When the Department of Labor accused Joe Marino’s family farm of violating agency regulations, Marino was forced to defend the farm in an agency “court,” where the agency employed both the prosecutors and the judge. The agency judge found the farm liable and imposed over half a million dollars in penalties — all payable to the agency. The crushing fines contributed to the financial pressure that led the Marino family to close the vegetable farm they had operated for decades.
What do you call a court where the winning party employs the judge? It’s a trick question. It’s not a “court” at all.
On Wednesday (November 29), the nation’s highest real court, the Supreme Court, will hear oral arguments in a case poised to determine the constitutionality of such sham agency trials. The case, SEC v. Jarkesy, involves nearly a million dollars in penalties imposed by an in-house agency judge.
The agency court in Jarkesy had a nearly spotless record — always ruling for the agency. When Jarkesy’s case went to trial, the agency had won the last 200 times.
George Jarkesy challenged the agency’s decision in a real federal court, the 5th U.S. Circuit Court of Appeals, where a panel of real federal judges held that the agency’s sham trial violated the Seventh Amendment right to trial by jury. Now, that decision is on review at the Supreme Court.
Jarkesy is just one of many Americans whose rights hang in the balance. The Institute for Justice filed a federal constitutional challenge on behalf of Joe Marino, challenging the sham trial in his case, and we also filed a constitutional challenge on behalf of Chuck Saine — the owner of a Maryland landscaping business fined $50,000 by another Department of Labor judge. The principle in all these cases is the same: If the government wants to impose tens or hundreds of thousands of dollars in fines, it should have to prove its case before a real judge and jury, not an agency bureaucrat.
In Saine’s case, most of the fines were imposed because he rented workers an apartment on land zoned “suburban industrial,” rather than “residential.” Nobody found there was anything actually wrong with the apartment. Joe’s farm, meanwhile, was fined more than half a million dollars because a consultant made a mistake describing the farm’s meal plan for migrant workers when filling out government paperwork. Again, nobody claimed the meal plan itself was in any way illegal.
Saine and Marino maintain they did nothing wrong, but that’s not the point. In both cases, an independent judge and jury should have decided whether the business did anything wrong and, if so, what penalty would fit the offense. As is, the massive fines were set by “judges” employed by the same agency that will collect the money — and it is difficult to see how the fines bear any relationship to the alleged violations.
Before the Supreme Court, the government responded with a sweeping theory under which the jury right simply does not apply to cases involving administrative agencies. In the government’s view, if a private person sues you for $100, you get a jury and a real judge, but if the government sues you for $100,000, you get neither. That makes no sense at all.
The 5th Circuit rejected the government’s theory in memorable terms, echoing Ronald Reagan: “When the federal government sues, no jury is required. This is perhaps a runner-up in the competition for the ‘Nine Most Terrifying Words in the English Language.’”
The Constitution instead includes a different nine-word phrase: “The right of trial by jury shall be preserved.” The Supreme Court, in Jarkesy, should enforce that clear rule.
