Amicus Curiae Brief — Raymond J. Lucia, et al., Petitioners v. Securities and Exchange Commission

No. 17-130

================================================================

In The

Supreme Court of the United States

-----------------------------------------------------------------RAYMOND J. LUCIA, et al.,

Petitioners,

v.

SECURITIES AND EXCHANGE COMMISSION,

Respondent.

-----------------------------------------------------------------On Writ Of Certiorari To The

United States Court Of Appeals

For The District Of Columbia Circuit

-----------------------------------------------------------------BRIEF OF ASSOCIATION OF ADMINISTRATIVE

LAW JUDGES AS AMICUS CURIAE IN SUPPORT

OF AFFIRMING THE JUDGMENT BELOW

-----------------------------------------------------------------DEAN HAROLD J. KRENT

CHICAGO-KENT COLLEGE

OF LAW

565 W. Adams St.

Chicago, IL 60661

(312) 906-5010

RUTHANNE M. DEUTSCH

Counsel of Record

HYLAND HUNT

DEUTSCH HUNT PLLC

300 New Jersey Ave. NW

Suite 900

Washington, DC 20001

(202) 868-6915

rdeutsch@deutschhunt.com

================================================================

COCKLE LEGAL BRIEFS (800) 225-6964

WWW.COCKLELEGALBRIEFS.COM

QUESTION PRESENTED

Whether administrative law judges of the

Securities and Exchange Commission are Officers

of the United States within the meaning of the

Appointments Clause.

(i)

ii

TABLE OF CONTENTS

Page

INTEREST OF AMICUS CURIAE ........................

1

SUMMARY OF ARGUMENT ................................

2

ARGUMENT ...........................................................

3

I. The Decision Below Was Correct Because

Congress Did Not Confer The Sovereign

Power Of The United States On SEC

ALJs .............................................................

3

A. Congress Creates an Office Only when

It Delegates Sovereign Power in the

Form of Authority to Bind the

Government or Third Parties ................

4

B. Congress Did Not Delegate Sovereign

Authority to SEC ALJs Because They

Lack the Power to Render and Enforce

Final, Binding Decisions .......................

5

II. Any Ruling That SEC ALJs Are Inferior

Officers Should Not Control For ALJs In

Other Agencies ............................................. 12

A. The “Significant Authority” Test May

Play Out Differently across Agencies

when Agency-Specific ALJ Duties Are

Considered ............................................. 13

B. SEC ALJs Exercise Significantly More

Authority than Most Other ALJs ......... 16

C. SSA Judges Exemplify Why ALJs Are

Not Inferior Officers .............................. 19

iii

Page

III.

This Court Should Not Reach The Removal

Question, But The APA Provisions Regarding

Removal Are Constitutional ........................ 28

A. The Removal Question is Not Presented....

28

B. The APA Removal Provision Is

Constitutional Because ALJs Perform

Quasi-Judicial Functions and the APA

Permits Sufficient Executive Control ... 30

CONCLUSION .......................................................

39

APPENDIX

AALJ National Executive Board......................... App. 1

iv

TABLE OF AUTHORITIES

Page

CASES:

Abrams v. Soc. Sec. Admin., 703 F.3d 538 (Fed.

Cir. 2012) .................................................................36

Ass’n of Admin. Law Judges v. Colvin, 777 F.3d

402 (7th Cir. 2015) ............................................. 25, 26

Ass’n of Admin. Law Judges v. Heckler, 594

F. Supp. 1132 (D.D.C. 1984) ....................................25

Buckley v. Valeo, 424 U.S. 1 (1976) ...............................4

Butz v. Economou, 438 U.S. 478 (1978) .........................9

Dames & Moore v. Regan, 453 U.S. 654 (1981) ..........31

Edmond v. United States, 520 U.S. 651 (1997) .. 4, 9, 11

Free Enterprise Fund v. Public Co. Acctg. Oversight

Bd., 561 U.S. 477 (2010) .................................. passim

Freytag v. Comm’r of Internal Revenue, 501 U.S.

868 (1991) .............................................................. 4, 6

Heckler v. Campbell, 461 U.S. 458 (1983)...................21

Heckler v. Day, 467 U.S. 104 (1984) ...................... 20, 25

Humphrey’s Executor v. United States, 295 U.S.

602 (1935) .......................................................... 33, 34

Moore v. Apfel, 216 F.3d 864 (9th Cir. 2000) ..............22

Morrison v. Olson, 487 U.S. 654 (1988) ................ 35, 37

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State

Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983) .......... 30

Mullen v. Bowen, 800 F.2d 535 (6th Cir. 1986) ............23

NLRB v. Noel Canning, 134 S. Ct. 2550 (2014) .........30

v

Page

Ramspeck v. Federal Trial Examiners Conference,

345 U.S. 128 (1953) ............................. 6, 9, 14, 15, 27

Richardson v. Perales, 402 U.S. 389

(1971) ............................................................... passim

Salling v. Bowen, 641 F. Supp. 1046 (W.D. Va.

1986) ........................................................................21

Schweiker v. Hanson, 450 U.S. 785 (1981) .................22

SEC v. Chenery Corp, 332 U.S. 194 (1947) .................22

Shapiro v. Soc. Sec. Admin., 800 F.3d 1332 (Fed.

Cir. 2015) .................................................................36

Sims v. Apfel, 530 U.S. 103 (2000) ........................ 20, 21

Sunshine Anthracite Coal Co. v. Adkins, 310 U.S.

381 (1940) ..................................................................9

The Pocket Veto Case, 279 U.S. 655 (1929) .................31

U.S. Dep’t of Homeland Sec., Bureau of Customs

& Border Prot., 61 FLRA 485 (2006) ......................28

United States v. Perkins, 116 U.S. 483 (1886) ............33

United States v. United Foods, Inc., 533 U.S. 405

(2001) .......................................................................29

Universal Camera Corp. v. NLRB, 340 U.S. 474

(1951) .......................................................................14

Wiener v. United States, 357 U.S. 349 (1958) ....... 33, 34

Wong Yang Sung v. McGrath, 339 U.S. 33 (1950) ......... 6

CONSTITUTIONAL PROVISIONS:

U.S. Const. art. II, § 2, cl. 2 ....................................... 3, 4

U.S. Const. art. II, § 3 .................................................30

vi

Page

STATUTES:

5 U.S.C. § 554(d) .............................................. 27, 32, 34

5 U.S.C. § 556 ..............................................................27

5 U.S.C. § 556(b) ...................................................... 7, 38

5 U.S.C. § 556(c) ................................................ 7, 11, 12

5 U.S.C. § 556(c)(11) ....................................................12

5 U.S.C. § 557 ..............................................................27

5 U.S.C. § 557(b) ........................................................ 7, 8

5 U.S.C. § 1104(a)(2) ...................................................10

5 U.S.C. § 1202(d) ........................................................36

5 U.S.C. § 1302 ............................................................14

5 U.S.C. § 3344 ............................................................10

5 U.S.C. §§ 7101 et seq. ...............................................26

5 U.S.C. § 7103(a)(2)(A) ..............................................27

5 U.S.C. § 7103(a)(15) .................................................27

5 U.S.C. § 7521 ............................................................28

5 U.S.C. § 7521(a) ........................................................37

15 U.S.C. § 45(l) ...........................................................17

15 U.S.C. § 45(m).........................................................17

15 U.S.C. §§ 77a et seq. ...............................................17

15 U.S.C. § 77h-1 .........................................................17

15 U.S.C. § 77h-1(a) ....................................................17

15 U.S.C. § 77t .............................................................16

15 U.S.C. § 78d-1(a).....................................................11

vii

Page

15 U.S.C. § 78d-1(b).....................................................11

15 U.S.C. § 78o ............................................................17

15 U.S.C. § 78o-4 .........................................................17

15 U.S.C. § 78q-1 .........................................................17

15 U.S.C. § 78u(e) ..........................................................8

15 U.S.C. § 80b-3 .........................................................17

19 U.S.C. § 1337(f ) ......................................................17

29 U.S.C. §160(e) .........................................................17

42 U.S.C. § 405(b)(1) ...................................................19

47 U.S.C. § 309(k) ........................................................14

47 U.S.C. § 312 ............................................................14

42 U.S.C. §§ 401 et seq. ...............................................19

42 U.S.C. §§ 1001 et seq. .............................................19

42 U.S.C. §§ 1381 et seq. .............................................19

42 U.S.C. §§ 1395 et seq. .............................................19

REGULATIONS:

