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Welcome to scot Discast, a project
of the Federalist Society for Law and Public

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Policy Studies. Our contributors joined us
from around the country to bring you expert

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commentary on US Supreme Court cases as
they are argued and the decisions are issued.

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The Federalist Society takes no position on
particular legal or public policy issues.

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All expressions are those of the speaker. Hello, and welcome to scot Discast.

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I'm your host, Kyle hammernis On, behalf of the Faculty division of

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the Federalist Society. We are here
today to discuss sec versus Jarcasy, which

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was argued before the Court on November
twenty ninth, twenty twenty three. It

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is my honor to introduce our guests
today, Peggy Little. Peggy is senior

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counselor at New Civil Liberties Alliance and
is over three decades of experience as a

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trial and appellate litigator representing individuals and
high profile litigants, including Fortune fifty companies,

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financial institutions, public companies, and
universe in both state and federal courts,

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including the United States Supreme Court.
And with that, I'll hand things

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over to our guests. Thank you
so much. So I'll start with just

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a little background, very short because
Jarcacy is a notable case, but for

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those who don't know, there were
three questions certified by the Supreme Court in

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Jarcacy. The first question certified was
a jury trial question. I can rephrase

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it as essentially, can Congress takeaway
constitutionally protected jury trial rights by expanding the

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jurisdiction of the SEC's in house tribunals
to encompass civil fraud prosecutions for penalties.

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Then there was a non delegation claim
in the case that the Supreme Court certified,

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and that focuses on the fact that
the SEC has the choice whether to

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prosecute defendants in federal court or where
by the way, they have the full

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range of constitutional protections, including jury
trial, or trying defendants before its own

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administrative law judges, where a host
of constitutional and procedural protections are unavailable,

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especially jury trial. Mister Jarcacy had
argued in the Fifth Circuit, and the

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Fifth Circuit Court of Appeals agreed that
by leaving this choice in the prosecuting agencies

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to discretion, that was non constitutional
delegation by Congress and that Congress must decide

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for itself when and whether SEC defendants
get jury trial rights and Article three court

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access or it must at the very
least provide the agency with an intelligible principle

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on which to make that decision,
which the statute does not do. And

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finally, in the case, there
was the issue that the SEC administrative law

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judges enjoy too many layers of tenure
protection. In the case of the SEC

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aljs, it's somewhere between two or
three layers of tenure protection, depending on

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whether you think the commissioners themselves have
tenure protection. But in any event,

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it's undebatable that there's at least two, and that the Free Enterprise Fund decision

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of twenty ten had held that more
than one layer of tenure protection violates the

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Constitution. A little factual background George
Jarknas he was charged with fraud in twenty

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thirteen. He went through an agonizing
process going through the administrative law proceeding that

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I will spare all of you.
But when he finally got to the promised

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judicial review circuit, Court of Appeals
vacated the SEC's al j as affirmed by

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the Commission's decision against him, assessing
a three hundred thousand dollars penalty in barring

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him from the securities industry, and
the Fifth Circuit had held, in what

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was widely regarded as a landmark decision, that he his jury trial rights had

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been violated. That further, the
decision leaving the decision of whether to prosecute

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him in a court as opposed to
an administrative proceeding was an unconstitutional delegation of

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legisltiveslateive power to the admiss the enforcement
staff of the SEC. And finally,

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the Fifth Circuit Court of Appeals held
that the removal protections that are enjoyed by

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the sec alj is violated. To
take care clause at oral arguments, the

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jury trial question occupied virtually every aspect
of the argument. In a moment,

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I will mention how the non delegation
issue ties into that. But the questioning

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and the argument whether it was of
the Solicitor General or of who was in

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the case was argued by mister Fletcher
or of the respondent the case is the

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questions really focused on the jury trial
question. So it is really kind of

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hard from that argument to reach any
sense of how the course court would handle

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two out of the three certified questions. Since jury trial occupied the court's time.

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The atmosphere in the room I thought
was very It was a genuine attempt

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by the court to tackle this important
jury trial question. I don't think any

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of the judges were treating it lightly
or as a frivolous question, and they

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were really struggling with some of the
line drawing sometimes the judges. The justices

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were trying to focus on the question
of public and private rights, which proved

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to be difficult. In fact,
Justice Thomas opened asking the UH for definition

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of private rights, and we know
from his decision in the acts On case

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that he felt strongly that this that
where people are charged and their private rights

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are at stake, they should be
in an Article three court and I don't

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think that he would back down from
that position. I think that was it

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was very clear from the argument that
would be consistently his view of things.

