Court Opinion

ID: 6341898
Source: CourtListenerOpinion
Date Created: 2022-05-18 18:00:45.991608+00
Date Added: 2024-06-11T09:12:23.670341
License: Public Domain

Case: 20-61007      Document: 00516323784         Page: 1     Date Filed: 05/18/2022

            United States Court of Appeals
                 for the Fifth Circuit                           United States Court of Appeals
                                                                          Fifth Circuit

                                                                        FILED
                                                                    May 18, 2022
                                   No. 20-61007
                                                                   Lyle W. Cayce
                                                                        Clerk

   George R. Jarkesy, Jr.; Patriot28, L.L.C.,

                                                                           Petitioners,

                                       versus

   Securities and Exchange Commission,

                                                                         Respondent.

                       Petition for Review of an Order of
             the United States Securities and Exchange Commission
                                   No. 3-15255

   Before Davis, Elrod, and Oldham, Circuit Judges.
   Jennifer Walker Elrod, Circuit Judge:
          Congress has given the Securities and Exchange Commission
   substantial power to enforce the nation’s securities laws. It often acts as both
   prosecutor and judge, and its decisions have broad consequences for personal
   liberty and property. But the Constitution constrains the SEC’s powers by
   protecting individual rights and the prerogatives of the other branches of
   government. This case is about the nature and extent of those constraints in
   securities fraud cases in which the SEC seeks penalties.
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                                     No. 20-61007

          The SEC brought an enforcement action within the agency against
   Petitioners for securities fraud. An SEC administrative law judge adjudged
   Petitioners liable and ordered various remedies, and the SEC affirmed on
   appeal over several constitutional arguments that Petitioners raised.
   Petitioners raise those same arguments before this court. We hold that:
   (1) the SEC’s in-house adjudication of Petitioners’ case violated their
   Seventh Amendment right to a jury trial; (2) Congress unconstitutionally
   delegated legislative power to the SEC by failing to provide an intelligible
   principle by which the SEC would exercise the delegated power, in violation
   of Article I’s vesting of “all” legislative power in Congress; and (3) statutory
   removal restrictions on SEC ALJs violate the Take Care Clause of Article II.
   Because the agency proceedings below were unconstitutional, we GRANT
   the petition for review, VACATE the decision of the SEC, and REMAND
   for further proceedings consistent with this opinion.
                                          I.
          Petitioner Jarkesy established two hedge funds and selected Petitioner
   Patriot28 as the investment adviser. The funds brought in over 100 investors
   and held about $24 million in assets.        In 2011, the SEC launched an
   investigation into Petitioners’ investing activities, and a couple of years later
   the SEC chose to bring an action within the agency, alleging that Petitioners
   (along with some former co-parties) committed fraud under the Securities
   Act, the Securities Exchange Act, and the Advisers Act. Specifically, the
   agency charged that Petitioners: (1) misrepresented who served as the prime
   broker and as the auditor; (2) misrepresented the funds’ investment
   parameters and safeguards; and (3) overvalued the funds’ assets to increase
   the fees that they could charge investors.
          Petitioners sued in the U.S. District Court for the District of Columbia
   to enjoin the agency proceedings, arguing that the proceedings infringed on

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   various constitutional rights. But the district court, and later the U.S. Court
   of Appeals for the D.C. Circuit, refused to issue an injunction, deciding that
   the district court had no jurisdiction and that Petitioners had to continue with
   the agency proceedings and petition the court of appeals to review any
   adverse final order. See Jarkesy v. SEC, 48 F. Supp. 3d 32, 40 (D.D.C. 2014),
   aff’d, 803 F.3d 9, 12 (D.C. Cir. 2015).
          Petitioners’ proceedings moved forward.            The ALJ held an
   evidentiary hearing and concluded that Petitioners committed securities
   fraud. Petitioners then sought review by the Commission. While their
   petition for Commission review was pending, the Supreme Court held that
   SEC ALJs had not been properly appointed under the Constitution. Lucia v.
   SEC, 138 S. Ct. 2044, 2054–55 (2018). In accordance with that decision, the
   SEC assigned Petitioners’ proceeding to an ALJ who was properly appointed.
   But Petitioners chose to waive their right to a new hearing and continued
   under their original petition to the Commission.
          The Commission affirmed that Petitioners committed various forms
   of securities fraud.    It ordered Petitioners to cease and desist from
   committing further violations and to pay a civil penalty of $300,000, and it
   ordered Patriot28 to disgorge nearly $685,000 in ill-gotten gains. The
   Commission also barred Jarkesy from various securities industry activities:
   associating with brokers, dealers, and advisers; offering penny stocks; and
   serving as an officer or director of an advisory board or as an investment
   adviser.
          Critical to this case, the Commission rejected several constitutional
   arguments Petitioners raised. It determined that: (1) the ALJ was not biased
   against Petitioners; (2) the Commission did not inappropriately prejudge the
   case; (3) the Commission did not use unconstitutionally delegated legislative
   power—or violate Petitioners’ equal protection rights—when it decided to

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   pursue the case within the agency instead of in an Article III court; (4) the
   removal restrictions on SEC ALJs did not violate Article II and separation-
   of-powers principles; and (5) the proceedings did not violate Petitioners’
   Seventh Amendment right to a jury trial. Petitioners then filed a petition for
   review in this court.
                                                 II.
           Petitioners raise several constitutional challenges to the SEC
   enforcement proceedings.1 We agree with Petitioners that the proceedings
   suffered from three independent constitutional defects: (1) Petitioners were
   deprived of their constitutional right to a jury trial; (2) Congress
   unconstitutionally delegated legislative power to the SEC by failing to
   provide it with an intelligible principle by which to exercise the delegated
   power; and (3) statutory removal restrictions on SEC ALJs violate Article II.
                                                 A.
           Petitioners challenge the agency’s rejection of their constitutional
   arguments. We review such issues de novo. See Emp. Sols. Staffing Grp. II,
   L.L.C. v. Off. of Chief Admin. Hearing Officer, 833 F.3d 480, 484 (5th Cir.
   2016); Trinity Marine Prods., Inc. v. Chao, 512 F.3d 198, 201 (5th Cir. 2007).
                                                 B.
           Petitioners argue that they were deprived of their Seventh
   Amendment right to a jury trial. The SEC responds that the legal interests
   at issue in this case vindicate distinctly public rights, and that Congress
   therefore appropriately allowed such actions to be brought in agency

           1
             Multiple amici have filed briefs with this court as well: the Cato Institute, Phillip
   Goldstein, Mark Cuban, Nelson Obus, and the New Civil Liberties Alliance. Each argues
   that the SEC proceedings exceeded constitutional limitations for reasons that Petitioners
   raise.

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   proceedings without juries.            We agree with Petitioners.              The Seventh
   Amendment guarantees Petitioners a jury trial because the SEC’s
   enforcement action is akin to traditional actions at law to which the jury-trial
   right attaches. And Congress, or an agency acting pursuant to congressional
   authorization, cannot assign the adjudication of such claims to an agency
   because such claims do not concern public rights alone.
                                                  1.
           Thomas Jefferson identified the jury “as the only anchor, ever yet
   imagined by man, by which a government can be held to the principles of its
   constitution.” Letter from Thomas Jefferson to Thomas Paine (July 11,
   1789), in The Papers of Thomas Jefferson 267 (Julian P. Boyd ed., 1958). And
   John Adams called trial by jury (along with popular elections) “the heart and
   lungs of liberty.” The Revolutionary Writings of John Adams 55 (C. Bradley
   Thompson ed., 2000); see also Jennifer W. Elrod, Is the Jury Still Out?: A Case
   for the Continued Viability of the American Jury, 44 Tex. Tech L. Rev. 303,
   303–04 (2012) (explaining that the jury is “as central to the American
   conception of the consent of the governed as an elected legislature or the
   independent judiciary”).2

           2
              Veneration of the jury as safeguard of liberty predates the American Founding.
   Our inherited English common-law tradition has long extolled the jury as an institution.
   William Blackstone said that trial by jury is “the glory of the English law” and “the most
   transcendent privilege which any subject can enjoy or wish for, that he cannot be affected,
   either in his property, his liberty, or his person, but by the unanimous consent of twelve of
   his neighbors and equals.” Mitchell v. Harmony, 54 U.S. 115, 142–43 (1851) (quoting 4
   William Blackstone, Commentaries on the Laws of England 227–29 (Oxford, Clarendon
   Pr. 1992) (1765)); see also Jennifer W. Elrod, W(h)ither The Jury? The Diminishing Role of the
   Jury Trial in Our Legal System, 68 Wash. & Lee L. Rev. 3, 7 (2011). Indeed, King George
   III’s attempts to strip colonists of their right to trial by jury was one of the chief grievances
   aired against him and was a catalyst for declaring independence. The Declaration of
   Independence para. 20 (U.S. 1776).

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           Civil juries in particular have long served as a critical check on
   government power. So precious were civil juries at the time of the Founding
   that the Constitution likely would not have been ratified absent assurance
   that the institution would be protected expressly by amendment. 2 The
   Debate on the Constitution 549, 551, 555, 560, 567 (Bernard Bailyn ed. 1993)
   (collecting various state ratification convention documents calling for the
   adoption of a civil jury trial amendment); The Federalist No. 83 (Alexander
   Hamilton) (“The objection to the plan of the convention, which has met with
   most success in this State [i.e., New York], and perhaps in several of the other
   States, is that relative to the want of a constitutional provision for the trial by
   jury in civil cases.”); Mercy Otis Warren, Observations on the Constitution
   (1788), in 2 The Debate on the Constitution 290 (Bernard Bailyn ed. 1993)
   (worrying that the unamended Constitution would lead to “[t]he abolition of
   trial by jury in civil causes”); Parsons v. Bedford, 28 U.S. (3 Pet.) 433, 446
   (1830) (“One of the strongest objections originally taken against the
   constitution of the United States, was the want of an express provision
   securing the right of trial by jury in civil cases.”).3
           Trial by jury therefore is a “fundamental” component of our legal
   system “and remains one of our most vital barriers to governmental
   arbitrariness.” Reid v. Covert, 354 U.S. 1, 9–10 (1957). “Indeed, ‘[t]he right
   to trial by jury was probably the only one universally secured by the first
   American state constitutions . . . .’” Parklane Hosiery Co., Inc. v. Shore, 439

           3
              See also Kenneth Klein, The Validity of The Public Rights Doctrine in Light of the
   Historical Rationale of the Seventh Amendment, 21 Hastings Const. L.Q. 1013, 1015 (1994)
   (“At the time the Constitution was proposed, the people of the United States greatly
   distrusted government, and saw the absence of a guaranteed civil jury right as a reason,
   standing alone, to reject adoption of the Constitution; only by promising the Seventh
   Amendment did the Federalists secure adoption of the Constitution in several of the state
   ratification debates.”).

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   U.S. 322, 341 (1979) (Rehnquist, J., dissenting) (quoting Leonard Levy,
   Legacy of Suppression: Freedom of Speech and Press in Early American
   History 281 (1960)). Because “[m]aintenance of the jury as a fact-finding
   body is of such importance and occupies so firm a place in our history and
   jurisprudence[,] . . . any seeming curtailment of the right to a jury trial should
   be scrutinized with the utmost care.” Dimick v. Schiedt, 293 U.S. 474, 486
   (1935).
             The Seventh Amendment protects that right. It provides that “[i]n
   Suits at common law, where the value in controversy shall exceed twenty
   dollars, the right of trial by jury shall be preserved, and no fact tried by a jury,
   shall be otherwise reexamined in any Court of the United States, than
   according to the rules of the common law.” U.S. Const. amend. VII. The
   Supreme Court has interpreted “Suits at common law” to include all actions
   akin to those brought at common law as those actions were understood at the
   time of the Seventh Amendment’s adoption. Tull v. United States, 481 U.S.
   412, 417 (1987). The term can include suits brought under a statute as long
   as the suit seeks common-law-like legal remedies. Id. at 418–19. And the
   Court has specifically held that, under this standard, the Seventh
   Amendment jury-trial right applies to suits brought under a statute seeking
   civil penalties. Id. at 418–24.
             That is not to say, however, that Congress may never assign
   adjudications to agency processes that exclude a jury. See Atlas Roofing Co.
   v. Occupational Safety & Health Rev. Comm’n, 430 U.S. 442, 455 (1977).
   “[W]hen Congress properly assigns a matter to adjudication in a non-Article
   III tribunal, the Seventh Amendment poses no independent bar to the
   adjudication of that action by a nonjury factfinder.” Oil States Energy Servs.,
   LLC v. Greene’s Energy Grp., LLC, 138 S. Ct. 1365, 1379 (2018) (internal
   quotations omitted).

