Rory Flynn v. Securities and Exchange Commission ( 2022 )

UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
RORY C. FLYNN, DOCKET NUMBER
Appellant, DC-1221-14-1124-M-4
v.
SECURITIES AND EXCHANGE DATE: March 31, 2022
COMMISSION,
Agency.
THIS ORDER IS NONPRECEDENTIAL 1
Bruce M. Bettigole, Washington, D.C., for the appellant.
James V. Blair, and Laura Walker, Washington, D.C., for the agency.
BEFORE
Raymond A. Limon, Vice Chair
Tristan L. Leavitt, Member
ORDER
¶1 This appeal is before us on the administrative judge’s April 23, 2019 order
certifying for interlocutory review his order addressing the appellant’s claims
under the Appointments Clause and separation of powers provisions of the
U.S. Constitution. We VACATE the administrative judge’s ruling and RETURN
1
A nonprecedential order is one that the Board has determined does not add
significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
but such orders have no precedential value; the Board and administrative judges are not
required to follow or distinguish them in any future decisions. In contrast, a
precedential decision issued as an Opinion and Order has been identified by the Board
as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
2
this case to the regional office for further adjudication before a different
administrative judge consistent with this decision.
BACKGROUND
¶2 The appellant first filed his individual right of action appeal with the Board
in September 2014, after exhausting his administrative remedies with the Office
of Special Counsel. In his appeal, he alleged that the agency terminated him in
May 2013, from his position as an Associate General Counsel in retaliation for
whistleblowing. Flynn v. Securities & Exchange Commission, MSPB Docket
No. DC-1221-14-1124-W-1, Appeal File (W-1 AF), Tab 1. After the parties
engaged in extensive discovery over several months, the assigned administrative
judge held the appellant’s requested hearing over the course of 3 days in May and
July 2015. The administrative judge issued an initial decision denying the
appellant’s request for corrective action. W-1 AF, Tab 128, Initial Decision
(July 30, 2015). The appellant filed a petition for review of the initial decision,
but the two Board members could not agree on the disposition of the petition and
the initial decision therefore became the final decision of the Board. W -1 AF,
Tab 12, Order (Sept. 1, 2016).
¶3 The appellant then sought review of the Board’s final decision i n the
U.S. Court of Appeals for the Fourth Circuit. In December 2017, the
Fourth Circuit issued a decision remanding the case to the Board for further
consideration. The court agreed with the Board that the appellant’s disclosures
alleging violations of the agency’s Rule 900(a) were not protected, but it found
that the Board failed to fully consider whether the appellant made protected
disclosures alleging violations of Rule 900(b). Flynn v. Securities & Exchange
Commission, 877 F.3d 200, 205-08 (4th Cir. 2017). Rather than evaluating those
additional disclosures itself in the first instance, the court remanded the case to
the Board in order for the administrative judge to interpret the evidence after
further development of the record, if necessary.
3
¶4 In February 2018, after the case had returned to the Board, the appellant
moved to vacate the administrative judge’s prior decision based on violatio ns of
the Appointments Clause and separation of powers provisions of the
U.S. Constitution. Flynn v. Securities & Exchange Commission, MSPB Docket
No. DC-1221-14-1124-M-1, Appeal File (M-1 AF), Tab 2. He noted that the
U.S. Supreme Court had granted certiorari in January 2018, in Lucia v. Securities
& Exchange Commission, 138 S. Ct. 736 (Jan. 12, 2018), to address whether
administrative law judges (ALJs) of the Securities & Exchange Commission
(SEC) are Officers of the United States who must be appointed in accordance
with the Appointments Clause. The appellant argued that the Board’s
administrative judges, like SEC ALJs, are Officers of the United States whose
appointments were not made in accordance with the Appointments Clause. 2 To
remedy the alleged Appointments Clause violation, the appellant asked that a
Board member adjudicate his appeal de novo. 3 M-1 AF, Tab 2 at 5-9. The
appellant also argued that the prior Board decision was void because the
administrative judge who decided his case was insulated from removal by
multiple layers of for-cause protection. Id. at 9-10.
¶5 The remanded appeal was assigned to the same administrative judge who
decided the initial appeal. In March 2018, he dismissed the appeal without
prejudice pending the Supreme Court’s decision in Lucia. M-1 AF, Tab 7, Initial
Decision (Mar. 12, 2018). In June 2018, just after the Supreme Court decided
Lucia, the administrative judge dismissed the appeal a second time “to allow time
to further refine the issues and determine the proper scope of inquiry and action
2
Under the Appointments Clause, the President “shall nominate, and by and with the
Advice and Consent of the Senate, shall appoint . . . Officers of the United States . . .
but the Congress may by Law vest the Appointment of such inf erior Officers, as they
think proper, in the President alone, in the Courts of Law, or in the Heads of
Departments.” U.S. Const. art. II, § 2, cl. 2.
