One of the many questions our clients ask us about bringing a taking claim in the U.S. Court of Federal Claims (CFC) is whether their claim can be decided by a jury. Recently the Supreme Court held that the Securities and Exchange Commission can no longer impose civil penalties through its administrative proceedings for securities fraud cases because defendants accused of fraud have the right to a jury trial under the Seventh Amendment. Does this holding also apply to takings cases in the CFC?
The Seventh Amendment guarantees that in “[s]uits at common law . . . the right of trial by jury shall be preserved.” In SEC v. Jarkesy, Justice Roberts writing for the majority stated that the “right to trial by jury is ‘of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right” has always been and “should be scrutinized with the utmost care.’”
In Jarkesy, the SEC brought a securities fraud action before an agency administrative law judge. And under the SEC’s administrative rules, the agency’s in-house proceedings did not include the right to a jury trial.
But the Supreme Court held that SEC’s in-house, administrative proceeding violated the Seventh Amendment because securities fraud actions replicated a common law fraud action, thus triggering the protection of the Seventh Amendment. The Court further noted that federal securities laws incorporated common law fraud principles. The Court also found that the SEC’s administrative fraud enforcement actions were not exempted from the Seventh Amendment under the public rights exception. Under this exception, Congress can assign matters for decision by an agency without a jury if the matter involves public rights, or cases involving matters historically determined by legislative or executive branches such as immigration, tariffs, and taxation.
Takings cases in the Court of Federal Claims have historically not been considered claims at common law, and are not tried by a jury. And the power of eminent domain, which underpins a taking claim, would seem to fit squarely within the public rights exception. So, even under the Supreme Court’s strong endorsement of the right to jury trials, the SEC case may not affect taking cases in the CFC.
As the Supreme Court explained in McElrath v. United States, 102 U.S. 426, 440 (1880):
Suits against the government in the Court of Claims, whether reference be had to the claimant’s demand, or to the defence, or to any set-off, or counter-claim which the government may assert, are not controlled by the Seventh Amendment. They are not suits at common law within its true meaning. The government cannot be sued, except with its own consent. It can declare in what court it may be sued, and prescribe the forms of pleading and the rules of practice to be observed in such suits. It may restrict the jurisdiction of the court to a consideration of only certain classes of claims against the United States. Congress, by the act in question, informs the claimant that if he avails himself of the privilege of suing the government in the special court organized for that purpose, he may be met with a set-off, counter-claim, or other demand of the government, upon which judgment may go against him, without the intervention of a jury, if the court, upon the whole case, is of opinion that the government is entitled to such judgment. If the claimant avails himself of the privilege thus granted, he must do so subject to the conditions annexed by the government to the exercise of the privilege. Nothing more need be said on this subject.
Read full decision here.
