OFCCP logo and official U.S. Supreme Court sealBut it’s Complicated. And, of course, OFCCP’s Enforcement Scheme will not go gentle into that good night.

The case decision is Securities & Exchange Commission v. Jarkesy  (Case No.  22-859; i.e., “SEC decision”).

The Seventh Amendment (passed in 1791) to the Constitution of the United States states:

Seventh Amendment Civil Trial Rights

“In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.”

Highlights and Takeaways:

1. Federal agencies must afford litigants a right to jury trial in federal Article III courts unless Congress has specifically and properly invoked a so-called “public right” exception. (Article III courts are the standard federal courts we know today and are so-called because Article III of the United States Constitution authorizes them to exist). Common “law” courts were courts of “law” and not of “equity.”

SPOILER ALERT! For those of you who do not want to understand the Constitutional Law at the heart of the SEC Case and applicable to OFCCP’s in-house administrative enforcement scheme, and just want to get to the conclusions as to OFCCP, you may just skip ahead to paragraph numbered #8, below.

2. All nine Supreme Court (“SCOTUS”) Justices (unanimously) found that the SEC in-house administrative court prosecution scheme using SEC Administrative Law Judges — and not providing either an Article III federal court proceeding or a jury trial to Defendant Jarkesy – and seeking a “civil penalty” of $300,000 for alleged violations of the “antifraud provisions” of a 2010 federal statute, was the type of remedy sought which would trigger the Seventh Amendment right to jury trial, ABSENT an exception. In other words, “fraud” was a kind of action known to the common law (in colonial America and in English courts before the colonies existed) before the Seventh Amendment passed in 1791. Moreover, the Court unanimously found that civil money penalties were also a form of remedy well known to the common law courts in colonial America. Hence, the Seventh Amendment jury trial right would attach, unless subject to the narrow “public right” exception the SCOTUS had first created in the middle of the 19th Century.

3. Putting politics and the conclusions of uninformed broadcast journalists blabbering their personal opinions before having even read the SCOTUS’ 114-page collection of opinions, the SEC decision was not a departure from hundreds of years of Supreme Court precedent. SCOTUS has handed down Seventh Amendment case decisions for 200 years, parsing one statutory enforcement scheme after another, some of which (but few) raised the “public right” exception. SCOTUS has a long history of finding that jury trial rights sometimes attach, but not as to other statutory schemes, depending on the facts of the cases presented.

Before the 2010 statute at issue in this case, the SEC always filed its anti-fraud claims in Article III courts, although not affording jury trial rights. The SEC filed its administrative court prosecution against investment adviser George Jarkesy, Jr., and his firm, Patriot28, LLC, shortly after the 2010 statute became legally effective.

Under the 2010 statute, the SEC had the choice to sue Mr. Jarkesy in an Article III Court before an Article III Judge with jury trial rights, or in its in-house administrative courts pursuant to the “public exception” Congress had authorized in the 2010 statute. So, the Jarkesy case was the SCOTUS’s first opportunity to address the lack of a jury trial in the context of the SEC’s new 2010 statutes according the SEC’s three new forms of fraud claims. (Yes, the law grinds slowly, but finely: The SEC is deep into its second decade litigating this case against Mr. Jarkesy).

And no animals were hurt in the making of this decision. This was not a case of a deprivation of individual rights or a roll-back of case-law (like the Roe v. Wade rollback in Dobbs v. Jackson Women’s Health Organization). The SCOTUS decision actually expanded personal rights and liberties by according the targets of SEC prosecutions Article III Judges and Courts and jury trials.

The SEC decision does not limit the SEC in any way from prosecuting its 2010 anti-fraud authorities. The only thing that has changed is the forum: the SEC must, going forward, press its anti-fraud claims in the federal courts and not in the SEC’s in-house administrative tribunals.

So, this is where the politics come in. Those who decry the decision can do so for only one reason: the decision-maker has changed. No longer a federal employee Administrative Law Judge employed by the SEC Commissioners (the very people bringing the case against the SEC’s prosecution targets), but rather by independent and neutral federal Judges. The shift in decision-makers, writ large, is from the President’s federal Executive Branch agencies to the federal courts…from the Second Branch of the federal government to the Third Branch of the federal government. Those who favor consolidating power in the Executive Branch are understandably therefore disappointed that the Courts have taken back some of the powers the Constitution granted to the Courts…but that is politics talking, not Constitutional law.