3
Members of the Board are appointed by the President with the advice and consent of
the Senate, 5 U.S.C. § 1201, and therefore there is no dispute as to the validity of their
appointment.
4
by the Board.” Flynn v. Securities & Exchange Commission, MSPB Docket
No. DC-1221-14-1124-M-2, Appeal File (M-2 AF), Tab 3, Initial Decision
(June 29, 2018). He dismissed the appeal without prejudice a third time in
October 2018. Flynn v. Securities & Exchange Commission, MSPB Docket
No. DC-1221-14-1124-M-3, Appeal File (M-3 AF), Tab 2, Initial Decision
(Oct. 2, 2018). Later in October 2018, the appeal was refiled and reassigned to a
new administrative judge. Flynn v. Securities & Exchange Commission, MSPB
Docket No. DC-1221-14-1124-M-4, Appeal File (M-4 AF), Tab 2.
¶6 In response to the appellant’s constitutional arguments, the agency argued
in part that the appellant had waived those arguments by failing to raise them in
his initial appeal before the administrative judge or in his petition for rev iew to
the Board. M-2 AF, Tab 5; M-3 AF, Tab 5. In April 2019, the newly assigned
administrative judge issued an Order and Certification for Interlocutory Appeal
holding that (1) the appellant’s constitutional claims were properly before the
Board, (2) the Board’s administrative judges are Officers of the United States
whose appointments did not comply with the Appointments Clause, and (3) the
Board lacks authority to address the appellant’s separation-of-powers argument
because doing so would require the Board to adjudicate the constitutionality of a
statute. M-4 AF, Tab 9. The administrative judge stayed all further proceedings
pending the Board’s resolution of this interlocutory appeal. 4
ANALYSIS
¶7 An administrative judge will certify a ruling for interlocutory review if the
ruling involves an important question of law or policy about which there is
substantial ground for difference of opinion and an immediate ruling will
4
While this matter was pending before the Board on interlocutory review, the appellant
filed several pleadings citing additional legal authority regarding the constitutional
claims raised in this appeal. M-4 AF, Tabs 12-18. In reaching our decision in this
matter, we have considered the relevant legal authorities, including but not limited to
those cited in the appellant’s additional pleadings.
5
materially advance the completing of the proceeding, or the denial of an
immediate ruling will cause undue harm to a party or the public. Cooper v.
Department of the Navy, 98 M.S.P.R. 683, ¶ 5 (2005), review dismissed sub nom.
Weaver v. Department of the Navy, 197 F. App’x 936 (Fed. Cir. 2006); 5 C.F.R.
§ 1201.92. In light of the lack of guidance regarding the impact of the Lucia
decision on the Board, we find that certification was proper.
The law of the case doctrine applies to those claims that were not the subject of
the remand.
¶8 As noted above, although the Fourth Circuit remanded this appeal to the
Board for further consideration of the appellant’s Rule 900(b) disclosures, the
court agreed with the Board that the appellant’ s Rule 900(a) disclosures were not
protected. Under the law of the case doctrine, a tribunal will not consider issues
that have already been decided in an appeal, unless there is new and material
evidence adduced at a subsequent trial, controlling authori ty has made a contrary
decision of law, or the prior decision was clearly erroneous and would work a
manifest injustice. Doe v. Department of Justice, 121 M.S.P.R. 596, ¶ 7 (2014).
We find that the law of the case doctrine prevents relitigation of the appellant’s
claims arising out of his Rule 900(a) disclosures. Therefore, consistent with the
Fourth Circuit’s instructions, proceedings on remand are limited to the appellant’s
Rule 900(b) disclosures.
The appellant’s Appointments Clause claim is now moot.
¶9 In Lucia, the Supreme Court held that SEC ALJs qualify as Officers of the
United States subject to the Appointments Clause, rather than as mere employees.
Lucia v. Securities & Exchange Commission, 138 S. Ct. 2044, 2049, 2052-55
(2018). Because SEC’s ALJs were appointed by SEC staff members rather than
the Commission itself, the Court held that the appointment of those ALJs violated
the Appointments Clause. Id. at 2050-51. The Court further held that because
Lucia had made a timely challenge to the constitutional validity of the
appointment of the ALJ who adjudicated his case, he was entitled to relief in the
6
form of a new hearing before a different, properly appointed official. Id.
at 2055. 5
¶10 The Court in Lucia did not specifically define what constitutes a timely
challenge to an appointment. Id. There is an issue as to the timeliness of the
Appointments Clause claim in this case. See McClenning v. Department of the
Army, 2022 MSPB 3, ¶¶ 5-15 (2022) (holding that, in order to be timely, an
Appointments Clause claim must be raised before the close of the record before
the administrative judge). Here, the appellant failed to raise his Appointments
Clause claim before the administrative judge in his initial appeal, in his petition
for review to the Board, or in his appeal to the Fourth Circuit. It was only after
the Fourth Circuit had remanded the appeal to the Board for further adjudication
of certain claims that the appellant raised the Appointments Clause for the first
time. However, we find that we need not resolve the timeliness question because
the appellant’s Appointments Clause claim as to the claims remanded by the
Fourth Circuit is moot.
