Court rules against horse owner’s constitutional challenge to USDA adjudication structure
A federal district court in North Carolina delivered an adverse ruling against Pacific Legal Foundation’s client Joe Manis, who challenged the constitutional structure of the U.S. Department of Agriculture’s (USDA) administrative adjudication process. While the court ruled that USDA’s in-house tribunals were constitutionally structured, the decision opens important avenues for appeal that could ultimately strengthen protections for Americans facing similar situations.
Joe Manis, a longtime member of the North Carolina Walking Horse Association, was accused by USDA of violating the Horse Protection Act (HPA) by allegedly allowing a sore horse he owns to be entered in a Virginia show. USDA brought the claim in its own internal adjudication system in which USDA-appointed administrative law judges (ALJ) decide the case and impose serious penalties. Manis denied the allegation and challenged the constitutional structure of USDA’s adjudication process itself. Not content to simply endure this unconstitutional process, he also sued USDA in federal court raising his constitutional challenges.
Despite being confronted with serious constitutional questions about USDA’s process, neither the USDA ALJ nor the district court would stay Manis’s USDA hearing while his federal case was considered. Instead, the ALJ skipped to the merits and imposed on Manis a $10 civil penalty and a one-year disqualification from the walking horse industry. Manis appealed this decision to USDA’s Judicial Officer, who stayed further consideration while the federal case continued.
Now the federal district court has weighed in on the side of USDA. But a district court ruling is just the first step in any legal challenge.
The constitutional claims
In today’s ruling, the district court upheld an adjudication scheme that, properly understood, violates the Constitution’s Appointments Clause. Final, binding adjudication decisions for the Executive Branch must be made by a principal officer—one nominated by the President and confirmed by the Senate. The Supreme Court established this rule in the 2021 decision, United States v. Arthrex, which struck down the Patent Office’s scheme to have inferior officers make final decisions in adjudications of patent validity.
But here, USDA’s final decision-maker—the Judicial Officer—was appointed by the Secretary of Agriculture. That appointment is consistent with the Judicial Officer being an inferior officer and therefore unable to make final decisions. Despite this, the district court concluded that the relevant statute and USDA regulations provided the principal officer Secretary of Agriculture with enough wiggle room to be able to review the Judicial Officer’s decisions. But that is inconsistent with Congress’s actual design.
The district court also rejected Manis’s claim that he is being denied his Seventh Amendment right to a jury trial. The court reached this conclusion despite the Supreme Court’s recent decision in SEC v. Jarkesy, which held that when the government seeks monetary penalties through common law-type claims, the Seventh Amendment requires a jury trial. Here, the court concluded that USDA’s claim against Manis was not sufficiently like a common law claim for the Seventh Amendment to apply. Instead, the court reasoned, USDA’s claim was of a type that may be assigned to administrative agencies. But after Jarkesy, there is a presumption that all claims for monetary penalties must be heard in an Article III court with a jury. And the exception to that is extremely narrow. So narrow, in fact, that USDA’s claim against Manis cannot fit into it notwithstanding the district court’s conclusion.
A silver lining
The good news is the district court correctly recognized its jurisdiction to hear Manis’s constitutional challenges under Axon Enterprise, Inc. v. FTC. This allows individuals to challenge agency structures in federal court—including whether the agency can adjudicate the claim at all—rather than being forced to endure potentially unconstitutional administrative processes first. In its opinion, the court explained that structural challenges would “come too late to be meaningful” if reviewed only after the administrative process concluded.
The path forward
PLF is exploring an appeal of this decision to vindicate constitutional principles that protect all Americans from administrative overreach. These issues extend far beyond USDA’s HPA enforcement to EPA enforcement, SEC investigations, and more. Indeed, the questions in Manis’s case potentially affect anyone facing federal agency action.
The Constitution’s separation of powers was designed to prevent concentrated administrative power like USDA’s from being wielded against individual Americans like Manis. While this ruling was disappointing, it represents just the first phase of our efforts to restore proper constitutional limits on USDA’s administrative power.
