Appellate Circuit

Two Familiar Appellate Courts and Another Constitutional Conundrum

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.

LIT COMMENTARY

On 20th of January, 2021, Oral argument was heard at the Court of Appeals for the Fifth Circuit, Cochran v SEC, 19-10396.

NCLA Constitutional Case Against SEC Administrative Law Judges Draws Strong Amicus Support
Michelle Cochran v. U.S. Securities and Exchange Commission

Washington, D.C., Oct. 02, 2020 (GLOBE NEWSWIRE) — The Texas Public Policy Foundation, the Cato Institute and Competitive Enterprise Institute filed in support of NCLA’s petition for rehearing en banc last night at the U.S. Court of Appeals for the Fifth Circuit in the case of Michelle Cochran v. U.S. Securities and Exchange Commission. The briefs amici curiae urge all judges on the Court to rehear the appeal because the petition raises an issue of exceptional importance—whether the Securities and Exchange Commission (SEC) is conducting its administrative proceedings in an unconstitutional manner.

NCLA’s client, Michelle Cochran, is contesting last month’s 2-1 panel decision that erroneously dismissed her case. Ms. Cochran seeks federal court jurisdiction to challenge the unconstitutional protections from removal by the President enjoyed by Administrative Law Judges (ALJs) at SEC.  If left to stand, the panel’s flawed decision will condemn single mother Michelle Cochran and other Americans like her to another cycle of futile, duplicative, to-be-vacated administrative proceedings that violate the Constitution and Americans’ due process rights.

“The Fifth Circuit just asked the government to file a brief in response to NCLA’s petition for rehearing en banc. NCLA is encouraged that the Court of Appeals is giving serious consideration to Michelle Cochran’s request to rehear this important constitutional challenge.”

Peggy Little, Senior Litigation Counsel, NCLA

Excerpts from the two briefs amici curiae submitted in support of NCLA’s petition:

“Separation of powers is the genius of our Constitution—and one of its most important liberty-protecting structures. But its vitality depends upon the judiciary carrying out its unique responsibility to enforce that separation and keep the elected branches within their assigned roles. That responsibility is especially important when it comes to safeguarding the rights of ordinary citizens vis-à-vis the vast administrative state… Forcing a separation-of-powers challenger to present that challenge to the same agency adjudicator whose constitutional legitimacy is under scrutiny will inflict precisely the harm that the challenger seeks to prevent—adjudication before a constitutionally illegitimate arbiter.”

— Texas Public Policy Foundation (TPPF)

“This case presents a recurring, exceptionally important issue concerning citizens’ access to federal court when personal liberty is threatened by ongoing executive-branch action that violates the Constitution’s separation of powers. It also highlights the intolerable predicament faced by citizens when structural constitutional violations are allowed to persist until any meaningful remedy evaporates. The panel majority affirmed the district court’s … [denial of jurisdiction, which] ensures that Cochran will never obtain a meaningful remedy for her constitutional injury.”

— Cato Institute and Competitive Enterprise Institute (CEI)

 

ABOUT NCLA

NCLA is a nonpartisan, nonprofit civil rights group 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.

 

 ###

Judy Pino, Communications Director
New Civil Liberties Alliance
202-869-5218
media@ncla.legal

NCLA Asks Eleventh Circuit to Rehear Case that Consigns SEC Defendants to Repeated Proceedings Before Unconstitutional ALJs

Washington, D.C., Feb. 14, 2020 (GLOBE NEWSWIRE) — 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 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.

For more information visit us online: NCLAlegal.org.

Judy Pino, Communications Director
New Civil Liberties Alliance
202-869-5218
media@ncla.legal
Two Familiar Appellate Courts and Another Constitutional Conundrum
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