Constitution Daily

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Court says administrative law judges subject to Appointments Clause

June 21, 2018 by Scott Bomboy


A divided Supreme Court said on Thursday that SEC administrative law judges appointed by staffers should be appointed by the President, courts or department heads instead, but it didn’t consider a Justice Department request to clarify the President’s ability to fire any “officer of the United States.”

In the 6-3 ruling in Lucia v. SEC, Justice Elena Kagan said that judges are “Officers of the United States,” subject to the conditions of the Constitution’s Appointments Clause and ordered that petitioner Raymond Lucia should receive a new hearing with a different judge.

The SEC has the legal authority to bring an administrative proceeding against an alleged wrongdoer, Kagan said, with the SEC presiding over the hearing. But in practice, the SEC has other staff members appoint administrative law judges that is considers as employees to conduct the hearings.

The SEC had charged Lucia with violations under the Investment Advisers Act, and it assigned an administrative law judge to adjudicate the case. Lucia appealed a ruling against him to the SEC, arguing the proceeding was invalid because the administrative law judge had not been constitutionally appointed. The SEC disagreed, claiming their judges were not “Officers of the United States” but “mere employees” instead.

Citing precedent, Kagan said the Court’s decision in Freytag v. Commissioner (1991) found that special trial judges of the United States Tax Court were officers of the United States, and not employees. “Freytag says everything necessary to decide this case,” Kagan said, noting the similarities between the two types of judges.

During arguments, the Justice Department pressed the Court to answer a separate question it didn’t accept from the petitioners’ attorneys about clarifying or expanding the President’s power to directly removed officers of the United States.

“The Government asked us to add a second question presented: whether the statutory restrictions on removing the Commission’s ALJs are constitutional,” Kagan said. “When we granted certiorari, we chose not to take that step. The Government’s merits brief now asks us again to address the removal issue. We once more decline. No court has addressed that question, and we ordinarily await ‘thorough lower court opinions to guide our analysis of the merits.’”

Justice Sonia Sotomayor dissented from the majority opinion, joined by Justice Ruth Bader Ginsburg. “I would hold that Commission ALJs are not officers because they lack final decision-making authority,” Sotomayor said. But Breyer thought the case should be decided on statutory grounds, and that the Court needed to address the Justice Department’s questions about removing officials before ruling on the case on constitutional grounds, as it did.

Scott Bomboy is the editor in chief of the National Constitution Center.


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