Justice Kavanaugh, Lorenzo v. SEC, and the Future of Deference at the Post-Kennedy Supreme Court

Abstract

This Article analyzes an upcoming Supreme Court case, Lorenzo v. SEC (Lorenzo), and explains why it provides a unique window into the Court’s future now that Justice Kennedy has departed and presumably will be replaced by Brett Kavanaugh. When the Court issues its decision on Lorenzo in 2019, it will be ruling on a lower court opinion from the D.C. Circuit in which Judge Kavanaugh wrote separately in an extensive dissent. That dissent is quite remarkable. It contains a scathing assessment of securities fraud enforcement and adjudication at the SEC, the majority opinion’s interpretation of deceptive financial conduct under Rule 10b-5, and the SEC’s overall role in the development of federal securities law doctrine. In the dissent, Judge Kavanaugh further identifies how the legal deficiencies specific to Lorenzo also motivate his broader skepticism towards the Constitutional legitimacy of the administrative and regulatory state as a whole, a view that represents his signature contribution as a federal judge. Thus, in Lorenzo, the defining judicial philosophy of an incoming Supreme Court Justice is on full display.

 

As this article further argues, the deeper import of Lorenzo is not what it reveals about the views of Judge Kavanaugh. Rather, it is in the reception those views will meet from the other eight Justices on the Court. In addressing the argument set forth in Lorenzo’s dissent, the current members of the Court will be confronting the positions of a peer and future colleague. By necessity, they will also signal their openness to being persuaded by Judge Kavanaugh on issues where he speaks with greatest authority and can be expected to act as forceful advocate for his vision of the law at the Court. In short, Lorenzo will serve as a bellwether for Judge Kavanaugh’s influence as judicial entrepreneur on behalf of his trademark theory of the Constitutional separation of powers in administrative law. Given the current juncture at which the Court finds itself, the stakes could not be higher. Accordingly, this article concludes its analysis by turning to where the stakes are highest of all—the role that Judge Kavanaugh may play in the demise of the Chevron doctrine and the collapse of judicial deference toward the administrative state.

Keywords: Securities Law, Administrative Law, Constitutional Law, US Supreme Court