FIGHT THE POWER: NCLA Responds in SEC v. Cochran.
The New Civil Liberties Alliance today filed an early response to the U.S. Securities and Exchange Commission’s March 11 petition for a writ of certiorari in SEC v. Michelle Cochran. NCLA argues that the U.S. Supreme Court should reject the government’s request to hold the Cochran case pending a decision in Axon Enterprise, Inc. v. FTC; instead, it should grant plenary review in Cochran and consolidate the case with Axon for argument next fall.
NCLA’s December 2021 victory in Cochran at the en banc U.S. Court of Appeals for the Fifth Circuit created a circuit split as to whether the scheme of administrative and judicial review in the Securities Exchange Act of 1934 implicitly strips federal district courts of jurisdiction to hear structural constitutional claims challenging SEC administrative proceedings. The Fifth Circuit correctly held that Congress did not “implicitly strip[] district courts of jurisdiction to hear structural constructional claims.”
Three weeks after the Fifth Circuit’s momentous decision—the Supreme Court granted certiorari in Axon, which presents the same jurisdiction-stripping question in the context of the Federal Trade Commission (FTC) Act. The Court’s resolution of that question, however, would not necessarily resolve the circuit split, which has arisen in the context of SEC’s distinct statutory scheme. Aside from granting a summary affirmance in Cochran, granting plenary review and hearing the case alongside Axon is the only way to ensure that the Court can fully resolve the circuit split that has closed federal courthouse doors to the constitutional claims of SEC defendants for far too long. Plenary review will also forestall otherwise inevitable spin-off litigation that would accompany an FTC-specific decision in Axon. Such ancillary litigation would add insult to injury for a litigant like Michelle Cochran, who already has been fighting for years for her day in court to present her structural constitutional claims.
By filing a petition for certiorari in this case, the government conceded that this question merits Supreme Court review. The fact that so many circuits—including those hearing the lion’s share of securities enforcement actions—have already weighed in on this issue underscores its national significance. The issue will not subside until the Court addresses the SEC statutory scheme directly.
Judicial issues should be resolved by courts, not by bureaucrats sitting as courts.