Adjudicative Angst: Administrative Law Judges and the Fairness Paradox at the Heart of SEC v. Jarkesy

Ever since Congress passed the Administrative Procedure Act (APA) in 1946, Administrative Law Judges (ALJs) have adjudicated disputes like federal courts. ALJs resemble Article III judges with respect to insulation from executive branch control, and similarly play an important part in assessing agency enforcement of federal law. Today, almost two thousand ALJs adjudicate Social Security, Medicare, and securities regulation claims, among others. Until recently, the U.S. Supreme Court has largely upheld administrative  adjudication as consistent with the Constitution under the public rights doctrine. Yet, as the Supreme Court has shifted rightward, attacks on this feature of the modern administrative state have grown. In 2022, in Jarkesy v. SEC, the United States Court of Appeals for the Fifth Circuit invalidated the Securities and Exchange Commission’s use of ALJs to adjudicate federal securities law on two key grounds. First, it determined that SEC ALJs could not impose securities fraud fines without violating the Seventh Amendment right to a trial by jury; and second, the court determined that dual for-cause removal provisions protecting SEC ALJs from presidential control infringed upon the President’s Article II removal power. In 2024, the U.S. Supreme Court affirmed the Fifth Circuit’s Seventh Amendment holding, avoiding the removal issue for now. This Note argues that these two holdings are in tension. Lurking beneath the Court’s formalist Seventh Amendment jurisprudence is a deep skepticism of the fairness of ALJ adjudication. Yet, the Court adopting the Fifth Circuit’s removal analysis would subject ALJs to political influence, thereby perpetuating the very fairness deficiencies it denounces in Jarkesy across thousands of ALJ proceedings.