[00:00:01] Speaker 00:
Case number 14-5196, George R. Giacchisi, Jr.

[00:00:06] Speaker 00:
at L, Appellants vs. Securities and Exchange Commission.

[00:00:09] Speaker 00:
Ms.

[00:00:09] Speaker 00:
McAuliffe for the Appellants, Mr. Frieda for the Appellate.

[00:01:09] Speaker 06:
Good morning, Your Honor.

[00:01:09] Speaker 06:
Good morning.

[00:01:10] Speaker 06:
May it please the Court?

[00:01:12] Speaker 06:
I'm Mike McCulloch, representing George Jarkosy Jr.

[00:01:15] Speaker 06:
and Patriot 28.

[00:01:16] Speaker 06:
I'll just refer to them as we have in our brief as Jarkosy for shorthand.

[00:01:23] Speaker 06:
Your Honors, this case challenges SEC administrative enforcement authority in a case that prior to Dodd-Frank could only be tried in the federal court.

[00:01:34] Speaker 06:
As a result of the powers transferred by Dodd-Frank, the SEC no longer needs Article III courts.

[00:01:42] Speaker 06:
And indeed, that was the very intent of the legislation to make the authority in the SEC's administrative enforcement proceedings truly coextensive with that of federal courts.

[00:01:52] Speaker 06:
For several reasons, that transfer was unconstitutional, and the administrative proceeding against Mr. Jarvisi is void.

[00:02:02] Speaker 06:
two facial challenges and a due process pre-judgment challenge.

[00:02:09] Speaker 06:
While the district court below had subject matter federal question jurisdiction to resolve the issues in this case, pursuant to its holding in track, we're asking this court to invoke its powers under the All Writs Act to protect its current and future jurisdiction.

[00:02:28] Speaker 06:
to decide Jarkosy's constitutional claims now.

[00:02:35] Speaker 06:
The problems with this transfer of authority to the SEC are several.

[00:02:42] Speaker 06:
Number one, the Seventh Amendment.

[00:02:46] Speaker 06:
The SEC enforcement today in the wake of Dodd-Frank is fundamentally different.

[00:02:54] Speaker 06:
from historical enforcement practices.

[00:02:58] Speaker 06:
Dodd-Frank, in fact, created an unprecedented enforcement scheme allowing massive punishment that can be meted out unilaterally against ordinary citizens by this agency.

[00:03:12] Speaker 06:
uh... where previously for many decades this power could only be exercised by article three court.

[00:03:20] Speaker 03:
So that's the seventh amendment problem and you also say that the discretion to choose federal court or the agency is a separation of powers problem.

[00:03:30] Speaker 03:
Correct your honor and really the... So just I mean I understand I just want to get that out of terms of your merits claim but obviously we have to figure out the issue of

[00:03:41] Speaker 03:
the preclusion here and it just strikes me that, and this is a question for both sides, just navigating the case law here is a challenge because you have cases like Free Enterprise and Matthews v. Eldridge and McNary and then you have cases like Elgin and I'm curious how you would propose that we

[00:04:04] Speaker 03:
navigate that in a principled way.

[00:04:07] Speaker 03:
Through the subject matter.

[00:04:08] Speaker 03:
I know the way you're going to navigate it has you winning, but what's the principled line we would draw for future cases?

[00:04:15] Speaker 06:
Well, Your Honor, I will concede that the whole area of subject matter jurisdiction is not a model of clarity.

[00:04:25] Speaker 06:
It almost becomes metaphysical at times.

[00:04:28] Speaker 06:
And I think the easiest way to resolve it here, number one, we have briefed ad nauseum in the briefing the three prongs of the three enterprise thunder basin formulation because

[00:04:44] Speaker 06:
Under this statutory scheme, which is review of a final order of the commission by this Court, which in turn is, at the commission level, is review of the administrative proceeding from the issuance of the order instituting proceedings, the OIP, up to the initial opinion by the ALJ.

[00:05:10] Speaker 06:
All of these claims, these constitutional problems, are underlying structural problems and or result or emanate from events occurring outside of the administrative proceeding.

[00:05:23] Speaker 06:
And as we said, more stress in our reply brief than our principal brief on this point.

[00:05:29] Speaker 06:
We don't believe that

[00:05:32] Speaker 06:
the whole free enterprise formulation makes sense and fits well within the context of this case with these challenges where you have an equal protection violation that occurs prior to the initiation of the AP.

[00:05:52] Speaker 06:
You have a

[00:05:55] Speaker 06:
a separation of powers problem, that it's just an underlying structural issue, all of these issues are irrelevant to the merits and the conduct of the administrator procedure.

[00:06:09] Speaker 01:
So can I – when you mentioned the doctrine, and I think you called it the Thunder Basin free enterprise doctrine, and there's also Elgin, and – which is not

[00:06:20] Speaker 05:
as good for you, but can you explain how Elgin is distinguished based on what you just told us?

[00:06:33] Speaker 06:
and itself in Elgin draws the distinction between those two situations.

[00:06:38] Speaker 06:
In Elgin, as I recall, that was a merit selection review board proceeding, it's a civil service proceeding, and there were all kinds of

[00:06:51] Speaker 06:
discovery devices available in that proceeding.

[00:06:56] Speaker 06:
You didn't also have an interested party conducting the proceedings in that case.

[00:07:01] Speaker 06:
That review process

[00:07:06] Speaker 06:
included depositions, interrogatory, almost everything that you would see in a federal court.

[00:07:12] Speaker 06:
So one of the issues, of course, is whether you can obtain meaningful review of your issue and you can therefore develop the issue below before you get up to a circuit court.

[00:07:27] Speaker 06:
The court in Elgin cited McNary as

[00:07:33] Speaker 06:
the other kind of situation where you have a much more Spartan agency adjudicated process.

[00:07:40] Speaker 01:
So is that your main distinction with Elgin?

[00:07:42] Speaker 01:
I know that you and the SEC disagree on what kind of fact development proceedings are available in the context of the administrative proceedings that are going on.

[00:07:51] Speaker 01:
So it sounds to me like your argument for a distinction with Elgin is that if you're right about how constricted it is, then Elgin's different.

[00:07:59] Speaker 01:
But if you're wrong about how constricted it is, then maybe Elgin's not so different.

[00:08:03] Speaker 06:
Perhaps not, and I'll get to track in a moment, because I think we have – well, and maybe I should get to it very quickly, and then I'll directly address your Honor's question.

[00:08:14] Speaker 06:
Under track, this Court can look at a – and there's

[00:08:22] Speaker 06:
There's a provision or an excerpt I can give you from track is where the court says, as Judge Leventhal emphasized in national advertisers, only in rare instances is a non-final agency action reviewed in the teeth of a general denial of jurisdiction.

[00:08:38] Speaker 06:
Thus, we generally will hear only cases of clear right, such as an outright violation of a clear statutory provision, or violation of basic rights established by a structural flaw and not requiring in any way a consideration of the interrelated aspects of the merits.

