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Justices grant review in two cases that test jurisdiction of district courts

The Supreme Court on Monday added two new cases, both involving the jurisdiction of federal district courts, to the merits docket for the 2022-23 term. And the justices called for the federal government’s views in two more cases, involving a school board’s responsibility for student-on-student sexual harassment and pleading requirements in cases brought under the False Claims Act.

In Securities and Exchange Commission v. Cochran, the justices agreed to decide whether federal district courts have the power to consider claims challenging the constitutionality of the commission’s administrative law proceedings.

The case was filed by Michelle Cochran, an accountant against whom the SEC brought administrative proceedings in 2016, alleging that she had failed to comply with federal auditing standards. An administrative law judge agreed that Cochran had violated federal law, fined her over $20,000, and banned her from practicing before the SEC for five years.

After the Supreme Court’s 2018 decision in Lucia v. SEC, holding that the appointments of SEC ALJs violated the Constitution because they were made by the SEC’s staff rather than the commission itself, the SEC sent Cochran’s case back for a new hearing in front of a different ALJ.

Cochran went instead to a federal district court in Texas, seeking to block the administrative proceedings before the new ALJ. She argued, among other things, that restrictions on the SEC’s power to remove ALJs – who can only be terminated “for cause” – violate Article II of the Constitution, which charges the president with ensuring that the laws are “faithfully executed.”

The district court dismissed Cochran’s case. Reasoning that federal law provides for the review of final orders by the SEC in the court of appeals, the district court held that Cochran was required to go to the court of appeals. But the full U.S. Court of Appeals for the 5th Circuit reversed and sent the case back to the district court, holding that at the very least, Congress did not intend to bar claims like Cochran’s from going first to the district court.

The SEC came to the Supreme Court in March, asking the justices to hold its petition until the court issues its decision in Axon Enterprise v. Federal Trade Commission, a case involving a similar statutory scheme that the justices will hear during the 2022-23 term. But Cochran urged the justices to grant review now, arguing that doing so is the only way to eliminate both the conflict among the lower courts on this question and “the otherwise inevitable and unnecessary spin-off litigation that would accompany an FTC-specific decision in Axon.”

The justices also granted review in Jones v. Hendrix, in which they will consider whether a district court has the power to review a claim that a federal prisoner’s sentence is invalid based on a Supreme Court decision, issued after the denial of his petition for post-conviction review but applying retroactively, that narrowed the scope of the federal criminal law that resulted in an enhanced sentence, when he could not previously have raised that argument under the precedent in that circuit.

Both cases will likely be scheduled for argument in the fall.

The justices called for the views of the U.S. solicitor general in Fairfax County School Board v. Doe, in which the school board had asked the justices to decide whether it can be held liable for the sexual harassment of a student by another student. The case was filed by a student known only as Jane Doe, who was sexually assaulted by another student while they were on a school-sponsored band trip.

A jury concluded that the other student, known as Jack Smith, had severely harassed Doe, but it found that the school board could not be held responsible because it was not actually aware of the harassment. The U.S. Court of Appeals for the 4th Circuit reversed, holding that it was enough that the school board had received a report alleging sexual harassment. The school board came to the Supreme Court in December, asking the justices to weigh in, but on Monday the justices instead invited the Biden administration to weigh in.

The court also sought the Biden administration’s views in United States ex rel. Owsley v. Fazzi Associates, a case brought by a registered nurse who alleged that a home health agency had defrauded the federal government by altering data to make Medicare and Medicaid beneficiaries seem sicker and therefore in need of more care, for which the government paid. At issue in the case is whether, under the Federal Rules of Civil Procedure, the nurse must plead specific details of false claims, or whether it is enough that she provided details about a scheme to submit false claims, from which an inference that false claims were submitted can be drawn.

There is no deadline for the solicitor general to file her briefs. The justices will meet for their next conference on Thursday, May 19.

This article was originally published at Howe on the Court.

Recommended Citation: Amy Howe, Justices grant review in two cases that test jurisdiction of district courts, SCOTUSblog (May. 16, 2022, 1:59 PM),