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          Whether Congress may properly assign an action to administrative
   adjudication depends on whether the proceedings center on “public rights.”
   Atlas Roofing, 430 U.S. at 450. “[I]n cases in which ‘public rights’ are being
   litigated[,] e.g., cases in which the Government sues in its sovereign capacity
   to enforce public rights created by statutes within the power of Congress to
   enact[,] the Seventh Amendment does not prohibit Congress from assigning
   the factfinding function and initial adjudication to an administrative forum
   with which the jury would be incompatible.”          Id.   Describing proper
   assignments, the Supreme Court identified situations “where the
   Government is involved in its sovereign capacity under an otherwise valid
   statute creating enforceable public rights. Wholly private tort, contract, and
   property cases, [and] a vast range of other cases as well are not at all
   implicated.” Id. at 458.
          The Supreme Court refined the public-right concept as it relates to
   the Seventh Amendment in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33
   (1989). There, the Court clarified that Congress cannot circumvent the
   Seventh Amendment jury-trial right simply by passing a statute that assigns
   “traditional legal claims” to an administrative tribunal. Id. at 52. Public
   rights, the Court explained, arise when Congress passes a statute under its
   constitutional authority that creates a right so closely integrated with a
   comprehensive regulatory scheme that the right is appropriate for agency
   resolution. Id. at 54.
          The analysis thus moves in two stages. First, a court must determine
   whether an action’s claims arise “at common law” under the Seventh
   Amendment. See Tull, 481 U.S. at 417. Second, if the action involves
   common-law claims, a court must determine whether the Supreme Court’s
   public-rights cases nonetheless permit Congress to assign it to agency
   adjudication without a jury trial. See Granfinanciera, 492 U.S. at 54; Atlas
   Roofing, 430 U.S. at 455. Here, the relevant considerations include:

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   (1) whether “Congress ‘creat[ed] a new cause of action, and remedies
   therefor, unknown to the common law,’ because traditional rights and
   remedies were inadequate to cope with a manifest public problem”; and
   (2) whether jury trials would “go far to dismantle the statutory scheme” or
   “impede swift resolution” of the claims created by statute. Granfinanciera,
   492 U.S. at 60–63 (quoting Atlas Roofing, 430 U.S. at 454 n.11, 461 (first and
   second quotations)).
                                          2.
          The rights that the SEC sought to vindicate in its enforcement action
   here arise “at common law” under the Seventh Amendment.                  Fraud
   prosecutions were regularly brought in English courts at common law. See 3
   William Blackstone, Commentaries on the Laws of England *42 (explaining
   the common-law courts’ jurisdiction over “actions on the case which allege
   any falsity or fraud; all of which savour of a criminal nature, although the
   action is brought for a civil remedy; and make the defendant liable in
   strictness to pay a fine to the king, as well as damages to the injured party”).
   And even more pointedly, the Supreme Court has held that actions seeking
   civil penalties are akin to special types of actions in debt from early in our
   nation’s history which were distinctly legal claims. Tull, 481 U.S. at 418–19.
   Thus, “[a] civil penalty was a type of remedy at common law that could only
   be enforced in courts of law.” Id. at 422.
          Applying that principle, the Court in Tull held that the right to a jury
   trial applied to an action brought by an agency seeking civil penalties for
   violations of the Clean Water Act. Id. at 425. Likewise here, the actions the
   SEC brought seeking civil penalties under securities statutes are akin to those
   same traditional actions in debt. Under the Seventh Amendment, both as
   originally understood and as interpreted by the Supreme Court, the jury-trial
   right applies to the penalties action the SEC brought in this case.

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          That conclusion harmonizes with the holdings of other courts
   applying Tull. The Seventh Circuit followed the Supreme Court’s lead in
   that case and has specifically said that when the SEC brings an enforcement
   action to obtain civil penalties under a statute, the subject of the action has
   the right to a jury trial. SEC v. Lipson, 278 F.3d 656, 662 (7th Cir. 2002)
   (“Because the SEC was seeking both legal and equitable relief (the former
   under the Insider Trading Sanctions Act, 15 U.S.C. § 78u–1, which (in
   subsection (a)(1)) authorizes the imposition of civil penalties for insider
   trading at the suit of the SEC[)] . . . [the defendant] was entitled to and
   received a jury trial.”); see also id. (explaining that another circuit was wrong
   to tacitly assume “that civil penalties in SEC cases are not a form of legal
   relief”4). Some district courts have applied Tull similarly. See, e.g., SEC v.
   Badian, 822 F. Supp. 2d 352, 365 (S.D.N.Y. 2011) (explaining that “whether
   the facts are such that the defendants can be subjected to a civil penalty . . . is
   a question for the jury, [and] the determination of the severity of the civil
   penalty to be imposed . . . is a question for the Court, once liability is
   established”); SEC v. Solow, 554 F. Supp. 2d 1356, 1367 (S.D. Fla. 2008)
   (applying Tull for the proposition that civil penalties are “legal, as opposed
   to equitable, in nature,” and that it therefore “was [the defendant’s]
   constitutional right to have a jury determine his liability, with [the court]
   thereafter determining the amount of penalty, if any”).
          Other elements of the action brought by the SEC against Petitioners
   are more equitable in nature, but that fact does not invalidate the jury-trial
   right that attaches because of the civil penalties sought. The Supreme Court
   has held that the Seventh Amendment applies to proceedings that involve a
   mix of legal and equitable claims—the facts relevant to the legal claims

          4
             The Seventh Circuit was referring to the Ninth Circuit’s opinion in SEC v.
   Clark, 915 F.2d 439, 442 (9th Cir. 1990). Clark did not address the issue whatsoever.

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   should be adjudicated by a jury, even if those facts relate to equitable claims
   too. See Ross v. Bernhard, 396 U.S. 531, 537–38 (1970); see also Lipson, 278
   F.3d at 662 (noting that the defendant was entitled to a jury trial because the
   SEC sought legal relief in the form of penalties, even though the SEC also
   sought equitable relief).    Here, the SEC sought to ban Jarkesy from
   participation in securities industry activities and to require Patriot28 to
   disgorge ill-gotten gains—both equitable remedies. Even so, the penalty
   facet of the action suffices for the jury-trial right to apply to an adjudication
   of the underlying facts supporting fraud liability.
                                          3.
          Next, the action the SEC brought against Petitioners is not the sort
   that may be properly assigned to agency adjudication under the public-rights
   doctrine. Securities fraud actions are not new actions unknown to the
   common law. Jury trials in securities fraud suits would not “dismantle the
   statutory scheme” addressing securities fraud or “impede swift resolution”
   of the SEC’s fraud prosecutions. And such suits are not uniquely suited for
   agency adjudication.
          Common-law courts have heard fraud actions for centuries, even
   actions brought by the government for fines. See Blackstone, supra at *42; see
   also Tull, 481 U.S. at 422 (“A civil penalty was a type of remedy at common
   law that could only be enforced in courts of law.”). Naturally, then, the
   securities statutes at play in this case created causes of action that reflect
   common-law fraud actions. The traditional elements of common-law fraud
   are (1) a knowing or reckless material misrepresentation, (2) that the
   tortfeasor intended to act on, and (3) that harmed the plaintiff. In re
   Deepwater Horizon, 857 F.3d 246, 249 (5th Cir. 2017). The statutes under
   which the SEC brought securities fraud actions use terms like “fraud” and
   “untrue statement[s] of material fact” to describe the prohibited conduct.

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   See 15 U.S.C. §§ 77a–77aa, 78j(b), 80b-6. When “Congress uses terms that
   have accumulated settled meaning under . . . the common law, a court must
   infer, unless the statute otherwise dictates, that Congress means to
   incorporate the established meaning of these terms.” Nationwide Mut. Ins.
   Co. v. Darden, 503 U.S. 318, 322 (1992) (quoting Cmty. for Creative Non-
   Violence v. Reid, 490 U.S. 730, 739 (1989)); see also Felix Frankfurter, Some
   Reflections on the Reading of Statutes, 47 Colum. L. Rev. 527, 537 (1947)
   (explaining that “if a word is obviously transplanted from another legal
   source, whether the common law or other legislation, it brings the old soil
   with it”).
          Accordingly, the Supreme Court has often looked to common-law
   principles to interpret fraud and misrepresentation under securities statutes.
   See, e.g, Omnicare, Inc. v. Laborers Dist. Council Indus. Pension Fund, 575 U.S.
   175, 191 (2015) (considering the Restatement (Second) of Torts to determine
   whether material omissions are actionable under a securities statute); Dura
   Pharms., Inc. v. Broudo, 544 U.S. 336, 343–44 (2005) (relying on “the
   common-law roots of the securities fraud action” in “common-law deceit
   and misrepresentation actions” to interpret the statutory securities-fraud
   action); SEC v. Cap. Gains Rsch. Bureau, 375 U.S. 180, 192–95 (1963)
   (considering the principles of common-law fraud to determine the
   requirements of fraud under the Advisers Act). Thus, fraud actions under
   the securities statutes echo actions that historically have been available under
   the common law.
          Next, jury trials would not “go far to dismantle the statutory scheme”
   or “impede swift resolution” of the statutory claims. See Granfinanciera, 492
   U.S. at 60–63. For one, the statutory scheme itself allows the SEC to bring
   enforcement actions either in-house or in Article III courts, where the jury-
   trial right would apply. See Dodd–Frank Act § 929P(a), 15 U.S.C. § 78u-2(a).
   If Congress has not prevented the SEC from bringing claims in Article III

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   courts with juries as often as it sees fit to do so, and if the SEC has in fact
   brought many such actions to jury trial over the years,5 then it is difficult to
   see how jury trials could “dismantle the statutory scheme.” Congress could
   have purported to assign such proceedings solely to administrative tribunals,
   but it did not. And there also is no evidence that jury trials would impede
   swift resolution of the claims.6 In this case, for example, the SEC took seven
   years to dispose of Petitioners’ case and makes no argument that proceedings
   with a jury trial would have been less efficient.
           Relatedly, securities-fraud enforcement actions are not the sort that
   are uniquely suited for agency adjudication. Again, Congress has not limited
   the SEC’s ability to bring enforcement actions in Article III courts. Consider
   the statutory scheme in Atlas Roofing for contrast. The statutes in that case
   were new and somewhat unusual. They provided elaborate enforcement
   mechanisms for the sorts of claims that likely could not have been brought in
   legal actions before that point. See Atlas Roofing, 430 U.S. at 445 (describing
   how the statutes required factfinders to undertake detailed assessments of
   workplace safety conditions and to make unsafe-conditions findings even if
   no injury had occurred). But the federal courts have dealt with actions under

           5
             Indeed, the SEC regularly brings securities-fraud actions in Article III courts and
   adjudicates them through jury trials. See, e.g., SEC v. Fowler, 6 F.4th 255, 258–60 (2d Cir.
   2021); SEC v. Johnston, 986 F.3d 63, 71 (1st Cir. 2021); SEC v. Life Partners Holdings, Inc.,
   854 F.3d 765, 772 (5th Cir. 2017); SEC v. Quan, 817 F.3d 583, 587 (8th Cir. 2016); SEC v.
   Miller, 808 F.3d 623, 626 (2d Cir. 2015); SEC v. Jasper, 678 F.3d 1116, 1119, 1121–22 (9th
   Cir. 2012); SEC v. Seghers, 298 F. App’x 319, 321 (5th Cir. 2008).
           6
             The dissenting opinion contends that these considerations are “not decisive”
   (that the SEC has for decades sued in Article III courts under securities statutes) or “not
   determinative” (that those same suits are not unique to agency adjudication). To disregard
   these facts is to ignore the Supreme Court’s explanation for what public rights are made of.
   And in any event, though the facts may not in isolation make up a private right, they
   together establish (along with the other considerations discussed above) that the right being
   vindicated here is a private right, not a public one.

