Replicating Common Law Is Core to SCOTUS Administrative Law Ruling

Whether executive branch administrative trials involve legal issues often at issue in common law actions is at the center of a June 27 Supreme Court's decision that fraud proceedings at the Securities and Exchange Commission (SEC) violate the 7th Amendment right to trial by jury.

The ruling, with a six-judge majority, explained (bit.ly/45L35KS):

"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…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."

The 7th Amendment states:

"In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law."

The case was Securities and Exchange Commission v. Jarkesky et al. (22-859).

As for CPSC – which has similar administrative procedures – a question is whether this decision could be used beyond the issue of monetary penalties to stop actions that impose other costs like forcing companies to do recalls.

The court did acknowledge existence of "public rights" exceptions. It pointed to adjudication of violations of safety regulations under the Occupational Safety and Health Act as upheld in a 1977 Supreme Court decision, Atlas Roofing Co. v. Occupational Safety and Health Review Comm'n. That ruling said such actions do not violate the 7th Amendment.

CPSC currently has two unresolved proceedings that seek forced recalls. They are against Amazon and Leachco.