Court Opinion

ID: 9373798
Source: CourtListenerOpinion
Date Created: 2023-02-22 16:07:28.952557+00
Date Added: 2024-06-11T17:16:43.684870
License: Public Domain

UNITED STATES OF AMERICA
                        MERIT SYSTEMS PROTECTION BOARD

     RORY C. FLYNN,                                  DOCKET NUMBER
                         Appellant,                  DC-1221-14-1124-M-4

                  v.

     SECURITIES AND EXCHANGE                         DATE: March 31, 2022
       COMMISSION,
                   Agency.

                  THIS ORDER IS NONPRECEDENTIAL 1

           Bruce M. Bettigole, Washington, D.C., for the appellant.

           James V. Blair, and Laura Walker, Washington, D.C., for the agency.

                                           BEFORE

                               Raymond A. Limon, Vice Chair
                                 Tristan L. Leavitt, Member

                                           ORDER

¶1         This appeal is before us on the administrative judge’s April 23, 2019 order
     certifying for interlocutory review his order addressing the appellant’s claims
     under the Appointments Clause and separation of powers provisions of the
     U.S. Constitution. We VACATE the administrative judge’s ruling and RETURN

     1
        A nonprecedential order is one that the Board has determined does not add
     significantly to the body of MSPB case law. Parties may cite nonprecedential orders,
     but such orders have no precedential value; the Board and administrative judges are not
     required to follow or distinguish them in any future decisions. In contrast, a
     precedential decision issued as an Opinion and Order has been identified by the Board
     as significantly contributing to the Board’s case law. See 5 C.F.R. § 1201.117(c).
                                                                                       2

     this case to the regional office for further adjudication before a different
     administrative judge consistent with this decision.

                                      BACKGROUND
¶2        The appellant first filed his individual right of action appeal with the Board
     in September 2014, after exhausting his administrative remedies with the Office
     of Special Counsel. In his appeal, he alleged that the agency terminated him in
     May 2013, from his position as an Associate General Counsel in retaliation for
     whistleblowing.   Flynn v. Securities & Exchange Commission, MSPB Docket
     No. DC-1221-14-1124-W-1, Appeal File (W-1 AF), Tab 1.            After the parties
     engaged in extensive discovery over several months, the assigned administrative
     judge held the appellant’s requested hearing over the course of 3 days in May and
     July 2015.    The administrative judge issued an initial decision denying the
     appellant’s request for corrective action.    W-1 AF, Tab 128, Initial Decision
     (July 30, 2015). The appellant filed a petition for review of the initial decision,
     but the two Board members could not agree on the disposition of the petition and
     the initial decision therefore became the final decision of the Board. W -1 AF,
     Tab 12, Order (Sept. 1, 2016).
¶3        The appellant then sought review of the Board’s final decision i n the
     U.S. Court of Appeals for the Fourth Circuit.           In December 2017, the
     Fourth Circuit issued a decision remanding the case to the Board for further
     consideration. The court agreed with the Board that the appellant’s disclosures
     alleging violations of the agency’s Rule 900(a) were not protected, but it found
     that the Board failed to fully consider whether the appellant made protected
     disclosures alleging violations of Rule 900(b). Flynn v. Securities & Exchange
     Commission, 877 F.3d 200, 205-08 (4th Cir. 2017). Rather than evaluating those
     additional disclosures itself in the first instance, the court remanded the case to
     the Board in order for the administrative judge to interpret the evidence after
     further development of the record, if necessary.
                                                                                              3

¶4         In February 2018, after the case had returned to the Board, the appellant
     moved to vacate the administrative judge’s prior decision based on violatio ns of
     the   Appointments     Clause    and   separation    of    powers   provisions    of   the
     U.S. Constitution. Flynn v. Securities & Exchange Commission, MSPB Docket
     No. DC-1221-14-1124-M-1, Appeal File (M-1 AF), Tab 2.                He noted that the
     U.S. Supreme Court had granted certiorari in January 2018, in Lucia v. Securities
     & Exchange Commission, 138 S. Ct. 736 (Jan. 12, 2018), to address whether
     administrative law judges (ALJs) of the Securities & Exchange Commission
     (SEC) are Officers of the United States who must be appointed in accordance
     with the Appointments Clause.            The appellant argued that the Board’s
     administrative judges, like SEC ALJs, are Officers of the United States whose
     appointments were not made in accordance with the Appointments Clause. 2 To
     remedy the alleged Appointments Clause violation, the appellant asked that a
     Board member adjudicate his appeal de novo. 3             M-1 AF, Tab 2 at 5-9.        The
     appellant also argued that the prior Board decision was void because the
     administrative judge who decided his case was insulated from removal by
     multiple layers of for-cause protection. Id. at 9-10.
¶5         The remanded appeal was assigned to the same administrative judge who
     decided the initial appeal.     In March 2018, he dismissed the appeal without
     prejudice pending the Supreme Court’s decision in Lucia. M-1 AF, Tab 7, Initial
     Decision (Mar. 12, 2018). In June 2018, just after the Supreme Court decided
     Lucia, the administrative judge dismissed the appeal a second time “to allow time
     to further refine the issues and determine the proper scope of inquiry and action
     2
       Under the Appointments Clause, the President “shall nominate, and by and with the
     Advice and Consent of the Senate, shall appoint . . . Officers of the United States . . .
     but the Congress may by Law vest the Appointment of such inf erior Officers, as they
     think proper, in the President alone, in the Courts of Law, or in the Heads of
     Departments.” U.S. Const. art. II, § 2, cl. 2.
     3
       Members of the Board are appointed by the President with the advice and consent of
     the Senate, 5 U.S.C. § 1201, and therefore there is no dispute as to the validity of their
     appointment.
                                                                                          4

