Possible Gorsuch Recusal Complicates SCOTUS Review of SEC Judges
The U.S. Supreme Court's consideration of cases challenging the constitutional status of SEC administrative law judges has brought recusal issues front and center.
November 15, 2017 at 12:48 PM
5 minute read
Associate Justice Neil Gorsuch walks down the steps of the U.S. Supreme Court after his investiture ceremony June 15, 2017. Credit: Diego M. Radzinschi/ALM
The U.S. Supreme Court's handling of key cases challenging the constitutional status of SEC administrative law judges may hinge on the possibility that Justice Neil Gorsuch will recuse in one of the cases.
The two cases—Lucia v. SEC and SEC v. Bandimere—have created a sharp circuit split, ultimately making one or both of them likely candidates for Supreme Court review. In Bandimere, the U.S. Court of Appeals for the Tenth Circuit ruled that the judges are “inferior officers” under the Constitution and therefore must be hired by the president, a court or a department head—not by internal staff of the U.S. Securities and Exchange Commission, as they are now. But in Lucia, the U.S. Court of Appeals for the D.C. Circuit ruled that administrative law judges are SEC employees, not officers, because their decisions are not final.
The Lucia case has been before the high court since July 21, and Bandimere since Sept. 29. On Tuesday, Solicitor General Noel Francisco asked the court to extend the deadline for his response for the fourth time in the Lucia case. The court granted the request and the response is due Nov. 29. If both cases are considered together, the court might not decide whether to grant certiorari until January.
In the meantime, in light of the Bandimere ruling, the SEC decided to suspend all administrative proceedings in the Tenth Circuit. Several other circuits are considering the same issue.
A complicating factor, first raised in the government's petition in Bandimere, is that Gorsuch was still a judge on the Tenth Circuit when the government sought en banc review of the decision—a request that would have been put forward to all the circuit's judges. The court denied the en banc request in May—after Gorsuch was sworn in as a justice.
Francisco's petition in Bandimere mentioned the Lucia case and said the court “may wish … to consider” the constitutional issue in Lucia, not Bandimere, “because the government's petition for rehearing en banc in this case was filed in the court of appeals while Justice Gorsuch was a member of that court.”
♦ RELATED COVERAGE: Neil Gorsuch Recused in More Than 1,000 Cases as Tenth Circuit Judge
But the lawyer for David Bandimere, who was found guilty of securities fraud by an administrative law judge, dismissed the government's “oblique notation” about the need for Gorsuch to recuse himself in the case. “Justice Gorsuch appears not to have participated in the denial of rehearing,” Mark Fleming, partner at Wilmer Cutler Pickering Hale and Dorr, wrote in a brief in opposition. “The government offers no reason to think that Justice Gorsuch would be recused in this case, and we know of none.”
It is very rare for parties to discuss openly whether a justice should recuse in a case, a decision that is viewed as highly personal for each justice. But the timing of the Tenth Circuit's receipt of the request for en banc review appears to make the recusal possible, though Gorsuch has not yet acted on the suggestion.
Gibson, Dunn & Crutcher partner Mark Perry, who represents plaintiff Raymond Lucia, also mentioned the “significant possibility” of Gorsuch's recusal in an amicus brief he filed in the Bandimere case. He noted that Gorsuch has recused in two other cases in similar circumstances where a party sought en banc review while he was still in “active regular service” on the Tenth Circuit before he was confirmed to the high court. “The Lucia case, in contrast, presents no potential recusal issues,” Perry wrote.
“The court's institutional interests would best be served by granting certiorari in the case with no possibility of recusal,” Perry continued. “This will ensure that all nine Justices can participate in this important decision, and eliminate any potential for criticism regarding consistent application of (nonpublic) recusal policies.”
In a separate letter to the court, Perry wrote, “the petitions should be distributed on the same schedule and considered together at the same conference.” If the court agrees, given the government's extended deadline in Lucia, the cases may not be considered until January.
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