June 21, 2018
Lucia v. SEC, No. 17-130
Decided June 21, 2018
Today, the Supreme Court held that administrative law judges of the Securities and Exchange Commission are inferior “Officers of the United States” within the meaning of the Constitution’s Appointments Clause. Thus, the ALJs were unconstitutionally appointed by SEC staff.
The SEC has relied on ALJs to resolve hundreds of enforcement actions. Raymond Lucia challenged the lawfulness of sanctions that the SEC had imposed on him, arguing that the ALJ hearing his case was not constitutionally appointed. He asserted that SEC ALJs are “Officers of the United States” under the Constitution’s Appointments Clause, which requires such officers to be appointed by the President, “Courts of Law,” or “Heads of Departments.” SEC ALJs, however, were appointed by agency staff. A panel of the D.C. Circuit held that the ALJs are mere “employees”—governmental officials with lesser responsibilities than “Officers” and thus not subject to the Appointments Clause. An evenly divided en banc court affirmed.
Whether SEC ALJs are “Officers of the United States” subject to the Appointments Clause.
Yes. Because SEC ALJs exercise “significant authority pursuant to the laws of the United States,” they are inferior “Officers” under the Appointments Clause. As such, the ALJs may not be appointed by agency staff and must instead be appointed by the President, the SEC itself, or a court of law.
“[T]he Commission’s ALJs issue decisions containing factual findings, legal conclusions, and appropriate remedies. . . . And when the SEC declines review (and issues an order saying so), the ALJ’s decision itself ‘becomes final’ and is ‘deemed the action of the Commission.’”
Justice Kagan, writing for the Court
Gibson Dunn represented the winning party: Raymond Lucia
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