Steve M. Bussanich v. Ports America, Ports America Insurance Company and Director, OWCP

No. 18-71189

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

STEVE M. BUSSANICH,

Petitioner,

PORTS AMERICA,

PORTS AMERICA INSURANCE COMPANY, and

DIRECTOR, OFFICE OF WORKERS’ COMPENSATION

PROGRAMS, UNITED STATES DEPARTMENT OF LABOR,

Respondents.

On Petition for Review of an Order of the Benefits

Review Board, United States Department of Labor

BRIEF FOR THE FEDERAL RESPONDENT

KATE O’SCANNLAIN

Solicitor of Labor

KEVIN LYSKOWSKI

Acting Associate Solicitor

MARK REINHALTER

Counsel for Longshore

GARY K. STEARMAN

Counsel for Appellate Litigation

MATTHEW W. BOYLE

Attorney

U. S. Department of Labor

Office of the Solicitor

Suite N2117, 200 Constitution Ave. NW

Washington, D.C. 20210

(202) 693-5660

Attorneys for the Director, Office of

Workers’ Compensation Programs

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TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .................................................................................... ii

JURISDICTIONAL STATEMENT .......................................................................... 1

STATEMENT OF THE ISSUES............................................................................... 2

STATEMENT OF THE CASE .................................................................................. 3

SUMMARY OF THE ARGUMENT ........................................................................ 3

ARGUMENT ............................................................................................................. 4

Petitioner’s argument for vacatur of the ALJ’s decision because she was

not appointed in accordance with the Appointments Clause should be

rejected

.................................................................................................................. 4

I. Petitioner forfeited his Appointments Clause challenge by

failing to raise the issue before the agency

.......................................... 4

II. There are no grounds to excuse Petitioner’s failure to raise

the Appointments Clause before the Benefits Review Board

. ......... 13

CONCLUSION ........................................................................................................ 20

STATEMENT OF RELATED CASES ................................................................... 21

CERTIFICATE OF COMPLIANCE ....................................................................... 21

CERTIFICATE OF SERVICE ................................................................................ 21

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TABLE OF AUTHORITIES

Cases

Ackerman v. Western Electric Co.,

860 F.2d 1514 (9th Cir. 1988) ................................................................... 16

Aetna Cas. & Sur. Co. v. Director, OWCP,

97 F.3d 815 (5th Cir. 1996) ......................................................................... 8

Arch Mineral Corp. v. Director, OWCP,

798 F.2d 215 (7th Cir. 1986) ....................................................................... 8

Bandimere v. SEC,

844 F.3d 1168 (10th Cir. 2016) ................................................................. 15

Billiter v. J&S Collieries,

BRB No. 18-0256 (Aug. 9, 2018)

............................................................ 11

Bennett v. SEC,

151 F. Supp. 3d 632 (D. Md. 2015) .......................................................... 16

Bennett v. SEC,

844 F.3d 174 (4th Cir. 2016) ..................................................................... 16

Crum v. Amber Coal,

BRB No. 17-0387 (Feb. 26, 2018)

........................................................... 11

Director, OWCP v. North American Coal Corp.,

626 F.2d 1137 (3d Cir. 1980) ...................................................................... 8

Dominguez v. Bethlehem Steel Corp.,

Ninth Cir. No. 18-70184 ...................................................................... 19, 21

