The Process Is the Punishment

Texas accountant Michelle Cochran asked the U.S. Supreme Court to determine if she has the right to present her case against the U.S. Securities and Exchange Commission before a real federal judge. It might sound like an odd request. Don’t we all have the right to be heard before a “real judge”? Not if you are going up against the SEC. This agency employs administrative law judges or ALJs to preside over their case against you! At SEC, the process is the punishment.

Her Story.

Cochran v. SEC

On April 14, 2023, in an historic ruling, the U.S. Supreme Court held that Michelle, indeed, has the right to challenge the constitutionality of her Administrative Law Judge in federal court before undergoing yet, another administrative adjudication.

The SEC had the choice to proceed before a federal district court, but instead, it assigned Michelle’s case to a new ALJ for a do-over. SEC employees play judge, jury, and prosecutor in agency proceedings, so unsurprisingly, the agency wins the vast majority of the cases it brings in-house.

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U.S. Supreme Court Justice Neil Gorsuch

“This is what a win looks like… When you replace clear jurisdictional rules with a jumble of factors, the room for disagreement grows. The incentive to litigate increases. Years and fortunes are lost just figuring out where a case belongs.”
— Justice Neil Gorsuch, SEC v. Cochran

Problem is, SEC ALJs are not appointed by the president. They are hired by the SEC like any other civil servant. To faithfully execute the laws under the Constitution, the president must not only be able to appoint all federal officers but remove them as well. If the president cannot remove officers such as ALJs, then the president can’t control the administrative agencies they are charged with overseeing.

Luckily, the Supreme Court agreed that Michelle deserves to have her case heard before a federal court that is competent to decide the constitutional claims at issue before the unconstitutional ALJ proceeding takes place.