Commodity Futures Trading Comm'n v. Schor

In Commodity Futures Trading Comm'n v. Schor (1986) 478 U.S. 833 (CFTC), the United States Supreme Court held that the structural principle which precludes the encroachment or aggrandizement of one branch of government at the expense of the other did not bar the de minimis intrusion on the judicial branch occurring there. The Supreme Court held that a grant of authority to the CFTC by Congress under the Commodity Exchange Act (7 U.S.C. 1 et seq.; CEA), allowing the CFTC to adjudicate counterclaims to complaints brought before the CFTC against professional commodity brokers by their customers for violations of the CEA or CFTC regulations, did not violate article III, section 1 of the United States Constitution (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"). (CFTC, supra, 478 U.S. at p. 847.) In the counterclaim at issue in CFTC, a commodity futures broker sought to recover the debit balance of a customer's account. The court concluded that the customer, who had elected to pursue his complaint against the broker for numerous violations of the CEA before the CFTC rather than in federal court, had waived his right to be heard in federal court on the broker's counterclaim. Because the parties had the option of proceeding in federal court, the court declared that "separation of powers concerns are diminished." (CFTC, supra, 478 U.S. at p. 855.) However, the court made clear that such "waiver" is not dispositive where the separation of powers limitations are involved. The court observed that "our precedents establish that Article III, 1, not only preserves to litigants their interest in an impartial and independent federal adjudication of claims within the judicial power of the United States, but also serves an 'an inseparable element of the constitutional system of checks and balances.' Article III, 1 safeguards the role of the Judicial Branch in our tripartite system by barring congressional attempts 'to transfer jurisdiction to non-Article III tribunals for the purpose of emasculating' constitutional courts, and thereby preventing 'the encroachment or aggrandizement of one branch at the expense of the other.' To the extent that this structural principle is implicated in a given case, the parties cannot by consent cure the constitutional difficulty for the same reason that the parties by consent cannot confer on federal courts subject-matter jurisdiction beyond the limitations imposed by Article III, 2. When these Article III limitations are at issue, notions of consent and waiver cannot be dispositive because the limitations serve institutional interests that the parties cannot be expected to protect." (CFTC, supra, 478 U.S. at pp. 850-851.) The court concluded that the separation of powers principles were not contravened, stating: "we are persuaded that the congressional authorization of limited CFTC jurisdiction over a narrow class of common law claims as an incident to the CFTC's primary, and unchallenged, adjudicative function does not create a substantial threat to the separation of powers" and that ". . . The magnitude of any intrusion on the Judicial Branch can only be termed de minimis." (CFTC, supra, 478 U.S. at pp. 854, 856.)