Sarah A. Good is partner and co-leader of the securities litigation and enforcement team and Laura C. Hurtado is a senior associate at Pillsbury Winthrop Shaw Pittman LLP. This post is based on a Pillsbury publication authored by Ms. Good and Ms. Hurtado.
The District of Columbia Circuit Court of Appeals’ earlier decision in Lucia v. SEC that U.S. Securities and Exchange Commission (SEC) administrative law judges (ALJs) are employees who are not subject to the Appointments Clause of the U.S. Constitution will stand after a ten-judge en banc panel of the Court deadlocked on the issue, resulting in a one-page per curiam order on June 26, 2017, denying Raymond J. Lucia’s petition for review. See Lucia v. SEC, No. 15-1345 (D.C. Cir. June 26, 2017) (noting Chief Judge Merrick Garland did not participate in this matter). It is undisputed that SEC ALJs are selected by the SEC’s Office of Administrative Law Judges and not by the President. Thus, a determination that SEC ALJs are “Officers” (as opposed to mere employees) would mean they are subject to the Appointments Clause and that their selection by someone other than the President renders their appointments unconstitutional.