[00:08:58] Speaker 06:
That's this case.

[00:09:00] Speaker 06:
And so regardless in track where the circuit court had exclusive jurisdiction to review what in that case was, it was all about the final order or the lack thereof, the delay in the issuance of the final order, this court found it had exclusive jurisdiction over that, which means to the exclusion of the district court.

[00:09:23] Speaker 06:
but still was able to take up a structural flaw or a clear right under the All Writs Act to protect its jurisdiction.

[00:09:32] Speaker 06:
Once the case is here, it's here.

[00:09:34] Speaker 06:
And if the court's going to have – this court is going to have either

[00:09:38] Speaker 06:
jurisdiction on reappeal if it remands to the district court, for example, on the Equal Protection Challenge, which just can't be litigated by any stretch adequately for a number of reasons in the SEC – in the context of the SEC process.

[00:09:57] Speaker 04:
What is the equal protection argument?

[00:09:59] Speaker 04:
Is it selective prosecution?

[00:10:01] Speaker 04:
Is that the idea?

[00:10:02] Speaker 06:
Your Honor, it's a class of one equal protection claim which alleges that the defendant, that this target, Jarvisy, was treated differently from other identically situated SEC targets.

[00:10:17] Speaker 06:
during the same time period that Jarkosy was charged as the... Yeah, so what's the evidence that you want to gather?

[00:10:25] Speaker 04:
Is it that you want to question the enforcement division of the SEC?

[00:10:29] Speaker 06:
Yes, Your Honor, and we probably would want to look at Commission records as well, as we alleged in the lawsuit.

[00:10:41] Speaker 04:
So you want to take the deposition of the General Counsel and other individuals working in the Enforcement Division?

[00:10:48] Speaker 06:
Well, as you can probably like to whether we need to do that.

[00:10:53] Speaker 06:
We never got that far in the district court.

[00:10:56] Speaker 04:
I thought you did.

[00:10:57] Speaker 04:
I thought you saw the subpoena that they just said.

[00:11:01] Speaker 06:
We issued a subpoena in the context of the administrative proceeding to the Commission for its records pertaining to the selection of the administrative proceeding as opposed to taking this federal court.

[00:11:18] Speaker 06:
There were, I think we had nine other

[00:11:21] Speaker 06:
Eight or nine other identically situated targets of SEC enforcement, charged under the exact same statute, that at the same time period were allowed to defend themselves in federal court, filed jocacy,

[00:11:37] Speaker 06:
got relegated to the SEC's internal courts with the truncated summary procedures and greatly diminished defensive procedures.

[00:11:48] Speaker 03:
But for purposes of the free enterprise Elgin point,

[00:11:55] Speaker 03:
That's a tougher hill for you to climb than the Seventh Amendment kind of the day after the statutes passed.

[00:12:02] Speaker 03:
We have this constitutional argument teed up.

[00:12:05] Speaker 06:
Your Honor, I don't think it's more difficult if you're asking about the Equal Protection Challenge.

[00:12:11] Speaker 03:
I don't know.

[00:12:11] Speaker 03:
I'm not talking about the merits of it, but just it doesn't appear from the face of the statute necessarily, obviously, that there's going to be a class of one situation, whereas under your theory,

[00:12:24] Speaker 03:
The day the statute's passed, we have a constitutional argument, whether it's meritorious or not is a different question, but a constitutional argument about the structure that's set up by this statute as being violative of the Seventh Amendment and separation of powers.

[00:12:39] Speaker 03:
Correct, Your Honor.

[00:12:40] Speaker 04:
Why can't that be brought, why can't that claim be made in the Court of Appeals after administrative proceedings have ended?

[00:12:49] Speaker 04:
uh... that point uh... the separation of powers plan right it can be brought uh... as as uh... so what cases stand for the proposition that you can bypass the normal review from an administrative agency to the direct review to this court and going to district court because you've got a that's you've got a challenge that doesn't depend on the evidence because of this case this case is distinguishable from all those cases because

[00:13:18] Speaker 06:
We're not complaining.

[00:13:20] Speaker 06:
None of these claims, including equal protection, complain about what's going to be in the final order, complain about the conduct of the administrator proceeding or the findings of the administrator proceeding.

[00:13:34] Speaker 06:
The final order is completely irrelevant.

[00:13:36] Speaker 06:
It's an event that occurred prior to the administrative proceeding.

[00:13:40] Speaker 04:
Yeah, but the argument is, I guess your argument is, that the SEC had no authority to adjudicate this because it deprived us of our Seventh Amendment rights.

[00:13:50] Speaker 06:
Well, that is correct, Your Honor.

[00:13:52] Speaker 06:
These are all alternative claims.

[00:13:56] Speaker 04:
As I understand your submission, it's that the facial challenges can go directly to the Constitutional challenge, directly to the district court, because there's no evidence to the vote.

[00:14:08] Speaker 04:
And the other challenges you have are as applied, and they can go directly to the district court, because there is evidence to be developed.

[00:14:16] Speaker 06:
There's evidence to be developed that can't be developed.

[00:14:18] Speaker 04:
So all constitutional challenges under your theory go to the district court?

[00:14:22] Speaker 06:
Well, we carefully pick these constitutional challenges that are here that we're talking about today because they are outside of the administrative proceeding, which under the

[00:14:33] Speaker 06:
narrow jurisdiction of the SEC is outside of the Commission.

[00:14:37] Speaker 04:
Didn't Elgin specifically reject any kind of an analysis based on whether it's an as applied or on its face

[00:14:47] Speaker 04:
constitutional challenge.

[00:14:49] Speaker 04:
I thought Elgin just completely rejected.

[00:14:51] Speaker 06:
Well, and we're not stressing that.

[00:14:52] Speaker 06:
We're stressing what the essence of the claim is that doesn't complain about anything occurring with regard to the administrative procedure.

[00:15:02] Speaker 06:
All of these things occurred outside, including the prejudgment issue, which was in another party's head.

[00:15:11] Speaker 04:
apply to anything occurring in the administrative proceeding?

[00:15:15] Speaker 04:
I thought your argument was there shouldn't be an administrative proceeding.

[00:15:18] Speaker 04:
So it not only covers things happening, it covers everything that's happening.

[00:15:23] Speaker 06:
Well, it covers the very existence of it, but the review allotted by statute

[00:15:28] Speaker 06:
for commission review in issuing the final order and circuit court review of the final order is restricted by statute to whether or not the target, the respondent, and the administrator proceeding is culpable or not for securities fraud.

[00:15:48] Speaker 06:
and all of the incidents surrounding the conduct of the administrative proceeding, evidentiary issues, et cetera.

[00:15:57] Speaker 06:
We have claims that will go up in the administrative appeal, which is pending, that relate just to what happened inside the administrative proceeding.

[00:16:11] Speaker 01:
One thing that seems different about this case than Free Enterprise, because I think, as Judge Randolph was pointing out, a lot of what's in Elgin

[00:16:18] Speaker 01:
cuts against you.

