In recent years, courts have decided several cases involving both the substance and timing of constitutional challenges to federal agency enforcement proceedings. Because the Supreme Court’s decision in AMG Capital v. FTC, 2 curtailing the Federal Trade Commission’s (FTC) enforcement abilities, has caused the FTC to increasingly rely upon administrative enforcement actions, any challenges to this administrative process may be even more consequential. The recent Fifth Circuit case, Jarkesy v. SEC, and the pending Supreme Court cases, Axon v. FTC and Cochran v. SEC, are at the forefront of cases that raise challenges to agency enforcement actions.3 It is helpful to understand the underlying rationale of these decisions and their specific applicability to the FTC in light of their potentially wide-reaching effects on consumer protection enforcement. If challenges of this sort are successful, decreased enforcement power available at the federal level will likely result in a burden shift, with consumer protection enforcement increasingly falling to the states.
Obstacle to FTC Enforcement — AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 1341 (2021):
In the Supreme Court’s 2021 AMG decision, the FTC’s enforcement authority under section 13(b) of the FTC Act4 took a significant blow. The Court held, based on its interpretation of section 13(b) of the FTC Act, that the “permanent injunction” remedy provided by section 13(b) did not authorize the FTC to collect equitable monetary relief, i.e., restitution.5 The Court reasoned that legislative and common law history also did not support the inclusion of retrospective restitution within the FTC’s prospective injunctive powers.6
AMG’s holding drastically changed the landscape of FTC enforcement actions, and as characterized by North Carolina Attorney General Josh Stein, “took the biggest cop off the beat” in the realm of consumer protection.7 Similarly, FTC Chair Lina Khan described the decision as a loss of “the key engine of our law enforcement efforts for four decades.”8 Commissioner Rebecca Slaughter, in a joint statement with Khan, stated the agency utilized section 13(b) restitution to obtain $11.2 billion of relief from 2016 to 2022.9
With the removal of section 13(b) as a tool to obtain consumer restitution, the FTC has used other enforcement approaches, including administrative enforcement for monetary relief in cases of FTC regulatory rule violations (authorized by section 19 of the FTC Act10), new rulemakings to allow for future section 19 enforcement, bringing administrative proceedings in cases that do not involve rule violations, and partnering with state attorneys general who may seek restitution under state consumer protection statutes.11
Since the AMG decision was announced, the FTC Commissioners have been advocating for a legislative solution. However, until the loss of section 13(b) restitution authority is addressed legislatively, the FTC, by necessity, may increasingly pursue restitution through administrative proceedings.
A Collection of Challenges — Jarkesy v. Sec. & Exch. Comm’n, 34 F.4th 446 (5th Cir. 2022):
One of the most recent cases in the new wave of challenges to agency action is the Fifth’s Circuit May 2022 decision in Jarkesy, which decided three separate constitutional issues related to an SEC administrative enforcement proceeding.12 In Jarkesy, the SEC pursued an administrative enforcement action for securities fraud against Jarkesy, a hedge fund operator. The SEC elected to pursue the case administratively, rather than in federal court, both options being authorized by the Securities Exchange Act of 1934 (“SEC Act”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”).13 An SEC-appointed administrative law judge (ALJ) found Jarkesy and others liable for securities fraud and imposed civil monetary penalties and ordered disgorgement of illegal gains. The Commission then affirmed the ALJ’s decision, ordering disgorgement, entering a cease-and-desist order, and imposing civil penalties. The Commission also dismissed Jarkesy’s contentions that the administrative proceeding was unconstitutional.14
The Fifth Circuit reviewed the SEC’s decision on direct appeal and ultimately held that the SEC action violated three constitutional provisions: (1) the Seventh Amendment right to jury trial, (2) the nondelegation doctrine, stemming from Congress’ failure to provide an “intelligible principle” to guide the SEC in exercising its discretion in choosing an enforcement forum, and (3) the Take Care Clause, resulting from the restrictions on executive authority to remove SEC ALJs.15
On July 1, the SEC filed a petition requesting en banc review by the Fifth Circuit. The petition argues that the May 2022 decision runs counter to Supreme Court precedent and raises issues of “exceptional importance” worthy of additional review.16
(1) Seventh Amendment Holding:
The Fifth Circuit’s Seventh Amendment analysis focused on two Supreme Court decisions: Atlas v. OSHA and Granfinanceria v. Nordberg.17 Atlas held that when Congress creates a new “public right,” the adjudication of those claims can be assigned to an administrative agency without violating the Seventh Amendment.18 In Atlas, the Secretary of Labor brought an administrative action to enforce occupational safety standards and obtain civil penalties. The action was deemed to be one to enforce a “public right,” because it involved a claim that did not exist at common law.19 Granfinanceria involved an appeal of a bankruptcy court’s denial of a jury trial to defendants sued by a bankruptcy trustee. The trustee had sued to avoid allegedly fraudulent transfers and to recover damages. The Supreme Court held that such a suit involved a traditional private, not “public” right, even though the proceeding was authorized by a detailed regulatory regime. Therefore, the denial of the defendant’s demand for a jury trial violated the Seventh Amendment.20 As stated by the Court: “The decisive point is that in neither the 1978 [Bankruptcy] Act nor the 1984 Amendments did Congress ‘creat[e] a new cause of action, and remedies therefor, unknown to the common law,’ because traditional rights and remedies were inadequate to cope with a manifest public problem.”21
Jarkesy’s holding hinges on the fact that the SEC enforcement action, in the view of the Fifth Circuit, involved a traditional common law claim of fraud and sought a monetary penalty, a remedy to which the jury trial right attached at common law. The court noted that administrative actions may be employed by the SEC without running afoul of the Seventh Amendment if the dispute at issue involves “public rights” as opposed to traditional common law claims. The Fifth Circuit, relying on Granfinanceria, stated: “Public rights … arise when Congress passes a statute under its constitutional authority that creates a right so closely integrated with a comprehensive regulatory scheme that the right is appropriate for agency resolution.”22
The Jarkesy court stated that determining whether the right at issue is a public right for Seventh Amendment purposes involves a two-prong analysis: (1) whether the claims at issue arise “at common law” under the Seventh Amendment, and if so, (2) whether public rights precedent allows Congress to pursue those claims via an administrative adjudication without a jury. Relevant considerations for the second stage of the analysis include whether Congress created a new cause of action with corresponding remedies and if a jury trial would “dismantle the statutory scheme or impede swift resolution.”23
When applied to the SEC’s administrative proceedings against Jarkesy, the court found that fraud was a common law claim and that civil penalties could be enforced in court without harming the statutory scheme. Accordingly, the Fifth Circuit held that Jarkesy was entitled to a jury trial under the Seventh Amendment, and because the facts supporting a civil penalty would also be used to support the injunction sought by the SEC, the defendant was entitled to a jury trial for “the liability-determination portion of [the] case.”24
The SEC and the dissent both argued that where the government pursues action “in its sovereign capacity to enforce a statutory right,” that action then implicates a public right and any proceedings related thereto do not require a jury trial. The SEC cited Atlas, which held that “the Seventh Amendment does not apply to the adjudication of public rights in an administrative proceeding ‘even if the Seventh Amendment would have required a jury where the adjudication of those rights is assigned instead to a federal court of law.’”25 The SEC further noted that there is no right to a jury trial when equitable relief, such as injunctions or disgorgement, is sought.
