SEC antifraud claims were “akin to [a] traditional action[] in debt,” a jury trial would be required if this case were brought in an Article III court. Id., at 454; see id., at 453–455. It then considered whether the “public rights” exception applied. That exception permits Congress, under certain circumstances, to assign an action to an agency tribunal without a jury, consistent with the Seventh Amendment. See id., at 455–459. The panel concluded that the exception did not apply, and that therefore the case should have been brought in federal court,
It also identified two further constitutional problems. First, it determined that Congress had violated the nondelegation doctrine by authorizing the SEC, without adequate guidance, to choose whether to litigate this action in an Article III court or to adjudicate the matter itself. See id., at 459–463. The panel also found that the insulation of the SEC ALJs from executive supervision with two layers of for-cause removal protections violated the separation of powers. See id., at 463–466. Judge Davis dissented. Id., at 466–479. The Fifth Circuit denied rehearing en banc, 51 F. 4th 644 (2022), and we granted certiorari, 600 U. S. ___ (2023).
II
This case poses a straightforward question: whether the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties against him for securities fraud. Our analysis of this question follows the approach set forth in Granfinanciera and Tull v. United States, 481 U. S. 412 (1987). The threshold issue is whether this action implicates the Seventh Amendment. It does. The SEC‘s antifraud provisions replicate common law fraud, and it is well established that common law claims must be heard by a jury.
Since this case does implicate the Seventh Amendment, we next consider whether the “public rights” exception to Article III jurisdiction applies. This exception has been held to permit Congress to assign certain matters to agencies for adjudication even though such proceedings would not afford the right to a jury trial. The exception does not apply here because the present action does not fall within
A
We first explain why this action implicates the Seventh Amendment.
1
The right to trial by jury is “of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right” has always been and “should be scrutinized with the utmost care.” Dimick v. Schiedt, 293 U. S. 474, 486 (1935). Commentators recognized the right as “the glory of the English law,” 3 W. Blackstone, Commentaries on the Laws of England 379 (8th ed. 1778) (Blackstone), and it was prized by the American colonists. When the English began evading American juries by siphoning adjudications to juryless admiralty, vice admiralty, and chancery courts, Americans condemned Parliament for “subvert[ing] the rights and liberties of the colonists.” Resolutions of the Stamp Act Congress, Art. VIII (Oct. 19, 1765), reprinted in Sources of Our Liberties 270, 271 (R. Perry & J. Cooper eds. 1959). Representatives gathered at the First Continental Congress demanded that Parliament respect the “great and inestimable privilege of being tried by their peers of the vicinage, according to the [common] law.” 1 Journals of the Continental Congress, 1774–1789, p. 69 (Oct. 14, 1774) (W. Ford ed. 1904). And when the English continued to try Americans without juries, the Founders cited the practice as a justification for
In the Revolution‘s aftermath, perhaps the “most success[ful]” critique leveled against the proposed Constitution was its “want of a . . . provision for the trial by jury in civil cases.” The Federalist No. 83, p. 495 (C. Rossiter ed. 1961) (A. Hamilton) (emphasis deleted). The Framers promptly adopted the Seventh Amendment to fix that flaw. In so doing, they “embedded” the right in the Constitution, securing it “against the passing demands of expediency or convenience.” Reid v. Covert, 354 U. S. 1, 10 (1957) (plurality opinion). Since then, “every encroachment upon it has been watched with great jealousy.” Parsons v. Bedford, 3 Pet. 433, 446 (1830).
2
By its text, the Seventh Amendment guarantees that in “[s]uits at common law, . . . the right of trial by jury shall be preserved.” In construing this language, we have noted that the right is not limited to the “common-law forms of action recognized” when the Seventh Amendment was ratified. Curtis v. Loether, 415 U. S. 189, 193 (1974). As Justice Story explained, the Framers used the term “common law” in the Amendment “in contradistinction to equity, and admiralty, and maritime jurisprudence.” Parsons, 3 Pet., at 446. The Amendment therefore “embrace[s] all suits which are not of equity or admiralty jurisdiction, whatever may be the peculiar form which they may assume.” Id., at 447.
The Seventh Amendment extends to a particular statutory claim if the claim is “legal in nature.” Granfinanciera, 492 U. S., at 53. As we made clear in Tull, whether that claim is statutory is immaterial to this analysis. See 481 U. S., at 414–415, 417–425. In that case, the Government sued a real estate developer for civil penalties in federal
In this case, the remedy is all but dispositive. For respondents’ alleged fraud, the SEC seeks civil penalties, a form of monetary relief. While monetary relief can be legal or equitable, money damages are the prototypical common law remedy. See Mertens v. Hewitt Associates, 508 U. S. 248, 255 (1993). What determines whether a monetary remedy is legal is if it is designed to punish or deter the wrongdoer, or, on the other hand, solely to “restore the status quo.” Tull, 481 U. S., at 422. As we have previously explained, “a civil sanction that cannot fairly be said solely to serve a remedial purpose, but rather can only be explained as also serving either retributive or deterrent purposes, is punishment.” Austin v. United States, 509 U. S. 602, 610 (1993) (internal quotation marks omitted). And while courts of equity could order a defendant to return unjustly obtained funds, only courts of law issued monetary penalties to “punish culpable individuals.” Tull, 481 U. S., at 422. Applying these principles, we have recognized that “civil penalt[ies are] a type of remedy at common law that could only be enforced in courts of law.” Ibid. The same is true here.