5 C.F.R. Part 930 .........................................................14

5 C.F.R. § 930.204(h) ...................................................10

12 C.F.R. § 263.29(b) ...................................................18

12 C.F.R. § 1081.105(c) ...............................................18

12 C.F.R. § 1081.201(d) ...............................................18

12 C.F.R. § 1081.203(e) ...............................................18

12 C.F.R. § 1081.212(c) ...............................................18

16 C.F.R. § 3.24(a) .......................................................18

viii

Page

17 C.F.R. § 10.91(a) .....................................................18

17 C.F.R. § 201.112(b) .................................................18

17 C.F.R. § 201.155(a)(3) .............................................18

17 C.F.R. § 201.180(a) .................................................12

17 C.F.R. § 201.250(c) .................................................18

17 C.F.R. § 201.400(a) .................................................18

18 C.F.R. §§ 385.206-.207 ...........................................14

20 C.F.R. §§ 404.900-.996 ...........................................23

20 C.F.R. § 404.967 .....................................................23

20 C.F.R. § 404.969(a) .................................................23

20 C.F.R. § 404.969(b) .................................................23

20 C.F.R. § 404.969(b)(1) .............................................23

20 C.F.R. § 416.1467 ...................................................23

20 C.F.R. § 416.1469(b) ...............................................23

20 C.F.R. § 416.1469(b)(1) ...........................................23

20 C.F.R. § 422.205 .....................................................23

24 C.F.R. § 100.10 .......................................................17

OTHER AUTHORITIES:

Administrative Procedure: Hearings Before a

Subcomm. of the S. Comm. On the Judiciary,

77th Cong. 250 (1941) ...............................................7

Asher C. Hinds, 1 Hinds’ Precedents of the House

of Representatives 604 (1907) ............................. 5, 21

ix

Page

Daniel Solomon, Summary of Administrative

Law Judge Responsibilities, 31 J. NAT’L ASSOC.

OF ADMIN. LAW JUDICIARY 475 (2011) ......................14

Exchange Act Release No. 70,708 (Oct. 17, 2013) ........ 12

Harold J. Krent, Presidential Control of Adjudication

Within the Executive Branch, 65 CASE W. RESERVE

L. REV. 1083 (2015) .................................................36

Hearings, Appeals and Litigation Law, HALLEX

21I-1-0-3 ..................................................................21

Hearings, Appeals and Litigation Law, HALLEX

I-2-1090 ...................................................................22

Horsky & Mahin, The Operation of the SSA

Administration and Decisional Machinery

(1960) .........................................................................7

Kenneth Barnett, Against Administrative Judges,

49 U.C. DAVIS L. REV. 1643 (2016) ..........................14

KENNETH CULP DAVIS, 2 ADMIN. L. TREATISE

§§ 10.02-03 (1958) .....................................................8

Kenneth Culp Davis, Separation of Functions in

Administrative Agencies, 61 HARV. L. REV. 612

(1948) .......................................................................27

Kent H. Barnett, Resolving the ALJ Quandary,

66 VAND. L. REV. 797 (2013) ...................................36

Officers of the United States Within the Meaning

of the Appointments Clause, 31 Op. O.L.C. 73

(2007) ..................................................................... 4, 5

Paul R. Verkuil, Reflections upon the Federal

Administrative Judiciary, 39 U.C.L.A L. REV.

1341 (1992) ..............................................................25

x

Page

Social Security Administration, Fiscal Year

2019 Budget Overview ............................................36

SSA, Office of Inspector General, Congressional

Response Report, The Social Security

Administration’s Review of Administrative Law

Judges’ Decisions, No. A-07-12-21234 (March

2012) ........................................................................23

Statement of Michael J. Astrue, Commissioner,

SSA, before the Committee on Ways and Means

Subcommittee on Social Security, June 27,

2012 ................................................................... 20, 25

U.S. Dep’t of Justice, Attorney General’s Manual

on the Administrative Procedure Act 83 (1947)

...................................................................................8

Victor G. Rosenblum, Contexts and Contents of

“For Good Cause” as Criterion for Removal of

Administrative Law Judges: Legal & Policy

Factors, 6 W.N. ENG. L. REV. 593 (1984) .............. 6, 7

INTEREST OF AMICUS CURIAE1

The Association of Administrative Law Judges (AALJ)

represents the interests of 1460 non-supervising

ALJs employed by the Social Security Administration

(SSA)—nearly three-quarters of all ALJs serving

across the federal government—and as such has a

keen interest in this case. AALJ was founded as a

professional association in 1971 and has affiliated

since 1999 with the International Federation of

Professional and Technical Engineers, AFL-CIO.2

AALJ aims to preserve the integrity and

independence of the administrative judiciary. Its

objectives include securing the guarantees of the

U.S. Constitution, the Administrative Procedure Act,

the Social Security Act, and all other federal laws;

supporting the professional growth of ALJs; and

improving the working conditions of ALJs through

collective bargaining, political action, and other means,

like participating in several notable court cases

involving judicial independence.

All AALJ’s activities, including the filing of this

brief, further the Association’s goal of protecting

1

This brief is filed with the written consent of all parties. No

counsel for any party authored this brief in whole or in part, and

no person or entity other than amicus curiae or its counsel made

a monetary contribution intended to fund the brief ’s preparation

or submission.

2

Office of Personnel Management (OPM) data show 1655 ALJs

serving at SSA as of March 1, 2017. See https://goo.gl/Vf8UV4.

By March 2018, roughly 1700 ALJs (including supervisory ALJs)

were serving at SSA, according to agency data.

(1)

2

judicial independence and preserving due process in

administrative adjudication.3

------------------------------------------------------------------

SUMMARY OF ARGUMENT

The D.C. Circuit’s judgment should be affirmed

because Congress intended ALJs to be federal civil

service employees, who act as impartial and independent

fact-finders in building records and rendering initial

decisions free from bias and political control, but lack

coercive authority to bind either the government or

third parties.

Because every agency’s organic statute and internal

deployment of ALJs are distinct, even if SEC ALJs are

considered inferior officers, that ruling should not

control for other ALJs; especially those like SSA ALJs

who do not preside over adversarial enforcement

proceedings.

The inverse proposition, however, would hold.

Because SEC ALJs exercise more authority through

a unique variety of agency-conferred duties than do

most other ALJs, if this Court were to hold that SEC

ALJs are federal employees, then the same would

be true for all ALJs. Affirmance of the judgment

would thus firmly shut a Pandora’s Box of otherwise

unending agency-by-agency litigation contesting the

3

The Association’s Constitution is available at https://goo.gl/

KQNphN. AALJ’s National Executive Board members are listed

in the Appendix.

3

specific duties discharged by each agency’s ALJs, and the

precise nature of their appointments.

Finally, this Court should not reach the removal

question, which was not pressed or passed on below

and is not independently worthy of review. But if it

does, it should hold that ALJ removal protections are

consistent with Article II given ALJs’ status as quasijudicial officers.

------------------------------------------------------------------

ARGUMENT

I.

The Decision Below Was Correct Because

Congress Did Not Confer The Sovereign

Power Of The United States On SEC ALJs.

The decision to create an office within the

meaning of the Appointments Clause belongs in the

first instance to Congress, which must “establish[ ]

[it] by Law.” U.S. Const. Art. II, § 2, cl. 2. Such

establishment requires a delegation of the sovereign

power of the United States to the office, meaning the

authority to bind the government or the public in the

name of the United States.

Congress did not confer that sort of sovereign

authority on ALJs generally when it created them as

a special class of employees within administrative

agencies. Rather, by requiring impartial initial

administrative adjudications but preserving plenary

agency authority over all final decisions, Congress

made plain that the sovereign authority of the United

4

States was vested in agency heads, not ALJs. Nor did

Congress confer sovereign authority on SEC ALJs

specifically, addressing them only as assistants to

the Commission who lack the authority to bind the

Commission or third parties.

A. Congress Creates an Office Only when It

Delegates Sovereign Power in the Form

of Authority to Bind the Government or

Third Parties.

