Listeners’ Guide to Department of Labor v. Sun Valley Orchards

What happened to Sun Valley Orchards?

Sun Valley Orchards was run by the Marino family in southern New Jersey for four generations. Vegetable farming is labor intensive and crops can quickly spoil in the fields. The Marinos employed workers year after year without serious citations from labor inspectors. But with domestic farmworkers becoming hard to find, the family reluctantly decided to apply for the federal farm guest worker program. Workers can use an H-2A visa to come to the U.S. to work during the farming season and return home during the slow season.

In the first summer Sun Valley employed guest workers, inspectors showed up in force and spent days on the farm. Months later, after all the workers had left, the inspectors showed back up with a letter saying that Sun Valley owned more than $550,000 in fines and back wages.

Sun Valley’s only way to fight the allegations was by defending itself in the Department of Labor’s in-house agency court system, where the prosecutor and judge were both employed by the federal agency. After a trial, the DOL judge ruled in favor of the DOL prosecution, upholding the fines. Sun Valley then appealed to another in-house DOL court, where a panel of DOL judges once again ruled in favor of DOL.  

Who will be arguing?

IJ Senior Attorney Rob Johnson will argue for Sun Valley and an attorney for the United States Solicitor General’s office will argue for the government. Since IJ won this case at the appeals court, the government will argue first, Rob will argue second, and then the government will have a short time for rebuttal.

What is at stake in Department of Labor v. Sun Valley Orchards?

Sun Valley Orchards had to fight against the allegations and penalties in the Department of Labor’s in-house agency court, where agency employees serve as prosecutor, judge, and jury. Such courts were never envisioned by the U.S. Constitution, which established federal courts to be a neutral judge between parties. At the heart of it, this case is about whether the federal government needs to provide a fair day in court when imposing ruinous fines on a business.

What is an agency court?

Federal agencies operate court systems that are staffed by agency employees rather than judges nominated by the President and confirmed by Congress. They are overseen by an “administrative law judge” that has typically worked for that agency for decades. They hear cases brought by colleagues who they may also have worked with side-by-side before becoming a judge. Rules of evidence and procedure are tilted in the government’s favor.

What are the questions presented?

When the U.S. Supreme Court considers cases, it resolves legal questions that the lower courts have struggled to resolve. In Sun Valley, the Court will consider two questions. First, whether the U.S. Constitution prohibits the government from using the agency court to assess money penalties. Second, whether the law establishing the visa program clearly allows the government to create agency courts to oversee violations. Interestingly in this case, the U.S. Supreme Court reworded the questions the government wanted them to ask.

How did the case get here?

The Institute for Justice took up Sun Valley’s case after the Department of Labor’s court ruled in favor of the government. In 2021, IJ filed a federal lawsuit saying that the penalties were unconstitutional because they violated Article III of the U.S. Constitution, which creates an independent federal judiciary. (Sun Valley also pressed other constitutional arguments not at issue in the Supreme Court case.) In 2023, the district court ruled against Sun Valley. However, last year the 3rd U.S. Circuit Court of Appeals, following the Supreme Court’s decision in SEC v. Jarkesy, determined that the government had to press its case in an independent federal court. The government appealed to the Supreme Court, which accepted the case earlier this year.

What is Article III of the Constitution?

The Constitution establishes the three branches of the federal government: Congress in Article I, the Presidency in Article II, and the judiciary in Article III. Article III, Section 2 says that “The judicial Power shall extend to all Cases, in Law and Equity, arising under … the Laws of the United States.”

What did the Jarkesy case decide?

In SEC v. Jarkesy, the Supreme Court ruled that the government violated the Seventh Amendment’s right to a jury trial by bringing its case in an agency court similar to the one run by the Department of Labor. Despite this clear blow, the government has continued to defend the use of agency courts in other departments.

What is a “public right” and what role could it play in Sun Valley’s case?

A “public right” is when the government grants someone a privilege they are not entitled to under the Constitution. For example, benefits like Social Security or pensions are a privilege and not a right and controversies over whether individuals are entitled to receive such benefits can be handled by agency courts. The Institute for Justice concedes that the government can take away the privilege of hiring workers with H-2A visas through an agency court. But if the government wants to fine Sun Valley for violations of the Department of Labor’s rules and make the farm pay monetary penalties, the farm is entitled to defend itself in the courts the Constitution established.

What are “common law claims”?

Common law claims are legal actions where a person or the government seeks compensation. IJ argues that the government is bringing common law claims against Sun Valley and that it is well-established that these cases must be heard in a regular federal court.

What was the Oceanic Steam case about?

The Supreme Court concluded in a 1909 case, Oceanic Steam v. Strahan, that the government could impose fines on a steamship company that brought immigrants with contagious diseases to the U.S. The government argues that this precedent should lead the Court to rule in its favor. IJ maintains that this case bears little similarity to what happened to Sun Valley, as Oceanic Steam was a case about penalties imposed at the border based on the movement of people across the border—not a case about employment-related penalties. The same Term that the Court decided Oceanic Steam, it decided another case, Hepner v. United States, where penalties against a domestic employer of immigrant workers were adjudicated in the Article III courts.

What was the Sherman & Sons case?

Sherman & Sons is a 1915 case that rejected the government’s attempt to collect punitive tariffs outside the Article III courts. Earlier cases allowed executive officials to value imports—and, thus, to determine how much the importer owed in tariffs. In Sherman & Sons, however, the government held that tradition of executive branch tariff collection did not allow customs officials to impose additional tariffs years after the property crossed the border. IJ argues that Sherman & Sons shows the tradition of executive officials collecting penalties at the border does not allow the executive branch to impose liability away from the border merely because its allegations have some connection to the border.

What was the Wong Wing case?

An 1896 Supreme Court case, Wong Wing v. United States, rejected the government’s argument that it could punish unlawful immigrants by sentencing them to hard labor through executive-branch courts. While the executive branch could decide whether or not to deport an unlawful alien, the executive branch could not decide whether to impose other punishments—as that was a job for the Article III courts. 

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