To start, the Securities Exchange Act and the Investment
The same is true of the criteria that determine the size of the available remedy. The Securities Act, the Securities Exchange Act, and the Investment Advisers Act establish three “tiers” of civil penalties. See
Like the considerations that determine the availability of civil penalties in the first place, the criteria that divide these tiers are also legal in nature. Each tier conditions the available penalty on the culpability of the defendant and the need for deterrence, not the size of the harm that must be remedied. Indeed, showing that a victim suffered harm is not even required to advance a defendant from one tier to the next. Since nothing in this analysis turns on “restor[ing] the status quo,” Tull, 481 U. S., at 422, these factors
The final proof that this remedy is punitive is that the SEC is not obligated to return any money to victims. See id., at 422–423. Although the SEC can choose to compensate injured shareholders from the civil penalties it collects, see
In sum, the civil penalties in this case are designed to punish and deter, not to compensate. They are therefore “a type of remedy at common law that could only be enforced in courts of law.” Ibid. That conclusion effectively decides that this suit implicates the Seventh Amendment right, and that a defendant would be entitled to a jury on these claims. See id., at 421–423.
The close relationship between the causes of action in this case and common law fraud confirms that conclusion. Both target the same basic conduct: misrepresenting or concealing material facts. Compare
Congress‘s decision to draw upon common law fraud created an enduring link between federal securities fraud and its common law “ancestor.” Foster v. Wilson, 504 F. 3d 1046, 1050 (CA9 2007). “[W]hen Congress transplants a common-law term, the old soil comes with it.” United States v. Hansen, 599 U. S. 762, 778 (2023) (internal quotation marks omitted). Our precedents therefore often consider common law fraud principles when interpreting federal securities law. E.g., Dura Pharmaceuticals, Inc. v. Broudo, 544 U. S. 336, 343–344 (2005) (evaluating pleading requirements in light of the “common-law roots of the securities fraud action“); Schreiber v. Burlington Northern, Inc., 472 U. S. 1, 7 (1985) (“The meaning the Court has given the term ‘manipulative’ [in §10b of the Securities Exchange Act] is consistent with the use of the term at common law . . . .” (footnote omitted)); Chiarella v. United States, 445 U. S. 222, 227–229 (1980) (explaining that insider trading liability under Rule 10b–5 is rooted in the common law duty of disclosure); Basic Inc. v. Levinson, 485 U. S. 224, 253 (1988) (White, J., concurring in part and dissenting in part) (“In general, the case law developed in this Court with respect to §10(b) and Rule 10b–5 has been based on doctrines with which we, as judges, are familiar: common-law doctrines of fraud and deceit.“).
That is not to say that federal securities fraud and common law fraud are identical. In some respects, federal securities fraud is narrower. For example, federal securities law does not “convert every common-law fraud that happens to involve securities into a violation.” SEC v. Zandford, 535 U. S. 813, 820 (2002). It only targets certain subject matter and certain disclosures. In other respects,
B
1
Although the claims at issue here implicate the Seventh Amendment, the Government and the dissent argue that a jury trial is not required because the “public rights” exception applies. Under this exception, Congress may assign the matter for decision to an agency without a jury, consistent with the Seventh Amendment. But this case does not fall within the exception, so Congress may not avoid a jury trial by preventing the case from being heard before an Article III tribunal.
The Constitution prohibits Congress from “withdraw[ing] from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law.” Murray‘s Lessee v. Hoboken Land & Improvement Co., 18 How. 272, 284 (1856). Once such a suit “is brought within the bounds of federal jurisdiction,” an Article III court must decide it, with a jury if the Seventh Amendment applies. Stern v. Marshall, 564 U. S. 462, 484 (2011). These propositions are critical to maintaining the proper role of the Judiciary in the Constitution: “Under ‘the basic concept of separation of powers . . . that flow[s] from the scheme of a tripartite government’ adopted in the Constitution, ‘the judicial Power of
On that basis, we have repeatedly explained that matters concerning private rights may not be removed from Article III courts. Murray‘s Lessee, 18 How., at 284; Granfinanciera, 492 U. S., at 51–52; Stern, 564 U. S., at 484. A hallmark that we have looked to in determining if a suit concerns private rights is whether it “is made of ‘the stuff of the traditional actions at common law tried by the courts at Westminster in 1789.‘” Id., at 484 (quoting Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U. S. 50, 90 (1982) (Rehnquist, J., concurring in judgment)). If a suit is in the nature of an action at common law, then the matter presumptively concerns private rights, and adjudication by an Article III court is mandatory. Stern, 564 U. S., at 484.
At the same time, our precedent has also recognized a class of cases concerning what we have called “public rights.” Such matters “historically could have been determined exclusively by [the executive and legislative] branches,” id., at 493 (internal quotation marks omitted), even when they were “presented in such form that the judicial power [wa]s capable of acting on them,” Murray‘s Lessee, 18 How., at 284. In contrast to common law claims, no involvement by an Article III court in the initial adjudication is necessary in such a case.
The decision that first recognized the public rights exception was Murray‘s Lessee. In that case, a federal customs collector failed to deliver public funds to the Treasury, so the Government issued a “warrant of distress” to compel him to produce the withheld sum. 18 How., at 274–275.
Pursuant to the warrant, the Government eventually seized and sold a plot of the collector‘s land. Id., at 274. Plaintiffs later attacked the purchaser‘s title, arguing that the initial seizure was void because the Government had audited the collector‘s account and issued the warrant itself without judicial involvement. Id., at 275.
The Court upheld the sale. It explained that pursuant to its power to collect revenue, the Government could rely on “summary proceedings” to compel its officers to “pay such balances of the public money” into the Treasury “as may be in their hands.” Id., at 281, 285. Indeed, the Court observed, there was an unbroken tradition—long predating the founding—of using these kinds of proceedings to “enforce payment of balances due from receivers of the revenue.” Id., at 278; see id., at 281. In light of this historical practice, the Government could issue a valid warrant without intruding on the domain of the Judiciary. See id., at 280–282. The challenge to the sale thus lacked merit.
