# Tilton v. Securities & Exchange Commission

> Court of Appeals for the Second Circuit · June 1, 2016 · 824 F.3d 276

URL: https://www.frixlaw.com/law-library/cases/8414004

## Case

- **Full name:** Lynn TILTON, Patriarch Partners, LLC, Patriarch Partners VIII, LLC, Patriarch Partners XIV, LLC, and Patriarch Partners XV, LLC v. SECURITIES AND EXCHANGE COMMISSION
- **Court:** Court of Appeals for the Second Circuit
- **Decided:** June 1, 2016
- **Citations:** 824 F.3d 276; 2016 U.S. App. LEXIS 9970; 2016 WL 3084795
- **Precedential status:** Published
- **Opinion:** Concurrence by Newman
- **Judges:** Droney, Newman, Sack
- **Cited by:** 47 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/8414004

## How later opinions describe it (automated extraction)

- holding, in Appointments Clause challenge to SEC judges, that the injury of “ ‘being subjected to an unconstitutional adjudicative procedure,’ with the attendant ‘embarrassment, expense, * * * ordeal, * * * [and] state of anxiety and insecurity’ ” was not an “irremediable harm”
- holding, in Appointments Clause challenge to SEC judges, that the injury of “‘being subjected to an unconstitutional adjudicative procedure,’ with the attendant ‘embarrassment, expense, * * * ordeal, * * * [and] state of anxiety and insecurity’” was not an “irremediable harm”
- concluding that the Exchange Act precluded district court jurisdiction over an Appointments Clause challenge to an ongoing SEC proceeding
- concluding that “appellants have identified no such additional, irremediable harm here” because “[t]he only prospective injury that they describe is being subjected to an unconstitutional adjudicative procedure”
- holding that when this factor "weighs strongly against district court jurisdiction," "closer questions" on the other factors are insufficient to give rise to district court jurisdiction

## Opinion text

JON O. NEWMAN, Circuit Judge,
concurring:
An additional reason why the Appellants in this case must raise their Appointments Clause issue by filing a petition for review in a court of appeals rather than initiate a new action in a district court is a concept that has been called “colorable jurisdiction.” As the Seventh Circuit has explained in a case challenging an order of criminal contempt, “If a court has colorable jurisdiction of a case, though later it is determined that actually it didn’t have jurisdiction, an order of criminal contempt issued by the court before the absence of jurisdiction is determined is valid.” Mann v. Calumet City, 588 F.3d 949, 954 (7th Cir. 2009).
The Supreme Court, without using the phrase “colorable jurisdiction,” made the same point in United States v. United Mine Workers of America, 330 U.S. 258 , 67 S.Ct. 677 , 91 L.Ed. 884 (1947). The Court there ruled that even if the constitutionality of a statute is in doubt, an order issued by a court under that statute must be obeyed and enforced even by criminal contempt. See id. at 293 , 67 S.Ct. 677 . The Court noted that “a different result would follow were the question of jurisdiction frivolous and not substantial,” id. or, as Justice Frankfurter’s concurrence put it, the “court is so obviously traveling outside its orbit as to be merely usurping judicial forms and facilities,” id. at 309 , 67 S.Ct. 677 (Frankfurter, J., concurring).
The concept of colorable jurisdiction has also been deemed relevant to the availability of a collateral attack to challenge a judgment for lack of subject matter jurisdiction. Courts have distinguished between an erroneous assertion of subject matter jurisdiction, where collateral attack is precluded by res judicata, and a clear usurpation of judicial power, where collateral attack is permitted. See Nemaizer v. Baker, 793 F.2d 58, 65 (2d Cir. 1986) (collecting *292 cases); see also Restatement (Second) of Judgments § 12(1) (1982). “Collateral attack is available only if the assertion of subject matter jurisdiction was without colorable basis, not merely erroneous.” In re U.S. Catholic Conference, 824 F.2d 156, 165 (2d Cir. 1987), rev’d on other grounds, U.S. Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U.S. 72 , 108 S.Ct. 2268 , 101 L.Ed.2d 69 (1988) (on direct appeal, nonparty witness held in civil contempt may challenge subject matter jurisdiction of court in underlying action).
The Administrative Law Judge (“ALJ”) that will be hearing the pending administrative proceeding against the Appellants is not an interloper. The ALJ is an official of the agency, facially clothed with authority to adjudicate the proceeding before her. Whether her appointment comports with the Appointments Clause is a fair question, but there is surely a plausible basis for arguing that her appointment is valid.
With colorable jurisdiction, the ALJ may adjudicate the administrative case, and the losing party will have its opportunity to seek review before the Commission and then petition for review of a final order in a Court of Appeals, see 15 U.S.C. § 80b-13(a).
For this additional reason, I concur in Judge Sack’s opinion for the Court.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/8414004. Public record. Not legal advice.