In a move that could have ramifications for lawsuits filed by former FTC and NCUA board members, by a vote of 6-3 the Supreme Court has issued a stay that prohibits the Democratic members of the National Labor Relations Board and the Merit Systems Protection Board who were fired by President Trump from continuing to serve while challenging the legality of their removal.
Although the Court indicated that it did not make a final decision on the merits, believing such a decision "is better left for resolution after full briefing and argument," the Court made what appear to be significant statements signaling that it will uphold the President's ability to fire board members of independent regulatory agencies. Citing the Constitution and the 2020 decision of the Court in Seila Law LLC v. Consumer Financial Protection Bureau, in which the Court struck the provision in the Consumer Financial Protection Act allowing the President to remove the CFPB Director only for cause, the Court stated that "[b]ecause the Constitution vests the executive power in the President . . ., he may remove without cause executive officers who exercise that power on his behalf, subject to narrow exceptions recognized by our precedents." The Court continued by stating that "[t]he stay reflects our judgment that the Government is likely to show that both the NLRB and MSPB exercise considerable executive power," and that "[a] stay is appropriate to avoid the disruptive effect of the repeated removal and reinstatement of officers during the pendency of this litigation."
In this case, Cathy Harris, the chair of the MSPB, and Gwynne Wilcox, a member of the NLRB—both Democrats– had filed suit, contending that they could only be removed for cause.
The case is being closely watched by independent agencies as it a test of Trump's power over boards or similar bodies governing those agencies. Two former Democratic FTC members, Alvaro Bedoya and Rebecca Slaughter, who were fired by President Trump without cause have filed suit. Two former NCUA Democratic board members, Todd Harper and Tonya Otsuka, also have filed suit challenging their dismissals. The court did not mention those suits in issuing its stay.
Regardless of the decision, the Supreme Court said that members of the Federal Reserve Board may not be simply fired from their jobs. "The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States," the court said.
The Supreme Court's three liberal Justices, Elena Kagan, Sonia Sotomayor and Ketanji Brown Jackson dissented from the majority decision.
To bolster their arguments, they cited Supreme Court precedent in Humphrey's Executor v. United States, which upheld the constitutionality of the for cause removal standard applicable to FTC commissioners. In its Seila Law ruling noted above, the Supreme Court distinguished Humphrey's Executor in finding the for cause removal standard applicable to the sole director of the CFPB to be unconstitutional.
The dissenting opinion provides it is thought that in certain spheres of "government, a group of knowledgeable people from both parties—none of whom a President could remove without cause—would make decisions likely to advance the long-term public good," they wrote. "And that congressional judgment, Humphrey's makes clear, creates no conflict with the Constitution."
The dissent continues, "Or differently put, the interest at stake is in maintaining Congress's idea of independent agencies: bodies of specialists balanced along partisan lines, which will make sound judgments precisely because not fully controlled by the White House."
The dissent also states:
"Maybe by saying that the Commissioners exercise "considerable" executive power, the majority is suggesting that they cannot fall within the Humphrey's "exception." But if that is what the majority means, then it has foretold a massive change in the law—reducing Humphrey's to nothing and depriving members of the NLRB, MSPB, and many other independent agencies of tenure protections. And it has done so on the emergency docket, with little time, scant briefing, and no argument."
Addressing the important issue of what this decision may mean for the Federal Reserve Board members, which the majority found to be distinguishable from NLRB and MSPB members, the dissent states:"[T]he Federal Reserve's independence rests on the same constitutional and analytic foundations as that of the NLRB, MSPB, FTC, FCC, and so on—which is to say it rests largely on Humphrey's. So the majority has to offer a different story: The Federal Reserve, it submits, is a "uniquely structured" entity with a "distinct historical tradition"."
The dissent then criticizes the majority's citing of a footnote from Seila Law as support for distinguishing Federal Reserve Board members stating, "sorry [the]footnote provides no support."
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