Duka v. SEC,

124 F. Supp. 3d 287 (S.D.N.Y. 2015) ....................................................... 15

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iii

Duncanson-Harrelson Co. v. Director, OWCP,

644 F.2d 827 (9th Cir. 1981) ....................................................................... 8

Elk Grove Unified School Dist. v. Newdow,

524 U.S. 1 (2004) ...................................................................................... 14

First-Citizens Bank & Trust Co. v. Camp,

409 F.2d 1086 (4th Cir. 1969) ................................................................... 12

Freytag v. C.I.R.,

501 U.S. 868 (1991) ............................................................ 9, 12, 13, 14, 15

Gaylor v. United States,

74 F.3d 214 (10th Cir. 1996) ..................................................................... 14

General Dynamics Corp. v. Sacchetti,

681 F.2d 37 (1st Cir. 1982) ......................................................................... 8

GGNSC Springfield LLC,

721 F.3d 403 (6th Cir. 2013) ....................................................................... 9

Gray Fin. Grp. v. SEC,

166 F. Supp. 3d 1335 (N.D. Ga. 2015) ..................................................... 16

Herrington v. Savannah Machine & Shipyard,

17 BRBS 196 (1985) ................................................................................. 18

Hill v. SEC,

114 F. Supp. 3d 1297 (N.D. Ga. 2015) ..................................................... 16

Hill v. SEC,

825 F.3d 1236 (11th Cir. 2016) ................................................................. 16

Hite v. Dresser Guiberson Pumping,

22 BRBS 87 (1989) ..................................................................................... 7

Hix v. Director, OWCP,

824 F.2d 526 (6th Cir. 1987) ....................................................................... 8

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In re DBC,

545 F.3d 1373 (Fed. Cir. 2008) ....................................................... 9, 10, 12

In re Howell,

731 F.2d 624 (9th Cir. 1984) ..................................................................... 16

Inter-Tribal Council of Nevada v. U.S. Dept. of Labor,

701 F.2d 770 (9th Cir. 1983) ....................................................................... 7

Intercollegiate Broadcast Sys., Inc. v. Copyright Royalty Bd.,

574 F.3d 748 (D.C. Cir. 2013)................................................................... 10

Ironridge Global IV, Ltd. v. SEC,

146 F. Supp. 3d 1294 (N.D. Ga. 2015) ..................................................... 16

Island Creek Coal Co. v. Wilkerson,

910 F.3d 254 (6th Cir. 2018) ............................................................... 10, 15

Jones Bros. v. Secretary of Labor,

898 F.3d. 669 (6th Cir. 2018) .................................................... 9, 12, 17, 18

Kabani & Co., Inc. v. SEC,

733 F. App’x 918 (Mem.), 2018 WL 3828524 ............................... 9, 10, 14

Kamala Serv. v. Director, OWCP,

354 F.3d 1085, 1094 (9th Cir. 2004)

.......................................................... 7-8

Lucia v. SEC,

138 S.Ct. 2044 (2018) ................................................................. 4, 5, 13, 15

Lucia v. SEC,

832 F.3d 277 (D.C. Cir. 2016)................................................................... 15

Luckern v. Richard Brady & Assoc.,

52 BRBS 65 (BRB 2018) ........................................................................... 7

McConnell v. Director, OWCP,

993 F.2d 1454 (10th Cir. 1993) ................................................................... 8

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Micheli v. Director, OWCP,

846 F.2d 632 (10th Cir. 1988) ..................................................................... 8

Miller v. Pine Branch Coal Sales, Inc.,

--- Black Lung Rep. (MB) ---, BRB No. 18-325 BLA (Oct. 22, 2018)

... 11

Motton v. Huntington, Ingalls Indus., Inc.,

--- BRBS ---, 2018 WL 6303734 *1 (BRB Nov. 14, 2018) ........................ 7

NLRB v. Southeast Ass’n for Retarded Citizens, Inc.,

666 F.2d 428 (9th Cir. 1982) ....................................................................... 7

NLRB v. RELCO Locomotives, Inc.,

734 F.3d 764 (8th Cir. 2013) ....................................................................... 9

Newdow v. U.S. Congress,

328 F.3d 466 (9th Cir. 2003) ..................................................................... 14

Parker v. Motor Boat Sales, Inc.,

314 U.S. 244 (1942) .................................................................................... 7

Ryder v. United States,

515 U.S. 177 (1995) .................................................................................... 5

Shaw v. Bath Iron Works,

22 BRBS 73 (1989) ................................................................................... 18

Smith v. Aerojet General Shipyards,

16 BRBS 49 (1983) ................................................................................... 18

Stern v. Marshall,

564 U.S. 462 (2011) .................................................................................. 12

Tilton v. SEC,

824 F.3d 276 (2d Cir. June 1, 2016) .......................................................... 16

Tilton v. SEC,

2015 WL 4006165 (S.D.N.Y. June 30, 2015) ........................................... 16

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Turner Bros., Inc. v. Conley,

__ F. App’x __, 2018 WL 6523096 (10th Cir. 2018) ................................ 9

United States v. Baird,

85 F.3d 450 (9th Cir. 1996) ....................................................................... 14

United States v. L.A. Tucker Truck Lines, Inc.,

344 U.S. 33 (1952) ............................................................................ 6, 7, 19

United States v. Patrin,

575 F.2d 708 (9th Cir. 1978) ..................................................................... 16

Woodford v. Ngo,

548 U.S. 81 (2006) .................................................................................... 10

Zumwalt v. NASSCO,

Ninth Cir. No. 18-72257 ...................................................................... 19, 21

Statutes

30 U.S.C. § 932(a) .......................................................................................... 8

33 U.S.C. §§ 901-950...................................................................................... 1

33 U.S.C. §§ 919(c), (d) .................................................................................. 1

33 U.S.C. § 921 ............................................................................................... 8

33 U.S.C. § 921(a) .......................................................................................... 2

33 U.S.C. § 921(b)(3)...................................................................................... 2

33 U.S.C. § 921(c) .......................................................................................... 2

U.S. Const. Art. II, sec. 2, cl. 2. .............................................................. 2, 3, 4

Rules

Fed. R. App. P. 32(a)(7)(C) .......................................................................... 21

Ninth Circuit Rule 28 .................................................................................... 21

Ninth Circuit Rule 32-1................................................................................. 21

