“The FDIC continues to ignore the Supreme Court’s case law on the President’s power to remove officers.”
—John Masslon, WLF Senior Litigation Counsel
Click here for WLF’s brief.
WASHINGTON, DC— Washington Legal Foundation (WLF) today urged the U.S. Court of Appeals for the Fifth Circuit to affirm in part and reverse in part an injunction stopping a Federal Deposit Insurance Corporation administrative proceeding. WLF argues that the District Court had jurisdiction over the case and the FDIC’s structure is unconstitutional.
The case arises from a lengthy administrative proceeding. Based on charges brought in 2014, an ALJ recommended that the FDIC sanction Cornelius Burgess for his conduct as CEO of Herring Bank. Burgess then sued in federal court seeking an injunction barring further proceedings because (1) the administrative proceeding violated his Seventh Amendment rights; (2) the FDIC’s board members enjoy unconstitutional for-cause removal protections; and (3) FDIC ALJs enjoy two layers of for-cause removal protections. The District Court granted relief on the Seventh Amendment claim and denied relief on the other two claims. Both sides appealed.
In its amicus brief supporting Mr. Burgess, WLF explains why the District Court had jurisdiction over the case. Congress neither explicitly nor implicitly stripped federal courts of jurisdiction over claims like Burgess’s. The FDIC’s argument about explicit jurisdiction stripping is based on a misreading of prior Fifth Circuit case law. And its arguments about implicit jurisdiction stripping are similarly based on flawed analogies to factually and legally dissimilar cases.
WLF’s brief also argues that the FDIC’s structure is unconstitutional. First, three FDIC board members—who are principal officers—enjoy for-cause removal protection. Because the FDIC exercises executive power and is not a non-partisan board of experts, this violates Article II. FDIC ALJs, on the other hand, are inferior officers. Yet they enjoy two levels of for-cause removal protection. This too violates Article II. Finally, the brief outlines why federal courts may grant relief to Mr. Burgess.