[00:16:19] Speaker 01:
But you have free enterprise, I guess would be your main answer under the case law.

[00:16:25] Speaker 01:
But one thing that seems different about, and of course, Elgin comes after free enterprise, but if we go back to free enterprise, one thing that seems different about free enterprise is just the fact that in that case, the administrative proceeding hadn't been kicked off.

[00:16:37] Speaker 01:
Whereas in this case, it has.

[00:16:39] Speaker 01:
And so you've got a proceeding in place right now, the culmination of which will be a court of appeals resolution at which every claim that you raise can be aired and resolved.

[00:16:54] Speaker 06:
Every claim that we raise now can be resolved.

[00:16:58] Speaker 03:
because if you lose if we lose here if you lose in the SEC if you win in the SEC the claim won't be resolved in the court of appeals but you'll have been subject to the expense of the proceeding that you don't think ever should have taken there's always the theoretical uh... chance that we could we could win in the SEC uh... yes your honor but uh... it's it's but I thought your point was maybe I'm wrong here but I thought the idea was

[00:17:28] Speaker 03:
For forced – we can't raise this claim in a court unless we actually lose before the SEC, but the existence of the procedure or the proceeding is something we want to challenge and not have to go through the SEC.

[00:17:46] Speaker 06:
And we believe that avoiding proceeding is something we shouldn't have to go through, and there's a Supreme Court precedent on that, particularly with regard to prejudgment.

[00:17:55] Speaker 03:
I don't know if that's successful.

[00:17:56] Speaker 03:
As Judge Turner-Boston and Judge Randolph have both pointed out, there's Elgin's a problem for you.

[00:18:02] Speaker 03:
Free Enterprise is a problem for them.

[00:18:05] Speaker 03:
And we would really stress McNary versus Haitian Refugee Center.

[00:18:09] Speaker 03:
Right.

[00:18:09] Speaker 03:
And you have other kids.

[00:18:10] Speaker 03:
So Free Enterprise plus McNary plus Matthews v. Eldridge.

[00:18:15] Speaker 03:
But they have Elgin plus Thunder Basin.

[00:18:18] Speaker 03:
And it

[00:18:18] Speaker 03:
couple of others as well.

[00:18:19] Speaker 06:
That well summarizes it.

[00:18:21] Speaker 06:
It's our structural issues that are our primary issues here in this Court, and if I could just, with the Court's indulgence to continue to answer that question, the Court... Can I ask one thing?

[00:18:35] Speaker 03:
I'm sorry, you will be able to answer that question, but if you were to prevail in this case,

[00:18:42] Speaker 03:
The SEC, it wouldn't preclude the SEC from continuing its enforcement proceeding unless you actually prevail or obtain a stay from a federal court, correct?

[00:18:52] Speaker 03:
Correct.

[00:18:53] Speaker 03:
In other words, there's no, I just want to make sure that your position is that if you win on this theory and you're allowed to pursue the claim in federal district court, that shouldn't slow down the SEC at all unless you actually prevail on your constitutional claim.

[00:19:07] Speaker 06:
Well, correct to the extent, you know, we're requesting, the suit is about injunctive, really.

[00:19:14] Speaker 03:
I know, but the point is if you, the SEC can keep going unless and until a federal court says, no, actually you succeed or you get a stay by showing a likelihood of success on those constitutional claims.

[00:19:28] Speaker 06:
So they can proceed and we're asking this court, yes, and we're asking this court.

[00:19:33] Speaker 03:
In other words, the mere existence of your suit doesn't stop the SEC in its tracks.

[00:19:38] Speaker 06:
Correct.

[00:19:38] Speaker 06:
And now if this court holds, if this court in this appeal holds that the Dodd-Frank unprecedented grant of jurisdiction over ordinary citizens for massive penalties violates the Seventh Amendment, one would think that the SEC would

[00:20:02] Speaker 06:
declined to continue to pursue the case.

[00:20:05] Speaker 03:
Now, what I meant by prevail in this suit was meant and prevail in having the district court, your primary argument is just to have the district court to consider this, I think.

[00:20:15] Speaker 03:
You would want us to go consider the merits too, but assuming that didn't happen.

[00:20:19] Speaker 06:
Correct.

[00:20:20] Speaker 06:
That was our original suit, was to get the court to do that.

[00:20:23] Speaker 06:
And the district court, which we filed the day after the commission in late January of 14, the day after the commission denied our interlocutory appeal for prejudgment, the next day we filed that suit.

[00:20:38] Speaker 06:
And then the next business day, the administrative proceeding began as the court had denied the temporary restraining order.

[00:20:47] Speaker 06:
So going back to the question is that the structural claims are, again, first that the Seventh Amendment under the Atlas roofing limited to a situation that doesn't exist here,

[00:21:03] Speaker 06:
And under Toll and under Gran Financiera, that sort of trilogy of cases, we see that the Seventh Amendment requires a situation where Congress exclusively, Congress exclusively,

[00:21:19] Speaker 06:
assigns a certain category or class of cases to administrative adjudication, which has not happened here.

[00:21:29] Speaker 06:
And also, in all of these cases, they keep stressing it's permissible for Congress to do that only if

[00:21:38] Speaker 06:
Juries are incompatible with the statutory enforcement scheme that Congress has created.

[00:21:47] Speaker 06:
This is usually the case for technical OSHA violations, as in Atlas roofing.

[00:21:54] Speaker 06:
Here, we've got juries have been doing – have been adjudicating basic common law securities fraud and statutory security fraud cases for many decades, and all of a sudden,

[00:22:07] Speaker 06:
the Dodd-Frank amendments, which is four paragraphs in a very lengthy bill, but then it did something very profound and very different and unprecedented in federal administrative law giving this agency that power.

[00:22:24] Speaker 06:
It's if the court doesn't find that that's a Seventh Amendment violation, then there's obviously something wrong with the first ever non-exclusive

[00:22:35] Speaker 06:
assignment of this category of claims for massive punitive sanctions.

[00:22:43] Speaker 06:
to an administrative agency where they get to pick and choose essentially willy-nilly.

[00:22:49] Speaker 06:
And first of all, they can't do it exclusively.

[00:22:53] Speaker 06:
They have to do it exclusively.

[00:22:55] Speaker 06:
There's never been a case where they've given the agency identical claims for identical sanctions, where they've given an agency free reign to pick on its own.

[00:23:08] Speaker 06:
If they're going to do that, and this would be the first time a court's upheld such a thing in this case,

[00:23:13] Speaker ?:
Thanks.

[00:23:14] Speaker 06:
And if this court's going to do that, then we have to look at the discretion that's been conferred, the legislative power, to make that decision as to which category classes of cases are going to be relegated to administrative, non-jury adjudication.

[00:23:32] Speaker 06:
Whether that has any guidelines, whether it has any intelligible principle behind it, the SEC's conceded.

[00:23:37] Speaker 03:
That's the merits, and we're still on reviewability.

[00:23:40] Speaker 03:
So why don't we hear from the SEC?