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Other justices were trying to focus on
how and if a claim for fraud brought

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by the SEC against an individual maps
onto what was common law fraud in seventeen

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ninety one and bringing claims for damages, and there was a lot of back

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and forth on that. The Solicitor
General focused a lot on forum and he

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came very close, I thought,
to making an argument that I think was

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unwise, which was essentially, if
Congress assigns the claim to another forum,

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presumably an administrative tribunal, that decides
the question, and I don't think the

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justices, even the ones who might
not be inclined to affirm the Fifth Circuit

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Court of Appeals, were satisfied with
that rather circular, simplistic, and self

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serving definition of when you do and
do not get a jury trial right.

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The Justice Jackson was very active from
the beginning, and she correctly, in

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my view, focused on the fact
that the question is not the forum in

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which Congress assigns it, because it
would be all too easy for Congress to

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simply take common law rights that where
jury trial protections are expected to be afforded,

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and then just assign them to a
different form and then extinguish that right.

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I think she understood that problem,
and so she was focusing on what

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the nature of the cause of action
was, which I think is the correct

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inquiry to make. I think she
I think she's likely to perhaps come out

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on the other side of the question, but at least she's framing the issue

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looking at the type of action that
is being brought by the administrative agency as

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the correct thing to analyze as to
whether there is a jury trial right.

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The arguments went on for some time. Each side got approximately an hour and

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fifteen minutes. I don't think anyone
felt short changed in the argument, and

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there was lively questioning right up front. Justice Gorsich and mister Fletcher tangled on

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a few occasions, and that was
kind of fun to see. In terms

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of drawing distinctions. One thing that
came out that I I think qualifies my

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earlier statement that the argument focused pretty
much completely on jurie trial issues is that

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Justice bar in particular, but also
Justice Kavanaugh in a somewhat different way.

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We're very concerned with the ability of
the SEC enforcement staff to essentially decide what

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quality and brand of justice that you
got. And I do think that mister

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Jarcracy's council was effective in talking about
the very well known deficiencies of the administrative

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process in terms of hearsay and rules
of evidence. He actually related the fact

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that in mister Jarcrasy's own case,
the SEC was successfully able to get hearsay

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admitted against mister Jarcacy, and then
when they tried to admit here say they

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were told that the administrative proceedings do
not allow that sort of evidence, even

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though they were relying upon it themselves. And that's one of the troubling problems.

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Everything is asymmetrical in the administrative proceedings. You are rushed into an early

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trial when the SEC has had years
to investigate and build a record against you.

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You're given a document dump that's almost
unmanageable, and then expected to prepare

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your defense in mere weeks, and
then you wait forever and ever for a

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decision from the agency. And I
think the disparities of justice there were well

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set out, and I think of
concern to at least some of the justices.

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And so when I say that the
jury trial issue occupied virtually all of

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the argument, then non delegation issue, which comes into play when the question

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is, well can the prosecutor in
enforcement stat make the unilateral decision of what

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brand of justice do you get?
I think that was genuinely troubling several of

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the justices. And there were also
some ardent defenses of the jury trial right

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and how important it was the response
the respondents did not ask for Atlas Roofing

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to be overturned, and that got
raised at several points. For example,

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Justice Kagan seemed to feel that Atlas, at least in your questioning of respondence

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counsel, Atlas pretty much decides the
case, and I don't think that's true.

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The problem with Atlas is that's a
government on one side of the v

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and a company on the other side
of the question. And the post Atlas

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cases which did constrain that ruling,
the cases being told and Grand Financier and

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all that were one private party versus
another private party, where the question of

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denying them jury trial rights is a
hard one. And the government certainly was

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arguing when the government's on one side
of the V while that sort of defines

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the issue. And I think that's
a troubling argument for them to make,

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and I don't think the justices were
necessarily buying that wholesale and Respondence Council was

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able to cite to an early case
in seventeen ninety called King versus Well,

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I'm forgetting the name of the person
prosecuted for fraud, the government bringing a

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fraud claim against an individual who had
defrauded people, and is that a private