This principle extends beyond cases involving the collection of revenue. In Oceanic Steam Navigation Co. v. Stranahan, 214 U. S. 320 (1909), we considered the imposition of a monetary penalty on a steamship company. Pursuant to its plenary power over immigration, Congress had excluded immigration by aliens afflicted with “loathsome or dangerous contagious diseases,” and it authorized customs collectors to enforce the prohibition with fines. Id., at 331–334. When a steamship company challenged the penalty under Article III, we upheld it. Congress‘s power over foreign commerce, we explained, was so total that no party had a “‘vested right‘” to import anything into the country. Id., at 335 (quoting Buttfield v. Stranahan, 192 U. S. 470, 493 (1904)). By the same token, Congress could also prohibit immigration by certain classes of persons and enforce those prohibitions with administrative penalties assessed without a jury. See Oceanic Steam Navigation Co., 214 U. S., at
In Ex parte Bakelite Corp., 279 U.S. 438, 446 (1929), we upheld a law authorizing the President to impose tariffs on goods imported by “unfair methods of competition.” Id., at 446. The law permitted him to set whatever tariff was necessary, subject to a statutory cap, to produce fair competition. If the President was “satisfied the unfairness [was] extreme,” the law even authorized him to “exclude[]” foreign goods entirely. Ibid. Because the political branches had traditionally held exclusive power over this field and had exercised
This Court has since held that certain other historic categories of adjudications fall within the exception, including relations with Indian tribes, see United States v. Jicarilla Apache Nation, 564 U.S. 162, 174 (2011), the administration of public lands, Crowell v. Benson, 285 U.S. 22, 51 (1932), and the granting of public benefits such as payments to veterans, ibid., pensions, ibid., and patent rights, United States v. Duell, 172 U.S. 576, 582–583 (1899).
Our opinions governing the public rights exception have not always spoken in precise terms. This is an “area of frequently arcane distinctions and confusing precedents.” Thomas v. Union Carbide Agricultural Products Co., 473 U.S. 568, 583 (1985) (internal quotation marks omitted). The Court “has not ‘definitively explained’ the distinction between public and private rights,” and we do not claim to do so today. Oil States Energy Services, LLC v. Greene‘s Energy Group, LLC, 584 U.S. 325, 334 (2018).
Nevertheless, since Murray‘s Lessee, this Court has typically evaluated the legal basis for the assertion of the doctrine with care. The public rights exception is, after all, an exception. It has no textual basis in the Constitution and must therefore derive instead from background legal principles. Murray‘s Lessee itself, for example, took pains to justify the application of the exception in that particular instance by explaining that it flowed from centuries-old rules concerning revenue collection by a sovereign. See 18 How., at 281–285. Without such close attention to the basis for each asserted application of the doctrine, the exception would swallow the rule.2
The dissent also appeals to practice, ignoring that the statute Jarkesy and Patriot28 have been prosecuted under is barely over a decade old. It is also unclear how practice could transmute a private right into a public one, or how the absence of legal challenges brought by one generation could waive the individual rights of the next. Practice may be probative when it reflects the settled institutional understandings of the branches. That case is far weaker when the rights of individuals are directly at stake.
From the beginning we have emphasized one point: “To avoid misconstruction upon so grave a subject, we think it proper to state that we do not consider congress can . . . withdraw from judicial cognizance any matter which, from its nature, is the subject of a suit at the common law, or in equity, or admiralty.” Murray‘s Lessee, 18 How., at 284. We have never embraced the proposition that “practical” considerations alone can justify extending the scope of the public rights exception to such matters. Stern, 564 U.S., at 501. “[E]ven with respect to matters that arguably fall within the scope of the ‘public rights’ doctrine, the presumption is in favor of Article III courts.” Northern Pipeline Constr. Co., 458 U.S., at 69, n. 23 (plurality opinion) (citing Glidden Co. v. Zdanok, 370 U.S. 530, 548–549, and n. 21 (1962) (plurality opinion)). And for good reason: “Article III could neither serve its purpose in the system of checks and balances nor preserve the integrity of judicial decisionmaking if the other branches of the Federal Government could confer the Government‘s ‘judicial Power’ on entities outside
2
This is not the first time we have considered whether the
Granfinanciera involved a statutory action for fraudulent conveyance. As codified in the
The issue in Granfinanciera was whether this designation was permissible under the public rights exception. Ibid. We explained that it was not. Although Congress had assigned fraudulent conveyance claims to bankruptcy courts, that assignment was not dispositive. See id., at 52. What mattered, we explained, was the substance of the suit. “[T]raditional legal claims” must be decided by courts, “whether they originate in a newly fashioned regulatory scheme or possess a long line of common-law forebears.” Ibid. To determine whether the claim implicated the
We also considered whether these actions were “closely intertwined” with the bankruptcy regime. Id., at 54. Some bankruptcy claims, such as “creditors’ hierarchically ordered claims to a pro rata share of the bankruptcy res,” id., at 56, are highly interdependent and require coordination. Resolving such claims fairly is only possible if they are all submitted at once to a single adjudicator. Otherwise, parties with lower priority claims can rush to the courthouse to seek payment before higher priority claims exhaust the estate, and an orderly disposition of a bankruptcy is impossible. Other claims, though, can be brought in standalone suits, because they are neither prioritized nor subordinated to related claims. Since fraudulent conveyance actions fall into that latter category, we concluded that these actions were not “closely intertwined” with the bankruptcy process. Id., at 54. We also noted that Congress had already authorized jury trials for certain bankruptcy matters, demonstrating that jury trials were not generally “incompatible” with the overall regime. Id., at 61–62 (internal quotation marks omitted).
