September 5, 2023 - On Sept. 5, Thomas Lee and Mana Ameri filed an amici curiae brief in the Supreme Court case Securities and Exchange Commission (SEC) v. Jarkesy on behalf of Lee in his capacity as Leitner Family Professor of Law at Fordham Law School and John M. Golden, the Edward S. Knight Chair in Law, Entrepreneurialism and Innovation at the University of Texas at Austin School of Law. The case is one of the most important the Supreme Court will hear in administrative law and federal courts in recent memory.
The case presents three issues: (1) Whether statutory provisions that empower the SEC to initiate and adjudicate administrative enforcement proceedings seeking civil penalties violate the Seventh Amendment; (2) whether statutory provisions that authorize the SEC to choose to enforce the securities laws through an agency adjudication instead of filing a district court action violate the nondelegation doctrine; and (3) whether Congress violated Article II by granting for-cause removal protection to administrative law judges in agencies whose heads enjoy for-cause removal protection.
Golden and Lee are national experts on the constitutionality of non-Article III adjudication and have written three articles – in the Virginia, Notre Dame and Fordham law reviews – on the subject. Based on this work, the amicus brief urges reversal of the Fifth Circuit panel on the first question presented. As the brief shows, the Fifth Circuit misreads Blackstone’s Commentaries and a key 1987 Supreme Court precedent to hold that the so-called public rights doctrine does not apply to the case because it is a matter of private rights, analogous to common-law fraud.
Relying on Golden and Lee’s path-marking work, the brief explains that Article III courts were constitutionally necessary for private-rights adjudication to preserve state-court, local-jury decisional primacy over ordinary dispute resolution between private parties. An SEC action to enforce the federal securities antifraud laws is generally not such a private-rights case (as opposed to private rights of action under the securities laws), although it may require going to an Article III court to enforce the collection of fines, if severe punishments are meted, or if the relief the SEC seeks is plainly for the compensation of individual investors.
An oral argument date has not yet been set and the Supreme Court’s decision is expected by June 2024. HHR is representing Golden and Lee on a pro bono basis.