On October 31, 2019, the Federal Circuit in Arthrex, Inc. v. Smith & Nephew, Inc., No. 2018-2140, ruled that Administrative Patent Judges (APJs) are “principal officers” of the United States under the Appointments Clause in Article II, section 2, clause 2 of the Constitution. Because the appointments of APJs do not comply with the Constitution, their rulings in Arthrex were invalid, and the case was remanded to be decided by constitutional APJs.
This comment first argues that, assuming that APJs are principal officers, the remedy that the Federal Circuit imposed does not remove the constitutional flaw and creates its own problems. Second, I argue that the test that the courts have been using to decide who is a principal officer is ill-suited to the task, and I outline a better approach that closely follows the language of the Clause itself and is also easier to administer and produces more sensible results than the current framework. But first some background on how the various persons who work for the federal government are selected.
There is a very small group of federal officers who are elected and whose method of elections, terms of office, and requirements for the office are spelled out in the Constitution: the President and Vice President and the Members of both the Senate and the House of Representatives.
Second, there are officers of the United States, who fall into two groups. Among them are “principal officers,” although the term is not used in the Constitution, who must be appointed by the President with the advice and consent of the Senate. The Constitution is explicit that certain officers come within this category: “ambassadors, other public ministers and consuls, judges of the Supreme Court.” The Clause also includes within this requirement “all other officers of the United States, whose appointments are not otherwise herein provided for, and which have been established by law.” Thus, if a person is an officer, the default option is Presidential appointment plus Senate confirmation. Although this provision is broad, and might be read to include individuals who hold positions such as Director of the Congressional Budget Office, basic principles of separation of powers counsel against that interpretation which would allow the President to make appointments in the legislative branch, unlike his inter-branch appointments to the Supreme Court which are expressly provided for in this Clause.
The second group consists of “inferior officers” whose appointments do not necessarily require Senate confirmation. That category is established by a provision based on the Framer’s conclusion that requiring the President and the Senate to act on every appointment of an officer of the United States was unnecessary. Therefore, they created the following exception: “the Congress may by law vest the appointment of such inferior officers, as they think proper, in the President alone, in the courts of law, or in the heads of departments.” It is this exception that was at issue in Arthrex, but before turning to it, there is one more category to be described.
Not everyone who works for the federal government is an officer. Although not spelled out in the Constitution, it is agreed that most federal workers are “employees” whose appointments can be made without complying with the Appointments Clause. The dividing line between officers and employees is whether the individual “exercises significant authority pursuant to the laws of the United States.” Buckley v. Valeo, 424 U.S. 1, 125-26 (1976). There is no dispute that the Buckley test is the correct one, although its application is sometimes contested, as it was in Lucia v. SEC, 138 S. Ct. 2044 (2018), in which the Court ruled that Administrative Law Judges (ALJs) are inferior officers and not employees and had to be appointed by the Commissioners of the SEC, not its staff. No one argued that the APJs in Arthrex were employees; the question there was whether they were principal or inferior officers.
In reaching its conclusion that APJs are principal officers, the Federal Circuit looked to three factors that the Supreme Court has considered significant when passing on this question: (1) whether the decisions of the officers in question are subject to review by principal officers; (2) whether their work is otherwise subject to supervision by others; and (3) whether they can be removed from office at will or only for cause. On the first, the court concluded that no principal officer reviews rulings of APJs, and on the second it found that the supervision was modest at best, but nonetheless found that this factor supported a finding that APJs are inferior officers.
On the third, 35 U.S.C. § 6(a), providing for the appointment of APJs by the Secretary of Commerce, in consultation with the Director of the Patent and Trademark Office, complies with the inferior officer appointment exception since the Secretary is the head of his department. But neither that provision, nor any other part of Title 35, sets forth who may remove an APJ or on what basis. On the sensible assumption that there must be some basis for the removal of all officers, the Federal Circuit looked to the general provisions in Title 5 applicable to federal employees generally, and are made applicable to the Patent Office by 35 U.S.C. § 3(c) and concluded that ALJs could not be removed except for some form of cause. Based on the court’s balancing of these incommensurable factors, and some lesser ones, the court reached the conclusion that APJs are principal officers.
Assuming that the test used in Arthrex court is correct and was properly applied, the remedy approved by the court makes no sense, even if other courts have utilized similar approaches. According to the court, if APJs were removable without cause by the Secretary, that would cure the principal officer problem. That is what the courts ordered in Free Enterprise Fund v. Public Company Accounting Oversight Board, 561 U.S. 477 (2010), and Intercollegiate Broadcasting System, Inc. v. Copyright Royalty Bd., 684 F.3d 1332 (D.C. Cir. 2012), cert denied, 569 U.S. 1004 (2013). Free Enterprise is distinguishable because of the special context in which the limits on officer removal arose, but Intercollegiate Broadcasting, which followed Free Enterprise without recognizing the different contexts in which they arose, is on all fours with Arthrex, and so must be attacked based on first principles.
The courts that have solved the constitutional Appointments Clause by removing the good cause removal protection for the officer in question have done so on the theory that they are trying to save as much of the statute as they can and thereby carry out what Congress would have wanted if it had known of the constitutional flaw. In the case of APJs, that endeavor is complicated by the fact that Congress did not specifically provide for their removal, and the statute that the Federal Circuit held unconstitutional as applied to APJs is in a different Title of the U.S. Code, and it applies to many more officers and employees than these APJs. Accordingly, in these circumstances, it is surely a fiction or perhaps wishful thinking for the Federal Circuit to assert that it was trying to carry out the will of Congress when it eliminated a for-cause removal provision that Congress never included for APJs.
