In Lucia v. U.S. Securities and Exchange Commission, Justice Elena Kagan, writing for a six-justice majority, presents the U.S. Supreme Court’s decision as both narrow and uncomplicated. “The sole question” the court chose to decide was whether the SEC's administrative law judges, or ALJs, “are ‘Officers of the United States’ or simply employees of the Federal Government.” If officers, the Constitution’s appointments clause requires that the president, a court of law, or a head of a department appoint the ALJs, and the commission conceded that its ALJs were not so appointed.

The court found the question of whether the commission’s ALJs qualified as “officers” to be conclusively resolved by its prior decisions, including Freytag v. Commissioner, a case in which the court held that the Tax Court’s special trial judges, or STJs, were officers. Freytag, the court explained, “necessarily decides” Lucia, as the SEC’s ALJs exercise powers nearly indistinguishable from those employed by the Tax Court’s STJs: Both “take testimony, conduct trials, rule on the admissibility of evidence, and have the power to enforce compliance with discovery orders,” and in so doing, “exercise significant discretion.” Because the ALJs (like the STJs) exercise “significant authority,” the court reasoned, they are officers, and the commission’s failure to appoint ALJs consistent with the appointments clause meant ALJ Cameron Elliot’s exercise of that authority in the Lucia matter was unconstitutional.

Originally published in Law360 on June 25, 2018.