We accordingly concluded that fraudulent conveyance actions were akin to “suits at common law” and were not inseparable from the bankruptcy process. Id., at 54, 56. The public rights exception therefore did not apply, and a jury was required.
3
Granfinanciera effectively decides this case. Even when an action “originate[s] in a newly fashioned regulatory
According to the SEC, these are actions under the “antifraud provisions of the federal securities laws” for “fraudulent conduct.” App. to Pet. for Cert. 72a–73a (opinion of the Commission). They provide civil penalties, a punitive remedy that we have recognized “could only be enforced in courts of law.” Tull, 481 U.S., at 422. And they target the same basic conduct as common law fraud, employ the same terms of art, and operate pursuant to similar legal principles. See supra, at 10–12. In short, this action involves a “matter[] of private rather than public right.” Granfinanciera, 492 U.S., at 56. Therefore, “Congress may not ‘withdraw‘” it “‘from judicial cognizance.‘” Stern, 564 U.S., at 484 (quoting Murray‘s Lessee, 18 How., at 284).
4
Notwithstanding Granfinanciera, the SEC contends the public rights exception still applies in this case because Congress created “new statutory obligations, impose[d] civil penalties for their violation, and then commit[ted] to an administrative agency the function of deciding whether a violation ha[d] in fact occurred.” Brief for Petitioner 21 (internal quotation marks omitted).
The foregoing from Granfinanciera already does away with much of the SEC‘s argument. Congress cannot “conjure away the
The SEC‘s sole remaining basis for distinguishing Granfinanciera is that the Government is the party prosecuting this action. See Brief for Petitioner 26–28; see also Tr. of Oral Arg. 25 (Principal Deputy Solicitor General) (the “critical distinction” in the public rights analysis is “enforcement by the executive“); id., at 26 (identifying as “the constitutionally relevant distinction” that “this is something that has been assigned to a federal agency to enforce“). But we have never held that “the presence of the United States as a proper party to the proceeding is . . . sufficient” by itself to trigger the exception. Northern Pipeline Constr. Co., 458 U.S., at 69, n. 23 (plurality opinion). Again, what matters is the substance of the suit, not where it is brought, who brings it, or how it is labeled. See ibid. The object of this SEC action is to regulate transactions between private individuals interacting in a pre-existing market. To do so, the Government has created claims whose causes of action are modeled on common law fraud and that provide a type of remedy available only in law courts. This is a common law suit in all but name. And such suits typically must be adjudicated in Article III courts.
5
The principal case on which the SEC and the dissent rely is Atlas Roofing Co. v. Occupational Safety and Health Review Commission, 430 U.S. 442 (1977). Because the public rights exception as construed in Atlas Roofing does not extend to these civil penalty suits for fraud, that case does not control. And for that same reason, we need not reach the suggestion made by Jarkesy and Patriot28 that Tull and Granfinanciera effectively overruled Atlas Roofing to the extent that case construed the public rights exception to allow the adjudication of civil penalty suits in administrative
The litigation in Atlas Roofing arose under the
Unlike the claims in Granfinanciera and this action, the
Facing enforcement actions, two employers alleged that the adjudicatory authority of the OSHRC violated the
The cases that Atlas Roofing relied upon did not extend the public rights exception to “traditional legal claims.” Granfinanciera, 492 U.S., at 52. Instead, they applied the exception to actions that were “‘not . . . suit[s] at common law or in the nature of such . . . suit[s].‘” Atlas Roofing, 430 U.S., at 453 (quoting Jones & Laughlin Steel Corp., 301 U.S. 1, 48 (1937)); see Atlas Roofing, 430 U.S., at 450–451 (discussing, e.g., Murray‘s Lessee, Ex parte Bakelite Corp., Helvering v. Mitchell, 303 U.S. 391 (1938), and Oceanic Steam Navigation Co.). Indeed, the Court recognized that if a case did involve a common law action or its equivalent, a jury was required. See 430 U.S., at 455 (“‘[W]here the action involves rights and remedies recognized at common law, it must preserve to parties their right to a jury trial.‘“) (quoting Pernell v. Southall Realty, 416 U.S. 363, 383 (1974)); Atlas Roofing, 430 U.S., at 458–459 (jury required
Atlas Roofing concluded that Congress could assign the
The reasoning of Atlas Roofing cannot support any broader rule. The dissent chants ”Atlas Roofing” like a mantra, but no matter how many times it repeats those words, it cannot give Atlas Roofing substance that it lacks.4
Even as Atlas Roofing invoked the public rights exception, the definition it offered of the exception was circular. The exception applied, the Court said, “in cases in which ‘public rights’ are being litigated—e. g., cases in which the Government sues in its sovereign capacity to enforce public rights created by statutes.” 430 U.S., at 450; see id., at 458.
After Atlas Roofing, this Court clarified in Tull that the
For its part, the dissent also seems to suggest that Atlas Roofing establishes that the public rights exception applies whenever a statute increases governmental efficiency. Post, at 15 (opinion of SOTOMAYOR, J.). Again, our precedents foreclose this argument. As Stern explained, effects like increasing efficiency and reducing public costs are not enough to trigger the exception. See 564 U.S., at 501; INS v. Chadha, 462 U.S. 919, 944 (1983). Otherwise, evading
The novel claims in Atlas Roofing had never been brought in an Article III court. By contrast, law courts have dealt with fraud actions since before the founding, and Congress had authorized the SEC to bring such actions in Article III courts and still authorizes the SEC to do so today. See 3 Blackstone 41–42;
In short, Atlas Roofing does not conflict with our conclusion. When a matter “from its nature, is the subject of a suit at the common law,” Congress may not “withdraw [it] from judicial cognizance.” Murray‘s Lessee, 18 How., at 284.
