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Supreme Court of the United States ______ No. 18-1501 IN THE Supreme Court of the United States __________ CHARLES C. LIU AND XIN WANG A/K/A LISA WANG, Petitioners, v. SECURITIES AND EXCHANGE COMMISSION, Respondent. __________ On Writ of Certiorari To the United States Court of Appeals For the Ninth Circuit __________ BRIEF OF THE CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA AS AMICUS CURIAE IN SUPPORT OF PETITIONERS __________ STEVEN P. LEHOTSKY ADAM G. UNIKOWSKY JANET GALERIA Counsel of Record U.S. CHAMBER ZACHARY C. SCHAUF LITIGATION CENTER JENNER & BLOCK LLP 1615 H Street, NW 1099 New York Ave., NW Washington, DC 20062 Suite 900 Washington, DC 20001 (202) 639-6000 [email protected] TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................... ii INTEREST OF AMICUS CURIAE ............................. 1 SUMMARY OF ARGUMENT ........................................ 2 ARGUMENT ...................................................................... 2 I. SEC Disgorgement Is Not An “Injunction.” ............................................................ 4 II. SEC Disgorgement Is Not “Equitable Relief.”...................................................................... 5 A. “Equitable Relief” Is Relief That Could Historically Be Obtained In The Courts Of Equity. ............................... 6 B. Disgorgement Was Unavailable In The Courts Of Equity. ............................... 7 1. Disgorgement Does Not Resemble Any Remedy Available To The Sovereign In The Courts Of Equity. .............. 8 2. SEC Disgorgement Cannot Be Analogized To Traditional Equitable Remedies Awarded In Private Litigation. .......................... 9 III. Congress Did Not Ratify The SEC’s Non- Equitable Disgorgement. .................................... 17 CONCLUSION ................................................................ 25 ii TABLE OF AUTHORITIES CASES Alexander v. Sandoval, 532 U.S. 275 (2001) ....... 18, 19 Brown v. Swann, 35 U.S. (10 Pet.) 497 (1836) .......... 17 Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994) ..................................................... 18, 19, 20 CFTC v. Walsh, 618 F.3d 218 (2d Cir. 2010) ............. 16 Exploration Co. v. United States, 247 U.S. 435 (1918) .......................................................................... 6 FTC v. Bronson Partners, LLC, 654 F.3d 359 (2d Cir. 2011) ............................................... 10, 12, 15 Gabelli v. SEC, 568 U.S. 442 (2013) ......................... 6, 7 Great-West Life & Annuity Insurance Co. v. Knudson, 534 U.S. 204 (2002) ...................... passim Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999) .................................................................... 6, 12 Kokesh v. SEC, 137 S. Ct. 1635 (2017) ............. passim Louisiana Public Service Commission v. FCC, 476 U.S. 355 (1986) ......................................... 3 Marshall v. City of Vicksburg, 82 U.S. (15 Wall.) 146 (1892) ...................................................... 17 Meghrig v. KFC Western, Inc., 516 U.S. 479 (1996) .......................................................................... 4 iii Mertens v. Hewitt Associates, 508 U.S. 248 (1993) .................................................................... 7, 17 Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288 (1960) ......................................................... 11 Montanile v. Board of Trustees of National Elevator Industry Health Benefit Plan, 136 S. Ct. 651 (2016) ................................................ 14 Patterson v. McLean Credit Union, 491 U.S. 164 (1989) ........................................................... 18, 19 Porter v. Warner Holding Co., 328 U.S. 395 (1946) .......................................................... 5, 9, 11, 16 SEC v. Banner Fund International, 211 F.3d 602 (D.C. Cir. 2000) ..................................... 15, 18, 20 SEC v. Cavanagh, 155 F.3d 129 (2d Cir. 1998) ......... 16 SEC v. Cavanagh, 445 F.3d 105 (2d Cir. 2006) ..... 9, 12 SEC v. Colello, 139 F.3d 674 (9th Cir. 1998) ............. 16 SEC v. Commonwealth Chemical Securities, Inc., 574 F.2d 90 (2d Cir. 1978) ............................. 10 SEC v. Fischbach Corp., 133 F.3d 170 (2d Cir. 1997) .............................................................. 