Legislative Courts Adjudicating Public Rights

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Article III, Section 1:

The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.

The Supreme Court has held that Article I courts can adjudicate cases involving “public rights” —cases that arise between a private actor and the government. The public rights theory can be traced back to the Court’s 1855 ruling in Murray’s Lessee v. Hoboken Land & Improvement Co.1 In that case, Justice Joseph Story explained that, although Congress cannot withdraw from federal courts the jurisdiction to hear suits at common law, equity, or admiralty, “there are matters, involving public rights, which may be presented in such form that the judicial power is capable of acting on them, and which are susceptible of judicial determination, but which Congress may or may not bring within the cognizance of the courts of the United States, as it may deem proper.” 2 In essence, the Court distinguished between matters that historically had been decided by courts and matters that arose between the government and others and had been historically resolved by executive or legislative acts. Thus, under Murray’s Lessee, certain matters arising between the government and others that might be susceptible to judicial determination may also be referred to Article I courts. Congress does not have sole discretion to determine what matters fall within that class. In subsequent cases, the Court has held that matters susceptible of judicial determination, but not requiring it, include claims against the United States;3 the disposal of public lands and claims arising therefrom;4 questions concerning membership in Indian tribes;5 and questions arising out of the administration of the customs and internal revenue laws.6 Courts such as consular courts and military courts martial may be justified on similar grounds.7

The Supreme Court has offered several rationales for why public rights cases can be handled in Article I courts. The first is based on the doctrine of sovereign immunity and postulates that, because Congress need not allow suits against the government at all, the legislature is free to attach conditions to the federal government being sued, including what type of forum the claims can be brought in.8 The second major rationale is that, historically, these cases were conclusively determined by the Executive and Legislative Branches, “and that as a result there can be no constitutional objection to Congress’s employing the less drastic expedient of committing their determination to a legislative court or an administrative agency.” 9

As a general matter, the Court has broadly defined public rights cases as those that arise “between the Government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments.” 10 At the core of the public rights doctrine are cases involving claims for benefits against the government.11 Private rights cases, by contrast, pertain to the “liability of one individual to another under the law as defined.” 12 Beyond these general definitions, the Supreme Court has not articulated the exact parameters of the public rights doctrine. As Chief Justice John Roberts has noted, “our discussion of the public rights exception . . . has not been entirely consistent, and the exception has been the subject of some debate.” 13 However, a series of Supreme Court cases have attempted to draw the line between public and private rights.

In 1932, in Crowell v. Benson, the Court approved an administrative scheme for evaluating maritime employee compensation claims, subject to judicial review, although the case involved a matter of private right.14 The scheme was permissible, the Court said, because in cases arising out of congressional statutes, an administrative tribunal could make findings of fact and render an initial decision on legal and constitutional questions, as long as there was adequate review in a constitutional court.15 The “essential attributes” of decisions must remain in an Article III court, but so long as they do, Congress may use administrative decisionmakers in those private rights cases that arise in the context of a comprehensive federal statutory scheme.16

In the 1982 case Northern Pipeline Const. Co. v. Marathon Pipeline Co., the Court addressed whether Article I bankruptcy courts could adjudicate common law contract and tort claims.17 Acknowledging that the “distinction between public and private rights has not been definitely explained” in the Court’s precedents, Justice William J. Brennan, writing for a plurality of the Court, traced three historical exceptions to the literal command of Article III: territorial courts, military courts, and courts and agencies that adjudicate public rights.18 Disposing of the first two categories as clearly inapplicable, the plurality also rejected the public rights argument as the underlying case did not arise between government and a private party, but involved a state-created claim between two private parties.19

In two cases following Northern Pipeline, the Court rejected a bright line test for the distinction between public and private rights. It instead focused on substance—that is, on the extent to which a particular grant of jurisdiction to an Article I court threatened judicial integrity and separation of powers principles. First, in Thomas v. Union Carbide Agricultural Products Co., the Court adopted a functional approach for determining when Congress may use non-Article III forums.20 The statute in question created a system of binding arbitration, subject to limited judicial review, for determining the amount of compensation due to pesticide manufacturers whose data had been used by other manufacturers to register their products.21 Justice Sandra Day O’Connor, writing for the majority, asserted that “substance rather than doctrinaire reliance on formal categories should inform application of Article III.” 22 Because the arbitration scheme (1) was created by federal statute, (2) was a “pragmatic solution to the difficult problem of spreading [ ] costs,” and (3) did not “preclude review of the arbitration proceeding by an Article III court,” the Court found that it “did not threaten the independent role the Judiciary in our constitutional scheme.” 23 Two years later, in Commodity Futures Trading Commission (CFTC) v. Schor, the Court reaffirmed Thomas’s functional approach and held that the CFTC was empowered to hear common law counterclaims related to violations of the Commodities Exchange Act or CFTC regulations.24

