Jarkesy Jumps to the FTC: When Must Agency Cases Go to Federal Court?

Two years after the Supreme Court decided SEC v. Jarkesy, the Fifth Circuit applied its logic to the FTC — holding that the agency's century-old power to adjudicate deceptive advertising claims in-house is unconstitutional when the underlying conduct resembles common law fraud.

On March 20, 2026, the Fifth Circuit decided Intuit v. FTC and vacated a cease and desist order against TurboTax's advertising. The court didn't rule on whether Intuit's ads were actually deceptive. It stopped at a more fundamental question: whether the FTC could adjudicate the case in-house at all. Applying SEC v. Jarkesy, the Fifth Circuit held that the FTC's internal adjudication of deceptive advertising claims violated the constitutional separation of powers. The claims were too close to common law fraud to be resolved outside an Article III court.

The decision is significant because of what it targets. The FTC isn't a recent expansion of agency power — it's one of the oldest independent agencies in the country, deliberately designed by Congress in 1914 to adjudicate cases in-house. Senate reports from that era explicitly called for an independent, bipartisan body with the prestige and permanence to decide cases impartially. In-house adjudicative authority wasn't an afterthought. It was the whole point of creating the FTC. Intuit v. FTC says that 110-year-old design is unconstitutional for deceptive advertising cases.

The ruling also extends Jarkesy in a critical way. Jarkesy involved civil penalties — money the SEC was seeking to take from the defendant. Intuit was about a cease and desist order, an equitable remedy. The Fifth Circuit held that the private rights analysis controls the forum question regardless of remedy. If the underlying claim shares a common core with a common law action, it has to go to an Article III court — even when the agency is only seeking an injunction. That closes a door agencies might otherwise have used to keep cases in-house and expands Jarkesy's reach to a much larger universe of enforcement actions.

Intuit isn't the only recent decision reshaping the 1914 FTC design. Three months later, the Supreme Court decided Trump v. Slaughter, an FTC case involving Rebecca Slaughter, the FTC commissioner Donald Trump fired in March 2025. The Court overruled Humphrey's Executor v. United States — the 1935 decision that had made the FTC's for-cause removal protection enforceable — and held that FTC commissioners must be removable at will by the president. Together, Intuit and Slaughter hit different parts of the same institutional design. The Senate reports from 1914 wanted "an independent, bipartisan body with the prestige and permanence to decide cases impartially." Intuit attacks the "decide cases" part: many of the cases the FTC was set up to decide can't be decided in-house anymore. Slaughter attacks the "independent, bipartisan body" part: the removal protection that made independence and bipartisanship enforceable is gone, and a president can now fire the minority-party commissioners the statute was supposed to guarantee. Both cases won for the plaintiff. Both were decided in the same term. Both rely on the Court's willingness to override long-standing precedent in service of a stricter separation-of-powers framework. What's left of the 1914 FTC is not what Congress designed. It is what the modern Court thinks Article III and Article II require Congress to have designed instead.

In this episode, we walk through the case in detail, explain the public rights versus private rights framework, examine how the court distinguished FTC enforcement from OSHA workplace safety rules, and trace what this means for federal agencies that rely on in-house adjudication to enforce consumer protection and similar laws.

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What We Cover

  • The facts of Intuit v. FTC: how TurboTax's "free" advertising led to an FTC enforcement action and a 20-year cease and desist order covering every Intuit product
  • Why the FTC tried federal court first, lost, and then brought the same claims before its own ALJ — and how that forum-shopping set up the constitutional challenge
  • The public rights versus private rights framework from SEC v. Jarkesy and how the Fifth Circuit applied it to deceptive advertising
  • Why the court held that Section 5 deceptive advertising claims share a common core with common law fraud, even though Congress lowered the evidentiary requirements
  • The Atlas Roofing distinction: why OSHA can still adjudicate workplace safety cases in-house while the FTC can't adjudicate deceptive advertising
  • The crucial extension beyond Jarkesy: why the private rights analysis applies even when the agency seeks equitable relief like a cease and desist order, not just civil penalties
  • The FTC's strongest argument — that Congress deliberately designed the agency in 1914 to adjudicate in-house — and why the court rejected it anyway
  • What this ruling means for other agencies that rely on in-house adjudication for enforcement actions that resemble common law claims