The line between inferior officers and employees

rests on at least three constitutional minimums. The

starting point is that Congress must create the office

“by Law.” U.S. Const. Art. II, § 2, cl. 2; see Freytag v.

Comm’r of Internal Revenue, 501 U.S. 868, 881 (1991).

Next, under both historical and current

understanding, the law must delegate some portion

of the sovereign power of the United States to the

officer. See Br. for Court-Appointed Amicus Curiae,

at 24-25, 28 (hereafter “Court-Appointed Amicus Br.”);

Edmond v. United States, 520 U.S. 651, 662 (1997)

(“The exercise of ‘significant authority pursuant to

the laws of the United States’ marks . . . the line

between officer and nonofficer.”) (quoting Buckley v.

Valeo, 424 U.S. 1, 126 (1976)); Officers of the United

States Within the Meaning of the Appointments

Clause, 31 Op. O.L.C. 73 (2007) (hereafter “OLC

Opinion”), 2007 WL 1405459, at *5-*10 (collecting

sources from the Founding era and thereafter).

5

Finally, the authority to bind in the name of the

officer (not on behalf of a superior) is an essential part

of the exercise of the sovereign authority and thus

of constitutional officer status. See Court-Appointed

Amicus Br. 25-34; OLC Opinion, 2007 WL 140545, at

*11 (surveying historical sources, case law, and other

OLC Opinions to conclude that “one could define

delegated sovereign authority as power lawfully

conferred by the Government to bind third parties,

or the Government itself, for the public benefit”);

Asher C. Hinds, 1 Hinds’ Precedents of the House

of Representatives 604, 610 (1907) (describing 1899

report of the Judiciary Committee of the House of

Representatives concluding that commissioners were

not officers of the United States when they were “mere

advisory agents” with “no power to decide any question

or bind the Government or do any act affecting the

rights of a single individual citizen”).

B. Congress Did Not Delegate Sovereign

Authority to SEC ALJs Because They

Lack the Power to Render and Enforce

Final, Binding Decisions.

Congress created SEC ALJs as employees, not

officers, because SEC ALJs lack the authority to bind

the government and third parties under either the

APA or the organic statutes governing the SEC. In this

analysis, the duties conferred by Congress—rather

than agency rule—are the most informative, because

only statutorily-conferred duties reflect Congress’s

intent (or not) to establish a constitutional office by

6

law. Considering those duties, SEC ALJs do not

exercise significant authority under the laws of the

United States. Their statutory duties include neither

final decision-making authority nor enforcement power,

unlike the special trial judges in Freytag (who could

enforce discovery orders in all cases and make final

decisions in many, 501 U.S. at 881-82).

1. The creation in the APA of ALJs (then hearing

examiners) as “classified Civil Service employees,”

Ramspeck v. Federal Trial Examiners Conference,

345 U.S. 128, 133 (1953), was a grand compromise

between two competing objectives: agency control and

adjudicative impartiality. How Congress ultimately

struck the balance confirms that ALJs are employees,

not officers. ALJs assist agencies through impartial

fact finding and adjudication—but the agency may

disregard their determinations at will.

a. As other amici have well described,4 the

Administrative Procedure Act was extraordinary

legislation, passed unanimously by both houses, only

after “a long period of study and strife,” Wong

Yang Sung v. McGrath, 339 U.S. 33, 39-41 (1950).

Among the “key objectives” of the Act was the

“prevention of agency abuses of examiners’ integrity

and impartiality.” Victor G. Rosenblum, Contexts and

4

See, e.g., Br. for Administrative Law Scholars as Amici

Curiae in Support of Neither Party, at 6-11 (“Pierce Br.”); Br. for

Forum of United States Administrative Law Judges as Amicus

Curiae in Support of Neither Party, at 4-8 (“Forum Br.”); Br. for

Federal Administrative Law Judges Conference as Amicus Curiae

in Support of Neither Party, at 4-7 (“FALJC Br.”).

7

Contents of “For Good Cause” as Criterion for Removal

of Administrative Law Judges: Legal & Policy Factors,

6 W.N. ENG. L. REV. 593, 609 (1984). Congress thus

placed “trial examiners, and other similar employees”

in the civil service to prevent political appointments to

these positions. Administrative Procedure: Hearings

Before a Subcomm. of the S. Comm. On the Judiciary,

77th Cong. 250, 876, 1000 (1941).

Although protected from political interference,

Congress intended the ALJ to still serve as a “member

of a regulatory team—independent of the agency to be

sure . . . but nonetheless subordinate in the sense that

his work must mesh with and adapt to conform itself

to the role and responsibility of the agency.”

Rosenblum, supra, at 616-17 (quoting Horsky &

Mahin, The Operation of the SSA Administration and

Decisional Machinery (1960) (mimeo)).

This balance between adjudicative independence

and regulatory control is reflected in the duties

assigned to ALJs by the APA. ALJs preside over

fact-finding hearings at which evidence will be taken,

5 U.S.C. § 556(c) (list of presiding-employee tasks),

have a duty to act impartially, id. § 556(b) (“The

functions of presiding . . . shall be conducted in an

impartial manner.”), and issue initial decisions (if

tasked by their agency to do so), id. § 557(b).

But ALJs cannot bind the agency, which has

plenary authority regardless of any ALJ act or decision.

5 U.S.C. § 557(b) (“On appeal from or review of the

initial decision, the agency has all the powers which it

8

would have in making the initial decision . . . ”); see

also U.S. Dep’t of Justice, Attorney General’s Manual

on the Administrative Procedure Act 83 (1947) (the

agency retains “complete freedom of decision—as

though it had heard the evidence itself ”); KENNETH

CULP DAVIS, 2 ADMIN. L. TREATISE §§ 10.02-03 (1958)

(noting the “APA clearly maintains the examiner in

a subordinate position” in part because the “initial

decision can rise no higher than a recommendation”).

Consistent with their role as impartial hearing

officers, ALJs also cannot bind private parties. No ALJ

decision becomes the final decision of the agency

without the agency’s consent. 5 U.S.C. § 557(b).5 And

ALJs lack enforcement power (for interim or final

decisions) in the form of contempt or otherwise. If a

party ignores an ALJ-issued subpoena, the ALJ has no

mechanism to compel it to submit. Rather, the agency

itself (not the ALJ) ordinarily must go to court to

obtain that compulsion. See, e.g., 15 U.S.C. § 78u(e)

(application to court by SEC to enforce orders). The

5

It is irrelevant whether agency consent is exercised through

an affirmative post-decision act, a blanket policy accepting all

decisions in certain categories, or silent acquiescence. Regardless

of procedure, the agency—not the ALJ—holds the sovereign

power. If the only criterion for officer status were the ability

to make a “final” decision that stands as the agency’s absent a

further affirmative act, it would prove far too much, because many

decisions are made every day by undisputed agency employees

(like the initial examiners for disability claims, see p. 20, infra),

that are never appealed and never even reach the ALJ level.

Simply because some agency decisions become final without

express action by the agency head does not transform employees

making those decisions into constitutional officers.

9

same is true for an ALJ decision that the agency has

opted to allow to become final without review; it is not

enforceable without independent agency action (and,

often, an order from an Article III court). See id.; pp.

16-17, infra (discussing enforcement of orders for other

agencies).

The absence of the authority to bind confirms that

Congress did not delegate sovereign power of the

United States to ALJs. ALJs are instead unique civil

service employees insulated from political influence

through tenure and removal protections. They are

insulated “from political interference,” Butz v. Economou,

438 U.S. 478, 513 (1978), and are “not to be paid,

promoted, or discharged at the whim or caprice of the

agency or for political reasons.” Ramspeck, 345 U.S.

at 142. But they are not shielded from plenary agency

policy control, and serve as front-line, advisory

adjudicators—not final decision-makers.

Such plenary control over regulatory policy and

administrative outcomes maintains complete political

accountability within the Executive Branch for the

exercise of executive power by the agency, fulfilling the

objective of the Appointments Clause. See Edmond,

520 U.S. at 663 (the Appointments Clause is “designed to

preserve political accountability relative to important

Government assignments”). The mere assistance of

employees, private industry, or other advisors in

carrying out agency functions does not transform those

assistants into officers. Providing support to the

exercise of power is not the exercise of power. This

Court in Sunshine Anthracite Coal Co. v. Adkins, 310

10

U.S. 381, 399 (1940), thus held that the Appointments

Clause is not implicated when individuals “function

subordinately to the [agency]” and were not entrusted

with “law-making” power.

b. The fact that ALJ duties are fungible (and,

by congressional design, variable) across agencies,

reinforces that Congress did not contemplate a specific

office wielding sovereign authority when it created the

ALJ corps. Rather, Congress created a special class of

federal employees to be impartial (but not final) factfinders, with an elevated, universal skill set, and

specific duties assigned by the agency.

