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How the SEC and FTC Stack the Deck in Their Favor with ALJs

Agencies wield tremendous power over almost all aspects of American life, enacting thousands of regulations every year that have the force of law. Many agencies, like the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC), use agency employees with the title of “administrative law judge” (ALJ) to enforce this staggering edifice of agency-made rules. These are not impartial Article III judges, but agency enforcers with an intractable bias in favor of their employer.

Under these circumstances, the process is the punishment. Agency enforcement can be brutal, often destroying the lives, reputations, and businesses of enforcement targets long before any wrongdoing is ever established. Further, in-house adjudication—where your judge’s boss is also your prosecutor—confers an staggering homecourt advantage for agencies (90% for SEC and 100% for FTC).

In 2016-17, Michelle Cochran endured one such administrative trial and was facing a second still-unconstitutional proceeding after the Supreme Court ruled in 2018 that the first judge had not been constitutionally appointed. Her suit in federal court—and a later suit by Axon—raised the question: Who decides constitutional questions?

Should it be unaccountable ALJs insulated from removal whose very competence to adjudicate is at issue, or Senate-confirmed Article III judges making an unbiased review of the constitutionality of the proceeding before it takes place?

For years, Michelle Cochran and Axon Enterprise Inc. fought to have that question answered all the way to the United States Supreme Court.