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   the securities statutes for many decades, and there is no reason to believe that
   such courts are suddenly incapable of continuing that work just because an
   agency may now share some of the workload. In fact, for the first decades of
   the SEC’s existence, securities-fraud actions against nonregistered parties
   could be brought only in Article III courts. Thomas Glassman, Ice Skating
   Uphill: Constitutional Challenges to SEC Administrative Proceedings, 16 J. Bus.
   & Sec. L. 47, 50–52 (2015).7
           The SEC counters that the securities statutes are designed to protect
   the public at large, and that some circuits have identified SEC enforcement
   actions as vindicating rights on behalf of the public. Indeed, the SEC says,
   the statutes allow for enforcement proceedings based on theories broader
   than actions like fraud that existed at common law.
           Those facts do not convert the SEC’s action into one focused on
   public rights. Surely Congress believes that the securities statutes it passes
   serve the public interest and the U.S. economy overall, not just individual
   parties. Yet Congress cannot convert any sort of action into a “public right”
   simply by finding a public purpose for it and codifying it in federal statutory
   law. See Granfinanciera, 492 U.S. at 61 (explaining that “Congress cannot
   eliminate a party’s Seventh Amendment right to a jury trial merely by
   relabeling the cause of action to which it attaches and placing exclusive
   jurisdiction in an administrative agency or a specialized court of equity”).
   Purely private suits for securities fraud likely would have a similar public
   purpose—they too would serve to discourage and remedy fraudulent

           7
             Moreover, the Supreme Court has noted that agency adjudicators generally do
   not have special expertise to address structural constitutional claims—precisely the issues
   central to this case. Carr v. Saul, 141 S. Ct. 1352, 1360 (2021) (“[T]his Court has often
   observed that agency adjudications are generally ill suited to address structural
   constitutional challenges, which usually fall outside the adjudicators’ areas of technical
   expertise.”).

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   behavior in securities markets. That does not mean such suits concern public
   rights at their core. Granted, some actions provided for by the securities
   statutes may be new and not rooted in any common-law corollary. The fact
   remains, though, that the enforcement action seeking penalties in this case
   was one for securities fraud, which is nothing new and nothing foreign to
   Article III tribunals and juries.
            That being so, Petitioners had the right for a jury to adjudicate the
   facts underlying any potential fraud liability that justifies penalties. And
   because those facts would potentially support not only the civil penalties
   sought by the SEC, but the injunctive remedies as well, Petitioners had a
   Seventh Amendment right to a jury trial for the liability-determination
   portion of their case.
                                            4.
            The dissenting opinion cannot define a “public right” without using
   the term itself in the definition. That leads to a good bit of question-begging.
   It says at times that the “SEC’s enforcement action” is itself “a ‘public
   right’ because it is a case ‘in which the Government sues in its sovereign
   capacity to enforce public rights.” Post at 37. So the action is a public right
   because (1) the SEC is the government, and (2) it is vindicating a public right.
   And what is that public right being vindicated? The dissenting opinion does
   not say. In reality, the dissenting opinion’s rule is satisfied by the first step
   alone:    The action is itself a “public right” because the SEC is the
   government. And the not-so-far-removed consequences that flow from that
   conclusion: When the federal government sues, no jury is required. This is
   perhaps a runner-up in the competition for the “Nine Most Terrifying

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                                     No. 20-61007

   Words in the English Language.”8 But fear not, the dissenting opinion’s
   proposal runs headlong into Granfinanciera: “Congress cannot eliminate a
   party’s Seventh Amendment right to a jury trial merely by relabeling the
   cause of action to which it attaches and placing exclusive jurisdiction in an
   administrative agency or a specialized court of equity” 492 U.S. at 61. With
   that limit in place, the dissenting opinion’s bright-line rule burns out.
   Congress cannot change the nature of a right, thereby circumventing the
   Seventh Amendment, by simply giving the keys to the SEC to do the
   vindicating.
          In this light, this approach treats the government’s involvement as a
   sufficient condition for converting “private rights” into public ones. But
   from 1856 to 1989, the government’s involvement in a suit was only a
   necessary condition, not a sufficient condition, for determining whether a suit
   vindicated public rights. See Granfinanciera, 492 U.S. at 65–66, 68–69
   (Scalia, J., concurring in part) (referring to Murray’s Lessee v. Hoboken Land
   & Improvement Co., 18 U.S. (How.) 272, 283 (1856), and N. Pipeline Constr.
   Co. v. Marathon Pipeline Co., 458 U.S. 50, 68–69 (1982) (plurality op.)); cf. N.
   Pipeline Constr. Co., 458 U.S. at 69 n.23 (“It is thus clear that the presence of
   the United States as a proper party to the proceeding is a necessary but not
   sufficient means of distinguishing ‘private rights’ from ‘public rights.’”).
   Then Granfinanciera said that a dispute between two private parties could
   still vindicate “public rights,” such that the government was no longer a
   necessary condition for such suits. See 492 U.S. at 53–55. The dissenting
   opinion thus says that, after Granfinanciera, the government is no longer a
   necessary condition, but it is now a sufficient condition. That is at odds with
   Granfinanciera and does not follow from any of the Court’s previous

          8
             Cf. Ronald Reagan, Presidential News Conference (Aug. 12, 1986),
   https://www.presidency.ucsb.edu/documents/the-presidents-news-conference-957.

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   decisions, which stressed that the government’s involvement alone does not
   convert a suit about private rights into one about public rights.
          The question is not just whether the government is a party, but also
   whether the right being vindicated is public or private, and how it is being
   vindicated. Tracing the roots of, and justification for, the public-rights
   doctrine, the Supreme Court has explained “that certain prerogatives were
   [historically] reserved to the political Branches of Government.” N. Pipeline
   Constr. Co., 458 U.S. at 67. Specifically, “[t]he public-rights doctrine is
   grounded in a historically recognized distinction between matters that could
   be conclusively determined by the Executive and Legislative Branches and
   matters that are ‘inherently . . . judicial.’” Id. at 68 (quoting Ex parte Bakelite
   Corp., 279 U.S. 438, 458 (1929)).
          The inquiry is thus inherently historical. The dissenting opinion tries
   to avoid the history by again emphasizing that Granfinanciera dealt with
   private parties, not the government. But again, if the right being vindicated
   is a private one, it is not enough that the government is doing the suing. That
   means we must consider whether the form of the action—whether brought
   by the government or by a private entity—is historically judicial, or if it
   reflects the sorts of issues which courts of law did not traditionally decide.
          As discussed in Part II.B.2, history demonstrates that fraud claims like
   these are “traditional legal claims” that arose at common law. Even aside
   from post-Atlas Roofing refinements of the “public rights” doctrine, this fact,
   among others, distinguishes that case. In Atlas Roofing, OSHA empowered
   the government to pursue civil penalties and abatement orders whether or
   not any employees were “actually injured or killed as a result of the [unsafe
   working] condition.” 430 U.S. at 445; see also id. at 461 (“[Congress] created
   a new cause of action, and remedies therefor, unknown to the common law

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   . . . .”). The government’s right to relief was exclusively a creature of statute
   and was therefore distinctly public in nature.
          In contrast, fraud claims, including the securities-fraud claims here,
   are quintessentially about the redress of private harms.           Indeed, the
   government alleges that Petitioners defrauded particular investors. Cf. 15
   U.S.C. §§ 77q(a), 78j(b), 80b-6. As explained above, these fraud claims and
   civil penalties are analogous to traditional fraud claims at common law in a
   way that the “new” claims and remedies in Atlas Roofing were not. See Atlas
   Roofing, 430 U.S. at 461.
          That being so, Granfinanciera’s considerations about whether
   Congress created a new action unfamiliar to the common law, and whether
   jury trial rights are incompatible with the statutory scheme, are appropriate
   for us to address even if the suit involves the federal government. And as
   discussed above: (1) this type of action was commonplace at common law,
   (2) jury trial rights are consistent and compatible with the statutory scheme,
   and (3) such actions are commonly considered by federal courts with or
   without the federal government’s involvement.               Thus, the agency
   proceedings below violated Petitioners’ Seventh Amendment rights, and the
   SEC’s decision must be vacated.
                                          C.
          Petitioners next argue that Congress unconstitutionally delegated
   legislative power to the SEC when it gave the SEC the unfettered authority
   to choose whether to bring enforcement actions in Article III courts or within
   the agency. Because Congress gave the SEC a significant legislative power

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                                        No. 20-61007

   by failing to provide it with an intelligible principle to guide its use of the
   delegated power, we agree with Petitioners.9
          “We the People” are the fountainhead of all government power.
   Through the Constitution, the People delegated some of that power to the
   federal government so that it would protect rights and promote the common
   good. See The Federalist No. 10 (James Madison) (explaining that one of the
   defining features of a republic is “the delegation of the government . . . to a
   small number of citizens elected by the rest”). But, in keeping with the
   Founding principles that (1) men are not angels, and (2) “[a]mbition must be
   made to counteract ambition,” see The Federalist No. 51 (James Madison),
   the People did not vest all governmental power in one person or entity. It
   separated the power among the legislative, executive, and judicial branches.
   See The Federalist No. 47 (James Madison) (“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 legislative power
   is the greatest of these powers, and, of course, it was given to Congress. U.S.
   Const. art. I, § 1.
          The Constitution, in turn, provides strict rules to ensure that
   Congress exercises the legislative power in a way that comports with the
   People’s will. Every member of Congress is accountable to his or her
   constituents through regular popular elections. U.S. Const. art I, §§ 2, 3; id.
   amend. XVII, cl. 1. And a duly elected Congress may exercise the legislative
   power only through the assent of two separately constituted chambers

          9
             This is an alternative holding that provides ground for vacating the SEC’s
   judgment. “This circuit follows the rule that alternative holdings are binding precedent
   and not obiter dictum.” Texas v. United States, 809 F.3d 134, 178 n.158 (5th Cir. 2015)
   (quoting United States v. Potts, 644 F.3d 233, 237 n.3 (5th Cir. 2011)).

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   (bicameralism) and the approval of the President (presentment). U.S. Const.
   art. I, § 7. This process, cumbersome though it may often seem to eager
   onlookers,10 ensures that the People can be heard and that their
   representatives have deliberated before the strong hand of the federal
   government raises to change the rights and responsibilities attendant to our
   public life. Cf. Rachel E. Barkow, Separation of Powers and the Criminal Law,
   58 Stan. L. Rev. 989, 1017 (2006). (“[T]he Framers weighed the need for
   federal government efficiency against the potential for abuse and came out
   heavily in favor of limiting federal government power over crime.”).
           But that accountability evaporates if a person or entity other than
   Congress exercises legislative power. See Gundy v. United States, 139 S. Ct.
   2116, 2134 (2019) (Gorsuch, J., dissenting) (“[B]y directing that legislating
   be done only by elected representatives in a public process, the Constitution
   sought to ensure that the lines of accountability would be clear: The
   sovereign people would know, without ambiguity, whom to hold accountable
   for the laws they would have to follow.”). Thus, sequestering that power
   within the halls of Congress was essential to the Framers. As John Locke—

           10
               Indeed, President Woodrow Wilson, the original instigator of the agency that
   became the SEC, believed agencies like that one could solve the “problem” of
   congressional gridlock and the burden of popular accountability. See Cochran v. SEC, 20
   F.4th 194, 218 (5th Cir. 2021) (Oldham, J., concurring) (“Wilson’s ‘new constitution’
   would ditch the Founders’ tripartite system and their checks and balances for a ‘more
   efficient separation of politics and administration, which w[ould] enable the bureaucracy to
   tend to the details of administering progress without being encumbered by the
   inefficiencies of politics.’” (quoting Ronald J. Pestritto, Woodrow Wilson and the Roots of
   Modern Liberalism 227 (2005))), cert. granted sub nom., SEC v. Cochran, 21-1239, 2022 WL
   1528373 (U.S. May 16, 2022); see also id. (“Wilson’s goal was to completely separate ‘the
   province of constitutional law’ from ‘the province of administrative function.’” (quoting
   Philip Hamburger, Is Administrative Law Unlawful? 464 (2014))).

