BLW513 – The Legal Process and Administrative Law

Introduction

As established by the framers of the U.S. Constitution in 1787, the judicial branch of government involves the administration of justice at every level, from the Supreme Court to the local magistrate. Central to any level of court is the 14th Amendment’s admonition that “No state shall …deprive any person of life, liberty or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

Constitutional Basis for the Court System

Article III, Section I of the U.S. Constitution gives Congress the power to create “one supreme Court, and …such inferior Courts” as Congress deems necessary. Because the United States has a federal system of government, it has two different kinds of court systems. Each state has its own courts, enforcing that state’s law, and in addition the federal government has courts throughout the country, enforcing federal law. State court systems tend to be organized as needed by the state, while the federal courts operate the same way throughout the nation.

Congress has created the U.S. Supreme Court, twelve Courts of Appeal, two specialized courts, and numerous District Courts located throughout the U.S. Federal courts also have the authority to review decisions from some administrative agencies. In addition to Article III courts, Congress has the power to create legislative courts under Article I.

State Courts

State courts are patterned after the federal hierarchy, but are free to construct the state court system as they choose in order to accommodate their needs. Courts of general jurisdiction have the power to review decisions of the courts of limited jurisdiction and of original jurisdiction over claims arising under state law. State courts may also have courts of general jurisdiction that are used to handle special areas of the law such as domestic relations courts, family courts, probate courts, or surrogate courts. Courts of limited jurisdiction are those courts that fall within some specialized trial court. Specialized courts might include a Court of Claims to hear suits against the state government, a Probate Court to adjudicate questions involving wills and inheritances, a Family Court to settle matters of support and child custody, a Juvenile Court to determine whether minors have committed crimes or are otherwise in need of special supervision, a Small Claims Court to decide (perhaps without lawyers) disputes where the value at stake is not large, a Magistrate’s Court to try some misdemeanors and other offenses, and a Housing Court to resolve litigation between landlords and tenants.

About two-thirds of the states have intermediate courts of appeal which sit between the court of general jurisdiction and the final appellate court.

Next, we will examine administrative law created by government agencies. You will learn why and how such agencies are created, what they do, how what they do relates to law and the legal environment of business and why this is such a critical aspect of law of which any business must be thoroughly aware.

Administrative law is the area of law that addresses federal and state government agencies and their role in carrying out their delegated authority.

Agencies are created by the government to conduct business on its behalf. Agencies are generally created by way of enabling statutes. These statutes set forth the purpose of the agency, the authority by which the agency is created, the powers of the agency, the overall structure of the agency, how it will be governed and what powers it is granted to carry out its mission including whether it has quasi legislative and/or judicial power and whether its decisions can be appealed to a court of law.

Creating Administrative Agencies

As mentioned in regard to sources of law in the introductory chapter, enabling statutes are laws passed by Congress (or state legislatures) delegating some of the legislature’s authority to an entity created by the statute. That entity is called an administrative agency. The president can also create executive agencies by executive order, e.g., the Environmental Protection Agency, the CIA and the FBI. The administrative agency does not stand alone and has no authority other than that which Congress delegates to it. The agency is only operating under a delegation of authority and, as such, is responsible to its delegator for its actions. Congress oversees the delegation of authority by monitoring the agency and making sure it is acting within its delegated authority. The administrative agency does not exist apart from Congress and is only in existence to carry out Congress’ wishes.

Delegating Administrative Powers

The powers that an agency is given in the enabling statute depends on what the agency is created to do. Sometimes an agency does not need a good deal of authority because it is created merely for overseeing, monitoring or providing education or investigation in a given area.
Other times an agency may need more extensive powers to carry out its mission.

Quasi-Legislative Authority

Under Article III of the Constitution the primary role of Congress is to enact laws. This power to enact laws rests solely with Congress and may not be delegated to another body. If Congress grants an agency the authority to issue regulations, the agency is said to have quasii-legislative authority. The fact that the rule or regulation is promulgated under quasi-legislative power does not make the regulation any less effective as a dictate that must be followed much like law.

Quasi-Judicial Authority

An agency may also be granted quasi-judicial authority in its enabling statute and have the power to hear and decide disputes involving agency regulations. These agency decisions also become quasi-judicial law binding on the agency in its future decisions. Many businesses address this issue by belonging to trade organizations comprised of those in the same business or industry. The trade organization generally monitors relevant agencies for actions impacting the organization’s members and notifies them when issues arise. Unions may also serve a similar function for its members, notifying them and rallying them around issues important to the union’s members.

