On March 3, 2021, the Supreme Court will hear oral arguments in Carr v. Saul. This case involves important constitutional questions of appointments and officer status. Specifically, the case deals with the question of whether a claimant seeking disability benefits under the Social Security Act forfeits an Appointments Clause challenge to the appointment of an administrative law judge by failing to present that challenge during administrative proceedings.
Profs. Jennifer Mascott and Richard Pierce, distinguished experts in the field of administrative law, join us to discuss the case, review oral arguments, and discuss implications, and offer their thoughts on related constitutional questions.
Prof. Jennifer L. Mascott, Assistant Professor of Law, Antonin Scalia Law School, George Mason University
Prof. Richard Pierce, Lyle T. Alverson Professor of Law, George Washington University Law School
This call is open to the public and press. Dial 888-752-3232 to be connected.
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Nick Marr: Welcome, everyone, to The Federalist Society's teleforum conference call as this afternoon, March 3, 2021, we have a "Courthouse Steps Oral Argument Review of Carr v. Saul," an administrative law case heard earlier today before the Supreme Court. I'm Nick Marr, Assistant Director of Practice Groups here at The Federalist Society.
As always, please note that expressions of opinion on our call today are those of our experts.
We're very pleased to be joined by a great set of experts here. I'm going to introduce them, and then I'll hand the floor off to the first one to give a little background on the case, and then we'll have a bit of moderated discussion. Then, we'll be looking to you, the audience, for questions towards the end, so be thinking of those as we go along, or maybe you came to the call to questions. We'll let you know how to ask those at the time.
We're joined today by two experts in administrative law: Professor Jennifer L. Mascott, who's an Assistant Professor of Law at Antonin Scalia Law School, George Mason University, and Professor Richard Pierce. He's a Lyle T. Alverson Professor of Law at the George Washington University Law School.
Thank you both for joining us today. Professor Pierce, I'll give the floor to you first.
Prof. Richard Pierce: Thanks, Nick. This case arose as a result of the Supreme Court's decision in 2018 in Lucia v. SEC where the Court held that administrative law judges at the Securities and Exchange Commission are inferior officers rather than employers. Now, the main consequence of that whole thing is that they have to be appointed by the heads of departments.
In many cases, the practice was instead for lower-level people in the agency to appoint them. That was the case at the Social Security Administration where they had all been appointed, all 1,600 of them that existed at that time, had been appointed by the head of the human relations department at SSA.
Immediately after the Court handed down the Lucia decision, the head of the Social Security Administration ratified the appointments that had previously been made of those 1,600 administrative law judges. The appointment, then, was in accordance with the Constitution.
For purposes of this litigation at least, the solicitor general conceded that Lucia applies to administrative law judges at the Social Security Administration as well as at regulatory agencies. That issue has not yet been litigated any place, but for purposes of this case at least, he conceded that.
That laid the groundwork for potentially as many as 60,000 people to go to court and argue that they were entitled to new hearings before a new administrative law judge because they were the victims of an adverse decision by an unconstitutionally appointed administrative law judge.
It happened, though, that the 60,000 comes from the fact that there's a 60-day statute of limitations and that is the average number of cases that SSA ALJs would've denied benefits in. There were potentially 60,000. There were only a few hundred cases, however, in which there actually were timely petitions for review filed in district courts, so those are the petitioners whose fate is subject to the decision of the Court in this case.
None of those 100, 200 had raised this issue before either the administrative law judge who originally presided in their case or the Social Security Appeals Council that has the power to review all decisions of ALJs. So the government argued in each of those cases that the petitioner had lost his opportunity to raise this issue on judicial review because he had not complied with the issue exhaustive doctrine. That's a doctrine that says that you cannot raise an issue on judicial review unless you have first raised it at each level in which you could raise it at the agency.
That doctrine is sometimes required by statute or by agency rule, but usually it is required by common law. There are cases going back over a century in which the Supreme Court has held that issue exhaustion applies to all actions taken by agencies as a matter of common law.
The doctrine is based on a lot of different considerations: the desire to avoid sandbagging by parties in agency proceedings by discouraging them from waiting until the end of a proceeding to raise an issue, efficiency considerations by creating a legal environment in which there's only one review proceeding and it addresses all of the issues that have been raised, deference to both the executive and legislative branches because this arises in contexts in which the Congress has decided that at least the initial decision making should be done by an executive branch agency, and the opportunity for that agency then to apply its expertise in deciding a case and to exercise whatever discretion Congress has conferred on it.
