Fleming v. U.S. Dep't of Agric.

• Decision Date: 16 February 2021
• Docket Number: C/w 17-1249, 17-1250,No. 17-1246,17-1246
• Citation: 987 F.3d 1093
• Parties: Joe FLEMING, Individually, and as Joe Fleming Stables, Petitioner v. UNITED STATES DEPARTMENT OF AGRICULTURE, Respondent
• Court: U.S. Court of Appeals — District of Columbia Circuit

987 F.3d 1093

Joe FLEMING, Individually, and as Joe Fleming Stables, Petitioner

v.UNITED STATES DEPARTMENT OF AGRICULTURE, Respondent

No. 17-1246

C/w 17-1249, 17-1250

United States Court of Appeals, District of Columbia Circuit.

Argued November 15, 2019

Reargued April 17, 2020

Decided February 16, 2021

Rehearing En Banc Denied April 13, 2021

David Broiles argued the cause for petitioners. With him on the brief was Karin Cagle.

Ilya Shapiro was on the brief for amicus curiae Cato Institute in support of petitioners.

Michael Pepson and R. James Valvo, III were on the brief for amicus curiae Americans for Prosperity Foundation in support of petitioners.

Aditya Dynar was on the brief for amicus curiae The New Civil Liberties Alliance in support of petitioners.

Hashim M. Mooppan, Deputy Assistant Attorney General, U.S. Department of Justice, argued the cause for respondent. With him on the brief were Mark R. Freeman, Mark B. Stern, Washington, DC, Joshua M. Salzman, Daniel Aguilar, and Amanda L. Mundell, Attorneys.

Pratik A. Shah, appointed by the court, argued the cause as amicus curiae. With him on the briefs were Z.W. Julius Chen, and Rachel Bayefsky, Washington, DC.

Alan B. Morrison and Richard J. Pierce, Jr. were on the brief for amici curiae Alan B. Morrison et al., in support of appointed amicus curiae.

Robert J. Lesnick was on the brief for amicus curiae The Federal Administrative Law Judges Conference in support of appointed amicus curiae.

Danette L. Walker (Mincey) was on the brief for amicus curiae Association of Administrative Law Judges in support of appointed amicus curiae.

Marilyn Dixon Zahm was on the brief for amicus curiae SSA ALJ Collective in support of appointed amicus curiae.

Before: Srinivasan, Chief Judge, and Katsas and Rao, Circuit Judges.

Srinivasan, Chief Judge:

The petitions for review in these cases ask us to set aside decisions of the Department of Agriculture imposing sanctions on petitioners for violating the Horse Protection Act, 15 U.S.C. § 1821 et seq . After the petitions for review were filed, the Supreme Court decided Lucia v. S.E.C. , ––– U.S. ––––, 138 S. Ct. 2044, 201 L.Ed.2d 464 (2018), holding that the SEC's administrative law judges (ALJs) had not been appointed in compliance with the Appointments Clause, U.S. Const. art. II, § 2, cl. 2. In light of Lucia , the government agrees with petitioners that the ALJ who presided over petitioners’ cases was improperly appointed. The government moves for vacatur of the challenged orders and remand for new proceedings before constitutionally appointed ALJs.

Petitioners, however, oppose the government's motion, urging us first to address a number of additional challenges they advance. While we consider and reject one of those additional claims, we cannot consider another of the arguments because petitioners failed to present it before the agency, and we decline to consider the remaining ones in the present posture. We therefore grant the petitions for review and remand these cases so that petitioners may have new administrative hearings before validly appointed ALJs.

I.

A.

The Horse Protection Act, 15 U.S.C. § 1821 et seq. , imposes penalties on persons who enter a "sore" horse into shows or auctions. "Soring" refers to the practice of intentionally injuring a horse's forelimbs so that it will quickly lift its feet as a result of the pain, inducing it to walk with a high-stepping gait considered desirable for shows and exhibitions. See Thornton v. USDA , 715 F.2d 1508, 1510 (11th Cir. 1983). The Horse Protection Act forbids the practice of soring in order to prevent animal cruelty and protect the industry. See id. Any person who knowingly shows or exhibits a sore horse faces criminal and civil penalties, including temporary disqualification from shows and exhibitions. 15 U.S.C. § 1825(a)(1), (b)(1), (c).

The Department of Agriculture enforces the Horse Protection Act. The Department begins enforcement proceedings under the Act (and other statutes it administers) by filing an administrative complaint against suspected violators. See 7 C.F.R. §§ 1.131, 1.133(b)(1). The proceeding is then assigned to an ALJ within the agency. Id. § 1.132. A respondent served with a complaint has twenty days to file an answer. Id. § 1.136(a). If no answer is filed, the ALJ may enter a default order. See id. §§ 1.136(c), 1.139. If an answer is filed, the ALJ holds a hearing and issues a decision. Id. §§ 1.141, 1.142.

