Court Opinion

ID: 4468173
Source: CourtListenerOpinion
Date Created: 2019-12-30 17:00:32.302438+00
Date Added: 2024-06-11T08:48:41.301739
License: Public Domain

Case: 19-11969    Date Filed: 12/30/2019   Page: 1 of 7

                                                          [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 19-11969
                        Non-Argument Calendar
                      ________________________

                  D.C. Docket No. 1:19-cv-01014-WMR

CHRISTOPHER M. GIBSON,

                                              Plaintiff - Appellant,

versus

SECURITIES AND EXCHANGE COMMISSION,
CHAIRMAN OF THE SECURITIES AND EXCHANGE COMMISSION,
UNITED STATES ATTORNEY GENERAL,

                                              Defendants - Appellees.

                      ________________________

               Appeal from the United States District Court
                  for the Northern District of Georgia
                     ________________________

                            (December 30, 2019)

Before WILSON, ANDERSON and DUBINA, Circuit Judges.

PER CURIAM:
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      Appellant, Christopher M. Gibson, appeals the district court’s order denying

his motion for preliminary injunctive relief, requesting that the district court

preliminarily enjoin, based on constitutional grounds, the Securities and Exchange

Commission (“SEC”) from continuing an administrative proceeding against him.

Relying on circuit precedent, the district court determined that it lacked subject

matter jurisdiction over the case, denied the request for injunctive relief, and

dismissed Gibson’s complaint in its entirety. After reviewing the record and

reading the parties’ briefs, we affirm the district court’s order.

                                 I. BACKGROUND

      In 2016, the SEC instituted an administrative enforcement proceeding

against Gibson to determine whether he had violated the Securities and Exchange

Act by acting as an investment adviser to a private pooled investment fund. The

allegation was that in his role, Gibson had “engaged in a deceptive scheme to

front-run [the Fund’s] trades and benefit himself and those close to him at the

expense of the Fund and his other clients by exploiting the investment advice he

provided to the Fund.” See Order Instituting Administrative and Cease-and-Desist

Proceedings, at 9 (SEC Mar. 29, 2016) (Violations E. 54.),

https://go.usa.gov/xVA7g. An Administrative Law Judge (“ALJ”) held a hearing

and issued an initial decision adverse to Gibson. The SEC granted Gibson’s

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request to review that initial decision and ordered merits briefing. While Gibson’s

case was pending, the United States Solicitor General submitted a brief in the

Supreme Court in Lucia v. SEC, No. 17-130, agreeing with the petitioner’s

argument that the ALJ’s are inferior officers under the Appointments Clause who

must be appointed by the President, a Court of Law, or the Head of a Department,

such as the SEC. Because of this brief, the SEC issued an order that ratified the

previous appointments of its ALJs and remanded all pending administrative

proceedings, including Gibson’s case, to its ALJs. The ALJ assigned to Gibson’s

case ratified her earlier decision, and Gibson petitioned for SEC review.

      While Gibson’s petition for review was pending, the Supreme Court issued

its decision in Lucia v. SEC, ___ U.S. ___, 138 S. Ct. 2044 (2018), holding that the

SEC’s ALJs were inferior officers who had not been properly appointed at the time

of petitioner’s administrative proceeding. The Court’s remedy was a remand to the

agency for a new hearing before a properly appointed officer; however, the

properly appointed officer could not be the same officer who previously heard the

case. Id. at ___, 138 S. Ct. at 2055. Hence, the SEC remanded Gibson’s case for a

new hearing before a different, properly appointed, ALJ.

      Gibson filed an answer and raised several objections to the administrative

proceedings, such as (1) the proceedings violated the separation of powers, (2) the

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statutory restrictions on removing the SEC’s ALJs violated Article II, (3) the

SEC’s ALJs had not been properly appointed, (4) the proceedings were based on

an impermissible delegation of legislative authority, (5) the proceedings violated

his due process rights, (6) the proceedings violated his equal protection rights, (7)

the proceedings violated his right to a jury trial, (8) the statute of limitations had

run, and (9) the proceedings were barred by laches. The ALJ held proceedings in

July and August 2019, took the case under advisement, but has not issued an initial

decision.

