July 23, 2018 / 6:56 PM / 3 months ago

In confidential memo to agency GCs, DOJ signals ‘aggressive’ stand on firing ALJs

(Reuters) - The Justice Department said in a confidential memo to top lawyers for federal agencies that agency heads have the authority to determine when there is good cause to fire administrative law judges. ALJs, as these executive-branch judges are known, oversee administrative proceedings ranging from individual Social Security benefits disputes to big-dollar Federal Trade Commission and Consumer Financial Protection Bureau enforcement actions against corporations. The DOJ memo, marked privileged and confidential, was viewed by Reuters.

Under the Administrative Procedure Act, ALJs cannot be removed from office unless the independent Merit System Protection Board finds good cause. But in the new memo, the solicitor general said that to comply with the U.S. Constitution, the MSPB must be “suitably deferential” to department heads who find an ALJ has failed to perform adequately or has not followed “agency policies, procedures or instructions.” The Justice Department will defend the constitutionality of the statute, the memo said, if it is “properly read” to give the president and his appointees an “adequate degree of control over ALJs.”

The Justice Department issued the memo in conjunction with an executive order from President Trump that revamped the ALJ hiring process to bypass the Office of Personnel Management’s objective system for screening ALJ candidates. Trump said the controversial executive order was prompted by the U.S. Supreme Court’s June 21 ruling in Lucia v. Securities and Exchange Commission, which held that SEC ALJs are covered by the Constitution’s Appointments Clause.

The Lucia ruling was deliberately narrow, but the Justice Department said in the memo that the court’s reasoning may apply broadly to a wide swatch of ALJs. It advised agency heads to ratify and approve the appointments of all ALJs and administrative judges currently serving in the executive branch. It also advised agencies to reassign any administrative proceedings in which a respondent raised a timely Appointments Clause objection to a different, properly-appointed judge.

Two law professors told me that prophylactic advice is entirely reasonable – but that the DOJ memo’s discussion of potential litigation over the constitutionality of the statute for firing ALJs raises concerns about the judges’ independence. “It’s a sword of Damocles,” said Kent Barnett of the University of Georgia. “The memo leaves open the possibility of removing ALJs whose overall grant or denial record (considering more than an indivisible case) is contrary to the agency’s preferred record,” Barnett said in an email. “This is where agencies can seek to determine outcomes, and this is most troubling when the agency is a party.”

Loyola law professor Adam Zimmerman said the Justice Department is promulgating more expansive department head authority over ALJ removal than previous administrations. In the past, he said, the Merit System Protection Board has been regarded as an independent evaluator of ALJ conduct. “The memo’s removal position is aggressive,” Zimmerman told me. “It’s a different view of the relationship between agency heads and the MSPB. The Justice Department is saying ‘We’re going to decide good cause.’ That’s different.”

As both Barnett and Zimmerman pointed out, the Justice Department has already advanced a version of that position in the Lucia case. The solicitor general’s brief, you may recall, called for the Supreme Court to determine the constitutionality of the statute controlling ALJ firing. DOJ argued that the law’s constitutionality rests on the ability of the president and his appointees to determine whether there’s good cause to get rid of the judges, with the MSPB acting only as a backstop to determine whether there is sufficient evidence to back the agency’s determination. The APA “is best interpreted to permit an agency to remove an ALJ for personal misconduct or for failure to follow lawful agency directives or to perform his duties adequately,” the SG’s Lucia brief said. “The court should construe the provision in that manner to safeguard the president’s power to control and supervise the executive branch.”

The Justice Department’s brief in Lucia provoked a flurry of amicus filings from law professors and ALJ organizations, arguing that judicial independence would be compromised if the Supreme Court weakened MSPB’s control of the firing process. The Supreme Court opted not to decide the constitutionality of ALJ removal provisions in the Lucia case.

But the new memo, said Barnett and Zimmerman, shows that the Justice Department intends to keep pushing its view of the president’s power, via his agency heads, to remove ALJs who aren’t following his administration’s policies. The memo acknowledges, in what seems to be a nod to the Supreme Court’s 1926 precedent in Myers v. U.S. (47 S.Ct. 21), that ALJs cannot be removed in order for the administration to obtain a particular outcome in any one case (or, the memo said, for any other “invidious reason.”)

The Myers decision nevertheless endorsed broad presidential power to remove executive branch officials, even those with “quasi judicial duties.” Even if an official can’t be fired for refusing to rule as the president wants while a case is under way, the Myers court said, the official can afterward be removed “on the ground that the discretion regularly entrusted to that officer by statute has not been on the whole intelligently or wisely exercised.”

Barnett and Zimmerman said the DOJ memo follows Myers’ “unitary executive” theory. The Supreme Court itself, in 2010’s Free Enterprise Fund v. Public Company Accounting Oversight Board has questioned whether the president’s removal powers are tempered when executive branch officials act as judges. The justices left that as an open question in the PCAOB case and in Lucia.

The Justice Department seems to want it to be answered. In the new memo, DOJ noted that many people challenging adverse ALJ rulings have already argued that the judges’ MSPB protection from removal is unconstitutional. Justice said it’s expecting an influx of additional challenges now that the Supreme Court has declined to address ALJ removal in Lucia. It urged agency general counsel immediately to coordinate with DOJ if a plaintiff raises constitutional arguments about ALJ removal.

Zimmerman said that if the ALJ removal issue does come to the Supreme Court – via a constitutional challenge from a litigant protesting an adverse ruling or a future suit by an ALJ alleging improper dismissal – the Trump administration is likely to find an ally in Brett Kavanaugh, the District of Columbia U.S. Circuit Court judge who has been nominated to fill the seat of retiring Justice Anthony Kennedy.

A Justice Department spokesman declined to comment on the new memo.

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