Bandimere v. United States Securities & Exchange Commission
855 F.3d 1128
| 10th Cir. | 2017Background
- Case arises from a panel decision (Bandimere) holding that SEC administrative law judges (ALJs) are "inferior officers" under the Appointments Clause, prompting SEC petition for rehearing en banc.
- Judges Lucero and Moritz dissented from the denial of rehearing en banc; Lucero authored the attached dissent.
- Lucero argues the panel majority improperly extends Freytag (which addressed Tax Court special trial judges) to routine agency ALJs.
- The dissent stresses Congress’s and the APA’s long-standing structure that (1) insulated ALJs via merit hiring and removal protections and (2) left final decisionmaking to agency heads, preserving separation of functions and political accountability.
- Lucero warns the panel ruling threatens ALJ independence, could invite widespread challenges to agency adjudications, and risks disrupting established administrative practice.
- The court’s lead order: panel rehearing denied and a majority of active judges voted to deny en banc reconsideration; Lucero and Moritz voted to grant rehearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SEC ALJs are "inferior officers" under the Appointments Clause | ALJs exercise significant authority and are therefore inferior officers (supporting panel majority) | ALJs are mere employees protected by APA hiring/removal scheme and agency review; not inferior officers | Panel held ALJs are inferior officers; en banc rehearing was denied (Lucero dissenting) |
| Whether Freytag v. Commissioner compels treating ALJs as inferior officers | Freytag’s reasoning about Article I special trial judges applies to ALJs | Freytag involved distinct Article I judges and should not be extended to agency ALJs | Majority relied on Freytag; dissent argues Freytag does not clearly apply and expansion should await Supreme Court guidance |
| Whether the APA’s separation-of-functions and statutory protections for ALJs resolve Appointments Clause concerns | The APA’s merit hiring, removal protections, and agency-review framework preserve ALJs as employees and protect impartiality | The panel majority viewed ALJ duties as sufficiently authoritative despite APA protections | Lucero: APA framework provides constitutional balance; majority undervalued it. En banc rehearing denied |
| Whether this panel decision warrants en banc review because of broader disruptive consequences | Petitioner (SEC) and dissenters argue the constitutional and practical stakes merit full-court review | Panel majority and a majority of active judges voted to deny en banc rehearing | En banc rehearing denied; Lucero and Moritz dissented |
Key Cases Cited
- Freytag v. Commissioner, 501 U.S. 868 (1991) (addressed Appointments Clause for Tax Court special trial judges)
- Humphrey’s Executor v. United States, 295 U.S. 602 (1935) (independence of quasi‑judicial officers from executive removal pressures)
- Ramspeck v. Federal Trial Examiners Conference, 345 U.S. 128 (1953) (historical concerns about agency hearing examiner dependence)
- Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477 (2010) (limits on dual for‑cause removal protections and implications for officer status)
- NLRB v. Noel Canning, 573 U.S. 513 (2014) (weight of long‑settled practice in constitutional interpretation)