ARE MSPB ADMINISTRATIVE JUDGES PRINCIPAL OFFICERS REQUIRING DIRECT APPOINTMENT BY AGENCY HEADS?
Are MSPB administrative judges lawfully issuing decisions? That's a question a few luminaries are asking during slow days at the office.
Why, you may ask, is their status in question? Long story short.
Lucia v. SEC, 138 S.Ct. 2044 (2018), is our starting point. Disputed was the authority of a Securities and Exchange Commission administrative law judge to issue a decision concerning a penalty against an individual for a violation of the securities laws. Like MSPB AJs, SEC ALJs supervise cases and related discovery and motion practice, hold hearings, and issue initial decisions. Those decisions are reviewable by the Commission itself on request of a party or sua sponte. If the Commission does not review the decision, it issues an order that the ALJs decision is final and the initial decision becomes the action of the Commission.
Enter the Constitution. Under Article II, Section 2, clause 2 of the Constitution, the president appoints, subject to Senate confirmation, "Officers of the United States;" by statute, inferior officers may be appointed by heads of departments.
What makes a judge in an agency an "officer" who must be appointed by the President or under statute by a department (agency) head? Examining some precedent, the Court looked to the nature of the appointment-at SEC, as with MSPB, a career appointment. Appointment of an ALJ is by statute-or at least it was at the time of the Court's decision (things may be different now because of an Executive Order placing ALJs into the excepted service and allowing their appointments by agency heads rather than through the OPM examining process). MSPB AJs are appointed as employees of the Board-excepted service attorneys; there is no statute that specifically addresses appointment of MSPB AJs. The Court looked to the authority of the SEC ALJs, basically the same as a federal trial judge-so too MSPB AJs are vested with that type of authority, including issuance of subpoenas and the authority to impose sanctions. And, as with an SEC ALJ initial decision, which if unreviewed because a final agency decision, so too an MSPB AJ's initial decision, though subject to review by the full Board (when there is a full Board) becomes final if review is denied or if review is not sought at all. The Court's conclusion was that the SEC ALJ was an officer who had to be appointed by the SEC itself. Since that did not happen, the underlying litigation had to be returned to the SEC for decision by an ALJ appointed by the Commission.
Which brings us back to the MSPB. Are AJs constitutional officers, or are they "employees" not subject to the Appointment Clause? No statute governs their appointment (other than the Board's organic statute authorizing it to hire employees and have employees hold hearings)?
Enter the Federal Circuit. In Arthrex, Inc. v. Smith & Nephew, Inc. (2018-2140 Oct. 31, 2019), the challenge was to a decision of an administrative patent judge of the Patent Office. The APJs were appointed by the Secretary of Commerce. But if they were "principal officers," they had to be appointed by the President. The APJs functioned like ALJs and MSPB AJs, but they issued final decisions deciding patent claims. Their decisions were subject to rehearing or court review. As to whether they were principal officers, the court looked to Supreme Court precedent to determine if an appointed official had the power to review and reverse the officer's decision; the level of supervision and oversight an appointed official has over the officers; and the appointed official's power to remove the officers. The Circuit noted that no presidentially-appointed officer had independent statutory authority to review a final written decision of the APJs before the decision issues on behalf of the United States, although the decisions are subject to rehearing by a panel of three members of the Patent Trial and Appeal Board. APJs, once appointed to hearing panels, were not subject to removal from the panels. The only direct authority over the exercise of their discretion was to use civil service procedures to remove them from employment. Those protections, along with the lack of a presidentially-appointed officer who could vacate or review an APJ decision, left them in the position of being principal officers, meaning that their decisions could not be constitutionally proper without their appointments being made by the president with Senate confirmation. The remedy for the problem identified by the Circuit was to invalidate, as unconstitutional, the statutory civil service protections for the APJs, leaving them subject to removal at will by the Secretary of Commerce. It is of interest that the APJs apparently were not asked to brief that issue-which had important ramifications for their tenure and future careers.
Back to the MSPB. AJs are not appointed by the President and no statute specifically governs their appointment. Looking to the Arthrex factors, can an AJ be taken off an appeal and substituted with another AJ before an initial decision is issued? Unquestionably, yes (although another hearing might be required if there are credibility issues). Can an AJ's initial decision be modified by the AJ's superior (regional chief AJ). Unquestionably, no. Can a single MSPB member, or the chair, modify an initial decision? Certainly not. Can an AJ be removed at will? Not if he or she is no longer serving a trial period. Who appoints AJs? The MSPB as a whole, the chairman (with statutory authority as executive officer), the Director or Regional Operations or the Executive Director? And given the statutory protections governing removal of AJs, what difference does it makes who appoints them? So, are AJs, who are not appointed under a specific statute, principal officers with invalid appointments and issuing invalid decisions? At least one agency is raising those questions in response to Board appeals assigned to AJs. When and in what forum that question will be resolved is unknown. The analysis is complex-more so than suggested in this brief discussion. The answer will affect other employers of AJs (hint: EEOC). One thing is for sure: you may disagree with an MSPB AJ's style, temperament, or decision, but we all should agree that their decisional independence as hearing officers should remain unimpaired-including continuing protection against "at will" removal from employment-the inelegant solution in Arthrex.