Beyond the Orchard: The Third Circuit Extends Jarkesy’s Article III Limitations to Department of Labor H-2A Enforcement

Introduction

In Sun Valley Orchards LLC v. United States Department of Labor, No. 23-2608 (3d Cir. July 29, 2025), the Court of Appeals for the Third Circuit invoked the Supreme Court’s 2024 watershed decision, SEC v. Jarkesy, to hold that the U.S. Department of Labor (DOL) may not adjudicate civil penalties and back-pay claims against an H-2A agricultural employer in its own administrative forum. Instead, such disputes—framed by the court as contractual in nature and seeking traditional legal remedies—must be resolved by an Article III court with the attendant right to a jury trial.

The decision is the first published appellate opinion to apply Jarkesy outside the securities-fraud context, signaling a broad re-examination of agency in-house enforcement. It casts immediate doubt on a host of Labor Department, Occupational Safety and Health Administration (OSHA), and other agency proceedings that similarly impose penalties for putatively “private-right” violations.

Summary of the Judgment

The Third Circuit reversed the district court’s dismissal of Sun Valley’s Administrative Procedure Act complaint.
It held that DOL’s Wage and Hour Division violated Article III by adjudicating what is, in effect, a breach-of-contract dispute (the H-2A job order) and imposing $556,000 in penalties and back wages through an Administrative Law Judge (ALJ).
The court rejected DOL’s contention that the case fit within the “public-rights” or “immigration” exceptions permitting non-Article III adjudication.
Because the Article III defect was dispositive, the panel (Hardiman, Porter, Smith, JJ.) declined to reach Sun Valley’s alternative claims under Article II, the statutory authority question, and the Eighth Amendment.

Analysis

A. Precedents Cited and Their Influence

1. SEC v. Jarkesy, 603 U.S. 109 (2024)

Jarkesy held that the Securities and Exchange Commission’s in-house penalty proceedings for securities fraud infringed the defendant’s Seventh Amendment and Article III rights. The Supreme Court emphasized the historical “public-rights” doctrine and insisted on a “serious and unbroken” tradition of non-Article III adjudication before an agency could constitutionally resolve a dispute.

The Third Circuit imported Jarkesy’s tripartite inquiry—(1) whether the claim involves private rights, (2) whether a historical public-rights exception applies, and (3) whether the party waived Article III protection. Applying that framework, it concluded:

“Those same considerations require Article III adjudication here.” (Op. at 13.)

2. Nineteenth- and Early Twentieth-Century Immigration Cases

Murray’s Lessee v. Hoboken Land & Improvement (1855) – origin of the public-rights doctrine.
Nishimura Ekiu (1892); Fong Yue Ting (1893) – recognized plenary political-branch control over admission and exclusion of aliens.
Oceanic Steam Navigation Co. v. Stranahan (1909) – upheld administrative monetary penalties tied to landing inadmissible aliens.

DOL relied heavily on these cases, but the Third Circuit distinguished them because the H-2A labor-certification regulations, unlike exclusion cases, primarily protect domestic wages rather than govern physical entry or removal.

3. Other Structural Cases

Tull v. United States (1987) – civil penalties are legal remedies requiring a jury trial.
Wellness Int’l Network v. Sharif (2015) – parties can consent to non-Article III adjudication, but only with informed, voluntary consent.
Carr v. Saul (2021); Santos-Zacaria v. Garland (2023) – exhaustion principles and the government’s ability to forfeit them.

Collectively, these authorities shaped the court’s conclusions on remedies (legal vs. equitable), waiver, and exhaustion.

B. The Court’s Legal Reasoning

Private-Right Characterization
The court emphasized the contractual nature of an H-2A job order. Because DOL’s case sounded in breach of contract and sought common-law remedies (civil penalties and back wages designed to punish/deter), the controversy was “made of the stuff of traditional actions at common law tried by the courts at Westminster in 1789.” (Jarkesy standard.)
Rejection of the Immigration/Public-Rights Exception
Although the H-2A program touches immigration, the panel confined the historical exception to matters “closely related to the admission and exclusion of aliens.” Wage-and-hour promises to both domestic and foreign laborers, the court said, serve “local” employment policies, not sovereign border-control interests.
No Knowing, Voluntary Waiver
DOL’s procedural notice to Sun Valley effectively forced the farm into ALJ proceedings—negating any implied consent under Wellness. Moreover, DOL forfeited an exhaustion defense by not raising it below.

C. Impact on Future Cases

1. Immediate Consequences for DOL

Wage and Hour Division matters seeking civil money penalties or retroactive wages (H-2A, H-2B, MSPA, FLSA repeat-violator assessments) now face Article III challenges.
ALJ decisions currently on judicial review in district courts within the Third Circuit may be vulnerable to motions for vacatur.

2. Broader Administrative-Law Reverberations

The opinion adds agricultural-labor enforcement to the list of administrative schemes (SEC, FAA hazardous-materials, etc.) that are constitutionally suspect after Jarkesy.
It supplies a concrete analytical roadmap for other circuits weighing similar challenges, making a Supreme Court follow-up increasingly likely.
The distinction drawn between “immigration” writ large and “employment regulations that incidentally affect aliens” narrows agencies’ ability to rely on the immigration public-rights justification.

3. Practical Effects for Employers and Workers

Employers may insist on federal-court adjudication, slowing the pace of enforcement and increasing settlement leverage.
Workers owed back wages may experience longer delays, because their claims will proceed in district courts under Federal Rules of Civil Procedure and Evidence.
Agency Resource Allocation: DOL may seek congressional authorization to litigate in district court or to restructure the H-2A enforcement model.

Complex Concepts Simplified

Article III Courts: Federal courts whose judges enjoy life tenure and salary protection (e.g., U.S. District Courts). They decide traditional cases and controversies.
Administrative Law Judge (ALJ): An agency employee who presides over regulatory hearings; not an Article III judge.
Public-Rights Doctrine: A limited exception allowing agencies (or legislative courts) to resolve disputes that historically could be determined by the political branches alone—typically because they involve sovereign prerogatives (tax, customs, immigration exclusion).
H-2A Program: A visa scheme letting U.S. farms hire seasonal foreign laborers when there are too few domestic workers, subject to stringent wage and workplace conditions.
Job Order: The employer’s standardized description of wages, housing, meals, and transportation offered; serves as a de-facto contract with both foreign and domestic workers.
Three-Fourths Guarantee: A rule requiring H-2A employers to offer at least 75% of the hours promised in the job order.
Waiver v. Exhaustion: Waiver: relinquishing a right (e.g., trial by jury) knowingly & voluntarily. Exhaustion: the principle that a party must present an argument to the agency before raising it in court. The government can forfeit an exhaustion defense by not asserting it.

Conclusion

Sun Valley Orchards cements the momentum begun by Jarkesy: federal appellate courts are scrutinizing, with constitutional rigor, agency adjudications that look and feel like common-law lawsuits. By refusing to let the Department of Labor penalize an employer in-house for contractual breaches under the H-2A program, the Third Circuit:

Clarifies that the public-rights exception does not extend to every program tangentially connected to immigration;
Signals that traditional legal remedies—civil penalties and deterrent back pay—trigger Article III protections; and
Opens the door for broader constitutional challenges across the administrative state.

Going forward, regulated entities should reevaluate litigation strategies, agencies should reassess enforcement architectures, and Congress may need to revisit statutory authorizations if it wishes to preserve expeditious agency enforcement without judicial entanglement. The orchard in New Jersey may prove a fertile ground for reshaping the division of power between Article III courts and the modern administrative state.