Lexis Nexis - Case Brief

Not a Lexis Advance subscriber? Try it out for free.

Law School Case Brief

Free Enter. Fund v. Pub. Co. Accounting Oversight Bd. - 561 U.S. 477, 130 S. Ct. 3138 (2010)


Provisions for agency review do not restrict judicial review unless the statutory scheme displays a fairly discernible intent to limit jurisdiction, and the claims at issue are of the type Congress intended to be reviewed within the statutory structure. But courts presume that Congress does not intend to limit jurisdiction if a finding of preclusion could foreclose all meaningful judicial review; if the suit is wholly collateral to a statute's review provisions; and if the claims are outside the agency's expertise. 


The Free Enterprise Fund, a non-profit organization, brought suit challenging the constitutionality of Title I of the Sarbanes-Oxley Act. It alleged that the creation of the Public Company Oversight Board (the Board) by the Act violated the Appointments Clause because it deprived the President from exercising adequate control over the Board. However, the Board itself was under the direct supervision of the Securities and Exchange Commission (SEC), all of whose commissioners are appointed by and can be removed by the President.


Did the statutes providing for judicial review of Commission action prevent the District Court from considering petitioners' claims?




The Court held that the dual for-cause limitations on the removal of Board members contravened the Constitution's separation of powers. The Sarbanes-Oxley Act not only protected Board members from removal except for good cause, but withdrew from the President any decision on whether that good cause existed. That decision was vested instead in other tenured officers--Securities and Exchange Commissioners--none of whom was subject to the President's direct control. The result was a Board that was not accountable to the President, and a President who was not responsible for the Board. The unconstitutional tenure provisions were severable from the remainder of the statute. Concluding that the removal restrictions imposed by 15 U.S.C.S. §§7211(e)(6) and 7217(d)(3) were invalid left the Board removable by  [***707]  the Commission at will, and left the President separated from Board members by only a single level of good-cause tenure. The Sarbanes-Oxley Act remained fully operative as a law with those tenure restrictions excised. The Appointments Clause challenges had no merit

Access the full text case Not a Lexis Advance subscriber? Try it out for free.
Be Sure You're Prepared for Class