The Future of Fines under the Clery Act Post SEC v. Jarkesy

This spring, the U.S. Department of Education imposed a staggering $14 million fine against Liberty University, a private university in Lynchburg, Virginia. The Department of Education fined Liberty for violating the federal Clery Act which requires colleges and universities to publish school-related crime statistics and to put in place sexual violence prevention and response programs.

Liberty’s $14 million fine dwarfed all prior Clery Act penalties, including 2019 Department of Education fines against Michigan State University for $4.5 million and, separately, against the University of California at Berkeley, for $2.35 million.

Who Gets to Impose Clery Act Fines?

Under the Clery Act, Congress gave the Department of Education the authority to impose civil penalties against institutions of higher education who have “substantially misrepresented the number, location, or nature of the crimes required to be reported.”[1] It authorizes a fine of $69,733 for each violation[2].

Jarkesy Calls Into Question Civil Penalties in Federal Administrative Proceedings

Mere months after Liberty’s $14 million fine, in June of this year the Supreme Court of the United States handed down its decision in Securities and Exchange Commission (SEC) v. Jarkesy.  Jarkesy seismically shifted the legal landscape for civil penalties.[3]

In Jarkesy, Chief Justice John Roberts, writing for a 6-3 majority, reasoned that the U.S. Constitutional right to a jury trial guaranteed by the Seventh Amendment applies to fines imposed by the SEC against a private individual. That’s because the fine targeted the same conduct as a common law fraud claim.[4] And if, according to the Court, the claim derives from the common law, then the Seventh Amendment guarantees litigants the right to a jury trial.

Importantly, Jarkesy does acknowledge a limited exception to the guarantee of a jury trial under the Seventh Amendment—the “public rights exception.” This exception applies to matters which ‘historically could have been determined exclusively by [the executive and legislative] branches.’ But, the Court concluded, the penalty imposed by the SEC on Mr. Jarkesy, a private individual, more closely aligned with common law claims exclusively in the jurisdictional purview of Article III courts.[5]

In other words, before Mr. Jarkesy could be obligated to pay a civil penalty, he was entitled, first, to a jury trial to decide whether he was liable in the first place. The SEC had no right to require Mr. Jarkesy’s participation in a process that afforded no jury trial and to then impose a fine against him. Moreover, Congress could not usurp the jurisdiction of Article III courts to adjudicate claims or controversies involving ‘a matter[] of private rather than public right.’[6] That is to say, Congress can’t cut off peoples’ Seventh Amendment jury trial rights simply by providing an administrative process at the SEC. 

What Does Jarkesy Mean for Clery Act and Other Claims in Higher Ed?

The Supreme Court has not yet decided whether Jarkesy applies to Clery Act-based civil penalties. That said, Jarkesy logically implies that, at least in the case of private universities, such as Liberty, the Seventh Amendment guarantees a right to a jury trial.

Like the SEC civil penalty imposed in Jarkesy, Clery Act fines against private institutions of higher education are punitive and, obviously, involve private entities. And, also like Jarkesy, such penalties stem from false representations,[7] capturing the essence of a common law fraud claim, at least in Virginia.[8]

By contrast, in the case of public institutions (such as Michigan State and U.C. Berkeley), the “public rights exception” to a jury trial may be more likely to apply. This is because these institutions remain more subject to both executive and legislative control than their private counterparts. In other words, public institutions may be less likely than their private counterparts to get jury trials for Clery Act violations post-Jarkesy.

But will Jarkesy implicate more than Clery Act violations?  It’s reasonable to ask whether Jarkesy impacts other laws imposed on institutions of higher education, such as Title VI of the Civil Rights Act of 1964 (prohibiting discrimination based on race, color, or national origin by organizations receiving federal money) or Title IX (prohibiting sex-based discrimination by institutions receiving federal money).

The distinction between these laws and the Clery Act is that neither Title VI nor Title IX endow an administrative agency with the ability to impose a civil penalty. By contrast, both Title IX[9] and Title VI authorize the federal government to withdraw federal funding from institutions found in non-compliance. That withdrawal of aid, at first blush, doesn’t sound punitive so much as it sounds like the federal government deciding not to spend money on schools that unlawfully discriminate. 

That decision may feel like punishment to the affected school. But from the federal government’s perspective, it’s just a policy choice to not subsidize invidious discrimination. Surely, the Spending Clause[10] of the U.S. Constitution gives executive agencies, such as the U.S. Department of Education, authority to both grant and withdraw tax-payer dollars from higher educational institutions that fail to comply with such laws without recourse to a jury trial. However, the real answers to these and other questions—or the full implications of Jarkesy—are ultimately TBD.

[1] See 20 U.S.C. § 1092(f)(13).

[2] See id., citing fines under 20 U.S.C. § 1094(c)(3)(B) as specified in 34 CFR § 36.2.

[3] See Securities and Exchange Commission v. Jarkesy, 144 S.Ct. 2117, 219 L.Ed.2d 650, Fed. Sec. L. Rep. P 101,886, 2024 Daily Journal D.A.R. 5853 (2024).

[4] See Jarkesy, 144 S.Ct. at 2135-36.

[5] See Jarkesy, 144 S.Ct. at 2132 (cleaned up and citations omitted).

[6] See Jarkesy, 144 S.Ct. at 2136 (cleaned up and citations omitted).

[7] See 20 U.S.C. § 1092(f)(13) (stating: “[u]pon a determination pursuant to section 1094(c)(3)(B) of this title that an institution of higher education has substantially misrepresented the number, location or nature of the crimes required to be reported under this subsection, the Secretary [of Education] shall impose a civil penalty upon the institution in the same amount and pursuant to the same procedures as a civil penalty is imposed under section 1094(c)(3(B) of this title.”).

[8] In Virginia, elements of a common law fraud claim include: “(1) a false representation, (2) of a material fact, (3) made intentionally and knowingly, (4) with intent to mislead, (5) reliance by the party misled, and (6) resulting damage to him.” Qiu v. Huang, 77 Va. App. 304, 325, 885 S.E.2d 503, 513 (2023) (quoting Thompson v. Bacon, 245 Va. 107, 111, 425 S.E.2d 512 (1993)) (cleaned up).

[9] See 20 U.S.C. § 1681 (stating: “[n]o person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance”).

[10] See U.S. Const. Article I, Section 8, Clause 1 (stating: “[t]he Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States”).

Subscribe now to receive the latest insights from our Higher Education Team. 

If you have any questions about this post. please contact a member of our Higher Education Team.