In a subsequent case, Granfinanciera, S.A. v. Nordberg, the Court held that the distinction between public and private rights determined both whether a matter could be referred to a non-Article III tribunal and whether Congress could dispense with a civil jury trial.25 Granfinanciera suggests that seemingly private causes of action between private parties will also be deemed public rights when Congress, acting for a valid legislative purpose pursuant to its Article I powers, fashions a cause of action that is analogous to a common law claim and integrates it so closely into a public regulatory scheme that it becomes a matter appropriate for agency resolution with limited involvement by the Article III Judiciary.26

In the 2011 case Stern v. Marshall, the Court shifted away from the functionalism of Thomas and Schor and back towards the formalism of Northern Pipeline.27 In Stern, the issue was whether a bankruptcy court could adjudicate a common law claim for fraudulent interference with a gift. In a 5-4 decision authored by Chief Justice John Roberts, the Court held that Article III prohibited the bankruptcy court’s exercise of jurisdiction because the common law claim did not fall under the public rights exception. The Court acknowledged that Thomas and Schor had declined to limit the public rights exception to actions involving the government as a party, but it concluded that the Court had continued to limit the exception to claims deriving from a “federal regulatory scheme” or in which “an expert Government agency is deemed essential to a limited regulatory objective.” 28 In rejecting applying the public rights exception to the fraudulent interference counterclaim, the Court observed that the claim was not one that could be “pursued only by grace of the other branches” or could have been “determined exclusively” by the Executive or Legislative Branches.29 Additionally, the underlying claim did not “flow from a federal regulatory scheme” and was not limited to a “particularized area of law.” 30 Because the counterclaim involved the “most prototypical exercise of judicial power,” adjudication of a common law cause of action not created by federal law, the Court rejected the bankruptcy courts’ exercise of jurisdiction over the counterclaim as a breach of Article III.31

Subsequently, in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, the Court noted that it has not “definitively explained” the distinction between public and private rights, and its precedents applying the public-rights doctrine have “not been entirely consistent.” 32 The Court observed, however, that its “precedents have given Congress significant latitude to assign adjudication of public rights to entities other than Article III courts.” 33 In Oil States, the Court addressed whether inter partes review, a type of patent validity proceeding conducted by the U.S. Patent and Trademark Office (PTO), violates Article III. The Court held that such proceedings “fall[ ] squarely within the public-rights doctrine” and therefore could constitutionally be conducted by a non-Article III tribunal.34 In so holding, the Court described the public-rights doctrine as “cover[ing] matters ‘which arise between the Government and persons subject to its authority in connection with the performance of the constitutional functions of the executive or legislative departments.’” 35