Uniform qualification and examination criteria,

5 U.S.C. § 1104(a)(2), and the possibility of ALJ

transfer between agencies, 5 C.F.R. § 930.204(h), see

also 5 U.S.C. § 3344 (permitting temporary detail of

ALJs from one agency to another)—most often from

SSA, the largest employer of ALJs, to other agencies,

see Pierce Br. 9—confirm the employee status of ALJs.

ALJs are selected through a centralized process, where

OPM, a neutral civil service agency, administers an

examination for those eligible for a generic position

based on objective qualification criteria. Agencies

then select from an OPM certification that contains

at least the three highest ranking candidates for

the geographical location where they are hiring. See 5

U.S.C. § 1104(a)(2); FALJC Br. 7-9 & App. C (describing

selection process). OPM’s centralized certification

process is further proof that Congress did not consider

ALJs to be inferior officers, because the principal

officers whom they serve do not fully control their

11

selection. Congress set no prescribed hierarchy as

would typify a principal/inferior officer relationship.

2. Consideration of the authority conferred on

SEC ALJs under the Commission’s organic statutes

does not alter the outcome. Although some of the

authorities exercised by SEC ALJs are unique among

ALJs, see part II.B, infra, the statutes governing

SEC ALJs in the main strike the same balance as

within the APA: the SEC may work through ALJs (or

other employees) to accomplish its functions, 15 U.S.C.

§ 78d-1(a), but the Commission itself always retains

the final decision authority. Id. § 78d-1(b). That leaves

SEC ALJs without the authority to bind, making them

fall on the employee side of the employee-officer line.

See Court-Appointed Amicus Br. 44-51.

Neither the APA, 5 U.S.C. § 556(c), nor the statutes

specific to the SEC, confer “significant authority

pursuant to the laws of the United States,” Edmond,

520 U.S. at 662 (internal citation omitted), on SEC

ALJs. And the duties highlighted by Petitioner (Br.

21-23) that suggest greater authority for SEC ALJs

are created by agency rule, not by statute. They do not

reflect a congressional decision to delegate sovereign

power to SEC ALJs. What’s more, even those rulebased duties have been cut back in recent years, as

Petitioner acknowledges. For example, the power to

issue default orders (including default orders that

levy sanctions and cease-and-desist obligations) is

conferred by rule, but (as noted by Petitioner (Br. 32)),

the Commission has, since 2013, mandated that ALJs

can issue only initial decisions in such circumstances,

12

which require Commission action to take effect. See

Exchange Act Release No. 70,708 (Oct. 17, 2013).

Accordingly, SEC ALJs do not possess authority to

issue binding default orders.

The power of redressing contemptuous conduct,

17 C.F.R. § 201.180(a), is likewise conveyed by rule,

not by statute, and is very limited (and subject to

de novo review). See Court-Appointed Amicus Br. 9.

Moreover, this outlier rule should not control the

constitutional analysis under the Appointments Clause,

where Congress itself has declined to confer any

enforcement authority on ALJs, see 5 U.S.C. § 556(c).

Although Congress contemplated that agencies could

assign additional duties related to presiding over

hearings to ALJs, 5 U.S.C. § 556(c)(11), that narrow

provision does not grant the agency license to establish

an “office” in the absence of more explicit congressional

authorization. To the extent that some SEC rules

may stretch too far, the result should be that the rules

are invalid, rather than undercutting Congress’s

careful assignment of limited powers to ALJs.

II.

Any Ruling That SEC ALJs Are Inferior

Officers Should Not Control For ALJs In

Other Agencies.

For the reasons described above, all ALJs are

employees. But if the Court concludes otherwise for

SEC ALJs given their agency-conferred duties and

responsibilities, that function-specific analysis should

not control for ALJs from other agencies, because every

13

agency deploys its ALJs differently. There can be

no one-size-fits-all functional approach to the Article

II question. Cf. Free Enterprise Fund v. Public

Co. Acctg. Oversight Bd., 561 U.S. 477, 506-07 (2010)

(“[T]he very size and variety of the Federal

Government . . . discourage general pronouncements”

on separation-of-powers questions not specifically

presented).

A. The “Significant Authority” Test May

Play Out Differently across Agencies

when Agency-Specific ALJ Duties Are

Considered.

Petitioner argues that only ALJs tasked by their

agency to preside over adversarial enforcement

proceedings are inferior officers, taking pains to

exclude other ALJs from the reach of his argument.

E.g., Pet. Br. 41-42. Rightly so. ALJ authority,

particularly the authority to bind others, is arguably

greater when presiding over adversarial enforcement

proceedings. But even for such proceedings, each

agency differs in how much authority ALJs are

permitted to wield.

This Court’s cases, as well as the parties’ careful

parsing of the specific duties and functions of SEC

ALJs here, confirm that the Appointments Clause

analysis is fact-specific and contextualized. Yet the

Government’s brief, as well as some amici, suggest

that the constitutional analysis would be the same for

14

all ALJs across every agency. AALJ respectfully

disagrees.

As Justice Frankfurter observed, the APA

established a “mood” that “must be respected . . .

[that] can only serve as a standard for judgment and

not as a body of rigid rules assuming sameness of

applications.” Universal Camera Corp. v. NLRB, 340

U.S. 474, 487 (1951). Thus, although every ALJ is

subject to the same selection criteria, see 5 U.S.C.

§ 1302; 5 C.F.R. Part 930, once placed within a given

agency, the duties ALJs perform vary tremendously.

Some, like those at the SEC, preside over adversarial

enforcement proceedings, while others, like the

majority of ALJs who work for the Social Security

Administration, determine eligibility for government

benefits. Still others hear regulatory matters, e.g., FCC

hearings on licenses under 47 U.S.C. §§ 312, 309(k); or

FERC hearings resolving rate disputes, 18 C.F.R.

§§ 385.206-.207.6

ALJ duties can also vary within agencies. When

upholding intra-agency grade differences for ALJs,

the Court in Ramspeck noted the different roles

6

See generally Daniel Solomon, Summary of Administrative

Law Judge Responsibilities, 31 J. NAT’L ASSOC. OF ADMIN. LAW

JUDICIARY 475 (2011); see also Kenneth Barnett, Against Administrative

Judges, 49 U.C. DAVIS L. REV. 1643, 1652 & n.42 (2016). Beyond

ALJs, whose independence is preserved by the APA, agencies also

employ a far greater number of Administrative Judges (AJs), who

often perform the same functions, and who are typically agency

attorneys. See generally id. Whether or not sound policy, agencies’

use of employee AJs interchangeably with APA ALJs is another

indication of ALJs’ employee status.

15

Civil Aeronautics Board ALJs played in safety versus

economic cases, as well as differences between the

“relatively simple applications for extensions” of

certificates heard by ICC ALJs and other ICC

proceedings “involv[ing] complicated and difficult

railroad rate” determinations. 345 U.S. at 134. A

functional approach to the Appointments Clause

analysis, thus, might yield different results for

ALJs even within the same agency.

There are also differences in how each agency

appoints its ALJs; none addressed in this record.

So even if this Court concludes that SEC ALJs are

inferior officers and that their appointment was

unconstitutional, such a holding cannot govern other

ALJs for the additional reason that it is unclear how

other agencies appoint their ALJs.

Here, it took years of litigation culminating in

an affidavit ordered from the Commission’s Deputy

Chief Operating Officer to divulge the SEC’s own

ALJ appointment procedures. Pet. App. 298a-299a. The

process would likely be no less complicated for the 30

other agencies that employ ALJs. Each, including SSA,

has its own internal appointment process that is not

necessarily prescribed by statute or even published

rule, and that can and does change over time.

The absence of any statutory mandate governing

individual agency internal hiring procedures, once

ALJs have been selected by OPM, is yet further proof

that Congress, in enacting the APA, did not consider

16

ALJs constitutional officers that required appointment

in conformance with Article II.