The majority rejected these arguments, stating that the SEC misread Atlas’s discussion of public rights and that mere government enforcement is not a sufficient condition to convert a private right into a public right. The majority reiterated that Granfinanceria’s holding instructed that traditional common law claims cannot be assigned for non-jury agency adjudication without violating the Seventh Amendment and that the fraud claim at issue was not a public right.
The applicability of Jarkesy’s Seventh Amendment holding to FTC enforcement actions alleging unfair or deceptive acts or practices is yet to be determined. Actions under the FTC Act are not traditional fraud actions. Rather, the FTC Act originated in part from the need for new authority to address unfair and deceptive trade practices that were not adequately addressed through traditional common law fraud actions.26 Consumer protection enforcement is predicated upon the redressable harm for unfair or deceptive acts or practices regardless of intent to deceive, whereas traditional fraud claims require clear and convincing evidence of intent to defraud and reliance.27 The FTC Act thus created a new federal cause of action and may not implicate the Seventh Amendment argument in the same way that SEC fraud cases do.
(2) Nondelegation Doctrine Holding:
Jarkesy’s second alternative holding deals with the nondelegation doctrine. In the words of the Fifth Circuit, Congress endowed the SEC with the “exclusive authority and absolute discretion to decide whether to bring securities fraud enforcement actions within the agency instead of in an Article III court.”28 The court ultimately held that such broad discretion was an unconstitutional delegation of legislative power.
The nondelegation doctrine controls Congress’ ability to grant legislative power, requiring Congress to provide an “intelligible principle” in the statutory language of any delegation.29. )) These intelligible principles are both limitations on the executive’s power and standards by which to judge and guide the executive’s actions.30 In Schecter Poultry v. United States, the Supreme Court explained what constitutes an intelligible principle by asking whether Congress “established the standards of legal obligation, thus performing its essential legislative function, or, by the failure to enact such standards, has attempted to transfer that function to others.”31 The Supreme Court has not struck down any agency action based on nondelegation grounds since 1935.
Nondelegation was most recently revisited by the Supreme Court in Gundy v. United States, involving the Sex Offender Registration and Notification Act (SORNA).32 In SORNA, Congress delegated to the Attorney General the authority to “’specify the applicability’ of SORNA’s registration requirements and ‘to prescribe rules for [sex offender] registration.’” Although the Court did not find the delegation unconstitutional, certain justices indicated they could be open to future revision or development of the doctrine.33 Specifically, Justice Alito’s concurrence stated he would support reconsideration of the intelligible principles standard, and Justice Gorsuch’s dissent proposed an alternative standard. Justice Gorsuch’s alternative three-prong approach would focus on (1) whether Congress made key policy decisions just leaving the executive to “fill up the details,” (2) whether Congress announced a rule of conduct subject to executive fact-finding, and/or (3) whether Congress assigned tasks to the executive that already fall within the scope of executive power.
In Jarkesy, the Fifth Circuit engaged in a two-part analysis, first deciding if the discretion provided to the SEC was an exercise of legislative authority at all, and if so, whether an intelligible principle was provided by Congress such that the agency only exercised executive power in its choice of forum.34
In deciding the first question, the Fifth Circuit characterized legislative actions as having “the purpose and effect of altering the legal rights, duties and relations of persons … outside the legislative branch.”35. )) The Fifth Circuit further stated that the ability to decide whether a case is subject to agency adjudication is “peculiarly within the authority of the legislative department.” As such, the court characterized the SEC’s ability to choose its preferred forum as an exercise of legislative power.
The court then found that “Congress did not provide the SEC with an intelligible principle by which to exercise that [legislative] power.” The Fifth Circuit described the SEC Act as “open ended” and lacking any indication of how the SEC should determine whether to bring an administrative action or file in federal court. The decision also states that the SEC itself agrees that it has “exclusive authority and absolute discretion” in this realm of decision making. In effect, the statute “gave the SEC the ability to determine which subjects of its enforcement actions are entitled to Article III proceedings with a jury trial, and which are not.”36 The court concluded this lack of legislative guidance violated the “intelligible principle” standard and thus was an unconstitutional delegation of legislative authority.
Both the SEC and the Jarkesy dissent agreed that the statute gave the agency total discretion in choosing an enforcement forum, however, they argued that such authority aligns with the historical executive power of prosecutorial discretion and so should not be characterized as a delegation of legislative power at all.37 The SEC and dissent relied upon U.S. v. Nixon, which held that the executive “has exclusive authority and absolute discretion” when it comes to prosecutorial decisions.38. )) Thus, they argued, as an exercise of purely executive power, the nondelegation doctrine concerning legislative powers was not implicated nor applicable to the SEC’s choice of forum.39 The Jarkesy majority held instead that choice of administrative adjudication versus an Article III trial is unrelated to prosecutorial discretion and an inherent exercise of legislative power.40. ))
The FTC is also authorized to exercise discretion regarding where and in what way it brings enforcement proceedings.41 Like the SEC, the FTC may opt to pursue cases either administratively or in federal court. This choice may potentially implicate constitutional rights like the Seventh Amendment claim discussed above. The choice between federal court or an administrative proceeding also involves the remedies being sought as section 13(b) of the FTC Act authorizes the agency to seek injunctive relief in federal court while section 19 allows for some forms of monetary relief, but only after the agency initiates an administrative proceeding, obtains a cease-and-desist order, and petitions a federal court to enforce that order under section 19(d).42 Prior to AMG, the FTC also pursued restitution in cases filed under section 13(b). Should Congress restore that authority, defendants would be expected to consider making a nondelegation challenge similar to the successful challenge in Jarkesy. Given the considerable differences between the enforcement provisions in the SEC Act and the FTC Act, and the fact Congress has yet to “fix” section 13(b), it is uncertain at best, how such a challenge would play out.
