Christopher M. Gibson v. U.S. Securities and Exchange Commission

CASE SUMMARY

​Mr. Gibson’s case against the U.S. Securities and Exchange Commission (SEC) is disturbingly similar to scores of cases where that agency insists on putting people through pointless administrative proceedings before unconstitutional administrative law judges (ALJs) that are destined to be vacated.

Mr. Gibson’s case is one of more than one-hundred invalid SEC hearings nullified following the Lucia v. SEC decision. In 2014 the SEC entered a formal order of investigation of Gibson that focused on trading activities. An ALJ found him in violation of securities laws in a 2017 hearing. Gibson filed a petition for review of that decision which sat undecided before the Commission for over two years. In June 2018, the Supreme Court’s decision in Lucia v. SEC vacated the ALJ’s initial decision. Rather than retry Gibson before the Commission itself, the SEC subjected him to a second hearing before another constitutionally defective ALJ. This time, the problem is that the ALJ enjoys multiple layers of removal protection.

Under an earlier precedent called Free Enterprise Fund v. Public Co. Accounting Oversight Board, the Supreme Court made clear that officers of the U.S. may not be insulated from removal by more than one layer of tenure protection without running afoul of the clause in Article II of the Constitution that requires the President to “take Care that the Laws be faithfully executed.” Free Enterprise Fund also squarely held that district court jurisdiction exists under the very statutory provision at issue in Mr. Gibson’s case.

Seeking to avoid a second unconstitutional proceeding, Gibson brought suit in the United States District Court in the Northern District of Georgia to stop the invalid administrative proceeding.   Both the trial judge and a panel of the Eleventh Circuit Court of Appeals dismissed his suit for lack of jurisdiction following an earlier decision called Hill v. SEC, which is one of a growing handful of federal appellate cases that close the courthouse doors to people facing Gibson’s dilemma.

In February of 2020, New Civil Liberties Alliance asked the full Eleventh Circuit Court of Appeals to reconsider this disturbing trend, but the court declined to review its precedent.

On August 31, 2020, NCLA filed a petition for certiorari to the United States Supreme Court asking the Supreme Court to step in and put a stop to this illogical, costly, unjust, and pointless judge-made rule that withholds court jurisdiction from Americans, requiring them to undergo an unconstitutional proceeding before they can challenge its constitutionality.

NCLA also represents Michelle Cochran in her Fifth Circuit case against the SEC for trying to force her to appear before another invalid ALJ.

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CASE STATUS: Active

CASE START DATE: February 13, 2020

DECIDING COURT: The Supreme Court of the United States

ORIGINAL COURT: United Stated District Court, N.D.Ga.

CASE DOCUMENTS

August 31, 2020 | Petition for a Writ of Certiorari
February 13, 2020 | Appellant's Petition for Rehearing En Banc
Click below to read full petition: Exhibits to Petition- As filed with the Court

PRESS RELEASES

August 31, 2020 | NCLA Asks Supreme Court to Vindicate Right to Sue in Federal District Court over SEC ALJ Defect

Washington, DC (August 31, 2020) –The New Civil Liberties Alliance, a nonpartisan, nonprofit civil rights group, filed a petition for a writ of certiorari with the U.S. Supreme Court today in the case of Christopher M. Gibson v. U.S. Securities and Exchange Commission. Former U.S. Solicitor General Greg Garre of Latham & Watkins is counsel of record on the petition and led NCLA’s pro bono effort seeking certiorari.

The petition asks the highest court in the land to review a decision of the United States Court of Appeals for the Eleventh Circuit. At issue is whether individuals like Mr. Gibson may gain access to a federal court to vindicate structural constitutional claims that directly impact individual liberty before they must run the entire gauntlet of agency administrative proceedings. NCLA believes the Eleventh Circuit panel erred in concluding the district court lacked jurisdiction to hear Mr. Gibson’s objections to the unlawful protection from removal by the President that SEC administrative law judges (ALJs) enjoy.

Mr. Gibson’s case is one of many trapped on a treadmill of administrative proceedings that are going nowhere, before unconstitutional ALJs. In 2014 the SEC entered a formal order of investigation of Gibson’s trading activities. Gibson’s first ALJ, who ruled on his case in 2017, was deemed unlawfully appointed according to the U.S. Supreme Court’s 2018 decision in Lucia v. SEC.

Rather than try Gibson in federal court, the SEC subjected him to a second hearing before another constitutionally-defective ALJ. This time, the problem is that the ALJ enjoys multiple layers of for-cause removal protection. In Free Enterprise Fund v. Public Co. Accounting Oversight Board, the Supreme Court made clear in 2010 that “officers of the U.S.” may not be insulated from removal by more than one layer of for-cause protection. Further protection runs afoul of Article II of the Constitution, which requires the President to “take Care that the Laws be faithfully executed.”

