Commodity Futures Trading Commission v. Schor

478 U.S. 833 (1986)

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Commodity Futures Trading Commission v. Schor

United States Supreme Court
478 U.S. 833 (1986)

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Facts

The Commodity Futures Trading Commission (CFTC) (defendant) had broad authority to implement the Commodity Exchange Act (CEA), which regulates commodity-futures transactions. The CFTC conducted reparations procedures in which disgruntled customers could seek reparations for a commodity broker’s violations of CEA or CFTC regulations. A CFTC regulation allowed the CFTC to adjudicate any counterclaims that a broker asserted against a customer if such counterclaims arose out of the same transaction as in the reparations complaint. Such counterclaims were not mandatory; brokers could instead pursue their claims in court. Schor (plaintiff), a customer, filed a reparations complaint against a broker, ContiCommodity Services, Inc. (Conti). Schor alleged that Conti’s violations of the CEA caused an outstanding balance on his account. Conti had previously filed suit in federal court, seeking Schor’s payment of the balance. When Schor asked the federal court to dismiss or stay the action pending the CFTC’s reparations decision, Conti voluntarily dismissed the federal action and instead asserted a counterclaim in the CFTC proceeding. The CFTC ruled in Conti’s favor, and Schor then argued that the CFTC lacked authority to decide Conti’s counterclaim. Schor petitioned for review. The federal court of appeals dismissed Conti’s counterclaim, holding that the CFTC’s authority to adjudicate Conti’s state common-law claims violated Article III of the Constitution. The United States Supreme Court granted certiorari.

Rule of Law

Issue

Holding and Reasoning (O’Connor, J.)

Dissent (Brennan, J.)

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