Waiver of the Seventh Amendment (and Other Constitutional Rights) After SEC v. Jarkesy
SEC v. Jarkesy holds that under the Seventh Amendment there is a right to a jury trial when the Securities and Exchange Commission (SEC) brings a securities fraud enforcement action with civil penalties. Footnote #1 content: 603 U.S. 109, 120 (2024). If the Supreme Court really means to move such actions from adjudication before an agency tribunal to adjudication by a jury in federal court, it will soon confront the question of whether and how defendants may waive the Seventh Amendment right that Jarkesy recognizes and celebrates. With Jarkesy on the books, the SEC is likely to seek to keep in place in-house adjudication of most, or perhaps all, securities fraud claims by creating incentives for respondents/defendants Footnote #2 content: If an action is brought in an administrative proceeding, the target of the action is a respondent. If the action is brought as a lawsuit in federal district court, the target is a defendant. For ease of reference, in the remainder of the essay I’ll use the term, defendant, rather than switch between defendant and respondent or use the more clunky designation of respondent/defendant. to give up their jury rights and proceed entirely through an agency process. Specifically, the SEC will (and does already) negotiate settlements of securities claims before they even make it to court, and (after Jarkesy) offer defendants the prospect of reduced fines and other penalties if they agree in advance to an agency process. Courts have long recognized in a variety of other contexts that the right to a jury like other trial rights may be waived so long as the waiver is “knowing and voluntary.” Footnote #3 content: See Parke v. Raley, 506 U.S. 20, 28 (1992) (Sixth Amendment right to a jury trial); K.M.C. Co. v. Irving Tr. Co., 757 F.2d 752, 756 (6th Cir. 1985) (Seventh Amendment right to a jury trial). Parties in civil cases—whether they involve the government or not—routinely give up their right to a jury trial by settling their disputes or by having them resolved by bench trial, arbitration, or another non-jury process. Further, most criminal prosecutions are resolved through a guilty plea (that waives the Sixth Amendment trial right) secured through a plea bargain in which the defendant receives a lesser punishment than would likely result following conviction after trial. If, after Jarkesy, the Court’s approach to waiver of trial rights in other contexts simply extends unchanged to civil claims brought by the SEC—or, looking down the road, other federal agencies—there are likely to be very few such claims actually decided by juries in federal court. Indeed, there are likely to be few such cases that make it to court at all.
Yet there is some reason to think that with respect to agency claims the Court will be less inclined than it has so far been in other contexts to allow the government to negotiate a waiver of the right to trial. Jarkesy, like Loper Bright decided the same term, Footnote #4 content: Loper Bright Enterprises v. Raimondo, 603 U.S. 369, 412–13 (2024) (overruling Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) to hold that because courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, they need not, and under the Administrative Procedure Act may not, defer to an agency’s interpretation of the law simply because a statute is ambiguous). reflects the Court’s broader skepticism of a powerful administrative state and particularly of agencies displacing judicial authority. The Court might, therefore, develop new doctrinal rules—perhaps by drawing upon the doctrine of unconstitutional conditions—which limit the ability of the SEC and other agencies to negotiate waiver of the jury trial right that Jarkesy recognizes, and particularly of waivers that prevent actions that agencies initiate from ever reaching a federal court. In other words, skepticism of agency power might well counteract the Court’s willingness in other contexts to permit negotiated waiver of the right to a jury trial. Jarkesy, then, could be a tipping point.
This essay explores limits the Court might impose on the ability of federal agencies to secure waiver of the right to a jury trial and assesses the implications for agency adjudication, for waiver of trial rights in other contexts, and for waiver of constitutional rights more generally. In so doing, the essay considers Jarkesy’s potential to unsettle or produce a rethinking of longstanding rules that treat certain constitutional rights—including the right to a jury trial—as in the hands of individual rights-holders to exercise or bargain away as they please. Specifically, the Court, applying the doctrine of unconstitutional conditions, has barred government from offering benefits (or relief from a burden) to those who agree to give up certain constitutional rights. But the Court has not viewed the right to a jury trial to trigger scrutiny under the doctrine. The Court’s permissive approach to negotiated waiver of the right to jury trial (especially in criminal cases) has long puzzled commentators, given the Court’s insistence in a variety of cases that with respect to other rights it is unconstitutional for the government to condition a benefit on waiver of the right. Jarkesy might well be the case that ultimately leads the Court to account for its differential treatment of the right to a jury trial or to forge a more coherent approach to the question of whether and when constitutional rights may be used as negotiating chips in making deals with the government.
Part I sets the stage by presenting the account of juries advanced in the Jarkesy litigation and in the Court’s decision as in significant tension with the modern reality that rights to jury trials are routinely bargained away such that juries—despite their historical significance—today play only a minimal role in our legal system. With that background, Part II explores the various ways in which after Jarkesy, defendants in SEC enforcement (or other agency) actions might waive—and, more importantly, be enticed by the government to waive—the right to a jury trial and it discusses possible limits to those forms of waiver in light of existing doctrine governing bargaining around and alienation of constitutional rights. Part III considers ways in which the Court, committed to juries and skeptical of agency adjudication, might in the future put a brake on government-induced waivers of the right to jury trial in agency enforcement actions. From there, it explores some implications for the waiver of trial rights in other contexts and waiver of constitutional rights more generally.
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