The Dodd-Frank Act’s statutory language found unconstitutional by the Fifth Circuit in Jarkesy was silent as to the SEC’s choice of enforcement action forum. Nondelegation challenges to the FTC’s procedures for determining the enforcement forum could be subject to similar criticism depending on whether a court decides the FTC Act provides an appropriate guiding intelligible principle. Future challenges may also hinge on whether choice of forum is viewed as simply a matter of prosecutorial discretion and thus an exercise of executive power or instead as a delegation of legislative authority lacking a guiding intelligible principle.
(3) Take Care Clause Holding:
The third alternative Jarkesy holding was that the SEC’s ALJs are unconstitutionally insulated from removal in violation of the Take Care Clause. Article II, Section 2 of the Constitution provides that the President “shall take Care that the Laws be faithfully executed…” From that clause, courts have inferred that the president must have certain authority to remove executive branch employees in order to fulfill the presidential duty to ensure that the laws are executed faithfully.
SEC ALJs may only be removed for cause through action by both the SEC Commissioners and members of the Merit Systems Protection Board (MSPB).43 Further, the SEC Commissioners and MSPB members are only removable by the president for cause.44 Citing the interaction between the Supreme Court’s decisions in Free Enterprise v. PCAOB and Lucia v. SEC, the Fifth Circuit found this dual layered for-cause removal process unconstitutional.45
The Supreme Court recently addressed the removal power in both Free Enterprise Fund v. PCAOB and Seila Law LLC v. CFPB. The Free Enterprise case involved a small Nevada accounting firm that was the subject of a Public Company Accounting Oversight Board (PCAOB) investigation regarding its auditing practices. After issuance of its critical investigative report, the PCAOB initiated formal enforcement proceedings.46 The firm filed a complaint in federal district court alleging the PCAOB members were unconstitutionally insulated from removal.47 (The firm also raised a collateral challenge issue, discussed below). The Supreme Court explicitly held that the “dual for-cause protection from removal is contrary to Article II’s vesting of the executive power in the President,” because the second layer of for-cause removal diffused executive power too broadly.48
Ten years later in Seila Law, in a challenge to the structure of the Consumer Financial Protection Bureau (CFPB) as an independent agency, the Court held that the CFPB’s leadership by a single individual removable only for inefficiency, neglect, or malfeasance violated separation of powers.49 In Seila Law, the Court held the president possessed a broad, general removal power over officers with two primary exceptions.50. )) The Court decided the CFPB’s unique leadership structure did not fall within the exceptions, and so the president’s removal power over the CFPB could not be limited.51
Removal power cases also hinge upon whether the government position in question is occupied by a U.S. officer, rather than an employee. To be classified as an officer, a person needs to have a “continuing” position established by law and must “exercise[e] significant authority pursuant to the laws of the United States.” In the Lucia decision the Court determined that the SEC ALJs were officers due to their ability to make final legal decisions.52 Lucia was charged with violating certain securities laws, and after being found liable by an SEC ALJ, appealed this outcome, arguing the ALJ who decided his case was unconstitutionally appointed. The Supreme Court agreed and held that because the ALJ was not appointed in accordance with the Constitution’s Appointments Clause (Article II section 2), Lucia was entitled to a new hearing. Although this then-unconstitutional process of appointing SEC ALJs has since been rectified by the Commission ratification of all ALJ appointments, the determination that SEC ALJs are officers for purposes of Take Care Clause challenges still stands.53
The Jarkesy removal power holding relies upon the relationship between the Free Enterprise and Lucia decisions discussed above. The Fifth Circuit majority reached its decision based on Lucia’s holding that SEC ALJs are U.S. officers and Free Enterprise’s holding that two layers of for-cause protection from removal for a U.S. officer deprives the president of his responsibilities and duties under the Take Care Clause.54 As the SEC ALJs are officers (per Lucia) with two layers of for-cause removal protections (akin to the officers in Free Enterprise), the Fifth Circuit found the SEC ALJs unconstitutionally insulated.
The SEC and Jarkesy dissent tried to distinguish the SEC ALJs from the board in Free Enterprise. They asserted that the SEC ALJs “perform solely adjudicative functions,” and so are distinguishable from the PCAOB, which they argued engaged in policymaking.55 The SEC maintained that Free Enterprise’s holding was not meant to address the ALJs of independent agencies who “perform adjudicative rather than enforcement or policymaking functions.”56 The SEC also cited D.C. Circuit caselaw which stated that ALJs may be officers subject to presidential removal controls but that the ALJs have “a measure of independence.”57. )) The SEC’s brief further emphasized that Free Enterprise did not make a “general pronouncement” that two levels of for-cause removal restrictions were always unconstitutional and that preservation of limited protection for the ALJs, like for-cause removal, will encourage public confidence in ALJ decision making.
The SEC’s brief also raised policy arguments relating to Congress’ rationale and concerns in providing the ALJs with some measures of protection “from removal based on invidious or otherwise improper reasons.” The brief cited Supreme Court precedent arguing that ALJs are not meant to be removable “at the whim or caprice of the agency or for political reasons.”58. )) The SEC further noted that for-cause removal restrictions do not provide ALJs with complete insulation nor preclude removal for legitimate reasons such as “lack of diligence, ignorance, incompetence, or lack of commitment to their legal duties.”59. )) In a D.C. Circuit Court dissent to Free Enterprise, cited in the SEC’s brief, Supreme Court Justice (then-Judge) Kavanaugh sympathized with this sentiment, noting that ALJs perform adjudicatory functions that are “arguably … not …’central to the functioning of the Executive Branch,’” and thus not in violation of the Take Care Clause.60. )) The debate regarding the policy reasons for providing ALJs with removal protections balanced against the way removal restrictions impact the president’s ability to fulfil their duties under the Take Care Clause may well factor into future litigation of this issue.
As the appointment and removal procedures related to SEC ALJs are very similar to those at the FTC, a similar constitutional challenge against the FTC should be anticipated.61 Such a challenge has indeed been brought against the FTC in Axon v. FTC.62 However, the removal power challenge in that case was not addressed by the district or circuit courts who dismissed the case on jurisdictional grounds, and certiorari was recently granted only regarding the jurisdictional issue. (See further discussion below.)