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   a particularly influential thinker at the Founding—explained, not even the
   legislative branch itself may give the power away:
           The legislative cannot transfer the power of making laws to any
           other hands; for it being but a delegated power from the people,
           they who have it cannot pass it over to others. The people
           alone can appoint the form of the commonwealth, which is by
           constituting the legislative, and appointing in whose hands that
           shall be. And when the people have said we will submit to rules,
           and be governed by laws made by such men, and in such forms,
           nobody else can say other men shall make laws for them; nor
           can the people be bound by any laws but such as are enacted by
           those whom they have chosen and authorised to make laws for
           them.
   Id. at 2133–34 (quoting John Locke, The Second Treatise of Civil
   Government and a Letter Concerning Toleration § 141, p. 71 (1947)).11
           Article I of the Constitution thus provides that “[a]ll legislative
   Powers herein granted shall be vested in a Congress of the United States.”
   U.S. Const. art. I, § 1 (emphasis added).                 In keeping with Founding
   conceptions of separation of powers, 12 the Supreme Court has made clear
   that Congress cannot “delegate to the Courts, or to any other tribunals,
   powers which are strictly and exclusively legislative.” Wayman v. Southard,
   23 U.S. (10 Wheat.) 1, 42 (1825); see also A.L.A. Schechter Poultry Corp. v.

           11
            Locke’s perspective on the legislature’s delegation of its power was influential in
   the United States around the time of the framing of the Constitution. See Hamburger, supra
   at 384.
           12
             Principles of non-delegation had even taken hold in England before the American
   Founding. See Hamburger, supra at 381 (explaining that “even under [King] James I, the
   judges recognized that the king’s prerogative power came from his subjects—that he was
   exercising a power delegated by the people” and, as a result, he could not transfer the royal
   powers to anyone else); see also id. (“[P]arliamentary subdelegations were widely
   understood to be unlawful.”).

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   United States, 295 U.S. 495, 529 (1935) (“Congress is not permitted to
   abdicate or to transfer to others the essential legislative functions with which
   it is thus vested.”).         According to the Supreme Court’s more recent
   formulations of that longstanding rule,13 Congress may grant regulatory
   power to another entity only if it provides an “intelligible principle” by which
   the recipient of the power can exercise it. Mistretta v. United States, 488 U.S.
   361, 372 (1989) (quoting J.W. Hampton, Jr., & Co. v. United States, 276 U.S.
   394, 409 (1928)). The two questions we must address, then, are (1) whether
   Congress has delegated power to the agency that would be legislative power
   but-for an intelligible principle to guide its use and, if it has, (2) whether it
   has provided an intelligible principle such that the agency exercises only
   executive power.14
           We first conclude that Congress has delegated to the SEC what would
   be legislative power absent a guiding intelligible principle. Government
   actions are “legislative” if they have “the purpose and effect of altering the
   legal rights, duties and relations of persons . . . outside the legislative
   branch.” INS v. Chadha, 462 U.S. 919, 952 (1983). The Supreme Court has
   noted that the power to assign disputes to agency adjudication is “peculiarly

           13
              Some contemporary academics have argued that the non-delegation doctrine
   lacks a sound historical basis. See Julian Davis Mortenson & Nicholas Bagley, Delegation at
   the Founding, 121 Colum. L. Rev. 277 (2021); but see Ilan Wurman, Nondelegation at the
   Founding, 130 Yale L.J. 1490 (2021) (arguing that the doctrine was present at the
   Founding); Philip Hamburger, Delegating or Divesting?, 115 Nw. U. L. Rev. Online 88
   (2020) (similar). Of course, our role as an inferior court is to faithfully apply Supreme
   Court precedent, so we do not reach the proper historical scope of the non-delegation
   doctrine. See Morrow v. Meachum, 917 F.3d 870, 874 n.4 (5th Cir. 2019).
           14
              Adrian Vermeule, No, 93 Tex. L. Rev. 1547, 1558 (2015) (“[T]here is [no]
   delegation of legislative power at all so long as the legislature has supplied an ‘intelligible
   principle’ to guide the exercise of delegated discretion. Where there is such a principle,
   the delegatee is exercising executive power, not legislative power.” (emphasis and footnote
   omitted)).

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   within the authority of the legislative department.”                     Oceanic Steam
   Navigation Co. v. Stranahan, 214 U.S. 320, 339            (1909).15   And, as discussed
   above, in some special circumstances Congress has the power to assign to
   agency adjudication matters traditionally at home in Article III courts. Atlas
   Roofing, 430 U.S. at 455. Through Dodd–Frank § 929P(a), Congress gave
   the SEC the power to bring securities fraud actions for monetary penalties
   within the agency instead of in an Article III court whenever the SEC in its
   unfettered discretion decides to do so. See 15 U.S.C. § 78u-2(a). Thus, it
   gave the SEC the ability to determine which subjects of its enforcement
   actions are entitled to Article III proceedings with a jury trial, and which are
   not. That was a delegation of legislative power. As the Court said in Crowell
   v. Benson, “the mode of determining” which cases are assigned to
   administrative tribunals “is completely within congressional control.” 285
   U.S. 22, 50 (1932) (quoting Ex parte Bakelite Corp., 279 U.S. at 451).
           The SEC argues that by choosing whether to bring an action in an
   agency tribunal instead of in an Article III court it merely exercises a form of
   prosecutorial discretion—an executive, not legislative, power. That position
   reflects a misunderstanding of the nature of the delegated power. Congress
   did not, for example, merely give the SEC the power to decide whether to
   bring enforcement actions in the first place, or to choose where to bring a case
   among those district courts that might have proper jurisdiction. It instead
   effectively gave the SEC the power to decide which defendants should

           15
               Moreover, at the Virginia Ratifying Convention in 1788, then-delegate John
   Marshall suggested that it is proper to the legislative power to determine the expedience of
   assigning particular matters for jury trial. See John Marshall on the Fairness and
   Jurisdiction of the Federal Courts, in 2 The Debate on the Constitution 740 (Bernard
   Bailyn ed. 1993) (“The Legislature of Virginia does not give a trial by jury where it is not
   necessary. But gives it wherever it is thought expedient. The Federal Legislature will do
   so too, as it is formed on the same principles.”).

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   receive certain legal processes (those accompanying Article III proceedings)
   and which should not. Such a decision—to assign certain actions to agency
   adjudication—is a power that Congress uniquely possesses. See id.
          Next, Congress did not provide the SEC with an intelligible principle
   by which to exercise that power. We recognize that the Supreme Court has
   not in the past several decades held that Congress failed to provide a requisite
   intelligible principle. Cf. Whitman v. Am. Trucking Ass’ns, Inc., 531 U.S. 457,
   474–75 (2001) (cataloguing the various congressional directives that the
   Court has found to be “intelligible principle[s]”). But neither in the last
   eighty years has the Supreme Court considered the issue when Congress
   offered no guidance whatsoever. The last time it did consider such an open-
   ended delegation of legislative power, it concluded that Congress had acted
   unconstitutionally: In Panama Refining Co. v. Ryan, 293 U.S. 388, 405–06
   (1935), the Court considered a statutory provision granting the President the
   authority to prohibit the transportation in interstate commerce of petroleum
   and related products. The Court scoured the statute for directives to guide
   the President’s use of that authority, but it found none. Id. at 414–20. It
   therefore explained:
          [I]n every case in which the question has been raised, the Court
          has recognized that there are limits of delegation which there is
          no constitutional authority to transcend. We think that section
          9(c) goes beyond those limits. As to the transportation of oil
          production in excess of state permission, the Congress has
          declared no policy, has established no standard, has laid down
          no rule.
   Id. at 430.
          Congress’s grant of authority to the SEC here is similarly open-ended.
   Even the SEC agrees that Congress has given it exclusive authority and
   absolute discretion to decide whether to bring securities fraud enforcement

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                                          No. 20-61007

   actions within the agency instead of in an Article III court. Congress has said
   nothing at all indicating how the SEC should make that call in any given case.
   If the intelligible principle standard means anything, it must mean that a total
   absence of guidance is impermissible under the Constitution. 16 See Gundy,
   139 S. Ct. at 2123 (Kagan, J., plurality op.) (noting that “we would face a
   nondelegation question” if the statutory provision at issue had “grant[ed]
   the Attorney General plenary power to determine SORNA’s applicability to
   pre-Act offenders—to require them to register, or not, as she sees fit, and to
   change her policy for any reason and at any time” (emphasis added)). We
   therefore vacate the SEC’s judgment on this ground as well.
                                               D.
           The SEC proceedings below suffered from another constitutional
   infirmity: the statutory removal restrictions for SEC ALJs are
   unconstitutional.17 SEC ALJs perform substantial executive functions. The
   President therefore must have sufficient control over the performance of
   their functions, and, by implication, he must be able to choose who holds the

           16
               As a member of this court aptly noted just last year, the fact that the modern
   administrative state is real and robust does not mean courts are never called to declare its
   limits. See Cochran, 20 F.4th at 222 (Oldham, J., concurring) (“If administrative agencies
   ‘are permitted gradually to extend their powers by encroachments—even petty
   encroachments—upon the fundamental rights, privileges and immunities of the people,’
   the Court warned that ‘we shall in the end, while avoiding the fatal consequences of a
   supreme autocracy, become submerged by a multitude of minor invasions of personal
   rights, less destructive but no less violative of constitutional guaranties.’” (quoting Jones
   v. SEC, 298 U.S. 1, 24–25 (1936))).
           17
              Because we vacate the SEC’s judgment on various other grounds, we do not
   decide whether vacating would be the appropriate remedy based on this error alone. See
   Collins v. Yellen, 27 F.4th 1068, 1069 (5th Cir. 2022) (remanding to the district court to
   determine what remedy, if any, is appropriate in light of the Supreme Court’s holding that
   removal restrictions applicable to the Director of the Federal Housing Finance Agency
   were unconstitutional).

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   positions. Two layers of for-cause protection impede that control; Supreme
   Court precedent forbids such impediment.
          Article II provides that the President must “take Care that the Laws
   be faithfully executed.” U.S. Const. art. II, § 3. The Supreme Court has
   held that this provision guarantees the President a certain degree of control
   over executive officers; the President must have adequate power over
   officers’ appointment and removal.18 Myers v. United States, 272 U.S. 52, 117
   (1926).     Only then can the People, to whom the President is directly
   accountable, vicariously exercise authority over high-ranking executive
   officials. Free Enterprise Fund v. Public Co. Accounting Oversight Bd., 561 U.S.
   477, 498 (2010).     Yet not all removal restrictions are constitutionally
   problematic. “Inferior officers” may retain some amount of for-cause
   protection from firing. See, e.g., Morrison v. Olson, 487 U.S. 654, 691–92
   (1988). Likewise, even principal officers may retain for-cause protection
   when they act as part of an expert board. Seila Law LLC v. CFPB, 140 S. Ct.
   2183, 2192 (2020).
          But a problem arises when both of those protections act in concert. In
   Free Enterprise Fund, the Supreme Court considered the constitutionality of
   two layers of for-cause protection for members of the Public Company
   Accounting Oversight Board (PCAOB). 561 U.S. at 492. The members of
   the board answered to the SEC Commissioners. But the SEC could remove
   them only for “willful violations of the [Sarbanes–Oxley] Act, Board rules,
   or the securities laws; willful abuse of authority; or unreasonable failure to
   enforce compliance—as determined in a formal Commission order, rendered
   on the record and after notice and an opportunity for a hearing.” Id. at 503.

          18
            Of course, the President’s authority over appointments derives from the
   Appointments Clause as well. See U.S. Const. art. II, § 2, cl. 2.