¶11 The Court in Lucia held that the remedy for an Appointments Clause
violation “is a new ‘hearing before a properly appointed’ official.” Lucia,
138 S. Ct. at 2055 (quoting Ryder v. United States, 515 U.S. 177, 182-83 (1995)).
Here, all of the Board’s administrative judges have now received appointments
ratified by the head of the agency, thereby satisfying the requirements of the
Appointments Clause. See U.S. Merit Systems Protection Board Ratification
Order (Mar. 4, 2022), https://www.mspb.gov/foia/files/AJ_Ratification_
Order_3-4-2022.pdf. The Ratification Order is a public document, of which we
take administrative notice. Id.; see Azdell v. Office of Personnel Management ,
88 M.S.P.R. 319, 323 (2001). That document is also now a part of the record
5
The holding in Lucia applied only to SEC ALJs and therefore did not directly address
whether the Board’s method of appointing administrative judges violated the
Appointments Clause. For the reasons set forth herein, we need not resolve that
question here.
7
before the Board. M-4 AF, Tab 19. In order to avoid any additional
Appointments Clause issues, we direct the regional office to assign the appeal to
a properly appointed official other than either the administrative judge who issued
the first initial decision or the administrative judge who certified the interlocutory
appeal. See Lucia, 138 S. Ct. at 2055. 6 Thus, the appellant has received all the
relief the Board can provide as to his Appointments Clause claim and that issue is
now moot. See Milner v. U.S. Postal Service, 118 M.S.P.R. 600, ¶ 4 (2012)
(holding that an issue is moot when there is no effective relief that the Board can
provide).
The Board lacks authority to adjudicate the appellant’s separation of powers
claim.
¶12 We agree with the administrative judge that the Board is unable to
adjudicate the appellant’s argument that the removal protections provided by
statute to Board members and other Board officials, including administrative
judges, violates constitutional separation-of-powers principles. See Malone v.
Department of Justice, 14 M.S.P.R. 403, 406 (1983) (declining to address the
constitutionality of a statute relating to veterans preference). An administrative
6
Arguably, either of those administrative judges could properly adjudicate the appeal
now that they have received proper appointments. The Court in Lucia held that the
official who heard the case after remand could not be the same one who already heard
the case and issued an initial decision on the merits, even if he were to receive a proper
appointment, because “[h]e cannot be expected to consider the matter as though he had
not adjudicated it before.” Lucia, 138 S. Ct. at 2055. This logic would not apply to the
administrative judge who certified the interlocutory appeal as he has not expressed a
view on the merits of the appeal. The Court in Lucia further indicated that it was
especially important to have a different ALJ adjudicate the case on remand when the
Appointments Clause issue was the only basis for remand and thus “the old judge would
have no reason to think he did anything wrong on the merits . . . and so could be
expected to reach all the same judgments.” Id. at 2055 n.5. Here, by contrast, even if
we returned the case to the administrative judge who issued the first initial decision, the
Fourth Circuit’s decision would preclude him from simply issuing the same decision a
second time. Nevertheless, we find it appropriate to assign the appeal to a different
administrative judge for further adjudication in order to avoid any further claim under
the Appointments Clause.
8
agency “has no authority to entertain a facial constitutional challenge to the
validity of a law.” Jones Brothers, Inc. v. Secretary of Labor, 898 F.3d 669, 673
(6th Cir. 2018). “Each of the three branches of the [F]ederal [G]overnment . . .
has an independent obligation to interpret the Constitution[,] [b]ut only the
Judiciary enjoys the power to invalidate statutes inconsistent with the
Constitution.” Id. at 674 (citing Marbury v. Madison, 5 U.S. (1 Cranch)
137 (1803)). Should the appellant choose to seek judicial review of the Board’s
final decision in this matter after remand, he would have an opportunity to
present his separation of powers argument at that time.
ORDER
¶13 Accordingly, we vacate the stay order issued in this proceeding and return
the appeal to the regional office for further processing and adjudication before a
different administrative judge consistent with this Order.
FOR THE BOARD: /s/ for
Jennifer Everling
Acting Clerk of the Board
Washington, D.C.