* * *
A defendant facing a fraud suit has the right to be tried by a jury of his peers before a neutral adjudicator. Rather than recognize that right, the dissent would permit Congress to concentrate the roles of prosecutor, judge, and jury in the hands of the Executive Branch. That is the very opposite of the separation of powers that the Constitution demands. Jarkesy and Patriot28 are entitled to a jury trial in an Article III court. We do not reach the remaining constitutional issues and affirm the ruling of the Fifth Circuit on the
The judgment of the Court of Appeals for the Fifth Circuit is affirmed, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.
SECURITIES AND EXCHANGE COMMISSION, PETITIONER v. GEORGE R. JARKESY, JR., ET AL.
No. 22–859
SUPREME COURT OF THE UNITED STATES
[June 27, 2024]
603 U. S. ____ (2024)
GORSUCH, J.
JUSTICE GORSUCH, with whom JUSTICE THOMAS joins, concurring.
The Court decides a single issue: Whether the Security and Exchange Commission‘s use of in-house hearings to seek civil penalties violates the
I write separately to highlight that other constitutional provisions reinforce the correctness of the Court‘s course. The
I
In March 2013, the SEC‘s Commissioners approved
In 2010, however, all that changed. With the passage of the
There is little mystery why. The new law gave the SEC‘s Commissioners—the same officials who authorized the suit against Mr. Jarkesy—the power to preside over his case themselves and issue judgment. To be sure, the Commissioners opted, as they often do, to send Mr. Jarkesy‘s case in the first instance to an “administrative law judge” (ALJ). See
Going in, then, the odds were stacked against Mr. Jarkesy. The numbers confirm as much: According to one report, during the period under study the SEC won about 90% of its contested in-house proceedings compared to 69% of its cases in court. D. Thornley & J. Blount, SEC In-House Tribunals: A Call for Reform, 62 Vill. L. Rev. 261, 286 (2017) (Thornley). Reportedly, too, one of the SEC‘s handful of ALJs even warned individuals during settlement discussions that he had found defendants liable in every contested case and never once “‘ruled against the agency‘s enforcement division.‘” Axon Enterprise, Inc. v. FTC, 598 U.S. 175, 213–214 (2023) (GORSUCH, J., concurring in judgment).
The shift from a court to an ALJ didn‘t just deprive Mr. Jarkesy of the right to an independent judge and a jury. He also lost many of the procedural protections our courts supply in cases where a person‘s life, liberty, or property is at stake. After an agency files a civil complaint in court, a defendant may obtain from the SEC a large swathe of documents relevant to the lawsuit. See
Things look very different in agency proceedings. The SEC has a responsibility to provide “documents that contain material exculpatory evidence.”
How did all this play out in Mr. Jarkesy‘s case? Accompanying its charges, the SEC disclosed 700 gigabytes of data—equivalent to between 15 and 25 million pages of information—it had collected during its investigation. App. to Pet. for Cert. 164a; Complaint in Jarkesy v. U. S. SEC, No. 1:14–cv–00114 (DDC, Jan. 29, 2014), ECF Doc. 1, ¶49, pp. 12–13. Over Mr. Jarkesy‘s protest that it would take “two lawyers or paralegals working twelve-hour days over four decades to review,” ibid., the ALJ gave Mr. Jarkesy 10 months to prepare for his hearing, see App. to Pet. for Cert. 156a. Then, after conducting that hearing, the ALJ turned around and obtained from the Commission “an extension of
Mr. Jarkesy had the right to appeal to the Commission, but appeals to that politically accountable body (again, the same body that approved the charges) tend to go about as one might expect. The Commission may decline to review the ALJ‘s decision.
Mr. Jarkesy filed an appeal anyway. The Commission agreed to review the ALJ‘s decision. It then afforded itself the better part of six years to issue an opinion. And, after all that, it largely agreed with the ALJ. See App. to Pet. for Cert. 71a–74a. None of this likely came as a surprise to the SEC employees in the Division of Enforcement responsible for pressing the action against Mr. Jarkesy. While his appeal was pending, employees in that division—including an “‘Enforcement Supervisor‘” in the regional office prosecuting Mr. Jarkesy—accessed confidential memos by the Commissioners’ advisors about his appeal. See SEC, Second Commission Statement Relating to Certain Administrative Adjudications 3 (June 2, 2023).
II
A
If administrative proceedings like Mr. Jarkesy‘s seem a
The vice-admiralty courts in the Colonies began as rough equivalents of English courts of admiralty. E. Surrency, The Courts in the American Colonies, 11 Am. J. Legal Hist. 347, 355 (1967). These courts generally concerned themselves with maritime matters arising on “the oceans and rivers and their immediate shores.” C. Ubbelohde, The Vice-Admiralty Courts and the American Revolution 19 (1960) (Ubbelohde). And the proceedings they used accorded more with civil law traditions than common law ones. Among other things, this meant officials could try cases against colonists without a jury. Id., at 21.
Confined to admiralty disputes, perhaps the lack of a jury would have proven unexceptional (as juries were not usually required in such cases then, nor are they today). See, e.g., Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 448 (2001). But Parliament deployed these juryless tribunals in the Colonies to new ends that, according to John Adams, could fill “‘volumes.‘” Ubbelohde vii. The creep away from the original province of those courts began with the grant of authority over violations of certain trade and customs laws. But in the decade before the Revolution, the drip, drip, drip of expanding power became a torrent, as Parliament allowed more and more actions to be brought in colonial vice-admiralty courts.
Many of the matters added to vice-admiralty jurisdiction in the Colonies would have required juries in England. Id., at 112. But as the Massachusetts royal governor explained,
Vice-admiralty court judges also lacked independence. While judges in England since the end of the seventeenth century generally enjoyed the protection of tenure during good behavior, colonial judges usually served at the pleasure of the royal administration. See United States v. Will, 449 U.S. 200, 218–219 (1980). And, doing away with the pretense of impartiality entirely, some vice-admiralty judges held dual appointments—for instance, as colonial attorneys general and vice-admiralty judges. Ubbelohde 162–163.