Jarkesy’s Potential Ramifications:
Though not directly addressed in Jarkesy, successful challenges to agency proceedings could cause severe disruption to existing cases and investigations until any constitutional defects are corrected either by Congress or the agency itself. While it is unclear whether prior administrative adjudications could be re-opened, prior administrative adjudication outcomes could be vulnerable and potentially vacated. Such was the case after the Court in Lucia found the SEC ALJs were unconstitutionally appointed. Once this issue was rectified by the Commission ratifying the ALJs’ appointments, the SEC rescheduled all pending cases to be heard by constitutionally appointed ALJs, including the ALJ in SEC v. Cochran, discussed below.63 Lastly, while it is perhaps possible that similar constitutionally based arguments could be raised against the CFPB, these challenges seem less likely.64
When Can Agency Actions Be Challenged? — Axon Enter., Inc. v. Fed. Trade Comm’n, 986 F.3d 1173 (9th Cir. 2021) and Cochran v. U.S. Sec. & Exch. Comm’n, 20 F.4th 194 (5th Cir. 2021):
In addition to the substantive constitutional challenges to administrative enforcement proceedings addressed in Jarkesy, a fourth category of argument, relating to the timing of challenges to agency action, will soon be considered by the Supreme Court. In two distinct cases, Axon and Cochran, the Court will determine whether federal courts have jurisdiction to hear cases collaterally challenging an agency administrative enforcement proceeding.65 The government’s position in both cases is that the district courts lack subject matter jurisdiction to hear what they argue are collateral issues that must first be raised in the administrative action itself. The Ninth Circuit, in Axon, agreed with this position, the Fifth Circuit, in Cochran, rejected it.
The Supreme Court’s Thunder Basin Coal v. Reich case, as further interpreted by the Free Enterprise v. PCAOB, and Elgin v. Dep’t of Treasury decisions, plays an important role in both Axon and Cochran.66 Taken together these cases create a framework known as the “Thunder Basin factors” which are considered in determining whether Congress intended to preclude collateral judicial review by creating a system in which the administrative agency conducts an initial review.
Thunder Basin arose out of a mine operator’s challenge to a Mine Safety and Health Administration order regarding delegation of union representatives. Ultimately, the Court held that the Federal Mine Safety and Health Act precluded district court jurisdiction over the mine operator’s pre-enforcement challenge. The Thunder Basin line of inquiry asks (1) whether Congress’s intent to preclude district court jurisdiction was “fairly discernible in the statutory scheme,” and (2) whether the dispute at issue is of the kind meant to be first reviewed within an agency’s statutory scheme.67 In determining the second question, courts should consider three factors: (1) whether “a finding of preclusion could foreclose all meaningful judicial review”; (2) whether the claims at issue are “‘wholly collateral’ to a statute’s review provisions”; and (3) whether the claims are “outside the agency’s expertise.”68
Elgin’s interpretation of “wholly collateral” completes this framework. The Elgin case involved challenges by federal employees to the Military Selective Service Act. The employees were discharged for failing to register for the Selective Service as required by the statute.69 The Court held that the Civil Service Reform Act precluded district court jurisdiction. The Court noted that, as evidenced by their district court complaint, the petitioner’s constitutional claims were being specifically used to overturn the agency’s decision and require reinstatement and backpay for the employees. The opinion interpreted “wholly collateral,” as utilized in the Thunder Basin framework, as excluding any claims being used as “the ‘vehicle by which’ a party seeks to prevail [against] the agency.”70
Axon Enter., Inc. v. Fed. Trade Comm’n, 986 F.3d 1173 (9th Cir. 2021), cert. granted in part, 142 S. Ct. 895, 211 L. Ed. 2d 604 (2022)
Axon v. FTC raises the question, as characterized in Axon’s Petition for Writ of Certiorari, “Whether Congress impliedly stripped federal district courts of jurisdiction over constitutional challenges to the Federal Trade Commission’s structure, procedures, and existence by granting the courts of appeals jurisdiction to ‘affirm, enforce, modify, or set aside’ the Commission’s cease-and-desist orders.”71
The Axon case originated in an FTC antitrust investigation into an acquisition by Axon Enterprises, Inc., a maker of police body camera and surveillance equipment, of Vievu LLC. Eighteen months into the FTC’s investigation, Axon filed an action in federal district court alleging constitutional defects regarding the restrictions on removal of FTC ALJs, an unconstitutional delegation of legislative power manifested in the FTC’s shared clearance process with the DOJ regarding pursuit of antitrust cases, and due process violations based on the “combining [of] the role of investigator, prosecutor, and adjudicator within one agency.”72
Shortly after Axon filed its federal court complaint, the FTC filed its administrative complaint regarding the Vievu acquisition. The district court then dismissed Axon’s complaint for lack of subject-matter jurisdiction. Afterwards, following Axon’s motion for expedited appeal, the Ninth Circuit stayed the FTC’s proceedings until further notice. The Ninth Circuit then affirmed the district court’s dismissal. Certiorari was granted only on the collateral challenge question.
In affirming the dismissal of Axon’s claims, the Ninth Circuit held that all but one of the Thunder Basin factors (regarding the FTC’s expertise) favored allowing initial FTC review and precluding collateral judicial review. When the court balanced these factors, it held that collateral jurisdiction was precluded. In step one of the analysis, the court succinctly found that the FTC Act “evinces a fairly discernible intent to preclude district court jurisdiction.”73 The court cited to other circuit court decisions interpreting the SEC Act’s nearly identical statutory review provisions as indicating Congressional intent to preclude district court review.74. ))
Step two of the analysis, deciding if the claim at issue is meant for agency review, involved consideration of the additional three Thunder Basin factors. The court stated these additional considerations are meant to be interpreted in the aggregate and balanced together, with the first question regarding meaningful judicial review holding the most weight. In addressing what constitutes meaningful judicial review the Ninth Circuit cited to Free Enterprise, stating that it clarifies that a party need only be able to “seek judicial review for its grievances under the normal procedures of the statutory scheme” in order to have meaningful review.”75
Axon argued that enduring an unconstitutional administrative process is a “here-and-now” constitutional injustice that cannot wait for redress until after the agency proceedings fully conclude and so meaningful review is not available if it is only provided after exhaustion of the administrative process. However, the Ninth Circuit majority pointed to Supreme Court and appellate precedents holding that bearing the costs of legal proceedings does not constitute the type of injury that provides grounds for immediate judicial review.76. )) The court found that the Thunder Basin factors did not definitively indicate whether preclusion was required, so it employed a balancing test, holding that the meaningful judicial review factor supporting preclusion was “enough to find that Congress precluded district court jurisdiction over the type of claims that Axon brings.”77
The Ninth Circuit majority recognized the policy rationale and intuitive reasoning supporting the ability to challenge the constitutionality of an administrative proceeding before enduring such proceedings. But the court noted that the caselaw and binding precedent precluded allowing Axon immediate judicial review in this case.
