Bebo v. Securities & Exchange Commission, 799 F.3d 765

Laurie Bebo, former CEO of Assisted Living Concepts, is a respondent in an SEC administrative cease-and-desist enforcement proceeding alleging securities-law misconduct.
The ALJ hearing is ongoing; if an adverse initial decision issues, Bebo may petition the SEC for review, and after a final SEC decision she may seek judicial review under 15 U.S.C. § 78y in either the D.C. Circuit or the Seventh Circuit.
Instead of awaiting that process, Bebo sued in federal district court under 28 U.S.C. § 1331, challenging the constitutionality of Dodd-Frank § 929P(a) (choice of forum for SEC enforcement) and the SEC ALJs’ removal protections (Article II claim).
The district court dismissed for lack of subject-matter jurisdiction, reasoning that the § 78y statutory review scheme channels review to the courts of appeals.
The Seventh Circuit affirmed, applying Supreme Court guidance (Free Enterprise Fund and Elgin) and concluding § 78y fairly discernibly requires exclusive review through the administrative process followed by appellate review because meaningful judicial review remains available.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether § 78y precludes district-court jurisdiction over Bebo’s pre-enforcement constitutional challenge while she is a respondent in a pending SEC enforcement proceeding	Bebo: Free Enterprise Fund allows district-court review of facial and structural constitutional attacks; her claims are collateral to agency expertise and do not depend on the agency’s factual allegations	SEC: Elgin and § 78y require plaintiffs already in administrative proceedings to use the statutory path; meaningful appellate review will be available after final agency action	Held: § 78y precludes district-court jurisdiction here; Bebo must await final SEC action and then seek review in a court of appeals
Whether a facial constitutional challenge (e.g., to § 929P(a) or ALJ removal protections) automatically permits district-court jurisdiction	Bebo: Facial challenge should allow bypass of administrative process because it questions the enabling statute and structural authority	SEC: Facial form does not control jurisdiction; Elgin rejects a per se rule for facial claims and focuses on the statutory review scheme and availability of meaningful judicial review	Held: Facial status alone does not permit district-court suit; Elgin controls and precludes district-court jurisdiction when meaningful appellate review exists

Elgin v. Dep’t of Treasury, 567 U.S. 1 (explains that facial constitutional claims do not automatically permit district-court jurisdiction when statutory review provides meaningful appellate review)
Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 561 U.S. 477 (identifies factors for when statutory review may be inadequate and district-court jurisdiction may be proper)
Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (framework for determining when statutory review schemes preclude district-court jurisdiction)
FTC v. Standard Oil Co., 449 U.S. 232 (expense and disruption of administrative proceedings do not automatically justify district-court review)
McNary v. Haitian Refugee Ctr., 498 U.S. 479 (exception where administrative route would effectively deny meaningful judicial review)
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (plaintiffs need not ‘bet the farm’ to challenge laws they claim are invalid)
Ex parte Young, 209 U.S. 123 (equitable relief against unconstitutional official action)