The Solicitor General's Baffling Brief Inwards Lucia V. Sec
In a serial of recent posts (most recent here), I’ve been sharply critical of filings past times the Solicitor General inward the Hargan v. Garza abortion litigation, involving HHS’s efforts to deny minors inward their de facto custody the powerfulness to exercise their constitutional rights. Last month, for example, I wrote that the Solicitor General’s nominal “Petition for Certiorari” in No. 17-654 “[i]n many respects . . . departs, sometimes dramatically, from the justly lauded, traditional standards as well as practices of [the Office of the Solicitor General].”
Unfortunately, it appears that the Hargan litigation is non a singular aberration. Three weeks later on his petition inward Hargan, the Solicitor General filed another extraordinary brief inward No. 17-130, Lucia v. SEC, well-nigh a topic far removed from (and less heated than) abortion rights—namely, whether the Administrative Law Judges (ALJs) who piece of work inward the Securities as well as Exchange Commission (SEC) are hired inward a trend that violates the Appointments Clause of the Constitution, Art. II, § 2, cl. 2.
In his Lucia brief, filed on behalf of the Respondent SEC, the SG urges the Court to grant Lucia’s petition for certiorari, fifty-fifty though the authorities prevailed below. As I’ll discuss, SG Francisco failed to offering a compelling reason why the authorities was switching its longstanding legal seat in Lucia; but that’s non what makes the brief especially concerning. Such a reversal is unusual, but it’s not, inward as well as of itself, problematic. Indeed, ane of the most laudable practices of the Office of Solicitor General is the confession of error.
What makes the brief extraordinary, from the perspective of the Office’s commons standards, are 2 other things:
-- First, the SG did non explicate why, nether the government’s novel view, the proper response was non for the accused agency—the SEC—to alter its practices to suit to the government’s novel watch of what the Constitution requires, rather than (as the SG has urged) for the Court to grant cert. What’s more, the brief failed to inform the Court that the SEC was well-nigh to bring steps, the rattling side past times side day, to cure the alleged constitutional infirmity identified inward the petition as well as thereby also eliminate the purported soil for the Court to grant the petition. The SG’s stated justification for the Court to grant the petition is no longer operative—yet the SG has non whispered a give-and-take to the Court well-nigh that decisive alter of circumstance.
-- Second, the SG non only asked the Court to grant cert. on the Appointments Clause inquiry where at that topographic point was no longer whatever factual predicate for it; he also asked the Court to expand the Question Presented to include an additional constitutional challenge to a federal statute (regarding ALJs’ “for cause” removal protections) that no courtroom has accepted, on which no courtroom of appeals has opined, as well as that the petitioners themselves receive got non raised.
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Some background: Petitioners Lucia, et al., were registered investment advisers who marketed a wealth-management strategy called “Buckets of Money.” The SEC instituted administrative proceedings against them based upon allegations that they had used misleading slideshow presentations to deceive prospective clients well-nigh how the “Buckets of Money” strategy would receive got performed nether historical marketplace conditions, inward violation of 3 federal statutes.
The Commission assigned the initial stages of the proceeding to ALJ Cameron Elliot. After a hearing, Elliot concluded that the petitioners had willfully as well as materially misled investors inward violation of the Investment Advisers Act, as well as ordered a diversity of sanctions. Such an ALJ determination does non itself operate past times strength of law: It becomes lastly only upon an guild issued past times the SEC itself, as well as the SEC reviews the ALJ’s determination de novo. In this case, the Commission conducted an independent review of the record, except amongst observe to the findings non challenged on appeal, as well as the Commission determined that the ALJ had correctly found that the petitioners had willfully made fraudulent statements as well as omissions inward violation of the Investment Advisers Act. With limited exceptions, the Commission also affirmed the sanctions that ALJ Elliot had proposed.
Lucia as well as the other petitioners challenged the SEC procedure on the solid soil that ALJ Elliot was an “inferior” “Officer[] of the United States” who had non been appointed inward conformity amongst the Appointments Clause. The Appointments Clause provides that such inferior Officers must live appointed inward ane of 4 ways: past times the President, past times as well as amongst the advice as well as consent of the Senate; past times the President alone; past times a courtroom of law; or—as most relevant here—by the caput of a Department.
