Seventh Circuit holds FDIC enforcement action doesn’t require jury, adding to muddled picture for agency in-house adjudication post-Jarkesy

On August 12, 2026, the U.S. Court of Appeals for the Seventh Circuit held in Bonan v. Federal Deposit Insurance Corporation that the FDIC’s in-house adjudication of an enforcement action did not violate the Seventh Amendment right to a jury trial. The Seventh Circuit thus became the latest to interpret Securities and Exchange Commission v. Jarkesy, in which the Supreme Court of the United States held that defendants in SEC enforcement actions seeking civil penalties for securities fraud are entitled to a jury trial. Together, these decisions show that much remains unsettled about the propriety of agency in-house adjudication—a point the Supreme Court appeared to acknowledge by recently granting certiorari in another similar case.

Background: The Jarkesy decision

In Jarkesy, the SEC prevailed in its in-house adjudication of claims seeking civil penalties and other remedies against the defendant and his investment advisory firm for alleged violations of the anti-fraud provisions of the Securities Act, the Securities Exchange Act, and the Investment Advisers Act. The defendant sought review, and the Supreme Court agreed to decide what it called a “straightforward” question: “whether the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties against him for securities fraud.” Applying a two-step inquiry, the Court answered “yes.”

At the first step, the SEC’s claims were “legal in nature,” and the Seventh Amendment therefore applied, because at common law the remedy of civil penalties could be enforced only in courts of law.

At the second step, the “public rights” exception—which allows Congress to assign a matter to an agency for adjudication without violating the Seventh Amendment—did not apply because the SEC’s claims concerned “private rights.” The Court explained that a case concerns “private rights” if it “is in the nature of an action at common law.” That was true in Jarkesy because a federal securities fraud action sufficiently resembles common law fraud.

The Seventh Circuit’s Bonan decision

Jarkesy left unanswered whether the Seventh Amendment applies to other claims brought by another agency—precisely the question presented in Bonan.

In Bonan, the FDIC brought an enforcement action against a banker under the Federal Deposit Insurance Act for (1) unsafe or unsound banking practices and (2) breach of fiduciary duties. The FDIC prevailed in its in-house adjudication and imposed sanctions that included a civil penalty. As in Jarkesy, the defendant sought review based on the Seventh Amendment.

Applying the two-step inquiry from Jarkesy, the Seventh Circuit resolved the first step easily, finding that the FDIC’s action implicated the Seventh Amendment because a civil penalty is “the prototypical common law remedy.”

At the second step, the court asked whether the FDIC’s statutory claims were analogous to suits at common law—and therefore concerned private rights, requiring a jury trial—but also added a new gloss concerning the time period to be examined. Reading Jarkesy to require comparison to the common law as it existed at the founding of the United States, rather than at some later time, the court found no founding-era cause of action that “target[ed] the same conduct or operate[d] under similar legal principles.” Each of the FDIC’s claims therefore concerned public rights, and the agency’s in-house adjudication did not violate the Seventh Amendment.

Notably, the Seventh Circuit called the defendant’s argument “a close and challenging call,” particularly as to the breach of fiduciary duties claim. The court read the relevant Supreme Court case law to support the conclusion that traditional actions in equity—such as claims for breach of fiduciary duty—concern private rights just as actions at law do. The Seventh Circuit declined to so hold, however, explaining that the Supreme Court had not gone that far in Jarkesy, and “[a]s a lower federal court, our role is to follow the Supreme Court’s precedent, not guess its future direction.”

The current and future landscape of agency in-house adjudication

Courts find themselves with much to resolve regarding the propriety of in-house adjudication of agency actions. That is a product of the narrowness of the Jarkesy ruling and the muddled picture it has created for other agencies, as Bonan and several earlier appellate court decisions demonstrate.

On one hand, at least four circuit courts have held, as Bonan did, that an agency’s in-house adjudication did not violate the Seventh Amendment right to a jury trial. See Sligo Creek Ctr. v. United States Dep’t of Health & Hum. Servs. (U.S. Court of Appeals for the Fourth Circuit); Verizon Commc’ns Inc. v. Fed. Commc’ns Comm’n (U.S. Court of Appeals for the Second Circuit); Sprint Corp. v. Fed. Commc’ns Comm’n (U.S. Court of Appeals for the D.C. Circuit); Axalta Coating Sys. LLC v. Fed. Aviation Admin. (U.S. Court of Appeals for the Third Circuit).

On the other hand, at least two circuit courts have held that an agency’s in-house adjudication was improper under the Seventh Amendment or Article III. (The Article III case turned on the same “public rights” vs. “private rights” inquiry as the Seventh Amendment cases.) See AT&T, Inc. v. Fed. Commc’ns Comm’n (U.S. Court of Appeals for the Fifth Circuit); Sun Valley Orchards, LLC v. U.S. Dep’t of Lab. (Third Circuit).

Perhaps owing to this uneven landscape, the Supreme Court has already decided one more case in this area since Jarkesy, and it recently agreed to hear another.

On June 4, 2026, the Court decided Federal Communications Commission v. AT&T, Inc., which addressed the circuit split between the Second Circuit (Verizon) and the Fifth Circuit (AT&T). Rather than decide whether the FCC’s claims required a jury trial in the first instance, however, the Court affirmed the Second Circuit’s holding that the particular statutory scheme’s provision for a possible back-end jury trial sufficed under the Seventh Amendment.

Shortly before that ruling, on April 27, 2026, the Court granted certiorari in Sun Valley Orchards. There, the Court will consider whether the agency action at issue requires adjudication in an Article III court, but its analysis of the “public rights” vs. “private rights” inquiry will bear on Seventh Amendment questions as well.

The decision in Sun Valley Orchards will be notable regardless of the outcome, but the scope of its impact will hinge on the Court’s reasoning. Another narrow ruling limited to specific claims brought by one specific agency—like the rulings in Jarkesy and AT&T—would leave lower courts with much still to determine.