Other Authorities

Amici Brief,

Lucia v. SEC,

No. 17-130, 2018 WL 1733141 (U.S. Apr. 2, 2018) .................................. 5

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Nos. 18-71189

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TEVE M. BUSSANICH

Petitioner,

ORTS AMERICA,

PORTS AMERICA INSURANCE CO.

and

DIRECTOR, OFFICE OF WORKERS’ COMPENSATION PROGRAMS,

UNITED STATES DEPARTMENT OF LABOR,

Respondents,

n Petition for Review of a Final Order

Of the Benefits Review Board

BRIE

F FOR THE FEDERAL RESPONDENT

JURISDICTIONAL STATEMENT

This appeal arises from a claim filed by Steve M. Bussanich

(Petitioner), against his employer, Ports America (Employer), for benefits

under the Longshore and Harbor Workers’ Compensation Act, 33 U.S.C.

§§ 901-950 (Longshore Act or Act). Administrative Law Judge Jennifer

Gee (ALJ) had jurisdiction to hear the claim under 33 U.S.C. §§ 919(c), (d).

She issued an order dated April 27, 2017, which became effective on May 2,

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2017, when it was filed in the office of the district director. Excerpts of

Record (ER) 13; 33 U.S.C. § 921(a).

Petitioner appealed the ALJ’s decision to the Benefits Review Board

(Board) on May 31, 2017. Because the appeal was filed within the thirty-

day period provided by 33 U.S.C. § 921(a), it invoked the Board’s review

jurisdiction under 33 U.S.C. § 921(b)(3). On March 27, 2018, the Board

issued a final Decision and Order, affirming the ALJ’s decision. ER 1.

Petitioner was aggrieved by the Board’s decision, and filed a petition

for review with this Court on April 24, 2018, within the sixty days allowed

under 33 U.S.C. § 921(c). He was injured in the State of California, within

this Court’s territorial jurisdiction. Consequently, under § 921(c) of the

Longshore Act, this Court has jurisdiction over this appeal.

STATEMENT OF THE ISSUE

The Appointments Clause provides that inferior officers are to be

appointed by “the President,” the “Heads of Departments,” or the “Courts of

Law.” Petitioner argues in his opening brief that the ALJ’s decision denying

his claim should be vacated, inter alia, because he was not properly

appointed.

The question presented is:

Petitioner also challenges the ALJ’s decision on the merits. Opening Brief

at 28-51. This brief does not address those arguments.

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Did Petitioner forfeit his Appointments Clause claim by failing to

raise it before the administrative agency?

STATEMENT OF THE CASE

Petitioner sustained a neck injury while working as a checker for Ports

America on December 1, 2013. The ALJ awarded Petitioner temporary

disability benefits and other relief in a decision dated April 27, 2017. ER 13.

Petitioner appealed to the Benefits Review Board, arguing that he was

entitled to permanent disability benefits under the Longshore Act. The

Board disagreed and affirmed the ALJ’s decision. ER 1. At no point during

the administrative proceedings—before either the ALJ or the Board—did

Petitioner challenge the ALJ’s authority under the Appointments Clause.

After appealing to this Court, Petitioner filed a motion for summary

vacatur, arguing for the first time that the ALJ’s decision should be vacated

because she was not properly appointed under the Appointments Clause,

U.S. Const. Art. II, sec. 2, cl. 2. A motions panel denied the request on

November 7, 2018.

SUMMARY OF THE ARGUMENT

The Court correctly rejected Petitioner’s Appointments Clause

challenge in denying his motion for summary vacatur. Petitioner forfeited

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his Appointments Clause claim by failing to raise it before the administrative

agency.

ARGUMENT

Petitioner’s argument for vacatur of the ALJ’s decision because he was not

appointed in accordance with the Appointments Clause should be rejected.

I. Petitioner forfeited his Appointments Clause challenge by

failing to raise the issue before the agency.

Petitioner’s failure to preserve his Appointments Clause claim results

in its forfeiture before this Court. Under longstanding principles that govern

judicial review of administrative decisions, this Court should not reach a

claim that could and should have been preserved before the agency, but was

not.

The Appointments Clause provides that inferior officers are to be

appointed by “the President,” the “Heads of Departments,” or the “Courts of

Law.” U.S. Const. Art. II, sec. 2, cl. 2. In Lucia v. SEC, 138 S.Ct. 2044

(2018), the Supreme Court held that Securities and Exchange Commission

ALJs are inferior officers who must be appointed consistent with the

Constitution’s Appointments Clause.

In so holding, the Supreme Court

On the merits of the Appointments Clause challenge, the Director agrees

that ALJs who preside over Longshore Act proceedings are inferior officers,

and that the ALJ below was not properly appointed when she adjudicated the

case. In December 2017, the Secretary of Labor ratified her appointment

and the appointments of other Department of Labor ALJs.