DirectEmployers wrote this story on Friday, May 20, 2022, about the decision of the United States Court of Appeals for the Fifth Circuit (New Orleans) in the Jarkesy case before the SEC took it up to the SCOTUS. We knew this case was going up since the SEC had to appeal or forfeit its administrative enforcement scheme. We also knew that the case raised issues similar to hundreds of recently adopted federal agency enforcement schemes the agencies have deployed with the build-up of the federal government since the end of the Johnson Administration. While many of our readers wondered at the time of our reporting of the Fifth Circuit’s decision why we were covering an SEC story, we knew it would be the case to watch as it pertains to the administrative enforcement scheme OFCCP (and many other federal agencies) have created.

Here is the Fifth Circuit’s decision ruling for Jarkesy on three different constitutional grounds (it was not just SCOTUS out on a thin limb last week), only one of which the SCOTUS agreed to hear and decide (the Seventh Amendment jury trial issue).

4. The fight in the SEC case, – which did lead to a 6-3 split within the SCOTUS as to the ultimate result of the case – was whether the “public right” exception applied to the SEC’s administrative enforcement scheme. Chief Justice Roberts delivered the opinion of the court in which Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett joined. Justice Gorsuch filed a concurring opinion, as well, in which Justice Thomas also joined, without comment. Justice Sonia Sotomayer filed an opinion for the dissent, with which Justices Elena Kagan and Ketanji Brown Jackson joined, without comment.

5. Justice Sotomayer’s 38-page dissent argued that the majority should not have overruled the Congress’ determination that the “public right” exception applied. She concluded that the SEC’s election to sue Mr. Jarkesy in its in-house administrative court (and not in the federal Article III courts as the agency could have done under the 2010 statute: it had an election) was thus proper. Justice Sotomayer framed the fight very succinctly and went directly at the forum shift issue (do SEC fraud claims get resolved by the Executive Branch or in the federal Courts?):

“There are two key constitutional provisions at issue here. One is the Seventh Amendment, which “preserve[s]” the “right of trial by jury” in “Suits at common law, where the value in controversy shall exceed twenty dollars.”  The other is Article III’s Vesting Clause, which provides that the “judicial Power of the United States . . . shall be vested” in federal Article III courts. This case presents the familiar interplay between these two provisions.”

Justice Sotomayer and the dissent found themselves in the unenviable position of arguing in favor of stripping away civil rights and AGAINST individual rights to a jury trial to preserve federal Executive power…. rooting for Goliath (the power of the Sovereign) and not for David.

As to the application of the 2010 Congressional statute authorizing the exception to the Seventh Amendment jury trial right because the SEC’s claims were allegedly vindicating a “public right,” the Majority noted that the long history of Seventh Amendment law had never allowed “private rights” to be adjudicated without a jury trial.

So, what is a “public right” properly subject to the exception for otherwise required jury trials? Here is the majority’s explanation and reasoning:

“…[W]e have repeatedly explained that matters concerning private rights may not be removed from Article III courts. Murray’s Lessee, 18 How., at 284 [Murray’s Lessee v. Hoboken Land & Improvement Company, 18 Howard 272 (1856)]; Granfinanciera, 492 U. S., at 51–52; [[Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989)] Stern, 564 U. S., at 484 [Stern v. Marshall, 564 U.S. 462 (2011)]. A hallmark that we have looked to in determining if a suit concerns private rights is whether it “is made of ‘the stuff of the traditional actions at common law tried by the courts at Westminster in 1789.’” Id., at 484 (quoting Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U. S. 50, 90 (1982) (Rehnquist, J., concurring in judgment)). If a suit is in the nature of an action at common law, then the matter presumptively concerns private rights, and adjudication by an Article III court is mandatory. Stern, 564 U. S., at 484.”

Ok, so how do we know this is a “private right” that the SCOTUS, the Congress, and the Federal Executive Branch of government must accord Article III and Seventh Amendment protections?