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   On top of that, the President could only remove SEC Commissioners for
   “inefficiency, neglect of duty, or malfeasance in office.” Id. at 486–87, 502.
   The Supreme Court held that this extensive system insulating PCAOB
   members from removal deprived the President of the ability to adequately
   oversee the Board’s actions. Id. at 492, 496.
          The question here is whether SEC ALJs serve sufficiently important
   executive functions, and whether the restrictions on their removal are
   sufficiently onerous, that the President has lost the ability to take care that
   the laws are faithfully executed. Petitioners’ argument on this point is
   straightforward: SEC ALJs are inferior officers; they can only be removed by
   the SEC Commissioners if good cause is found by the Merits Systems
   Protection Board; SEC Commissioners and MSPB members can only be
   removed by the President for cause; so, SEC ALJs are insulated from the
   President by at least two layers of for-cause protection from removal, which
   is unconstitutional under Free Enterprise Fund. The SEC responds that this
   case is not like Free Enterprise Fund. First, it contends that SEC ALJs
   primarily serve an adjudicatory role. Second, it asserts that the for-cause
   protections for ALJs are not as stringent as those which applied to PCAOB
   members at the time of Free Enterprise Fund—or, at least, that this court
   should read the removal protections for ALJs that way to avoid constitutional
   problems.
          We agree with Petitioners and hold that the removal restrictions are
   unconstitutional. The Supreme Court decided in Lucia that SEC ALJs are
   “inferior officers” under the Appointments Clause because they have
   substantial authority within SEC enforcement actions. Lucia v. SEC, 138 S.
   Ct. 2044, 2053 (2018). And in Free Enterprise Fund it explained that the
   President must have adequate control over officers and how they carry out
   their functions. 561 U.S. at 492, 496. If principal officers cannot intervene
   in their inferior officers’ actions except in rare cases, the President lacks the

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   control necessary to ensure that the laws are faithfully executed. So, if SEC
   ALJs are “inferior officers” of an executive agency, as the Supreme Court in
   Lucia indicated was the case at least for the purposes of the Appointments
   Clause, they are sufficiently important to executing the laws that the
   Constitution requires that the President be able to exercise authority over
   their functions. Specifically, SEC ALJs exercise considerable power over
   administrative case records by controlling the presentation and admission of
   evidence; they may punish contemptuous conduct; and often their decisions
   are final and binding. Lucia, 138 S. Ct. at 2053–54. But 5 U.S.C. § 7521(a)
   provides that SEC ALJs may be removed by the Commission “only for good
   cause established and determined by the Merit Systems Protection Board
   (MSPB) on the record after opportunity for hearing before the Board.”
   (Parenthetical not in original.) And the SEC Commissioners may only be
   removed by the President for good cause.
          The dissenting opinion’s response is all built on dicta from Free
   Enterprise Fund. There, in noting what issues the Court was leaving open,
   the Court identified characteristics that were true of ALJs that were not true
   of PCAOB members: “[U]nlike members of the [PCAOB], many” ALJs
   “perform adjudicative rather than enforcement or policymaking functions.”
   Free Enterprise Fund, 561 U.S. at 507 n.10. Far from “stat[ing]” that this
   “may justify multiple layers of removal protection,” post at 22, the Court
   merely identified that its decision does not resolve the issue presented here.
   In any event, the Court itself said in Myers that “quasi[-]judicial” executive
   officers must nonetheless be removable by the President “on the ground that
   the discretion regularly entrusted to that officer by statute has not been on

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   the whole intelligently or wisely exercised.” 272 U.S. at 135.19 So even if
   ALJs’ functions are more adjudicative than PCAOB members, the fact
   remains that two layers of insulation impedes the President’s power to
   remove ALJs based on their exercise of the discretion granted to them.20
           Finally, the SEC urges us to interpret the for-cause protections for
   ALJs to instead allow removal for essentially any reason. Even if we could do
   so (and the statutory language likely does not give us that flexibility), that

           19
              The dissenting opinion deems this proposition from Myers to be obiter dicta that
   the Court subsequently disregarded in Humphrey’s Executor v. United States, 295 U.S. 602,
   626–28 (1935). Post at 54 n.113. But that itself is to disregard the Supreme Court’s more
   recent guidance, which fortifies the Court’s “landmark decision” in Myers and narrowed
   Humphrey’s Executor. See Seila Law, 140 S. Ct. at 2191–92, 2197–99 & n.2 (limiting the
   Humphrey’s Executor exception to Myers to cases involving “for-cause removal protections
   [given] to a multimember body of experts, balanced along partisan lines, that perform[]
   legislative and judicial functions and [are] said not to exercise any executive power,” while
   casting doubt on the existence of wholly non-executive, quasi-legislative or quasi-judicial
   agency powers altogether); see also City of Arlington v. F.C.C., 569 U.S. 290, 305 n.4 (2013)
   (noting that “[agency] activities take ‘legislative’ and ‘judicial’ forms, but they are
   exercises of—indeed, under our constitutional structure they must be exercises of—the
   ‘executive Power’” (citing U.S. Const. art. II, § 1, cl. 1)).
           20
              In the next breath, the dissenting position draws from a law review article that
   “[t]he ALJs’ role is similar to that of a federal judge.” Post at 52. It then concludes that
   they must be insulated from removal by the president to maintain their independence. But
   that analogy runs out under a little scrutiny. The SEC’s ALJs are not mere neutral arbiters
   of federal securities law; they are integral pieces within the SEC’s powerful enforcement
   apparatus. The ALJs report to the Commission itself and act under authority delegated by
   it. SEC Organization Chart (2020), https://www.sec.gov/about/secorg.pdf; 15 U.S.C.
   § 78d-1(a); 17 C.F.R. § 200.30-10. As the amicus brief by the Cato Institute points out,
   these administrative proceedings differ significantly from cases resolved in federal district
   courts and reviewed by federal courts of appeals. Cato Amicus Br. at 19–31. First, the
   Commission has ex parte discussions with the prosecutors to determine whether to pursue
   securities-fraud claims. Then the Commission itself decides what claims should be brought
   by the prosecutors. Only then do ALJs resolve the claims, which are then again reviewed
   by the Commission. Suffice it to say, even if ALJs have some of the same “tools of federal
   trial judges,” Lucia, 138 S. Ct. at 2053, they use those tools at the direction of and with the
   power delegated to them by the Commission.

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                                         No. 20-61007

   would not solve the Article II problem. As noted above, the MSPB is part of
   the mix as well. Furthermore, MSPB members “may be removed by the
   President only for inefficiency, neglect of duty, or malfeasance in office.” 5
   U.S.C. § 1202(d). So, for an SEC ALJ to be removed, the MSPB must find
   good cause and the Commission must choose to act on that finding. And
   members of both the MSPB and the Commission have for-cause protection
   from removal by the President. Simply put, if the President wanted an SEC
   ALJ to be removed, at least two layers of for-cause protection stand in the
   President’s way.
           Thus, SEC ALJs are sufficiently insulated from removal that the
   President cannot take care that the laws are faithfully executed.                    The
   statutory removal restrictions are unconstitutional.
                                              III.
           In sum, we agree with Petitioners that the SEC proceedings below
   were unconstitutional. The SEC’s judgment should be vacated for at least
   two reasons: (1) Petitioners were deprived of their Seventh Amendment right
   to a civil jury; and (2) Congress unconstitutionally delegated legislative
   power to the SEC by failing to give the SEC an intelligible principle by which
   to exercise the delegated power. We also hold that the statutory removal
   restrictions for SEC ALJs are unconstitutional, though we do not address
   whether vacating would be appropriate based on that defect alone.21
           We GRANT the petition for review, VACATE the decision of the
   SEC, and REMAND for further proceedings consistent with this opinion.

           21
              Petitioners also argue that the SEC violated their equal protection rights, and
   that its decision was infected with bias and violated their due process rights. Because we
   vacate the SEC’s decision on other grounds, we decline to reach these issues.

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   W. Eugene Davis, Circuit Judge, dissenting:
           The majority holds that (1) administrative adjudication of the SEC’s
   enforcement action violated Petitioners’ Seventh Amendment right to a jury
   trial; (2) Congress unconstitutionally delegated an Article I legislative power
   to the executive branch when it gave the SEC the discretion to choose
   between bringing its enforcement action in an Article III court or before the
   agency without providing an intelligible principle to guide the SEC’s
   decision; and (3) the removal protections on SEC administrative law judges
   violate Article II’s requirement that the President “take Care that the Laws
   be faithfully executed.” I respectfully disagree with each of these
   conclusions.
                                                  I.
           The majority holds that the Seventh Amendment grants Petitioners
   the right to a jury trial on the facts underlying the SEC’s enforcement action,
   and administrative adjudication without a jury violated that right. In reaching
   this conclusion, the majority correctly recognizes that a case involving
   “public rights” may be adjudicated in an agency proceeding without a jury
   notwithstanding the Seventh Amendment.1 But, the majority then
   erroneously concludes that the SEC’s enforcement action does not involve
   “public rights.” In my view, the majority misreads the Supreme Court’s
   decisions addressing what are and are not “public rights.”

           1
              See, e.g., Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 42 n.4 (1989) (“If a claim
   that is legal in nature asserts a ‘public right,’ . . . then the Seventh Amendment does not
   entitle the parties to a jury trial if Congress assigns its adjudication to an administrative
   agency or specialized court of equity. The Seventh Amendment protects a litigant’s right
   to a jury trial only if a cause of action is legal in nature and it involves a matter of ‘private
   right.’” (citation omitted)).

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                                                A.
          As declared by Professors Wright and Miller, “A definitive statement
   by the Supreme Court regarding congressional authority in this context is
   found in Atlas Roofing v. Occupational Safety & Health Review Commission.”2
   That case concerned the Occupational Safety and Health Act (“OSHA” or
   “the Act”), which created a new statutory duty on employers to avoid
   maintaining unsafe or unhealthy working conditions. OSHA also empowered
   the Federal Government, proceeding before an administrative agency
   without a jury, to impose civil penalties on those who violated the Act.3 Two
   employers who had been cited for violating the Act argued that a suit in a
   federal court by the Government seeking civil penalties for violation of a
   statute is classically a suit at common law for which the Seventh Amendment
   provides a right to a jury trial; therefore, Congress cannot deprive them of
   that right by simply assigning the function of adjudicating the Government’s
   right to civil penalties to an administrative forum where no jury is available.4
   The Court, in a unanimous opinion, disagreed:
          At least in cases in which “public rights” are being litigated—
          e.g., cases in which the Government sues in its sovereign
          capacity to enforce public rights created by statutes within the
          power of Congress to enact—the Seventh Amendment does
          not prohibit Congress from assigning the factfinding function
          and initial adjudication to an administrative forum with which
          the jury would be incompatible. . . . This is the case even if the
          Seventh Amendment would have required a jury where the

          2
             9 Charles Alan Wright & Arthur R. Miller, Federal
   Practice and Procedure § 2302.2, at 59 (4th ed. 2020) (citing Atlas Roofing Co. v.
   Occupational Safety & Health Rev. Comm’n, 430 U.S. 442 (1977)) (italics added).
          3
              Atlas Roofing, 430 U.S. at 445.
          4
              Id. at 449–50.

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           adjudication of those rights is assigned instead to a federal
           court of law instead of an administrative agency.5
   Atlas Roofing drew its definition of “public rights” from, inter alia, Crowell v.
   Benson, which described “public rights” in slightly broader terms: matters
   “which arise between the Government and persons subject to its authority in
   connection with the performance of the constitutional functions of the
   executive or legislative departments.”6
           The Supreme Court has never retreated from its holding in Atlas
   Roofing.7 In fact, the Court implicitly re-affirmed Atlas Roofing’s definition of
   “public rights” as recently as 2018, when it decided Oil States Energy
   Services, LLC v. Greene’s Energy Group, LLC.8 That case involved the Leahy-
   Smith America Invents Act, which granted the Patent and Trademark Office
   (“PTO”) the power to reconsider a previously-issued patent via an
   administrative process called “inter partes review.” 9 This was a departure
   from historical practice, which placed this function in Article III courts
   alone.10 The petitioner argued that inter partes review violated both Article

           5
             Id. at 450, 455 (emphasis added; paragraph break omitted); see also id. at 458
   (“Our prior cases support administrative factfinding in only those situations involving
   ‘public rights,’ e.g., where the Government is involved in its sovereign capacity under an
   otherwise valid statute creating enforceable public rights.”).
           6
               Id. at 452 (quoting Crowell v. Benson, 285 U.S. 22, 50 (1932)) (emphasis added);
   see also id. at 456, 457, 460 (citing Crowell, 285 U.S. 22).
           7
             Gideon Mark, SEC and CFTC Administrative Proceedings, 19 U. Pa. J. Const.
   L. 45, 95 (2016).
           8
               138 S. Ct. 1365 (2018).
           9
               Id. at 1370–72.
           10
               Id. at 1384 (Gorsuch, J., dissenting) (“[F]rom the time it established the
   American patent system in 1790 until about 1980, Congress left the job of invalidating
   patents at the federal level to courts alone.”).

