Late last month, the Supreme Court heard an important case about administrative law, SEC v. Jarkesy. While the case concerned several issues, the argument revolved around one—whether the Security and Exchange Commission’s choice to have its lawsuit for a civil penalty for fraud decided by an administrative law judge (ALJ) deprived George Jarkesy of his Seventh Amendment right to a jury trial.

When an ALJ, a bureaucrat chosen by the administrative state, hears a case, he makes the key factual decisions. Assuming his decision is affirmed by the full commission, his factual determinations are then upheld on appeal so long as they are backed by “substantial evidence.” By contrast, if the trial occurs in court, a group of Jarkesy’s fellow citizens are empaneled as a jury to make factual determinations on issues of law, including his liability for a penalty. These determinations will then be upheld on appeal unless a court finds that no reasonable jury could have reached that conclusion.

The Substantial Stakes

While the doctrinal issues, as discussed below, are complicated, the case illustrates the stark divide between committing decisions about our legal rights wholly to a bureaucracy or requiring the greater participation of the citizenry. The bureaucracy is national, elite, and anti-populist—the quintessential reflection of the machinery of a centralized state.

The jury provides a complete contrast. First, it is local. Second, the jury is a popular, even populist institution. Nevertheless, it does not typically face the process defects of popular democracy, such as the leverage of special interests and the rational apathy of citizens. Indeed, a virtue of the jury is its capacity to focus the attention of a set of citizens on a specific purpose. Moreover, unlike administrative agencies, it is not amenable to the pressure of special interest groups.

Like civic associations, the jury also has an educative function, making citizens who serve on it more knowledgeable about the mechanics of the government that is supposed to serve them. For these reasons, Alexis De Tocqueville celebrated juries as a kind of civic association. He noted that the jury placed the “real direction of society in the hands of the governed … and not in that of the government.” The institution, he continued, “contributes powerfully to form the judgment and increase the natural intelligence of the people.” For De Tocqueville, the jury is an essential part of civil society.

 More recently, Akhil Amar has called the jury a “mediating institution.” He argues that the jury reinforces popular sovereignty. But the local and focused nature of the jury also serves as a break on centralized authority, whether exercised bureaucratically or by majorities of the citizenry at large. To be sure, juries are not as expert as judges or bureaucrats, but the modern jury trial permits ample use of expert testimony to fill in gaps in the jurors’ knowledge.

In short, juries help form the judgments of a republican people in a decentralized manner. Judgments reached by a jury are more likely to reflect the norms of the community than are a bureaucrat’s decisions. Thus, the question at stake in Jarkesy—of when juries rather than bureaucrats must determine legal issues like civil penalties—is not one with only narrow legal implications. It raises the fundamental issue of the balance of power between a decentralized civil society and a centralized, more bureaucratic state.

The Original Meaning

The Seventh Amendment provides: “In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.”

Juries were important at the Founding. In fact, King George III’s effort to deprive the colonists of their right to a jury trial was one of the Declaration’s justifications for independence. This amendment was added at the behest of the Antifederalists who feared that the federal government would take away power from a populist institution and give it over to the organs of the federal government, in particular federal judges. The Antifederalists celebrated the jury as a republican institution that protected the liberty of the people.

Nevertheless, three arguments might still be made against Jarkesy’s demand for a jury trial. The first is that the Antifederalists were concerned only with suits in court and with constraining the power of the judiciary, fearing that a legal elite would make factual determinations that would not comport with the wisdom of the community. The difficulty with this argument is that the term “suits” is not so limited. In fact, at oral argument, Justice Gorsuch quoted from a contemporaneous dictionary describing a suit “as any action or process for the recovery of a right or a claim before any tribunal.” Moreover, as discussed above, the bureaucracy has many of the same qualities—elitism and distance from the people—that the Antifederalists saw in the judiciary.

The second potential argument against Jarkesy is that the jury trial is to be preserved only at common law, and administrative agencies are not bringing common-law suits, but suits authorized by federal statutes. But surely the government cannot simply avoid the requirement of a jury trial by transforming what would have been a common law action into an administrative action. That move would evade the entire purpose of the clause and potentially make it a dead letter if the government engaged in systematic transfer of common-law actions to the administrative state.

The third argument is that the Seventh Amendment applies only to private suits and not ones brought by the government. But nothing in the Amendment limits it to private suits. Moreover, some of the Antifederalist complaints about the absence of jury trials were specifically about suits brought by the government. For instance, they worried about the potential absence of the jury in suits brought by “excise officers” against citizens. Moreover, the whole purpose of interposing a jury of the people between a legal allegation and its resolution applies a fortiori when the government is bringing the suit. It is more powerful than most private individuals and, unlike the private individual, would have some role in choosing any non-jury decision makers, like federal judges and ALJs.