Like the modern SEC, British colonial officials were not required to bring many of their cases before the vice-admiralty courts. Often, Parliament gave those officials the option to proceed in either the ordinary common-law courts or the vice-admiralty courts. Unsurprisingly, though, they sought to file where they were most likely to win. And “[i]n this contest, the vice-admiralty courts were usually the victors.” Id., at 21.
B
The abuses of these courts featured prominently in the calls for revolution. In the First Continental Congress, the assembled delegates condemned how Parliament “ex-tend[ed] the jurisdiction of Courts of Admiralty,” complained how colonial judges were “dependent on the
When the smoke settled, the American people went to great lengths to prevent a backslide toward anything like the vice-admiralty courts. Erlinger, 602 U.S., at ___–___ (slip op., at 5–6). One product of these efforts was Article III of the Constitution. There, the Constitution provided that “[t]he judicial Power“—the power over “Cases” and “Controversies“—would lie with life-tenured, salary-protected judges.
Despite these guarantees, many at the founding thought Article III didn‘t go far enough. Yes, it promised a defendant an independent judge rather than one dependent on
And what about civil juries? “[T]he jury trial,” one prominent Anti-Federalist observed, “brings with it an open and public discussion of all causes, and excludes secret and arbitrary proceedings.” Letter from a Federal Farmer (Jan. 18, 1788), in id., at 320 (Federal Farmer 15). The participation of ordinary Americans “drawn from the body of the people” serves another function, too: “If the conduct of judges shall . . . tend to subvert the laws, and change the forms of government, the jury may check them.” Ibid. As originally composed, however, the
The answer to these concerns was the
The
More than that, because it was “the peculiar province of the judiciary” to safeguard life, liberty, and property, due process often meant judicial process. 1 St. George Tucker, Blackstone‘s Commentaries, Editor‘s App. 358 (1803). That is, if the government sought to interfere with those rights, nothing less than “the process and proceedings of the common law” had to be observed before any such deprivation could take place. 3 J. Story, Commentaries on the Constitution of the United States §1783, p. 661 (1833) (Story). In other words, “‘due process of law’ generally implie[d] and include[d] . . . judex [a judge], regular allegations, opportunity to answer, and a trial according to some settled course of judicial proceedings.” Murray‘s Lessee, 18 How., at 280. This constitutional baseline was designed to serve
C
These three constitutional provisions were meant to work together, and together they make quick work of this case. In fact, each provision requires the result the Court reaches today.
First, because the “‘matter‘” before us is one “which, from its nature, is the subject of a suit at the common law,” id., at 284, “the responsibility for deciding [it] rests with
Second, because the action the SEC seeks to pursue is not the stuff of equity or admiralty jurisdiction but the sort of suit historically adjudicated before common-law courts, the
Third, were there any doubt, the
III
A
The government resists these conclusions. As the government sees it, this case implicates the so-called public rights exception. One that defeats not only Mr. Jarkesy‘s right to trial by jury, but also his right to proceed before an independent trial judge consistent with traditional judicial processes. That is, on the government‘s account, not only does the
In the government‘s view, the public rights exception “at a minimum allows Congress to create new statutory obligations, impose civil penalties for their violation, and then commit to an administrative agency the function of deciding whether a violation has in fact occurred.” Brief for Petitioner 21 (emphasis added; internal quotation marks omitted). Put plainly, all that need be done to dispense almost entirely with three separate constitutional provisions is an Act of Congress creating some new statutory obligation. And, the government continues, this case easily meets that standard because the proceeding against Mr. Jarkesy is one
The Court rightly rejects these arguments. See ante, at 19-21. No one denies that, under the public rights exception, Congress may allow the Executive Branch to resolve certain matters free from judicial involvement in the first instance. Ante, at 6, 14-15. But, despite its misleading name, the exception does not refer to all matters brought by the government against an individual to remedy public harms, or even all those that spring from a statute. See ante, at 16-17. Instead, public rights are a narrow class defined and limited by history. As the Court explains, that class has traditionally included the collection of revenue, customs enforcement, immigration, and the grant of public benefits. Ante, at 15-17.
How did these matters find themselves categorized as public rights? Competing explanations abound. Some have pointed to ancient practical considerations. In Murray‘s Lessee, for example, the Court reasoned that the “[i]mperative necessity” of tax collection for a functional state had long caused governments to treat “claims for public taxes” differently from “all others.” 18 How., at 282. Others have theorized that “the core of the judicial power” concerns the disposition of the “three ‘absolute’ rights” “to life, liberty, and property.” Wellness Int‘l Network, Ltd. v. Sharif, 575 U. S. 665, 713-714 (2015) (THOMAS, J., dissenting). Public rights, the theory goes, involve matters originally understood to fall outside this core. Id., at 714. So, for example, “[a]lthough Congress could authorize executive agencies to dispose of public rights in land—often by means of adjudicating a claimant‘s qualifications for a land grant under a statute—the United States had to go to the courts if it wished to revoke” that grant, which had become the owner‘s private property. Id., at 715. There are still other theories yet. See, e.g., Stern, 564 U. S., at 489.
With the public rights exception viewed in this light, the government‘s invocation of it in this case cannot succeed. Starting with a “‘presumption . . . in favor of
B
If all that‘s so, why might the government feel comfortable invoking the public rights exception? To be fair, much of it may have to do with this Court. Some of our past decisions have allowed the government to chip away at the courts’ historically exclusive role in adjudicating private rights—and juries’ accompanying role in that adjudication. This process began, of all places, in an admiralty case.
