In Cochran v. SEC the Fifth Circuit court of appeals sitting en banc opened the doors of federal district courts in Texas, Mississippi and Louisiana to constitutional challenges to agency administrative law judges (ALJs) who enjoy multiple layers of protection from removal. This means that persons administratively charged by the SEC will no longer have to first endure years of pointless administrative proceedings before judges they claim are unconstitutional. By contrast, in six other circuits (Second, Fourth, Seventh, Eleventh, D.C. and Ninth), administrative agencies such as the SEC and FTC can instigate unconstitutional proceedings and evade judicial review by an Article III court for years on end. Defendants are thereby forced to settle or bankrupted before ever receiving meaningful judicial review.
Cochran is not only a groundbreaking course-correction vindicating Americans’ access to Article III courts for redress of their constitutional rights, but it creates a circuit split that may well prompt Supreme Court review. The Fifth Circuit, by a 9-7 vote (Haynes, Jones, Smith, Elrod, Willett, Duncan, Engelhardt, Oldham and Wilson) held that § 78y of the Exchange Act neither explicitly nor implicitly stripped jurisdiction from federal courts to hear this challenge.
Judge Oldham, joined by Judges Smith, Willett, Duncan, Engelhardt and Wilson, concurred separately in a remarkable opinion that set forth the origins of the administrative state in § 78y’s transfer of power “far away from the three branches of government the Founders worked so hard to create, separate and balance … [a]nd … as far away from democracy and universal suffrage as possible.” They said that critical disjuncture has allowed “administrative agencies to operate in a separate, anti-constitutional, and anti-democratic space—free from pesky things like law and an increasingly diverse electorate.”
Please join Peggy Little, Senior Litigation Counsel of the New Civil Liberties Alliance (NCLA), who argued the en banc, and Gregory Garre, former U.S. Solicitor General and now partner at Latham & Watkins, who worked with another NCLA client in 2020 on a petition for certiorari to the Supreme Court on this point, for a discussion of this landmark decision and the concurrence’s open engagement with administrative power. Peggy and Greg will discuss how this structural constitutional question was litigated in district courts in California, Texas and the Fifth, Ninth and Eleventh Circuits, what the Fifth Circuit got right that so many other circuits got wrong, and how this separation of powers question might reach the Supreme Court in the near future.

Featuring:

Peggy Little, Senior Litigation Counsel, New Civil Liberties Alliance
Gregory Garre, Partner, Latham & Watkins