Last term I wrote about the Supreme Court’s decision in Axon v. FTC, which made it easier for individuals subject to agency enforcement proceedings to bring fundamental legal challenges to those proceedings in federal court. In today’s decision, SEC v. Jarkesy, the Supreme Court is once again defending the little guy against agency enforcement proceedings.

In Jarkesy, the Supreme Court considered whether the U.S. Securities and Exchange Commission (SEC) could itself adjudicate enforcement proceedings it brings against individuals seeking civil penalties for securities fraud, or whether the agency instead was required to bring these proceedings in federal court. This issue matters a lot for targets of SEC enforcement proceedings. Among other things, in court, their cases will be heard by a neutral judge with life tenure and they have a right to a jury. Before the SEC, their cases, at best, will be heard by an administrative law judge who works for the SEC. Administrative law judges employed by the SEC are not exactly neutral: The SEC can keep the civil penalties it collects, which can be up to $750,000 per violation even if no investor has suffered a financial loss. 

In a 6-3 decision, the majority, written by Chief Judges Roberts, held that requiring SEC adjudication of such enforcement proceedings violated the respondent’s Seventh Amendment right to a jury trial. The case turned on the application of the relatively obscure and confusing “public rights” doctrine, which provides that Congress may require agency adjudication of certain narrow classes of cases involving public rights, like the collection of revenue or the grant of public benefits. 

The majority does not provide much clarity on the scope of the public rights exception, and it acknowledges as much in its opinion: “The Court ‘has not ‘definitively explained’ the distinction between public and private rights,’ and we do not claim to do so today.” But it did definitively reject the broad argument advanced by the dissent, written by Justice Sotomayor, that “Congress has broad latitude to create statutory obligations that entitle the Government to civil penalties, and then to assign their enforcement outside the regular courts of law where there are no juries.”

The dissent claims that “[t]oday’s decision is a power grab.” But in truth the majority simply rejects an astounding power grab by the SEC: an asserted authority to prosecute individuals for hundreds of thousands of dollars of fines and to decide for itself whether its prosecution is valid.

It is a true shame that Jarkesy was not 9-0 like Axon was. Liberal jurists and lawyers were once staunch defenders of individual rights. But now, progressive reactionaries like Slate’s Mark Joseph Stern are already sounding false alarms about the decision, tweeting that “SCOTUS’ decision is Jarkesy may well hobble many federal agencies’ ability to bring meaningful enforcement actions against wrongdoers. Not just the SEC. Neither the executive branch nor the judiciary have the time or resources to try all these cases before a jury. Nowhere close.”

My strong suspicion is that the SEC and other federal agencies will adjust just fine to Jarkesy. After all, the SEC was bringing all of its claims for civil penalties in court before the 2010 Dodd-Frank Act. 

Even if proceeding in court is a substantial inconvenience, it is an inconvenience that protects liberty. Certainly, it would be more convenient if the Constitution did not require bicameralism and presentment to enact legislation. Certainly, it would be more convenient if a criminal conviction did not require a unanimous jury finding guilt beyond a reasonable doubt. And, obviously, the SEC would prefer to decide for itself whether it is entitled to civil penalties from those it prosecutes. While the checks and balances required by the Constitution in all of these situations may make the process of governing more difficult, they also provide critical safeguards against abuse of government power.

In a battle between David and Goliath, the least we can do is ensure that Goliath fights fairly. By requiring the SEC to prove its case for civil penalties in an Article III court, the Supreme Court’s decision does just that.