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Cochran v. United States SEC

United States District Court for the Northern District of Texas, Fort Worth Division

March 25, 2019, Decided; March 25, 2019, Filed

NO. 4:19-CV-066-A

Opinion

MEMORANDUM OPINION and ORDER

Came on for consideration the above-captioned action wherein Michelle Cochran is plaintiff and the U.S. Securities and Exchange Commission ("SEC"), Jay Clayton in his official capacity as SEC Chairman, and William Barr1 in his official capacity as U.S. Attorney General, are defendants. The court, having considered the complaint, plaintiff's motion for preliminary injunction, the response, the reply, and the applicable authorities, finds that this action should be dismissed [*2]  for lack of subject matter jurisdiction.

I. Background

A. The Complaint

Plaintiff initiated this action by filing her complaint on January 18, 2019, alleging that the SEC initiated an enforcement proceeding against her that violated Article II of the U.S. Constitution, because, in light of Lucia v. SEC, 138 S.Ct. 2044, 201 L. Ed. 2d 464, (2018), SEC administrative law judges ("ALJs") hold their positions in violation of Article II,2 and the Fifth Amendment's Due Process Clause, because the SEC violated its own rules, procedures, and deadlines. Doc.3 1 at 1 ¶ 1, 2-3 ¶¶ 5-7. She sought to enjoin the proceeding and obtain declaratory relief. Id. at 23.

B. The Defense Response

The defendants filed on March 12, 2019, a document titled "Defendants' Amended Response to Plaintiff's Motion for Preliminary Injunction" in which they included a section that provided argument and authority in support of the proposition that this court lacks jurisdiction to entertain this action. Doc. 19 at 6-15.

C. Plaintiff's Reply

Plaintiff filed a reply brief on March 18, 2019, claiming that this court has jurisdiction because the Supreme Court's decision in Lucia made clear that SEC ALJs hold their positions in violation of Article II, and the Court's decision in Free Enterprise Fund v. PCAOB, 561 U.S. 477, 130 S. Ct. 3138, 177 L. Ed. 2d 706 (2010), held that 15 U.S.C. § 78y(a)(1) did not preclude district court jurisdiction over the constitutional claims [*3]  at issue there. Doc. 20 at 4-8.

II. Analysis

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2019 U.S. Dist. LEXIS 49751 *; 2019 WL 1359252

MICHELLE COCHRAN, Plaintiff, VS. U.S. SECURITIES AND EXCHANGE COMMISSION, ET AL., Defendants.

Subsequent History: Injunction granted at Cochran v. SEC, 2019 U.S. App. LEXIS 29032 (5th Cir. Tex., Sept. 24, 2019)

Counsel:  [*1] For Michelle Cochran, Plaintiff: Karen Lundskow Cook, LEAD ATTORNEY, Karen Cook PLLC, Dallas, TX; Margaret Ann Little, Steven M Simpson, PRO HAC VICE, New Civil Liberties Alliance, Washington, DC.

For U.S. Securities and Exchange Commission, Matthew Whitaker, in his official capacity as Acting United States Attorney General, Defendants: Brian Walters Stoltz, LEAD ATTORNEY, U.S. Attorney's Office, Dallas, TX; Rebecca Cutri-Kohart, US Department of Justice, Washington, DC.

For Jay Clayton in his official capacity as Chairman of the U.S. Securities and Exchange Commission, Defendant: Rebecca Cutri-Kohart, US Department of Justice, Washington, DC.

Judges: JOHN McBRYDE, United States District Judge.

Opinion by: JOHN McBRYDE