There have always been some exceptions to this common law doctrine. One applies in the case where exhaustion would be an exercise in futility, but the Supreme Court has interpreted that as extremely narrow and applicable only when you would be certain to lose if you were to raise the issue before the agency.
And there's an exception for constitutional issues that are wholly collateral to the merits of the case before the agency. The problem with that exception is that there's a long line of cases in which the Court has applied it and an equally long line of cases in which the Court has not applied it. I just find those two lines of cases completely inconsistent. I've never been able to reconcile them.
Just to look at the most recent examples on each side. Free Enterprise Fund in 2010, the Court applied it, but then two years later in Elgin in 2012, the Court didn't apply it. I can't see any reasoned basis for distinction.
Then there's the Sims exception, which is unique to the Social Security Administration. It's based on a Supreme Court opinion in which the Court said well, these SSA proceedings are more inquisitorial than adversarial, and the issue exhaustion doctrine is attributable to the adversarial nature of our legal system, doesn't apply the same way in the context of an inquisitorial proceeding, like a social security disability proceeding.
The problem with that exception -- a couple of problems. First, it was announced in a 4-4 division among the justices where the concurring justice used very narrow reasoning and said this only applies to what would otherwise be the duty to exhaust remedies by raising an issue before the appeals council, and she reasoned that that was an exception just because of the rules unique to the appeals council. So it's very difficult to figure out the breadth of that exception.
After listening to the oral argument, I think it's really reinforced my prior belief that this is highly unlikely to produce any big landmark decision or even much of a spirited debate among the justices. I think the most likely outcome is 9-0 for the government, and that could be on any of four bases: issue exhaustion, application of the de facto officer doctrine, harmless error, or choice of remedies.
The next most likely outcome would be a 9-zip win for the petitioner but on very, very narrow grounds. Some combination of the Sims exception, but then only when the agency doesn't have any rules that govern the process of exhausting remedies and probably in the unique context of wholly collateral constitutional issues.
That's my take on the case. Now it's over to Jennifer to see what her take is.
Prof. Jennifer L. Mascott: Thanks, Dick. Yes, I will fill in on the oral argument itself, so thank you so much for laying out all of the issues at stake.
I thought, first of all, the oral arguments themselves were just excellent. The two advocates were relatively new to the Supreme Court stage, both former Thomas clerks. I just thought the whole discussion seemed very well prepared, seemed very comfortable. It seemed like the justices' questions got a lot of vetting.
The one idiosyncratic point I would made from the start is I was surprised that the justices themselves seemed to almost exclusively ask very functionalist questions, very values driven, about efficiency, judicial economy, fairness, sandbagging. I would've thought that there might've been some more focus on just the core question of which branch of government has the power to decide on the merits the Appointments Clause challenge? And then, also, which branch of government should be deciding the exhaustion rules for the agency?
One potential analog people could've thought through comes from a wonderful article by Caleb Nelson, "Adjudication and the Political Branches," which, instead of just comparing and contrasting from Sims, and just generally looking at values with exhaustion, would instead have asked what is the category of the right or set of issues that the social security judges are looking at? That article makes the point that in benefits determinations, it's a classic case that would've been left to the political branches, and if that's the construct that we're in, then one might think that not only should the agency be deciding the case on the merits but it should also have in place exhaustion rules to the extent that Congress has authorized it to do so.
In that construct, maybe you should still say the petition prevails here because Congress has authorized judicial review of social security benefits determinations, and despite the Social Security Administration being put on notice after Sims that the Court is going to be skeptical in places where they have not imposed an exhaustion requirement by regulation, the Social Security Administration has never clearly imposed an exhaustion requirement for raising issues that would bar the petitioners here from raising their challenge in court.
Another way you might think of it, though, is well, perhaps this is slightly different because it's not just the benefits determination being adjudicated here. It is a more structural constitutional issue. So, in that case, if that's supposed to be seen as a separate challenge and claim, one might think that actually the agency indeed has no competence at all to hear that, and so there shouldn't be any possibility that the agency can adjudicate it or impose exhaustion requirements, and it should go straight to Article III court.
I think looking at it that way, probably here, on the facts, the petitioner has a strong argument to prevail.
The justices, as I said before, didn't really seem to be focused on that. They seemed to be focused on minor distinctions or major distinctions from the Sims decision, which Professor Pierce terms as an exception to the general exhaustion and waiver rule. I guess when I go back and reread Sims, I actually see it a little bit different, the way that Justice Thomas wrote that opinion, and actually think, in a certain sense, it lines up with the public rights or political branches approach that I'm proposing. I read his opinion to basically be saying the default baseline here is that Congress by statute and the Social Security Administration by regulation did not impose or create exhaustion requirements, and so, therefore, we don't really see that rule in place.
