This term, the cases before the Supreme Court represent the apex of a decades-long effort by conservative activists and jurists to kneecap functional federal agencies that protect workers, consumers, investors, and the environment in favor of the interests of corporations and the ultra-wealthy. During recent oral argument in SEC v. Jarkesy, the six conservative justices on the Supreme Court opened the door to challenge the very constitutionality of the federal agencies that protect the American people from corporate misconduct. Later the same day, Meta coincidentally filed a lawsuit seeking to declare the Federal Trade Commission (FTC) unconstitutional on many of the same grounds the court considered in Jarkesy.
During the argument in Jarkesy, the court’s conservative justices appeared ready to uphold the 5th U.S. Circuit Court of Appeals’ extreme ruling that prohibits the Securities and Exchange Commission (SEC) from enforcing statutory fraud violations in agency proceedings when there is a similar common law cause of action. Should the court uphold this ruling, it could mean that agencies may no longer be able to enforce regulations that prevent misconduct or impose civil penalties for violations often committed by monied and corporate perpetrators without forcing years of expensive litigation and appeals processes, which many companies can write off as the cost of doing business.
The conservative justices latched on to the theory that the SEC’s administrative enforcement of statutory fraud and imposing civil penalties violates the Seventh Amendment right to jury trial. Should the Court choose to rule on that basis, the conservative majority would be flouting nearly 50 years of Supreme Court precedent—rooted in the history of the Seventh Amendment—that allows for administrative agencies to impose monetary penalties without a jury when the statute at issue concerns public rights.
Make no mistake: Upholding this decision will have vast ripple effects that will limit the ability of Congress and agencies to protect the American people from any number of bad actors—from massive polluters, to stock swindlers, to companies violating Americans’ privacy rights, to fraudsters of every stripe. For example, Meta—a company frequently found violating American’s privacy rights—has already decided to challenge the constitutionality of the very agency that sought to hold them accountable.
In 2012, the FTC found that that Meta had violated its privacy promises to users and issued an order designed to protect those users. Meta entered into a consent agreement. In 2019, following the Cambridge Analytica scandal, the FTC filed a complaint in federal court alleging that Meta deceived users about keeping their personal data private and violated the 2012 order. Meta entered into a second consent agreement that included a $5 billion civil penalty, and a modified order was issued in 2020. In May 2023, the FTC issued an Order to Show Cause proposing to alter the 2020 order, finding that Meta had failed to comply with it fully; misled parents about their ability to control their children’s communications through the Messenger Kids app; and misrepresented the access it provided to some app developers to private user data.
Meta challenged the FTC’s show cause order and proposed modification in its complaint, parroting many of the arguments raised in Jarkesy, including the Seventh Amendment claim. Meta also asserts that removal protections preventing FTC commissioners from being swayed by political interference are unconstitutional. Additionally, Meta argues that Congress unconstitutionally delegated the FTC the authority to pursue administrative enforcement of statutory violations rather than through litigation in the courts. This last claim is an effort to resurrect the defunct nondelegation doctrine—a legal theory that has only been used twice in American history, and not since 1935.
Like Jarkesy, the Meta case should be easily decided by applying long-standing precedent like, Atlas Roofing v. Occupational Safety and Health Commission, which held that Congress could assign agencies the authority to enforce statutorily created civil penalties for actions distinct from the common law without a jury trial. However, this Supreme Court appears to have other ideas, which will likely result in a decade of lawsuits chipping away at federal agencies’ ability to protect Americans from corporate wrongdoing and enforce their statutory mandates in the first instance. More than 200 federal statutes that allow for the administrative enforcement of civil monetary penalties could be challenged on this basis.
Additionally, as the Administrative Conference of the United States (ACUS) found in 1972 that the availability of civil money penalties is critical for agencies to narrowly tailor enforcement decisions rather than render harsh “all-or-nothing decisions” such as licensure revocation, which could also adversely affect innocent third parties. The ACUS specifically found that in “areas of increased concern (e.g., health and safety, the environment, consumer protection) availability of civil money penalties might significantly enhance an agency’s ability to achieve its statutory goals.” But that is now all at risk.
The practical effect of taking the Seventh Amendment argument to its logical conclusion would mean flooding the federal court system with cases typically adjudicated by independent subject-matter experts within agencies. This could prevent agencies from efficiently enforcing statutes against bad actors in the public’s interest. For instance, the U.S. Department of Labor could be prevented from administratively enforcing statutes on wage theft, instead having to go through years of litigation to hold wrongdoers accountable. Corporations such as Meta, for which a $5 billion fine is little more than a slap on the wrist, could face far fewer, if any, measures of accountability since the court already removed the FTC’s authority to seek equitable monetary relief. Under this context, agencies could even refuse to pursue litigation against malefactors as simply a political or budgetary decision, as congressional conservatives continue their efforts to starve agencies of funding.
If the conservative justices are willing to deal massive blows to government functionality in a case that should be as easy to decide as Jarkesy, then there is no telling what they may be poised to do in the upcoming Loper Bright/Relentless case, in which they could further strip Congress and agencies of the very authority to govern. Unless reined in, this extreme Supreme Court led by far right justices can quickly lead us down the path that will eviscerate labor and environmental protections; eliminate private enforcement of public harms such voting rights and qui tam lawsuits; and limit the wholesale ability by private individuals or the government to hold bad actors accountable for their misdeeds. The Supreme Court has become a threat to the function of government, and it will only get worse in the years to come unless the court itself is held to account through significant structural reforms, including a binding code of ethics and term limits.