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right or at least a claim for
fraud kind of law fraud that where a

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jury trial right was recognized in seventeen
ninety. And I think that is an

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effective rebuttal to the argument that was
holding some force for at least part of

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the argument that will we post Atlas
Roofing case and case law really only applies

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between private parties, and when the
government is on the other side of the

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v it is sort of, by
definition, a public right. I think

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the public private right issue was exposed
in this argument as a deeply unsatisfactory way

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to resolve these questions. Justice Thomas
asked the Solicitor of General for a definition

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and got some pretty simplistic responses from
the government. And I think the government

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was making arguments that were circular and
I think not helpful to its case if

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you're really taking these questions seriously.
So I think one loser in the argument

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was this public private rights distinction insofar
as it bears on the jury trial question,

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and how unsatisfactory that has been over
the years. I suppose one question

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that might follow from that is is
it possible the court would overrule Atlas Rufe.

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I think that's unlikely because the respondent
did not ask for it, and

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that came up a couple of times
in the oral argument, and the Court

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is certainly not going to be inclined
to overrule a precedent of that long standing

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when that hasn't even been requested as
part of the relief there. On the

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other hand, I think anything as
possible, and there might be some justices

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who are flirting with that possibility.
They might wait for a later case that

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presents that issue more cleanly to the
court, but it is anything as possible.

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Certainly. I would say the Court
as a whole was wrestling very sincerely

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with the jury trial question, and
I think they were concerned with the erosion

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of jury trial rights. Now,
a contrary view did come up, and

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that was that, you know,
all the world's got bigger, more complicate,

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hated, and Congress has so many
things on its mind, and it

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has, you know, after one
financial crisis or another, or one other

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you know, public emergency or another, the courts, the Congress may decide

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that it needs to set up remedies
for these situations that do not overburden the

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courts. And that did come up
as a consideration that there are so many

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things that Congress needs to remedy that
you know, we have to be careful

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we're not throwing too many claims into
Article three courts and jury trials. I

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don't think that was an overwriting concern
of a majority of the justices, but

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it certainly was a subtext that had
considerable play the other uh the I guess

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I would call that the beginning of
what I would call the Bloodgates issue.

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You know, how is this going
to play across many agencies? You know,

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are we opening up a really flood
of problems here where Congress will have

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to go back and look at agency
adjudication schemes that has set up in which

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jury trial rights are not permitted,
and do they have to like amend the

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statutes and all of that. And
I think that was a hard and perhaps

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not even fair question to pose it
argument, because of course that hasn't been

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briefed, and we know that these
schemes differ from one agency to another.

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Some agencies actually allow people to elect
to move their case back into court,

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which would certainly be a satisfactory solution, and that was mentioned at argument.

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But you know, it's very difficult
for any of the parties to effectively respond

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to that concern when that was not
properly briefed. There was some mention of

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supplemental briefing in the discussion at argument
that got a kind of dutiful response from

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the respondent. I doubt that will
take place, but it does. It

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does suggest that the Court might decide
to rule in a fairly narrow fashion so

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as not to implicate those concerns.
I can't give you a nose count other

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than really, from a very rough
assessment, I think it is possible that

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the Fifth Circuit would be affirmed on
one or more of the questions that were

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certified. I certainly don't think I
came away from the argument feeling that the

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Fifth Circuit would be reversed. But
it was not an overwhelming sense that the

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Fifth Circuit would be affirmed, and
certainly not affirmed on all three questions.

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The question that I got the least
time was the removal questions. Now that

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could be for a variety of reasons. If it would be easy to say,

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after attending argument today that the Court
will only decide the jury question,

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because that's really all that was disgusted
argument, and I think that's a fallacious

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conclusion to reach. And here's why
the Court knows how to certify just one

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question if it wants to, and
it certified all three, and it required

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briefing on all three. And it
could equally be true that on the for

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example, the removal question, which
many people whom I've spoken with and who

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have reviewed the briefing and were submitted
a Mikus brief, many people think that

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the removal question is the easiest one, and so it is entirely possible that

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the Court has already polled itself and
that they feel that Free Enterprise Fund decides

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that question. Certainly, Justice Kagan
felt that Free Enterprise Fund had decided the

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jurisdictional question in the Axon Cochrane case, And as somebody who had briefed the

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Cochrane case, I can tell you, I had argued throughout those proceedings that