There is this, as Professor Pierce talked about, judicial background principle of requiring exhaustion, but even if that would normally apply, certainly it shouldn't do so here because the only reason courts are applying that is when administrative proceedings mimic the adversarial process that goes on in courts. That's not happening here at all with the Social Security Administration.
Now, Justice Thomas did, in his language in the opinion, note that the case there dealt with a matter that had gone up to the appeals council and so the forfeiture problem was there rather than before the ALJ, which is the lower level of review that's at issue in this case.
But I have a hard time actually seeing how that distinction would overcome what I read as more of the background sense, at least of where Justice Thomas was going in that initial Sims opinion, would seem to be, again, basically saying we don't see a statutory or regulatory basis for exhaustion. We're not going to extend it in this case. Even if the ALJ is slightly doing less adversarial things than the appeals council, in my view, I still think it's a far cry from deep fixing the Sims precedent.
A couple of things to note on justices' specific questions or approach in the case. It does seem to me like the justices may very well have kind of made up their mind, to a large degree, before coming into the oral arguments because, actually, the arguments really, the round of questioning ended ten minutes early. A couple of justices passed on asking the assistant to the SG, the government side, any questions at all, saying their questions had already been answered.
So the government advocate was left to basically be able to go back at the end and have a little bit more free time to sort of affirmatively make his case, at which point some justices broke in with additional questions. But it seemed as though it was not nearly a very contentious debate or where the justices had more weighing on their mind than they could get into the timeframe or something like that.
I also thought it was interesting that Justice Kavanaugh seemed to really show his hand by asking the government attorney, "Assuming you lose, what do you want us to do on the remedy?" The justices seemed to be asking that kind of question a lot this week. Justice Barrett asked a similar question of Mark Perry in the Arthrex case earlier in the week, so it seems like Justice Kavanaugh has a sense of where he's going.
Justice Alito made an interesting point asking a lot of questions about how on earth it could make sense to -- even if there was an Appointments Clause problem, why the remedy would be to give new hearings here, and what a colossal waste of money and energy and time that could be spent on adjudicating other important issues for social security claimants. That point does seem reasonable to me.
That said, if the Court is to decide or were to think that there was a constitutional problem here and the issue were not totally forfeited, I have a hard time seeing how that concern of Justice Alito's can be reconciled with some of the language in the Court's opinion in Lucia v. SEC, which, as Dick mentioned, dealt with the underlying issue of whether certain agency adjudicators are subject to the Appointments Clause in the first place.
In that opinion, it was very interesting. Justice Kagan, for the Court, did quite a good job, I think, of not reaching many issues. She really didn't break much new ground in what the meaning of an officer is. She did not want to decide for the Court whether it was a problem the way that the appointments had been ratified. She did not want to decide issues on removal.
But one thing that she did clearly say is that, at least in that case where the constitutional violation had been properly raised before the agency, that in no uncertain terms, it was not okay for the same ALJ to rehear the case having just had the SEC ratify that individual's appointment; that, for fairness, it needed to go to a new person. So that seems to be diametrically opposed with Justice Alito's instinct here.
Justice Gorsuch's questions all centered on sort of a functionalist-type consideration of a 2018 notice that, interestingly, the Social Security Administration sent out to all of its adjudicators saying you absolutely may not consider Appointments Clause challenges that are raised. He seemed very concerned to know whether parties would've had awareness of this set of instructions in advance. Although he didn't really tip his hand too much as to how he thought that would lead the case to come out.
Another justice who asked, I think, more functionalist questions than one might expect seemed to be Justice Barrett, who seemed concerned about wanting to know how many other agencies' proceedings would be swept into this holding if the Court were to decide this case on the ground that these particular proceedings are non-adversarial. The petitioner's attorney, at that point, said maybe the Veterans Affairs, maybe the Railroad Retirement Board, but again, seemed to be hanging a lot, at least from a practical standpoint, on the fact that, as Dick said, there are just a few hundred cases that would have to be reheard here.
So, trying to kind of allay concerns, I think, from the Court that a ruling for petitioner would really uproot agency proceedings and waste a lot of time.
Nick Marr: Alrighty, very good. Dick, do you want to add anything in response?
Prof. Richard Pierce: Just a couple of brief points. First of all, I completely agree on virtually everything that Jennifer said, and particularly the quality of the advocacy was superb. I was particularly impressed with the lawyer for the petitioner who got hellishly hard questions and handled them as well as anybody possible could.