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   III and the Seventh Amendment.11 The Court disagreed and explained that
   Congress has “significant latitude” to assign adjudication of “public rights”
   to non-Article III tribunals that do not use a jury. 12 Moreover, the Court,
   quoting Crowell, defined “public rights” as “matters ‘which arise between
   the Government and persons subject to its authority in connection with the
   performance of the constitutional functions of the executive or legislative
   departments.’”13
             As mentioned, Atlas Roofing’s definition of “public rights” is a
   slightly narrower version of Crowell’s definition. Thus, when Oil States re-
   affirmed Crowell, it necessarily re-affirmed Atlas Roofing’s definition as
   well.14
             Oil States is also significant because it held that historical practice is
   not determinative in matters governed by the public rights doctrine, as such
   matters “‘from their nature’ can be resolved in multiple ways.”15
   Accordingly, the Court rejected the view that “because courts have
   traditionally adjudicated patent validity in this country, courts must forever
   continue to do so.”16

             11
                  Id. at 1372.
             12
                  Id. at 1373, 1379.
             13
                  Id. at 1373 (quoting Crowell, 285 U.S. at 50).
             14
             Oil States did not purport to provide an exhaustive definition of “public rights,”
   and the opinion alludes to the possibility that, under certain circumstances, matters not
   involving the Government may also fall within the realm of “public rights.” See id.
   However, the Court did not need to address these other, “various formulations” of “public
   rights,” because inter partes review fell squarely within Crowell’s definition. See id. This
   court reached a similar conclusion in Austin v. Shalala, discussed below.
             15
                  Id. at 1378 (quoting Ex parte Bakelite Corp., 279 U.S. 438, 451 (1929)).
             16
              Id.; see also id. (“That Congress chose the courts in the past does not foreclose
   its choice of the PTO today.”).

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                                            No. 20-61007

           Like Oil States, this court relied on Crowell to define “public rights”
   in Austin v. Shalala.17 That case involved the Government’s action to recover
   overpayment of social security benefits via an administrative proceeding
   before the Social Security Administration.18 Austin rejected the plaintiff’s
   argument that the proceeding violated her Seventh Amendment right,
   explaining that “if Congress may employ an administrative body as a
   factfinder in imposing money penalties for the violation of federal laws”—as
   was done in Atlas Roofing and in the securities statutes at issue here—“it
   plainly may employ such a body to recover overpayments of government
   largess.”19
           Consistent with the above cases, our sister circuits routinely hold that
   an enforcement action by the Government for violations of a federal statute
   or regulation is a “public right” that Congress may assign to an agency for
   adjudication without offending the Seventh Amendment.20 For example, the
   Eleventh Circuit relied solely on Atlas Roofing when it rejected a Seventh
   Amendment challenge to administrative adjudication of an SEC
   enforcement action and declared “it is well-established that the Seventh

           17
                994 F.2d 1170, 1177 (5th Cir. 1993).
           18
                Id. at 1173.
           19
             Id. at 1177-78 (citing Oceanic Steam Navigation Co. v. Stranahan, 412 U.S. 320,
   339 (1909)).
           20
             See, e.g., Imperato v. SEC, 693 F. App’x 870, 876 (11th Cir. 2017) (unpublished)
   (administrative adjudication for violations of the Securities Exchange Act); Crude Co. v.
   FERC, 135 F.3d 1445, 1454–55 (Fed. Cir. 1998) (Mandatory Petroleum Allocation
   Regulations); Cavallari v. Office of Comptroller of Currency, 57 F.3d 137, 145 (2d Cir. 1995)
   (Financial Institutions Reform, Recovery and Enforcement Act); Sasser v. Adm’r EPA, 990
   F.2d 127, 130 (4th Cir. 1993) (Clean Water Act).

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   Amendment does not require a jury trial in administrative proceedings
   designed to adjudicate statutory ‘public rights.’” 21
           The SEC’s enforcement action satisfies Atlas Roofing’s definition of a
   “public right,” as well as the slightly broader definition set forth in Crowell
   and applied in Oil States and Austin. The broad congressional purpose of the
   securities laws is to “protect investors.”22 For example, the Securities Act of
   1933 was “designed to provide investors with full disclosure of material
   information concerning public offerings of securities in commerce, to protect
   investors against fraud and, through the imposition of specified civil
   liabilities, to promote ethical standards of honesty and fair dealing.” 23 The
   Dodd-Frank Act, which, inter alia, expanded the SEC’s authority to pursue
   civil penalties in administrative proceedings, 24 was “intended to improve
   investor protection,” particularly in light of the Bernard Madoff Ponzi
   scheme.25 Other circuits have consistently recognized that “[w]hen the SEC
   sues to enforce the securities laws, it is vindicating public rights and
   furthering public interests, and therefore is acting in the United States’s

           21
                Imperato, 693 F. App’x at 876 (citing Atlas Roofing, 430 U.S. at 455–56).
           22
                Smallwood v. Pearl Brewing Co., 489 F.2d 579, 592 (5th Cir. 1974).
           23
              Ernst & Ernst v. Hochfelder, 425 U.S. 185, 195 (1976). In a similar vein, the
   Investment Advisers Act of 1940 seeks to “protect[] investors through the prophylaxis of
   disclosure,” in order to eliminate “the darkness and ignorance of commercial secrecy,”
   which “are the conditions upon which predatory practices best thrive.” SEC v. Capital
   Gains Research Bureau, Inc., 375 U.S. 180, 200 (1963).
           24
              Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-
   203, Sec. 929P, 124 Stat. 1376, 1862–64 (2010) (codified at 15 U.S.C. §§ 77h-1(g), 78u-2(a),
   80a-9(d), 80b-3(i)).
           25
              Mark Jickling, Congressional Research Service, R41503 The Dodd-Frank Wall
   Street Reform and Consumer Protection Act: Title IX, Investor Protection at i (2010).

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   sovereign capacity.”26 Thus, the SEC’s enforcement action is a “public
   right” because it is a case “in which the Government sues in its sovereign
   capacity to enforce public rights created by statutes within the power of
   Congress to enact.”27 It is also a matter “which arise[s] between the
   Government and persons subject to its authority in connection with the
   performance of the constitutional functions of the executive or legislative
   departments.”28
           Because the SEC’s enforcement action is a “public right,” the
   Seventh Amendment does not prohibit Congress from assigning its
   adjudication to an administrative forum that lacks a jury. 29 As discussed
   below, the fact that the securities statutes at issue resemble (but are not
   identical to) common-law fraud does not change this result.30 It also makes

           26
              SEC v. Diversified, 378 F.3d 1219, 1224 (11th Cir. 2004), abrogated on other
   grounds by Kokesh v. SEC, 137 S. Ct. 1635 (2017); see also SEC v. Rind, 991 F.2d 1486, 1491
   (9th Cir. 1993); United States v. Badger, 818 F.3d 563, 566 (10th Cir. 2016).
           27
                Atlas Roofing, 430 U.S. at 450.
           28
                Crowell, 285 U.S. at 22; Oil States, 138 S. Ct. at 1373; Austin, 994 F.2d at 1177.
           The majority asserts that “[t]he dissenting opinion cannot define a ‘public right’
   without using the term itself in the definition.” First, I rely on definitions the Supreme
   Court has provided. Second, while Atlas Roofing does use “public rights” to define “public
   rights,” Crowell does not. Furthermore, Granfinanciera observed that Atlas Roofing “left
   the term ‘public rights’ undefined” and so looked to Crowell to fill in any perceived gap.
   Granfinanciera, 492 U.S. at 51 n.8; see also id. at 53 (noting that, under Atlas Roofing, a
   “public right” is simply “a statutory cause of action [that] inheres in, or lies against, the
   Federal Government in its sovereign capacity”).
           29
               Atlas Roofing, 430 U.S. at 450; Granfinanciera, 492 U.S. at 52–54; Oil States, 138
   S. Ct. at 1379.
           30
             See Granfinanciera, 492 U.S. at 52 (“Congress may fashion causes of action that
   are closely analogous to common-law claims and place them beyond the ambit of the
   Seventh Amendment by assigning their resolution to a forum in which jury trials are
   unavailable” if the action involves “public rights.”).

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   no difference that federal courts have decided claims under the securities
   statutes for decades.31
                                                 B.
           The majority’s conclusion that the SEC’s enforcement action is not a
   “public right” is based primarily on an erroneous reading of Granfinanciera,
   S.A. v. Nordberg.32 Specifically, the majority interprets that case as abrogating
   Atlas Roofing. Granfinanciera did nothing of the sort.
           In Granfinanciera, a bankruptcy trustee sued in bankruptcy court
   (where a jury was unavailable) to avoid allegedly fraudulent transfers the
   defendants had received from the debtor.33 The defendants argued that they
   were entitled to a jury trial under the Seventh Amendment. 34 A key issue was
   whether the trustee’s claim involved “public” or “private” rights. The
   Court held that the action was a private right.35
           Unlike Atlas Roofing, Granfinanciera did not involve a suit by or
   against the Federal Government. This distinction is important. In discussing
   what constitutes a “public right,” Granfinanciera, citing Atlas Roofing,
   recognized that “Congress may effectively supplant a common-law cause of
   action carrying with it a right to a jury trial with a statutory cause of action
   shorn of a jury trial right if that statutory cause of action inheres in, or lies

           31
              See Oil States, 138 S. Ct. at 1378 (“[W]e disagree with the dissent’s assumption
   that, because courts have traditionally adjudicated patent validity in this country, courts
   must forever continue to do so. Historical practice is not decisive . . . [in] matters governed
   by the public-rights doctrine . . . . That Congress chose the courts in the past does not
   foreclose its choice of the PTO today.”)
           32
                492 U.S. 33.
           33
                Id. at 36.
           34
                Id. at 40.
           35
                Id. at 55, 64.

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   against, the Federal Government in its sovereign capacity.”36 Granfinanciera
   then clarified that “the class of ‘public rights’ whose adjudication Congress
   may assign to administrative agencies . . . is more expansive than Atlas
   Roofing’s discussion suggests”;37 i.e., the “Government need not be a party
   for a case to revolve around ‘public rights’” provided certain other criteria
   are met.38 Nevertheless, and contrary to what is implied by the majority,
   Granfinanciera’s recognition that the public-rights doctrine can extend to
   cases where the Government is not a party in no way undermines or alters
   Atlas Roofing’s holding that a case where the Government sues in its
   sovereign capacity to enforce a statutory right is a case involving “public
   rights.”39
             Because the bankruptcy trustee’s suit involved only private parties
   and not the Government, Granfinanciera’s analysis is solely concerned with
   whether the action was one of the “seemingly ‘private’ right[s]” that are

             36
                  Granfinanciera, 492 U.S. at 53 (citing Atlas Roofing, 430 U.S. at 458) (emphasis
   added).
             37
                  Id. at 53 (emphasis added).
             38
             Id. at 54 (citing Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 586,
   596–99 (1985)).
             39
                  Granfinanciera itself makes this clear when it states:
             The crucial question, in cases not involving the Federal Government, is
             whether “Congress, acting for a valid legislative purpose pursuant to its
             constitutional powers under Article I, [has] create[d] a seemingly ‘private’
             right that is so closely integrated into a public regulatory scheme as to be a
             matter appropriate for agency resolution with limited involvement by the
             Article III judiciary.” If a statutory right is not closely intertwined with a
             federal regulatory program Congress has power to enact, and if that right
             neither belongs to nor exists against the Federal Government, then it must
             be adjudicated by an Article III court.
   Id. at 54-55 (quoting Thomas, 473 U.S. at 593–94) (footnote omitted; emphasis added;
   bracketed alterations in original).

