N.Y. Republican State Comm. v. Sec. & Exch. Comm'n

• Citation: 799 F.3d 1126
• Decision Date: 25 August 2015
• Docket Number: 14–5242.,Nos. 14–1194,s. 14–1194
• Parties: NEW YORK REPUBLICAN STATE COMMITTEE and Tennessee Republican Party, Petitioners v. SECURITIES AND EXCHANGE COMMISSION, Respondent.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

799 F.3d 1126

NEW YORK REPUBLICAN STATE COMMITTEE and Tennessee Republican Party, Petitioners

v.SECURITIES AND EXCHANGE COMMISSION, Respondent.

Nos. 14–1194

14–5242.

United States Court of Appeals, District of Columbia Circuit.

Argued March 23, 2015.

Decided Aug. 25, 2015.

Jason B. Torchinsky argued the cause for petitioners. With him on the briefs were H. Christopher Bartolomucci, Erin E. Murphy, and Brian J. Field.

Allen Dickerson was on the brief for amicus curiae Financial Services Institute, Inc. in support of appellants.

Jeffrey A. Berger, Senior Litigation Counsel, Securities and Exchange Commission, argued the cause for respondent. With him on the brief were Michael A. Conley, Deputy General Counsel, Jacob H. Stillman, Solicitor, and Jacob R. Loshin, Attorney. Thomas J. Karr, Assistant Attorney General, entered an appearance.

Ronald A. Fein was on the brief for amicus curiae Free Speech For People in support of respondent.

Muhammad Umair Khan was on the brief for amicus curiae Letitia James, New York City Public Advocate, and Trustee of the New York City Employees' Retirement System in support of appellee/respondent.

J. Gerald Hebert, Lawrence M. Noble, Fred Wertheimer, and Donald J. Simon were on the brief for amici curiae The Campaign Legal Center and Democracy 21 in support of respondent-appellee.

Before: TATEL and PILLARD, Circuit Judges, and EDWARDS, Senior Circuit Judge.

Opinion

Opinion for the Court filed by Circuit Judge PILLARD.

PILLARD, Circuit Judge:

The New York Republican State Committee and the Tennessee Republican Party (“the plaintiffs”) sued the Securities and Exchange Commission to invalidate a four-year-old rule, promulgated under the Investment Advisers Act of 1940, regulating campaign contributions by investment advisers. The district court dismissed the suit for lack of subject matter jurisdiction, concluding that courts of appeals have exclusive jurisdiction to hear challenges to rules under the Act. The plaintiffs appealed that decision and concurrently filed a petition asking this court for direct review. We consolidated and expedited the cases. We hold that courts of appeals have exclusive jurisdiction to hear challenges to rules promulgated under the Investment Advisers Act. We therefore affirm the district court's decision. We also hold that such challenges must be brought in this court within sixty days of promulgation of the rule, and there are no grounds for an exception in this case: The law governing where to file was clear during the limitations period, and the length of time the statute affords for pre-enforcement review is adequate. We therefore dismiss the petition as time-barred.

I.

“The Investment Advisers Act of 1940 was the last in a series of Acts designed to eliminate certain abuses in the securities industry, abuses which were found to have contributed to the stock market crash of 1929 and the depression of the 1930's.” SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 186, 84 S.Ct. 275, 11 L.Ed.2d 237 (1963). The Act is the linchpin of the federal regulation of financial advisers and money managers. In enacting the Investment Advisers Act, “Congress intended ... to establish federal fiduciary standards for investment advisers.” Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 471 n. 11, 97 S.Ct. 1292, 51 L.Ed.2d 480 (1977) ; see also Transamerica Mortg. Advisors Inc. v. Lewis, 444 U.S. 11, 16–17, 100 S.Ct. 242, 62 L.Ed.2d 146 (1979). Most individuals and firms that provide paid advice about the value of securities or the advisability of investing in, purchasing, or selling them are considered to be investment advisers subject to the standards of conduct set forth in the Act. See 15 U.S.C. § 80b–2(a)(11).

Under the Act, the Commission has the authority to promulgate “rules and regulations ... reasonably designed to prevent such acts, practices, and courses of business as are fraudulent, deceptive, or manipulative.” Id. § 80b–6(4); see also id. § 80b–11(a). Congress also provided for judicial review of orders the Commission issues pursuant to the Act. According to the relevant provision, “[a]ny person or party aggrieved by an order issued by the Commission” pursuant to the Act “may obtain a review of such order in” an appropriate court of appeals by filing a petition with that court “within sixty days after the entry of such order.” Id. § 80b–13(a).