And I certainly agree with her that there was a lot more questioning on functional grounds than on formal grounds, and that surprised me. But I react to it kind of the opposite way that Jennifer does because I am much more of a functionalist, and Jennifer's much more of a formalist.
But I was shocked that, for instance, Justices Thomas and Alito, the two justices I think of as the most formalistic of the justices, asked questions only about practical issues, efficiency effects. That pleased me. I understand why it doesn't please Jennifer.
Nick Marr: Okay, shall we move on to a couple questions here? We'll go to one about Office of Solicitor General. Lurking in the background is the question of whether the new administration's solicitor will agree with Trump's solicitor that Lucia applies to SSA administrative law judges. Dick, do you want to speak to that one first, or Jen?
Prof. Richard Pierce: Yeah, I'll take a first crack at it. I actually filed an amicus brief on that in this case. As with many of my briefs, it began with "The Court should not decide this issue in this case." The rest of it was 20 pages of "However, if it does..." I made a big argument that it's not at all clear to me that Lucia applies to social security administrative law judges. I went through a lengthy description of the enormous differences between the roles of ALJs at regulatory agencies and the role of the 1,600 administrative law judges at the Social Security Administration.
I also pointed out that if they are any kind of officer, the SSA ALJs almost certainly are principal officers who would have to be, in each case, nominated by the president and confirmed by the Senate because their decisions are not reviewable by any principal officer. The precedence in distinguishing between inferior officers and principal officers I interpret to mean you can't be an inferior officer unless there is a principal officer who can review, and potentially overturn, your decision.
I can't imagine how we could live with an additional 1,600 principal officers that would have to go through the nomination and confirmation process.
Prof. Jennifer L. Mascott: I share the instinct that it's an interesting question in general about how free this solicitor general's office will feel to reverse or change positions of the Trump administration.
On this particular question, though, about how administrative law judges should be treated in the Social Security Administration, I don't think, for a number of reasons, that that's a good candidate for reconsideration, and I'll say why.
I do agree with Dick that what these ALJs are doing is quite different in kind than the couple hundred ALJs who are in charge of formal hearings under the definition of formal adjudication as it's set forth in the APA, as we typically think about it.
However, just one practical point. I think the brief filed by the government here was just seven days after the administration turned over, so there may just not have been the amount of time that you would want to have to reconsider things.
Second, the Trump administration issued an executive order that built on Lucia and said whether or not Lucia extends beyond the Securities and Exchange Commission ALJ context, we're going to go ahead and just voluntarily apply it to all administrative law judges. To my knowledge, that particular executive order, even though some of the other administrative ones have been taken off the books and reversed, I don't believe anything has yet happened with that.
Indeed, I would -- the Administration Conference of the United States did a study on implementation of that executive order, and interestingly, almost every agency's representatives who were involved in hiring actually were completely fine, as a practical matter, with the executive order. It did take ALJs out of some of the competitive service requirements as a practical matter, but left it up to the agency to decide what characteristics to look at in the future for hiring administrative law judges.
Many agencies chose to implement the order by still imposing merit-based requirements, just doing it in a way that was tailored more to the agency's need. There actually is a longstanding history on both sides of the aisle with dissatisfaction, I think, about how the Office of Personnel Management had been hiring and evaluating ALJ candidates. I don't know, practically, if there would be the will to want to uproot that system.
And then, I also [inaudible 00:25:41] that I don't think Lucia explicitly spoke to the Social Security Administration ALJs because it was such a minimalist opinion and it was just dealing with the SEC ALJs and all of the formal things they do with cross-examination, having motions to compel, compliance with subpoenas. The Social Security Administration ALJs are distinguishable. However, Justice Kagan, in that opinion, said it was not the case that all of the characteristics that made the SEC ALJs officers have to be present for officer status in the future.
I just don't think, actually, Lucia speaks to it at all. Instead, I think there's a good argument to say that, going back to Buckley v. Valeo in 1976, the question is answered. That case just gave the significant authority standard, but it also talked about how district court clerks are inferior officers and mentioned a couple of other positions. In a situation like this where we've got the ALJs making benefits determinations, it's hard for me to see how, even under that general standard, they don't qualify as officers under the more longstanding precedent of Buckley.
Also, the executive branch has, internally, an Office of Legal Counsel opinion defining what an officer is, and it's somebody who exercises a portion of the delegated sovereign authority of the United States. Now, obviously, there can be, I suppose, a range of interpretations about exactly what that means, and the lengthy opinion tries to go into what some of those are.
