The Jarkesy Question: Is a New Constitutional Challenge Brewing for ITC Enforcement?

"The threat of a cease-and-desist order, backed by civil penalties of up to $100,000 a day or twice the value of imported goods, is a powerful deterrent. For years, the process for enforcing these penalties has been a settled feature of ITC practice. But a recent Supreme Court decision, Jarkesy v. SEC, has introduced a new constitutional question that ITC litigators might want to watch out for."

"For respondents, this poses more than an academic exercise. The Supreme Court's holding in Jarkesy -that the Securities and Exchange Commission's (SEC's) in-house adjudication of civil fraud penalties violated the Seventh Amendment-provides a new arrow in the quiver for challenging the Commission's enforcement authority. At first blush, the parallel is compelling: an administrative agency, through an internal proceeding, is assessing significant monetary penalties. This feels precisely like the scenario the Supreme Court just addressed."

Section 337 remedial orders at the International Trade Commission can impose cease-and-desist orders and civil penalties up to $100,000 per day or twice the value of imported goods. The Supreme Court's Jarkesy v. SEC holding found that in-house adjudication of substantial civil penalties can raise Seventh Amendment jury-trial issues. Respondents facing ITC enforcement therefore have a potential basis to seek jury trials for monetary penalties. The ITC will likely invoke the public-rights doctrine and the historical sovereign nature of international trade regulation to defend its internal enforcement processes. Litigation will hinge on the character of the rights and remedies at stake.

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