U.S. Supreme Court Deals Latest Setback to Federal Government's Use of Administrative Law Judges

Michael Birnbaum, Haima Marlier, and Gerardo Gomez Galvis authored an article for The Journal of Federal Agency Action explaining how a recent decision by the Supreme Court created doubt about the administrative law judge (ALJ) procedure on which the Securities and Exchange Commission (SEC) so critically relies.

"The Axon decision means that litigants can raise constitutional challenges to contested SEC administrative proceedings – challenging the apparent lack of restrictions on presidential removal of ALJs, for example – before the SEC has rendered a final decision on the merits," the authors wrote. "Under the Exchange Act, the SEC can elect whether to file enforcement actions in federal district court, where it will be heard by an Article III judge, or by bringing administrative proceedings, to be heard by an ALJ. The Axon decision means, as a practical matter, that litigated SEC enforcement actions will almost entirely be brought in federal court, except for the rare matters where only administrative relief is available."

Read the full article.