The Appearance of Justice – Part 2

A court of law has a prosecutor and a defendant. It has a judge who works for neither. That separation is not a formality. It is the structural condition without which the word "court" loses its meaning.

The administrative law judge system operates on a different model. The judge is an employee of the agency. The agency brings the case. The agency pays the salary. The agency reviews the decision on appeal. The prosecutor and the adjudicator share a budget, a building, and an employer.

Before the Supreme Court intervened in 2024, this arrangement had been in place across the federal government for decades — in some agencies, for most of a century.

Before the Supreme Court ruled otherwise, the Securities and Exchange Commission maintained its own internal court system. Administrative law judges — hired by the SEC, supervised by the SEC, subject to SEC review on appeal — presided over enforcement actions brought by the SEC.

Their record against defendants approached 100 percent.

In Article III courts — before federal judges with lifetime tenure, before juries of ordinary citizens — the SEC won approximately 61 percent of its cases. The difference between those two outcomes is not a reflection of case quality. The cases were substantially similar. What differed was the forum. In one, the SEC prosecuted before a neutral decision-maker. In the other, the SEC prosecuted before itself.

A gap that large has a name. It is not "impartiality."

On June 27, 2024, the Supreme Court ruled 6-3 in SEC v. Jarkesy that the SEC could not impose civil penalties through its in-house administrative proceedings. The Seventh Amendment, the majority held, entitles a defendant to a jury trial in an Article III court when an agency seeks civil monetary penalties for conduct that is legal in nature.

George Jarkesy managed two hedge funds. The SEC accused him of securities fraud and brought the enforcement action before its own administrative law judge rather than a federal court. Jarkesy argued he had a constitutional right to a jury trial. The SEC argued its in-house system was sufficient.

The Supreme Court sided with Jarkesy.

Justice Gorsuch, joined by Justice Thomas, wrote separately to extend the holding further. The violation, he argued, was not only the Seventh Amendment. The SEC's enforcement regime simultaneously violated the Due Process Clause of the Fifth Amendment and Article III of the Constitution — three independent constitutional provisions, each requiring adjudication of private rights before a neutral and independent tribunal.

The administrative law judge system did not emerge from a deliberate design to remove neutrality from enforcement. It emerged from a theory: regulatory enforcement involves technical complexity that generalist federal judges are ill-equipped to evaluate. Agencies employ specialists. Specialists should adjudicate.

The theory assumed that expertise and neutrality travel together. They do not. A judge whose salary, advancement, and institutional standing depend on the agency that brings cases before them has interests that are not identical to the interests of justice.

The administrative court system substituted the appearance of adjudication for its substance. Citizens facing agency enforcement believed they were receiving a hearing. What they were receiving was a review conducted by the same institution that had reached the conclusion being reviewed.

Following Jarkesy, the Federal Energy Regulatory Commission terminated its ongoing administrative enforcement proceedings in September 2024 and moved all enforcement to federal court. Other agencies have been slower. Some lack the statutory authority to proceed in federal court without congressional action.

Jarkesy does not end administrative adjudication. The public rights doctrine — which allows Congress to assign certain categories of dispute to non-Article III forums — survived the ruling intact. Significant categories of agency enforcement remain outside Article III courts.

What Jarkesy established is the constitutional minimum: when an agency seeks to impose civil monetary penalties for conduct that could have been tried at common law, the Seventh Amendment demands a jury. The decision did not create that requirement. It acknowledged one that was already there.

When the prosecutor and the judge share the same employer, the word "neutral" is doing a great deal of work.

Next: The government found a way to permanently seize your property without charging you with a crime. The method is to file the lawsuit against the property itself. The case names are not a joke. They are the mechanism.