  • Why the court held that Section 5 deceptive advertising claims share a common core with common law fraud, even though Congress lowered the evidentiary requirements
  • The Atlas Roofing distinction: why OSHA can still adjudicate workplace safety cases in-house while the FTC can't adjudicate deceptive advertising
  • The crucial extension beyond Jarkesy: why the private rights analysis applies even when the agency seeks equitable relief like a cease and desist order, not just civil penalties
  • The FTC's strongest argument — that Congress deliberately designed the agency in 1914 to adjudicate in-house — and why the court rejected it anyway
  • What this ruling means for other agencies that rely on in-house adjudication for enforcement actions that resemble common law claims

    Full Rough Transcript

    The Framework: In-House vs. Federal Court

    Gwen: Marc, last time we talked about Jarkesy, the SEC case where the Supreme Court said that securities fraud claims have to go to federal court with a jury because they’re too close to common law fraud for agency adjudication.

    Marc: Yeah, the private rights problem. If the underlying claim looks like something courts handled at common law, the agency can’t adjudicate it in-house.

    Gwen: Yes. So we’ve seen it applied. And it’s actually the perfect case to be talking about the day before tax day. On March 20th, the Fifth Circuit decided Intuit v. FTC and vacated a cease-and-desist order against TurboTax’s advertising. The court held that the FTC’s in-house adjudication of deceptive advertising claims was unconstitutional under Jarkesy.

    Marc: So Jarkesy jumped from the SEC now to the FTC.

    Gwen: Yes, in less than two years. And not just any agency—to the FTC. The agency we spent an entire episode on in Season 1 talking about how Congress deliberately designed it to adjudicate cases in-house. We talked about the Senate reports from 1914, the bipartisan structure, the whole architecture of independent enforcement. A federal court just said that 110-year-old design is unconstitutional for deceptive advertising cases.

    Marc: So that doesn’t sound like a crack in the foundation. That sounds like tearing down an entire load-bearing wall.

    Gwen: It really is. But before we get into the case, we should do a quick framework for anyone who’s new or missed the last episode. So when the government wants to enforce a law—like punish a company for deceptive advertising—there are two places it can do it. One is regular federal court, with an independent judge, potentially a jury, formal rules of evidence. These are called Article III courts, after the part of the Constitution that creates the federal judiciary. The other option is in-house. The agency brings the case before its own administrative law judge, an ALJ, who works for the agency.

    Marc: And the constitutional question, then, is which cases can go in-house and which ones have to go to a real courthouse?

    Gwen: Exactly. So the Supreme Court drew the line using two categories. Public rights are obligations the government creates from scratch—things like workplace safety standards at specific levels, or tax obligations, or licensing requirements. Those didn’t exist at common law. That’s the body of judge-made law that developed over centuries in English and American courts. Congress invented those obligations, and Congress can assign them to agencies to enforce in-house. Private rights are claims that look like the kind of disputes courts have always handled—fraud, property disputes, breach of contract. These have to go to Article III courts. That’s the framework. The question is always: which category does this case fall into?

    What Happened: Intuit, TurboTax, and Forum Shopping

    Gwen: The facts here are pretty straightforward. Intuit sells TurboTax, and they advertise their product as free, but it wasn’t actually free for most people. The free version only worked for taxpayers with super simple returns. If you had student loan interest, or freelance income, or you were itemizing deductions, you’d get partway through your taxes and find out, actually, you would need to pay.

    Marc: Yeah, I think a lot of people have experienced that exact bait-and-switch.