The five-member Commission is the caput of a Department, as well as the relevant statute would permit the Commissioners to appoint ALJs. See 5 U.S.C. 3105 (“Each agency shall appoint equally many administrative police describe judges equally are necessary . . . .”). If the Commission had done so, such an appointment would receive got satisfied the Appointments Clause fifty-fifty if ALJ Elliot is an inferior “Officer.” The SEC, however, for some ground had non itself straight appointed its ALJs. Most of them were, instead, chosen past times the Commission’s Office of Human Resources, based upon recommendations past times the SEC’s Chief ALJ as well as an interview committee, who inward plow selected individuals from amid 3 candidates identified past times the U.S. Office of Personnel Management. ALJ Elliot, too, appears to receive got been hired past times the Office of Human Resources, albeit mayhap non pursuant to the OPM “Rule of Three” (see Freytag v. Commissioner (1991). Reasonable minds tin give the axe differ.
And apparently SG Francisco does: His view, later on “further consideration” of the inquiry (p.9), is that the ALJs are “Officers” as well as thus must live appointed past times the SEC itself. Fair enough. Just because a novel SG does non grip amongst the traditional watch of the U.S.A. on a legal question, however, does non hateful that the authorities should hence alter its legal seat inward court—particularly non where, equally here, the Trump Administration itself pressed the traditional watch before an en banc courtroom of appeals just 6 months before (reply brief here; oral declaration here); as well as where the novel watch would impose greater constraints on the flexibility of the customer agency. The traditional agreement is that the meat of the Solicitor General’s responsibleness is, in the words of quondam SG Seth Waxman, “to ascertain as well as stand upward for the interests of the U.S.A. inward litigation.” And, obviously, it is non inward the interests of the U.S.A. to flip its views every fourth dimension a detail Solicitor General happens to personally remember that the prevailing U.S. seat is non the ane he would receive got arrived at on a build clean slate. Such convulsive shifts, based only on the individual who happens to live SG at a given time, would undermine the credibility of OSG’s representations to the Court.
This doesn’t hateful that such shifts are ever inappropriate, however. Sometimes, for instance, major changes inward the Supreme Court’s ain jurisprudence mightiness warrant a reconsideration of the government’s views. And inward still other cases, a Solicitor General, Attorney General, and/or the President mightiness conclude that the traditional U.S. seat was insufficiently protective of constitutional rights—such equally the switch inward positions of the George W. Bush Administration on the Second Amendment, or President Obama’s conclusion that Section 3 of the Defense of Marriage Act was unconstitutional. The SG’s Lucia brief, unfortunately, fails to offering whatever such compelling ground for the about-face, apart from the fact that the novel SG undertook “further consideration” of the question. (The brief also refers (pp.9-10) to “the implications for the exercise of executive powerfulness nether Article II”—but it doesn’t say what those “implications” mightiness be. Indeed, executive powerfulness is enhanced if the agency may take amid dissimilar agency of appointing ALJs—a flexibility that the government’s novel watch would foreclose.)
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The failure to offering a adept explanation for the shift inward the government’s traditional view, however, is non what makes the brief so troubling. What’s much to a greater extent than inexplicable is the SG’s failure to offering a persuasive ground why certiorari is warranted inward low-cal of the novel seat of the United States, as well as his failure to inform the Court of intervening developments undertaken past times the Respondent agency itself that eliminate the demand for the Court to resolve the Question Presented.
The SG argues (p.10) that the Court should grant cert. because “[t]he inquiry presented has arisen often across the courts of appeals on petitions for review of the Commission’s decisions, and it volition proceed to arise absent this Court’s intervention.” Indeed, the SG represents (p.25) that “the Commission’s powerfulness to enforce the nation’s securities laws has, inward pregnant respects, been seat on grip pending this Court’s resolution of the inquiry presented.”
This is just untrue, however—or, to a greater extent than to the point, it was something only inside the Respondent agency’s ain powerfulness to prevent. The upshot of the SG’s brief for the SEC is this: “We receive got been acting unconstitutionally.” OK, then, if that's the case—if the SEC’s novel watch is that its ALJs are “officers”—then why wouldn’t the Commission directly just appoint ALJs in conformity with the Appointments Clause, past times making the appointments itself, thereby curing the constitutional defect? (The federal statute allows the SEC to do so. The SG’s watch of the constitutional question, that is to say, does non hateful that whatever federal statute is unconstitutional.) One would expression the brief to say something well-nigh that possibility—about whether as well as how the SEC was responding to its novel watch that the appointments had been unconstitutional. Yet on this crucial question, the brief is silent.