Parties can appeal the ALJ's decision to a Department officer known as the Judicial Officer. Id. § 1.145(a). The Judicial Officer, exercising authority delegated by the Secretary of Agriculture, acts as the agency's final adjudicator. Id. § 2.35(a). The Judicial Officer reviews the record and the parties’ briefs, presides over any oral argument, and issues a final decision for the Department. Id. §§ 1.145, 2.35(a). By regulation, only decisions of the Judicial Officer are "final for purposes of judicial review." Id. §§ 1.139, 1.142(c)(4).

B.

In 2017, the Department filed an administrative complaint against petitioners Jarrett Bradley, Joe Fleming, and Sam Perkins, alleging that each of them had entered sored horses into competition in violation of the Horse Protection Act. No petitioner filed a timely answer to the complaint against him, and the agency moved for default orders in each case. Petitioners then filed objections to the motions for default. Among petitioners’ arguments, they contended that the presiding ALJ qualified as an "Officer[ ] of the United States" for purposes of the Constitution's Appointments Clause, U.S. Const. art. II, § 2, cl. 2, and had not been appointed in compliance with the Clause. Without addressing that argument, the ALJ entered the requested default orders, assessing civil monetary penalties and temporarily disqualifying petitioners from participating in horse shows or exhibitions.

Petitioners appealed to the Judicial Officer, renewing their contention that the ALJ had been improperly appointed. Petitioners additionally argued that the Judicial Officer's own appointment was invalid under the Appointments Clause. The Judicial Officer declined to rule on the Appointments Clause challenge to the ALJ, finding that it "should be raised in an appropriate United States Court of Appeals." Joe Fleming , 76 Agric. Dec. 532, 535 (2017). With regard to the constitutionality of his own appointment, the Judicial Officer concluded that he had been lawfully appointed. Id. at 538. After rejecting petitioners’ remaining arguments, the Judicial Officer affirmed the default orders. Petitioners then sought review in our court.

C.

While the petitions for review were pending, the Supreme Court decided Lucia v. S.E.C. , ––– U.S. ––––, 138 S. Ct. 2044, 201 L.Ed.2d 464 (2018). Lucia considered whether ALJs working in the Securities and Exchange Commission had been appointed in violation of the Appointments Clause. Id. at 2051. For purposes of the Clause, federal workers fall into three categories: (i) principal officers, who must be appointed by the President with the advice and consent of the Senate; (ii) inferior officers, who can be appointed by the President, the head of a department, or a court of law; and (iii) non-officer employees, whose appointments are unaddressed (and thus unconstrained) by the Clause. See id. at 2051 & n.3. Lucia held that the ALJ in that case was an officer rather than an employee, and that his appointment was invalid because he had not been appointed by the President, a department head, or a court of law. Id. at 2055. The Court vacated the ALJ's order and remanded for proceedings before a properly appointed ALJ. Id. at 2055.

After Lucia , the government conceded that the ALJ who had decided petitioners’ cases was, as petitioners argued, an inferior officer who had been improperly appointed. The government thus moved our court to impose the same remedy ordered in Lucia : vacatur of the challenged orders and remand for new hearings before a different, properly appointed ALJ.

Petitioners, however, oppose the government's motion, urging us to address a number of additional arguments before any remand. Specifically, petitioners argue, as they did before the Judicial Officer, that (i) the Judicial Officer, appointed as an inferior officer, is in fact a principal officer; (ii) the Department's ALJs also are principal officers, not just inferior officers as is now conceded by the government; and (iii) the Department lacked authority under the Horse Protection Act to disqualify petitioners from entering horses in shows and exhibitions. Petitioners also advance a new argument they have not previously raised: the Department's ALJs enjoy dual layers of "for-cause" protection against their removal, 5 U.S.C. §§ 1202(d), 7521, and those dual layers of protection unconstitutionally constrain the President's removal power under the Supreme Court's decision in Free Enterprise Fund v. PCAOB , 561 U.S. 477, 492, 130 S.Ct. 3138, 177 L.Ed.2d 706 (2010).

The government argues that we should decline to address petitioners’ additional arguments and should do no more than grant them relief based on Lucia . With regard to petitioners’ new argument that the dual layers of for-cause-removal protections for ALJs are unconstitutional under Free Enterprise , the government contends that we cannot consider the argument because petitioners failed to raise it before the agency. If we were to reach the merits of that issue, the government submits that we should adopt a narrowing construction of one of the applicable layers of removal protections, see 5 U.S.C. § 7521, to avoid serious constitutional concerns. Petitioners, for their part, urge us to reject the government's proposed narrowing construction and declare the dual for-cause-removal protections unconstitutional.

Thus, no party takes the position that the dual protections would be valid under Free Enterprise without adopting the government's narrowing construction. Yet Free Enterprise left open whether...