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explained that it “has held that one who makes a timely challenge to the

constitutional validity of the appointment of an officer who adjudicates his

case is entitled to relief,” and that Lucia was entitled to relief because he

“made just such a timely challenge” by raising the issue “before the

Commission.” Id. at 2055 (emphasis added, quotation marks omitted). To

support that conclusion, the Court cited Ryder v. United States, 515 U.S.

177 (1995), which held that the petitioner was entitled to relief on his

Appointments Clause claim because he—unlike other litigants—had “raised

his objection to the judges’ titles before those very judges and prior to their

action on his case.” Ryder, 515 U.S. at 181-83. And forfeiture and

preservations concerns had been raised in Lucia’s merits briefing, as amici

the National Black Lung Association urged the Supreme Court to “make

clear that where the losing party failed to properly and timely object, the

challenge to an ALJ’s appointment cannot succeed.” Amici Br. 15, Lucia v.

SEC, No. 17-130, 2018 WL 1733141 (U.S. Apr. 2, 2018).

Unlike the challenger in Lucia, Petitioner failed to timely raise and

preserve his Appointments Clause challenge before the agency. For over

three years, from December 2014, when Petitioner first requested an ALJ

hearing, to March 2018, when the Board issued its decision affirming the

limited award of benefits, Petitioner never raised the Appointments Clause

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issue. Instead, Petitioner waited until after he had lost before both the ALJ

and the Board before raising his challenge.

Under longstanding principles of administrative law, Petitioner may

not now raise in court an argument he failed to preserve before the agency.

In United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 35 (1952), a

litigant argued for the first time in court that the agency’s hearing examiner

had not been properly appointed under the Administrative Procedure Act.

Based on the improper appointment, the district court invalidated the

agency’s order. Id. The Supreme Court reversed, holding that the litigant

forfeited this claim by failing to raise it before the agency, and explained

that “orderly procedure and good administration require that objections to

the proceedings of an administrative agency be made” during the agency’s

proceedings “while it has opportunity for correction.” Id. at 36-37.

Although the Court recognized that a timely challenge would have rendered

the agency’s decision “a nullity,” id. at 38, it refused to entertain the

forfeited claim based on the “general rule that courts should not topple over

administrative decisions unless the administrative body not only has erred

but has erred against objection made at the time appropriate under its

practice,” id. at 37.

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This Court has consistently applied these normal principles of

forfeiture, see NLRB v. Southeast Ass’n for Retarded Citizens, Inc., 666

F.2d 428, 432 (9th Cir. 1982) (quoting L.A. Tucker Truck Lines, Inc., 344

U.S. at 37), and emphasized that “[a]ll issues which a party contests on

appeal must be raised at the appropriate time under the agency practice.”

Inter-Tribal Council of Nevada v. U.S. Dept. of Labor, 701 F.2d 770, 771

(9th Cir. 1983) (holding that, because petitioner failed to raise the issue of

the Secretary’s authority to recoup allegedly misspent funds in either its pre-

hearing statement or at the hearing before the ALJ, the Court could not

consider the issue on appeal). And in cases under the Longshore Act, the

Court will not consider issues that were not raised and preserved before the

Board.

Parker v. Motor Boat Sales, Inc., 314 U.S. 244, 251 (1942) (failure

to raise issue of widow’s capacity to file claim below waived);

Kamala

Petitioner did not raise his Appointments Clause challenge to either the

ALJ or the Board. Although he arguably was required to apprise both

tribunals, Hite v. Dresser Guiberson Pumping, 22 BRBS 87 (1989) (issue

raised for first time in appeal to the Board waived), the Court need not reach

the question because Petitioner failed to meet even the bare minimum

obligation of raising the issue to the Board. See Motton v. Huntington,

Ingalls Indus., Inc., --- BRBS ---, 2018 WL 6303734 *1, n.1 (BRB Nov. 14,

2018) (Appointments Clause challenge forfeited when not raised until post-

briefing motion); Luckern v. Richard Brady & Assoc., 52 BRBS 65, 66 n.3

(BRB 2018) (challenge forfeited when not raised until reply brief).

When Parker was decided, deputy commissioners, rather than ALJs,

conducted hearing in Longshore Act cases, and any party aggrieved by the

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Serv. v. Director, OWCP, 354 F.3d 1085, 1094 (9th Cir. 2004);

Duncanson-

Harrelson Co. v. Director, OWCP, 644 F.2d 827 (9th Cir. 1981) (employer

could not contest situs element of coverage under the Longshore Act where

it had not raised the issue before the ALJ or challenged it on appeal to the

Board); accord Aetna Cas. & Sur. Co. v. Director, OWCP, 97 F.3d 815 (5th

Cir. 1996) (argument not raised before the Board, and raised for the first

time on appeal, was waived); General Dynamics Corp. v. Sacchetti, 681

F.2d 37 (1st Cir. 1982) (argument that worker had a pre-existing permanent

total disability was not raised before the Board and was therefore waived).

