SEC and FTC authority at heart of Supreme Court cases on Monday




Conservative Supreme Court justices indicated Monday that they are prepared to ease the process of challenging the regulatory power of federal agencies, hearing arguments in two cases that could diminish the authority of the Securities and Exchange Commission and the Federal Trade Commission, respectively.

The issue in both cases seems trivial: whether a person designated for enforcement by either agency can go directly to the Federal Court to challenge the constitutionality of the process. In both cases, the plaintiffs dispute whether the internal administrative judges used by the agencies are not appointed in a manner consistent with the Constitution. They don’t want to wait for the agency’s final action to begin their challenges.

But the bigger issue is a battle of business interests to weaken the federal administrative state, and the plaintiffs hope to build on a series of Supreme Court rulings that have moved that case forward. The importance of the issue was underscored by amicus briefs by industry groups and the fact that two former Republican solicitors general were arguing the cases against the government.

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Paul D. Clement represented body camera equipment company Axon, which came under intense scrutiny from the FTC when it bought a rival, and Gregory G. Garre was attorney for accountant Michelle Cochran, accused by the SEC of violating auditing standards.

Both attorneys served as Solicitors General under President George W. Bush.

They told the judges that their clients should not endure years of litigation before they can challenge the constitutionality of administrative judges and hence the enforcement actions of the agencies themselves.

“The SEC acts as prosecutor, judge and, in effect, executioner in its own proceedings, giving it an extraordinary advantage in home court,” gar said. Because the internal judges are too far removed from the president’s control, he argued, they suffer from a “glaring constitutional flaw.”

People targeted by agencies shouldn’t have to wait for final agency action to challenge this, Garre said.

Justice Department attorney Malcolm L. Stewart countered that Congress allows the actions of affected agencies to be reviewed by appellate courts only after those actions become final. In doing so, Congress stated “clearly that the district courts have no power to entertain constitutional challenges against . . . agency decisions,” Stewart said.

But Chief Justice John G. Roberts Jr., who wrote one of the earlier rulings that raised questions about the agency’s authority, said there was a ‘constellation’ of similar cases. which “show the need for direct resolution of a related claim”. strong enough.”

In the FTC case, Judge Samuel A. Alito Jr. said that the statute of administrative law judges “presides over everything the agency does. Isn’t it in your best interests to have that decided?” he asked Stewart.

Alito said that since the Supreme Court would have the final say on the constitutionality of the process, the sooner the better.

Clement agreed in FTC argument. “The government is saying, listen, it’s every citizen’s burden to have to go through these administrative processes before getting judicial review,” he said. “I don’t think it’s fair if the administrative agency is deemed unconstitutional. … This should not be the burden of citizenship.”

But liberal justices Sonia Sotomayor and Elena Kagan noted that in many other aspects of the law a final ruling was required before challenging the action.

“Going through the process is what due process is,” Sotomayor told Clement.

Kagan noted that the court is “pretty stingy” in allowing interim challenges. “So what makes yours different?” ” she asked.

The cases are Axon Enterprise v. Federal Trade Commission and Securities and Exchange Commission v. Cochran.

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Also on Monday, Judge Ketanji Brown Jackson filed her first opinion as a judge, dissenting from her colleagues’ decision not to consider the request of an Ohio death row inmate.

Jackson said the United States Court of Appeals for the 6th Circuit used the wrong standard to rule against Davel Chinn, who was convicted of murder in 1989 in Dayton. Chinn’s attorneys said prosecutors withheld evidence that a key witness against Chinn had a developmental disability that may have affected his ability to “remember, perceive facts from fiction and testify accurately.” Jackson wrote.

The 6th Circuit said Chinn failed to demonstrate that the evidence would more likely than not affect the outcome of Chinn’s trial. But Jackson, joined by Justice Sonia Sotomayor, said the standard was higher than recognized in Supreme Court precedents.

“Because Chinn’s life is at stake and given the high likelihood that the deleted records would have changed the outcome of the trial. . . I would summarily reverse to ensure that the Sixth Circuit conducts its materiality analysis to the proper standard,” Jackson wrote.

The deal is Chinn vs Shoop.

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