B. SEC ALJs Exercise Significantly More

Authority than Most Other ALJs.

Because SEC ALJs exercise a greater array of

functions and are vested with more discretion by

agency rule than other ALJs, including other ALJs who

preside over adversarial enforcement proceedings,

Petitioner’s attempt to paint all adversarial-hearing

ALJs with the same brush fails.

SEC judges are among the few ALJs (about 150)

who preside over adversarial enforcement proceedings.

And the expansive jurisdiction of SEC ALJs, their

ability to order significant monetary penalties, and the

fewer procedural protections afforded to respondents

in SEC adjudications all provide greater authority to

SEC judges and distinguish them from their ALJ

counterparts in other agencies.

As others have chronicled,7 SEC ALJs have

authority to impose substantial monetary penalties

through administrative proceedings, including the

power to order disgorgement, 15 U.S.C. § 77t. SEC

ALJs also have cease-and-desist powers—that is,

powers prohibiting licensed firms and persons from

7

E.g., Br. of Urska Velikonja & Joseph A. Grundfest as Amici

Curiae in Support of Neither Party, at 7-8 (describing the

Commission’s expanding authority to seek monetary penalties

since 1990, culminating in civil fines against non-registered

entities under the Dodd-Frank Act).

17

violating the securities laws—and the ability to revoke

licenses or bar defendants from doing securitiesindustry work. 15 U.S.C. § 77h-1. Although this power

is always subject to the plenary authority of the SEC,

it still outstrips the authority of ALJs in other

agencies, largely because those other agencies are

themselves less powerful than the SEC.

For example, the Federal Trade Commission and

the International Trade Commission use ALJs for

administrative enforcement proceedings but must

seek civil penalties in a federal district court. 15 U.S.C.

§§ 45(l), (m) (FTC); 19 U.S.C. § 1337(f ) (ITC). The

National Labor Relations Board, too, can enforce its

orders remedying unfair labor practices only on

application to a court of appeals. 29 U.S.C. §160(e).

Unlike many other agencies, SEC ALJs also

have jurisdiction over non-regulated entities, 15 U.S.C.

§§ 78o, 78o-4, 78q-1, 80b-3, and may impose (with

SEC consent) monetary penalties on any individual

who “is violating, has violated, or is about to violate

any provision of this [title] [id. §§ 77a et seq.], or

any rule or regulation thereunder.” Id. § 77h-1(a). By

comparison, other agencies are far more limited in

their jurisdiction. E.g., 24 C.F.R. § 100.10 (HUD’s

jurisdiction in Fair Housing Act cases limited to

licensed or regulated businesses).

SEC ALJs also have some unique authorities

under agency procedural rules. For example, SEC

internal rules empower its ALJs to limit dispositive

motions in 120-day proceedings, where motions for

18

summary disposition are available “only with leave of

the hearing officer.” 17 C.F.R. § 201.250(c). By contrast,

dispositive motions are available without ALJ leave in

other agency adjudications. E.g., Consumer Financial

Protection Bureau (CFPB), 12 C.F.R. § 1081.212(c);

Federal Trade Commission, 16 C.F.R. § 3.24(a); Office

of Financial Institution Adjudication/Federal Reserve,

12 C.F.R. § 263.29(b); and Commodity Futures Trading

Commission, 17 C.F.R. § 10.91(a).

There are also fewer immediate checks on an SEC

ALJ’s power when compared to otherwise analogous

counterparts (like the CFPB). Specifically, if a party

moves to disqualify an SEC ALJ, the ALJ will rule on

the motion and may continue the proceeding if the

motion is denied. 17 C.F.R. § 201.112(b). Interlocutory

appeals are “disfavored,” and the Commission grants

such appeals “only in extraordinary circumstances.”

Id. § 201.400(a). But if a party moves to disqualify

a CFPB ALJ, the ALJ must certify the motion to

the CFPB Director for a “prompt determination” on

disqualification if he or she does not self-disqualify. 12

C.F.R. § 1081.105(c).

Finally, SEC ALJs can find that a party has

defaulted for a wide range of conduct and can enter a

default (subject to SEC confirmation) if a party fails to

cure a deficient filing within a specified time. 17 C.F.R.

§ 201.155(a)(3). But a CFPB ALJ can find a party in

default only where the party does not file an answer,

12 C.F.R. § 1081.201(d), or fails to appear, id.

§ 1081.203(e).

19

These differences in ALJ authority in adversarial

enforcement actions pale in comparison to the

differences across agencies in usage of ALJs more

generally. As Petitioner recognizes, ALJs who run

adversarial enforcement proceedings cannot be lumped

together with ALJs who conduct other types of

proceedings for purposes of the Article II analysis.

Examining in more detail the work done by SSA ALJs,

who far outnumber all other ALJs, helps explain why.

C. SSA Judges Exemplify Why ALJs Are

Not Inferior Officers.

1. SSA ALJs are arguably the quintessential

ALJs. SSA adjudicators served as the model for APA

hearing examiners. See Richardson v. Perales, 402 U.S.

389, 409 (1971). And most ALJs start at the Social

Security Administration before moving to positions

at other agencies. The roughly 1700 ALJs working

for SSA far outnumber their peers in other agencies

and preside over non-adversarial administrative

adjudications brought under the Social Security Act.

See 42 U.S.C. § 405(b)(1).8

As then-Commissioner Astrue testified in 2012, a

“key component of the integrity of [the SSA] hearings

process is that ALJs act as independent adjudicators—

who fairly apply the standards in the Act and

our regulations. We respect the qualified decisional

8

E.g., Titles II, VIII, XVI, XVIII of the Social Security Act, 42

U.S.C. §§ 401 et seq., id. §§ 1001 et seq., id. §§ 1381 et seq., id.

§§ 1395 et seq.

20

independence that is integral to the ALJ’s role as an

independent adjudicator.” Statement of Michael J.

Astrue, Commissioner, SSA, before the Committee on

Ways and Means Subcommittee on Social Security,

June 27, 2012 (Astrue Testimony).9

a. SSA ALJs are involved in one phase of an

administrative process that has been described as

“unusually protective” of disability claimants. Heckler

v. Day, 467 U.S. 104, 106 (1984). An on-the-record

hearing before an SSA ALJ is the third stage of agency

review, occurring only after a claimant has been

twice-denied benefits at the State level. See generally

Astrue Testimony, supra (explaining the four-stage

administrative review process); see also Richardson,

402 U.S. at 392-98 (detailing one claimant’s path

through the multi-level administrative process).

The hearings are non-adversarial. This Court

has previously observed that “the differences between

courts and agencies are nowhere more pronounced

than in Social Security proceedings.” Sims v. Apfel, 530

U.S. 103, 110 (2000) (plurality op.). Unlike Article III

judges, or other ALJs who preside over adversarial

enforcement proceedings, SSA ALJs are oft-said to wear

three hats, because in presiding over SSA non-adversarial

hearings, they act as “(1) a judge, (2) a representative

of the government who cross examines the claimant,

and, (3) an adviser to the claimant, required by

regulation to fully develop the case to see that the

claimant has a fair hearing regardless of whether the

9

Available at https://goo.gl/Wrgs24.

21

claimant is represented by counsel or otherwise.”

Salling v. Bowen, 641 F. Supp. 1046, 1053 (W.D. Va.

1986); see also Sims, 530 U.S. at 110-11 (describing

Social Security proceedings as inquisitorial rather

than adversarial, and the ALJ’s duty as investigative).

This independent “duty to inquire,” Heckler

v. Campbell, 461 U.S. 458, 471 (1983) (Brennan,

J., concurring), exemplifies the core fact-finding

and record-building functions of ALJs as originally

contemplated under the APA, and further indicates

the ALJ’s employee status. See 1 Hinds’ Precedents

at 607-08 (1899 report concluding that certain

commissioners were not officers because the “mere

power to investigate some particular subject and

report thereon . . . does not constitute a person an

officer”).

