On Lucia v. SEC II (over at Law360)

Law360 recently ran a piece I wrote on the next fight brewing in Lucia v. SEC following the Court’s decision last year that SEC ALJs were “inferior officers” whose appointments had to comport with Article II.  The Court remanded Lucia for “a new ‘hearing before a properly appointed’ official,” declining to decide “whether the statutory restrictions on removing the [SEC’s] ALJs are constitutional.”

On remand, the SEC re-instituted proceedings against Lucia before an in-house ALJ who is insulated from presidential removal by two layers of “for cause” protection, contrary to the Court’s 2010 decision in Free Enterprise Fund v. PCAOB. In other words, Lucia has not been given “a new hearing before a properly appointed official.”

Lucia and others have since filed federal district court actions to attack collaterally the renewed agency proceedings in order to sustain the recently-vindicated right to a hearing before a government official whose appointment comports with the Constitution. The government, however, has argued per Thunder Basin Coal Co. v. Reich that these litigants are not permitted recourse to an Article III court to hear this challenge until they endure another round of proceedings before the agency. Although the Free Enterprise Fund Court rejected this very argument in that case, five circuits prior to Lucia have distinguished Free Enterprise Fund to hold that constitutional challenges to agency proceedings based on this kind of Appointments Clause argument cannot be raised collaterally but must await culmination of agency proceedings before it can be heard in the courts of appeals.

In the Law360 post, I argue that Thunder Basin has no application to this follow-on litigation, particularly (but not only) because of the Court’s instructions on remand in Lucia itself.

[T]he United States would not deserve to be called “a government of laws, and not of men” if “the laws furnish no remedy for the violation of a vested legal right.” In Lucia, the Supreme Court just recognized litigants’ right to have a lawfully appointed government official hear their case when forced to proceed before an administrative agency. Ray Lucia and Michelle Cochran would like to have this right vindicated . . . but they may have to survive yet another administrative gauntlet before seeing this happen. The courts considering these challenges have the chance to take the Court’s instructions in Lucia seriously, even if that means taking a fresh look at the body of pre-Lucia circuit precedent.

The essay is available here.

PS, for those who have ears to hear: the “Phil Connors” reference in the last sentence is the lone vestige of a “Groundhog Day” analogy that got cut from the title.

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