Appellate Lawyer Mark A. Perry to Argue SEC Forum Unconstitutional

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By Antoinette Gartrell

Washington lawyer Mark A. Perry is hoping for a better outcome when he returns to the D.C. Circuit tomorrow to argue that the SEC’s administrative forum is inconsistent with the Appointments Clause.

The Gibson Dunn & Crutcher LLP appellate litigator will argue the constitutional question on behalf of investment adviser Raymond J. Lucia for the second time as the full circuit reconsiders a panel ruling siding with the SEC’s in-house tribunals.

Perry thinks the result will be different this time because the case the panel relied on has been called into question by a later Tenth Circuit decision that reached the opposite conclusion.

If all else fails and the full circuit doesn’t reverse the panel decision, “there’s a virtual certainty, after consultation with our client, that we’d petition the Supreme Court for review,” Perry said. The U.S. Supreme Court often agrees to hear cases when federal appeals courts reach different conclusions on the same legal issue.

The D.C. Circuit’s decision in this case is especially important because many federal agencies have similar in-house courts. A decision by their “home” court that the SEC’s administrative judges are unconstitutional could create confusion and delays at those agencies as well as at the SEC.

The outcome also could undo in-house SEC decisions in which a party timely and properly raised the Appointments Clause challenge, Perry said. “It requires vacating the decisions and orders and sending them back to the agency to start from square one,” he said. Perry acknowledged that there would be open questions about retroactive effects in settled cases, but said “those who properly injected the constitutional challenge into their still-pending cases should be entitled to meaningful review from the courts.”

The panel was interested in what its ruling could mean for ALJs in other agencies, Perry told Bloomberg BNA. “It’s an issue that the government has never briefed in this case or any other case,” he said.

Perry, who clerked for former U.S. Supreme Court Justice Sandra Day O’Connor, has argued in all 13 federal appeals courts, as well as the high court and a host of district and state courts. He will square off against the Justice Department’s Mark B. Stern, a Harvard University law school graduate.

Lucia

In 2012, the SEC brought administrative proceedings against Lucia and his firm for allegedly misrepresenting their “Buckets of Money” investment strategy. An administrative law judge found for the Enforcement Division and the commission affirmed. It rejected Lucia’s argument that the ALJ was an “officer” who wasn’t appointed in accordance with the Constitution’s Appointments Clause. According to the agency, an SEC ALJ “is a ‘mere employee’” whose hiring isn’t subject to Article II restrictions.

In August, the D.C. Circuit upheld the commission’s decision. The panel cited an earlier D.C. Circuit ruling in Landry v. FDIC which held ALJs aren’t officers because they don’t reach “final” decisions. Rather, initial decisions become final “when, and only when” the commission issues a finality order, the appeals court said.

The D.C. Circuit decided the Lucia case assuming it was bound by Landry’s reasoning, Perry said. However, a few months after the D.C. court ruled, the Tenth Circuit in Bandimere v. SEC parted ways with Landry and Lucia, ruling that the appointment of SEC ALJs violated the Constitution.

The Tenth Circuit declined the SEC’s request for rehearing. Lucia, meanwhile, asked the D.C. Circuit to reconsider its decision that SEC ALJs are employees rather than officers, and in February, the appeals court accepted Lucia’s challenge.

“When we first argued the [ Lucia] case, the panel felt that it was bound by Landry, and it’s a matter of good judicial practice to follow on point precedent,” he said. However, in light of the Tenth Circuit’s ruling in Bandimere, which “flatly disagreed with the D.C. Circuit,” the question of whether Landry should be overruled is now “on the chopping block,” Perry said. “My answer is absolutely. The Tenth Circuit didn’t feel bound by Landry and I think that’s the cleaner way to decide the case.”

Four-Step Prep

To prepare for each oral argument, Perry follows a four-step process. First, he “relearns the case.” Many times oral arguments come months or years after the case has been briefed, he said. Therefore, he takes detailed notes summarizing what has already been submitted to the court. Second, he generates an extensive list of questions that the court might ask or that he is curious about.

His team then writes memos detailing the applicable law and answering the questions. In the Lucia case, there are currently 127 questions, Perry said. Next, he holds roundtables with his firm colleagues to discuss the issues in the case. Finally, Perry said, he’s a “big believer in moot courts”, and holds one or two sessions for every case. In this case, he will have two—one internally at his firm and the other at the U.S. Chamber of Commerce, he told Bloomberg BNA.

Appellate Advocacy

Perry came to love appellate advocacy early. “I read tons of appellate decisions in law school, it’s what I did as a very junior lawyer and it’s what I’ve continued to do for the past 25 or more years. I have found it a rewarding and fulfilling way to spend my professional life,” he said.

Of all the cases Perry has argued, his most memorable were Janus Capital Group v. First Derivative Traders and Alice Corp. v. CLS BankInternational, both in the Supreme Court. In Janus, Perry argued what it meant to “make” a material misstatement under the antifraud provisions of the 1934 Securities Exchange Act. “ Janus was the first case I argued at the Supreme Court and it was my case from start to finish.” In the second case, Perry argued that abstract ideas implemented using a computer aren’t eligible for a patent. “The Alice case affected far more people and that was certainly a high point,” Perry said.

Perry graduated from the University of Chicago Law School with high honors in 1991, where he served as executive director of the law review. He also clerked for Judge Alex Kozinski of the U.S. Court of Appeals for the Ninth Circuit and was a Bristow Fellow in the Solicitor General’s office.

Perfection

Despite juggling a full appellate schedule, Perry still finds time to mentor and encourage young attorneys at his firm. Perry is a “creative and persuasive writer” and a “patient and accessible mentor to our younger lawyers,” his partner Theodore “Ted” Olson told Bloomberg BNA. He possesses “impeccable judgment” and “serves the firm as an insightful teacher of the arts of advocacy,” Olson said.

Perry said he often tells young associates that “perfection is the expectation.” “I let them know that we hold ourselves to the highest standard. The baseline is getting everything right. The extra credit is style and flair,” Perry said.

In his spare time, he enjoys bike riding in the woods or on trails. He enters cycling races because he loves the competitive nature, but admits that he’ll “never win.”

To contact the reporter on this story: Antoinette Gartrell in Washington at agartrell@bna.com

To contact the editor responsible for this story: Phyllis Diamond at pdiamond@bna.com

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