And while SSA ALJs exercise discretion and

independent judgment in determining eligibility for

benefits and adjudicating other issues they are tasked

to decide, they do so with the benefit of comprehensive

agency guidelines, such as medical-vocational grids,

that provide detailed schedules on medical criteria

for different levels of impairment. SSA also provides

internal guidance tools, like the Hearings, Appeals

and Litigation Law (HALLEX) manual, intended to

“communicate[ ] guiding principles and procedures” to

SSA adjudicators. HALLEX I-1-0-3. One of these

guidelines even urges ALJs to refer novel policy issues

to their agency supervisors, rather than decide the

question themselves in the first instance, while

recognizing that the need for any referral will be

22

rare given the comprehensive guidelines already

provided.10

SEC ALJs, although also circumscribed by APA and

agency constraints in their policy-making role, have

considerably more leeway for interstitial common-law

decision-making. In contrast to non-adversarial

determinations of benefit eligibility status, administrative

enforcement proceedings will, by necessity, involve the

refining of “statutory standards” through “case-by-case

evolution.” SEC v. Chenery Corp, 332 U.S. 194, 202-03

(1947). Here, at least by Petitioner’s account, the ALJ’s

definition of “backtest” helped shape the course of the

litigation. See Pet. Br. 7-8. While ultimately it is the

Commission’s final call, the opportunity for SEC ALJs

to make these sorts of legal determinations even in

the first instance is foreign to SSA ALJs, given the

detailed agency policies and guidelines that cabin their

discretion.

10

See HALLEX I-2-1090. HALLEX guidelines are not

promulgated through notice and comment rulemaking and courts

have recognized that they are not binding. See Schweiker v.

Hanson, 450 U.S. 785, 789 (1981); Moore v. Apfel, 216 F.3d 864,

868-69 (9th Cir. 2000). The extent to which HALLEX guidelines

bind SSA ALJs—particularly if they encroach upon an ALJ’s

independence in how hearings are conducted or may conflict with

published regulations—is frequently litigated between AALJ

members and SSA. The agency’s position is that HALLEX is

binding on all SSA employees, including ALJs. Whatever the

propriety of the agency’s position, it further supports the

conclusion that its ALJs are federal employees, albeit sui generis

employees who conduct due process hearings pursuant to the APA

with concomitant quasi-judicial decision-making powers.

23

b. An additional distinguishing feature of the

scope of authority exercised by SSA ALJs as compared

to others is the nature of internal review mechanisms.

In contrast to other agencies, the Appeals Council plays

a critical role. See generally 20 C.F.R. §§ 404.900-.996,

422.205; see also Mullen v. Bowen, 800 F.2d 535, 536-37

(6th Cir. 1986) (en banc) (describing Appeals Council).

Not only must claimants dissatisfied with an ALJ

determination seek Appeals Council review to exhaust

administrative remedies, 20 C.F.R. §§ 404.967, 416.1467,

but the Council itself can (and often does), on case-specific

own-motion review, review ALJ decisions sua sponte.

See id. § 404.969(a).11 In addition, as part of a more

generalized quality review system, the agency selects

a sampling of cases to review pre-effectuation. See id.

§§ 404.969(b), 416.1469(b).

To preserve ALJ independence, SSA regulations

bar the agency from conducting pre-effectuation

reviews of ALJs’ decisions based on the identity of a

specific ALJ or the hearing office where the decision

was made. 20 C.F.R. §§ 404.969(b)(1), 416.1469(b)(1).

Instead, SSA uses random and selective sampling to

pick decisions allowing benefits for such reviews. Id.

The agency also undertakes special studies based on

anomalies identified. See generally SSA, Office of

Inspector General, Congressional Response Report,

11

Further support for recognizing that SSA ALJs are

federal employees, not officers, is the fact that their decisions

can be overturned by an Appeals Council staffed by employee

attorney-advisors, who are exercising the Commissioner’s

delegated final decision-making authority.

24

The Social Security Administration’s Review of

Administrative Law Judges’ Decisions, No. A-07-12-21234,

at 6-7 (March 2012).12 Through these various review

processes, the SSA aims to ensure that ALJ decisions,

overall, do not stray from mandated regulatory policy.

c. There is a rationale behind these constraints.

This Court, nearly a half-century ago, recognized that

the disability programs administered by SSA are of “a

size and extent difficult to comprehend.” Richardson,

402 U.S. at 399. And the workload has only grown since

then. The number of ALJs employed by SSA, and

the sheer quantity of cases they handle, is further

indication that SSA ALJs are usually applying policies,

not making them.

There are only five ALJs at the SEC, and the

Federal Trade Commission and the Consumer Finance

Protection Bureau, other agencies that pursue

administrative enforcement actions, have only one

apiece. See OPM, ALJs by Agency.13 In contrast, some

1700 ALJs currently serve at the Social Security

Administration. See supra note 2. And they handle a

far greater number of cases, both overall and per

judge.

During the first five months of fiscal year 2018,

roughly 283,000 initial decisions were issued by SSA

ALJs.14 And although ALJs succeeded in reducing the

12

Available at https://goo.gl/8QDVfK.

Available at https://goo.gl/Vf8UV4.

14

See https://goo.gl/vhfLJA.

13

25

agency’s backlog during this period, nearly 1,000,000

cases remain pending. Id. In contrast, fewer than 500

administrative proceedings are currently pending, at

all stages, before the SEC.15

Management challenges for a hearing load of this

magnitude have yielded the unique agency appeal

structure and system of internal review described

above. The agency has long “sought to balance the need

for accuracy and fairness to the claimant with the need

to handle a large volume of claims in an expeditious

manner.” Astrue Testimony, supra, at 3. The Social

Security hearings system “must be fair—and it must

work.” Richardson, 402 U.S. at 399.

These twin goals are sometimes competing, reflecting

a tension between the promise of individualized justice

and a “need for efficiency” that is “self-evident.”

Heckler, 461 U.S. at 461 n.2. For years, “SSA and its

independent-minded ALJs [have been] locked in a

continuing struggle over the proper parameters of . . .

management standards.” Paul R. Verkuil, Reflections

upon the Federal Administrative Judiciary, 39 U.C.L.A

L. REV. 1341, 1354 (1992). And Amicus AALJ has

long fought to protect ALJ independence in setting the

right balance. See, e.g., Ass’n of Admin. Law Judges v.

Heckler, 594 F. Supp. 1132, 1143 (D.D.C. 1984)

(recognizing that focusing review on ALJs with high

allowance rates created an “atmosphere of tension and

unfairness which violated the spirit of the APA, if

no specific provision thereof ”); Ass’n of Admin. Law

15

See https://goo.gl/E9xMFY.

26

Judges v. Colvin, 777 F.3d 402 (7th Cir. 2015); see also

id. at 406 (Ripple, J., concurring) (declining to assert

jurisdiction over AALJ’s challenge to SSA policy

mandating number of cases to be decided annually and

recognizing the “gnarled intersection” of the APA and

the Civil Service Reform Act).

This ongoing tug-of-war reflects how SSA ALJs

are subject to more levels and varieties of internal

agency control than are their counterparts in other

agencies. Such a high degree of agency review and

supervision is yet another feature distinguishing them

from SEC ALJs.

2. The nature of SSA ALJs’ working conditions

confirms they are federal employees. And they have

long been classified as such by OPM, unionized as

federal employees, and represented by AALJ under the

Federal Service Labor-Management Relations Statute

(FSLMRS), 5 U.S.C. §§ 7101 et seq.

Ultimately, whatever this Court decides about the

constitutional officer status of SSA or other ALJs, it

should have no bearing on their status as federal

employees protected under federal labor laws. The

Constitution has nothing to say about employee status

under federal labor statutes, so even if deemed

constitutional officers, ALJs can and should still be

treated as employees under the relevant federal

statutes. Cf. Free Enterprise Fund, 561 U.S. at

485-86 (noting provisions that Board members are

not government officials for statutory purposes, but

27

parties’ agreement that members are officers of the

United States for constitutional purposes).

To start, and contra Pet. Br. 35-36, the APA uses

the terms officers and employees interchangeably

when describing ALJs. The statute that created

ALJs thus “consistently uses the term ‘officer’ or the

term ‘officer, employee, or agent’ ” to “refer to [agency]

staff members.” Kenneth Culp Davis, Separation of

Functions in Administrative Agencies, 61 HARV. L. REV.