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Free Enterprise Fund not only decided the
jurisdictional question but the merits of whether more

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than one layer of tenure protection violates
the Constitution. So it is entirely possible

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the Court has already reached of a
straw vote on that, and so there

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was no point in addressing that question
at oral argument. As to the non

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delegation argument, as I say,
it arises and meshes with the jury trial

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argument because of the difficulty that several
of the judges seem to have about when

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you do and do not have access
to an Article three court, whether or

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not it gives you a jury trial. And I think that was troubling several

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of the justices. So I would
not rule out the Court reaching the non

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delegation question, but it did not
get a lot of distinctive argument on its

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own merits. At the proceedings,
the Court seemed most concerned with dealing with

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Atlas Roofing, the Grand Financierra Untold
decisions, and whether they did or did

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not effectively overrule Atlas Roofing. I
think the line drawing, as I said

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earlier but I will repeat, was
kind of all over the place. Public

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do you draw the line at the
public private distinction? Do you only award

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jury trial rights when there's a suit
at common law? And I believe it

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was. Justice Gorsis pointed out that, of course, the Dictionary definition of

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suit at the time the Seventh Amendment
was adopted included a proceeding in any tribunal,

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and so I think that the suit
distinction is an unsatisfactory one. It

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was certainly advanced by the Solicitor General. But I don't think it was a

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particularly of distinction in which to decide
the jury trial question. I said earlier

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that the idea that well, it
kindass simply puts you in a certain form,

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then you lose your jury trial rights. That that didn't seem to carry

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a lot of persuasive weight, And
I think the decision is probably going to

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turn on the right of action,
which is I think the correct focus of

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the Seventh Amendment jury trial question,
and whether or not this was something that

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was analogous enough to a common law
right of action recognized in seventeen ninety one,

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for which penalties could be sought.
And there were some interesting hypotheticals offered

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by Justice Roberts up front. He
said, well, you know, you

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have an interstatehighway system. Could kind
of say that, at least on our

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roads, we want to put all
tour claims into a non Article three court

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without juries. Same thing with healthcare. We regulate that heavily. Could we

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take medical malpractice claims, for example, and do the same thing. We

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want to move them into non Article
three courts with no juries and bring our

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expertise into deciding these. You know, tough questions of medical malpractice, and

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we have an interest as the government
in reducing healthcare costs, for example.

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And so those were some very interesting
hypotheticals that suggested to me that the Chief

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was thinking carefully about the fact that
this public rights private rights distinction can be

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taken quite far, and you know, pretty much everything becomes a public right

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if the government has any intersection with
the issue at hand, and we could

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just extinguish all, you know,
all claims that are supposed to be hurt

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in courts and are supposed to be
decided by juries. One thing I found

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disappointing was the provision in the Seventh
Amendment which focuses on the fact that juris

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are supposed to be fact finders,
didn't get a lot of play, so

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that I think that's something that I
wish had a little bit more development,

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because I think that when you have
fact finding done by an administrative law judge

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who is employed by the very agency
that is prosecuting you, and then you

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have, you know, eventual judicial
review that defers to that fact finding,

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that's just such a troubling built in
structural bias that I wish that had gotten

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a little more development at a oral
argument, and it did not. But

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you know, perhaps that's something the
court understands so thoroughly that it didn't need

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a lot of questioning on that.
I think that's a pretty description of the

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general things that were addressed at oral
argument. The general atmosphere in the courtroom,

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I think was one of sincere engagement. You could see colloquies going back

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between the justices. Very often,
one justice would take up another justice's line

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of questioning I think Justice sort of
I or actually ask the Solicitor General to

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please answer the chiefs question, and
the we're back and forth with You could

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see between Justice fhar and Justice Jackson
on some of these very tough line drawing

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questions. So I think, you
know, in terms of a more general

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concern about whether the Court is you
know, has retreated into factions, I

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think what you saw was a very
sincere engagement with some very hard questions as

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to which the justices, all of
them care deeply. Thank you for listening

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to this episode of SCO Discast.
SCO Discust is a project of the Federalist

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Society, not for profit educational organization
of conservative and libertarian law students, law

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professors, and lawyers founded upon the
principles that the state exists to preserve freedom,

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that the separation of governmental power is
essential to our constitution, and that

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00:28:38.880 --> 00:28:42.519
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