In Crowell v. Benson, 285 U. S. 22 (1932), this Court faced a constitutional challenge to the
Crowell itself only went so far, however. The case fell within federal courts’ admiralty jurisdiction, and tribunals sitting in admiralty in England and America alike had long heard certain matters falling within the public rights exception. See Culley, 601 U. S., at 398 (GORSUCH, J., concurring). In deciding those matters, courts had long tolerated some flexibility in procedures, had long restricted appellate review of factual findings, and had always proceeded without a jury. Crowell, 285 U. S., at 45, 53.
Soon, though, none of that mattered. Almost in a blink, the admiralty limitation was discarded, and more and more agencies began assuming adjudicatory functions previously reserved for judges and juries, employing novel procedures that sometimes bore faint resemblance to those observed in court. Along the way, prominent voices in and out of government expressed concern at this development. Consider just two typical examples. Were an agency endowed with
The high-water mark of the movement toward agency adjudication may have come in 1977 in Atlas Roofing Co. v. Occupational Safety & Health Review Comm‘n, 430 U. S. 442. Some have read that decision to suggest the category of public rights might encompass pretty much any case arising under any “‘new statutory obligations,‘” Brief for Petitioner 22 (quoting Atlas Roofing, 430 U. S., at 450). It is a view the government essentially espouses in this case. But without reference to any constitutional text or history to guide what does or does not qualify as a public right, that view has (unsurprisingly) proven wholly unworkable.
It did not take long for this Court to realize as much. Just 12 years later, in Granfinanciera, S. A. v. Nordberg, 492 U. S. 33 (1989), this Court cabined Atlas Roofing so narrowly that the author of Atlas Roofing complained that the Court had “overrul[ed]” it. 492 U. S., at 71, n. 1 (White, J., dissenting); see ante, at 23, n. 3. Far from endorsing the notion that any new statutory obligation could qualify for
Yet, even after the Court moved away from Atlas Roofing, our public rights jurisprudence remained muddled. Since then, the Court has suggested that public rights might include those “involving statutory rights that are integral parts of a public regulatory scheme.” Granfinanciera, 492 U. S., at 55, n. 10. We have changed course and tried our hand at a five-factor balancing test. See Stern, 564 U. S., at 491 (describing Commodity Futures Trading Comm‘n v. Schor, 478 U. S. 833 (1986)). We have replaced that test with one that considers “at least seven different” factors. Stern, 564 U. S., at 504 (Scalia, J., concurring). And at one time or another, these factors have included the consideration of “the concerns that drove Congress to depart from the requirements of
Today, the Court does much to return us to a more traditional understanding of public rights. Adhering to Granfinanciera, the Court rejects the government‘s overbroad reading of Atlas Roofing and recognizes that the kind of atextual and ahistorical (not to mention confusing) tests it inspired do little more than ask policy questions the
This Court does not subject other constitutional rights to such shabby treatment. We have “reaffirm[ed],” many times and “emphatically[,] that the
Why should
C
The dissent‘s competing account of public rights is astonishing. On its telling, the
To be sure, the dissent tries to appeal to precedent. It even asserts that our decisions support, “without exception,” its sweeping conception of public rights doctrine. Post, at
The 19th century behind it (for it does not trouble with the founding era), the dissent turns to Oceanic Steam Nav. Co. v. Stranahan, 214 U. S. 320 (1909). Drawing on that decision, the dissent contends that “Congress [has] routinely ‘impose[d] appropriate obligations‘” by statute and given “‘executive officers the power to enforce‘” them “‘without the necessity of invoking the judicial power.‘” Post, at 11 (quoting Stranahan, 214 U. S., at 339). Notably absent from the dissent‘s account, however, is the decision‘s discussion of Congress‘s long-recognized and extensive authority over the field of immigration, the area of law at issue there. See id., at 339. Unmentioned, too, is Stranahan‘s explanation that what links immigration to other public rights like “tariff[s], . . . internal revenue, taxation,” and “foreign commerce” is that, “‘from the beginning[,] Congress has exercised a plenary power‘” over them “because they all relate to subjects peculiarly within the authority of the legislative department.” Id., at 334, 339.
Really, one has to wonder: If the public rights exception is as broad and unqualified as the dissent asserts, why did our predecessors bother to discuss history or Congress‘s peculiar powers when it comes to revenue and immigration? Why didn‘t the Court simply announce the rule the dissent would have us announce today: that our
That my dissenting colleagues plow ahead anyway with their remarkable conception of public rights is all the more puzzling considering how regularly they have argued against that sort of sweeping concentration of governmental power. The dissenters have recognized that a “lack of standardized procedural safeguards” can leave government enforcement schemes “vulnerable to abuse” and individuals subject to coercive “pressure from unchecked prosecutors.” Culley, 601 U. S., at 405, 407 (SOTOMAYOR, J., joined by KAGAN and JACKSON, JJ., dissenting). They have contended that the Judiciary has an affirmative obligation to supply “meaningful remedies,” trials before judges and juries included, even when “Congress or the Executive has [already] created a remedial process.” Egbert v. Boule, 596 U. S. 482, 524-525 (2022) (SOTOMAYOR, J., joined by, inter alios, KAGAN, J., dissenting) (internal quotation marks omitted; emphasis deleted). And like most every current Member of this Court at one time or another, they have acknowledged that the jury-trial right “stands as one of the
The dissent‘s conception of public rights is so unqualified that it refuses to commit itself on the question whether even muted forms of judicial review—such as asking executive tribunals to muster “more than a mere scintilla” of evidence in support of their rulings—are constitutionally required in the essentially unbounded class of cases that fall within its conception of public rights. See Part I, supra; post, at 8, n. 4. Gone, too, is any role for the jury—for why would the
All but admitting its view has no support in “historical practice dating back to the founding,” the dissent chastises the Court for daring to rely on that practice to flesh out the scope of the public rights exception. Post, at 18. It would be so much simpler, the dissent says, to adopt its rule permitting the government to skirt oversight by judge and jury alike whenever it enacts a new law. And, true enough, “a principle that the government always wins surely would be simple for judges to implement.” United States v. Rahimi, 602 U. S. ___, ___ (2024) (GORSUCH, J., concurring) (slip op., at 6). But looking to original meaning and historical practice informing it is exactly how this Court proceeds in so
It is hard, as well, to take seriously the dissent‘s charges of unworkability and unpredictability. At least until today, the dissenters supported procedural protections for those in the government‘s sights in civil as well as criminal cases. What kind of protections? Often, they have argued, it depends on a judicial balancing test. One that is “flexible,” defies “technical conception,” lacks “fixed content,” and will “not always yield the same result” even when applied in similar circumstances. Culley, 601 U. S., at 413 (opinion of SOTOMAYOR, J.) (internal quotation marks omitted). As we have seen, that was essentially the course some pursued, too, when it came to the public rights exception in the fallout from Atlas Roofing. See Part III–B, supra. But that kind of “‘we know it when we see it‘” approach to constitutional rights, post, at 21, can hardly claim any serious advantages when it comes to workability or predictability.