But, again, I think there'd be a strong case under that standard, and the way it's described in that opinion, that the decision makers for benefits awards or for revoking benefits would qualify as officers. Obviously, you would think the solicitor general's office would be mindful of that opinion in the future when figuring out which positions it's going to defend as employee positions versus officer positions.
Nick Marr: Great. I have a couple more questions, but first, I'm going to open the floor to our audience, so as people line up in the queue, I'll offer the question of -- and maybe we already touched on this, so you can just take it back, but the principal versus inferior officer. Jen, you just mentioned how they're officers, and Dick, I think you're on the side of them being inferior officers. What do we think? Dick, maybe you want to take the first crack?
Prof. Richard Pierce: I think that the Federal Circuit got that right in the Arthrex case that was just argued before the Supreme Court a week ago. As I interpret that oral argument, I think that there's six justices, at least, who are prepared to uphold the Federal Circuit's approach, which is if somebody's an officer and their decisions cannot be reviewed by a principal officer, then they are necessarily principal officers.
I'd be interested in Jennifer's view on that.
Prof. Jennifer L. Mascott: Well, look, the Court's certainly not going to weigh into this issue here in this case because, I think as Dick mentioned, maybe not, all the parties here are going in with the assumption that the ALJs are officers. I certainly have not conceded that they're principal officers, so I don't actually think the Court would get to that additional question here.
We'll also know more of the Court's thinking on how it's going to interpret and apply its past precedent about what supervision has to look like for somebody to be an inferior officer submitting under a principal officer after we get the Arthrex decision.
Look, I don't think anybody would have a stomach for all of a sudden suggesting that these thousands of ALJs need to be appointed by the president with Senate consent. It seems to me that if that became a question, then folks would start looking at do they get front-end direction? What role does the social security commissioner play? And that a more reasonable remedy, if there needed to be such a thing, would be either through congressional action or something else putting the ALJs subject to the direction that needs to be required rather than suggesting that these folks are reaching the kinds of decisions that require the sort of independence that you'd get from Senate confirmation.
But we're a few steps away, I think, from that, as a practical matter, here. Hopefully, the Court will give a little bit more guidance on the way it will evaluate sufficient supervision and tenure protection that ensconces someone as an inferior officer in the Arthrex decision.
Nick Marr: Great. Let's return to the oral arguments, then. You were talking about the difference between the formal questions and the functionalist questions. The judges asked a lot of functionalist questions. What would formalist questions have looked like? Jen, what would have wanted to see more of in the oral arguments?
Prof. Jennifer L. Mascott: Well, I think that the petitioners' briefs—and there were actually two petitioners who filed briefs in this case—and then it came through a little bit in the affirmative part of the argument today. I think you'd be looking at, again, first of all, who is in charge of who has the power to impose the exhaustion requirement to establish the rules of the road for the adjudication here? And starting with what kind of review has Congress provided? What did it authorize the Social Security Administration to do? What requirements did it impose before judicial review is provided?
I think the petitioners are correct that in the statute, it basically provides for review after there's been exhaustion of remedies, meaning after you've gone through a certain set of procedures through the Social Security Administration, then one can get review in Article III court without really speaking to the separate question of how each particular issue needs to be raised or not raised during the course of issues that are being challenged and appealed within the Social Security Administration itself.
I would think folks would've talked a little bit more about the language of the statute. What does it mean? What's the significance of the fact that the Social Security Administration then -- perhaps one might say maybe you'd read ambiguity into that. Even if you did, does that mean the Social Security Administration has authority to promulgate regulations?
Justice Thomas, in the Sims opinion, suggests at one point that he thinks they probably could, and they didn't here, and so focusing more on that. So, it did come up a little bit, but I think my sense was that—which is totally natural—is that a lot of the justices are seeing Sims as, obviously, a very closely on-point case. So they were more going back to that precedent and trying to figure out with part of it being just a plurality opinion, how do we weave in here Justice O'Connor's approach in her separate writing, which seemed to be the "more narrow approach," perhaps? And, if Sims is governing precedent, how similar or different is this case?
But I think in so doing, a lot of the justices seemed, again, to be conceiving of Sims as an exception from the general waiver rule whereas I think if you -- at least when I reread Justice Thomas' opinion, I saw him starting from the opposite point of actually a more formalist point. Which is to say there is no statutory or regulatory requirement here of exhaustion and so even if this other common law rule is valid and applies, it's sufficiently distinguishable here. We're not going to apply it.