    Gwen: Yes, the FTC agreed with you. So they initially went to federal court in 2022 trying to get a preliminary injunction. The court denied it. And here’s where things start to get interesting. After losing in federal court, the FTC dropped the federal case and brought the exact same claims in-house, before its own ALJ.

    Marc: Okay. They forum-shopped then. So they lost in federal court, and then they moved it into their own tribunal.

    Gwen: Yes. And this is exactly the dynamic we were talking about in the last episode—the agency choosing between two forums and potentially picking one where it’s more likely to win.

    Marc: Okay, I assume the second time around then they did better.

    Gwen: They did indeed. So in-house, the ALJ found that Intuit’s ads were likely to mislead a significant minority of consumers. The full Commission affirmed and issued a cease-and-desist order that was remarkably broad. It prohibited Intuit from advertising any goods or services as free for the next twenty years unless it met specific requirements. Not just TurboTax—everything Intuit sells.

    Marc: A 20-year order covering all products based on one advertising claim.

    Gwen: Yeah. So Intuit petitioned the Fifth Circuit for review, and the court never got to whether the advertising was actually deceptive. It stopped at the threshold—that the FTC had used the wrong forum to decide the case.

    Applying Jarkesy: The Private Rights Analysis

    Gwen: Here the court was applying the same private rights analysis that the Supreme Court used in Jarkesy. The question is whether the FTC’s deceptive advertising claim shares enough of a common core with traditional common law actions that it had to be adjudicated in an Article III court. Here’s the holding.

    Marc:“Following the Supreme Court’s decision in SEC v. Jarkesy, we hold that adjudication of a deceptive advertising claim before an administrative law judge violated the constitutional separation of powers.”

    Gwen: So we’re going to walk through the analysis. The first question was whether the claim targets the same basic conduct as a common law cause of action. The court found that deceptive advertising under Section 5 targets the same conduct as common law fraud and deceit—a material, false representation that was likely to mislead.

    Marc: Okay, but hold on. What the FTC was enforcing goes well beyond common law fraud. At common law, fraud required proof of an intent to deceive. It required proof that the victim actually relied on the misrepresentation, and it required proof of damages. Section 5 requires none of those things. The FTC just has to show the practice is likely to mislead. If Congress deliberately lowered the bar that far, isn’t that creating something new?

    Gwen: So it is definitely a valid argument. It was the argument the FTC made. But the court’s answer was that those were just modifications to the elements of fraud. They weren’t a transformation of the claim itself. Lowering the burden of proof or removing a reliance element didn’t change the fundamental nature of what was being alleged—you lied to people to try and get their money. The court said that modifying the common law cause of action or expanding the remedies available wasn’t enough for Congress to relegate claims of common law pedigree to adjudication by these non-Article III judges.

    Marc: So then the court is saying, look at the core of the claim, not the technical modifications Congress made around the edges.

    Gwen: Right. And the FTC’s own complaint made the common law connection fairly straightforward. The court pointed out that the complaint used classic terms of art associated with fraud—so there were references to Intuit’s “deceptive business practices,” their “false claims,” and “broad, enduring, and willful deceptive ad campaign.” The agency was describing fraud. It just didn’t want the constitutional consequences of calling it fraud.

    Marc: Okay, but what about the Atlas Roofing distinction? OSHA can still adjudicate in-house.

    Gwen: Yes. And the court drew that line explicitly. Here’s what it said.

    Marc:“A blanket prohibition on ‘unfair or deceptive acts or practices’ does not remotely resemble a detailed building code, like the workplace safety standards promulgated under the Occupational Safety and Health Act.”

    Gwen: So that’s the key distinction. They said that OSHA created specific, novel regulatory requirements—workplace safety standards at particular levels that just didn’t exist at common law. The duty not to deceive people when selling them things? That’s been actionable since before the Constitution was written. The FTC Act didn’t create a new obligation. It gave a government agency authority to enforce an old one.