Here is what Roberts had to say:

“This is not the first time we have considered whether the Seventh Amendment guarantees the right to a jury trial “in the face of Congress’ decision to allow a non-Article III tribunal to adjudicate” a statutory “fraud claim.” 492 U. S., at 37, 50. We did so in Granfinanciera, and the principles identified in that case largely resolve this one. Granfinanciera involved a statutory action for fraudulent conveyance. * * *Actions for fraudulent conveyance were well known at common law. 492 U. S., at 43. * * *The issue in Granfinanciera was whether this designation was permissible under the public rights exception. Ibid. We explained that it was not. Although Congress had assigned fraudulent conveyance claims to bankruptcy courts, that assignment was not dispositive. See id., at 52. What mattered, we explained, was the substance of the suit. “[T]raditional legal claims” must be decided by courts, “whether they originate in a newly fashioned regulatory scheme or possess a long line of common-law forebears.” Ibid. To determine whether the claim implicated the Seventh Amendment, the Court applied the principles distilled in Tull. We examined whether the matter was “from [its] nature subject to ‘a suit at common law.’” (some internal quotation marks omitted); see id., at 43–50. A survey of English cases showed that “actions to recover . . . fraudulent transfers were often brought at law in late 18th-century England.” Id., at 43. The remedy the trustee sought was also one “traditionally provided by law courts.” Id., at 49. Fraudulent conveyance actions were thus “quintessentially suits at common law.” Id., at 56. * * *

We accordingly concluded that fraudulent conveyance actions were akin to “suits at common law” and were not inseparable from the bankruptcy process. Id., at 54, 56. The public rights exception therefore did not apply, and a jury was required. * * *

Granfinanciera effectively decides this case. Even when an action “originate[s] in a newly fashioned regulatory scheme,” what matters is the substance of the action, not where Congress has assigned it. Id., at 52. And in this case, the substance points in only one direction. According to the SEC, these are actions under the “antifraud provisions of the federal securities laws” for “fraudulent conduct.” App. to Pet. for Cert. 72a–73a (opinion of the Commission). They provide civil penalties, a punitive remedy that we have recognized “could only be enforced in courts of law.” Tull, 481 U. S., at 422. And they target the same basic conduct as common law fraud, employ the same terms of art, and operate pursuant to similar legal principles. See supra, at 10–12. In short, this action involves a “matter[] of private rather than public right.” Granfinanciera, 492 U. S., at 56. Therefore, “Congress may not ‘withdraw’” it “‘from judicial cognizance.’” Stern, 564 U. S., at 484 (quoting Murray’s Lessee, 18 How., at 284).

The Man Who Would be King. Justice Sotomayer fired back in dissent arguing that when the Sovereign (the federal government) is filing suit, it is always a matter of a “public right:”

“So, the critical issue in this type of case is whether Congress can assign a particular matter to a non-Article III factfinder. * * *

For more than a century and a half, this Court has answered that Article III question by pointing to the distinction between “private rights” and “public rights.” See Murray’s Lessee v. Hoboken Land & Improvement Co., 18 How. 272, 284 (1856) (recognizing public-rights exception). The distinction is helpful because public rights always can be assigned outside of Article III. * * *

It has long been settled and undisputed that, at a minimum, a matter of public rights arises “between the government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments.” Crowell, 285 U. S., at 50; Oil States, 584 U. S., at 335 (describing the “Court’s longstanding formulation of the public-rights doctrine”); accord, Granfinanciera, 492 U. S., at 51, and n. 8; Atlas Roofing, 430 U. S., at 452, 457; Ex parte Bakelite Corp., 279 U. S., at 451. Indeed, ‘from the time the doctrine of public rights was born, in 1856,’ everyone understood that public rights “‘arise “between the government and others,”’” and refer to “rights of the public—that is, rights pertaining to claims brought by or against the United States.” Granfinanciera, 492 U. S., at 68–69 (Scalia, J., concurring in part and concurring in judgment); see ibid. (collecting sources). So, while this Court has recognized public rights in certain disputes between private parties, see infra at 19–20, the doctrine’s heartland consists of claims belonging to the Government.” (emphasis added)

The two problems with Justice Sotomayer’s argument that “Government claims are always public rights” is that the exception would swallow the rule since the Government asserting a claim to a private right, like claims involving prosecution for fraud, would never see a jury trial. Second, the SCOTUS’ Granfinanciera decision rejected the “Government uber alles” claim. See Roberts’ quote above on this issue.

