Commercial Litigation Update

Since the U.S. Supreme Court’s landmark Loper[1] decision, which overturned the longstanding precedent of the Chevron doctrine for agency deference, it was anticipated that lower courts, as well as the Supreme Court, would begin to decide whether specific deference to agency interpretation and power was appropriate, likely on a policy-by-policy and agency-by-agency basis. As expected, in the few short months since the Loper decision, the SEC and FINRA’s administrative power to seek and award civil penalties in their in-house disciplinary function has been called into question.

Specifically, alongside and in the same term as Loper, the Supreme Court decided SEC v. Jarksey, which reviewed whether the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties for securities fraud.  In Jarksey, the Supreme Court held that, “[w]hen the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial.”

In a per curiam opinion issued in Calcutt v. Federal Deposit Insurance Corporation, the Court has reversed the U.S. Court of Appeals for the Sixth Circuit and remanded to it an enforcement action that had been brought against a bank executive charged with mismanaging a loan relationship. After agency proceedings were completed and sanctions ordered, the Sixth Circuit held that the FDIC had made two fundamental legal errors in adjudicating the case against the bank CEO who had appealed. However, instead of remanding the case to the FDIC, the Sixth Circuit conducted its own review and concluded that the FDIC had, on the evidence presented, made a supportable decision to ban and fine the executive.

On June 15, the Court decided five cases and dismissed a sixth. A case of great importance to health care lawyers, regarding the availability of judicial review of Medicare rates for pharmaceuticals, and another of great importance to labor and employment lawyers, holding that a significant portion of the California Private Attorneys General Act's (PAGA’s) delegation of state enforcement power is preempted by federal law, lead the pack.