On January 12, the U.S. Supreme Court announced it had granted a writ of certiorari in Lucia v. SEC—a case which challenges the SEC’s practice of appointing administrative law judges (ALJs) and moves the Court to consider whether the ALJ appointment practice violates the Appointments Clause (Clause) of the Constitution. In Lucia, the petitioner—against whom an ALJ had issued sanctions, imposed a lifetime securities ban, and fined $300,000—appealed the decision to the D.C. Circuit Court of Appeals, and argued that ALJs are officers of the United States and therefore subject to provisions of the Clause, including the requirement that officers be appointed by the president, the head of a department, or a court of law. However, the D.C. Circuit upheld the ALJs sanctions and ruled that ALJs are not “inferior officers” subject to the Clause. In his petition for certiorari, the petitioner claimed that because he was subjected to a “trial before an unconstitutionally constituted tribunal,” the ALJ’s decision should be dismissed or a new hearing granted.
Notably, last November, the Solicitor General of the United States submitted a brief on behalf of the SEC to the Supreme Court, arguing that the SEC views in-house judges as officers of the U.S. government—not mere employees—who are subject to the Clause. Additionally, on November 30, the SEC ratified the appointment of its ALJs to resolve “any concerns that administrative proceedings presided over by its ALJs violate the Appointments Clause.”
A decision by the Court may resolve a split between the D.C. Circuit, which has ruled that ALJs are not “inferior officers” of the U.S. government, and the Tenth and Fifth Circuits, which disagreed and ruled separately that ALJs are officers.