On June 26, 2017, the en banc D.C. Circuit was equally divided on the question of whether SEC administrative law judges (“ALJs”) are “inferior officers.” This leaves intact the D.C. Circuit panel decision in Lucia which held that SEC ALJs are not officers and do not have to be appointed by the President. Because SEC ALJs are not appointed that way, a different decision may have called into question virtually every SEC ALJ decision ever issued.
Because it was an SEC ALJ who rendered the initial PHH decision, there was talk that a different decision in Lucia may have given the en banc D.C. Circuit a way to decide the PHH case in PHH’s favor without addressing the constitutional issues surrounding the CFPB’s structure. Indeed, in its final merits brief at the panel level, PHH raised the same argument at issue in Lucia. While the panel decision in PHH did not address the issue, in his concurrence, Judge Randolph stated that the problem with the ALJ’s appointment “itself rendered the proceedings against petitioners unconstitutional.” It may be that the Lucia issue ends up being decided in the PHH case, which has an eleven-judge panel that cannot split evenly.