To be sure, as the doctrinal discussion below shows, other sorts of suits between an individual and the government do not resemble Jarkesy. One important group of such suits encompass public benefits or privileges, where the government permits suits only because it has waived its right to sovereign immunity. In such cases, the foregoing analysis would not apply. An example would be suits over social security benefits. In these suits, the government has greater discretion to dictate the procedural conditions of the suit because it does not have to permit the suit at all. It does not even have to assign these decisions to a federal court with the Article III protections of life tenure, let alone permit factual determinations by juries.

The Case Law

Despite the original meaning of the Seventh Amendment, Jarkesy faces unfavorable case law. In Atlas Roofing v. Occupational Safety and Health Review Commission, the Supreme Court held that no jury trial was available to a company in a suit in which the government sought a civil penalty for violation of OSHA standards. The key move in the opinion was to adopt an overly broad meaning of public rights, which was not confined to the determination of public benefits like social security, or other cases where the government has special rights. The opinion did not define “public rights,” but it could easily be read to suggest that they included all rights that are for the benefit of the public. In Jarkesy, the Deputy Solicitor General argued that a public right is any right created by federal statute that benefits the public—essentially anything that Congress chooses.

The Court narrowed the holding of Atlas Roofing in two respects in subsequent cases. First, in Tull v. United States, it held that when an administrative agency sues in federal court the Seventh Amendment applies even to public rights so long as the cause of action is analogous to a common law one and suggested that an action for civil penalties was sufficiently analogous. It therefore held that a jury was required to determine the existence of the civil liability, even if a judge could determine the amount.

Second, in Granfinanciera v. Nordberg, the Court held that in cases between two private parties, an attempt to recover a payment made shortly before bankruptcy sufficiently resembles a common law contract claim by a bankrupt corporation to augment the bankruptcy estate. It seemed important, however, to the Court’s holding that the claim here was between two private parties. It was that aspect together with the nature of the claim that made it impermissible for the government to require that the claim be adjudicated by a non-Article III decisionmaker—in this case, a bankruptcy court—and without a trial by jury. Given that Jarkesy is being sued by the government, not a private party, it does not seem that this case helps him very much.

The Court’s Dilemma

From the oral argument, it seems clear that a majority of justices want to hold that Jarkesy is entitled to a jury trial on his factual liability for a civil penalty. This result would comport with the Court’s general effort to force the administrative state to move back toward complying with the strictures of the original Constitution. But, as I have written elsewhere, its other overriding objective is to do so without creating the chaos that could follow from too great a reworking of established administrative procedures. The tension between precedent and originalism is thus particularly acute in administrative law.

One effort to thread that needle would be to cut back on Atlas Roofing and its elastic definition of a public right that permitted a claim to be given to an administrative agency without any jury trial. Some justices at oral argument seemed to suggest that the SEC’s action seeking a penalty for fraud so closely resembles common law fraud that it could not be considered a public right. Thus, an Article III court would be required to adjudicate, and a jury would have to determine the factual existence of liability.

Certainly, such a narrow decision would not disrupt the administrative state. The SEC has the authority to go to court to seek civil penalties and so could continue enforcing its regulations. But the Court’s rule would not be clear. A civil penalty was at issue in Atlas Roofing as well. To be sure, there are no causes of action adjacent to workplace safety at common law, but there were causes for torts. Why is that not close enough to require an Article III court and a jury trial for the existence of liability?

The better course in my view would be to overrule Atlas Roofing entirely and hold that in cases where the government seeks civil penalties and puts citizens’ property at risk, a jury trial is required for their determination. This resolution would not fundamentally upset the administrative state either. Congress could provide additional authority to go to court to agencies that currently lack such authority. Moreover, as suggested by Chris Walker and David Zaring, Congress could also make clear that an agency could adjudicate its suit before an ALJ without a jury, if the defendant agreed to waive their Seventh Amendment rights, as they have always been permitted to do. And some defendants would make that waiver because federal trials can be expensive.

But the broader result would be still to restore an important constitutional right that has been eroded in the administrative context. And it would also import civil society into the workings of the administrative state by inviting the participation of citizens into determinations of liability sought by agencies. Administrative enforcement is too important and too ubiquitous for bureaucrats alone to shape justice through their peculiar view of the facts.