Whether Congress has implicitly stripped federal district courts of jurisdiction to adjudicate separation-of-powers challenges to the authority of SEC ALJs to preside over enforcement proceedings

QUESTION PRESENTED Since the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, the Securities and Exchange Commission (SEC) has brought an increasing number of enforcement actions before the agency itself, rather than in federal court. The SEC routinely delegates its authority to preside over these actions to its own cadre of administrative law judges (ALJs). Because these ALJs exercise “significant authority,” they are “Officers of the United States” for purposes of the Constitution’s Appointments Clause. Lucia v. SEC, 138 S. Ct. 2044, 2051-55 (2018) (quoting U.S. Const. art. II, § 2, cl. 2). For individuals subject to SEC enforcement proceedings, the ALJs’ actions and findings can have significant, often life-ruining consequences. The SEC’s ALJs, however, suffer from a blatant constitutional defect: they are insulated from removal by multiple “layers of good-cause tenure” protection, which this Court found “incompatible with the Constitution’s separation of powers” in Free Enterprise Fund v. Public Co. Accounting Oversight Board, 561 U.S. 477, 497-98 (2010). The ALJs’ actions also are subject to the same administrative review scheme that the Court held in Free Enterprise Fund did not “expressly” or “implicitly” strip federal district courts of their usual jurisdiction to adjudicate federal claim[s].” Id. at 489-91 & n.2; see 28 U.S.C. § 13831. The question presented is: Whether Congress has implicitly stripped federal district courts of jurisdiction to adjudicate separationof-powers challenges to the authority of SEC ALJs to preside over enforcement proceedings.