SCOTUS moves against the Bureaucracy

 Jan Wolfe and Dave Michaels at the Wall Street Journal.

It's probably a good thing to curb the power of Administrative Judges. Too often, they just side with the bureaucracy that employs them.

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Supreme Court Opens Path to Curbing FTC, SEC Powers

The Supreme Court on Friday issued an opinion that will make it easier for businesses to challenge the way government enforcers use special in-house courts to block mergers, punish stockbrokers and money managers, and go after allegedly unfair business practices.

In a unanimous decision, the justices said people and businesses subjected to administrative proceedings at the Federal Trade Commission and the Securities and Exchange Commission can seek to enjoin, or block, those proceedings by suing in U.S. District Court and raising constitutional arguments there.

The opinion dealt with two related cases, Axon Enterprise v. FTC and SEC v. Cochran. While it addressed a narrow jurisdictional question, it highlighted the court’s increasing skepticism toward administrative tribunals run by federal agencies.

“This foreshadows hard days to come” for the FTC, said William E. Kovacic, a law professor at George Washington University who was the commission’s chairman from 2008 until 2009. “There is evident discontent in the court about the structure and operations of the FTC.”

Writing for the court, Justice Elana Kagan said all the relevant factors “point in the same direction—toward allowing district court review of…claims that the structure, or even existence, of an agency violates the Constitution.”

Plaintiffs in both cases will now move forward in lower courts with arguments that administrative law judges are too difficult for the president or his appointees to remove, violating the separation of powers laid out in the Constitution. Friday’s decision didn’t address those questions.

Justice Kagan wrote that the FTC isn’t well-suited to deciding constitutional questions about its own power.

“The Commission knows a good deal about competition policy, but nothing special about the separation of powers,” Justice Kagan wrote.

While joining the unanimous decision, Justice Clarence Thomas wrote a separate opinion to reiterate his long-held concerns about tribunals run by administrative agencies. He said in a future case the court should address the “serious constitutional issues” raised by granting these administrative tribunals too much authority over people’s rights and livelihoods.

The FTC enforces competition and consumer-protection laws and frequently sues to block mergers using its in-house court. The agency in December challenged Microsoft Corp.’s purchase of Activision Blizzard Inc. in its administrative court.

The SEC’s domain is focused on investor-protection laws, and for years it used the administrative courts to sue regulated professionals such as stockbrokers, money managers and public-company accountants. Some brokers and money managers complained the deck was stacked against them and have waged a yearslong battle to oppose the SEC’s use of the special courts.

The FTC and SEC argued that the parties to the administrative proceeding must wait to lose at the agency tribunal before they can raise such constitutional questions in federal court.

The FTC case dates back to 2018, when Axon Enterprise, based in Scottsdale, Ariz., said it was buying a smaller competitor in the market for police body cameras, Vievu LLC, for $13 million. In January 2020, the FTC brought an administrative action to unwind the consummated merger, saying the deal had lessened competition in a concentrated industry.