The U.S. Supreme Court has ruled unanimously against two federal regulatory agencies in two cases that could make it easier for companies and individuals to proceed directly to federal district court when challenging charges, Bloomberg reported.

The cases, Axon v. Federal Trade Commission and Securities and Exchange Commission v. Cochran, concerned the constitutionality of administrative law judges (ALJs). Both plaintiffs maintained that the use of these ALJs is unconstitutional, as they are beyond reach of executive branch control, which violates the separation of powers doctrine.

Axon is fighting the FTC’s efforts to block its acquisition of what the company called an “essentially insolvent competitor.” Cochran is an accountant who was accused by the SEC of engaging in improper professional conduct. As Justice Elena Kagan noted in her majority opinion, "In each of these two cases, the respondent in an administrative enforcement action challenges the constitutional authority of the agency to proceed."

The government argued that that Cochran and Axon must first go through their respective commission proceedings and challenge the final decisions in federal appeals court. 

Kagan disagreed, writing that "the review schemes set out in the Exchange Act and the FTC Act do not displace district court jurisdiction over Axon’s and Cochran’s far-reaching constitutional claims" and that "Cochran and Axon will lose their rights not to undergo the complained-of agency proceedings if they cannot assert those rights until the proceedings are over."  Her opinion did not address the plaintiffs' underlying arguments—just their right to bring them in district court and bypass proceedings before administrative law judges.

Justice Kagan cited Thunder Basin Coal Co. v. Reich, 510 U. S. 200, 212 (1994)) for the premise "that a statutory review scheme precluding district court jurisdiction—like the FTC Act’s—might not extend to every “type of claim[]." She noted that the Supreme Court in Thunder Basin "identified three considerations designed to aid in that inquiry, commonly known now as the Thunder Basin factors. First, could precluding district court jurisdiction 'foreclose all meaningful judicial review' of the claim? ... Next, is the claim 'wholly collateral to [the] statute’s review provisions'? ... And last, is the claim 'outside the agency’s expertise'? When the answer to all three questions is yes, 'we presume that Congress does not intend to limit jurisdiction.'" She concluded that "[e]ach of the three Thunder Basin factors signals that a district court has jurisdiction to adjudicate Axon’s and Cochran’s ... sweeping constitutional claims."

The FTC declined to comment to Bloomberg on the ruling, and an SEC spokesperson said that the commission is reviewing the opinion, Bloomberg reported.

"We are thrilled that the Supreme Court has unanimously vindicated Michelle Cochran's right to have her day in court to challenge the constitutionality of the administrative apparatus she has fought for nearly a decade against the SEC," her lawyer, Gregory Garre of Latham & Watkins, told Bloomberg.