[00:23:42] Speaker 03:
We'll give you plenty of time on rebuttal.

[00:23:43] Speaker 03:
Thank you, Your Honor.

[00:23:56] Speaker 02:
May it please the court.

[00:23:59] Speaker 02:
I think this case demonstrates exactly why the line of cases starting with Thunder Basin recognizes that the agency process, where it's fairly discernible from the intent of Congress to submit claims through that process, comes out with the right result.

[00:24:17] Speaker 02:
There's a fairness innate in that, and there's an efficiency in that process.

[00:24:23] Speaker 02:
There are threshold issues here that counsel has pointed out that need to be determined by the commission in the first instance.

[00:24:30] Speaker 03:
Suppose the claim were in, let me just think of some claim that's probably settled by current law, but just a multi-member SEC is unconstitutional.

[00:24:42] Speaker 03:
Okay.

[00:24:43] Speaker 02:
And is it raised in this case?

[00:24:46] Speaker 03:
Right.

[00:24:47] Speaker 03:
So that kind of claim.

[00:24:48] Speaker 03:
Or that Dodd-Frank's provision assigning power to the SEC is unconstitutional.

[00:24:54] Speaker 03:
The general assignment of investigative power to the SEC over this topic is unconstitutional in some respect.

[00:25:02] Speaker 03:
And those kinds of claims that go to the agency structure or the existence of the agency, are those kinds of claims different?

[00:25:11] Speaker 02:
Well, Elgin would suggest no.

[00:25:14] Speaker 02:
But what about free enterprise?

[00:25:15] Speaker 02:
Free enterprise was different.

[00:25:16] Speaker 02:
I mean, free enterprise is different because you had to bet the farm in order to bring your claim, according to the Supreme Court.

[00:25:23] Speaker 03:
And don't you have to bet the farm here because you have to lose your administrative enforcement proceeding in order?

[00:25:29] Speaker 02:
No.

[00:25:29] Speaker 02:
That's simply constitutional avoidance, working its way through.

[00:25:33] Speaker 04:
I mean, this court has a case you should have cited, which is Noel Canning.

[00:25:39] Speaker 02:
OK.

[00:25:40] Speaker 02:
I was also thinking Deaver v. Seymour.

[00:25:42] Speaker 04:
Everyone went through a district court, and yet the Supreme Court decided that the structure of the NORB was unconstitutional because of the recess appointment.

[00:25:54] Speaker 04:
He didn't need a district court for that.

[00:25:57] Speaker 02:
OK.

[00:25:58] Speaker 02:
But the difference for our purposes, for our case and those cases,

[00:26:04] Speaker 02:
are that here you have a process that's in place, that's been invoked, that's been started.

[00:26:10] Speaker 03:
There is no additional- I think their argument is, or their response is, that you can raise all those arguments there, but you can also, there's an alternative route you can proceed.

[00:26:21] Speaker 03:
Certainly in free enterprise fund, you could raise the arguments in the defense and any enforcement proceeding.

[00:26:28] Speaker 03:
But you can also, someone also has the opportunity to bring a district court suit.

[00:26:34] Speaker 03:
And there will be preclusion issues depending on which case gets decided first, et cetera, potentially in some matters.

[00:26:41] Speaker 03:
Right?

[00:26:41] Speaker 02:
Well, I mean, that's their argument.

[00:26:43] Speaker 03:
But I think if that were the case, I think that- In other words, certainly these kinds of issues will arise through the administrative route and then go to the Court of Appeals.

[00:26:52] Speaker 03:
But the same issues could arise in the district court suit and free enterprise fund and relate McNary and Matthews v. Eldridge.

[00:27:01] Speaker 03:
court said that's fine because it was collateral.

[00:27:03] Speaker 03:
I'm trying to figure out what's collateral.

[00:27:05] Speaker 02:
Well, we've been trying to figure that out as well.

[00:27:08] Speaker 02:
I mean, I could point you to what this court has said is collateral.

[00:27:12] Speaker 02:
But ultimately, I think it's more helpful to go back to what is meaningful judicial review.

[00:27:20] Speaker 02:
I mean, I think if you look at the three factors for the exception that

[00:27:25] Speaker 02:
McNary and then Thunder Basin quotes and then free enterprise applies, it really boils down to whether or not there's meaningful judicial review of the claims.

[00:27:33] Speaker 02:
And undoubtedly, there will be meaningful judicial review for Mr. Jarkasey's claims at the end of the day.

[00:27:40] Speaker 02:
If he loses.

[00:27:41] Speaker 02:
Yeah, if he loses.

[00:27:42] Speaker 02:
Not if he wins.

[00:27:44] Speaker 02:
Not if he wins.

[00:27:45] Speaker 03:
And so in that circumstance.

[00:27:47] Speaker 03:
Even though his argument is that he shouldn't have to go through this proceeding.

[00:27:50] Speaker 02:
Right.

[00:27:51] Speaker 02:
And Standard Oil had no problem with that.

[00:27:53] Speaker 03:
So how's that different from Free Enterprise Fund?

[00:27:55] Speaker 02:
Well, again, Free Enterprise Fund was about the farm case.

[00:27:57] Speaker 02:
You had no clear path to meaningful judicial review.

[00:28:01] Speaker 02:
In that case, the court said, we're not going to require someone to violate a random rule or wait to challenge some random rule based upon their constitutional defense.

[00:28:11] Speaker 02:
In that case, you could go to district court.

[00:28:13] Speaker 02:
But that's the exception, not the rule.

[00:28:15] Speaker 02:
If the exception were the rule, we wouldn't have Thunder Basin.

[00:28:18] Speaker 03:
I don't know if there's an exception or a rule, given that you can line up a bunch of cases on both sides.

[00:28:23] Speaker 02:
But you can line them up.

[00:28:24] Speaker 02:
But I think if the weight falls on our side in this case, I mean, it's not just Thunder Basin.

[00:28:29] Speaker 02:
It's not just Elgin.

[00:28:30] Speaker 02:
It's Stern Murders, Daniels, it's John Doe, Inc.

[00:28:33] Speaker 02:
It's Fornaro.

[00:28:34] Speaker 02:
All of these court, this court's cases,

[00:28:36] Speaker 02:
All fours fall squarely on our side of the ledger on this.

[00:28:41] Speaker 02:
And the reason being is he can bring his claims at the end of the day.

[00:28:45] Speaker 02:
There's clear case law recognizing that merely having to go through the process to bring your claims is not itself a constitutional harm that needs to be avoided, because he has legal relief at the end of the day.

[00:28:57] Speaker 02:
I mean, if Dever versus Seymour could come out the way that it comes out, then of course you have to subject yourself to an agency administrative proceeding.

[00:29:04] Speaker 03:
Can I ask you a question about

[00:29:06] Speaker 03:
Suppose this were someone who were not the subject of current enforcement proceedings, but is a regulated entity under the statutory scheme.

[00:29:18] Speaker 03:
Same result.