Failing all else, the dissent retreats to Atlas Roofing. At least that decision, it insists, supports its nearly boundless conception of public rights. The dissent goes so far as to accuse the Court of undermining “stare decisis and the rule of law,” post, at 15, and engaging in “a power grab,” post, at 37, by failing to give Atlas Roofing its broadest possible construction. It‘s a “disconcerting” accusation indeed, post, at 36, and a misdirected one at that. Construed as broadly as the dissent proposes, Atlas Roofing‘s view of public rights
Were there any doubt about the propriety of the Court‘s treatment of Atlas Roofing, consider one more feature of the alternative the dissent proposes. In defending the broadest possible construction of Atlas Roofing‘s public rights discussion, the dissent necessarily endorses that decision‘s exceptionally narrow conception of the
Recall that, from the start, the
Atlas Roofing ignored all of that. Instead, it suggested, “[t]he phrase ‘Suits at common law’ has been construed to refer to cases tried prior to the adoption of the
Almost immediately, however, the Court rejected Atlas Roofing‘s analysis, not just with respect to public rights doctrine but the
Today, the Court respects and follows this longstanding
People like Mr. Jarkesy may be unpopular. Perhaps even rightly so: The acts he allegedly committed may warrant serious sanctions. But that should not obscure what is at stake in his case or others like it. While incursions on old rights may begin in cases against the unpopular, they rarely end there. The authority the government seeks (and the dissent would award) in this case—to penalize citizens without a jury, without an independent judge, and under procedures foreign to our courts—certainly contains no such limits. That is why the
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
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
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
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
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
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
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
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
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
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
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
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.
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 con-
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
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
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
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
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 do-
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
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
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
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).
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
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-
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
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;
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
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
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 publicrights 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
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 commonlaw 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.,
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
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 doc
trine. 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 thenAssistant 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.
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.,
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.,
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
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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
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.
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”
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.
Notes
This view is also reflected in the scholarship. Commentators writing comprehensively on Article III and agency adjudication have often simply ignored the case. See, e.g., R. Fallon, Of Legislative Courts, Administrative Agencies, and Article III, 101 Harv. L. Rev. 915 (1988) (no citation to Atlas Roofing); J. Harrison, Public Rights, Private Privileges, and Article III, 54 Ga. L. Rev. 143 (2019) (same); W. Baude, Adjudication Outside Article III, 133 Harv. L. Rev. 1511 (2020) (same).
Others who have considered it have offered nothing but a variety of criticisms. See, e.g., R. Kirst, Administrative Penalties and the Civil Jury: The Supreme Court‘s Assault on the Seventh Amendment, 126 U. Pa. L. Rev. 1281, 1294 (1978) (through its “careless use of precedent,” Atlas Roofing did “not recognize or [mis]understood” “careful distinctions developed by . . . earlier judges“); G. Young, Federal Courts & Federal Rights, 45 Brooklyn L. Rev. 1145, 1153 (1979) (“The Atlas Court . . . failed to offer an adequate justification for its interpretation of the sev-
Judicial review of these agency decisions allows Congress to avoid any due process concerns that might arise from having executive officials deprive someone of their property without review in an Article III court. See Atlas Roofing Co. v. Occupational Safety and Health Review Comm‘n, 430 U.S. 442, 455, n. 13 (1977) (“[T]hese cases do not present the question whether Congress may commit the adjudication of public rights and the imposition of fines for their violation to an administrative agency without any sort of intervention by a court at any stage of the proceedings“); accord, Oil States, 584 U.S., at 344 (same); Tr. of Oral Arg. 29 (Principal Deputy Solicitor General) (stating that “the Court has emphasized that judicial review of agency action may well be required” and the Due Process Clause may “ha[ve] something to say” about that requirement). The concurrence reproaches this dissent for declining to address any potential deficiencies in this administrative scheme, as well as failing to specify which forms of judicial review may be constitutionally required, see ante, at 22 (opinion of GORSUCH, J.), even though respondents did not raise any due process challenge in this case. Deciding whether this statutory scheme is procedurally deficient and so circumscribes judicial review that it violates due process would be inconsistent with the “settled principles of party presentation and adversarial testing.” Vidal v. Elster, 602 U.S. 286, 328 (2024) (SOTOMAYOR, J., concurring in judgment) (citing Maslenjak v. United States, 582 U.S. 335, 354 (2017) (GORSUCH, J., joined by THOMAS, J., concurring in part and concurring in judgment)).