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   within the reach of the public-rights doctrine. Thus, any considerations or
   requirements discussed in Granfinanciera that go beyond Atlas Roofing or
   Crowell apply only to cases not involving the Government.
          This understanding of Granfinanciera is supported by our subsequent
   decision in Austin, which stated:
          Although the definition is somewhat nebulous, at a minimum,
          suits involving public rights are those “which arise between the
          Government and persons subject to its authority in connection
          with the performance of the constitutional functions of the
          executive or legislative departments.” Crowell v. Benson, 285
          U.S. 22, 50, 52 S. Ct. 285, 292, 76 L.Ed. 598 (1932). Beyond
          that, certain other cases are said to involve public rights where
          Congress has created a “seemingly ‘private’ right that is so
          closely integrated into a public regulatory scheme as to be a
          matter appropriate for agency resolution with limited
          involvement by the Article III judiciary.” Granfinanciera, 492
          U.S. at 54 . . . .40
   Similarly, while Oil States acknowledged that Crowell did not provide the sole
   definition of what constitutes a “public right,” it did not discuss any of the
   other “formulations” because Crowell’s definition was met.41
          The majority overlooks the fact that Granfinanciera’s expansion of the
   public-rights doctrine applies only when the Government is not a party to the
   case. As a result, the majority applies “considerations” that have no
   relevance here. For example, the majority, quoting Granfinanciera, states
   that “jury trials would not ‘go far to dismantle the statutory scheme’ or
   ‘impede swift resolution’ of statutory claims.” Again, Granfinanciera
   discussed these considerations in the context of a suit between private

          40
               Austin, 994 F.2d at 1177 (emphasis added).
          41
               Oil States, 138 S. Ct. at 1373.

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   persons, not a case involving the Government acting in its sovereign capacity
   under an otherwise valid statute creating enforceable public rights. 42 Indeed,
   neither Austin nor Oil States, both of which were decided after Granfinanciera
   and which found public rights to exist, mentions these considerations.43
           The majority also states that the securities statutes at issue created
   causes of action that “reflect” and “echo” common-law fraud. But this does
   not matter, because, as Granfinanciera itself recognized, the public-rights
   doctrine allows Congress to “fashion causes of action that are closely
   analogous to common-law claims and place them beyond the ambit of the
   Seventh Amendment by assigning their resolution to a forum in which jury
   trials are unavailable.”44
           The majority asserts that Atlas Roofing is distinguishable from the
   SEC’s enforcement action because “OSHA empowered the government to
   pursue civil penalties regardless of whether any employe[e]s were ‘actually
   injured or killed as a result of the [unsafe working] condition.’” 45 But the
   securities statutes share this feature: The SEC may impose civil penalties on

           42
                Granfinanciera, 492 U.S. at 61, 63.
           43
              The same goes for the out-of-circuit decisions cited in footnote 20 above. Atlas
   Roofing, in a footnote, does make a passing reference to “go far to dismantle the statutory
   scheme.” 430 U.S. at 454 n.11. But the Court was merely describing its reasoning in another
   bankruptcy case. Nothing in Atlas Roofing suggests that this consideration is relevant to
   whether Congress may assign the Government’s enforcement action to an administrative
   proceeding lacking a jury.
           44
              Granfinanciera, 492 U.S. at 52 (citations omitted); see also id. at 53 (“Congress
   may effectively supplant a common-law cause of action carrying with it a right to a jury trial
   with a statutory cause of action shorn of a jury trial right if that statutory cause of action
   inheres in, or lies against, the Federal Government in its sovereign capacity.” (citing Atlas
   Roofing, 430 U.S. at 458)); accord Crude Co., 135 F.3d at 1455 (“The public right at issue is
   not converted into a common law tort simply because the theory of liability underlying the
   enforcement action is analogous to a common law tort theory of vicarious liability.”).
           45
                Majority Op. at 17–18 (quoting Atlas Roofing, 430 U.S. at 445).

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                                            No. 20-61007

   a person who makes a material misrepresentation even if no harm resulted
   from the misrepresentation.46 The statutory cause of action created by the
   securities statutes is as “new” to the common law as the one created by
   OSHA.47
           Relatedly, the majority harps on the fact that federal courts have dealt
   with actions under the securities statutes for decades. But Oil States makes
   clear that “[h]istorical practice is not decisive here.” 48 “That Congress
   chose the courts in the past does not foreclose its choice of [an administrative
   adjudication] today.”49
           The majority also states that “securities-fraud enforcement actions
   are not the sort that are uniquely suited for agency adjudication.” Again, this
   is not relevant. As Oil States explained, “the public-rights doctrine applies to
   matters ‘arising between the government and others, which from their nature

           46
                See 15 U.S.C. §§ 78u-2(c), 77h-1(g)(1), 80a-9(d)(3), 80b-3(i)(3).
           47
              Atlas Roofing recognized that, before (and after) OSHA, a person injured by an
   unsafe workplace condition may have an action at common law for negligence. See Atlas
   Roofing, 430 U.S. at 445. Through OSHA, specific safety standards were promulgated, and
   the Government could bring an enforcement action for a violation even if no one was
   harmed by the violation. Id. Similarly, before enactment of the securities statutes, an
   investor who was defrauded in the course of a securities transaction had a common-law
   action for fraud. Like OSHA, the securities statutes expressly prohibited certain conduct
   and empowered the SEC to bring an enforcement action for a violation, even if no one was
   actually harmed by the violation.
           48
                138 S. Ct. at 1378.
           49
             Id. Oil States likewise refutes the majority’s assertion that “[t]he inquiry is thus
   inherently historical.” I add that the majority’s support for this proposition consists of a
   concurring opinion in Granfinanciera and the plurality opinion in Northern Pipeline
   Construction Co. v. Marathon Pipeline Co., 458 U.S. 50 (1982) (plurality), which addressed
   whether a bankruptcy court may decide a breach of contract action between two private
   parties.

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   do not require judicial determination and yet are susceptible of it.’”50 Indeed,
   “matters governed by the public-rights doctrine ‘from their nature’ can be
   resolved in multiple ways.”51
           Finally, it should be emphasized that Tull v. United States52 does not
   control the outcome here. That case concerned the Government’s suit in
   district court seeking civil penalties and an injunction for violations of the
   Clean Water Act.53 Tull did not involve an administrative proceeding. Thus,
   while Tull concluded that the Government’s claim was analogous to a “Suit
   at common law” for Seventh Amendment purposes,54 the Court did not
   engage in the “quite distinct inquiry” into whether the claim was also a
   “public right” that Congress may assign to a non-Article III forum where
   juries are unavailable.55 Tull itself acknowledges in a footnote prior decisions
   “holding that the Seventh Amendment is not applicable to administrative
   proceedings,” making clear that it was not deciding whether the defendant
   would be entitled to a jury in an administrative adjudication. 56
                                                   C.
           In summary, the SEC’s enforcement action against Petitioners for
   violations of the securities laws is a “public right” under Supreme Court
   precedent as well as our own. Accordingly, Congress could and did validly

           50
                Id. at 1373 (citing Crowell, 285 U.S. at 50) (emphasis added).
           51
                Id. at 1378 (quoting Ex parte Bakelite Corp., 279 U.S. at 451).
           52
                481 U.S. 412 (1987).
           53
                Id. at 414–15.
           54
                Id. at 425.
           55
                Granfinanciera, 492 U.S. at 42 n.4; accord Sasser, 990 F.2d at 130.
           56
             Tull, 481 U.S. at 418 n.4 (citing Atlas Roofing, 430 U.S. at 454; Pernell v. Southall
   Realty, 416 U.S. 363, 383 (1974)).

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   assign adjudication of that action to an administrative forum where the
   Seventh Amendment does not require a jury.
                                                 II.
          I also disagree with the majority’s alternative holding that Congress
   exceeded its power by giving the SEC the authority to choose to bring its
   enforcement action in either an agency proceeding without a jury or to a court
   with a jury. The majority reasons that giving the SEC this power without
   providing guidelines on the use of that power violates Article I by delegating
   its legislative authority to the agency. The majority’s position runs counter
   to Supreme Court precedent. As set forth below, by authorizing the SEC to
   bring enforcement actions either in federal court or in agency proceedings,
   Congress fulfilled its legislative duty.
          In support of its determination that Congress unconstitutionally
   delegated its authority to the SEC, the majority relies on Crowell v. Benson,
   wherein the Supreme Court explained that “the mode of determining” cases
   involving public rights “is completely within congressional control.” 57
   Crowell did not state that Congress cannot authorize that a case involving
   public rights may be determined in either of two ways. By passing Dodd-
   Frank § 929P(a), Congress established that SEC enforcement actions can be
   brought in Article III courts or in administrative proceedings. In doing so,
   Congress fulfilled its duty of controlling the mode of determining public
   rights cases asserted by the SEC.
          The majority maintains that because the SEC has “the power to
   decide which defendants should receive certain legal processes (those
   accompanying Article III proceedings) and which should not,” then such a

          57
               285 U.S. at 50 (quoting Ex parte Bakelite Corp., 279 U.S. at 451).

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   decision falls under Congress’s legislative power. The Supreme Court’s
   decision in United States v. Batchelder58 demonstrates that the majority’s
   position on this issue is incorrect.
          In Batchelder, the issue presented was whether it was constitutional for
   Congress to allow the Government, when prosecuting a defendant, to choose
   between two criminal statutes that “provide[d] different penalties for
   essentially the same conduct.”59 The defendant had been convicted under
   the statute with the higher sentencing range, and the Court of Appeals
   determined that the delegation of authority to prosecutors to decide between
   the two statutes, and thus choose a higher sentencing range for identical
   conduct, was a violation of due process and the nondelegation doctrine. 60
   Specifically, the Court of Appeals determined that “such prosecutorial
   discretion could produce ‘unequal justice’” and that it might be
   “impermissibl[e] [to] delegate to the Executive Branch the Legislature’s
   responsibility to fix criminal penalties.”61
          The Supreme Court disagreed. The Court explained that “[t]he
   provisions at issue plainly demarcate the range of penalties that prosecutors
   and judges may seek and impose.”62 The Court further stated: “In light of
   that specificity, the power that Congress has delegated to those officials is no
   broader than the authority they routinely exercise in enforcing the criminal
   laws.”63 The Court concluded: “Having informed the courts, prosecutors,

          58
               442 U.S. 114 (1979).
          59
               Id. at 116.
          60
               Id. at 123, 125–26.
          61
               Id. at 125–26.
          62
               Id. at 126.
          63
               Id.

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   and defendants of the permissible punishment alternatives available under
   each Title, Congress has fulfilled its duty.”64
           The Supreme Court has analogized agency enforcement decisions to
   prosecutorial discretion exercised in criminal cases.65 If the Government’s
   prosecutorial authority to decide between two criminal statutes that provide
   for different sentencing ranges for essentially the same conduct does not
   violate the nondelegation doctrine, then surely the SEC’s authority to decide
   between two forums that provide different legal processes does not violate
   the nondelegation doctrine. Thus, the SEC’s forum-selection authority is
   part and parcel of its prosecutorial authority.66
           Although no other circuit court appears to have addressed the
   particular nondelegation issue presented in this case, a district court did so in
   Hill v. SEC.67 Like the majority does here, the plaintiff in Hill relied on I.N.S.
   v. Chadha68 to assert that the SEC’s choice of forum is a legislative action
   because it “alter[s] the rights, duties, and legal relations of individuals.” 69
   Chadha addressed the question whether a provision in the Immigration and

           64
                Id. (citation omitted).
           65
              See Heckler v. Chaney, 470 U.S. 821, 832 (1985) (“[W]e recognize that an
   agency’s refusal to institute proceedings shares to some extent the characteristics of the
   decision of a prosecutor in the Executive Branch not to indict—a decision which has long
   been regarded as the special province of the Executive Branch . . . .”).
           66
            Cf. SEC v. Chenery Corp., 332 U.S. 194, 203 (1947) (“[T]he choice made between
   proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the
   informed discretion of the administrative agency.”) (citation omitted).
           67
              114 F. Supp. 3d 1297 (N.D. Ga. 2015) (holding that SEC’s forum-selection
   authority does not violate the nondelegation doctrine), vacated and remanded on other
   grounds, 825 F.3d 1236 (11th Cir. 2016).
           68
                462 U.S. 919 (1983).
           69
                Hill, 114 F. Supp. 3d at 1312 (quoting Chadha, 462 U.S. at 952).