     by the Board.”     Flynn v. Securities & Exchange Commission, MSPB Docket
     No. DC-1221-14-1124-M-2, Appeal File (M-2 AF), Tab 3, Initial Decision
     (June 29, 2018).    He dismissed the appeal without prejudice a third time in
     October 2018.      Flynn v. Securities & Exchange Commission, MSPB Docket
     No. DC-1221-14-1124-M-3, Appeal File (M-3 AF), Tab 2, Initial Decision
     (Oct. 2, 2018). Later in October 2018, the appeal was refiled and reassigned to a
     new administrative judge. Flynn v. Securities & Exchange Commission, MSPB
     Docket No. DC-1221-14-1124-M-4, Appeal File (M-4 AF), Tab 2.
¶6         In response to the appellant’s constitutional arguments, the agency argued
     in part that the appellant had waived those arguments by failing to raise them in
     his initial appeal before the administrative judge or in his petition for rev iew to
     the Board. M-2 AF, Tab 5; M-3 AF, Tab 5. In April 2019, the newly assigned
     administrative judge issued an Order and Certification for Interlocutory Appeal
     holding that (1) the appellant’s constitutional claims were properly before the
     Board, (2) the Board’s administrative judges are Officers of the United States
     whose appointments did not comply with the Appointments Clause, and (3) the
     Board lacks authority to address the appellant’s separation-of-powers argument
     because doing so would require the Board to adjudicate the constitutionality of a
     statute. M-4 AF, Tab 9. The administrative judge stayed all further proceedings
     pending the Board’s resolution of this interlocutory appeal. 4

                                          ANALYSIS
¶7         An administrative judge will certify a ruling for interlocutory review if the
     ruling involves an important question of law or policy about which there is
     substantial ground for difference of opinion and an immediate ruling will

     4
       While this matter was pending before the Board on interlocutory review, the appellant
     filed several pleadings citing additional legal authority regarding the constitutional
     claims raised in this appeal. M-4 AF, Tabs 12-18. In reaching our decision in this
     matter, we have considered the relevant legal authorities, including but not limited to
     those cited in the appellant’s additional pleadings.
                                                                                       5

     materially advance the completing of the proceeding, or the denial of an
     immediate ruling will cause undue harm to a party or the public.        Cooper v.
     Department of the Navy, 98 M.S.P.R. 683, ¶ 5 (2005), review dismissed sub nom.
     Weaver v. Department of the Navy, 197 F. App’x 936 (Fed. Cir. 2006); 5 C.F.R.
     § 1201.92. In light of the lack of guidance regarding the impact of the Lucia
     decision on the Board, we find that certification was proper.

     The law of the case doctrine applies to those claims that were not the subject of
     the remand.
¶8        As noted above, although the Fourth Circuit remanded this appeal to the
     Board for further consideration of the appellant’s Rule 900(b) disclosures, the
     court agreed with the Board that the appellant’ s Rule 900(a) disclosures were not
     protected. Under the law of the case doctrine, a tribunal will not consider issues
     that have already been decided in an appeal, unless there is new and material
     evidence adduced at a subsequent trial, controlling authori ty has made a contrary
     decision of law, or the prior decision was clearly erroneous and would work a
     manifest injustice. Doe v. Department of Justice, 121 M.S.P.R. 596, ¶ 7 (2014).
     We find that the law of the case doctrine prevents relitigation of the appellant’s
     claims arising out of his Rule 900(a) disclosures. Therefore, consistent with the
     Fourth Circuit’s instructions, proceedings on remand are limited to the appellant’s
     Rule 900(b) disclosures.

     The appellant’s Appointments Clause claim is now moot.
¶9        In Lucia, the Supreme Court held that SEC ALJs qualify as Officers of the
     United States subject to the Appointments Clause, rather than as mere employees.
     Lucia v. Securities & Exchange Commission, 138 S. Ct. 2044, 2049, 2052-55
     (2018). Because SEC’s ALJs were appointed by SEC staff members rather than
     the Commission itself, the Court held that the appointment of those ALJs violated
     the Appointments Clause. Id. at 2050-51. The Court further held that because
     Lucia had made a timely challenge to the constitutional validity of the
     appointment of the ALJ who adjudicated his case, he was entitled to relief in the
                                                                                         6

