PHILADELPHIA—The owners of a now-shuttered family farm in New Jersey won a significant legal victory over a federal agency that imposed more than $500,000 in penalties, mostly for a paperwork mistake, in agency courts where agency employees served as both prosecutor and judge. A panel of the 3rd U.S. Circuit Court of Appeals unanimously ruled that the agency’s actions violated the Constitution and that charges against the farm had to be brought in an independent federal court.
The Department of Labor (DOL) first targeted Sun Valley Orchards for penalties in 2016, beginning a years-long legal odyssey through the DOL’s administrative courts. Sun Valley’s owners, Joe and Russell Marino, teamed up with the Institute for Justice (IJ) to file a federal lawsuit challenging DOL’s system of in-house courts in 2021.
“The upshot of the Third Circuit’s decision is that the days of the Department of Labor imposing liability through its own in-house courts are over,” said IJ Senior Attorney Rob Johnson. “Employers will have the right to defend themselves before a real judge, not an agency employee. That’s a win for basic fairness and for small businesses across the country.”
The decision follows the U.S. Supreme Court’s ruling in a case that challenged a similar administrative court system at the Securities and Exchange Commission, Jarkesy v. SEC. In that case, the Supreme Court held that the SEC was required to press its case in a federal court and in front of a jury. The Marinos filed an amicus brief in support of George Jarkesy in that case.
“This is a huge relief for my family, after years spent fighting for a fair chance to clear our name,” said Joe. “We’ve been dragged through the mud, and it seemed impossible to fight back.”
Due in part to the protracted and expensive legal fight in the agency courts, as well as the looming threat of a half-million dollar penalty, the Marino family shut down their farm several years ago.
“Today’s decision vindicates a right of enormous importance to everyone in America.” said IJ Attorney Bob Belden. “When a federal agency wants to take your money as punishment, it must prove its case against you in a real court, not in agency courts where the government plays investigator, prosecutor, judge, and jury.”
Sun Valley is just one of many businesses targeted through DOL’s system of in-house agency courts. In 2024, DOL’s Wage and Hours Division collected $4.9 million in back wages and imposed $5.8 million in penalties on agricultural employers under the same statues at issue in Sun Valley’s case.
IJ is also representing a Maryland landscaping business challenging the DOL’s in-house courts in a case in Washington, D.C., as well as an Oklahoma masonry business in challenging the Department of Justice’s agency courts. Those cases are currently being considered by district courts.