Worse yet, the brief does non bring upward the critical fact that the SEC was, indeed, well-nigh to cure the constitutional defect. The rattling side past times side twenty-four hr menses later on the brief was filed, the Commission— inward its capacity equally caput of a department—“ratified” the appointment of Elliot as well as its other ALJs. The Commission farther ordered that all pending cases, including those that had already been appealed from an ALJ to the Commission itself, must live reconsidered before a properly appointed ALJ, amongst an chance for the parties to submit novel evidence.
Because of this activeness past times the SEC, the inquiry presented volition not “continue to arise absent this Court’s intervention,” nor volition “the Commission’s powerfulness to enforce the nation’s securities laws [be] seat on grip pending this Court’s resolution of the inquiry presented.” There is no longer whatever ground for the Court to consider the merits of an agency exercise that no longer exists as well as that the agency as well as the Solicitor General receive got concluded cannot live revived.[1]
The SG’s failure fifty-fifty to identify, allow solitary discuss, this development, is indefensible, best I tin give the axe tell.
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Perhaps that failure tin give the axe live explained past times the other remarkable aspect of the SG’s novel brief: the SG’s eagerness for the Court also to consider an additional constitutional question, concerning the ALJs’ statutory protection from removal, that is non affected past times the SEC’s recent appointment of the ALJs.
Only the Commission itself tin give the axe take away ALJs from office, as well as so “only for adept displace established as well as determined past times the Merit Systems Protection Board.” 5 U.S.C. 7521(a). Moreover, the President tin give the axe only take away the members of the MSPB as well as (probably) Commissioners on the SEC itself for “good cause,” e.g. (as to the MSPB), “only for inefficiency, neglect of duty, or malfeasance inward office.” 5 U.S.C. 1202(d). After the Court’s determination inward Free Enterprise Fund v. Public Co. Accounting Oversight Bd., it is an opened upward inquiry whether this multi-layer “for cause” removal protection for ALJs is constitutional. See FEF, 561 U.S. at 507 n.10; id. at 542-43 (Breyer, J., dissenting).
The SG’s brief urges the Court to resolve this removal question, too. “It is critically important,” writes Francisco (p.21), “that the Court, inward considering whether the Commission’s ALJs are ‘Officers of the United States,’ address whether the restrictions imposed past times statute on their removal are consistent amongst the constitutionally prescribed separation of powers.” Yet non only doesn’t the SG offering whatever reasons why the Court’s consideration of that inquiry would live “critically important” now, he does non fifty-fifty offering any adept ground why the Court should do so. And at that topographic point are plenty of adept reasons—reasons the Solicitor General himself typically invokes, but that he disregards here—why the Court should not grant the petition inward guild to review that question.
For ane thing, the petitioners themselves receive got non raised it inward the case, allow solitary inward their petition, and, equally they explicate inward their reply brief, they do non desire the Court to address it. Indeed, equally the reply brief notes (pp. 10-11), fifty-fifty if the petitioners did bring the watch that they receive got a right to seem before an ALJ who is not protected past times such removal restrictions, that inquiry mightiness never arise inward their case—if, for example, “the proceeding is dismissed, or petitioners are afforded a novel trial inward an Article III forum.”
Moreover, non only is at that topographic point non a circuit dissever on the question, but no federal courtroom has ever held that the ALJ removal protections are unconstitutional, as well as no courtroom of appeals has fifty-fifty opined on the question, ane way or the other. (The inquiry has been raised inward a D.C. Circuit instance (Timbervest v. SEC, No. 15-1416) that the courtroom of appeals is asset inward abeyance pending the Supreme Court’s disposition of Lucia.) Thus, equally petitioners Federal Reserve annotation (p.10), “[t]he Solicitor General . . . asks this Court to interruption novel ground”—to address the constitutionality of a federal statute, no less!—“without the do goodness of a determination from the courtroom below or whatever other courtroom of appeals.”
Finally, the SG does non fifty-fifty suggest, allow solitary argue, that the ALJ “good cause” removal provisions of the federal police describe are unconstitutional—and at that topographic point are rattling adept reasons to believe that they are not, because an ALJ’s principal role is, of course, to “perform adjudicative rather than enforcement or policymaking functions.” FEF, 561 U.S. at 507 n.10; see also Wiener v. United States, 357 U.S. 349 (1958).[2]
Obviously, then, if the Solicitor General were applying his Office’s commons standards, he would never receive got urged the Court to consider the merits of the removal question. In this respect, too, he has starkly deviated from the traditional practices of the Office.
