The ever-growing administrative state has become a fourth branch of government. Unelected, unaccountable, and tenured bureaucrats pass most of the rules that govern Americans’ lives—thousands of new ones every year.
To help this bloated administrative state, Congress has created internal courts that have taken over most law enforcement cases from the judiciary. These administrative law judges are employed by the same body that initiates the case. Not surprisingly, the agency wins the vast majority of cases – 90% at the Securities and Exchange Commission and 100% at the Federal Trade Commission. Worse, these administrative judgments trap citizens in expensive years-long cases.
Michelle Cochran, a certified public accountant in Texas, has been caught up in costly and repeated SEC judgments for more than six years. Hers is one of two cases, SEC v. Cochran and
Axon v. FTC, which the Supreme Court will consider on Monday. At issue in both cases is whether Americans hauled before agency ALJs can challenge the ALJ’s unconstitutional removal protections in federal district courts before such unconstitutional proceedings take place.
As it stands, these ALJs cannot be removed by one person and are structurally dependent on the agency that employs them. Put another way, the separation of powers of the constitutional system made it imperative that the judiciary be separated from the executive. These ALJs are accountable to no one—not the president, not the judiciary (which they purport to replace), and least of all the voters.
These structurally biased internal courts deprive Americans of their constitutional rights to a fair trial and jury trial, shift the burden of proof from the government to the accused, deprive citizens of the protections of the Federal Rules of Evidence and the Rules of Civil Procedure, and remove meaningful judicial review—all essential conditions for a fair and impartial administration of justice .
Mrs. Cochran worked for a difficult boss who ignored accounting rules and was the real subject of the SEC’s concern. Mrs. Cochran had quit his job in 2013 for these reasons. Nevertheless, the SEC included her as an accessory after the fact for its 2016 charges, even though there were no losses or damages associated with her work.
Blindsided by these charges, which date back some six years, and unable to find a lawyer willing to represent her in a forum where the SEC almost always wins, Ms. Cochran filed the case without a lawyer before an administrative law judge who publicly boasted that he had never ruled against the agency. In 2017, the ALJ hit her with a $22,500 fine and a draconian five-year professional suspension.
In 2018, before her decision was final, the Supreme Court ruled Lucia v. SEC that the SEC’s administrative law judges had not been constitutionally appointed. That vacated the decision against Ms. Cochran. She was forced to defend herself again before a new ALJ. Eight years had passed since the contentious events hampered her ability to defend herself.
The new SEC judge assigned to her case was still at least doubly insulated from removal by the president — or anyone — as both the Supreme Court held in Free Enterprise Fund v. Public Company Accounting Oversight Board (2010), and as the government argued in Lucia was unconstitutional. The High Court also ruled unanimously Free Business Fund that federal courts have jurisdiction to decide such structural constitutional claims. So Ms. Cochran, determined to retain her hard-fought right to practice as a CPA, must be allowed to sue in federal court to vindicate her right to be tried only once—and in a constitutional court.
Backed by flawed precedents in five US appeals courts, the SEC was able to get her case dismissed. The federal district judge who ordered dismissal acknowledged the unfairness: “The Court is deeply troubled by the fact that Plaintiff has already been subjected to extensive proceedings before an ALJ who was not constitutionally appointed. . . . She should not have been subjected to stress during the first case, and if she is correct in her allegations, she will again be put through an additional case, undoubtedly at considerable expense and stress, before another unconstitutionally appointed administrative law judge.” Mrs. Cochran faced another ALJ decision that would eventually be reviewed and vacated – setting her up for a third trial.
This madness is not limited to the SEC. Axon Enterprise, Inc., an Arizona manufacturer of police cameras, was in a similar situation. The FTC sought to block its acquisition of a small competitor on antitrust grounds without a showing of anticompetitive effect. Axon was willing to divest the company, but balked when the FTC demanded that Axon surrender its intellectual property to the now-competitor. Rather than submit to a year-long administrative trial, the FTC was certain to win, Axon sued in district court so that its case could be heard before a constitutional judge. Axon, like Ms. Cochran, was denied relief and also lost on appeal over a vigorous dissent.
Mrs. Cochran convinced the majority of judges on the entire Fifth Circuit that this process makes no sense. Her victory created the circuit split that brought Ms. Cochran and Axon to the Supreme Court.
These challenges have the potential to reverse decades of judicial power building in administrative agencies. Thomas Jefferson wrote that “the most sacred of the duties of a government” is “to render equal and impartial justice to all its citizens.” An agency that functions as legislature, prosecutor, judge, and appellate court makes a mockery of Jefferson’s aspiration.
Mrs. Little is a senior trial attorney with the New Civil Liberties Alliance, which represents Michelle Cochran.
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