6. “I fought the law, and the law won.” So, this turns out to be a battle between whether the federal courts are going to resolve federal fraud claims, or the federal Executive Branch will. It is at its essence a Separation of Powers fight. As you can imagine, the federal Courts are not going to easily cede jurisdiction to the President and his Executive Branch of government. That is going to have to come with a high threshold of needed proof to sustain an “exception” to the Constitutional requirement of a jury trial for what all Justices conceded was a claim dead-center in the common law (familiar with civil contract, tort, and fraud cases, among many other causes of action, and with money damages).

7. First, let’s get over the immediate gut instinct that the common law courts from the late 1700s could not have anticipated, let alone tried, new statutes like the SEC’s 2010 law or other modern-day discrimination laws completely unknown to colonists. (Advocates for OFCCP administrative courts to resolve claims of unlawful discrimination may be especially keen to argue that “they could not have imagined non-discrimination law statutes in the late 1700’s.” After all, most of the Founding Fathers owned slaves, including 8 of our first 12 Presidents. And, while the Constitution banned slavery in the Northwest Territories, it (shamefully) recognized slavery as lawful elsewhere within the United States and (shockingly) counted slaves as only 3/5ths of a person for the purpose of counting state populations necessary to determine representation in the U.S. House of Representatives…known as the “3/5ths Compromise.” (Ah, we are inching ever closer to the OFCCP question).

BTW, the Congress in 1868 withdrew and nullified the “3/5ths Compromise” in the Constitution by passage of the 14th Amendment to the U.S. Constitution. But the SCOTUS has already addressed that “the common law could not have imagined it” question in 1987 in Tull v. United States, 481 U.S. 412, 417-418 (1987) as (very liberal) former Justice William Joseph Brennan, Jr. wrote explaining that one looks at the essence of the modern cause of action and the remedy and compares today’s cause of action/remedy against the past claims adjudicated in the English and colonial common law courts.

Important Tedious Legal Background Note: The U.S. Constitution recognized and adopted in America the English Court tradition of separating the civil courts into “Courts of Equity” and “Courts of Law.” “Courts of Equity” (a) did not have the power to award “monetary damages” and (b) did NOT provide for jury trials. THUS, it becomes important whether the cause of action sounds in “law” or in “equity” to get a jury trial. If the remedy is “equitable” in nature: no jury trial. Oh Boy! That is big for OFCCP and gives them something to argue. Watch below. (I promise we are getting close to the OFCCP issue and had promised that this was complicated. A few more bricks to lay down to finish the foundation, though.)

The federal Judiciary merged these two courts (law and equity) into the same court in 1938. Federal courts today thus hear and dispose of both law and equity claims. (Think “injunction” when you think about an equity court. Most states have followed suit (pun intended) and have consolidated their law and equity courts (except for Delaware, New Jersey, Mississippi, and Tennessee).

I remember as a young lawyer in Virginia trying cases seeking injunctions in the Virginia State Courts of Equity (now merged into the Virginia State Courts of law).

[I have a GREAT story showing vividly the differences between these two entirely different kinds of courts I so wish I could tell here (but it is a long story) to demonstrate the difference between these two courts. That case involved my pro bono representation as a second-year lawyer of a mother from Sri Lanka (now Ceylon) whose ex-husband kidnapped her five-year-old son at knifepoint in Utah and fled with her (their) son (over whom she had exclusive custody) and with a private investigator back to the ex’s home in Northern Virginia. The dad, son and his mother were readying themselves within hours to board a flight to Sri Lanka where the boy would have been lost forever to the mother. To the rescue, the Arlington County, Virginia SWAT, and the Virginia Equity Courts!] Meanwhile, across the river in the Maryland state courts and in the Washington D.C. territorial courts (the District of Columbia is a territory of the United States and not a “state”), I would handle both the damages and injunctive matters in the same “merged” state or territorial courts.

Please pay attention to the above three paragraphs. This issue of what are issues of “law” vs “equity” will decide the OFCCP question. (I promised we were getting close. Only a few more building blocks left to put in place).

