ALJs: Unnatural Law Judges
Core to American democracy is John Locke’s insight that the purpose of government is to preserve the people’s natural rights to life, liberty, and property. To accomplish this goal, a government must provide a “known and indifferent judge, with authority to determine all differences according to the established Law.” Locke specifically warned that “for every one in that state being both Judge and Executioner of the Law of Nature, Men being partial to themselves, Passion and Revenge is very apt to carry them too far, and with too much heat, in their own Cases.”
Today, administrative law judges (“ALJs”) act as judge, jury, and executioner, wielding significant power over many Americans. They work for agencies across the federal government, including, perhaps most egregiously, the SEC, as well as the DOL, the DEA, and the NLRB – to name a few. Far from being “indifferent,” they are employed and paid by the very administrative agencies that appear before them as parties to their adjudications. They are incentivized to rule in favor of their affiliated agencies, with some even boasting that they have never ruled against their agency in an enforcement action.
ALJs are not bound by the same rules of evidence that control proceedings in Article III courts: ALJs either substitute their agency’s own evidence rules, or they conveniently make up rules as they go. And at some independent agencies like the SEC and FTC, the decisions of ALJs are reviewed by the Commissioners themselves. FTC commissioners, for example, “vote on administrative complaints, send the matter to an ALJ, and then review ALJ decisions.” At the SEC, oftentimes Commissioners who initially charge defendants are the same Commissioners who then later review the ALJ’s judgment as to that defendant. That’s why (at least in the pre-Jarkesy era), the SEC consistently won more cases in their in-house agency adjudications than they did in federal courts before SEC-unaffiliated judges.
But ALJs are not unique to the federal government. Thomas Jefferson, the greatest student of Locke, would be appalled to learn that ALJs govern the liberties and libations of his beloved Virginia.
The Virginia Alcohol and Beverage Control Authority (“ABC”) has its own enforcement wing—whose special agents are empowered to make arrests—as well as its own ALJs. These ALJs are authorized to assess penalties for disciplinary infractions (which they do very regularly) and suspend liquor licenses. In 2023, the Board collected over an average of $2,000 in civil penalties for each violation, and suspended licenses for an average of 19 days.
The decisions of ALJs employed by the Virginia ABC, like the ALJs for federal agencies and countless other state agencies, can dramatically alter the lives of individuals and business-owners who are simply trying to make a living.
Fortunately, recent cases from the Supreme Court and lower federal courts have provided welcome limitations to the power of ALJs. In SEC v. Jarkesy, the Supreme Court held that the Seventh Amendment entitles defendants of SEC enforcement actions to a jury trial in in-house adjudications. In another recent case, the Southern District of Georgia ruled that the DOJ’s Office of the Chief Administrative Hearing Officers ALJs’ double layer protections are unconstitutional and enjoined the underlying agency proceedings.
These developments are a step in the right direction, but there is still much to be done to rid government agencies of the bias that accompanies in-house ALJ adjudications. As in the Lockean view, no civil law can be valid unless it is comfortable with the law of nature. We should heed John Locke’s warnings and recognize that self-interested agency adjudicators are incompatible with natural rights – and therefore are incompatible with the Constitution.
October 24, 2024