[00:29:20] Speaker 02:
in in this case uh... if he's not a regulated and he's a regulated entity but there's no enforcement proceeding that's been well i mean all initiated yeah it's hard to envision that case because all of dark hazee's claims really arise from the commission's administrative proceeding itself but well no look at a claim that the statutory scheme on its face is unconstitutional because it

[00:29:43] Speaker 03:
transfers this discretion.

[00:29:45] Speaker 03:
I'm not saying anything about the merits of this constitutional claim, but that's the theory is that on its face, the day has passed, we see something unconstitutional in this statute in that it grants huge new enforcement authority.

[00:29:57] Speaker 03:
Again, I'm not characterizing it, but that's their claim.

[00:30:02] Speaker 03:
So someone who's a regulated party says, I don't want to be subject to a regulation under that scheme, and brings the suit even though nothing's been initiated against them yet, which is

[00:30:13] Speaker 03:
what result there.

[00:30:15] Speaker 02:
Right, well, I think what you have to look at for that case is what is the harm that the person's under?

[00:30:20] Speaker 02:
It's a different scenario than in the PCAOB case.

[00:30:24] Speaker 02:
What they're complaining about in Dodd-Frank is extending the commission's discretion to bring an AP against unregistered persons, which could essentially be a large segment of the security industry.

[00:30:37] Speaker 04:
What is the situation for issuers, for regulated persons, for those registered?

[00:30:44] Speaker 04:
Is there a discussion within the SEC to proceed to district court or run an administrative proceeding?

[00:30:52] Speaker 02:
Yes, there is.

[00:30:53] Speaker 04:
And how long has that existed?

[00:30:56] Speaker 02:
Gosh, you're putting me on the spot here.

[00:30:58] Speaker 02:
It's been a very long time because I can't remember when this issue has ever come up before.

[00:31:04] Speaker 02:
134 acts, we could bring certain cases administratively.

[00:31:08] Speaker 02:
I just can't recall which class of cases.

[00:31:10] Speaker 02:
I think broken dealers, probably.

[00:31:12] Speaker 02:
But yes, we've had that discretion for a very long time.

[00:31:17] Speaker 03:
Your point there is that the merits of the constitutional arguments are weak.

[00:31:20] Speaker 02:
I don't know.

[00:31:22] Speaker 03:
Right?

[00:31:22] Speaker 03:
Well, no, but my point for... Which is a fair point, but it doesn't really... My fair point for you to make, but it's not really the one before us.

[00:31:30] Speaker 02:
Right.

[00:31:30] Speaker 02:
No, but my point for your question was the constitutional harm that they're making under Donald Frank really is about when you're bringing in AP.

[00:31:40] Speaker 02:
So anyone who would be subject to that harm would be before the permissions and administrative process already.

[00:31:46] Speaker 01:
But suppose it's... I mean, I guess I think what we're trying to do is...

[00:31:50] Speaker 01:
explore if there's a scenario in which free enterprise – your argument is that Elgin looms large and the line of cases takes control.

[00:31:59] Speaker 01:
And I think what we're trying to explore is, is there a scenario in which free enterprise takes control?

[00:32:03] Speaker 01:
And one distinction would be a case in which the proceeding hasn't been initiated yet.

[00:32:08] Speaker 01:
And suppose that the person – the regulated party has standing.

[00:32:12] Speaker 01:
under some theory, and so they have a concrete enough stake in the structure of the commission that they can bring the claim, then that starts to look a lot more like the one in pre-enterprise.

[00:32:24] Speaker 02:
Again, I have a difficulty envisioning such a claim, and I think it has a lot of other problems.

[00:32:28] Speaker 01:
What's difficult about envisioning the claim?

[00:32:30] Speaker 01:
Is what you're saying that's what's difficult to see how somebody who brought that claim would have standing to bring it?

[00:32:35] Speaker 01:
Is that what you're saying?

[00:32:36] Speaker 01:
Basically, yeah.

[00:32:37] Speaker 01:
Because a claim's not that difficult to envision.

[00:32:39] Speaker 02:
Yeah, because no, the claim, you're absolutely right, but I think

[00:32:42] Speaker 02:
One of, I think, a few issues that that hypothetical claim would raise is how are you going to be a person that's harmed by the process if you're not subject to the process.

[00:32:54] Speaker 04:
In free enterprise, that wasn't a problem because the rules that the accounting board would promulgate with the individuals who brought the suit would be subject to it.

[00:33:04] Speaker 04:
But here, the rules that you promulgate, or whatever the SEC's rules are, are wholly independent about how you proceed in an enforcement action.

[00:33:14] Speaker 02:
Exactly.

[00:33:16] Speaker 02:
I couldn't have said it any better.

[00:33:20] Speaker 03:
I find it odd for this issue to draw the line based on whether the enforcement proceeding has begun, as you can probably tell from my questions.

[00:33:31] Speaker 03:
I see that making a standing or rightness

[00:33:34] Speaker 03:
argument, but for this line of cases to say, oh, well, you have to go through the court of appeals route if the agency started investigating, but you can go to the district court if the agency hasn't started investigating strikes me as a little odd.

[00:33:53] Speaker 02:
I think if you're boiling it down to just that factor, yes.

[00:33:58] Speaker 02:
But I think in the context of the hypothetical you're opposing, I think it works.

[00:34:03] Speaker 02:
All of these cases have a bit of a facts and circumstances application.

[00:34:09] Speaker 02:
That's why you could have the same standard, and yet you have ThunderBase, and then you have free enterprise.

[00:34:15] Speaker 02:
I mean, the devil's in the details.

[00:34:17] Speaker 04:
This issue came up with respect to the NORB years and years ago.

[00:34:22] Speaker 04:
And the Supreme Court did carve out an exception for district court review, even though it's direct review after the NORB issues in order.

[00:34:30] Speaker 04:
And the case is called Liedem versus Coney.

[00:34:33] Speaker 04:
Are you familiar with that?

[00:34:34] Speaker 02:
Yes, I am.

[00:34:36] Speaker 02:
But again, that was a different scenario.

[00:34:39] Speaker 02:
And Liedem was one of the cases that I can't recall.

[00:34:45] Speaker 02:
One of our cases had distinguished it.

[00:34:48] Speaker 02:
Maybe it was Sternberger.

[00:34:49] Speaker 02:
It was this court in Sternberger.

[00:34:52] Speaker 02:
Again, that's one of those that goes on the other side of the ledger.

[00:34:56] Speaker 02:
But I think if you look at the details and you recall the real policy reasons why the Supreme Court recognized the Thunder Basin, that preclusion.

[00:35:07] Speaker 01:
Well, I guess one distinction.

[00:35:08] Speaker 01:
If you draw a distinction between the situation in which the enforcement proceeding has been initiated and one in which it hasn't, and you assume that the party in the latter situation does have standing,

[00:35:19] Speaker 01:
then one distinction is the one that was identified by the Supreme Court in free enterprise, which is that you don't have the strange situation in which somebody has to affirmatively incur a sanction in order to create.

