Originally published by The Regulatory Review
This term, the U.S. Supreme Court will hear SEC v. Jarkesy and decide whether the Constitution requires agencies to use biased judges to adjudicate cases.
As background, the U.S. Securities and Exchange Commission (SEC) brought an enforcement action over a decade ago against an investment advisor named George Jarkesy. An SEC administrative law judge (ALJ) then determined that Jarkesy had committed securities fraud. Jarkesy persuaded the U.S. Court of Appeals for the Fifth Circuit to hold that the SEC decision was unconstitutional because the ALJ who presided over the hearing in his case could only be removed “for cause.” The U.S. Supreme Court now must decide whether to uphold the SEC’s decision or the Fifth Circuit’s.
As Alan Morrison points out, Jarkesy’s sole interest is to avoid the adverse effects of the SEC’s decision on him. He has no interest in the adverse effect of a Supreme Court decision in his favor on the millions of other people who adjudicate cases before agencies every year. The Supreme Court should care about that latter effect, but it is not clear that it will even consider it in the process of deciding the case.
A decision in favor of Jarkesy would force every agency that conducts adjudications to use judges who are biased against the private parties who appear before them. Understanding why this is so requires reviewing an important chapter in the history of administrative law.