Here is what Justice Brennan wrote about the way to determine if a modern cause of action the common law courts could never even have dreamed of will provide the grist for an Article III court and Jury trial right:

“To determine whether a (modern) statutory action is more similar to cases that were tried in courts of law than to suits tried in courts of equity or admiralty, the Court must examine both the nature of the action and of the remedy sought. First, we compare the statutory action to 18th-century actions brought in the courts of England prior to the merger of the courts of law and equity. See, e.g., Pernell v. Southall Realty,416 U. S. 363,416 U. S. 378(1974); Dairy Queen, Inc. v. Wood, 369 U. S. 469369 U. S. 477 (1962). Second, we examine the remedy sought, and determine whether it is legal or equitable in nature. See, e.g., Curtis v. Loether, supra, at 415 U. S. 196Ross v. Bernhard, 396 U. S. 531396 U. S. 542 (1970). [Footnote 4]”

8. NOW, LET’S GET TO THE OFCCP CONUNDRUM.

OFCCP currently and historically sues covered federal Government contractors exclusively through the US Department of Labor’s in-house administrative courts and not through Article III courts with jury trials.

This presents OFCCP with two problems for the agency as to the first legal question (whether the agency’s causes of actions are ones the common law would have entertained).

First, OFCCP sues to enforce the federal government’s contract with the contractor. That’s it. Stop right there. Contract enforcement and money damages for the breach of a contract are both dead-center common law causes of action and remedy. No question about it. Contract disputes were the primary work of the common law courts. Still not sure? Here is how EVERY OFCCP Complaint it brings in to enforce Executive Order 11246 in its administrative forum it calls the Office of Administrative Law Judges (“OALJ”) begins, as it MUST (very bad news for OFCCP’s prospects in a challenge to its jurisdiction in its administrative courts):

“Plaintiff, Office of Federal Contract Compliance Programs, United States Department of Labor (“OFCCP”), by its attorneys, alleges the following facts.

1. This action is brought by OFCCP to enforce the contractual obligations imposed by Executive Order 11246 (30 Fed. Reg. 12319), as amended (“Executive Order 11246” or “Executive Order”), and the rules and regulations issued pursuant thereto at 41 C.F.R. Chapter 60.”

So, OFCCP Complaints are just contract cases to compel the covered federal Government contractor subject to OFCCP’s jurisdiction to comply with its contractual requirements. Dead-center common law cause of action.

No “Public Rights” Exception for Any of the “Statutes” OFCCP’s enforces. The question then becomes whether OFCCP’s common law-like contract enforcement actions are subject to a “public right” exemption. UH-OH! There is not a Congressional statutory exception for OFCCP to proceed by way of administrative in-house court systems. This is not like the SEC case at all where the 2010 statute at issue contained an express Congressional “exemption” for the SEC to elect either Article III courts or its own in-house administrative court system to prosecute fraud.

Game over for OFCCP. Stop right there. OFCCP’s administrative courts are more likely than not unconstitutional and OFCCP lacks jurisdiction to proceed to the OALJ with its contract enforcement lawsuits.

Second, let’s bend over backward for a moment and try to imagine what claims OFCCP could throw up on the wall to try to hang onto its OALJ process. Maybe OFCCP would argue that it is really not a government contracting agency at all and is not a poorly placed subagency within the USDOL to enforce the terms of government contracts but is really a “civil rights agency.” We never heard that claim until the Obama Administration and then again, oddly, in the Trump Administration, and then predictably in the current Biden Administration.

[Actually, OFCCP exists, it says, pursuant to the Federal Procurement Act to perform a government contract duty to lower the prices of the goods and services federal procurement agencies purchase in the open marketplace by ensuring that labor pools are expanded to their maximum (and not artificially constricted by unlawful discrimination keeping African Americans, Hispanics, Whites, Asians, etc., out of the labor pool). Expansion of the labor pool operates to drive wages down, of course, and create lower prices to the federal government. OFCCP has never been about “good jobs” (this administration’s code phrase for union jobs); that is why the unions have historically disliked OFCCP. The unions are trying to raise wages for workers while OFCCP is seeking to lower them by flooding the market with more workers.]

While OFCCP does not sue contractors on behalf of applicants and/ or employees, the at-issue federal contract is OFCCP’s main party in interest. Applicants and employees enjoy no private cause of action under any of the three “statutes” OFCCP enforces. Rather, they are technically merely “third-party beneficiaries” (not “victims”) to the contractor’s federal Government contract. OFCCP sues contractors merely to enforce the contractor’s Government contract.

