Washington, D.C. – The New Civil Liberties Alliance (NCLA) is asking the U.S. Court of Appeals for the Fifth Circuit to reverse the district court decision to dismiss the Cochran v. SEC case for lack of subject-matter jurisdiction. NCLA’s reply brief on behalf of Michelle Cochran seeks to enable Cochran to pursue her claim in district court that the administrative law judge (ALJ) assigned to her case enjoys extra layers of protection from removal by the President that violate Article II of the Constitution.
Cochran’s case was one of dozens slated for rehearing after the U.S. Supreme Court’s June 2018 ruling in Lucia v. SEC, which determined that ALJs are officers of the United States subject to the Appointments Clause. But rather than try Ms. Cochran in federal court on remand, or before the Commission itself, the U.S. Securities and Exchange Commission is trying to force her into a proceeding before another unconstitutional ALJ.
Under an earlier precedent called Free Enterprise Fund v. Public Co. Accounting Oversight Board, the U.S. Supreme Court recognizes that district courts retain jurisdiction to hear constitutional objections to unlawful tribunals. The Free Enterprise Fund case also held that federal officers cannot have more than one layer of removal protection. That means if an officer (like an ALJ at the SEC) can only be removed for “good cause” under a statute, then the President needs to be able to remove that officer directly. The officer cannot be subject to removal only by other officers (like SEC Commissioners or members of the Merit Systems Protection Board) who are themselves protected from removal by the President without “good cause.”
Ms. Cochran, who is a single mother of two, should not be required to endure a second proceeding—in front of another invalid ALJ—that is bound to be vacated. Instead, the Fifth Circuit should ensure that she is afforded the rights she should have been given in the first place.
Notable amici in this case include Dallas Mavericks owner Mark Cuban, hedge fund managers Philip Goldstein and Nelson Obus, as well as the following organizations: Texas Public Policy Foundation, Cato Institute, Cause of Action, and the Competitive Enterprise Institute, all of which filed amicus briefs with the Fifth Circuit in support of Ms. Cochran’s cause.
“Michelle Cochran already endured one prolonged, unconstitutional administrative hearing in 2016. The SEC is trying to subject her to a second trial before an unconstitutional ALJ—and they know it. We are asking the Fifth Circuit to short-circuit the SEC’s abuse of administrative power and stop these cruel and repeating cycles of endless prosecution. No American should have to live this litigation nightmare.”
—Peggy Little, Senior Litigation Counsel, NCLA
“In his Lucia v. SEC brief, the U.S. Solicitor General first brought the problem to the Supreme Court’s attention that ALJs at the SEC (and elsewhere) enjoy unconstitutional levels of protection from removal. The SEC should not now be pretending the problem does not exist and punishing defendants like Ms. Cochran with a pointless process.”—Mark Chenoweth, Executive Director and General Counsel, NCLA
NCLA is a nonprofit civil rights organization founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.
For more information visit us online: NCLAlegal.org.