The brief, filed last week on behalf of Georgetown law professor Urska Velikonja and Stanford law professor Joseph A. Grundfest, claims to refute earlier research cited by the petitioners in Lucia v. the U.S. Securities and Exchange Commission. That research, included in a 2015 Wall Street Journal article, found that not only was the SEC steering the vast majority of securities cases to its in-house judges, but that nearly all of the rulings in those cases were in favor of the agency.
Because Velikonja's and Grundfest's separate research indicates otherwise, the professors say it rejects the perception spread by the Wall Street Journal article and other media outlets — and subsequently adopted by the petitioner in Lucia — that the SEC has been funneling securities cases into administrative proceedings rather than federal court because of a perceived "home court" advantage provided by its ALJs.
The brief argues that the Supreme Court justices should therefore ignore all evidence generated by studies related to purported ALJ bias and rule solely on the question of whether the ALJs are constitutional.
"We urge the court to address the question presented as a matter of constitutional interpretation as to which the available statistical evidence provides no meaningful insight," the brief states.
Velikonja and Grundfest's amicus brief is based on a paper by Velikonja and a separate study conducted by Grundfest, a former SEC commissioner. Their joint brief takes no position on the merits of the case and offers no views on how the high court justices should rule. Instead, the brief is aimed squarely at debunking evidence purporting to show bias on the part of SEC judges, and in making an argument that the Supreme Court justices should not take bias-related evidence into account in their final ruling.
"We have each independently reached identical conclusions," the brief states. "Contrary to the suggestions that appear in the press, there is no statistically reliable evidence that the Commission has a 'home court advantage' before ALJs. There is also no statistically reliable evidence that the Commission is steering a disproportionate to the administrative forum in order to capitalize on this non-existent advantage."
Legal experts said the latest bias-related research doesn't alter the shape of the argument, agreeing with the professors' argument that the high court justices should steer clear of the bias argument while disagreeing with some of their findings.
Alex Lipman, a partner at Brown Rudnick LLP who has challenged ALJ rulings on behalf of clients, called the statistical argument related to ALJ bias a "red herring."
"It's color, but it has nothing to do with the legal argument," Lipman said. "It's an explanation for why there are so many challenges to ALJ proceedings. But it has nothing to do with the question presented, and the question presented is whether the ALJs are officers of the United States. And the answer to that is binary: either yes or no.""