As I say, I don't see that there are so many differences here that it would uproot Sims. Now, the functionalist justices, and even some we don't think of as functionalist, I think came up with many distinctions that are reasonable if one is going to try to figure out what system works best, and the Court is going to make it up and believe that its role is to decide exhaustion requirements in Social Security Administration proceedings. It's certainly the case that the ALJs are hearing many more cases, so if one doesn't imply a forfeiture or wavier rule at the ALJ stage, it's going to have a lot more of an impact than the Sims case which was dealing with an even higher level of review before the appeals council.
Also, there are some differences in terms of the ALJs' responsibility to help parties vet issues or investigate issues or not, and that the ALJ doesn't play quite precisely the same role as the appeals council.
Again, once we get into that realm, it seems to me we've got the justices sitting there trying to figure out what exhaustion rule makes sense, what's the best one, what's the most workable, and I don't see how anybody today established that that's really the role of the Supreme Court to be writing the rules for Congress and the agency carrying out congressional authority. When Congress has spoken to judicial review and not filled in the gap here of exhaustion, why would the Court then come and -- what role does it have to reason through all these softer factors today?
Nick Marr: Dick, do you want to respond or add anything?
Prof. Richard Pierce: I think that's a plausible approach. Not only is that approach reflected in Justice Thomas' opinion for the plurality in the Sims case, there's a very good amicus brief filed by a couple of administrative law professors who argue, I think quite persuasively, that this is a perfect topic for the Social Security Administration to address through issuance of rules. I think it would be. It lends itself well to that treatment.
There is, though, a practical problem there if you apply that approach beyond the Social Security Administration. Most agencies, I think, do not have rules that require issue exhaustion. They don't have those rules because the background norm has been, for over 100 years, the common law requirement that every party must exhaust issues by raising each issue at each level in which it can be raised at an agency.
There would be a disruptive effect in the sense of requiring a couple hundred agencies to sit down and devise rules for the first time to govern issue exhaustion.
Nick Marr: Dick, could you maybe talk a little bit about the applicability of issue exhaustion to other agencies and other contexts? Where might this case take us?
Prof. Richard Pierce: Issue exhaustion arises constantly at every agency. I write a treatise that requires me to read ever Court opinion in the field of administrative law, and issue exhaustion comes up again and again and again and again. The courts, except for these pretty narrow exceptions, the courts are really very strict in saying that you have to raise the issue at every level within the agency, and if you don't raise it at every issue, you can't raise it on review. They give this list of nine different reasons why that has always been the common law approach, subject only to a couple of judge-made narrow exceptions.
That applies to every agency. This would be a revolutionary change if the Court were to say issue exhaustion is required only when it is either required by statute or required by rule. Then every agency would have to have a rulemaking and figure out what rules they want to adopt.
Prof. Jennifer L. Mascott: I see that concern that you're raising. I do, though, think it's important to point out that, at least in the brief that was filed on behalf of the Davis petitioner by Kannon at Paul, Weiss, who did not argue today, he does list a number of agencies that are subject to statutory exhaustion requirements.
What would be your answer, Dick, if it is a 100 percent understood general common law background principle as to why, in those cases, Congress decided to act and impose a particular exhaustion requirement? And does that leave any room at all to then think that there's not a distinction going on here where Congress seems to instead definitively provide judicial review in certain circumstances?
Prof. Richard Pierce: I would have to look at each of those statutes to be able to answer that question definitively. When I read the issue exhaustion opinions, and I read probably at least a dozen a month, the vast majority of them arise in contexts in which there is no statutory or rule-based duty to exhaust issues.
Now, some of them arise in contexts in which there is a general statutory duty to exhaust remedies, but rarely does the statute, or any rule that the agency has, address issue exhaustion as opposed to just the general principles of exhaustion.
I'm sure there are some agencies that have this either as a statutory requirement and in the detail necessary for a court to be able to understand it and apply it, but I think it's a very small minority of agencies.
Prof. Jennifer L. Mascott: Of course, the other point here that we haven't really talked about a lot, and it did come up, obviously, in oral argument and in the briefing, is the petitioners then would argue that regardless of the general issue of exhaustion principle, that, here, you're dealing with a somewhat unique circumstance—which is what I think Justice Gorsuch was getting at in his questions about the 2018 instructions to the administrative adjudicators—where the Social Security Administration doesn't seem to think that its ALJs have the competence to deal with this particular constitutional structural question here of the Appointments Clause.
So, despite what the general principles would be, is there a distinction here? Because not only is there a doubt about whether these ALJs could hear these structural challenges, they were explicitly instructed, at certain points, not to consider them, suggesting that this was going to be a unique principle that really an Article III court needed to weigh in on. In part because, again, it's a constitutional structural thing, but also, obviously, a somewhat conflict of interest with the ALJs or any adjudicator within the Social Security Administration having to rule on whether their own service is constitutional or not because of how they were appointed.