[00:35:30] Speaker 01:
Now, I suppose somebody could take the position, well, that was one thing that they noticed, but that wasn't the be-all end-all, and there were other considerations that led to the decision in free enterprise, too.

[00:35:40] Speaker 01:
But as to at least that observation, there is a material distinction between the scenario in which a proceeding has been initiated and one in which it hasn't.

[00:35:48] Speaker 02:
Again, I couldn't agree more.

[00:35:50] Speaker 02:
It's hard not to view free enterprise as the Beck to Farm case.

[00:35:59] Speaker 02:
That's the classic language from it.

[00:36:02] Speaker 03:
What about McNary and Matthews v. Eldridge?

[00:36:05] Speaker 02:
Well, McNary and Mathews, they don't have, what you have there is, I'm sorry.

[00:36:11] Speaker 02:
Go ahead.

[00:36:12] Speaker 02:
What you have there, and what this court has said, particularly regarding McNary, is the touchstone is lack of meaningful judicial review.

[00:36:20] Speaker 02:
And so in McNary, the court said they weren't going to, I mean, the statute only allowed for review from deportation proceedings.

[00:36:31] Speaker 02:
And it was on a very limited record.

[00:36:33] Speaker 02:
I think it was like four categories of documents.

[00:36:36] Speaker 02:
And so by statute, you weren't the court found.

[00:36:39] Speaker 02:
There was really no meaningful avenue to bring the petitioner's claim in that case.

[00:36:45] Speaker 02:
But that's a far cry from what we have here, where all Mr. Ciarcozzini do is litigate his case to its completion, and if aggrieved, bring his claims to this court.

[00:36:56] Speaker 03:
And Matthews?

[00:36:59] Speaker 02:
Matthews, I mean, you don't have the dire circumstances and the real constitutional harm that is being subjected to by how you go through the process itself.

[00:37:09] Speaker 02:
So again, I think when you're talking about having to submit yourself to an administrative proceeding, I think Standard Oil clearly holds that that's not something that the harm that gets you out of a process.

[00:37:21] Speaker 02:
And you have clear legal relief at the end of the day here.

[00:37:24] Speaker 03:
So the line that seems to be out there

[00:37:28] Speaker 03:
is, no, that's wrong, there's not a clear line out there, but there is, I think we can agree on that.

[00:37:36] Speaker 03:
So the question here, though, as I approach it, and maybe this is the wrong way to approach it, is constitutional challenges to the statute.

[00:37:47] Speaker 03:
that you could bring the day after the statute was passed, or the day that the hour after the statute's passed.

[00:37:53] Speaker 03:
And those kinds of challenges to the statute that don't depend on future application.

[00:37:58] Speaker 03:
And it does seem like you have cases like Free Enterprise Fund, Johnson, Matthews, that allow those

[00:38:10] Speaker 03:
kinds of cases to be brought.

[00:38:12] Speaker 03:
And then you do have, though, I think, on your side, Elgin and Thunder Basin.

[00:38:17] Speaker 03:
You know, Elgin's very tied up with the civil service rules.

[00:38:22] Speaker 03:
That's one.

[00:38:22] Speaker 03:
I'm not saying that's a principle distinction, but that's certainly one issue that's going on in that case.

[00:38:30] Speaker 03:
And again, maybe that's an observation, not a principle, but that was going on in that case.

[00:38:36] Speaker 03:
I'm just not sure

[00:38:38] Speaker 03:
how to draw the line, really unsure how to draw the line.

[00:38:41] Speaker 03:
I'm really unsure about the broader issue of just a constitutional challenge to a statute.

[00:38:46] Speaker 03:
You have a statute's passed, you're going to be regulated under that statute, and to tell that person, well, we'll see in three years after you go through the administrative process seems in tension with some of these cases and some of the principles we have about constitutional adjudication.

[00:39:05] Speaker 02:
Well, but again, I think the line where it can be drawn, it follows on our side of the ledger.

[00:39:11] Speaker 02:
We are applying what appears to me to be Elgin or Thunder Basin or a mix of the two.

[00:39:17] Speaker 02:
I mean, you have essentially not a pre-enforcement, but an actual proceeding being initiated and litigated, and these claims all arise out of it.

[00:39:28] Speaker 03:
They're not trying to stop the proceeding, by the way.

[00:39:31] Speaker 03:
That was the point of my questions to them.

[00:39:34] Speaker 03:
One of your concerns would be it's going to really slow us down.

[00:39:38] Speaker 03:
But the answer is it won't slow you down unless they're actually successful.

[00:39:42] Speaker 03:
And if they're actually successful, you should be slowed down.

[00:39:45] Speaker 03:
Because that means you're operating in an unconstitutional statute.

[00:39:50] Speaker 02:
Right.

[00:39:50] Speaker 02:
Well, that's true.

[00:39:51] Speaker 02:
I mean, if that were going about four steps forward, I think that's true.

[00:39:54] Speaker 02:
Just two.

[00:39:55] Speaker 02:
All right.

[00:39:59] Speaker 02:
But as you can recognize, that's exactly what this court set in track that you want to avoid, the circumstance in which you have duplicative proceedings and you have arguments about when threshold issues need to be decided and really can be disposed of in the proceeding itself.

[00:40:16] Speaker 04:
The point is that if there's a proceeding ongoing, then the district court doesn't have jurisdiction to consider whether that proceeding should be enjoined.

[00:40:30] Speaker 02:
I don't know if I would say it so distinctly.

[00:40:33] Speaker 02:
I think there are a lot of factors that are involved.

[00:40:35] Speaker 02:
So long as the issues involved, the claims can be determined in that proceeding.

[00:40:41] Speaker 04:
So if the SEC started an enforcement proceeding on the basis that a particular company was violating EPA regulations, could you go into district court and join that proceeding?

[00:40:57] Speaker 02:
I mean, I'd have to have more information regarding the proceeding.

[00:41:01] Speaker 02:
Is it assuming that we have the same sort of excuse of use scheme that we have here?

[00:41:05] Speaker 04:
Over which the SEC has no authority whatsoever.

[00:41:08] Speaker 02:
Oh.

[00:41:09] Speaker 04:
I don't think you have authority over EPA.

[00:41:11] Speaker 02:
No, no, no.

[00:41:12] Speaker 02:
Right.

[00:41:14] Speaker 02:
I missed that step.

[00:41:15] Speaker 02:
OK.

[00:41:16] Speaker 02:
That's the crucial step.

[00:41:18] Speaker 02:
Right, yeah.

[00:41:20] Speaker 02:
Well, in that case, I think it's fair to concede that if we were bringing a case that was alleging EPA violations, that probably would not be something that could achieve meaningful review through our process.

[00:41:37] Speaker 04:
Even though after the proceeding ended and you tried to impose fines,

[00:41:42] Speaker 04:
the court of appeals could take care of the case.

[00:41:45] Speaker 02:
I think so, yeah.

[00:41:47] Speaker 02:
I think I feel pretty comfortable saying OK.

[00:41:49] Speaker 02:
Why?