There is, moreover, a more basic problem with this remedial fix. The Constitution is quite clear that all principal officers must be appointed by the President with the advice and consent of the Senate. But because the default option for officers is presidential appointment and Senate confirmation, it does not mean that every officer who is appointed by that method is a principal officer, as evidenced by my decades-old appointment and Senate confirmation as an Ensign in the Navy, which surely did not make me a principal officer.
There is another feature of being a principal officer based on Myers v. United States, 272 U.S. 52 (1926). Under that decision and those that followed it, many but not all principal officers can be removed at will. Compare Humphrey’s Executor v. United States, 295 U.S. 602 (1935). But the converse is not necessarily true: a person who can be fired at will is not automatically a principal officer. In fact, but for civil service or other statutory protections, many federal employees, as well as some inferior officers, are at will employees, which was the tradition at common law for most employees, but not for those performing judicial functions like APJs. However, there is nothing in the Constitution that enables any officer who may be discharged at will to perform the duties of principal officers. Rather, the Appointments Clause is very clear that any officer other than an inferior officer must be nominated by the President and confirmed by the Senate, neither of which has happened for any APJ.
Therefore, even accepting the Federal Circuit’s conclusion that the inability to remove APJs at will is a factor supporting the conclusion that they are principal officers, the removal remedy devised by the court does not cure the appointment problem under the Constitution. And that is without taking into account the due process concerns that arise when officers who are supposed to be neutral adjudicators are subject to removal by political appointees. Instead, to fix this problem, Congress would have to amend the law to provide for a proper principal officer appointment for the 200 or so APJs. In the meantime, they could not hear any cases, and many, perhaps most, of their previous decisions, would have to be sent back to be decided by duly appointed APJs. The United States, which was a party in Arthrex has announced that it will seek re-hearing en banc, in part because of the large number of cases affected by the ruling, which may produce a more workable result, even if the finding that APJs are principal officers holds.
All of this assumes that the method used in Arthrex is the appropriate one to decide whether an individual who is appointed by a method approved only for inferior officers is, nonetheless, a principal officer under the Constitution. To begin, because ambassadors, other public ministers and consuls, and judges of the Supreme Court are specifically stated to require Senate confirmation, they can never be inferior officers. In addition, because heads of departments and courts of law are themselves appointing agents, the appointments scheme plainly envisions that appointments of inferior officers must be made only by principal officers or the President. That leaves open the status of most other federal officers, including APJs.
To date, the three relevant Supreme Court cases – Morrison v. Olson, 487 U.S. 654 (1988), Freytag v. Commissioner, 501 U.S. 868 (1991), and Edmond v. United States, 520 U.S. 651 (1997) – have not focused on the text of the Appointments Clause. Everyone agrees that unless Congress – by law – makes an officer an inferior officer, the person requires Senate confirmation. But why isn’t the converse also true? The Appointments Clause exception provides that “the Congress may by law vest the appointment of such inferior officers, as they think proper,” in one of three designated alternative appointing authorities. Thus, if Congress passes a law designating an office as inferior, or a law specifies one of these alternative appointment methods for that office, why shouldn’t the office should, at least presumptively, be an inferior office?
Because the exception is most naturally read as giving the choice of which are inferior offices to Congress, the courts should not, or should almost never, second guess Congress. This grant of power to Congress is similar to the Necessary and Proper Clause in Article I, section 8, clause 18, which the Court has always construed to give Congress almost unlimited leeway to enact laws to carry out other powers given to the federal government, as long as the choices are not forbidden by another part of the Constitution. M’Culloch v. Maryland, 17 U.S. 316, 324-26 (1819). In addition, the term proper here is preceded by the even more permissive phrase “as they [the Congress] think proper,” which reinforces the conclusion that, subject to the express limits and requirements set forth above, it is up to Congress to decide whether there should be an exception and to which offices it should apply. There are, to be sure, other ways to read the exception, but this is a reasonable reading, and adopting it would make principal officer determinations much more certain for all concerned.
This reading is also supported by the dynamics of creating exceptions. Without an exception, the Senate will have the right to approve or disapprove the appointment of every federal officer, and the exception can apply only if both Houses of Congress pass a law to that effect. Thus, because the Senate must agree to surrender some of its power for there to be an exception, it will not lightly do so if the officer is likely to have the duties and powers of a head of a department or other principal officers, thereby creating a natural check against expanding the number of inferior officers. Moreover, if the appointment is being taken out of the hands of the President, he will have to sign the law that does that, or Congress will have to muster two thirds of both Houses to override his veto, thereby providing another check against improperly making a principal officer into an inferior one. There may be countervailing separation of powers consideration that push in the opposite direction, but none comes to mind.
The issues of who is a principal officer and how is that to be determined are not limited to APJs, but are important to a wide range of federal agencies. In addition, the courts should not overlook the rights of litigants in these situations and the due process implications of allowing administrative judges to be subject to removal at will by their superiors. Much more thought may be required to find the right answer, but even now it seems quite clear that the remedy devised by the Federal Circuit in Arthrex is ill-suited to the task and probably not a constitutionally valid solution as well.
Alan B. Morrison is the Lerner Family Associate Dean for Public Interest & Public Service Law at George Washington Law School where he teaches constitutional law and civil procedure.