Why Judicial Deference to Administrative Fact-Finding is Unconstitutional
2016; Brigham Young University; Volume: 2016; Issue: 5 Linguagem: Inglês
ISSN
0360-151X
Autores Tópico(s)Legal and Constitutional Studies
ResumoRepresentative government and trial by jury are the heart and lungs of liberty. Without them we have no other fortification against being ridden like horses, fleeced like sheep, worked like cattle, and fed and clothed like swine and hounds.John Adams1I. IntroductionThere are currently 1,792 federal administrative law judges (ALJs),2 but the five ALJs employed by the Securities & Exchange Commission (SEC) have received more attention in the last five years than the other 1,787 combined. The SEC has been widely attacked for implementing what critics perceive as a strategy to prevent Article III judges from adjudicating SEC enforcement actions and put as many enforcement actions as possible in front of the SEC's own judges.3The Dodd-Frank Act made this possible. In reaction to the excesses of the financial sector that led to that crisis, Congress in 2010 passed a significant package of financial accountability and regulatory reforms, titled the Dodd-Frank Wall Street Reform and Consumer Protection Act.4 One such reform granted the SEC increased authority to bring enforcement actions before its own ALJs rather than Article III judges.5Both the Wall Street Journal and the New York Times have since concluded that post-Dodd-Frank enforcement actions heard by SEC ALJs are systemically biased against defendants.6 For example, SEC ALJs find against defendants between eighty and ninety percent of the time, whereas federal district court judges find against defendants in only sixty-three to sixty-nine percent of SEC enforcement cases.7 Furthermore, when the ALJ decisions are appealed to the SEC commissioners, [t]he commissioners decided in their own agency's favor concerning 53 out of 56 defendants in appeals-or 95%-from January 2010 through this past March [2015].8 As the ALJs have heard more cases, the SEC has taken longer to decide appeals of ALJ decisions.9 The icing on the cake is that SEC officials are choosing to initiate proceedings before SEC ALJs, rather than before federal district court judges, with increasing frequency; in 2014, the SEC initiated eighty percent of its enforcement actions before ALJs rather than federal district court judges.10One New York City securities attorney observed: I've been involved in these administrative proceedings for many years and have been struck by the unfairness and lack of neutrality in the system. . . . The judge's mind-set reflects the agenda of the agency, which in this arena is enforcement.11 Even in the absence of hard evidence of actual bias, Professor Ronald J. Riccio has observed, If you get caught up in the web of an agency investigation, you're investigated, prosecuted, and judged by agency personnel. . . . Even if it doesn't create actual bias, it doesn't look good.12Several prominent businesspeople targeted by the SEC have challenged the ALJs and their dramatically expanded caseloads on constitutional grounds, with varying degrees of success.13 For example, Mark Cuban, the owner of the Dallas Mavericks and an acquitted former SEC defendant, has been an outspoken opponent of the SEC's litigation home-court advantage for years.14 This past year, Lynn Tilton, an investment executive known for rescuing struggling start-ups, joined the opposition when the SEC brought an enforcement action against her firm, Patriarch Partners.15 Because of this widespread backlash, the SEC quietly pulled back on its use of in-house judges,16 and modified its procedural rules to allow for more discovery during ALJ adjudications.17 However, to the extent that the real issues with ALJ adjudications are constitutional rather than political, these reforms fall short.18Criticisms of the administrative state that focus on separation-of-powers or Appointments Clause issues19 overlook another fundamental constitutional question: Does (1) granting ALJs the power to conduct jury-less fact-finding in what are essentially civil actions, or (2) deferring to that fact-finding on appeal, violate the Seventh Amendment. …
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