Supreme Court wrestles with administrative law judge case
WASHINGTON (AP) — The Supreme Court wrestled Monday with a case brought by a former financial adviser known for his “Buckets of Money” strategy who is challenging the appointment of the administrative law judge who ruled against him.
The case involves the Securities and Exchange Commission’s administrative law judges, who conduct hearings on alleged securities law violations and issue initial decisions. The federal government employs administrative law judges in more than 30 agencies, however, giving the case the potential to have a broader impact.
During arguments Monday, Justice Anthony Kennedy wanted to know “what effect, if any” the case would have on administrative law judges in other agencies. Attorney Mark Perry suggested that the court’s decision could impact some 150 administrative law judges in 25 agencies.
The question the justices are being asked to decide is whether the SEC’s administrative law judges are SEC employees or instead “inferior officers” of the United States. The answer is important in determining who can appoint them to their positions.
The case before the Supreme Court involves former financial adviser Raymond J. Lucia, who as a radio show host, author and seminar leader promoted a retirement strategy he called “Buckets of Money.” Lucia’s strategy was that in retirement investors should first sell safer investments, giving riskier investments time to grow.
The SEC charged Lucia in 2012 with violating federal law and SEC rules, saying he used misleading slides in a free presentation to potential clients. One of the SEC’s five administrative law judges conducted a nine-day hearing and ultimately found against Lucia, fining him and his company $300,000 and barring him from working as an investment adviser.
Lucia challenged the decision and argued that the administrative law judge who heard his case was improperly appointed. He says that because the SEC’s administrative law judges exercise significant authority under federal law, they are inferior officers of the United States under the Constitution’s Appointments Clause. Inferior officers have to be appointed either by the president, courts or heads of departments. Lucia says that means in his case that the administrative law judge should have been appointed by the commission itself, not chosen by the commission’s chief administrative law judge.
Breaking with the Obama administration, the Trump administration is siding with Lucia. And last year, to ward off new legal challenges, the SEC ratified the appointment of its administrative law judges, a move it said resolved any concerns they weren’t properly appointed.
Because the Trump administration is siding with Lucia, Supreme Court-appointed attorney Anton Metlitsky argued the opposite view on Monday. Metlitsky said the SEC’s administrative law judges don’t count as inferior officers because they don’t exercise significant authority, pointing out that every decision they make can be fully reviewed by the commission.
The case is 17-130 Lucia v. SEC.
Justices say foreign business can’t be sued under 1700s law
WASHINGTON (AP) — The Supreme Court said Tuesday that foreign businesses cannot be sued in U.S. courts by foreign victims of human rights abuses and extremist attacks.
The justices voted 5-4 in favor of the Jordan-based Arab Bank. It was sued by Israeli victims of attacks in the West Bank and Gaza who claim that the bank helped finance the attacks. The victims had tried to use the 18th-century Alien Tort Statute to hold the bank accountable for its role.
But the court’s conservative justices rejected that attempt.
“As demonstrated by this litigation, foreign corporate defendants create unique problems. And courts are not well suited to make the required policy judgments that are implicated by corporate liability in cases like this one,” Justice Anthony Kennedy wrote for the majority.
The decision continues the court’s paring back a three-decade-old strategy by human rights lawyers to use civil suits to pursue individuals who may be responsible for torture and other atrocities, as well as companies with operations in countries with poor records in the area of human rights.
Victims in the case alleged that the bank, through the involvement of its New York branch, knowingly distributed millions of dollars to finance suicide bombings and make “martyrdom” payments to reward the families of militants who killed civilians.
The bank denied the allegations and argued that allowing the victims’ claims to go forward would interfere with U.S. foreign policy and lead to diplomatic friction. Kennedy noted that friction in his opinion, writing that: “For 13 years, this litigation has ‘caused significant diplomatic tensions’ with Jordan, a critical ally in one of the world’s most sensitive regions.”
The Alien Tort Statute, adopted in part to deal with piracy claims, went unused for most of American history until rights lawyers dusted it off beginning in the late 1970s. The Supreme Court cautiously endorsed the use of the law in 2004, but left unanswered precisely who could be held liable and in what circumstances.
In 2013, the justices ruled that people or entities sued under the Alien Tort Statute must have a real connection to the United States. The court declined then to decide whether businesses could be sued.
Justice Sonia Sotomayor wrote in a dissent for herself and three liberal colleagues that the majority’s decision “absolves corporations from responsibility” under the Alien Tort Statute for “conscience-shocking behavior.”
High Court upholds challenged patent review practice
WASHINGTON (AP) — The Supreme Court has upheld a challenged practice that is used to invalidate patents without the involvement of federal courts.
The justices on Tuesday rejected a bid to strike down a process established by Congress in 2011 to speed up patent reviews.
The justices voted 7-2 in favor of the U.S. Patent and Trademark Office’s patent review process. It has been used to invalidate hundreds of patents since it was established in 2012.
Chief Justice John Roberts and Justice Neil Gorsuch dissented.