[00:41:49] Speaker 02:
Well, I'm not sure what the decision is.

[00:41:51] Speaker 02:
Because you haven't.

[00:41:53] Speaker 02:
I don't think there are.

[00:41:54] Speaker 02:
Because it's a two-step process in this Thunder Basin analysis.

[00:41:59] Speaker 02:
I mean, the first one is fairly discernible whether or not Congress has enacted a scheme, right?

[00:42:04] Speaker 02:
Well, under even Judge Randolph's example, we still have a statutory review scheme in place.

[00:42:10] Speaker 02:
But the thing is, that claim falls outside of it.

[00:42:12] Speaker 01:
But presumably the SEC would have asserted that it falls within.

[00:42:15] Speaker 01:
I mean, they'd bring a proceeding that says, we're trying to enforce the following statute.

[00:42:19] Speaker 01:
And it turns out when you look at the SEC's document, the AP or whatever you call the document, it turns out that everything that's being sought to be enforced is an EPA regulation.

[00:42:28] Speaker 01:
So in theory, you'd have judicial review at the end of the day that would say, that's interesting that you thought that, but you look at this and it's not within your purview, and this whole proceeding should never have been brought.

[00:42:40] Speaker 02:
Right.

[00:42:41] Speaker 02:
Yeah, I guess within, I guess I got a little tripped up by this hypo because it's a little far field.

[00:42:48] Speaker 02:
But I think you're right.

[00:42:51] Speaker 02:
You could have judicial review at the end of the day of that.

[00:42:54] Speaker 02:
I just can't envision us bringing such a case.

[00:42:57] Speaker 03:
Can I ask, this may be repetitive, but I want to try this.

[00:43:00] Speaker 03:
Sure.

[00:43:00] Speaker 03:
Which is, if the constitutional harm is the proceeding itself, being subjected to the proceeding itself,

[00:43:10] Speaker 03:
There's no way to get that review if you actually prevail in the proceeding.

[00:43:15] Speaker 03:
And you might respond, well, if you prevail in the proceeding, you haven't really been harmed.

[00:43:20] Speaker 03:
But that ignores hundreds of thousands of dollars in legal fees, et cetera, that would come from defending yourself in the proceeding.

[00:43:30] Speaker 03:
What are we supposed to do with that scenario?

[00:43:33] Speaker 02:
Well, the court said in Standard Oil that that is not constitutional harm.

[00:43:37] Speaker 02:
And so therefore, you have to subject yourself to the proceeding.

[00:43:40] Speaker 03:
And again, I think the court said in a lot of other cases, though, and this is getting really far afield, but cases like Sackett and the like, that that's a troubling scenario.

[00:43:52] Speaker 02:
Yeah, I think it was Dever versus Seymour said, you know, it's the cost of living in a democracy.

[00:43:59] Speaker 02:
Well, that's a criminal.

[00:44:00] Speaker 02:
Yeah.

[00:44:00] Speaker 02:
Yeah.

[00:44:01] Speaker 02:
I mean, well, but I know that's worse in some ways.

[00:44:06] Speaker 00:
Right.

[00:44:06] Speaker 02:
I mean, you were not able to bring your

[00:44:09] Speaker 02:
your claim to challenge the appointment of the prosecutor in that case.

[00:44:14] Speaker 02:
And interestingly, it goes through some of the same policy rationales that the court adopted in Thunder Basin.

[00:44:23] Speaker 02:
The notion that when Congress passed the Rules of Criminal Procedure, giving defendants only a limited right to bring into laudatory review, favoring final orders, final judgments, that's very similar to what you have when you look at the

[00:44:38] Speaker 02:
fairly discernible from the statutory scheme, whether the intent of Congress is to have an exclusive statutory review scheme.

[00:44:46] Speaker 04:
If the SEC goes off the deep end, could you get attorney's fees under Egypt?

[00:44:54] Speaker 02:
It's a possibility, yes.

[00:44:58] Speaker 04:
So if it's really egregious, then the likelihood of recovering for the expense, at least part of it anyway, is increasing.

[00:45:10] Speaker 04:
That's true.

[00:45:11] Speaker 02:
That's absolutely right.

[00:45:14] Speaker 02:
The panel has nothing further?

[00:45:16] Speaker 02:
Thank you.

[00:45:17] Speaker 02:
Thank you.

[00:45:32] Speaker 06:
Your Honor, I think that I want to come back, if I could briefly, to addressing or sort of responding to the whole colloquy about all of these subject matter jurisdiction cases.

[00:45:46] Speaker 06:
There are several reasons for this Court coming back to track on All Reds Act.

[00:45:52] Speaker 06:
We are where we are.

[00:45:54] Speaker 06:
This is here now, before this court, properly.

[00:46:01] Speaker 06:
Jarcus's rights are being denied every day as he's being subjected to this.

[00:46:08] Speaker 06:
It's not just the money.

[00:46:10] Speaker 06:
There's a whole lot of other reasons why.

[00:46:12] Speaker 06:
There's significant constitutional harm, and there's D.C.

[00:46:16] Speaker 06:
Circuit case law that discusses the continuing harm of a constitutional deprivation.

[00:46:23] Speaker 06:
If Jarcusy wins at the commission or loses, either way, this court will then lose the ability or may lose the ability to entertain his claims for injunctive relief.

[00:46:38] Speaker 06:
He's trying to stop the proceeding from proceeding to a final order.

[00:46:50] Speaker 04:
Is it a bifurcated proceeding with respect to, first of all, the violation of the SEC's rules?

[00:46:57] Speaker 04:
this number one and number two, what the remedy should be.

[00:47:02] Speaker 04:
Or is it a combined proceeding?

[00:47:06] Speaker 04:
It's all a combined proceeding.

[00:47:08] Speaker 04:
And what was the ALJ's recommendation here?

[00:47:11] Speaker 06:
The ALJ's recommendation here, she entered a 30-some page initial decision.

[00:47:22] Speaker 04:
That was in October?

[00:47:23] Speaker 06:
It was in about, it was in October.

[00:47:27] Speaker 06:
I think so, yes, Your Honor.

[00:47:30] Speaker 06:
And she imposed a disgorgement of over a million dollars and then penalties of $450,000, which was a tiny, tiny fraction of what the Division of Enforcement had sought.

[00:47:53] Speaker 06:
The Division of Enforcement is seeking, at this point, about $80 million in punishment.

[00:48:00] Speaker 04:
Did the ANJ impose a lifetime or recommend a lifetime bar?

[00:48:03] Speaker 06:
Yes, yes.

[00:48:06] Speaker 06:
Yes.

[00:48:06] Speaker 06:
And so he's barred for life if that's upheld by the commission.

[00:48:10] Speaker 06:
And virtually all of these are.

[00:48:13] Speaker 06:
And for purposes of even the Seventh Amendment argument, it's useful to understand that the losses to the investors in the wake of the financial meltdown of 708 was about $15 million.

[00:48:27] Speaker 06:
And they're requesting $80 million.

[00:48:29] Speaker 06:
So it's clearly all about punishment.

