Judge John McBryde of the U.S. District Court for the Northern District of Texas expressed concern on Tuesday in his opinion in Cochran v. SEC over the constitutionality of the administrative law judges (ALJs) at the Securities and Exchange Commission (SEC).
The plaintiff, Michelle Cochran, appealed an adverse decision from an SEC ALJ in 2017, but further action on her appeal was stalled as Lucia v. SEC moved through the federal courts. The Lucia case challenged the constitutionality of the SEC’s ALJ appointment process. The United States Supreme Court ultimately ruled in June 2018 the agency’s ALJ appointments violated the U.S. Constitution’s Appointments Clause. Following the Lucia decision, Cochran’s case was reassigned to new proceedings before a different, constitutionally-appointed ALJ.
Cochran filed for injunctive relief against the agency proceedings in district court, claiming that the SEC’s ALJs remained unconstitutionally appointed despite ratification by the agency’s commissioners. Cochran argued that the SEC’s ALJs have double for-cause removal protections, which unconstitutionally insulate them from direct removal by the president.
McBryde dismissed the case due to the court’s lack of subject matter jurisdiction. However, he expressed concern over the constitutionality of the SEC’s ALJs in his opinion, stating, “The court is deeply concerned with the fact that plaintiff has been subjected to extensive proceedings before an ALJ who was not constitutionally appointed and contends that the one she must now face for further, undoubtedly extended, proceedings likewise is unconstitutionally appointed.”
The New Civil Liberties Alliance, a pro bono law firm with a focus on the administrative state, plans to appeal Cochran’s case to the United States Court of Appeals for the Fifth Circuit.