Free Enterprise Fund also squarely held that district courts have jurisdiction to hear constitutional challenges to structural defects in agency tribunals under the very statutory provision at issue in Mr. Gibson’s case. Thus, the Eleventh Circuit’s ruling—and that of several other circuits—conflicts with the Supreme Court’s precedent in Free Enterprise Fund. Although the Supreme Court ordinarily awaits a circuit split before granting certiorari, the fact that so many circuits have followed one another in committing the same error is a compelling reason for granting review in this case.

NCLA also represents single mom Michelle Cochran in her similar case against the SEC.

NCLA released the following statements:  

“SEC charges put Americans’ personal, financial, professional and reputational futures in immediate and often permanent jeopardy. Such life-altering power should only be exerted before a constitutional ALJ. If the Supreme Court does not step in to course-correct the law, Christopher Gibson will have endured two trials, multiple appeals, and surrendered six figures to the government before any court can decide the threshold question of whether his ALJ had the right to try him in the first place—and he will face a third retrial even if he wins. This is senseless, costly, and illogical. NCLA is determined to secure justice for Gibson and all other similarly situated Americans.”

—Peggy Little, Senior Litigation Counsel, NCLA

“The courts of appeals—including the Eleventh Circuit—have gone off the rails when it comes to defendants challenging constitutional defects with agency decisionmakers. People like Christopher Gibson should not have to endure repeated pointless proceedings before ever having a chance to present their constitutional arguments to a real federal judge. The Supreme Court should grant cert in this case and let a federal district judge decide whether ALJs who enjoy multiple layers of protection from removal violate the U.S. Constitution.”

—Mark Chenoweth, Executive Director and General Counsel, NCLA

ABOUT NCLA  

NCLA is a nonpartisan, 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.

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February 14, 2020 | NCLA Asks Eleventh Circuit to Rehear Case that Consigns SEC Defendants to Repeated Proceedings Before Unconstitutional ALJs

Washington, DC (February 14, 2020) – The New Civil Liberties Alliance, a nonpartisan, nonprofit public-interest litigation group, filed a petition for rehearing en banc in the U.S. Court of Appeals for the Eleventh Circuit in the case of Christopher M. Gibson v. SEC.  Mr. Gibson’s case against the U.S. Securities and Exchange Commission (SEC) is disturbingly similar to scores of cases where that agency insists on putting people through pointless administrative proceedings before unconstitutional administrative law judges (ALJs) that are destined to be vacated.

NCLA believes the Eleventh Circuit panel erred in concluding the district court lacked jurisdiction to hear Mr. Gibson’s objections to the SEC’s second unconstitutional hearing in his case. As NCLA’s petition shows, the U.S. Supreme Court’s 2018 decision in Lucia v. SEC held that the SEC’s ALJs are “officers” of the United States. As such, NCLA argues, the ALJs may not enjoy more than one layer of for-cause tenure protection. Lucia clarified that defendants have a right not to be tried in front of constitutionally defective ALJs. Hence, federal district courts must have jurisdiction to decide before an administrative hearing takes place whether an ALJ has the proper constitutional authority to hear the case.

Mr. Gibson’s case is one of more than one-hundred invalid SEC hearings nullified following the Lucia v. SEC decision. In 2014 the SEC entered a formal order of investigation of Gibson that focused on trading activities. An ALJ found him in violation of securities laws in a 2017 hearing. Gibson filed a petition for review of that decision which sat undecided before the Commission for over two years. In June 2018, the Supreme Court’s decision in Lucia v. SEC vacated the ALJ’s initial decision. Rather than retry Gibson before the Commission itself, the SEC subjected him to a second hearing before another constitutionally defective ALJ. This time, the problem is that the ALJ enjoys multiple layers of removal protection.

Under an earlier precedent called Free Enterprise Fund v. Public Co. Accounting Oversight Board, the Supreme Court made clear that officers of the U.S. may not be insulated from removal by more than one layer of tenure protection without running afoul of the clause in Article II of the Constitution that requires the President to “take Care that the Laws be faithfully executed.” Free Enterprise Fund also squarely held that district court jurisdiction exists under the very statutory provision at issue in Mr. Gibson’s case.

NCLA also represents Michelle Cochran in her Fifth Circuit case against the SEC for trying to force her to appear before another invalid ALJ.

NCLA released the following statements:

“The SEC has defied the Supreme Court’s instruction to give Mr. Gibson a new hearing before a properly appointed official. This circuit should rehear the case en banc and rein in a lawless and defiant agency and course correct the law of this circuit.” Peggy Little, Senior Litigation Counsel, NCLA

“NCLA will not rest until the courts recognize the injustice of the SEC’s administrative law judges and the costly, life-altering, business and reputation destroying proceedings before these ALJs who preside in violation of the Constitution—as the Government itself admits.” —Jessica Thompson, Litigation Counsel, NCLA

ABOUT NCLA

NCLA is a nonpartisan, 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.

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OPINION