612, 615 & n.11 (1948). But reference to simple

“officers,” rather than “officers of the United States”

does not establish congressional intent to create an

office. See Court-Appointed Amicus Br. 55. And in

1966, when Congress enacted title 5 into positive law,

it replaced the term “officer” with the term “employee.”

E.g., 5 U.S.C. § 554(d) (referencing “the employee who

presides at the reception of evidence” under § 556, who

“shall make the recommended decision or initial

decision required by § 557”); see Court-Appointed

Amicus Br. 55-56. This Court too, in its pathmarking

decision on the protections afforded to hearing

examiners under the APA, has used the terms officer

and employee interchangeably. Ramspeck, 345 U.S. at

132.

What’s more, the Government’s decades-long

unbroken course of conduct in engaging in collective

bargaining with Amicus AALJ confirms that ALJs are

protected federal employees under the FSLMRS. That

statute defines employee as “an individual employed in

an agency.” 5 U.S.C. § 7103(a)(2)(A). And the definition

of “professional employees,” in 5 U.S.C. § 7103(a)(15),

28

readily encompasses ALJs, who regularly, and exclusively,

make “determinations that require judgment and

extensive educational background, the hallmark of

professional employees.” U.S. Dep’t of Homeland

Sec., Bureau of Customs & Border Prot., 61 FLRA 485,

493 (2006). Although SSA ALJs’ status as federal

employees for collective bargaining purposes would

not preclude inferior officer status under Article II, it

is more consistent to consider ALJs employees in both

contexts.

In sum, any Article II holding for SEC ALJs

cannot resolve the constitutional status of ALJs in

other agencies. And whatever the constitutional result,

it is irrelevant to the question of whether ALJs are

protected federal employees under the FSLMRS.

III. This Court Should Not Reach The Removal

Question, But The APA Provisions Regarding

Removal Are Constitutional.

A. The Removal Question Is Not Presented.

The Government alone asks this Court to apply

the constitutional avoidance canon to reinvent the

APA’s “good cause” removal provision, 5 U.S.C. § 7521,

because “[i]f Section 7521 were [not] construed” that

way, it might “undermine the President’s ability to

supervise the actions of the Executive Branch” to an

unconstitutional degree. U.S. Br. 48. There is no reason

to reach this hypothetical question, and every reason

not to.

29

First, the question was not pressed or passed on

below, which is reason enough not to decide it here.

See, e.g., United States v. United Foods, Inc., 533 U.S.

405, 417 (2001).16 Second, there is no circuit law on

the constitutional validity of the good cause removal

standard for ALJs, much less a circuit split. Finally, the

question is not only “not presented” here (Pet. Br. 38),

it is a hypothetical that might not be presented at all.

The Government does not argue that the APA is

unconstitutional as written, but only that it might be

unconstitutional if it were not construed to permit

ALJ removal for misconduct, poor job performance,

and failure to follow agency rules—even as the

Government concedes that some ALJs have been

removed on those grounds. See U.S. Br. 46.

Ultimately, the question of officer status under the

Appointments Clause is entirely distinct from the

question of how much Executive Branch supervision

is enough under the Take Care Clause. There is

thus no compelling reason for the Court to cast its

long-established practice aside and to decide the

removal question.

16

The Government usually agrees, even in cases raising the

same separation of powers concerns. See Br. for United States in

Opposition to Certiorari, Scott v. FDIC, No. 17-567, at 5-6 (arguing

the Court should not review whether FDIC ALJs are inferior

officers because the question was not pressed or passed upon

below).

30

B. The APA Removal Provision Is

Constitutional Because ALJs Perform

Quasi-Judicial Functions and the APA

Permits Sufficient Executive Control.

If the Court reaches the question, it should hold that

the APA’s ALJ-removal provision is constitutional.

Even if ALJs are inferior officers, the careful balance

achieved by Congress in the APA between political

accountability and impartiality is entirely consistent

with the Constitution and protects the Executive’s

authority and responsibility under the Take Care Clause.

1. At the outset, long-settled administrative

practice and the very deliberate choices made by

Congress to secure impartial administrative adjudications

create a high bar for any claim that ALJ removal

protections unconstitutionally impede the Executive’s

ability to “take Care that the Laws be faithfully

executed,” U.S. Const., Art. II, § 3.

The APA is, of course, a statute that comes to

the Court with a presumption of constitutionality.

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm

Mut. Auto. Ins. Co., 463 U.S. 29, 44 n.9 (1983)

(describing the “presumption of constitutionality afforded

legislation drafted by Congress”). And limiting the

grounds for removal of ALJs is a “ ‘[l]ong settled

and established practice’ ” since 1946, which “ ‘is a

consideration of great weight in a proper interpretation

of constitutional provisions’ regulating the relationship

between Congress and the President.” NLRB v. Noel

Canning, 134 S. Ct. 2550, 2559 (2014) (alteration in

31

original) (quoting The Pocket Veto Case, 279 U.S. 655,

689 (1929)); see id. at 2560 (citing with approval the

reliance of Dames & Moore v. Regan, 453 U.S. 654, 686

(1981), on one branch’s acquiescence in a practice since

1952).

That long-settled practice carries added force here

given the extensive study and deliberation undertaken

by Congress in enacting the APA and resolving the

pre-APA problem of unwarranted pro-agency bias

in agency decision-making while ensuring plenary

agency control over administrative policymaking. See

pp. 6-7, supra; Pierce Br. 6-11; Forum Br. 4-9; FALJC

Br. 4-7. AALJ joins those amici in urging that

Congress’s solution to the problems that plagued

pre-APA administrative decision-making should not

be overturned lightly, particularly when the proposed

“solution” of increasing the power of agency heads over

ALJ tenure could introduce the very bias that the APA

was enacted to eradicate. See, e.g., Pierce Br. 19-21;

Forum Br. 20-21.

2. The Take Care Clause demands no such

upending of congressional imperatives, even if ALJs are

deemed inferior officers. As has been long established,

and was recently reiterated in Free Enterprise Fund,

Congress can, consistent with the Take Care Clause,

choose to substantially limit the authority of the

Executive Branch to remove officers, particularly for

(i) inferior officers and (ii) officers exercising quasi-judicial

authority. 561 U.S. at 492-94.

32

Congressional authority to limit the Executive’s

removal authority is thus at its zenith here, where both

criteria are satisfied, and then some. If officers at all,

ALJs are inferior officers who exercise quasi-judicial

power. They are also subject to full “good cause”

removal and other levers of executive supervision.

Unsurprisingly, even as the Court in Free Enterprise

Fund concluded that the Constitution, in unique

circumstances, bars a combination of removal limits

on principal and inferior officers, it recognized that

ALJs are different because of their adjudicative

function. 561 U.S. at 506-07, 507 n.10 (“[U]nlike

members of the Board, many administrative law

judges of course perform adjudicative rather than

enforcement or policymaking functions, see §§ 554(d),

3105, or possess purely recommendatory powers.”).

That recognition presages the correct holding here—

that the APA’s ALJ-removal provision does not

unconstitutionally trench on executive power.

a. Inferior officer classification casts no

constitutional doubt on statutes restricting the

President’s (or relevant principal officer’s) removal

authority. The power to remove is not expressly

conveyed in the Appointments Clause and may be

limited by Congress so long as the limitations do not

impede the President’s power and duty under the Take

Care Clause. See, e.g., Free Enterprise Fund, 561 U.S.

at 492-94. And it is well established that, with respect

to inferior officers, Congress “ ‘may limit and restrict

the power of removal as it deems best for the public

33

interest.’ ” Id. at 494 (quoting United States v. Perkins,

116 U.S. 483, 485 (1886)).

What’s more, even for principal officers, the

President’s removal authority may be limited to good

cause when the officers exercise quasi-judicial authority,

intended by Congress to operate with some independence

from the Executive. See Free Enterprise Fund, 561 U.S.

at 493 (because the FTC was “ ‘quasi-legislative and

quasi-judicial’ rather than ‘purely executive,’ and . . .

Congress could require it ‘to act . . . independently of

executive control,’ ” Congress could limit removal to

good cause) (quoting Humphrey’s Executor v. United

States, 295 U.S. 602, 627-29 (1935)).

b. For ALJs, these two attributes—quasi-judicial

power and subordinate status—are combined, maximizing

Congress’s power to shield ALJs from executive

removal in furtherance of impartial decision-making.

