Administrative Agencies and Constitutional Issues

After posting the previous post about the SEC Supreme Court matter, I got sidetracked into looking at some SEC cases that dealt with the constitutional issue of whether ALJ’s are appointed under the Appointments Clause of the Constitution.  In some previous SEC matters, plaintiffs sought  TRO’s or preliminary injunctions in district court in order to have a district court decide the constitutional issue, rather than the SEC.  See, e.g., Duka v. SEC, 2015 WL 4940057 (S.D.N.Y. Aug. 3, 2015); Hill v. SEC, 2015 WL 4307088 (N.D. Ga. June 8, 2015)

That made me wonder about the current sovereign immunity cases at the PTAB and whether any of the affected parties in those proceedings would opt for pursuing a TRO or preliminary injunction in order to have a district court, rather than the PTO, decide the constitutional* issue of sovereign immunity protection.  Apparently, there is some Supreme Court authority for the proposition that administrative agencies are not well-suited to decide constitutional issues:

3. Plaintiff’s Constitutional Claims Are Outside the Agency’s Expertise.

The SEC claims that Plaintiff’s challenges “fall within the Commission’s expertise,” and the “SEC is in the best position to interpret its own policies and regulations in the first instance.” Dkt. No. [12] at 13. The Court finds that Plaintiff’s Article I, Seventh Amendment, and Article II claims are outside the agency’s expertise.[6]

1310*1310 Plaintiff’s constitutional claims are governed by Supreme Court jurisprudence, and “the statutory questions involved do not require technical considerations of agency policy.” Free Enterprise, 561 U.S. at 491, 130 S.Ct. 3138(alteration and internal quotations omitted) (quoting Johnson v. Robison, 415 U.S. 361, 373, 94 S.Ct. 1160, 39 L.Ed.2d 389 (1974)); see also Thunder Basin, 510 U.S. at 215, 114 S.Ct. 771 (“[A]djudication of the constitutionality of congressional enactments has generally been thought beyond the jurisdiction of administrative agencies.”) (quoting Johnson, 415 U.S. at 368, 94 S.Ct. 1160). These claims are not part and parcel of an ordinary securities fraud case, and there is no evidence that (1) Plaintiff’s constitutional claims are the type the SEC “routinely considers,” or (2) the agency’s expertise can be “brought to bear” on Plaintiff’s claims as they were in Elgin. Elgin, 132 S.Ct. at 2140.

The Court finds that as to this factor, Plaintiff’s constitutional claims are outside the SEC’s expertise, and that this Court has subject matter jurisdiction.

Hill v. SEC, 114 F. Supp. 3d 1297, 1309-10 (N.D. Ga. 2015).

Also, in Public Utilities Comm’n v. United States, 355 U. S. 534, 539 (1958) the Supreme Court said:

But where the only question is whether it is constitutional to fasten the administrative procedure onto the litigant, the administrative agency may be defied and judicial relief sought as the only effective way of protecting the asserted constitutional right.

* Categorizing sovereign immunity as a constitutional issue appears to be strongest in the state-owned patent IPR’s, see, e.g., Pennsylvania v. Union Gas Co., 491 U.S. 1, 7  (1989), as opposed to the tribe-owned patent IPR’s where tribal sovereign immunity might be considered a common law doctrine rather than a constitutional issue.

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