    The Extension Beyond Jarkesy: Equitable Remedies

    Marc: Okay, but here’s what I want to understand. Jarkesy was about civil penalties—money the SEC was trying to take from Jarkesy as a punishment. The FTC wasn’t seeking civil penalties here. It was seeking a cease-and-desist order—a stop-doing-this. That’s an equitable remedy, not a legal one. How does the Seventh Amendment jury trial right apply to an equitable remedy?

    Gwen: So that’s the important extension they’re doing here. Here is what the court said about this in a footnote.

    Marc:“Most cases concerning the private/public rights distinction involve claims that might have traditionally sounded at common law rather than at equity. Because Article III expressly confers exclusive jurisdiction on federal courts over cases that sound in law and equity, any distinction would only become relevant if Intuit claimed a right to a jury trial under the Seventh Amendment.”

    Gwen: So the court was saying Article III here isn’t just about law—it’s about law and equity. So the private rights analysis doesn’t stop at the remedy, it’s going to follow the claim. Even though a cease-and-desist order looks like an injunction, the underlying claim is still a private right if it shares a common core with common law fraud.

    Marc: So the court is saying Jarkesy’s logic isn’t limited to cases where the agency seeks money damages.

    Gwen: Right. If the claim itself involves private rights, the forum has to be an Article III court. It doesn’t matter whether the remedy that the agency is seeking is legal or equitable. And that’s a significant expansion. Under Jarkesy alone, an agency might have argued, “We’re not seeking civil penalties. We just want an injunction, so the Seventh Amendment doesn’t apply.” The Fifth Circuit closed that door.

    Marc: Which means the private rights analysis controls the forum question independent of the remedy.

    Gwen: Yes. And the implications here are significant. A lot of agency enforcement actions are seeking equitable relief—cease-and-desist orders, injunctions, compliance requirements. If the underlying claims share a common core with a common law action, the agency may not be able to adjudicate it in-house, even when it’s only seeking equitable relief. That is a much bigger universe of cases than when Jarkesy alone was decided.

    110 Years of Practice

    Gwen: So we’re going to spend a little bit of time on the FTC’s strongest argument, because it connects directly to what we covered in Season 1. The FTC argued that Congress authorized in-house adjudication for this agency in 1914. It was more than 110 years ago. This isn’t some recent expansion of power. It’s the original design.

    Marc: And we read the legislative history last season. The Senate reports were explicit. Congress wanted an independent, bipartisan body with the prestige and permanence to adjudicate impartially. In-house adjudicative authority wasn’t an afterthought. It was the whole point of creating the FTC.

    Gwen: Yeah. They were deliberately constructing an agency that could investigate and decide cases independently of political pressure. The in-house enforcement model wasn’t a modern overreach. It was the founding architecture of one of the oldest independent agencies in the country.

    Marc: Okay, so what did the court say to that?

    Gwen: Well, they just quoted Jarkesy here.

    Marc: “It is ‘unclear how practice could transmute a private right into a public one,’ and ‘practical considerations alone cannot justify extending the scope of the public rights exception.’”

    Gwen: So just because the FTC has been doing this for 110 years doesn’t make it constitutional. The length of the practice doesn’t change the nature of the right.

    Marc: That’s a remarkable position. The court is saying Congress got the constitutional analysis wrong in 1914, and every Congress since then that left the system in place also got it wrong. And every court that upheld FTC adjudication over the last century was working from the wrong framework, right?

    Gwen: So the Fifth Circuit did talk about these prior decisions. It said earlier circuit court opinions upholding this didn’t analyze the issue through the public rights/private rights framework, and Jarkesy is only now bringing that to everyone’s attention.

    Marc: File this under the “How to Win Friends and Influence People” argument of the Fifth Circuit. Jarkesy decides to undermine an entire century of precedent.

