ARLINGTON, Va.—The Supreme Court will soon hear oral argument in SEC v. Jarkesy, a case challenging the constitutionality of in-house agency judges. The 5th U.S. Circuit Court of Appeals ruled that the SEC’s use of agency judges to impose fines and penalties violates the Seventh Amendment. The SEC is not alone in operating courts staffed not with independent judges, but with bureaucrats who overwhelmingly side with their agency’s enforcers.

The Institute for Justice (IJ) is currently pursuing similar challenges to Department of Labor (DOL) and Department of Justice (DOJ) in-house agency courts on behalf of small business owners in New Jersey, Maryland, and Oklahoma. Those businesses jointly submitted an amicus brief advocating for Jarkesy.

“The Constitution guarantees the right to trial by jury, not trial by bureaucrat,” said IJ Senior Attorney Rob Johnson. “But, too often, federal agencies impose fines and penalties in agency courts, where agency employees serve as prosecutor, judge, and jury. That should frighten all Americans, but it is particularly frightening for small businesses, who, with limited resources, are forced to defend themselves for years in agency courts against potentially crushing fines. Across the country, small businesses ensnared in agency courts are looking to the Supreme Court for relief.”

The story of Sun Valley Farms illustrates how agency courts deny justice to Americans running family businesses that operate on tight margins. In 2016, DOL agents informed brothers Joe and Russell Marino that they were being penalized $550,000. The bulk of that amount, over $320,000, was because of a single error on agency paperwork submitted by the farm during the first year they tried to participate in a guest worker program. The brothers spent the next five years trying to fight the agency’s decision.

At every stage, their case was presided over by DOL employees. The agency served as prosecutor, judge, and jury, and the agency won every time. The crushing fines contributed to financial pressure that led the Marino family to shut down the vegetable farm they had operated for decades. The Marinos’ case is currently on appeal to the 3rd U.S. Circuit Court of Appeals.

“Agency courts arose in the 1970s, and their use to impose fines and take people’s property expanded rapidly, but the Supreme Court has never really addressed whether all that should instead happen in a real court,” said IJ Attorney Bob Belden. “Agency judges constitutionally can do things like process claims for social security benefits, but they can’t fine you tens of thousands of dollars. If an agency wants to do that, it should have to prove its case in a real court with a real judge and a jury.”

IJ attorneys and clients are available for interviews. To arrange, please contact Andrew Wimer, IJ Media Relations Director, [email protected].