These principles apply with full force to Appointments Clause

challenges. The courts of appeals have consistently held that Appointments

deputy commissioner’s decision could seek review in the U.S. district court.

The underlying principle, however—that issues must be raised before the

agency—remains the same.

The courts of appeals apply this same principle when reviewing Board

decisions issued under the Black Lung Benefits Act, which incorporates the

Longshore Act’s judicial review provision, 30 U.S.C. § 932(a)

(incorporating 33 U.S.C. § 921). See McConnell v. Director, OWCP, 993

F.2d 1454, 1460 n.8 (10th Cir. 1993) (refusing to consider argument not

raised before Board); see also Micheli v. Director, OWCP, 846 F.2d 632,

635 (10th Cir. 1988) (refusing to review ALJ’s finding that was not appealed

to Board); accord Hix v. Director, OWCP, 824 F.2d 526, 527 (6th Cir.

1987); Arch Mineral Corp. v. Director, OWCP, 798 F.2d 215, 220 (7th Cir.

1986); Director, OWCP v. North American Coal Corp., 626 F.2d 1137,

1143-44 (3d Cir. 1980).

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Clause challenges are “nonjurisdictional” and receive no special entitlement

to review. E.g., GGNSC Springfield LLC, 721 F.3d 403, 406 (6th Cir. 2013)

(“Errors regarding the appointment of officers under Article II are

‘nonjurisdictional.’”) (quoting Freytag v. C.I.R., 501 U.S. 868, 878-79

(1991)). Thus, even after Lucia, this Court, as well as the Tenth and Sixth

Circuits, have all held that Appointments Clause claims may be forfeited

when a petitioner fails to preserve them before the agency. Kabani & Co.,

Inc. v. SEC, 733 F. App’x 918 (Mem.), 2018 WL 3828524 at *1 (unpub.)

(9th Cir. Aug. 13, 2018) (“[P]etitioners forfeited their Appointments Clause

claim by failing to raise it in their briefs or before the agency.”); Turner

Bros., Inc. v. Conley, __ F. App’x __, 2018 WL 6523096, *1 (10th Cir.

2018) (agreeing that “Turner Brothers’ failure to raise [Appointments

Clause] issue to the agency is fatal.”);

Jones Bros. v. Secretary of Labor, 898

F.3d 669, 677 (6th Cir. 2018) (finding Appointments Clause challenge

forfeited when litigant failed to press issue before agency, but excusing the

forfeiture in light of the unique circumstances of the case). Likewise, the

Eighth and Federal Circuits reached the same result before Lucia.

NLRB v.

RELCO Locomotives, Inc., 734 F.3d 764, 798 (8th Cir. 2013) (holding party

waived Appointments Clause challenge by failing to raise the issue before

the agency);

In re DBC, 545 F.3d 1373, 1377-81 (Fed. Cir. 2008) (finding

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litigant forfeited Appointments Clause argument by failing to raise it before

agency). Similarly, this Court, and the Sixth and D.C. Circuits have found

Appointments Clause challenges forfeited when the petitioner failed to raise

it in its opening brief before the court.

Kabani & Co., supra; Island Creek

Coal Co. v. Wilkerson, 910 F.3d 254, 256 (6th Cir. 2018); Intercollegiate

Broadcast Sys., Inc. v. Copyright Royalty Bd., 574 F.3d 748, 755-56 (D.C.

Cir. 2013).

The Federal Circuit has explained that a timeliness requirement for

Appointments Clause challenges serves the same basic purposes as those

underlying administrative exhaustion: “First, it gives [the] agency an

opportunity to correct its own mistakes . . . before it is haled into federal

court, and [thus] discourages disregard of [the agency’s] procedures.” In re

DBC, 545 F.3d at 1378 (internal quotations omitted). Second, “it promotes

judicial efficiency, as [c]laims generally can be resolved much more quickly

and economically in proceedings before [the] agency than in litigation in

federal court.” Id. at 1379 (quoting Woodford v. Ngo, 548 U.S. 81, 89

(2006)). Both of those reasons apply here. If Petitioner had raised the

Appointments Clause challenge during the administrative proceedings, the

Secretary of Labor, or the Board, could well have provided an appropriate

remedy.

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In fact, both the Department of Labor and the Board have taken

appropriate remedial actions: the Secretary of Labor ratified the prior

appointments of all then-incumbent agency ALJs “to address any claim that

administrative proceedings pending before, or presided over by,

administrative law judges of the U.S. Department of Labor violate the

Appointments Clause of the U.S. Constitution.” Available at

https://www.oalj.dol.gov/Proactive_disclosures_ALJ_appointments.html.

