On June 27, 2024, the United States Supreme Court issued their decision in Securities and Exchange Commission v Jarkesy.¹ The Court invalidated the SEC’s process of levying fines for securities fraud via the administrative hearing process as violating the Seventh Amendment. In so doing, the Court called into question similar processes employed by other administrative agencies and added another arrow to the quiver of those seeking to challenge the authority of administrative agencies. While the National Labor Relations Board (NLRB) was previously found to be outside of the ambit of the Seventh Amendment, the changing judicial currents to be discussed below merit a revisiting of this issue.²

A. Jarkesy

In SEC v Jarkesy, the Court was called upon to decide whether the levying of fines through the administrative process by the SEC vio lated the Seventh Amendment, which reads in full:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.³

The Court held that Congress had exceeded their authority as part of the Dodd-Frank Act by empowering the SEC to levy financial penalties for securities fraud through the administrative process before administrative law judges. Previously, this remedy was only available by proceeding via federal court proceeding. The Court reached this conclusion by comparing the SEC’s administrative process to the common law tort of fraud. Having reached this comparison point, the Court held that there was a right to a jury trial under the Seventh Amendment and therefore struck down the levying of fines through the administrative process. The court further found that the “public right” exception did not apply because the SEC’s process did not fall within the area of government actions where the matter can be resolved without resorting to a jury.

B. NLRB

The NLRB was created in 1935 to enforce the National Labor Relations Act (NLRA). It has undergone only two major substantive changes since its passage, first in 1947 with the Taft-Hartley Act⁴ and again in 1959 with the Landrum-Griffin Act.⁵ The NLRB is divided into an investigative and prosecutorial component headed by the general counsel and an adjudicative side composed of five board members. Each is appointed by the president and subject to Senate confirmation. The general counsel is charged with investigating and where appropriate prosecuting violations of Section 8 of the NLRA, formally referred to as unfair labor practices. Following issuance of a complaint by the general counsel, the case in the absence of a settlement proceeds to trial before an administrative law judge, who will issue a decision that can be appealed to the five-member board functioning as an appellate body. Following the final order of the board, the case is subject to federal court review at the circuit court level.

JARKESY ANALYSIS

A. Suit at Common Law

The analysis under Jarkesy of the NLRB is twofold. First, the court must ask if there is a common law analogue to the administrative process employed by the NLRB. Assuming the answer to the first question is in the affirmative, the court then looks to see of the “public rights” exception applies.

Turning to the first question, the NLRB‘s remedial structure stands athwart the SEC. The remedial structure under the NLRB is limited to “make whole” remedies and lacks punitive authority.⁶ Employers or unions who violate the NLRA are subjected to cease and desist orders and affirmative orders fashioned to cure the violation(s). For example, if an employer infringed on the right of employees to support a union by threatening said employees with discharge, the NLRB would require the party to cease and desist from the offending conduct and communicate this action through posting a notice acknowledging the conduct and affirming the rights of employees to be free of the same. If an employer or a labor union failed to bargain in good faith with respect to a collective bargaining agreement, the NLRB would seek an order requiring the parties to return to the negotiating table and, depending on the circumstances, require meetings to be held with a minimum amount of frequency and length or other conditions to facilitate good faith negotiations. Even with these remedies for bargaining, the Supreme Court has emphatically held that the NLRB cannot compel an agreement or force a concession at the bargaining table.⁷ Finally, if an employer discharged an employee in retaliation for their support for a labor union or a union caused the same, the violator would be required to reinstate the employee and make them whole for their losses. Unlike the fine paid to the SEC in the Jarkesy case, the monetary aspect of the remedy passes through the NLRB and to the discharged employee. The NLRB is exercising equitable authority.⁸

Even assuming that a court were to find the remedial structure of the NLRA analogous to a suit brought at common law, there is an independent reason to find the NLRA to fall neatly within the public rights exception. There was, for much of the history of the United States, no free associational right to join a labor union.⁹ In fact, much of the common law treatment of labor unions and their supporters settled on thwarting them to various degrees. It was not until 1842 and the half-century following the enactment of the Seventh Amendment that the Massachusetts Supreme Court in Commonwealth v Hunt held that the common law of conspiracy did not apply to workers seeking to bargain collectively when legal means were used in furtherance of legal outcomes.¹⁰

A brief detour to the Michigan Supreme Court illustrates how little practical protection Commonwealth v Hunt provided under common law. In Beck v Railway Teamsters Protective Union, the Michigan Supreme Court, after first recognizing the right of workers to be protected from common law conspiracy under Commonwealth v Hunt, proceeded to find the act of calling for a peaceful boycott to enforce labor union demands to be enjoinable.¹¹ While the workers were not subject to criminal prosecution, any efforts to enforce their demands after asking nicely risked a contempt citation.

The “legal means” caveat became even more precarious following the passage of the Sherman Antitrust, in 1890 with its treble damages provision.¹² In Loewe v Lawlor, the Supreme Court found the Sherman Antitrust Act applicable to consumer boycotts led by a labor union.¹³ When Congress attempted to rectify this application with the passage of Sections 6 and 20 of the Clayton Act,¹⁴ rather than construe the amendments as a rebuke of their misconstruction of the Sherman Antitrust Act, the Court found in Duplex Printing v Deering that Congress reaffirmed the application of the Act to even peaceful boycotts by labor unions of third-party employers.¹⁵ It was not until the passage of the Norris-LaGuardia Act in 1932 that courts, involvement in peaceful labor disputes was ultimately curbed.¹⁶ With the concerns of prior court involvement no doubt on their minds, Congress passed the NLRA is 1935 and specifically structured it so as to postpone judicial involvement to the appellate stage.

CONCLUSION

The power exercised by the NLRB is equitable in nature and thus outside the ambit of the Seventh Amendment. Furthermore, there is no common law analogue either historically or in a novel sense, and accordingly, the Public Rights exception applies.