Norris v. Securities & Exchange Commission
2012 U.S. App. LEXIS 7169
| Fed. Cir. | 2012Background
- Norris, an SEC Trial Attorney, was removed on Aug. 28, 2009, after prior discipline for improper emails and misuse of government email.
- Discipline included 2007 suspension for emailing a witness attorney and 2007-2008 exchanges with Mark Cuban.
- The 2008 conduct involved three emails (SEC email) including a Post article email, staff demeans, and a confidential SAR email.
- The SEC proposed removal on May 22, 2009; Norris argued personal circumstances (AD/HD, spouse/daughter health) mitigated conduct.
- Romero, the deciding official, removed Norris citing continued inappropriate emails and loss of confidence in performance.
- Arbitration upheld the removal; Norris appealed to federal circuit court challenging due process and reliance on post-notice information.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ex parte information not in the notice tainted due process | Norris alleges Romero and arbitrator relied on prior confrontation not in the notice (Ward issue). | SEC contends no improper ex parte reliance; Romero testified she did not use new information in deciding removal. | No reversible error; no evidence that ex parte information influenced the penalty finding. |
| Whether post-removal evidence should be considered in evaluating penalty | Post-removal evidence (AD/HD treatment, family health, improved conditions) should mitigate the penalty. | Penalty review should be based on record before agency; post-removal evidence subordinate. | Arbitrator erred by not considering post-removal mitigation evidence; remand to evaluate Douglas factors with new evidence. |
| What standard governs review of penalty and consideration of new evidence on remand | Board must independently assess penalty with new evidence. | Agency discretion governs penalty; new evidence not mandatory on remand. | Board/arb must consider new mitigation evidence; remand for reapplication of Douglas factors with complete record. |
Key Cases Cited
- Ward v. U.S. Postal Service, 634 F.3d 1274 (Fed. Cir. 2011) (ex parte information violating due process when new material info is introduced)
- Malloy v. United States Postal Service, 578 F.3d 1351 (Fed. Cir. 2009) (new mitigation evidence can affect penalty review)
- Brook v. Corrado, 999 F.2d 523 (Fed. Cir. 1993) (penalty review is not de novo; Board ensures reasonableness within tolerable limits)
- Jackson v. Veterans Admin., 768 F.2d 1325 (Fed. Cir. 1985) (de novo merits review; record admissibility up to hearing)
- Vt. Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 U.S. 519 (U.S.) (limits on agency consideration and reopening of administrative orders)
- Lachance v. Devall, 178 F.3d 1246 (Fed. Cir. 1999) (Board must independently balance Douglas factors to determine reasonableness)