The Supreme Court agreed Monday to review a case about the reach of administrative law courts, which could have sweeping ramifications for the Securities and Exchange Commission and other federal agencies.
The 5th U.S. Circuit Court of Appeals agreed with certified public accountant Michelle Cochran that she can go to federal court to challenge the constitutionality of the SEC’s system of in-house judges, without first exhausting what could be “an endless series of unlawful agency hearings,” her lawyers said.
The single mother argues the SEC’s administrative law judges are unconstitutional because they enjoy “layers of good-cause tenure” protection, overseen by a Merit Systems Protection Board whose members can only be removed by the president for “inefficiency, neglect of duty, or malfeasance in office.”
“Federal courts have an unflagging duty to enforce the Constitution before Americans like Michelle must endure years-long administrative adjudications that are predestined to be vacated on constitutional grounds,” said New Civil Liberties Alliance senior litigation counsel Peggy Little, who is representing Cochran.
A different case seeking SCOTUS review involves billionaire SEC targets Elon Musk and Mark Cuban, who are challenging the agency’s 50-year practice of issuing gag orders as a condition of settlement.