The US Supreme Court Friday issued a 9-0 opinion in Axon Enterprise, Inc. v. Federal Trade Commission, holding that separate legal challenges to the structure of the Security and Exchange Commission (SEC) and the Federal Trade Commission (FTC) may proceed in federal court. The opinion, written by Justice Elena Kagan, stipulates that district courts retain federal question jurisdiction over constitutional challenges despite the agency’s statutory scheme allowing the commission to handle its own adjudication process. Justice Clarence Thomas, recently embroiled in a financial scandal, filed a concurring opinion. Justice Neil Gorsuch filed an opinion concurring in the judgment, but criticized the majority’s reasoning.
When reviewing a case involving an agency’s ability to adjudicate claims, the Supreme Court uses a three-factor test from Thunder Basin Coal Co. v. Reich to determine if the particular claims brought are “of the type Congress intended to be reviewed within this statutory scheme.” First, the court asks if precluding district court jurisdiction closes all meaningful judicial review of the claim. Second, the court asks if the claim is “wholly collateral to [the] statute’s review provisions.” Last, the court asks if the claim is outside the agency’s expertise. The majority found that questions of constitutional interpretation clearly fell outside both agencies’ expertise.
The SEC and FTC’s statutory scheme allows each commission to handle violations either by filing a civil suit in federal district court or instituting its own administrative proceedings. In the cases before the court, the commission chose the latter. However, the plaintiffs in each of the two suits sidestepped the adjudication process written into the acts establishing the agencies by bringing their suits in federal district court. The plaintiffs argued the agencies’ adjudication processes are unconstitutional.
Plaintiffs argued that the structure of the agencies, specifically the insufficiency of political accountability of the pseudo judicial officers who oversee the agency adjudications to the US president, cannot stand under the US Constitution because it constitutes a violation of separation of powers. Due to the unconstitutional nature of the agencies in this issue, plaintiffs argued the adjudication process by the commission against them was unconstitutional, and had to be blocked. However, the Supreme Court did not rule on the issue of the agencies’ constitutionality, only that the claims—originally dismissed in federal district court—may proceed.