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June 21, 2018 at 10:35 AM
Justice Elena Kagan (2015). Credit: Diego M. Radzinschi/ALM
Updated 1:08 p.m.
The U.S. Supreme Court ruled Thursday that administrative law judges who handle financial disputes at the Securities and Exchange Commission are “officers” of the United States who should be appointed by the president, courts or department heads and not by agency staff.
The split decision in Lucia v. Securities and Exchange Commission could affect hundreds of administrative judges throughout the federal bureaucracy and offer a fresh take on the status of the administrative and regulatory state.
Justice Elena Kagan wrote for herself and five other justices, determining that under the 1991 Freytag ruling the judges should be deemed “officers.” Justices Stephen Breyer, Ruth Bader Ginsburg and Sonia Sotomayor concurred in part, and Sotomayor, joined by Ginsburg, wrote a dissent.
The case also briefly resonated in the ongoing headlines about President Donald Trump’s threats to fire officials involved in the Russia probe. In the briefing of the Lucia case, U.S. Solicitor General Noel Francisco urged the court to consider strengthening presidential power to remove as well as appoint key officers. The Supreme Court on Thursday declined that invitation.
“The government’s merits brief now asks us again to address the removal issue. We once more decline,” Kagan wrote in a footnote. “No court has addressed that question, and we ordinarily await ‘thorough lower court opinions to guide our analysis of the merits.’”
The case was brought by Raymond Lucia, a financial advisor who was fined and banished from the industry by the SEC because of allegedly misleading statements in his “Buckets of Money” seminars.
Mark Perry of Gibson, Dunn & Crutcher, represented Lucia, claiming the process was tainted because SEC judges were picked internally, rather than appointed by the president or department heads under the appointments clause of the Constitution.
