Appeals court to rehear SEC judges case

Dealing with an issue that observers believed would ultimately be decided by the U.S. Supreme Court, the U.S. Court of Appeals for the District of Columbia Circuit has decided to rehear en banc a May 2016 ruling that held the Securities and Exchange Commission’s administrative law judges were constitutionally appointed.

A three-judge panel of the D.C. Circuit ruled on the matter in August in Raymond J. Lucia Cos. Inc. and Raymond J. Lucia v. Securities and Exchange Commission.  

But that ruling created a conflict with a Dec. 27, 2016, ruling by the 10th U.S. Circuit of Appeals in Denver, which  held that the five administrative law judges working for the SEC are “inferior officers” under the Constitution and therefore fall under its Appointment Clause, which means they should have been appointed by the president, a court or a department head. Instead, administrative law judges are hired through a merit selection process administered by the Office of Personnel Management.

That ruling was in David F. Bandimere v. United Sates Securities and Exchange Commission.
When the Bandimere ruling was issued, many experts cited the circuit split and said they believe this issue that will eventually be considered by the U.S. Supreme Court.

The D.C. Circuit order filed Thursday said a majority of judges eligible to participate have voted in favor of rehearing the case, but that Chief Justice Merrick Garland — whom former President Barack Obama had attempted to name as U.S. Supreme Court Justice to replace Justice Antonin Scalia — did not participate in the vote. 

Final briefs in the case are to be submitted by April 27.  Oral arguments have not yet been scheduled.