The APA’s ALJ-removal provision satisfies the Take

Care Clause given the adjudicative function of ALJs,

the supervisory mechanism of good cause removal

itself (including the involvement of the Merit Systems

Protection Board (MSPB)), and the other levers of

executive supervision over ALJ decisions under the

APA.

First, ALJs fit comfortably within the recognized

principle that Congress can limit the ability to remove

quasi-judicial officers to serve the public interest in

adjudicative impartiality. In Wiener v. United States,

357 U.S. 349 (1958), the Court considered whether the

President could remove commissioners at will when

34

Congress established a Commission to adjudicate

certain war claims “according to law.” Id. at 349–51.

Holding that the President could not do so, the Court

found “the intrinsic judicial character of the task with

which the Commission was charged” dispositive,

because it indicated the body was intended to be

“ ‘entirely free from the control or coercive influence,

direct or indirect,’ of either the Executive or the

Congress.” Id. at 355–56 (quoting Humphrey’s Executor,

295 U.S. at 629). The Court held that Congress’s

evident design to render the Commission impartial

meant that “Congress did not wish to have hang over

the Commission the Damocles’ sword of [at will]

removal.” Id. at 356.

Like the commissioners in Wiener, ALJs address

issues “to be ‘adjudicated according to law,’ that is, on

the merits of each claim, supported by evidence and

governing legal considerations,” id. at 355, evidencing

the “intrinsic judicial character” of the ALJs’ task.

Moreover, ALJs perform quasi-judicial tasks alone, not

a mix of adjudicative, policymaking, and enforcement

functions (unlike the Board in Free Enterprise Fund,

561 U.S. at 485-86). They are bound by executive

policies embodied in rules and are prohibited under

the APA from taking part in any agency investigation

and enforcement functions, 5 U.S.C. § 554(d).

And, as in Wiener—arguably even more so,

because the APA expressly addresses ALJ removal—

Congress plainly intended to insulate ALJs from

at-will removal in order to promote the adjudicative

impartiality that it deemed necessary to serve the

35

public interest. Congress made the well-studied decision

that ALJs could not act with sufficient impartiality

if the “Damocles sword of removal” hung over their

heads—while retaining executive accountability through

the agency’s ability to replace or negate any ALJ

decision.

Second, the good cause removal provision provides

ample executive supervisory authority and satisfies

constitutional minimums, notwithstanding the role of

the MSPB. Even with respect to a “purely executive”

officer, the authority to remove for good cause is an

important means of “supervising or controlling” an

officer, and limiting removal to “good cause” does not

“unduly trammel[ ] on executive authority.” Morrison v.

Olson, 487 U.S. 654, 690-91, 696 (1988). A fortiori,

it satisfies the Take Care Clause for quasi-judicial

officers like ALJs.

The APA does not limit the ordinary “good cause”

standard in any way, unlike the removal standard

at issue in Free Enterprise Fund, which allowed

Board members’ removal only upon a showing of

“willful violations . . . willful abuse of authority; or

unreasonable failure to enforce compliance.” 561 U.S.

at 503. And, contrary to the Government’s suppositions

(U.S. Br. 46-47), the removal of ALJs for a variety of

reasons confirms that “ordinary” good cause applies.

Among other things, ALJs have been removed

(sometimes over AALJ’s protest) for being absent for

extended periods, declining to set hearing dates,

having a high rate of significant adjudicatory errors,

not following mandatory rules, and deciding too few

36

cases. See U.S. Br. 46; Forum Br. 22; Harold J. Krent,

Presidential Control of Adjudication Within the

Executive Branch, 65 CASE W. RESERVE L. REV. 1083,

1109 & nn. 134-36 (2015); Kent H. Barnett, Resolving

the ALJ Quandary, 66 VAND. L. REV. 797, 807 (2013);

see also e.g., Shapiro v. Soc. Sec. Admin., 800 F.3d

1332 (Fed. Cir. 2015); Abrams v. Soc. Sec. Admin., 703

F.3d 538 (Fed. Cir. 2012). Good cause removal thus

remains an important and powerful tool of executive

accountability, without the interpretive gloss the

Government urges.17

Furthermore, the role of the MSPB as a neutral

arbiter of good cause does not unconstitutionally

attenuate executive control, nor create the same kind

of “dual for-cause limitations on . . . removal” at issue

in Free Enterprise Fund, 561 U.S. at 492, even though

there are limits on the President’s ability to remove the

members of the MSPB, 5 U.S.C. § 1202(d).18 The agency,

17

Outside of litigation, the Executive Branch recognizes

that a congressional amendment, not a judicial re-interpretation,

is required to meaningfully alter the APA’s removal provision

for ALJs. The Social Security Administration has sought, in its

fiscal year 2019 budget, an amendment to the APA that would,

among other things, create “probationary periods for newly

hired ALJs” and “allow the faster removal of ALJs.” Social

Security Administration, Fiscal Year 2019 Budget Overview, at

28, https://goo.gl/WKCAKJ.

18

The constitutionality of the APA’s ALJ removal provision

likewise does not depend on the happenstance of whether an ALJ

is assigned to an agency headed by an officer who can be removed

by the President at will, or not. Even the Government’s argument

does not turn on whether “the Department Head is permissibly

insulated from presidential removal at will.” U.S. Br. 52 n.8. Given

that ALJs are fungible across agencies under the APA, see p. 10,

37

not the MSPB, decides if there is good cause to remove

an ALJ and initiates a removal. 5 U.S.C. § 7521(a) (“An

action may be taken against an administrative law

judge . . . by the agency in which the administrative

law judge is employed. . . .”). That the agency must

prove good cause to the MSPB, id., is akin to judicial

review, which is constitutional (e.g., Morrison, 487 U.S.

at 686), even though the Executive lacks authority to

remove Article III judges.19

Finally, the limited nature of ALJ authority and

the additional tools of executive supervision must be

factored into the calculus of whether the Executive

Branch exercises sufficient supervision over ALJs.

See Morrison, 487 U.S. at 696 (holding that executive

supervision of an independent counsel was constitutionally

sufficient when, inter alia, the counsel’s jurisdiction was

defined and limited and the governing statute “requires

that the counsel abide by Justice Department policy

unless it is not ‘possible’ to do so”). ALJs, too, are bound

by agency policy, and there are many other executive

supervisory tools available—including the agency’s

authority to completely replace each and every one of

supra, it would be odd if the constitutionality of their tenure

protections waxed and waned with each different agency

assignment.

19

In objecting to the MSPB’s role, the Government would

permit the MSPB to find facts, yet be bound by the agency’s

position that the asserted facts are “good cause.” U.S. Br. 52. Such

an interpretation—under which “good cause” means nothing

more than requiring proof of whatever facts the agency decided

justified removal—would render the concept of “good cause”

meaningless and cannot be squared with the APA.

38

the ALJ’s decisions that it disagrees with. This

substantive control provides complete accountability

within the Executive Branch for any decision issued by

an ALJ.

In sum, far from being a recent and unprecedented

innovation, see Free Enterprise Fund, 561 U.S. at

505-06 (stressing the “lack of historical precedent” in

holding particularly restrictive dual for-cause removal

limitations unconstitutional), the practice of limiting

ALJ removal to good cause (as proved to the MSPB)

has a settled historical pedigree and falls within a

long line of precedents recognizing the authority of

Congress to limit removal authority for quasi-judicial

officials like ALJs to foster the adjudicative impartiality

that Congress has judged critical to the public interest.

See 5 U.S.C. § 556(b). Good cause removal, coupled with

plenary agency control over ALJ decisions, safeguards

the Executive’s authority to faithfully execute not only

the laws governing the matters under decision, but

also the APA’s guarantees of an impartial hearing

officer and procedural fairness.

------------------------------------------------------------------

39

CONCLUSION

For the foregoing reasons, the decision below

should be affirmed; this Court should clarify that any

ruling with respect to SEC ALJs does not extend

to ALJs from other agencies; and should likewise

confirm, if it reaches the removal question at all, that

current ALJ removal protections are constitutionally

sound.

Respectfully submitted,

DEAN HAROLD J. KRENT

CHICAGO-KENT

COLLEGE OF LAW

April 2, 2018

RUTHANNE M. DEUTSCH

Counsel of Record

HYLAND HUNT

DEUTSCH HUNT PLLC