Duka v. SEC and the Constitutionality of Administrative Law Judges (Part 3)

So how are ALJs appointed at the SEC?

In In re Timbervest, the SEC staff explained the appointment process this way:   

  • Pursuant to current statutes and regulations, the hiring process for Commission ALJs is overseen by the U.S. Office of Personnel Management ("OPM"), which administers the competitive examination for selecting all ALJs across the federal government. See 5 U.S.C. §§ 1104, 1302; 5 C.F.R. § 930.201(d)-(e). As do other agencies, the Commission hires its ALJs through this OPM process. See 5 U.S.C. § 3105; 5 C.F.R. § 930.20l(f). When the Commission seeks to hire a new ALJ, Chief ALJ Murray obtains from OPM a list of eligible candidates; a selection is made from the top three candidates on that list. See 5 U.S.C. ·§§ 3317, 3318; 5 C.F.R. §§ 332.402, 332.404, 930.204(a). Chief ALJ Murray and an interview committee then make a preliminary selection from among the available candidates. Their recommendation is subject to final approval and processing by the Commission's Office of Human Resources.  It is the Division's understanding that the above process was employed as to ALJ Elliot, who began work at the agency in 2011. 

The staff, however, acknowledged that the process may have been different in the past.

  • As for earlier hires, it is likely the Commission employed a similar, if not identical, hiring process. But the Division acknowledges that it is possible that internal processes have shifted over time with changing laws and circumstances, and thus the hiring process may have been somewhat different with respect to previously hired ALJs. For instance, Chief ALJ Murray began work at the agency in 1988 and information regarding hiring practices at that time is not readily accessible.

See Notice of Filing, In re Timbervest, Admin File No. 3-15519 (admin proc June 4, 2015).  

The process was apparently followed with some ALJs but, as quickly became clear, not with respect to Judge Elliot.  As he noted, the description was "erroneous" with respect to his appointment.  The description fit the appointment of Judges Patil and Grimes.  Transcript, In re Bebo ("And just by way of background, there’s two ways for a federal agency to hire an administrative law judge.  One is in the manner described in this paragraph, and that is in fact how Judge Patil and Judge Grimes were hired at the SEC, within the last year, roughly.").  

Judge Elliot, however, was already an ALJ at Social Security when he applied to the SEC.  As a result, he did not need to repeat the entire OPM vetting process.   As he described:   

  • the other way of being hired is if you are already an administrative law judge for a federal agency, then you don’t have to go through this process.  Instead, you just go through the process that essentially everyone else with the federal government goes through, which is you have USA Jobs, which is the federal government’s job-posting website, you respond to the advertisement, and then you get hired in the usual fashion.  

Thus, the vetting process by OPM had been done when Judge Elliot applied at Social Security, not when he applied at the SEC. 

  • So in my case, for example, I saw a posting on USA Jobs when I was at Social Security.  I sent in my resume, I had an interview, I got an offer; its as simple as that.  What’s described in the Division’s notice of filing in Timbervest is if you’ve never been an ALJ before.  And, as I said, I did in fact go through that process, just not when I was hired by the SEC.  

The actual selection process, however, did not involve the Commission.  As he described:   

  • I interviewed with Judge Murray, with Jayne Seidman, who at the time was – I think she was with human resources, and an attorney with the general counsel’s office, whose name escapes me at the moment.  I was supposed to interview with the general counsel himself at the time, but he didn’t bother to show up.

He received an offer, something confirmed by HR.  Id.  ("And then . . . once I accepted the offer, I don’t know for sure exactly what the process was, but when I – I pulled out one of my forms that I got from HR, and it appears that someone in HR did sign off on my hiring, ok?").  Although signing the papers, HR was not responsible for the appointment.  Id.  ("I mentioned about my hiring, that someone in HR had signed a paper, and I want to make it clear.  I’m not saying that the person who signed the paper or the paper itself was my appointment.  It was simply an SP50, as Standard Form 50, which is the customary document for the federal civil service – the document changes to personnel status, and it was signed by someone in HR, because they always are signed by someone in HR.").  

As for the source of the apppointment, he didn't know.  Id. ("I would have to say no, I don’t know.  I have an educated guess, but its really just an educated guess.  No, I don’t know the answer.").  There was, however, no direct involvement in the appointment process by the Commission.  Id.  ("The bottom line, for purposes of the Article II arguments, is that I was – I was not appointed by the Commission.  The Commission, as far as I know, did not issue any sort of order appointing me as an ALJ.").  

The process for joining the Commission, therefore, seemed clear enough.  The actual source of the appointment, however, was less clear.  HR was one possibility; the Chief ALJ was another.  Given the disclaimer, it wasn't OPM.  There seemed to be agreement that the Commission played no role in the process, except that sometimes it did.  As Chief Judge Murray stated in another case, "I was appointed as Chief Administrative Law Judge by the Commission on March 20, 1994."  In In re Bama Biotech, Release No. 836 (admin proc July 20, 2015).  

The statement is a bit delphic, noting only that she had been designated Chief by the Commission, not that she had been appointed as an ALJ by the Commission.  

For primary materials in the Duka case, go to the DU Corporate Governance web site. 

J Robert Brown Jr.