In deciding the second factor, i.e., whether Axon’s claim was “wholly collateral,” the Ninth Circuit relied upon Elgin’s interpretation of the term. In Elgin, the Supreme Court stated that claims being used as “the ‘vehicle by which’ a party seeks to prevail [against] the agency” do not qualify as being wholly collateral since they are instead functioning as a means to avoid enforcement action.78 The Ninth Circuit characterized this part of the analysis as a “close call,” ultimately holding that since Axon’s complaint was meant to help it avoid the FTC’s proceedings, this factor also supported preclusion of Axon’s claims.
The court finished the Thunder Basin analysis by considering the FTC’s expertise regarding the issue raised by the regulated party, eventually finding that “the FTC lacks agency expertise to resolve the constitutional claims.”79 The Ninth Circuit noted that some constitutional issues could involve threshold or preliminary questions that fall within the FTC’s expertise. However, it stated there were no such preliminary questions relating to Axon’s specific constitutional claims and so “as standard questions of administrative law” there was then “little room for the FTC to bring its expertise to bear.”80
The U.S. Chamber of Commerce’s amicus brief in support of the petition for certiorari supported Axon’s position, stating that constitutional challenges, like those raised by Axon, have no relevance to agency expertise. The Chamber of Commerce also appealed to the intuitive and policy rationales cited by the Ninth Circuit in their decision, stating that forcing parties to wait for judicial review and redress until after the conclusion of administrative procedures “produces no countervailing benefits.”81 The FTC countered this by citing the Supreme Court’s decision in FTC v. Standard Oil, which held that “immediate judicial review would serve neither efficiency nor enforcement of the Act.”82. )) The FTC also cited Standard Oil as establishing that the “expense and annoyance of litigation is part of the social burden of living under government” and if eventual judicial review is available there is no need to allow collateral challenges to disrupt agency enforcement proceedings.83
Cochran v. U.S. Sec. & Exch. Comm’n, 20 F.4th 194 (5th Cir. 2021), cert. granted sub nom. SEC v. Cochran, No. 21-1239, 2022 WL 1528373 (U.S. May 16, 2022):
In Cochran v. SEC, the Fifth Circuit addressed virtually the same issue as addressed by the Ninth Circuit in Axon. However, the Fifth Circuit found the SEC Act did not preclude federal judicial review.
The Cochran case arose out of an SEC enforcement action against an accountant, Cochran, who allegedly “aid[ed] and abett[ed] the performance of audits that did not comply with [SEC] standards.”84 After an initial hearing before an ALJ, the SEC ruled against Cochran and that ruling was adopted by the Commission as a final order. Cochran objected to this result, but before her objection was addressed, the Supreme Court issued its opinion in Lucia v. SEC, holding that the SEC ALJ was unconstitutionally appointed (see above for a more detailed discussion of Lucia).85 Cochran was then granted a new hearing. Prior to the new ALJ proceeding, Cochran filed suit in federal court alleging constitutional defects as to the restrictions placed on the removal of SEC ALJs (a claim identical to the removal powers issue raised in Jarkesy). The district court dismissed the complaint for lack of jurisdiction.86
Initially, a Fifth Circuit panel affirmed the district court’s dismissal, however, the Fifth Circuit sitting en banc reversed this decision and held that Cochran’s complaint was “wholly collateral” to the SEC’s administrative proceedings, and as such, her claims were within the jurisdiction of the district court.87 The court first engaged in statutory analysis, applying Free Enterprise, then applied the Thunder Basin framework.
As part of its statutory analysis the Fifth Circuit focused specifically on the language of section 78y of the SEC Act which addresses federal jurisdiction. The court noted the statute specifically addresses questions of federal jurisdiction “only [for] ‘person[s] aggrieved by a final order of the Commission.’” The opinion then characterized Cochran as falling outside of this group because she had not received a final order. The court further cited to both the “permissive” and “mandatory” language used in different parts of the SEC Act. In one instance the Act states those challenging a final order “may” file in a federal court of appeals and in other instances provides “exclusive” jurisdiction to the court of appeals. The court found the varying use in language indicated Congress was aware of the situations when it was precluding parties from federal jurisdiction and chose not to “strip jurisdiction” regarding structural constitutional claims.88
The Fifth Circuit then interpreted Free Enterprise as completely rebutting the SEC’s claims that the SEC Act precludes federal district court jurisdiction. The Fifth Circuit stated that Free Enterprise decided the issue entirely through its holding that the SEC Act “does not expressly limit [district court] jurisdiction …. Nor does it do so implicitly.”89 The SEC argued that Free Enterprise was distinguishable because the PCAOB had not yet initiated an administrative proceeding whereas Cochran was in the midst of her proceedings. However, the Fifth Circuit found that since Cochran was not guaranteed a final order against her, she therefore might have no ability to challenge the constitutionality of the proceedings in federal court. Accordingly, it held she was not ensured of meaningful judicial review and so was entitled to concurrent federal district court jurisdiction.