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The Justices are scheduled to speak over Lucia at their conference this coming Friday, Jan 5. For the reasons I’ve laid out here, the instance is non cert.-worthy: In low-cal of the Respondent’s novel watch of what the Appointments Clause requires, as well as the SEC’s recent appointments of its ALJs, there’s no ground for the Court to consider the merits of the agency’s past times practice, which it has directly repudiated as well as abandoned.
Nevertheless, Lucia notes inward its reply brief that the SEC’s activeness to fix the employment going frontward does non remedy the petitioners’ ain injuries (p.5): “Although the authorities directly agrees that SEC ALJs are Officers, it has afforded petitioners no redress for having subjected them to trial before an unconstitutionally constituted tribunal.” It farther asserts (p.6) that “[a]bsent review past times this Court, the judgment below volition stand upward uncorrected notwithstanding the Justice Department’s confession of error.” I’m non sure enough that’s right. It mightiness live the instance that the SEC tin give the axe directly guild the petitioners’ ain instance to live reopened before a properly appointed ALJ, just equally it has done amongst observe to cases that rest pending before the Commission. If so, the Commission evidently should do so right away. If it does non do so, however—or if the agency no longer has jurisdiction to so “reopen” the petitioners’ instance because the appeal is pending inward an Article III courtroom (a inquiry I haven’t researched)—the Court should grant Lucia’s petition, vacate the judgment below, as well as remand the instance to the courtroom of appeals, amongst an guild for that courtroom to remand the instance to the agency for reconsideration before a newly appointed ALJ (or some other lawful disposition).
[1] In its reply brief, Lucia offers 2 reasons why the Court should take heed the case, fifty-fifty later on this curative activeness past times the Commission. Neither ground is persuasive, however.
First, Lucia suggests (p.6) that mayhap the SEC itself—in contrast to the SG—might genuinely reject to appoint the ALJs, as well as “continu[e] to assert that its ALJs are employees. . . . [T]he Commission volition non genuinely admit that petitioners were tried past times an unconstitutional adjudicator or render an appropriate remedy for that constitutional violation.” The SEC, however, already has acknowledged that a Commission appointment is necessary to cure a constitutional defect: That is just the declaration of the brief that the Solicitor General filed on behalf of the SEC. Even if at that topographic point mightiness live sure enough officials at the SEC who do non personally grip amongst the watch inward the brief, the Commission itself is directly formally on tape equally conceding that an appointment past times the “Head” of the “Department” is constitutionally required—and it has taken steps to comply amongst that requirement.
Second, Lucia argues (p.8) that the SEC’s purported “ratification” does non do the (constitutional) trick, because the SEC used the incorrect nomenclature: Instead of maxim that the SEC “hereby appoints” the existing ALJs, or words to that effect, the Commission stated that it was ratifying the “agency’s prior appointment” of the 5 identified ALJs—and the agency, equally such, had not, inward fact, made the prior appointments. Surely, however, the Commission’s failure to utilisation whatever special “magic words”—or, to a greater extent than to the point, its insertion of the give-and-take “agency’s” to refer to the actions of the SEC’s Human Resources Department—should non brand whatever constitutional difference. The Commission has expressed its volition to appoint Elliot as well as the other ALJs through an opened upward as well as unequivocal world act, which is all the Constitution requires. See Marbury, 5 U.S. at 156-57. (And fifty-fifty if some clerical correction were required to confirm the novel appointments, that would hardly live ground for the Court to grant cert.)
[2] The SG writes, inward passing (p.20), that “the status of the Commission’s ALJs equally constitutional ‘Officers’ . . . has implications for whether the statutory restrictions on their removal are consistent amongst separation-of-powers principles.” That’s non correct: It’s mixing apples as well as oranges. Whether or non ALJs are “officers” for purposes of the Appointments Clause is a inquiry only distinct from whether Congress’s prescribed method for removing ALJs “impermissibly burdens the President's powerfulness to command or supervise” such actors “in the[ir] execution of . . . duties nether the Act” as well as thereby “interfere[s] impermissibly amongst his constitutional obligation to ensure the faithful execution of the laws.” Morrison v. Olson, 487 U.S. at 692-93. To live sure, evaluation of the ALJ’s detail functions, as well as of the SEC’s supervisory say-so over such ALJs, is relevant to both questions, as well as it’s hard to imagine whatever “employee,” non covered past times the Appointments Clause, for whom Congress may non render “for cause” removal protection; nevertheless, the answer to the “officer/employee” inquiry for Appointments Clause purposes does non resolve, or fifty-fifty affect, the inquiry of whether detail removal restrictions are constitutional.
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