And the Board has held that where an ALJ was not properly appointed, the

“parties are entitled to a new hearing before a new, constitutionally

appointed administrative law judge,” and accordingly remanded the case for

that to occur. Miller v. Pine Branch Coal Sales, Inc., --- Black Lung Rep.

(MB) ---, BRB No. 18-325 BLA (Oct. 22, 2018) (en banc) (available at

https://www.dol.gov/brb/decisions/blklung/published/18-0323.pdf); Billiter

v. J&S Collieries, BRB No. 18-0256 (Aug. 9, 2018) (remanding for

Appointments Clause remedy); Crum v. Amber Coal, BRB No. 17-0387

(Feb. 26, 2018) (same). But because Petitioner never raised the issue,

neither the Secretary nor the Board was given an opportunity to consider

and resolve it during the normal course of administrative proceedings.

Finally, considering Appointments Clause arguments raised for the

first time on appeal “would encourage what Justice Scalia has referred to as

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sandbagging, i.e., ‘suggesting or permitting, for strategic reasons, that the

trial court pursue a certain course, and later—if the outcome is

unfavorable—claiming that the course followed was reversible error.’” In

re DBC, 545 F.3d at 1379 (quoting Freytag, 501 U.S. at 895 (Scalia, J.,

concurring in part and concurring in the judgment)); see also Stern v.

Marshall, 564 U.S. 462, 481-82 (2011) (explaining that “[w]e have

recognized the value of waiver and forfeiture rules in complex cases,”

because “the consequences of a litigant sandbagging the court—remaining

silent about his objection and belatedly raising the error only if the case does

not conclude in his favor—can be particularly severe” (internal quotation

marks, alterations, and citations omitted)); First-Citizens Bank & Trust Co.

v. Camp, 409 F.2d 1086, 1088-89 (4th Cir. 1969) (“[O]rdinarily, a litigant is

not entitled to remain mute and await the outcome of an agency’s decision

and, if it is unfavorable, attack it on the ground of asserted procedural

defects not called to the agency’s attention when, if in fact they were

defects, they would have been correctable at the administrative level.”); cf.

Jones Bros., 898 F.3d at 677 (observing that “it’s not as if Jones Brothers

sandbagged the Commission or strategically slept on its rights”). Here,

Petitioner’s conduct suggests strategic handling of his constitutional

claim—he waited to see if the Board would grant his appeal and then, only

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after losing, appealed and filed a motion for summary vacatur based on the

Appointments Clause with this Court.

In sum, Petitioner’s failure to present any Appointments Clause

objection to the Benefits Review Board is quintessential forfeiture. There is

no reason that he could not have timely raised a constitutional challenge

during the administrative proceedings.

II. There are no grounds to excuse Petitioner’s failure to raise

the Appointments Clause before the Benefits Review Board.

Petitioner argues that his Appointments Clause challenge should be

considered timely under Lucia, because Lucia’s challenge was found timely

despite not having been raised before the SEC ALJ. But this ignores the

fact that, while Lucia did not raise the issue before the ALJ, he did raise it

before the administrative agency—when it was on appeal to the

Commission. 138 S.Ct. at 2050. Here, by contrast, Petitioner failed to raise

the issue before either the ALJ or the Board. His failure to raise his

objection at any point while the case was before the administrative agency

distinguishes this case from Lucia, and renders his Appointments Clause

challenge untimely.

Freytag does not change that outcome. Although the Supreme Court

chose to exercise its discretion to consider an Appointments Clause issue

that had not been raised before the Tax Court, it emphasized that Freytag

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was a “rare case,” and did not purport categorically to excuse petitioners

from abiding by ordinary principles of appellate review in Appointments

Clause cases. Freytag, 501 U.S. at 879 (noting that Appointments Clause

challenges are “nonjurisdictional”); id. at 893-94 (Scalia, J., concurring)

(“Appointments Clause claims, and other structural constitutional claims,

have no special entitlement to review.”).

Since it decided Freytag, the Supreme Court has emphasized that

litigants are entitled to a remedy for an Appointments Clause violation when

they have raised a “timely challenge.” Lucia, 138 S.Ct. at 2055. Lucia’s

“timely challenge” prerequisite must be seen as cabining the discretion

referred to in Freytag and highlighting the exceptionality of the Court’s

review there.

Moreover, the courts of appeals—including this Court—have

Petitioner quotes at length from Freytag while carefully excising the

Court’s conclusion that Freytag is the “rare case.” Opening Brief at 24-25.

Petitioner also disregards Lucia’s emphasis on a timely challenge and how

that constrains Freytag.