In 2010, the Commission promulgated a rule limiting investment advisers' campaign contributions to certain government officials. Such contributions are not banned, but they now come at a cost. If an investment adviser or certain of its employees contributes to the political campaign of a government official with the power to influence the adviser's hiring by a government client, the adviser must wait two years before it may provide services for compensation to that government client. See Political Contributions by Certain Investment Advisers, 75 Fed.Reg. 41,018 (July 14, 2010) (codified in part at 17 C.F.R. § 275.206(4)–5 ).

In August 2014, the plaintiffs sued the Commission in federal district court seeking an order declaring that the rule, as applied to federal campaign contributions, exceeds the Commission's statutory authority, violates the Administrative Procedure Act, and violates the First Amendment. They also sought an order enjoining the Commission from enforcing the rule with respect to federal campaign contributions. The district court dismissed the suit for lack of subject matter jurisdiction. New York Republican State Comm. v. SEC, 70 F.Supp.3d 362, 364 (D.D.C.2014). The plaintiffs appealed the district court's decision, and filed a parallel petition for review of the rule directly in this court.

II.

The plaintiffs urge us either to reverse the decision of the district court or to grant their petition and exercise jurisdiction. First, they claim that the Investment Advisers Act's review provision does not apply to their challenge because the text of the provision contemplates only review of the Commission's orders and says nothing of its rules. In the alternative, the plaintiffs argue that we should grant their petition for review even though it was not timely filed. They urge us to disregard the sixty day deadline in the Investment Advisers Act's review provision because, they contend, the law governing where and when they were supposed to file was so unclear that they were justified in filing late. Finally, they maintain that the statute's sixty-day period for mounting challenges to rules is unlawfully short. To afford plaintiffs a meaningful opportunity for pre-enforcement review, they contend, we should either disregard the statute's time limitation or recognize residual jurisdiction to bring their claims in the district court under the Administrative Procedure Act.

For the reasons that follow, we affirm the order of the district court and dismiss the petition. Precedent dictates the outcome of this case. For nearly four decades, it has been blackletter administrative law that, absent countervailing indicia of congressional intent, statutory provisions for direct review of orders encompass challenges to rules. Moreover, if the plaintiffs were uncertain about where and when to file their suit, our precedent gives precise instructions about what to do. The proper course for the plaintiffs to protect their rights was to file a petition with this court within sixty days of the rule's issuance, not to wait four years to test their claim. There is no basis for excusing the plaintiffs' failure timely to petition this court for review. The plaintiffs' final argument, that Congress cannot place a sixty-day limit on access to pre-enforcement relief, is similarly foreclosed.

A.

According to the plaintiffs, they appropriately and timely filed their suit in district court. They contend that the Investment Advisers Act's provision stating that parties “aggrieved by an order issued by the Commission ... may obtain a review of such order in” an appropriate court of appeals, 15 U.S.C. § 80b–13(a), does not apply to them because it speaks only to review of “an order” and is silent about challenges to rules. Therefore, they say, the statute remitted them to filing in the district court under the Administrative Procedure Act's catch-all review provisions authorizing judicial review of final agency action when no other adequate relief is available. See 5 U.S.C. §§ 702 –04. Because the Administrative Procedure Act was their route to review, the plaintiffs argue, they had six years rather than sixty days to sue under the default federal statute of limitations applicable to suits against the United States. See 28 U.S.C. § 2401. We reject that argument because longstanding precedent dictates that the word “order” in the Investment Advisers Act encompasses rules.

Our decision in Investment Company Institute v. Board of Governors of the Federal Reserve System controls this case. In Investment Company we explained that “the purposes underlying” a provision in the Bank Holding Company Act of 1956, similar to the provision at issue in this case, would “best be served if ‘order’ [were] interpreted to mean any agency action capable of review on the basis of the administrative record.” 551 F.2d 1270, 1278 (D.C.Cir.1977). The review provision at issue in Investment Company stated that “[a]ny party aggrieved by an order of the” Federal Reserve Board could “obtain a review of such order in” an appropriate court of appeals “within thirty days after the entry of the Board's order.” Id. at 1273 n. 3 (quoting 12 U.S.C. § 1848 (1970) ). We held that the provision's reference to orders vested the courts of appeals with exclusive jurisdiction to hear challenges to rules as well as orders. See id. at 1278.

Investment Company resolved longstanding uncertainty about the correct interpretation of statutes that provide for direct review of orders, but not rules. Id. at 1272. The Investment Company court confronted an unsettled legal landscape. Courts facing...