Indeed, let’s see how far OFCCP’s modern claim that it is a federal “civil rights agency” gets it. Was discrimination law a cause of action known to common law courts and are backpay damages civil money penalties well known to those law courts known as common “law” courts (not courts of “equity”?)  After all, discrimination based on race or sex was not unlawful in the late 1700s and slavery of Black Americans was widespread.

The legal issue would require us to determine the essence of a cause of action for unlawful employment discrimination and then determine if that kind of action was known to the common law courts.

Justice Sandra Day O’Connor addressed this very issue in her famous Concurring Opinion in Price Waterhouse v. Ann Hopkins, 490 U.S. 228 (1989). The majority in that case, whom Justice O’Connor joined, upheld the trial court’s finding that PW was guilty of unlawful sex discrimination. In so doing, Justice O’Connor (third in her Stanford Law School class behind Justice William Rehnquist (#1 in that class: tough class!) wrote a scholarly treatise explaining what kind of statute Title VII was and why she would impose on employers a much more aggressive burden of proof in employment discrimination cases going forward. She likened Title VII to a “tort” (a classic common law claim) using a phrase she coined in her Concurring opinion: “a statutory employment tort”:

“Like the common law of torts, the statutory employment ‘tort’ created by Title VII has two basic purposes. The first is to deter conduct which has been identified as contrary to public policy and harmful to society as a whole. As we have noted in the past, the award of backpay to a Title VII plaintiff provides “the spur or catalyst which causes employers and unions to self-examine and to self-evaluate their employment practices and to endeavor to eliminate, so far as possible, the “last vestiges” of discrimination in employment. Albemarle Paper Co. v. Moody, 422 U. S. 405422 U. S. 417-418 (1975) (citation omitted). The second goal of Title VII is “to make persons whole for injuries suffered on account of unlawful employment discrimination.” Id. at 422 U. S. 418.

And it is not just Justice O’Connor out there alone on a thin limb. A number of federal courts have described Title VII as a “quasi-tort” statute. Significantly, common law courts entertained all forms of torts (intentional torts, negligent torts, strict liability torts, etc.), however described. “Torts” (think negligence claims like horse and buggy accidents), or intentional torts (like assaults, batteries, theft, defamation, etc.) were never the province of the “equity courts.”

Now, here is one thing OFCCP would potentially have going for its argument (i.e., against Title VII discrimination claims requiring jury trials, especially following Justice Roberts’ statement in his Majority Opinion in the SEC Case Decision –  which started this parade 4,000 words ago – describing “remedies” as perhaps the primary factor to consider in assessing whether the claim at-issue was a common law claim or one belonging to a court of equity (which the Seventh Amendment misses).

Numerous federal courts, including the SCOTUS, have characterized “back pay” damages as an “equitable” remedy. Ironically, for this Seventh Amendment issue, OFCCP denies that. Because if backpay is an equitable remedy, it could vary in its award depending on the facts of the case and could not be awarded at all to a bona fide “victim” of unlawful discrimination. OFCCP has taken the position in audits and litigation for 50 years that its “backpay remedy” is NOT equitable in nature and must be applied without doubt after any finding of unlawful employment discrimination.

But, in the end: this gets OFCCP nowhere since OFCCP does not bring cases pursuant to Title VII. Rather, its Executive Order prosecutions challenging alleged unlawful employment discrimination, as noted above, does not include claims for back pay damages for the victims of unlawful discrimination since OFCCP is pursuing only a contract remedy for contract breach, and monetary payments to Applicants and employees are to cure contract breach…a monetary remedy calculable by courts of law.

So, now what happens at OFCCP? OFCCP will stonewall the difficult reality for it to face that for fifty years it has been playing out of bounds. It will back-hand, I predict, any suggestion that it needs to close down its administrative court prosecution scheme.

Second, it does not own this decision anyway. More likely, the U.S. Department of Justice, Office of Legal Counsel will most likely decide for every federal agency what its legal duties are. (These are the VERY smart lawyers within the USDOJ/OLC, in a Department already filled with nothing but smart lawyers. But the OLC lawyers are the “brain trust” and the best of the best.) The lawyers in the OLC will undoubtedly have to set up a project team to comb through the thousands of statutes the federal agencies enforce and for which they prosecute violations in their in-house administrative law courts. OFCCP will be far down the food chain. It could be years before OFCCP gets the legal advice it needs.