Prof. Richard Pierce: The government's response on that issue was that they interpret, the government interprets Sims as the plurality opinion is qualified necessarily by the concurring opinion in Sims as requiring a showing that the government affirmatively misled parties into believing that they could not raise certain issues at certain levels in adjudication.
That's certainly not what happened here. What, arguably, happened in Sims was the government said you don't have to raise this issue now, and then said, "Gotcha" when the Court and tried to raise it, and the government then switched positions and said, "Oh yeah, you had to raise it back when we told you that you didn't have to raise it."
By the way, I would also note at this point there was just a split decision of the D.C. Circuit in Fleming v. Department of Agriculture in which the judges debated these issues at great length in the context of litigation before administrative law judges at the Department of Agriculture.
Nick Marr: We do have one audience question.
Carlos: Thank you. Carlos. I had a quick question with regard to the policy implications of having to appoint a few hundred ALJs when the Biden administration seems to be having a hard time doing this transition. Do you think that that's also in the back of the minds of SCOTUS here where there's some concern that we're under special circumstances and that might weigh on what to expect here? Thank you.
Prof. Jennifer L. Mascott: Well, this is Jen. I'll let Dick follow up because he has more substantive views on feeling like the issue should be in play to consider whether these ALJs are principal officers if they're officers at all. But, no, I don't think here most folks are thinking about that, the need for Senate consent, because, again, it seems to have been just assumed in the way the case was argued that the ALJs are inferior officers, but if they're inferior officers, their appointments could be constitutional so long as they're approved, basically, or made by the dead of the department, so the social security commissioner.
Action has already been taken in the past to remedy the appointments of the judges. I think, actually, what could be influencing people here is the fact that -- one reason why you might want to make sure that claimants have the opportunity to be able to get judicial review of an Appointments Clause claim is to make sure that there's an incentive to raise the claim and that it's not so easily waivable that nobody's ever going to bring it and we're going to have an unconstitutional structure go on in perpetuity.
Here, the constitutional remedy has already been put into place in the sense that these ALJs, their appointments have already been ratified, so today, if one thinks that ratification was effective, they're all constitutionally serving. So there's not an ongoing constitutional violation if they're inferior officers for all matters being considered from this point forward. The question is a little bit more, arguably, more discreet one of what happens to the people whose claims were heard before that ratification took place.
If Dick is right and there's an even bigger constitutional problem and they're principal officers, then of course, that would worry people. That's not even been part of the general discussion, I don't think, at all about Social Security Administration or really ALJs in general. It's outside scholars who are just trying to take a second look. It's not as though litigants, to my knowledge—Dick, maybe you can correct me—but I'm not sure that there's any litigation right now suggesting that Lucia and ALJs of any kind need to be challenged because they're principal officers and now they need to be appointed with Senate consent.
Folks, it seems to me, have sort of settled on the intermediate position that they're inferior officers, at least for litigation purposes.
Prof. Richard Pierce: I'll agree with Jennifer on two points. First, it's highly unlikely to be an issue in this case. Second, I don't think it is, or should be, a matter of great concern when we're talking about inferior officer status because, as long as Congress enacts a statute that authorizes it, the appointment can be made by the head of each department. And that's not a big deal.
But there is already pending at the Court, and indeed argued last week, the first of what I expect to be a dozen or more cases, depending on how the Court resolves the first one, in which the question is whether administrative law judges—in that case they're called administrative patent judges, and there are, I think, 450 of them—whether they are principal officers. Their decisions are not subject to review.
Something has to give here. Either [CROSSTALK 00:47:50] --
Prof. Jennifer L. Mascott: That's true, but that's a different structure than some of these other agencies, right? For example, with the Lucia case with the SEC ALJs, the SEC, in those circumstances, can, if it so chooses, come in and completely reverse or redo the entire ALJs' proceedings.
The administrative patent judge circumstance is different because right now there's not a mechanism, at least this is what some of the parties are claiming, for the director of the Patent and Trademark Office, or for anybody other than a court, to come in and completely reverse the decision of the administrative patent judges.
So the question is if there's not a certain way to subject those decisions to reversal within the agency itself, then there's a little bit more of a principal officer question than in any other circumstance where the head, at least the commissioner sitting at the top, could redo the adjudicative proceeding from scratch if they wanted to. So I don't think those facts apply in every single agency that has administrative adjudicators by any stretch.