[00:48:32] Speaker 06:
The interesting exchange about criminal

[00:48:36] Speaker 06:
Criminal is worse, and going through a criminal proceeding is worse.

[00:48:41] Speaker 06:
You could actually argue here with an $80 million hit, which Mr. Jarcy, of course, doesn't have.

[00:48:50] Speaker 06:
He's an ordinary guy.

[00:48:54] Speaker 06:
You could debate what's worse.

[00:48:56] Speaker 06:
This is clearly at least quasi-criminal in nature, because it's all about punishment.

[00:49:02] Speaker 06:
And that's what the Seventh Amendment cases go to.

[00:49:06] Speaker 06:
It's all about the nature of the relief.

[00:49:09] Speaker 06:
And all the way back to 1830, in the Parsons case, the US Supreme Court said the focus for Seventh Amendment rights, it hinges on the nature of the relief sought.

[00:49:20] Speaker 06:
And then in Tull, the Supreme Court ruled that when they were looking for 22 million, governments looking for 22 million in penalties for Clean Water Act violations, because they

[00:49:32] Speaker 06:
multiplier, just like we have here, then there's an absolute right to a jury trial.

[00:49:41] Speaker 04:
And in Gran Financiera, the court – I'm thinking back, and I may be wrong about this, but I thought there were – there's a spate of cases

[00:49:50] Speaker 04:
in which there's dual investigations, one by the SEC and the other by the Department of Justice.

[00:49:56] Speaker 04:
And the subjects or targets of the investigation go into federal court and try to enjoin the SEC from proceeding until the Justice Department has finished this job.

[00:50:06] Speaker 04:
But how do these cases fit in?

[00:50:08] Speaker 04:
I haven't looked at those cases.

[00:50:09] Speaker 06:
Well, I don't know if those cases really fit into this situation, because we don't have that here.

[00:50:14] Speaker 06:
There was no criminal prosecution of Mr. Jarkasey, so we didn't have parallel proceeding going on.

[00:50:21] Speaker 04:
But do the district courts in those situations, I'm assuming there are cases, do the district courts say, well, we can't do that, we don't have jurisdiction?

[00:50:31] Speaker 06:
District courts can.

[00:50:33] Speaker 06:
District 4 stays civil litigation of course all the time if it's interfering with an ongoing criminal investigation.

[00:50:41] Speaker 04:
How does that fit into the exclusive review proceeding in the Court of Appeals?

[00:50:48] Speaker 06:
It wouldn't fit in very well at all.

[00:50:51] Speaker 06:
That's all I can say about it, but it would fit very badly.

[00:50:58] Speaker 06:
The SEC's position is basically

[00:51:06] Speaker 06:
with some very good answers a moment ago notwithstanding, I'd respectfully submit that their position essentially is that under Thunder Basin Free Enterprise, et cetera, that just about any attack on any lawsuit against the SEC for almost anything is precluded.

[00:51:26] Speaker 06:
even things that don't relate to the actual – or occur within the context and the purview of the administrative proceeding that is the sole subject of the statutory review.

[00:51:39] Speaker 06:
Statutory – as we say, especially in our reply brief,

[00:51:44] Speaker 06:
All of these cases that this court deals with, I suppose all the time, Elgin McNary, Thunder Basin, Free Enterprise, and on and on,

[00:51:57] Speaker 06:
The one thing they do teach that is clear is that every claim has to be looked at individually on an ad hoc basis and compared to the context of the particular statutory review process.

[00:52:13] Speaker 04:
You know, one of the common claims, as I recall, and I'm very fuzzy about this, is that the target of the investigation

[00:52:21] Speaker 04:
Claims that if the SEC is allowed to proceed, the only way I can defend is to waive my Fifth Amendment rights.

[00:52:30] Speaker 04:
Suppose in this situation, there was no, but you may not be aware of a grand jury investigation necessarily.

[00:52:40] Speaker 04:
But suppose there was none, and that was your client's claim.

[00:52:46] Speaker 04:
that by forcing me through this administrative proceeding, I can't defend myself against a potential criminal investigation.

[00:52:53] Speaker 06:
And because if I take the fifth, it'll be used against me.

[00:52:57] Speaker 06:
It'll be used against you.

[00:52:58] Speaker 06:
And which is another interesting constitutional question, whether you're paying a price for invoking a constitutional law.

[00:53:04] Speaker 04:
But that is selling.

[00:53:05] Speaker 04:
You claim you could bring that in the district court?

[00:53:07] Speaker 06:
I believe you could bring that in the district court.

[00:53:11] Speaker 06:
There's so many things that all of these cases on subject matter jurisdiction

[00:53:17] Speaker 06:
are pretty closely restricted to their facts, and you have to look really carefully what is the nature of the claim, what does it arise out of, and what is the scope and nature of the specific statutory review procedure that's available there.

[00:53:36] Speaker 06:
And we don't think that the statutory review, just because you can, obviously, you can bring up just about everything that has to do with the agency and what the agency's done during or before or outside of the administrative proceeding in the statutory review.

[00:53:59] Speaker 06:
to have to wait, as in free enterprise, to have to wait and go through that process, we don't believe that that's what the case law stands for.

[00:54:09] Speaker 06:
As I said before, these are pure questions of constitutional law.

[00:54:12] Speaker 06:
We don't need the commission's opinion.

[00:54:15] Speaker 06:
This court doesn't need the commission's opinion or their view of the Seventh Amendment and separation of powers in order to rule.

[00:54:23] Speaker 06:
With regard to the prejudgment claim,

[00:54:26] Speaker 06:
That's just a blatant and egregious prejudgment.

[00:54:30] Speaker 06:
There's not an argument around it.

[00:54:34] Speaker 06:
It's far worse than the Cinderella finishing school and Texaco cases out of this circuit, where a stray comment's made by a commissioner.

[00:54:46] Speaker 06:
implicitly referring to a current target of an enforcement proceeding, here they – in another party's case, not part of our record in this administrative proceeding, ruled that

[00:55:02] Speaker 06:
that Jarvis was guilty two months before his trial, before his administrative trial.

[00:55:08] Speaker 06:
That's already been up to the commission.

[00:55:10] Speaker 06:
They've already issued their opinion on that.

[00:55:12] Speaker 06:
It was thorough.

[00:55:13] Speaker 06:
It was thoroughly briefed.

[00:55:15] Speaker 06:
They thoroughly rejected the claim.

[00:55:20] Speaker 06:
This court's case law makes clear that that renders the proceedings void.

[00:55:24] Speaker 06:
Once the proceedings are void, they're void.

[00:55:27] Speaker 06:
And we think this court should stop the proceedings now.

[00:55:29] Speaker 06:
And under a tract, particularly, this court has jurisdiction to do that.

[00:55:33] Speaker 03:
Okay.

[00:55:33] Speaker 03:
Thank you very much.

[00:55:34] Speaker 03:
Thank both sides for their arguments.

[00:55:36] Speaker 03:
The case is submitted.