Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Bandimere v. United States Securities and Exchange Commission

United States Court of Appeals, Tenth Circuit

May 3, 2017

DAVID F. BANDIMERE, Petitioner,
v.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Respondent. IRONRIDGE GLOBAL IV, LTD; IRONRIDGE GLOBAL PARTNERS, LLC, Amici Curiae.

          Before TYMKOVICH, Chief Judge, KELLY, BRISCOE, LUCERO, HARTZ, HOLMES, MATHESON, BACHARACH, PHILLIPS, MCHUGH, and MORITZ, Circuit Judges.

          ORDER

         This matter is before the court on the Security and Exchange Commission's Petition for Rehearing or Rehearing En Banc. We also have a response from the petitioner. Upon consideration, the request for panel rehearing is denied by a majority of the original panel members.

         The petition and response were also transmitted to all the judges of the court who are in regular active service. Upon that circulation, a poll was called. A majority voted to deny en banc reconsideration. See Fed. R. App. P. 35(a). Consequently, the en banc request is likewise denied.

          LUCERO, J., joined by MORITZ, J., dissenting from the denial of rehearing en banc.

         Because this request for rehearing en banc presents numerous questions of constitutional importance, it is my view that we should rehear the matter. First, the panel majority opinion fails to accord proper deference to the constitutional structure of checks and balances and agency separation of functions that flow from that fundamental construct. Second, the panel decision needlessly and improvidently expands the reach of Freytag v. Commissioner, 501 U.S. 868 (1991), which involved judges on the Tax Court, to the unrelated issue of agency administrative law judges ("ALJs"). In light of the significant consequences of this decision, it is not our office to expand the holding in Freytag, to the contrary, any such expansion should remain in the sole discretion of the Supreme Court. Third, the impact of this opinion will be substantial, and it presents a threat of disruption throughout our government. Finally, the majority opinion fails to respect the carefully crafted procedural protections that are incorporated in the Administrative Procedure Act ("APA"), an essential condition of the congressional delegation of authority to administrative agencies.

         For each of these reasons, en banc review is not only appropriate, but necessary. That the Supreme Court may ultimately review this case does not relieve us of our independent obligation to rehear it. For the foregoing reasons, I respectfully dissent from the denial of en banc review.

         I

         As James Madison observed, "The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny." The Federalist No. 47, at 324 (James Madison) (J. Cooke ed., 1961). To prevent the tyranny against which Madison admonished, the founders crafted a constitutional division of authority among three co-equal branches of government, controlled by a series of checks and balances. The panel opinion in this case not only veers away from that constitutional structure, it aggregates power in administrative agency officials contrary to this Madisonian principle.

         In the face of a rapidly growing and largely unregulated body of administrative law during the first half of the twentieth century, and concerns about the commingling of functions within administrative agencies, Congress enacted the APA, which provides governing principles. As observed by Senator Pat McCarran in the foreword to the APA's compiled legislative history, the Act was celebrated as "a comprehensive charter of private liberty and a solemn undertaking of official fairness" that "enunciates and emphasizes the tripartite form of our democracy." Administrative Procedure Act Legislative History, at iii (1946).

         The need to maintain separation of functions was felt particularly in the area of agency adjudication, and a significant concern motivating the drafters of the APA was the perceived bias of administrative adjudicators. "Many complaints were voiced against the actions of the hearing examiners, it being charged that they were mere tools of the agency concerned and subservient to the agency heads in making their proposed findings of fact and recommendations." Ramspeck v. Fed. Trial Exam'rs Conference, 345 U.S. 128, 131 (1953).[1] Prior to the APA, hearing examiners were "employees of an agency, their classification was determined by the ratings given them by the agency, and their compensation and promotion depended upon their classification." Ramspeck, 345 U.S. at 130. Accordingly, "[t]he examiners were in a dependent status." Id. As the Supreme Court has long recognized, "one who holds his office only during the pleasure of another cannot be depended upon to maintain an attitude of independence against the latter's will." Humphrey's Ex'r v. United States, 295 U.S. 602, 629 (1935).

         A 1937 Report of the President's Committee on Administrative Management cogently articulates the concerns:

There is a conflict of principle involved in [the agencies'] make-up and functions. They are vested with duties of administration and at the same time they are given important judicial work. The evils resulting from this confusion of principles are insidious and far reaching. Pressures and influences properly enough directed toward officers responsible for formulating and administering policy constitute an unwholesome atmosphere in which to adjudicate private rights. But the mixed duties of the commissions render escape from these subversive influences impossible. Furthermore, the same men are obliged to serve both as prosecutors and as judges. This not only undermines judicial fairness; it weakens public confidence in that fairness. Commission decisions affecting private rights and conduct lie under the suspicion of being rationalizations of the preliminary findings with the Commission, in the role of prosecutor, presented to itself.

S. Rep. No. 79-752 (1945), as reprinted in Administrative Procedure Act Legislative History 189 (quotation and ellipses omitted). In light of these concerns, the APA authors adopted the view that the "commingling of functions of investigation or advocacy with the function of deciding [was] plainly undesirable" and should be remedied by "isolating those who engage in the activity" of adjudication via independent hearing officers. S. Comm. on the Judiciary, 79th Cong., Rep. on Admin. Procedure Act (Comm. Print 1945), as reprinted in Administrative Procedure Act Legislative History 25 (quotation and ellipses omitted).

         The majority opinion undermines this well-established structure of ALJ independence, and places the legitimacy of our administrative agencies in serious doubt. Whether SEC ALJs exercise the "significant authority" necessary to constitute inferior officers, Bandimere v. U.S. SEC, 844 F.3d 1168, 1173 (10th Cir. 2016), should be informed not just by their daily duties, but by the independent guardrails of our constitutional structure, to wit, the separation of functions within administrative agencies. The majority opinion notes that the Appointments Clause reflects "both separation of powers and checks and balances" concerns, and "promotes public accountability." Id. at 1172. But my ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.