Prof. Richard Pierce: Not at every agency, but I have counted so far over 3,000 administrative judges who make decisions that are not subject to review by any principal officer, and hence, under the Edmond opinion of the Supreme Court and the Arthrex opinion of the Federal Circuit, each of those 3,000 is a principal officer. That applies, certainly to administrative law judges. There is no one who qualifies as a principal officer who has the power to review any decision that is made by a Social Security Administration administrative law judge.
It's just a matter of time before some petitioner at SSA raises that issue. If, for instance, our mutual friend, Mark Perry, were to take one of those cases, I guarantee you he would raise that issue. Unless and until the Supreme Court changes the law it has previously announced as the basis to distinguish between principal officers and material officers, the Court will have no choice but to hold that the 1,600 SSA ALJs are all principal officers.
At that point, I think the Court will have to reconsider, though, this entire area of decision making because I don't think that's viable.
Prof. Jennifer L. Mascott: Although, interestingly, Mark Perry, in litigating Arthrex is focused there on suggesting, actually, that administrative patent judges are inferior officers because of looking at the front end and all of the instruction and direction to which they're subject before they rule. But maybe there would be a different litigator who would bring the challenge.
Nick Marr: Okay, we have about five minutes left and no audience questions in the queue. I guess we will do the classic reading of the tea leaves. Dick, I know you said in the very beginning you think it'll be 9-0. Maybe you could say a little bit more about that, and then, Jen, give your take on where you think this case is going and what the decision will be.
Prof. Richard Pierce: Yeah, I only see two possible outcomes based on the oral argument. One is 9-0 for the government on any of four theories. The other is potentially 9-0 for the petitioner, but if so, on a very narrow basis that includes the point that Jen has been emphasizing—the lack of agency rules governing issue exhaustion and the inquisitorial versus adversarial context in which the issues arise.
Prof. Jennifer L. Mascott: Nick, I heard, I think, in several justices today, it sounded to me, skepticism about this idea that the petitioners got all the vetting that they were due before the Social Security Administration on the Appointments Clause structural question. So, I would be very surprised if there weren't perhaps a couple of separate writings on at least different approaches to reasoning the outcome of this case.
Because it seemed to me that, although many of the questions were functionalist, that the justices each were motivated by somewhat different considerations, whether, again, with Justice Alito there the issue of just time and efficiency and how the remedy and it seems ridiculous to have different judges have to give new hearings if the only constitutional defect has now been remedied by just ratifying the appointment to Justice Gorsuch who seemed really focused on what exactly the adjudicators had been instructed to do and how much the litigators knew about that to Justice Kavanaugh already asking how do we solve this problem, government, if you lose.
We'll see. I don't anticipate this is going to be as controversial, obviously, as some other matters, but I do think the justices all seemed to be motivated by slightly different concerns here.
Nick Marr: Okay, thank you. With that, I'll offer a chance for any closing remarks that either of you want to offer. Otherwise, we see no audience questions in the queue, and we'll close out a little bit early this afternoon.
Prof. Richard Pierce: The only thing I'd add is the case I'd be looking at for the potential big important changes in law really is the Arthrex case rather than Carr v. Saul. I think in Arthrex, the Court has some real tough issues it has to grapple with.
Prof. Jennifer L. Mascott: I agree with that. I think Arthrex is a lot more likely to have a little bit more of a momentous impact, perhaps. The Court, there, could just also reason from past precedent and just try to flesh out a little bit more what it means for an inferior officer to need supervision, and is that going to be addressed by the amount of tenure protection somebody has and how susceptible they are to being fired, or can it be handled with how closely subject they are to direction.
Here, it seems to me that the Sims precedent is first and foremost in many of the justices' minds, and there's just such a close precedent on the books even though a portion of the opinion was just a plurality opinion. I suspect, as Dick mentioned early on, that this could be just, again, a very sort of incremental decision here that doesn't really make a sea change one way or the other; just reasoning a little bit from Sims, and perhaps confining the holding closely to the factual circumstances before the justices here with the particular circumstances of the Social Security Administration and the nature of the Appointments Clause claim rather than wreaking some major change in waiver or forfeiture doctrine.
Nick Marr: Well, thanks, Jen. On behalf of The Federalist Society, I want to offer our thanks to Professor Pierce and Professor Mascott for joining us today and for participating in this oral argument review of Carr v. Saul, and to our audience for calling in, for your good questions.
Just a reminder, we welcome your feedback on these programs and others by email at firstname.lastname@example.org. Be keeping an eye on your email and our website for announcements about upcoming teleforum calls like this one and Zoom events. We have a few more this week, so be sure to check on that. I hope to see you there.
With that, thank you all for joining us today. We are adjourned.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.