1: 59 U.S. (18 How.) 272 (1855).
2: Id. at 284.
3: Gordon v. United States, 117 U.S. 697 (1865) (published 1885); McElrath v. United States, 102 U.S. 426 (1880); Williams v. United States, 289 U.S. 553 (1933). On the status of the then-existing Court of Claims, see Glidden Co. v. Zdanok, 370 U.S. 530 (1962).
4: United States v. Coe, 155 U.S. 76 (1894) (Court of Private Land Claims).
5: Wallace v. Adams, 204 U.S. 415 (1907); Stephens v. Cherokee Nation, 174 U.S. 445 (1899) (Choctaw and Chickasaw Citizenship Court).
6: Old Colony Trust Co. v. Commissioner, 279 U.S. 716 (1929); Ex parte Bakelite Corp., 279 U.S. 438 (1929).
7: See In re Ross, 140 U.S. 453 (1891) (consular courts in foreign countries). Military courts may, on the other hand, be a separate entity of the military having no connection to Article III. Dynes v. Hoover, 61 U.S. (20 How.) 65, 79 (1858). But cf. Ortiz v. United States, 138 S. Ct. 2165, 2168 (2018) (noting that the essential character of the military justice system is, “in a word, judicial” ). For additional discussion of military courts, see ArtIII.S1.9.5 Non-Article III Military Courts.
8: N. Pipeline Constr. Co v. Marathon Pipe Line Co., 458 U.S. 50, 67 (1981)
9: Ex Parte Bakelite, 279 U.S. 438, 451 (1929) ( “The mode of determining [public rights cases] . . . is completely within congressional control. Congress may reserve to itself the power to decide, may delegate that power to executive officers, or may commit it to judicial tribunals.” ). Although Congress has generally employed some level of judicial review for public rights cases, it is generally accepted that this is not constitutionally required. See id. at 451; N. Pipeline, 458 U.S. at 68 n.20; Crowell v. Benson, 285 U.S. 22, 50–51 (1932).
10: Crowell, 285 U.S. at 50.
11: For example, the U.S. Tax Court is an Article I court that resolves disputes between taxpayers and the government. Although judges of the Tax Court exercise the “judicial power” of the United States, its judges do not enjoy life tenure, but rather sit for fifteen-year terms. And, unlike Article III judges who are subject to removal only through impeachment, Tax Court judges can be removed by the President for “inefficiency, neglect of duty, or malfeasance in office[.]” 26 U.S.C. §§ 7441–7443.
12: Crowell, 285 U.S. at 51.
13: Stern v. Marshall, 131 S. Ct. 2594, 2611 (2011).
14: 285 U.S. 22.
15: Id. at 51–65.
16: Id. at 50, 51, 58–63. For additional discussion of Crowell, see ArtIII.S1.9.7 Article I Adjuncts to Article III Courts.
17: 458 U.S. 50 (1981).
18: Id. at 69–70.
19: Id. at 71
20: 473 U.S. 568 (1984).
21: Id. at 573–74.
22: Id. at 587.
23: Id. at 590.
24: 478 U.S. 833, 857 (1986). In Schor, the Court described several non-determinative factors for assessing whether the adjudication of traditional Article III cases in a non-Article III forum threatens the institutional integrity of the judicial branch: (1) the “extent to which the ‘essential attributes of judicial power’ are reserved to Article III courts, and, conversely, the extent to which the non-Article III forum exercises the range of jurisdiction and powers normally vested only in Article III courts,” (2) “the origins and importance of the right to be adjudicated” ; and (3) “the concerns that drove Congress to depart from the requirements of Article III.” Id. at 851.
25: 492 U.S. 33, 51–55 (1989). While Granfinanciera was a Seventh Amendment jury-trial case, the decision is relevant to the Article III issue as well because, as the Court made clear, whether Congress can submit a legal issue to an Article I tribunal and whether it can dispense with a civil jury on that legal issue must be answered by the same analysis. Id. at 52–53 ( “[T]he question whether the Seventh Amendment permits Congress to assign its adjudication to a tribunal that does not employ juries as factfinders requires the same answer as the question whether Article III allows Congress to assign adjudication of that cause of action to a non-Article III tribunal.” ) See also Oil States Energy Servs., LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365, 1379 (2018) ( “This Court’s precedents establish that, when Congress properly assigns a matter to adjudication in a non-Article III tribunal, ‘the Seventh Amendment poses no independent bar to the adjudication of that action by a nonjury factfinder.’” (quoting Granfinanciera, 492 U.S. at 53–54)).
26: 492 U.S. at 52–54. The Court reiterated that the government need not be a party as a prerequisite to a matter being of public right. Id. at 54. Concurring, Justice Antonin Scalia argued that public rights historically were and should remain only those matters to which the Federal Government is a party. Id. at 65. See also Stern v. Marshall, 564 U.S. 462, 490–91 (2011) ( “[W]hat makes a right ‘public’ rather than private is that the right is integrally related to particular Federal Government action” ).
27: 564 U.S. 462.
28: Id. at 490.
29: Id. at 493.
30: Id.
31: Id. at 494.
32: 138 S. Ct. 1365, 1373 (2018) (additional citations omitted).
33: Id.
34: Id.
35: Id.