The Supreme Court ruled Thursday that people whom the Securities and Exchange Commission (SEC) would like to levy civil penalties against for alleged fraud violations are entitled to a trial by jury. That decision, though consequential in isolation, will likely have effects that extend far beyond that one agency.
At the heart of the ruling is George Jarkesy Jr., a hedge fund manager who oversaw the investment advising firm Patriot28, LLC. The SEC accused him and the company of "misrepresenting the investment strategies that Jarkesy and Patriot28 employed," "lying about the identity of the funds' auditor and prime broker," and "inflating the funds' claimed value." Yet whatever you think of those allegations, the SEC's approach to handling the matter, as Reason's Jacob Sullum highlighted earlier today, was unsavory, to put it mildly, which included evaluating its allegations in-house, confirming them, and then imposing $300,000 in penalties. That's not to say Jarkesy is innocent of wrongdoing. It is to say that the SEC assessing the SEC's accusations is not a picture of fairness.
The decision came down along ideological lines, with Justice Sonia Sotomayor writing in dissent. It's an interesting schism. Sotomayor has a robust record on questions around related criminal justice issues and the constitutional rights of the accused. She's not alone in that: Justice Ketanji Brown Jackson, for her part, wrote an undergraduate thesis on the coercive nature of plea bargaining, where juries are conspicuously absent, and as an attorney represented clients imprisoned at Guantanamo Bay, where inmates are held without charge or trial.
But here, according to Sotomayor, the jury trial requirement in this civil setting, as outlined in the Seventh Amendment, is "a power grab." She's right, but in the wrong way. It takes power from the federal government—which in some sense holds the monopoly on that—and gives a little of it back to the people. Jarkesy, as Justice Neil Gorsuch acknowledged in a concurring opinion, may very well be unsympathetic. But even potentially unlikeable hedge fund managers should be entitled to the same basic rights.
Those unhappy with today's ruling may be dismayed to learn that the core legal principle will almost certainly not be constrained to the SEC. But they may be surprised, in turn, to know that such defendants are not always the cartoon picture of corporate greed.
Consider the case of Sun Valley Orchards, a fourth-generation farm run by brothers Joe and Russell Marino, which a Department of Labor administrative judge ordered must pay the government over $550,000. The majority of that sum is in response to a paperwork violation.
A contractor failed to disclose on the company's forms for the H-2A visa program—which allows employers to hire migrants for temporary agricultural work—that it would offer migrant workers a meal plan. It is not against the law to do so, and Sun Valley did not charge its workers above what they are permitted to by federal regulation. It was a clerical error, and unless the owners can get before a jury who countermands the Labor Department's conclusion, the owners will find themselves in financial ruin. Their case, which got a lifeline today in the form of the Supreme Court's ruling, is pending before the U.S. Court of Appeals for the 3rd Circuit.
"Today's decision is loud and clear: If the government wants to punish people by taking their money, then it must go to a real court with a real judge and a jury," said Bob Belden, an attorney for the Institute for Justice who is representing Sun Valley Orchards in its appeal, in a statement. "The government had argued that cases by the government to impose money fines fall within a 'public rights' exception to the jury right, but the Court rejected that theory. When the government seeks to impose fines, that's exactly the kind of case that requires a jury."
That has not yet permeated some of the more progressive-leaning corners of Supreme Court commentary. But whether or not a defendant is sympathetic is, at the end of the day, irrelevant. What is imminently relevant, however, is that if you care about democracy and sticking up for the rights of the little guy, then trying to preserve executive agencies' monopoly power to sanction the public is not a hill to die on.
Much of the pushback essentially comes down to the following concern, well-intentioned as it may be: "This will make the government's job harder." To which I say: "Yes." As it should be.
The post Why Are Liberals Suddenly Denouncing the Right to a Jury Trial? appeared first on Reason.com.
