Dinsmore's Mark Carter: How SEC Judges Decision Affects NLRB Adjudication
A recent Fifth Circuit decision found the SEC's use of in-house courts to be unconstitutional. The decision could affect the National Labor Relations Board's adjudication system, according to Dinsmore labor law partner Mark Carter. Read what he told Law360 below.
"The one thing that I am certain of is that because the management labor bar is not composed of shrinking violets, someone will test the application of this decision to the National Labor Relations Board," said Mark Carter, a management-side attorney at
Dinsmore & Shohl LLP.
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Carter said constitutional challenges like one to the NLRB's system have not been particularly common because they are costly and their prospects uncertain.
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The Fifth Circuit also held in the Jarkesy case that the SEC's in-house court ran counter to the Seventh Amendment's guarantee of a right to a jury trial. Applying Supreme Court precedent, the appeals courts aid that the administrative proceeding was unconstitutional because the claims arose under common law and did not involve a purely public right.
Carter said it is possible a similar argument could be lodged against the NLRB, which could mean some previous board litigation would instead have a path to a federal court.
The common law analogue the Fifth Circuit found in the Jarkesy case was fraud, and a litigant hoping to raise a similar claim against the NLRB would need to identify a common law issue that comes up in board litigation. Levy said it is unlikely that suits related to collective bargaining rights would satisfy the requirements the Jarkesy court laid out, because they were not recognized until the NLRA.
Carter said, however, that a large share of cases at the NLRB do not concern collective bargaining rights, but instead alleged discrimination. He said it is arguable that discrimination claims could be the type that requires a trial by jury based on the reasoning in the Jarkesy decision.
"There is a fair amount of the act where I don't think you would be able to get to the Seventh Amendment right to a jury trial," Carter said. "However, discrimination, which is the bulk of the litigation under the National Labor Relations Act, that's different."
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