      form of a new hearing before a different, properly appointed official.            Id.
      at 2055. 5
¶10           The Court in Lucia did not specifically define what constitutes a timely
      challenge to an appointment. Id. There is an issue as to the timeliness of the
      Appointments Clause claim in this case. See McClenning v. Department of the
      Army, 2022 MSPB 3, ¶¶ 5-15 (2022) (holding that, in order to be timely, an
      Appointments Clause claim must be raised before the close of the record before
      the administrative judge). Here, the appellant failed to raise his Appointments
      Clause claim before the administrative judge in his initial appeal, in his petition
      for review to the Board, or in his appeal to the Fourth Circuit. It was only after
      the Fourth Circuit had remanded the appeal to the Board for further adjudication
      of certain claims that the appellant raised the Appointments Clause for the first
      time. However, we find that we need not resolve the timeliness question because
      the appellant’s Appointments Clause claim as to the claims remanded by the
      Fourth Circuit is moot.
¶11           The Court in Lucia held that the remedy for an Appointments Clause
      violation “is a new ‘hearing before a properly appointed’ official.”          Lucia,
      138 S. Ct. at 2055 (quoting Ryder v. United States, 515 U.S. 177, 182-83 (1995)).
      Here, all of the Board’s administrative judges have now received appointments
      ratified by the head of the agency, thereby satisfying the requirements of the
      Appointments Clause.        See U.S. Merit Systems Protection Board Ratification
      Order        (Mar.   4,   2022),   https://www.mspb.gov/foia/files/AJ_Ratification_
      Order_3-4-2022.pdf. The Ratification Order is a public document, of which we
      take administrative notice. Id.; see Azdell v. Office of Personnel Management ,
      88 M.S.P.R. 319, 323 (2001). That document is also now a part of the record

      5
       The holding in Lucia applied only to SEC ALJs and therefore did not directly address
      whether the Board’s method of appointing administrative judges violated the
      Appointments Clause. For the reasons set forth herein, we need not resolve that
      question here.
                                                                                               7

      before the Board.        M-4 AF, Tab 19.          In order to avoid any additional
      Appointments Clause issues, we direct the regional office to assign the appeal to
      a properly appointed official other than either the administrative judge who issued
      the first initial decision or the administrative judge who certified the interlocutory
      appeal. See Lucia, 138 S. Ct. at 2055. 6 Thus, the appellant has received all the
      relief the Board can provide as to his Appointments Clause claim and that issue is
      now moot.     See Milner v. U.S. Postal Service, 118 M.S.P.R. 600, ¶ 4 (2012)
      (holding that an issue is moot when there is no effective relief that the Board can
      provide).

      The Board lacks authority to adjudicate the appellant’s separation of powers
      claim.
¶12         We agree with the administrative judge that the Board is unable to
      adjudicate the appellant’s argument that the removal protections provided by
      statute to Board members and other Board officials, including administrative
      judges, violates constitutional separation-of-powers principles.          See Malone v.
      Department of Justice, 14 M.S.P.R. 403, 406 (1983) (declining to address the
      constitutionality of a statute relating to veterans preference). An administrative

      6
        Arguably, either of those administrative judges could properly adjudicate the appeal
      now that they have received proper appointments. The Court in Lucia held that the
      official who heard the case after remand could not be the same one who already heard
      the case and issued an initial decision on the merits, even if he were to receive a proper
      appointment, because “[h]e cannot be expected to consider the matter as though he had
      not adjudicated it before.” Lucia, 138 S. Ct. at 2055. This logic would not apply to the
      administrative judge who certified the interlocutory appeal as he has not expressed a
      view on the merits of the appeal. The Court in Lucia further indicated that it was
      especially important to have a different ALJ adjudicate the case on remand when the
      Appointments Clause issue was the only basis for remand and thus “the old judge would
      have no reason to think he did anything wrong on the merits . . . and so could be
      expected to reach all the same judgments.” Id. at 2055 n.5. Here, by contrast, even if
      we returned the case to the administrative judge who issued the first initial decision, the
      Fourth Circuit’s decision would preclude him from simply issuing the same decision a
      second time. Nevertheless, we find it appropriate to assign the appeal to a different
      administrative judge for further adjudication in order to avoid any further claim under
      the Appointments Clause.
                                                                                       8

      agency “has no authority to entertain a facial constitutional challenge to the
      validity of a law.” Jones Brothers, Inc. v. Secretary of Labor, 898 F.3d 669, 673
      (6th Cir. 2018). “Each of the three branches of the [F]ederal [G]overnment . . .
      has an independent obligation to interpret the Constitution[,] [b]ut only the
      Judiciary enjoys the power to invalidate statutes inconsistent with the
      Constitution.”   Id. at 674 (citing Marbury v. Madison, 5 U.S. (1 Cranch)
      137 (1803)). Should the appellant choose to seek judicial review of the Board’s
      final decision in this matter after remand, he would have an opportunity to
      present his separation of powers argument at that time.

                                           ORDER
¶13        Accordingly, we vacate the stay order issued in this proceeding and return
      the appeal to the regional office for further processing and adjudication before a
      different administrative judge consistent with this Order.

      FOR THE BOARD:                                    /s/ for
                                                Jennifer Everling
                                                Acting Clerk of the Board
      Washington, D.C.