Commodity Futures Trading Commission v. Schor case brief summary

Commodity Futures Trading Commission v. Schor, 1981 - O'Connor

 

·         Facts: CFTC was assigned administration of reparations procedure where disgruntled customers of commodity brokers could seek redress for the brokers' violations. In 1976, the CFTC instituted a regulation allowing permissive counterclaims arising out of the transaction or occurrence giving rise to the complaint. 

 

Court of appeals upheld, but ruled that CFTC lacked authority to adjudicate common law counterclaims. 

 

·         Issue: whether the Commodity Exchange Act empowers the CFTC to entertain state law counterclaims in reparations proceedings, and if so, whether that grant of authority violates Article III. 

 

·         Court of Appeals: this is a common law cause of action involving a private right. Cannot emasculate constitutional courts, and prevent the encroachment or aggrandizement of one branch at the expense of the other. Buckley.

§         Distinguishing private from public rights: public rights must at a minimum arise between government and others, and private which confined to Art III courts.

 

·         No Violation: Schor waived the right, no private interest, when he requested a hearing with the ALJ. 

 

·         The fact of the private, common law nature of the rights at stake was not determinative, even though court stated "where private, common law rights are at stake, our examination of the congressional attempt to control the manner in which those rights are adjudicated has been searching."

 

·         No interference with judiciary: Pragmatic approach

§         structurally speaking, CFTC has a narrow class of claims as incident to its primary, and unchallenged, adjudicative function does not create a substantial threat to the separation of powers. 

§         Congress wanted to make effective a specific and limited federal regulatory scheme.

 

·         No aggrandizement: Distinguishes Bowsher. No question about aggrandizement of congressional power at expense of other branch. Here the problem is with the executive agency asserting greater power. 

 

·         Dissent: Brennan, Marshall

 

§         Bowsher: Framers established three coequal branches of gov and intended to preserve each from encroachment (interference) by either of the others. 

§         The constitution did not grant congress the general authority to bypass the judiciary whenever it deems it advisable, any more than it granted congress the authority to arrogate to itself executive functions. 

 

§         Also: Because the individual and structural interests served by Art. III are coextensive, litigant may never waive his right to an Article III tribunal where one is constitutionally required. Reject the idea that you can separate the individual and structural interests. The fact that the person chose to waive that means that a harm has already been done. Consent is irrelevant to Article III analysis.