While it held that relying on Free Enterprise alone was enough to decide Cochran, the court undertook a brief Thunder Basin analysis. To accelerate its analysis of the Thunder Basin factors, in the first step of the analysis the Fifth Circuit assumed arguendo that Congress intended to strip federal court jurisdiction in the SEC Act, thus advancing to the second part of the analysis. Even with the court finding for the sake of argument that the first step stripped jurisdiction, ultimately the court concluded the second step of the analysis supported finding this type of claim was not one that Congress intended to send through the SEC’s administrative process first. In deciding this second question, unlike the Ninth Circuit in Axon, the Fifth Circuit held that all three necessary considerations, meaningful judicial review, wholly collateral status, and agency expertise, supported its holding.90
In finding Cochran’s suit “wholly collateral,” the court again referenced Free Enterprise. In that case, as with Cochran, the claims being raised were about structural constitutional issues and were unrelated to the substance of the SEC Act or any SEC rule, regulation, or order. When evaluating whether Cochran’s constitutional claims were within the SEC’s expertise, the Fifth Circuit reached the same conclusion as the Ninth Circuit, finding that purely administrative law questions fall outside of the agency’s expertise. In determining the meaningful judicial review factor, the Fifth Circuit noted like the Ninth Circuit, that some precedential cases (e.g., Thunder Basin and Elgin) held that meaningful judicial review existed whenever the eventual possibility of appellate review is available. However, unlike the Ninth Circuit, the Fifth Circuit interpreted Free Enterprise as distinct from earlier cases. In Free Enterprise, the plaintiff claimed they could not receive redress by enduring administrative proceedings with inherent structural constitutional defects in the same way that the plaintiffs in Thunder Basin and Elgin could receive redress. In Thunder Basin, the Court determined only “speculative” harm was at issue since the plaintiff was alleging potential future harm if they complied with the agency’s order. The Fifth Circuit distinguished Elgin by noting that redress could be appropriately provided through backpay, employment reinstatement, and payment of attorneys’ fees. According to the court, the speculative and substantive relief sought in Thunder Basin and Elgin differ from Cochran undergoing unconstitutional administrative proceedings with little opportunity for later redress. The court reasoned that if the agency proceedings did not result in a final adverse order, Cochran may never be able to seek redress for the unconstitutional proceedings.91 As such, the Fifth Circuit found all Thunder Basin factors pointed towards allowing federal jurisdiction for Cochran’s complaint.
Applicability to FTC and Potential Ramifications of Collateral Challenge Cases
If the agencies in Axon and Cochran are unsuccessful at the Supreme Court, defendants in agency administrative enforcement actions could potentially significantly derail enforcement efforts by filing preemptive or simultaneous federal court cases challenging the agency action on collateral grounds.
One immediate impact of a Supreme Court decision granting federal jurisdiction in cases like Axon and Cochran could be to require the agency to devote resources to defending such actions prior to obtaining a substantive ruling in the underlying case alleging consumer or investor harm. From the defendant’s perspective, this may be beneficial in shortening the time needed to raise structural constitutional challenges regarding the FTC’s or another agency’s administrative proceedings. The prospect of such collateral challenges could lead to legislative changes (although this may be difficult in a divided Congress) or could lead to a shift of enforcement to federal court. As the Ninth Circuit noted, increased availability of federal courts to consider such challenges may help litigants avoid conducting an entire administrative adjudication just to later have those proceedings rejected on constitutional grounds.
One possible outcome could be that the Supreme Court limits its ruling to a specific type of structural constitutional claim, such as removal powers issues or to claims filed prior to official initiation of administrative proceedings, thus limiting the decision’s broader applicability. However, if the Court allows federal jurisdiction for a wider variety of claims, the decision could have a much broader impact.
Administrative enforcement actions by the FTC and SEC (and perhaps the CFPB), among other agencies, may be vulnerable to constitutional challenges based on recent and pending cases.92 The structural constitutional claims available to potential challengers are varied, as evidenced by those raised in Jarkesy, and the timeline of when these claims can be brought in federal court may be accelerated depending on the outcomes of the Axon and Cochran decisions. The Supreme Court’s AMG decision increased uncertainty in the consumer protection realm regarding available enforcement methods, highlighting the potential significance of challenges to the agency administrative process. Depending on the outcomes of pending cases, federal consumer protection enforcement agencies could face additional levels of complexity in enforcing their statutes. Federal agencies may seek legislative remedies to address those rulings. However, as evidenced by the delay in obtaining a legislative solution to AMG’s stripping of the FTC’s ability to seek section 13(b) restitution, it may take years to enact a legislative “fix.” This protracted process may result in increased enforcement work on the part of state attorneys general, as well as a greater likelihood of harm to consumers.
Other articles in this edition include:
- Consumer Chief of the Month
- Attorney General Consumer Protection News: June 2022
- Federal Consumer Protection News: June 2022
- Many thanks to Todd Leatherman (NAGTRI Center for Consumer Protection Program Counsel) for his guidance and feedback in helping draft this article. [↩]
- AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 1341 (2021). [↩]
- Jarkesy v. Sec. & Exch. Comm’n, 34 F.4th 446 (5th Cir. 2022); Axon Enter., Inc. v. Fed. Trade Comm’n, 986 F.3d 1173, 1180 (9th Cir. 2021), cert. granted in part, 142 S. Ct. 895, 211 L. Ed. 2d 604 (2022); Cochran v. U.S. Sec. & Exch. Comm’n, 20 F.4th 194, 205 (5th Cir. 2021), cert. granted sub nom. SEC v. Cochran, No. 21-1239, 2022 WL 1528373 (U.S. May 16, 2022). [↩]
- 15 U.S.C. § 53(b). [↩]
- AMG Cap., 141 S. Ct. at 1347. [↩]
- Id. at 1343. [↩]
- Video: Josh Stein, NC Attorney General (National Association of Attorneys General 2021 Consumer Protection Fall Conference November 8, 2021) (on file with the National Association of Attorneys General). [↩]
- Maggie Crosswy and John Villafranco, FTC Uses AMG Anniversary to Push for a Bipartisan 13(b) Legislative Fix in an Increasingly Partisan Environment, JD Supra (April 29, 2022). [↩]
- Federal Trade Commission, Statement of Commissioner Rebecca Kelly Slaughter Joined by Chair Lina M. Khan Regarding Section 13(b) of the FTC Act at 1 (April 28, 2022) [↩]
- 15 U.S.C. § 57b [↩]
- Statement of Slaughter and Khan, supra at 4. [↩]
- Jarkesy, 34 F.4th at 446. [↩]
- The Securities Exchange Act of 1934 (“SEC Act”) specifies jurisdiction in the federal courts for SEC civil actions. 15 U.S.C. § 78u(d)(1). The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”) authorizes the SEC to impose civil penalties in proceedings before an administrative law judge. Prior to the Dodd-Frank Act, the SEC could only initiate administrative proceedings against registered entities. Pub. L. 111-203, 124 Stat. 1376 (2010). [↩]
- Jarkesy had also sued to enjoin the administrative proceedings in U.S. district court, but the court dismissed the action for lack of subject matter jurisdiction and that decision was upheld on appeal to the U.S. Court of Appeals for the District of Columbia Circuit. See Jarkesy v. SEC, 48 F. Supp. 3d 32, 40 (D.D.C. 2014), aff’d, 803 F.3d 9, 12 (D.C. Cir. 2015). [↩]
- Jarkesy, 34 F.4th at 450. [↩]
- Brief for Respondent Petition of the Securities and Exchange Commission for Rehearing En Banc at ii, Jarkesy v. Sec. & Exch. Comm’n, 34 F.4th 446 (5th Cir. 2022) (No. 20-61007). [↩]
- Atlas Roofing Co. v. Occupational Safety & Health Rev. Comm’n, 430 U.S. 442, 450 (1977); Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 52 (1989). [↩]
- Atlas Roofing, 430 U.S. at 450. [↩]
- Id. at 449-461. [↩]
- Granfinanciera, 492 U.S. at 52. [↩]
- Id. at 60 (citing Atlas Roofing, 430 U.S. at 461). [↩]
- Jarkesy, 34 F.4th at 453 (citing Granfinanceria, 492 U.S.at 54). [↩]
- Id. at 453. [↩]
- Id. at 457. [↩]
- Brief for Respondent at 21, Jarkesy v. Sec. & Exch. Comm’n, 34 F.4th 446 (5th Cir. 2022) (No. 20-61007), 2021 WL 2142885. (quoting Atlas Roofing, 430 U.S. at 455). [↩]
- See Neil W. Averitt, The Meaning of “Unfair Methods of Competition” in Section 5 of the Federal Trade Commission Act, 21 B.C. L. Rev. 227, 235 (1980). [↩]
- 15 USC § 45. [↩]
- Jarkesy, 34 F.4th at 462. [↩]
- Id. at 461 (citing Mistretta v. United States, 488 U.S. 361, 372 (1989) (quoting J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928[↩]
- See Panama Ref. Co. v. Ryan, 293 U.S. 388 (1935), A. L. A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935), and J. W. Hampton, Jr., & Co. v. United States, 276 U.S. 394 (1928). [↩]
- Schechter Poultry, 295 U.S. at 530. [↩]
- Gundy v. United States, 139 S. Ct. 2116 (2019). [↩]
- Id. at 2130-1 (Alito, J., concurring) (Gorsuch, J., dissenting in which Chief Justice Roberts and Justice Thomas joined). Justice Kavanaugh has also indicated some interest in revisiting the nondelegation doctrine, see Paul v. United States, 140 S.Ct. 342 (statement of Justice Kavanaugh respecting the denial of certiorari) (“Justice Gorsuch’s scholarly analysis of the Constitution’s nondelegation doctrine in his Gundy dissent may warrant further consideration in future cases.”). [↩]
- Jarkesy, 34 F.4th at 461. [↩]
- Id. (citing INS v. Chadha, 462 U.S. 919, 952 (1983[↩]
- Id. at 461. [↩]
- Id. at 474 (Davis, J., dissenting); Brief for Respondent, supra note 25, at 51. [↩]
- Brief for Respondent, supra note 25, at 51 (quoting United States v. Nixon, 418 U.S. 683, 693 (1974[↩]
- Id. (quoting Gundy, 139 S. Ct. at 2123). [↩]
- Jarkesy, 34 F.4th at 461 (citing Crowell v. Benson 285 U.S. 22, 50-52 (1932) (holding “the mode of determining” which cases are assigned to administrative tribunals “is completely within congressional control”[↩]
- The FTC also possesses additional discretion in antitrust merger cases as under Section 7 of the Clayton Act both the FTC and U.S. Department of Justice (DOJ) are charged with the preventing the creation of monopolies. 15 U.S.C. § 18. Some practitioners argue that the decision-making process for which agency pursues enforcement in any particular case raises a separate non-delegation issue. See Olivia Adendorff, Rich Cunningham and Matthew Rowen, SEC Constitutionality Ruling May Embolden FTC Targets, Law360 Expert Analysis (June 8, 2022). [↩]
- 15 U. S. C. § 53(b); 15 U. S. C. § 57(b). [↩]
- 5 U.S.C § 7521. [↩]
- 15 U.S.C. § 41; 5 U.S.C. § 7521(a). [↩]
- Jarkesy, 34 F.4th at 464. [↩]
- Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477, 487 (2010). [↩]
- The PCAOB members in question were only removable for cause by the SEC Commissioners who themselves were only removable for cause. Free Enter., 561 U.S. at 487. [↩]
- Free Enter., 561 U.S. at 478. [↩]
- Seila Law LLC v. Consumer Fin. Prot. Bureau, 140 S. Ct. 2183, 2192 (2020). [↩]
- Id. at 2192 (citing Humphrey’s Ex’r v. United States, 295 U.S. 602, 629 (1935) (holding that “Congress could create expert agencies led by a group of principal officers removable by the President only for good cause)” and Morrison v. Olson, 487 U.S. 654, 655-56 (1988) (holding that “that Congress could provide tenure protections to certain inferior officers with narrowly defined duties.”[↩]
- Seila Law, 140 S. Ct. at 2192. [↩]
- Lucia v. SEC, 138 S. Ct. 2044, 2055 (2018). [↩]
- Cochran v. U.S. Sec. & Exch. Comm’n, 20 F.4th 194, 198 (5th Cir. 2021), cert. granted sub nom. SEC v. Cochran, No. 21-1239, 2022 WL 1528373 (U.S. May 16, 2022). [↩]
