Close this search box.
Close this search box.

Don’t Expect Justice When The Government Hauls You Into Court

© AdobeStock
'Systemic, built-in bias' is a very real issue for administrative law judges.

At first glance, it sounds like something out of the old Soviet Union, or China today: You are dragged into court by the government, only to have your case decided by a judge who works for the prosecution. 

But that is how federal agencies have worked since the New Deal. Congress grants them the authority to write and enforce complex regulations governing everything from aircraft safety to toilet design. Break those rules and you will find yourself in front of a somewhat deceptively named administrative law judge (ALJ), who is employed by the very same agency that decided you violated a regulation. If you lose before the ALJ, you can appeal first to the agency and then to a traditional court— assuming you haven’t gone broke in the meantime. 

Here Come the Judges 

A recent decision by the Fifth Circuit Court of Appeals in New Orleans may have thrown this entire order into chaos. In Jarkesy v. Securities and Exchange Commission, the court ruled that hedge-fund operator George R. Jarkesy had a constitutional right to a jury trial over claims that he defrauded investors of $24 million. An ALJ employed by the Securities and Exchange Commission (SEC) found that he had committed fraud, and lower courts ruled that he had to exhaust all his administrative remedies, a process that had already consumed seven years, before getting a shot at a jury trial. 

In a decision that has raised wails of discontent among legal scholars wedded to the idea of the modern administrative state, the Fifth Circuit overruled those decisions, finding that the Seventh Amendment guarantee of trial by jury applies to serious allegations like fraud. The court also found that the very structure of the SEC was unconstitutional because Congress delegated too much power to the agency without a “guiding intelligible principle” to govern how it acts. Finally, the court ruled that ALJs, with two layers of protection from being fired, were unconstitutionally insulated from removal by the executive branch. 

‘Built-In Bias’ 

It was a clean sweep for critics of the administrative state, including the New Civil Liberties Alliance (NCLA), a group founded by Columbia Law School Professor Philip Hamburger, who says: “Administrative power is the most important civil rights issue of the 21st century.” 

“Our position is, any ALJ who is employed by the agency is going to have systematic, built-in bias,” says Peggy Little, an NCLA attorney who won another critical decision at the Fifth Circuit, speeding up the appeal process for people caught in the bureaucratic enforcement machine. 

For decades, the prevailing view in legal academia was that the Constitution changed during the Roosevelt administration to accommodate the administrative state, because elected representatives simply couldn’t write laws to address constantly changing technology and business practices. Judges were only too glad to shift their workload to agencies. 

That is starting to change, however. There are still thousands of ALJs deciding routine questions like whether someone can get Social Security benefits, and that’s not likely to change. But when the government hauls you into court seeking all your assets or an order barring you from practicing your trade, groups like the NCLA are getting involved. 

Billionaire Mark Cuban also fought the SEC and won in 2013, refusing to settle an insider-trading case and eventually convincing a jury he was innocent. However, he spent more on legal fees than the $2 million in fines the government was seeking. Others crumple in the face of years of bureaucratic procedures and overwhelming legal bills before they can even take their case to court. 

“If you’re not ultra-wealthy like Mark Cuban, you can’t get out of those administrative hearings,” Little says. 


  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events


    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)


    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.