Judicial Review

In most cases, enabling statutes that grant an agency the authority to hear and decide agency disputes will also provide a provision for judicial review of those decisions. That is, the law will grant the agency authority to have courts hear and decide cases arising from agency decisions once the litigant exhausts administrative remedies as set forth under the agency’s regulations.

Exhaustion means the claimant has done all he or she can do within the agency’s regulatory structure and is still not satisfied with the outcome and wishes to take the matter to a court of law. Some enabling statutes permit courts to have only limited review of administrative decisions upon judicial review. That is, the administrative agency’s final decision may only be reviewed at the appellate level by a court of appeals. If the administrative agency’s decision is none of these, then the agency’s decision stands.

Enforcement of Administrative Agency Orders

If an administrative agency issues a final order in an adjudication, the order will have full force and effect only if the order is enforced by a court of law. Remember that the Constitution rests authority in the courts and an agency performing quasi-judicial functions does not constitutionally have the final say to enforce its order since it is not a court of law. The effect of this move is to take the issue out of the purview of the agency, with its limited authority, and give it the full force and effect of law as issued by a more comprehensive court of law.

Administrative Regulations and Business

Since many state, federal and local regulations involve business matters, it is extremely important for those in business to know how administrative agencies work and how to provide input into the agencies’ regulatory processes. Administrative agencies routinely promulgate rules and regulations affecting business. Under the APA, these regulations generally must undergo a period of seeking input from those likely to be affected the regulation.

Business owners participating in the administrative process in whatever way is permitted by the administrative agency is very important. An agency may propose rules that would virtually wipe out an individual’s business. Being able to provide input to the agency about the impact the proposed regulation would have on the business is an important aspect of protecting the business.

With administrative rules and regulations it is the administrative agency that determines the final regulation. The agency personnel are not elected officials and thus are not so accountable to the public in the same way elected officials are. It can seem overwhelming for a business owner, especially a small business owner, to keep up with new rules and regulations that so many administrative agencies promulgate.

Lesson Learning Objectives

By the conclusion of this Lesson you should be able:

  • Explain the constitutional basis of the U.S. court systems.
  • Discuss the role of the courts and how they are organized.
  • Describe the process by which a court gains jurisdiction over people and matters.
  • Discuss the process for bringing a civil case through the court system.
  • Describe the remedies available to grant relief to aggrieved parties.
  • Explain administrative law is and its role in business.
  • Explain the powers of administrative agencies and how they are created.
  • Demonstrate the constitutional limitations of administrative law.

Reading

  • Study Chapters 3 and 4 of the text.

Assignments

The following Assignments should be completed and submitted to the course faculty via the learning platform for evaluation and grading. Submit your responses to these questions in one WORD document. List the question first, and then your response.
Be sure to properly site your sources, both in-text and with a reference list at the conclusion. If you use an online source to support your answers, you must provide a properly formatted link to the source. You should use APA citation format and make sure your sources are credible. In most cases, your responses should be no more than 100 words.

Short Answer Questions

  1. What is the major difference between original jurisdiction and appellate jurisdiction?
  2. Explain the functions performed by the state supreme courts.
  3. Describe the role of the federal courts.
  4. According to federal jurisdiction, what are the various criteria that must be fulfilled by a case so that it can be heard in a court?
  5. Discuss the use of precedent by the courts.
  6. What is a preemptory strike?
  7. Describe briefly, compensatory damages, punitive damages, and nominal damages.
  8. Define administrative law. Why is the knowledge of administrative law important?
  9. What is an executive agency? Give an example of an executive agency. What is the difference between an administrative agency and an executive agency?
  10. Who grants authority to administrative agencies? Describe the powers of administrative agencies.

Professional Development Questions

  1. Dawn takes her great-great-grandmother’s sewing machine, which has been in her family for over 100 years, to Charlie’s Sew ‘n Vac Repair for servicing. When Dawn returns to pick up the sewing machine, she is told that it has been sold. Charlie offers to pay Dawn the price of a similar machine. She refuses the offer. Explain Dawn’s alternatives for relief.
  2. Ethan is representing a client on a securities matter at an arbitration hearing before the Securities and Exchange Commission. The other side, a brokerage firm, is being represented by a law firm. Ethan discovers that the arbitrator used to be a member of the law firm, so Ethan requests that the arbitrator withdraw from the case. The arbitrator refuses because he says he no longer works for the firm and can be totally objective, so there is no conflict of interests. The brokerage firm sides with the arbitrator. Discuss the ethical implications and decide.

Lesson 2 Quiz

Use the quiz to test your knowledge of the concepts covered in this lesson. You may take the quiz as many times as you wish. The results are not calculated into your grade.