America’s unfair second court system

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Stone Washington and I have a paper out today on reforming administrative law courts, or ALCs. We also summarize our findings over at National Review’s Capital Matters section. These are courts that exist inside regulatory agencies, and not the independent judicial branch. The paper explains to a lay audience what ALCs are, how they work, and how extensive their problems are. We share a couple ALC case studies, including the Jarkesy case that the Supreme Court recently heard. Finally, we suggest reforms.

More than 30 agencies have ALCs. Inside them, the government nearly always wins. Not only is the agency the prosecutor, but it chooses the judges and pays their salaries. Agencies set the rules for procedure and evidence. ALC defendants typically do not have the right to request a jury trial.

The SEC wins about 90 percent of its ALC cases, compared to a roughly 60 percent win rate by the government in regular courts. The FTC recently snapped a 25-year winning streak in its ALC when it lost the Illumina-Grail merger case. Then the FTC’s commissioners overruled their own judge and handed themselves the win anyway.

ALCs are unfair to defendants, who nearly always lose. They violate the separation of powers; executive branch agencies should not take on judicial responsibilities. The Seventh Amendment guarantees the right to request a jury trial, which ALCs deny. ALCs have serious transparency problems and disclose far less data about their cases than do regular courts.

ALCs do have some redeeming qualities, such as specialized technical knowledge about their parent agencies’ issue areas that regular judges may lack. The best solution is not to abolish ALCs, but to remove them from agencies and place them into the independent judiciary outlined in Article III of the US Constitution. This would give defendants a better chance at a fair trial, while preserving ALCs’ useful aspects. We outline a few ways to do this, building on work by our colleagues Devin Watkins and Dan Greenberg.

Read the paper here. Our National Review article is here. The press release is here.