Even if Lucia’s repeated references to timeliness could be considered dicta,

“this court considers itself bound by Supreme Court dicta almost as firmly as

by the Court’s outright holdings, particularly when the dicta is recent and not

enfeebled by later statements.” Newdow v. U.S. Congress, 328 F.3d 466,

480 n.17 (9th Cir. 2003), rev’d on other grounds Elk Grove Unified School

Dist. v. Newdow, 524 U.S. 1 (2004) (quoting Gaylor v. United States, 74

F.3d 214, 217 (10th Cir. 1996)); see also United States v. Baird, 85 F.3d

450, 453 (9th Cir. 1996) (court treats Supreme Court dicta with due

deference); Kabani & Co., 733 F. App’x 918, 2018 WL 3828524, at *1

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often refused to consider post-Freytag Appointments Clause challenges that

were never presented to an agency. See supra at 10.

Petitioner’s argument that his forfeiture should be excused because

there was a change in law while the case was pending on appeal must also

be rejected. The Appointments Clause was adopted in 1789. Freytag was

decided in 1991, 501 U.S. 868, and the Tenth Circuit’s decision in

Bandimere

v. SEC,

which reached the same conclusion as the Supreme

Court in Lucia, was decided in 2016, before either the ALJ’s 2017 decision

or the Board’s 2018 decision here.

844 F.3d 1168, 1170 (10th Cir. Dec. 27,

2016).

Put simply, nothing prevented Petitioner from timely raising a

similar challenge to the ALJ’s authority before Lucia was decided. Island

Creek Coal, 910 F.3d at 257 (

explaining that “[n]o precedent prevented the

company from bringing the constitutional claim before [Lucia]” and that

“Lucia itself noted that existing case law ‘says everything necessary to

decide this case.’”).

(citing Lucia in holding that “petitioners forfeited their Appointments Clause

claim by failing to raise it in their briefs or before the agency”).

By the time Petitioner filed his opening Board brief in August 2017, there

had been eleven different reported court opinions that discussed

Appointments Clause challenges to Securities and Exchange Commission

ALJs. Bandimere, 844 F.3d at 1170 (Dec. 27, 2016); Bennett v. SEC, 844

F.3d 174, 177-78 (4th Cir. Dec. 16, 2016); Lucia v. SEC, 832 F.3d 277, 283

(D.C. Cir. Aug. 9, 2016), affirmed by an equally divided en banc court, 868

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Petitioner’s reliance on Ackerman v. Western Electric Co., 860 F.2d

1514 (9th Cir. 1988), is also misplaced, as Ackerman makes clear that an

issue raised for the first time on appeal—even a purely legal issue—is

ordinarily waived. Id. at 1517; see also In re Howell, 731 F.2d 624, 627 (9th

Cir. 1984) (“In most circumstances, a federal appellate court will not

consider an issue not passed upon below.”); United States v. Patrin, 575

F.2d 708, 713 (9th Cir. 1978) (refusing to consider on appeal a challenge

that “could have been raised and explored” below).

The Court in Ackerman

exercised its discretion to hear the previously unraised issue only because

“[

t]he issue has been thoroughly briefed and argued here, and Ackerman has

not objected to our consideration of it.” 860 F.2d at 1517 (emphasis added).

That is obviously not the case here, as both the Director and Mr. Bussanich’s

F.3d 1021 (D.C. Cir. June 26, 2017); Hill v. SEC, 825 F.3d 1236, 1240 (11th

Cir. June 17, 2016); Tilton v. SEC, 824 F.3d 276, 279-80 (2d Cir. June 1,

2016); Bennett v. SEC, 151 F. Supp. 3d 632, 633 (D. Md. Dec. 17, 2015);

Ironridge Global IV, Ltd. v. SEC, 146 F. Supp. 3d 1294, 1312 (N.D. Ga. Nov.

17, 2015); Duka v. SEC, 124 F. Supp. 3d 287, 289 (S.D.N.Y. Aug. 12, 2015);

Gray Fin. Grp. v. SEC, 166 F. Supp. 3d 1335, 1350 (N.D. Ga. Aug. 4, 2015);

Tilton v. SEC, 2015 WL 4006165, at *1 (S.D.N.Y. June 30, 2015); Hill v.

SEC, 114 F. Supp. 3d 1297, 1316 (N.D. Ga. June 8, 2015). In some of these

cases, the courts did not reach the merits of the Appointments Clause claim

because the litigants had not completed their administrative proceedings, and

the courts lacked jurisdiction until those proceedings were completed. See,

e.g., Hill, 825 F.3d at 1252

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former employer object to the Court hearing the Appointments Clause issue

at this late stage.

Finally, Petitioner argues that his failure to timely raise the

Appointments Clause issue should be excused under

Jones Brothers, but

Jones Brothers confirms that the Appointments Clause claim here has been

forfeited, as this case lacks the special distinguishing features that led the

Sixth Circuit to excuse the forfeiture in that case. In Jones Brothers, the

court held that a petitioner had forfeited its Appointments Clause claim by

failing to argue it before the Mine Safety and Health Review Commission,

but that this forfeiture was excusable for two reasons. First, it was not clear

whether the Commission could have entertained an Appointments Clause

challenge, given the statutory limits on the Commission’s review authority.