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   Nationality Act (INA) allowing one House of Congress to veto the Attorney
   General’s decision to allow a particular deportable alien to remain in the
   United States violated the Presentment Clauses and bicameral requirement
   of Article I.70 Specifically, it addressed whether Congress, after validly
   delegating authority to the Executive, can then alter or revoke that valid
   delegation of authority through the action of just one House.
          I agree with the district court in Hill that if Chadha’s definition of
   legislative action is interpreted broadly and out of context, then any SEC
   decision which affected a person’s legal rights—including charging
   decisions—would be legislative actions, which is contrary to the Supreme
   Court’s decision in Batchelder.71 Chadha, one of the primary authorities the
   majority relies on, does not touch on any issue involved in this case.
          I agree with the persuasive and well-reasoned decision of the district
   court in Hill that “Congress has properly delegated power to the executive
   branch to make the forum choice for the underlying SEC enforcement
   action.”72 In sum, it is clear to me that Congress’s decision to give
   prosecutorial authority to the SEC to choose between an Article III court and
   an administrative proceeding for its enforcement actions does not violate the
   nondelegation doctrine.
                                                III.
          Finally, the majority concludes that the statutory removal restrictions
   applicable to SEC administrative law judges are unconstitutional because
   they violate Article II’s requirement that the President “take Care that the

          70
               462 U.S. at 923, 946.
          71
               Hill, 114 F. Supp. 3d at 1313.
          72
               Id.

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   Laws be faithfully executed.” Specifically, the majority determines that SEC
   ALJs enjoy at least two layers of for-cause protection, and that such insulation
   from the President’s removal power is unconstitutional in light of the
   Supreme Court’s decisions in Free Enterprise Fund v. Public Company
   Accounting Oversight Board73 and Lucia v. SEC.74 I disagree. Rather than
   support the majority’s conclusion, these cases explain why the SEC ALJs’
   tenure protections are constitutional: ALJs perform an adjudicative function.
          Free Enterprise concerned the Public Company Accounting Oversight
   Board (“PCAOB”), which Congress created in 2002 to regulate the
   accounting industry.75 The PCAOB’s powers included promulgating
   standards, inspecting accounting firms, initiating formal investigations and
   disciplinary proceedings, and issuing sanctions.76 In other words, PCAOB
   members were inferior officers who exercised “significant executive
   power.”77 The President could not remove the members of the PCAOB;
   rather, they could be removed by the Securities and Exchange Commission
   under certain, limited circumstances.78 Furthermore, SEC Commissioners
   cannot themselves be removed by the President except for inefficiency,
   neglect of duty, or malfeasance in office.79 While prior cases upheld
   restrictions on the President’s removal power that imposed one level of
   protected tenure, Free Enterprise held that these dual for-cause limitations on

          73
               561 U.S. 477 (2010).
          74
               138 S. Ct. 2044 (2018).
          75
               Id. at 484-85.
          76
               Id. at 485.
          77
               Id. at 514.
          78
               Id. at 486, 503.
          79
               Id. at 487.

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   the removal of PCAOB members unconstitutionally impaired the President’s
   ability to ensure that the laws are faithfully executed, because “[n]either the
   President, nor anyone directly responsible to him, nor even an officer whose
   conduct he may review only for good cause, has full control over the
   [PCAOB].”80
          Free Enterprise, however, “did not broadly declare all two-level for-
   cause protections for inferior officers unconstitutional.”81 Furthermore, the
   Court expressly declined to address “that subset of independent agency
   employees who serve as administrative law judges.” 82 The Court made two
   observations about ALJs that potentially distinguished them from the
   PCAOB: (1) whether ALJs are “Officers of the United States” was, at that
   time, a disputed question, and (2) “unlike members of the [PCAOB], many
   administrative law judges of course perform adjudicative rather than
   enforcement or policymaking functions or possess purely recommendatory
   powers.”83
          The Supreme Court subsequently addressed the first observation in
   Lucia v. SEC.84 There, the Court held that SEC ALJs are “inferior officers”
   within the meaning of the Appointments Clause in Article II.85 However, the
   Court again expressly declined to decide whether multiple layers of statutory
   removal restrictions on SEC ALJs violate Article II.86

          80
               Id. at 496.
          81
               Decker Coal Co. v. Pehringer, 8 F.4th 1123, 1122 (9th Cir. 2021).
          82
               Free Enter. Fund, 516 U.S. at 507 n.10.
          83
               Id. (citations omitted; emphasis added).
          84
               138 S. Ct. 2044 (2018).
          85
               Id. at 2055.
          86
               Id. at 2051 & n.1.

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             Thus, neither Free Enterprise nor Lucia decided the issue raised here:
   whether multiple layers of removal restrictions for SEC ALJs violate Article
   II. As the Ninth Circuit recently concluded, the question is open. 87
             It is important to recognize that the Constitution does not expressly
   prohibit removal protections for “Officers of the United States.”88 The
   concept that such protections may be unconstitutional is drawn from the fact
   that “Article II vests ‘[t]he executive Power . . . in a President of the United
   States of America,’ who must ‘take Care that the Laws be faithfully
   executed.’”89 The test is functional, not categorical:
             The analysis contained in our removal cases is designed not to
             define rigid categories of those officials who may or may not be
             removed at will by the President, but to ensure that Congress
             does not interfere with the President’s exercise of the
             “executive power” and his constitutionally appointed duty to
             “take care that the laws be faithfully executed” under Article
             II.90
             Consistent with this standard, Free Enterprise thoroughly explained
   why two levels of removal protection for the PCAOB interfered with the
   executive power.91 The first step in the Court’s analysis focused on the fact
   that the PCAOB exercised “significant executive power” 92 as it

             87
                  See Decker Coal Co., 8 F.4th at 1122.
             88
              ERWIN CHEMERINSKY, CONSTITUTIONAL LAW § 4.2 (5th ed. 2015) (“No
   constitutional provision addresses the [President’s] removal power.”).
             89
                  Free Enter. Fund, 561 U.S. at 483 (quoting U.S. CONST. , art. II §§ 1 & 3).
             90
                  Morrison v. Olson, 487 U.S. 654, 689–90 (1988) (footnote omitted; emphasis
   added).
             91
                  Free Enter. Fund, 561 U.S. at 495–96.
             92
                  Id. at 514.

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   “determine[d] the policy and enforce[d] the laws of the United States.” 93
   Then the Court explained how the PCAOB’s removal protections subverted
   the President’s ability to oversee this power.94 The point here is that the
   function performed by the officer is critical to the analysis—the Court did
   not simply conclude that because members of the PCAOB were “Officers of
   the United States” (which was undisputed)95 that dual for-cause protections
   were unconstitutional.
           Unlike the PCAOB members who determine policy and enforce laws,
   SEC ALJs perform solely adjudicative functions. As the Lucia Court stated,
   “an SEC ALJ exercises authority ‘comparable to’ that of a federal district
   judge conducting a bench trial.”96 Their powers include supervising
   discovery, issuing subpoenas, deciding motions, ruling on the admissibility of
   evidence, hearing and examining witnesses, generally regulating the course
   of the proceeding, and imposing sanctions for contemptuous conduct or
   procedural violations.97 After a hearing, the ALJ issues an initial decision that
   is subject to review by the Commission. 98 Commentators have similarly
   observed that “SEC ALJs do not engage in enforcement or rulemaking”99

           93
             Id. at 484; see also id. at 508 (describing the PCAOB as “the regulator of first
   resort and the primary law enforcement authority for a vital sector of our economy”).
           94
                Id. at 498.
           95
                Id. at 506.
           96
                Lucia, 138 S. Ct. at 2049 (quoting Butz v. Economou, 438 U.S. 478, 513 (1978)).
           97
                Id.
           98
                Id.
           99
                Mark, supra, at 107.

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   and proceedings before them are “analogous to that which would occur
   before a federal judge.”100
             Free Enterprise stated, albeit in dicta, that the fact that an ALJ performs
   adjudicative rather than enforcement or policymaking functions may justify
   multiples layers of removal protection.101 I believe this to be the case. The
   ALJs’ role is similar to that of a federal judge; 102 it is not central to the
   functioning of the Executive Branch for purposes of the Article II removal
   precedents.103 As the Southern District of New York concluded, invalidating
   the “good cause” removal restrictions enjoyed by SEC ALJs would only
   “undermine the ALJs’ clear adjudicatory role and their ability to ‘exercise[ ]
   . . . independent judgment on the evidence before [them], free from pressures
   by the parties or other officials within the agency.’”104
             In fact, the Ninth Circuit recently employed similar reasoning in
   Decker Coal Co. v. Pehringer, which held that two layers of removal protection
   for ALJs in the Department of Labor do not violate Article II.105 Like SEC
   ALJs, the ALJs in Decker Coal performed “a purely adjudicatory

             100
                   David Zaring, Enforcement Discretion at the SEC, 94 Tex. L. Rev. 1155, 1166
   (2016).
             101
                   561 U.S. at 507 n.10.
             102
                   Lucia, 138 S. Ct. at 2049.
             103
              Free Enter. Fund v. Public Co. Accounting Oversight Bd., 537 F.3d 667, 669 (D.C.
   Cir. 2008) (Kavanaugh, J., dissenting) (citing Morrison, 487 U.S. at 691–92).
             104
              Duka v. SEC, 103 F. Supp. 3d 382, 395–96 (S.D.N.Y. 2015), abrogated on other
   grounds by Tilton v. SEC, 824 F.3d 276 (2d Cir. 2016) (quoting Butz, 438 U.S. at 513–14).
   See also Mark, supra, at 102–08 (arguing that multiple layers of removal protection for SEC
   ALJs do not violate Article II); Zaring, supra, at 1191–95 (same).
             105
                   Decker Coal Co., 8 F.4th at 1133.

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   function.”106 The majority’s decision is in tension, if not direct conflict, with
   Decker Coal.
          Free        Enterprise    also    noted        that    the   exercise   of   “purely
   recommendatory powers” may justify multiple removal protections.107
   When an SEC ALJ issues a decision in an enforcement proceeding, that
   decision is essentially a recommendation as the Commission can review it de
   novo.108 Even when the Commission declines review, the ALJ’s decision is
   “deemed the action of the Commission.” 109 Furthermore, the Commission
   is not required to use an ALJ and may elect to preside over the enforcement
   action itself.110 This further supports the conclusion that the SEC ALJs’
   removal protections do not interfere with the President’s executive power.
          The majority reasons that because Lucia determined that SEC ALJs
   are inferior officers under the Appointments Clause, “they are sufficiently
   important to executing the laws that the Constitution requires that the
   President be able to exercise authority over their functions,” and,
   consequently, multiple for-cause protections inhibit the President’s ability to
   take care that the laws be faithfully executed. But nowhere does the majority
   explain how the ALJs’ tenure protections interfere with the President’s
   ability to execute the laws. The majority does not mention Free Enterprise’s
   observation that the performance of “adjudicative rather than enforcement
   or policymaking functions” or “possess[ing] purely recommendatory
   powers” distinguishes ALJs from the PCAOB and may justify multiples

          106
                Id.
          107
                Free Enter. Fund, 561 U.S. at 507 n.10.
          108
                See Lucia, 138 S. Ct. at 2049 (citing 17 C.F.R. § 201.360(d)); 5 U.S.C. § 557(b).
          109
                Lucia, 138 S. Ct. at 2049 (quoting 15 U.S.C. § 78d-1(c)).
          110
                Id. (citing 17 C.F.R. § 201.110).

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   layers of removal protection for ALJs.111 The majority does not mention that
   Lucia found SEC ALJs to be similar to a federal judge.112 The majority does
   not mention Decker Coal. Instead, the majority applies what is essentially a
   rigid, categorical standard, not the functional analysis required by the
   Supreme Court’s precedents.113
           Accordingly, I disagree with the majority that multiple layers of
   removal protection for SEC ALJs violate Article II. Because SEC ALJs solely
   perform an adjudicative function, and because their powers are
   recommendatory, these removal restrictions do not interfere with the
   President’s ability to “take Care that the Laws be faithfully executed.”
                                              IV.
           I find no constitutional violations or any other errors with the
   administrative proceedings below. Accordingly, I would deny the petition for
   review.

           111
                 561 U.S. at 507 n.10.
           112
                 138 S. Ct. at 2049.
           113
             Morrison, 487 U.S. at 689–90. The majority also cites Myers v. United States, 272
   U.S. 52, 135 (1926), for the proposition that quasi-judicial executive officers must be
   removable by the President. But that part of Myers is dicta, which is why the Court
   disregarded it in Humphrey’s Executor v. United States, 295 U.S. 602, 626–28 (1935).

                                               54