- Free Enter., 561 U.S. at 478; Lucia, 138 S. Ct. at 2055. [↩]
- Jarkesy, 34 F.4th at 475 (Davis, J., dissenting). [↩]
- Id. at 507 n.10. [↩]
- Brief for Respondent, supra note 25, at 39 (citing Kuretski v. Commissioner, 755 F.3d 929, 944 (D.C. Cir. 2014[↩]
- Id. at 42-43 (citing Ramspeck v. Federal Trial Examiners Conf., 345 U.S. 128, 142-3 (1953[↩]
- Id. (quoting Lawrence Lessig & Cass R. Sunstein, The President and the Administration, 94 Colum. L. Rev. 1, 111 (1994[↩]
- Id. (quoting Free Enter., 537 F.3d at 699 n.8 (Kavanaugh, J., dissenting) (quoting Morrison, 487 U.S. at 691-92[↩]
- Both the SEC and FTC ALJs are appointed by their respective commissions pursuant to Title 5 of the U.S. Code, Section 3105. (I.e., by the heads of the departments, see Free Enter., 561 U.S. at 511; 26 Fed. Reg. 6,191 at § 1a, 75 Stat. 837 (Eff. July 9, 1961) (Reorganization Plan No. 4 of 1961). Both sets of ALJs “‘exercis[e] significant authority pursuant to the laws of the United States.'” Freytag v. CIR, 501 U.S. 868, 881 (1991). Both “take testimony,” “conduct trials,” “administer oaths, rule on motions, and generally ‘regulat[e] the course of’ a hearing, as well as the conduct of parties and counsel.” Lucia, 138 S. Ct. at 2053; see 16 C.F.R. § 3.42(c) (empowering FTC ALJs to, among other things, “receive evidence,” “conduct … hearings,” “administer oaths,” “rule upon … motions,” and “regulate the course of the hearings and the conduct of the parties and their counsel”). Both sets possess the ability to “make and file initial decisions,” which can later be appealed to the full commission. 16 C.F.R. § 3.42(c)(9); 17 C.F.R. § 201.360(a)(1). Finally, both FTC and SEC ALJs “have all powers necessary” to “dispos[e] of” the proceedings over which they preside. 16 C.F.R. § 3.42(c); 17 C.F.R. §§ 201.111, 200.14(a). [↩]
- Axon Enter., Inc. v. Fed. Trade Comm’n, 986 F.3d 1173 (9th Cir. 2021), cert. granted in part, 142 S. Ct. 895, 211 L. Ed. 2d 604 (2022). [↩]
- Cochran, 20 F.4th 194, cert. granted sub nom. SEC v. Cochran, No. 21-1239, 2022 WL 1528373 (U.S. May 16, 2022). [↩]
- Similar challenges to the CFPB are unlikely for two reasons. First, since the Seila Law ruling, the CFPB’s upper-tier leadership structure is now aligned with removal restriction jurisprudence. As such, the ALJs are less vulnerable to arguments regarding dual layers of for cause removal restrictions. Secondly, it appears that most of the CFPB’s contested enforcement actions take place in federal court as opposed to an administrative proceeding headed by an ALJ. Christopher L. Peterson, Consumer Financial Protection Bureau Law Enforcement: An Empirical Review, 90 Tul. L. Rev. 1057, 1081 (2016). However, the CFPB does issue administrative consent orders (agreements between the CFPB and parties under investigation) with some frequency. [↩]
- The Supreme Court first granted certiorari on this issue in Axon and followed that up with granting Cochran a combined scheduling order. However, the two cases will be argued separately in the fall with decisions expected in summer 2023. [↩]
- Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994); Free Enter., 561 U.S. 477; and Elgin v. Dep’t of Treasury, 567 U.S. 1 (2012). [↩]
- Cochran, 20 F.4th at 205, cert. granted sub nom. SEC v. Cochran, No. 21-1239, 2022 WL 1528373 (U.S. May 16, 2022) (citing Thunder Basin 510 U.S. at 207). [↩]
- Axon, 986 F.3d at 1178, cert. granted in part, 142 S. Ct. 895 (2022) (citing Thunder Basin, 510 U.S. 200; Free Enter., 561 U.S. 477; and Elgin, 567 U.S. 1). [↩]
- Elgin, 567 U.S. 1. [↩]
- Axon, 986 F.3d at 1180, cert. granted in part, 142 S. Ct. 895 (2022) (citing Elgin, 567 U.S. 1). [↩]
- Axon, Pet. for Writ of Cert. at i. [↩]
- Id. at 11-12. [↩]
- Axon, 986 F.3d at 1180, cert. granted in part, 142 S. Ct. 895 (2022). [↩]
- Id. (citing Hill v. SEC, 825 F.3d 1236, 1241 (11th Cir. 2016) and Tilton v. SEC, 824 F.3d 276, 281 (2d Cir. 2016[↩]
- Id. at 1180 (citing Free Enter., 561 U.S. 477). [↩]
- Id. at 1181 (See Thunder Basin, 510 U.S. at 215; see also FTC v. Standard Oil Co. of Cal., 449 U.S. 232, 244 (1980) (rejecting petitioner’s argument that “the expense and disruption of defending itself in protracted adjudicatory proceedings” warrants an exception to the agency review process[↩]
- Id. at 1187. [↩]
- Id. at 1185 (citing Elgin, 567 U.S. 1). [↩]
- Id. [↩]
- Id. at 1187 (citing Free Enter., 561 U.S. 477). [↩]
- Brief for the Chamber of Commerce of the United States of America as Amicus Curiae in Support of Petitioner at 3, Axon Enter., Inc. v. Fed. Trade Comm’n, 986 F.3d 1173 (9th Cir. 2021), cert. granted in part, 142 S. Ct. 895, 211 L. Ed. 2d 604 (2022) (No. 21-86), 2022 WL 1589262. [↩]
- Brief for the Respondents in Opposition to Petition for a Writ of Certiorari to the United States Court of Appeals for the Ninth Circuit at 13, Axon Enter., Inc. v. Fed. Trade Comm’n, 986 F.3d 1173 (9th Cir. 2021), cert. granted in part, 142 S. Ct. 895, 211 L. Ed. 2d 604 (2022) (No. 21-86) (quoting FTC v. Standard Oil Co., 449 U.S. 232, 243. (1980[↩]
- Id. (quoting Standard Oil, 449 U.S. at 244-45). [↩]
- Defendant’s Response to Plaintiff’s Motion for Preliminary Injunction at 4, Cochran v. SEC, (No. 19-CV-066-A) (N.D. Tex. Mar. 4, 2019). [↩]
- Lucia, 138 S. Ct. at 2055. [↩]
- Cochran v. SEC, No. 19-CV-066-A, 2019 WL 1359252, at *1 (N.D. Tex. Mar. 25, 2019). [↩]
- Cochran, 20 F.4th 194, 207 (5th Cir. 2021), cert. granted sub nom. SEC v. Cochran, No. 21-1239, 2022 WL 1528373 (U.S. May 16, 2022). [↩]
- Id. at 200-201. [↩]
- Id. at 202 (citing Free Enter., 561 U.S. at 489). [↩]
- Id. at 207. [↩]
- Id. at 209. [↩]
- Although outside the scope of this article, it is worth noting that additional challenges to consumer protection enforcement are on the horizon in the form of challenges to the CFPB’s funding and appropriations structure. Recent cases on this topic include Consumer Fin. Prot. Bureau v. All Am. Check Cashing, Inc., 33 F.4th 218 (U.S. 5th Cir. 2022), Consumer Financial Protection Bureau et al. v. MoneyGram International Inc. et al., case number 1:22-cv-03256, and Community Financial Services Assn’n of Am., Ltd., v. CFPB, No. 21-50826 (5th Cir.). [↩]