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Court Rules SEC's ALJ Appointment Process Unconstitutional

By George Khoury, Esq. | Last updated on

In the closely watched Lucia v. SEC matter, the High Court has ruled in favor of the petitioner, who sought to fight the decision of the SEC's administrative law judge by challenging the ALJ's appointment.

Unfortunately for the petitioner, although he did win, the Court hasn't done anything more than give the SEC a second chance to hear his case. The silver lining, at least, is that he won't have to go up in front of the same judge.

Disagreement Over ALJ Authority

While the majority did rule that the Appointments Clause required the ALJs to be appointed by the president, courts, or the head of a federal agency, the decision was not without some disagreement. Justice Breyer, in a concurrence, reached the same conclusion, but following different logic. Justice Thomas and Gorsuch, also concurring, took a similar approach but made sure to imbibe a mention of "founding-era law" and the First Congress.

Curiously Shifting Administrative Law Judges

Despite the fact that the SEC actually went ahead and ratified the appointments of the ALJs that would have been affected by the Court's decision, the majority opinion instructed that Lucia's rehearing not be before the same ALJ. Justice Breyer, as well as Justices Ginsburg and Sotomayor did not believe this was a necessary remedy to provide.

Not Much Needs to Change, But Implications Could Be Massive

As the Court surely realized, not much actually needs to change in the process of hiring the ALJs except for the ratification of the appointment by the agency head. However, the implication of this decision, which Justice Kagan seemed to remain silent on, is that other decisions made by ALJs that were unconstitutionally appointed could all be invalidated.

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