The Supreme Court continues its war against regulators

For his part, Jarkesy argued that the entire public rights doctrine was unconstitutional. Enshrining this line of thinking would upend the way the federal government works at a fundamental level. Roberts, writing for the Court, declined to go anywhere near that far. He ruled instead that the public rights doctrine simply did not apply to fraud suits because they were part of English common law in 1791.

“The goal of this SEC action is to regulate transactions between private individuals interacting in an existing market,” he wrote for the court. “To do so, the government has created actions whose causes of action are modeled on common law fraud and which provide a type of remedy available only in courts. This is a common law action, just not in name. And such actions must ordinarily be tried in Article III courts.”

Sotomayor strongly dissented in her dissent, calling Roberts’ majority opinion a break with the court’s precedents. “This Court has (previously) held without exception that Congress has broad latitude to create statutory obligations giving the government the right to impose civil penalties and then assign their enforcement outside of regular courts, where there are no juries,” she wrote.