“I am a Federal Judge”: Supreme Court Nixes Judge Appointed by SEC

Poor reader, you unfortunately know that as an Atlanta-based criminal defense lawyer, I also like to ponder various existential issues, such as what does it mean to “know” a fact in a criminal case, and similar musings.  Today, the United States Supreme Court issued a ruling on the existential question of what it takes to be a “judge”, at least in the context of a proceeding in front of the Securities and Exchange Commission (the “SEC”).  The case is Lucia v. SEC.

Our beloved U.S. Constitution has something called the “appointments clause.”  Go to Section 2 from Article II, look at the second clause if you are that interested.  Basically, it says that anyone who is an “officer” of the U.S. must be appointed to his or her position by either the President, by the “Courts of Law”, or by the “Heads of Departments.”  So far so good, a reasonable rule designed to make sure that high-ranking officials who get to make important government decisions are given their job by someone who has to answer to the People, or Congress.

Many federal agencies have gazillions of rules, and love to go after people and companies who supposedly violate those rules, regulations, or even a statute actually enacted by our elected representatives in Congress.  Again, a good idea, go after law-breakers.  However, more and more federal agencies now have set up their own miniature court systems for deciding if a person or company violated the rules.  Again, not a bad idea completely, for these mini-courts are usually less formal (and less expensive) than taking a case to “real” federal court.  However, the SEC took this process to a whole new level, and got spanked today by the Supreme Court.

Recall, only certain people get to appoint an “officer.” The SEC figured it would be OK for its “staff” to appoint the ALJ, who remember is the individual deciding if Mr. or Mrs. Public violated the SEC’s rules. Kind of reminds me of the fox guarding the henhouse.  Bottom line from today’s decision, the “staff” are not allowed to make the appointment of the ALJ.  A better aspect of the ruling is that if validates the position taken by Mr. Lucia’s lawyers.  They had challenged this “insider judge” from the very beginning, and Mr. Lucia now gets a new hearing before a new, and properly appointed, ALJ.  Regular readers of this and my web site know that this is the same process I use when pressing an appeal or post-conviction matter for a client in a criminal case: get a reversal to change the dynamic in a case, and possibly get a better result because the other side is reluctant to go back to court after getting spanked by the upper reaches of the judiciary.

One final note on the “I am a federal Judge” reference in the title of this post.  Federal judges are appointed by the President.  Magistrate Judges, on the other hand, are appointed by the federal judges.  Congress enacted a law that basically said a Magistrate Judge is a “federal judge.”  One of my favorite federal Magistrate Judges would tell recently arrested clients that the law requires that the person must make an initial appearance in front of a “federal judge”, and that “I AM a federal judge.” I recall a saucy client who turned to me and said: “Good thing he said that, I’d have never guessed it was the guy on the bench wearing a dress.”