Jones Bros., 898 F.3d at 673-77, 678 (“We understand why that question

may have confused Jones Brothers”). Second, Jones Brothers’ timely

identification of the Appointments Clause issue for the Commission’s

consideration was reasonable in light of the uncertainty surrounding the

Commission’s authority to address the issue. Id. at 677-78 (merely

identifying the issue was a “reasonable” course for a “petitioner who wished

to alert the Commission of a constitutional issue but is unsure (quite

understandably) just what the Commission can do about it.”). Given these

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circumstances, the court exercised its discretion to excuse petitioner’s

forfeiture, but explained that this was an exceptional outcome: “We

generally expect parties like Jones Brothers to raise their as-applied or

constitutional-avoidance challenges before the Commission and courts to

hold them responsible for failing to do so.” Id. at 677.

No similar exceptional circumstances exist here. Unlike Jones

Brothers, Petitioner did not timely identify the Appointments Clause issue to

the Board. Moreover, Petitioner does not argue that the Board lacked the

authority to address his Appointments Clause challenge. Nor could he have

reasonably believed that the Board would have refused to entertain such a

challenge. The Board has repeatedly provided remedies for Appointments

Clause violations, see supra at 11, and has broadly interpreted its authority

to decide substantive questions of law, including certain other constitutional

issues. See Shaw v. Bath Iron Works, 22 BRBS 73 (1989) (addressing the

constitutionality of the 1984 amendments to the Longshore Act); Herrington

v. Savannah Machine & Shipyard, 17 BRBS 194 (1985) (addressing

constitutional validity of statutes and regulations within its jurisdiction);

Smith v. Aerojet General Shipyards, 16 BRBS 49 (1983) (addressing due

process issue). Jones Brothers is simply inapposite.

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If the Court were to excuse Petitioner’s forfeiture, there would be real

world consequences. To the best of our knowledge, there are nearly six

hundred cases—arising under the Black Lung Benefits Act, the Longshore

Act, and its extensions—currently pending before the Board. But in over

five hundred of these cases, no Appointments Clause claim has been raised.

Should the Court excuse Petitioner’s forfeiture here—where he failed to

raise the claim to the agency—it would be inviting every losing party at the

Board to seek a re-do of years’ worth of administrative proceedings based on

an Appointments Clause claim raised for the first time before a court of

appeals.

For the Longshore program, whose very purpose is to provide

timely and certain relief to disabled workers, that is precisely the kind of

disruption that forfeiture seeks to avoid. See L.A. Tucker, 344 U.S. at 37

(cautioning against overturning administrative decisions where objections

are untimely under agency practice).

In addition to this case, there are two appeals under the Longshore Act

currently pending before this Court in which the Petitioner has raised an

Appointments Clause challenge. Dominguez v. Bethlehem Steel Corp., No.

18-70184; and Zumwalt v. National Steel & Shipbuilding Co., No. 18-72257.

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CONCLUSION

The basic tenets of administrative law required Petitioner to raise his

Appointments Clause challenge before the agency. His proffered reasons

for not doing so are meritless. The Court should hold that Petitioner

forfeited his right to challenge the ALJ’s authority under the Appointments

Clause.

Respectfully submitted,

KATE S. O’SCANNLAIN

Solicitor of Labor

KEVIN LYSKOWSKI

Acting Associate Solicitor

MARK A. REINHALTER

Counsel for Longshore

GARY K. STEARMAN

Counsel for Appellate Litigation

/s/ Matthew W. Boyle

MATTHEW W. BOYLE

Attorney

U.S. Department of Labor

200 Constitution Ave., N.W.

Room N-2117

Washington, D.C. 20210

(202) 693-5658

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STATEMENT OF RELATED CASES

Pursuant to Ninth Circuit Rule 28-2.6

The Appointments Clause issue is also raised in Zumwalt v. National

Steel & Shipbuilding Co., Case No. 18-72257; and Dominguez v. Bethlehem

Steel Corporation, Case No. 19-70184.

/s/ Matthew W. Boyle

MATTHEW W. BOYLE

CERTIFICATE OF COMPLIANCE

Pursuant to Fed. R. App. P. 32(a)(7)(C)

and Ninth Circuit Rule 32-1

I certify that, pursuant to Fed. R. App. P. 32(a)(7)(C) and Ninth

Circuit Rule 32-1, the attached brief for the Federal Respondent is

proportionally spaced, has a typeface of 14 points, and contains 3,543 words.

/s/ Matthew W. Boyle

MATTHEW W. BOYLE

CERTIFICATE OF SERVICE

I hereby certify that on January 31, 2019, I electronically filed the

foregoing Response through the appellate CM/ECF system, and that all

participants in the case are registered users of, and will be served through,

the CM/ECF system.

/s/ Matthew W. Boyle

MATTHEW W. BOYLE

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