    Gwen: Yes. And the court also pointed out something that’s pretty significant. The FTC already had the authority to go to federal court. Since the 1970s, they’d been able to seek preliminary and permanent injunctions in federal court. So this isn’t a case where they’re taking away the only possible option and leaving the agency with no enforcement mechanism. They can still pursue deceptive advertising. They just have to do it in a real courthouse.

    Marc: But that’s a fundamentally different kind of enforcement.

    Gwen: It is. And that’s why this matters beyond the legal doctrine.

    What This Doesn’t Reach: Unfairness vs. Deception

    Marc: Okay, so then what’s left? Can the FTC adjudicate anything in-house?

    Gwen: So the court was careful to confine its holding to deceptive advertising claims under Section 5. It didn’t explicitly address whether other types of Section 5 enforcement would face the same problem.

    Marc: Okay. What’s the key distinction here, then?

    Gwen: So Section 5 prohibits both “deceptive” and “unfair” acts or practices. Deception maps onto fraud—that’s what the court found. But unfairness is defined as practices causing substantial, unavoidable consumer injury not outweighed by benefits. And that’s arguably a modern regulatory construct without a direct common law ancestor.

    Marc: Okay. Can you give me a concrete example of this?

    Gwen: Yeah, it would certainly seem necessary after that kind of definition. So let’s talk about data security. The FTC has brought enforcement actions against companies for failing to protect customer data—saying that there was inadequate encryption, or poor password policies, or sloppy data handling. So when the FTC brings these cases as unfairness cases—the company’s practices caused substantial injury to consumers—there’s still an argument that this is a genuinely modern regulatory obligation that doesn’t have any corresponding common law analogy. There was no common law duty to encrypt customer databases in 1791.

    Marc: Okay, but what if the FTC frames it as a deception? The company told customers in its privacy policy that it would protect their data, and then it didn’t.

    Gwen: Now it starts to look like fraud again. You made a representation. It was false. Consumers relied on it. Same conduct, different legal theory, and potentially different constitutional answer. After Intuit, expect the FTC to think very carefully about how it’s framing each case. Unfairness claims may survive in-house adjudication, and deception claims probably won’t.

    Marc: So the framing of the complaint becomes the constitutional question.

    Gwen: Yes. And outside the Fifth Circuit, this is still open. This ruling is only binding in Texas, Louisiana, and Mississippi. But because it’s grounded in Supreme Court precedent, it’s going to be persuasive everywhere. Any respondent in an FTC administrative proceeding anywhere in the country now has a roadmap for challenging any in-house adjudication of deception claims, and this will likely alter the strategy that the agency adopts through the whole country.

    You Might Not Realize This Is Administrative Law

    Gwen: Here’s what most people won’t realize about this decision: it may actually make it harder for the government to protect you from deceptive advertising.

    Marc: And that can seem quite backward. I mean, since we’ve been talking about constitutional rights.

    Gwen: Yes. So we’ve been talking about rights, and the rights are real—like the right to an Article III judge and the structural protections of an independent court. And those matter. But think about what’s happening on the ground. The FTC’s in-house adjudication system was designed to be faster and cheaper than federal court. An administrative proceeding could be initiated, heard, and decided in a fraction of the time and a fraction of the cost of a federal lawsuit. So that speed meant that the FTC could pursue more cases, including cases against smaller companies engaged in clearly deceptive practices.

    Marc: And in federal court?

    Gwen: So federal litigation is expensive. We have full discovery. We have jury trials. We can have proceedings that go on for years. The FTC has a limited enforcement budget. Every case that has to go to federal court costs more and takes longer, and that means fewer total enforcement actions. Some cases that were worth pursuing in-house won’t be worth the cost and uncertainty of federal litigation.

    Marc: So the company that ran the deceptive ad campaign—

    Gwen: —still ran it. It still deceived people. But the government’s ability to hold them accountable just got slower, more expensive, and less certain. The constitutional protection runs in favor of the company being investigated, not the consumers who were misled.

