The Office of the Comptroller of Currency (OCC) regulates “national banks,” meaning banks that receive permission to do business by federal, rather than state, charter. The petitioners in this case, Saul Ortega and David Rogers, Jr., were working as directors and officers of a federally charted bank when, according to the government, they failed to adequately review loan packages, artificially inflating the bank’s capital. The OCC closed the bank, subsequently imposing penalties and entering orders prohibiting the petitioners from continuing to work in the banking industry. Ortega and Rogers challenged the OCC’s actions in the Fifth Circuit, arguing in part that the Seventh Amendment required the court to invalidate the OCC’s supervision power. The Constitutional Accountability Center filed a brief in the Fifth Circuit in support of the OCC. 

In SEC v. Jarkesy, the Supreme Court held that when the Securities Exchange Commission (SEC) seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial. But the Court made clear that there are “some contexts” in which what the Court has called the “public rights doctrine” applies, and in those contexts, the government may seek traditional legal remedies and civil penalties in administrative tribunals. Our brief explains why the public rights doctrine applies here. 

As the Court explained in Jarkesy, “public rights” concern matters that historically could have been determined exclusively by the executive and legislative branches. Put another way, the public rights doctrine applies when Congress’s power in an area is so total that no party has a “vested right” to act in that area without Congress’s approval. 

The OCC’s supervisory powers stem from the unique relationship between the federal government and national banks, which derive their entire existence from the federal government. The National Bank Act of 1864 allowed banks to perform valuable public functions—and receive valuable government benefits—while submitting to OCC supervision. The lawmakers who passed that Act saw national banks as private entities engaged in the public service of strengthening the nation’s currency and stabilizing its economy. Indeed, Congress gave the OCC the specific adjudicatory powers at issue in this case to ensure the agency could curb unsafe banking practices and prevent national banks from failing. Since the creation of the national banking system in the 1860s, Congress has only deepened the ties between national banks and the federal government, strengthening this symbiotic relationship and increasing the benefits associated with a federal charter. Moreover, it is up to bankers to decide whether to adopt a federal charter. Their voluntary participation in the OCC’s regulatory program makes especially clear that this is an area in which no vested rights are involved.  

The history of the national banking system makes clear that the regulation of federally chartered banks is an area in which the power of the political branches is long-standing and has traditionally been exclusive, making the public rights doctrine applicable. No court has ever held that the Seventh Amendment is implicated in this context, and the Fifth Circuit should not do so either.