Overview
In a brief filed Friday, a committee of the U.S. House of Representatives and a staffer, Brian Sutter, argued why they need not comply with an SEC subpoena relating to an investigation under the STOCK Act, which essentially extends the insider trading laws to Congress (see our prior post on the case here). Among other arguments, the committee and Mr. Sutter invoked sovereign immunity:
The federal government is immune from judicial process under the doctrine of sovereign immunity, absent a waiver that “cannot be implied but must be unequivocally expressed.” U.S. v. Testan, 424 U.S. 392, 399 (1976) (quotation marks omitted). The doctrine encompasses Legislative Branch entities and officials acting, as the Committee and Mr. Sutter are here, in their official capacities. And it applies in the context of subpoena enforcement action. See, e.g., In re S.E.C. ex rel. Glotzer, 374 F.3d 184, 190, 192 (2d Cir. 2004) (agreeing with SEC that sovereign immunity barred enforcement of subpoena to SEC, absent express waiver); E.P.A. v. Gen. Elec. Co., 197 F.3d 592, 597 (2d Cir. 1999) (“[E]nforcement of this [federal judicial] subpoena duces tecum issued by General Electric to [an EPA official] would compel the EPA to act and therefore is barred by sovereign immunity in the absence of a waiver.”), vacated in irrelevant part, on other grounds, 212 F.3d 689 (2d Cir. 2000). Because “[t]he doctrine of sovereign immunity is jurisdictional in nature,” the SEC “bears the burden of establishing that [its] claims fall within an applicable [immunity] waiver.” Makarova v. U.S., 201 F.3d 110, 113 (2d Cir. 2000); accord Luckett v. Bure, 290 F.3d 493, 496-97 (2d Cir. 2002); Malik v. Meissner, 82 F.3d 560, 562 (2d Cir. 1996). The SEC cannot satisfy that burden here. The SEC says there is an implicit exception to the sovereign immunity doctrine for actions brought by other federal government components. See SEC Mem. at 23. That argument, for which the SEC cites no authority, flies in the face of the Supreme Court’s repeated insistence that a waiver may not be implied. See supra note 13 & accompanying text; see also, e.g., S.E.C. ex rel. Glotzer, 374 F.3d at 190 (sovereign immunity protects Article II agency against Article III subpoena, except to extent Article I branch has enacted express waiver). Indeed, in S.E.C. ex rel. Glotzer, the SEC itself argued, correctly, that – absent an express waiver, narrowly construed – sovereign immunity protects the SEC from an Article III subpoena. See SEC Br. (Dec. 15, 2003), S.E.C. ex rel. Glotzer, at 2, 3, 15 n.6, 17-18, attached as Ex. B. It is more than ironic that the SEC now insists that sovereign immunity provides Congress no protection as against an administrative agency subpoena.