    Marc: That is a real trade-off.

    Gwen: It is. And it’s the same trade-off that runs through everything we’ve been covering. More process for the regulated party also means less efficient enforcement. People who hear “federal agency loses enforcement power” and cheer about that might feel differently when it’s their misleading product experience that the FTC decides isn’t worth the cost of investigating.

    The Pattern: Agencies Under Pressure

    Marc: So let’s step back and take a look at the pattern, because this connects to a lot of what we’ve covered across both seasons.

    Gwen: All right, let’s do it.

    Marc: Okay. So in Season 1, we talked about the court limiting what agencies can do substantively—the Major Questions Doctrine, Loper Bright killing Chevron, Corner Post opening old regulations to challenge. Now in Season 2, we’re seeing limits on how agencies adjudicate. Jarkesy said the SEC can’t try fraud cases in-house. Intuit says the FTC can’t try deceptive advertising in-house. The removal power cases are challenging whether agency heads can be independent from the President. It all seems to be converging.

    Gwen: It is. What’s connecting all of this is the court’s major skepticism about agency power, and it’s operating across multiple constitutional provisions simultaneously. Article I—that Congress can’t delegate too broadly. Article II—that the President must control the people executing the laws. Article III—that agencies can’t adjudicate claims that belong in court. And the Seventh Amendment—you have a right to a jury trial for certain claims. Each doctrine is doing its own work, but the cumulative effect is a substantial rebalancing of power away from agencies and toward other branches.

    Marc: And the Sotomayor dissent in Jarkesy warned about exactly this.

    Gwen: Yes. She said the majority’s reasoning imperils a vast swath of the administrative state. Less than two years later, the FTC’s main enforcement model—a model that has existed since 1914, and that Congress deliberately designed with in-house adjudication—is being dismantled in the Fifth Circuit. It’s happening, and it’s happening fast.

    The Next Domino

    Marc: So Jarkesy isn’t just an SEC case anymore.

    Gwen: It was never just an SEC case. The logic was always going to be a lot bigger than that. The question was how quickly it would spread and how far it would reach. And now we know—it’s been less than two years, and it’s already reshaping how one of the oldest independent agencies in the country can enforce the law.

    Marc: And the next domino?

    Gwen: It could be any agency whose enforcement authority traces back to common law wrongs. The CFPB’s consumer protection enforcement overlaps significantly with fraud. The FDA’s misbranding cases also look a lot like deceptive labeling at common law. Every agency with enforcement power is going to have to ask: does our claim share a common law core with something courts used to handle? And if the answer is yes, Intuit says you may need to take it to federal court.

    Marc: We’ll be watching this as it develops.

    Gwen: We interrupted the regular season because we didn’t really feel like this could wait. This decision is a couple of weeks old, and the implications are still unfolding. But we will be back next episode with our regular Season 2 arc on adjudication.

    Tax Day Bonus

    Marc: Okay, that’s it for the main substantive part of Administrative Remedies today. But Savage, I got another question for you.

    Gwen: Yeah.

    Marc: Okay. So tax day is tomorrow, April 15th.

    Gwen: Yes.

    Marc: Do you know when the last time the IRS deadline was on April 15th to pay your taxes?

    Gwen: Uh, last year?

    Marc: No, last year the deadline was on April 18th. The last time the deadline was April 15th was actually 2021. Because every year since then, April 15th has either been on a Friday, a Saturday, or a Monday, in which the IRS, typically by practice, extends the deadline by a day.

    Gwen: All right. Yeah, interesting to know.

    Marc: Okay. I don’t know why I know this.

    Gwen: I don’t know why you know this either. Off the top of my head.

    Marc: All right. Well, if you have any questions or topics you’d like us to cover, reach out to us at the University of Tulsa College of Law. And remember—you can’t fix what you don’t understand. See you next time.

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