If Donald Trump wins election to the Presidency in November, I strongly suspect that his USDOJ will just reverse the presumptions and wholesale charge every sub-component agency within each federal Department to justify why it feels the need to deprive federal contractors of jury trials, if they are currently relying on their in-house administrative courts.

For those contractors caught up already in an administrative court action currently pending before either the OALJ (trial courts) or the Administrative Review Board (“ARB” = appeals court), they will likely have two options (since I assume OFCCP will not voluntarily close its use of the OALJ and ARB as to OFCCP matters):

OPTION 1:  Contractors could waive their Seventh Amendment right to jury trial and continue before the OALJ, if USDOL does not disband its use for OFCCP enforcement actions; or

OPTION 2: Contractors could make demand on OFCCP’s lawyers (USDOL Office of the Solicitor) to dismiss OFCCP’s pending Administrative Complaint, and upon rejection of their demand, proceed immediately to federal District Court to file a Declaratory Judgment Complaint and seek an injunction enjoining OFCCP from further violating the contractor’s Seventh Amendment rights.

Current contractor litigants would not proceed to file a Motion for Dismissal with their OALJ Administrative Law Judge trying their case, by the way. This is for two reasons:

  1. No one at a federal agency may adjudicate constitutional challenges to federal agency actions. Those constitutional claims are reserved to the Article III federal courts and are not the province of the federal agency administrative courts, and
  2. In-house administrative courts must uncritically accept the legitimacy of the Rules of the agency the in-house administrative court serves. This is because the ALJ’s and ARB appellate judges report, ultimately, to their boss, the Secretary of Labor who has been the signer of all of USDOL’s Rules. In-house law tribunal officials are not at liberty to overrule their boss’ published Rules. (Oh, were it only so! To be able to invalidate what your boss just said or wrote! What a glorious (and chaotic) day that would be. Inmates running the asylum.)

But a tough choice lies ahead for the contractor. Be careful what you wish for. First, do you want to start all over again during an already pending case with a fresh Complaint in a federal District Court? Does the company really want a jury trial? (Litigants have to elect them; they are not just forced upon the parties). Are you just jumping out of one frying pan and into another? Do your employment litigators even know how to try a jury case?

I love to be in federal court facing a jury for many reasons, but the two primary reasons are that: (1) defense lawyers only have to “hang:” one juror to win (federal courts require a unanimous jury); and (2) the federal courts pick jurors from the voter registration lists (not the Department of Motor Vehicles registration lists); the difference is typically several grades of education difference and defense lawyers want smarter jurors.

As to federal courts generally, I MUCH prefer federal Article III Judges who are MUCH smarter, far more experienced, and well-trained than any other breed of state court or administrative judges with whom I am familiar, but I am sure with a fair number of exceptions. I have appeared before two incredibly experienced and knowledgeable ALJ’s in OFCCP cases over the years. There are some good ones out there, for sure. The federal Article III judges all come, however, VERY highly trained in employment discrimination law, class-action law, statistics, and damages as a basic starter kit. And, then USDOJ lawyers would be the ones to go into federal court on behalf of OFCCP. And, they are also very experienced, value their reputation for high-quality lawyering and winning, and know how to settle a poor case for the government.

Were I the OFCCP Director: I would hedge my bets and immediately begin referrals of all future OFCCP enforcement actions to USDOJ, Civil Rights Division under OFCCP’s existing MOUs and tradition of referral to USDOJ. Even though OFCCP will put on a “game face” when denying that the SEC Case decision reaches them, they know behind the scenes that the handwriting is already written on the wall.

OFCCP’s best case is that it keeps this ball “in the air” for five years or so until a federal contractor finally digs in its heels and runs to federal Court seeking to find a Judge to hold OFCCP’s in-house administrative prosecutions unconstitutional. While the case would go relatively quickly in the federal District Court, USDOJ could take the case up on appeal and buy another 12-18 months, easy. But OFCCP’s facade will eventually come crashing down.

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.

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John C. Fox
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