FORT WORTH -- U.S. District Court judge John McBryde dismissed a Coppola, Texas, woman’s complaint against the Security and Exchange Commission but one of her attorneys said there is some light at the end of the tunnel.
Michelle Cochran should not have been put through the stress of an SEC hearing before the organization’s administrative law judges, attorney Peggy Little said.
In his opinion, McBryde wrote, “The court is deeply concerned with the fact that plaintiff has been subjected to extensive proceedings before an administrative law judge who was not constitutionally appointed and contends that the one she must now face for further, undoubtedly extended, proceedings likewise is unconstitutionally appointed. She should not have been put to the stress of the first proceedings, and, if she is correct in her contentions, she again will be put to further proceedings, undoubtedly at considerable expense and stress, before another unconstitutionally appointed administrative law judge.”
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Cochran is a client of the New Civil Liberties Alliance and Little said there is hope after hearing McBryde’s ruling.
‘’Judicial understanding of the illogic of forcing people to undergo multiple proceedings and appeals before unlawfully appointed administrative law judges (ALJs)—when the essence of their claim is that the judge is not constitutionally appointed—is a key first step in course-correction,’’ Little told the SE Texas Record.
McBryde dismissed the case in U.S. District Court Northern District of Texas Fort Worth Division because of a lack of jurisdiction.
“While we respectfully disagree with the judge’s ruling on jurisdiction—and believe the precedent that guided his ruling is readily distinguishable--we thought Judge McBryde showed refreshing understanding of and deep concern for the plight of Americans caught in the maze of unlawful administrative proceedings,’’ Little said.
‘’The SEC had and has had every opportunity to bring these charges before a lawful judge in district court or before the commission and has a duty to all Americans to only bring charges in a constitutional tribunal. Insisting upon reinstituting these proceedings before unconstitutional ALJs is both unnecessary and unlawful.’’
The next step for Cochran and her attorneys is the Fifth Circuit Court of Appeals in New Orleans.
Little says she has confidence in the logic and legal support for their position.
Little pointed out that other circuits have looked at this question as the Supreme Court ruled in the Lucia case that SEC ALJs were unlawfully appointed.
‘’ In Lucia, Justice Stephen Breyer recognized that the unlawful layers of removal protections were an “embedded” constitutional question that must be decided. The solicitor general also took the position in that case that the removal protections were unlawful. For these reasons, we believe that the Fifth Circuit will see the compelling logic that these claims must be heard in a real court before a lawful judge.’’
Little said the U.S. Supreme Court held in 2010 in a case called Free Enterprise Fund that constitutional questions such as the removal issue are ones which courts are empowered to hear.
“That decision further held that Congress had no intent to limit federal court jurisdiction over constitutional questions, which were outside the Commission’s competence and expertise and could not be meaningfully pursued before an ALJ,’’ Little said.
On why SEC judges lack the constitutional authority to hear such cases, Little said, ’’Neither the SEC commissioners nor the ALJs to whom they delegate their regulatory authority have any power to decide constitutional questions. The laws enacted by Congress giving the SEC enforcement power allows them to decide questions about the violation of the securities laws, and the securities laws alone.’’
Cochran was the subject of the SEC proceeding in April 2016. She worked for the Hall Group CPAs, and its founder, David Hall.
According to court documents, ‘’The SEC alleged that the firm violated various accounting standards in several audits it performed. Although Hall was named as the primary violator, Cochran’s alleged liability was premised on her participation in some of the allegedly deficient audits as Hall’s employee. ‘’
Besides the SEC, the other plaintiff listed in the case file was former acting attorney general Matt Whitaker.