The US Supreme Court recently issued decisions that clarify the powers of federal regulators, offering a nuanced stance on agency authority. In FCC v. AT&T, the Court ruled 8-1 in favor of the Federal Communications Commission (FCC), affirming that the FCC’s monetary forfeiture orders do not infringe upon the Seventh Amendment’s guarantee of a jury trial. The case, which also involved Verizon, concerned fines exceeding $100 million linked to the mismanagement of customer data. The Court highlighted that these orders necessitate subsequent legal action by the Department of Justice, providing the companies with the opportunity for a jury trial.
In another ruling, Sripetch v. SEC, the Supreme Court unanimously determined that the Securities and Exchange Commission (SEC) is not required to demonstrate actual financial losses suffered by investors before pursuing disgorgement. Ongkaruck Sripetch, tied to numerous pump-and-dump schemes, contested the SEC’s $4.1 million disgorgement demand. The Court emphasized that the disgorgement reflects an equitable remedy based on the wrongdoer’s gains rather than the victims’ losses, aligning with traditional common law principles.
Both rulings draw from a 2024 decision in SEC v. Jarkesy, where the Court found the SEC had breached the Seventh Amendment by employing internal processes devoid of a jury. Challenges have since emerged against similar frameworks in various agencies, with litigants urging a broader application of the Jarkesy precedent. The Supreme Court, in these recent decisions, opted not to extend Jarkesy’s implications but rather upheld the constitutionality of the specific structures in question.
These decisions arrive in the wake of another significant 2024 case, Loper Bright Enterprises v. Raimondo, which rejected the Chevron doctrine, a principle granting deference to agencies in interpreting ambiguous statutes. Collectively, Loper Bright, Jarkesy, and the recent rulings reflect a recalibration of the dynamic between the Supreme Court and federal agencies, underscoring a careful reevaluation of regulatory authority that continues to attract substantial scrutiny.