      While these administrative proceedings were underway, Gibson sued in the

district court to enjoin these proceedings. Gibson raised in the district court many

of the same claims he raised in his administrative proceeding. The district court

dismissed the complaint for lack of jurisdiction based on our court’s holding in Hill

v. SEC, 825 F.3d 1236, 1237 (11th Cir. 2016), which construed the judicial review

provisions of the Securities and Exchange Act, 15 U.S.C. § 78y. The district court

also denied Gibson’s motion for preliminary injunctive relief.

                                  II. DISCUSSION

      On appeal, Gibson primarily challenges the district court’s reliance on our

Hill decision by attempting to distinguish his case from the Hill case. He also

argues that the SEC administrative proceedings deny him his Seventh Amendment

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right to a jury trial, that the district court should exercise its jurisdiction to consider

whether the SEC proceedings are now barred by the statute of limitations, and that

his due process claims can only be determined by the district court. We are

unpersuaded by Gibson’s arguments.

       We review de novo the district court’s determination of subject matter

jurisdiction. Hill, 825 F.3d at 1240. We note that federal district courts generally

have jurisdiction over claims that seek declaratory and injunctive relief based on

constitutional violations. See 28 U.S.C. §§ 1331, 2201. However, Congress may

allocate to an administrative body the initial review of such claims, and when it

does, the court must undertake the analysis set forth in Thunder Basin Coal Co. v.

Reich, 510 U.S. 200, 114 S. Ct. 771 (1994).

       In Hill, we employed the framework established in Thunder Basin to

examine whether Congress allocated initial review of claims raising constitutional

challenges that seek declaratory and injunctive relief to the SEC’s administrative

process. Hill, 825 F.3d at 1241. We first decided whether Congress’s intent to

preclude initial review in the district court is “fairly discernible in the statutory

scheme.” Id. (quoting Thunder Basin, 510 U.S. at 207, 114 S. Ct. at 776). We

then considered whether the respondents’ claims were “of the type Congress

intended to be reviewed within this statutory structure.” Id. (quoting Thunder

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Basin, 510 U.S. at 212, 114 S. Ct. at 779). We also examined whether the

respondents’ claims would receive meaningful judicial review within the statutory

structure. Lastly, we questioned whether “agency expertise could be brought to

bear on the . . . questions presented” and the extent to which the litigants’ claims

are “wholly collateral to [the] statute’s review provisions.” Id. (quoting Thunder

Basin, 510 U.S. at 212, 214–15, 114 S. Ct. at 780). Applying this framework, we

concluded that the respondents’ claims had to proceed initially in the

administrative forum and then through the judicial review scheme enacted by

Congress in 15 U.S.C. § 78y. Id.

      As our court noted, Congress authorized the SEC to bring civil actions to

enforce violations of the Securities and Exchange Act in either federal district

court or in an administrative proceeding before the SEC. Id. at 1237 (citing 15

U.S.C. § § 78u(d), 78u-1, 78u-2, 78u-3). “An SEC administrative enforcement

action culminates in a final order of the Commission, which in turn is reviewable

exclusively by the appropriate federal court of appeals.” Id. (citing 15 U.S.C. §

78y). We concluded that respondents in an SEC administrative enforcement action

could not bypass the Exchange Act’s review scheme by filing a collateral lawsuit

in federal district court challenging the administrative proceedings on

constitutional grounds. See id. at 1243. Because we discerned no Congressional

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intention to exempt the type of claims the respondents raised from the review

process Congress created, we vacated the district court’s preliminary injunction

orders and remanded to the district court with instructions to dismiss the actions for

lack of jurisdiction. Id. at 1252.

      Like the district court, we conclude that Hill controls in this case. Gibson

can receive meaningful judicial review of his claims in a court of appeals, and if

the appellate court finds merit in any of his claims, it may vacate or set aside any

adverse SEC order. Moreover, the SEC may bring its expertise to bear on

Gibson’s claims because it will necessarily have to decide threshold issues, such as

whether Gibson has violated the securities laws or whether the statute of

limitations has expired. Further, Gibson’s constitutional and statutory claims are

“inextricably intertwined with the conduct of the very enforcement proceeding the

statute grants the SEC the power to institute and resolve as an initial matter.”

Jarkesy v. SEC, 803 F.3d 9, 23 (D.C. Cir. 2015). Accordingly, we conclude that

because Gibson cannot bypass the SEC statutory scheme by filing a collateral

action in federal district court, the district court properly dismissed his action for

lack of jurisdiction. Moreover, we find no merit to the other arguments raised by

Gibson on appeal.

      AFFIRMED.

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