U.S. Supreme Court Empowers Defendants to Mount Constitutional Challenges to FTC and SEC In-House Courts
April 25, 2023
Earlier this month, in Axon Enterprise, Inc. v. Federal Trade Commission, the U.S. Supreme Court unanimously held that defendants may ask federal courts to halt administrative enforcement actions brought against them by the Securities and Exchange Commission or the Federal Trade Commission, on the grounds those claims are unconstitutional. Neither agency may force defendants to entrust the agencies' administrative judges to resolve such "existential" challenges to their own authority.
On its own, that holding is impactful and will certainly make it easier for parties to challenge the historically unchecked power of certain federal agencies on constitutional grounds. However, the potential implications of the Axon decision are even more far-reaching. As the latest in a series of Supreme Court decisions to cabin the reach of the administrative state, Axon strikes a blow to both agencies' longstanding practices of pursuing enforcement actions in friendly, in-house settings, where their long records of success suggest each agency has benefitted from a "homefield advantage" divorced from the merits of any given case. At a moment when both agencies are aggressively testing the boundaries of their respective mandates, Axon should embolden parties to step outside of those in-house proceedings to ask the federal courts to curb agency overreach, and it may shape the types of actions agencies choose to bring altogether.
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