10, 18, 20 SEC v. I-Cubed Domains, LLC, 664 F. App’x 53 (2d Cir. 2016) ................................................. 15-16 SEC v. Quan, 817 F.3d 583 (8th Cir. 2016) ............... 15 SEC v. Rosenthal, 426 F. App’x 1 (2d Cir. 2011) .......................................................................... 16 iv SEC v. Texas Gulf Sulphur Co., 312 F. Supp. 77 (S.D.N.Y. 1970), aff’d in part, rev’d in part, 446 F.2d 1301 (2d Cir. 1971) ..................... 7, 20 Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015) ............................... 19, 22 Tull v. United States, 481 U.S. 412 (1987) ............. 9, 11 United States v. Moore, 340 U.S. 616 (1951) ....... 11, 12 Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011) .......................................................................... 4 Ziglar v. Abbasi, 137 S. Ct. 1843 (2017) ..................... 24 STATUTES 15 U.S.C. § 77t(b) ........................................................ 3, 4 15 U.S.C. § 78u-2(e) ...................................................... 22 15 U.S.C. § 78u(d)(1) ................................................... 3, 4 15 U.S.C. § 78u(d)(4) ............................................... 18, 22 15 U.S.C. § 78u(d)(5) ................................................... 3, 6 15 U.S.C. § 7246(a) ........................................................ 22 Securities Enforcement Remedies and Penny Stock Reform Act of 1990, Pub. L. No. 101- 429, tit. II, § 202(a), 104 Stat. 931, 937 ................. 22 OTHER AUTHORITIES Henry C. Black, A Law Dictionary (2d ed. 1910) ............................................................................ 4 Black’s Law Dictionary (11th ed. 2019) ....................... 4 v 4 William Blackstone, Commentaries (1765-1769) ................................................................. 8 1 Dan B. Dobbs, Law of Remedies (2d ed. 1993) ................................................................ 9, 12, 13 John N. Pomeroy, A Treatise on Equity Jurisprudence (3d ed. 1905) .................................... 8 Restatement (First) of Restitution (1937) ............ 8, 12 Restatement (Third) of Restitution and Unjust Enrichment (2011) .............................. 13, 16 Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts (2012) ........................................................................ 21 Joseph Story, Commentaries on Equity Jurisprudence (1846) ............................................... 8 INTEREST OF AMICUS CURIAE1 The Chamber of Commerce of the United States of America is the world’s largest business federation. It represents approximately 300,000 direct members and indirectly represents the interests of more than three million companies and professional organizations of every size, in every industry sector, and from every region of the country. One of the Chamber’s most important responsibilities is to represent the interests of its members in matters before the courts, Congress, and the Executive Branch. To that end, the Chamber regularly files amicus curiae briefs in cases that raise issues of vital concern to the nation’s business community. The members of the Chamber recognize that the appropriate exercise of enforcement powers by the SEC and other agencies is important for ensuring that our markets function fairly and effectively. Those enforcement powers, however, must be exercised within the limits Congress has provided. That includes Congress’s decision to limit SEC enforcement actions to seeking civil penalties, injunctions, and “equitable relief”—and not to authorize the form of relief that the 1 Counsel for all parties consented to the filing of this brief. Pursuant to this Court’s Rule 37.6, amicus states that this brief was not authored in whole or in part by counsel for any party, and that no person or entity other than amicus, its members, or its counsel made a monetary contribution intended to fund the preparation or submission of this brief. 2 SEC pursues under the label “disgorgement.” The Court should reverse the decision of the Ninth Circuit. SUMMARY OF ARGUMENT This case boils down to a straightforward principle: if Congress does not give an agency a power, the agency does not have it. Congress did not give the SEC the power to seek disgorgement in judicial proceedings. So, the SEC may not seek disgorgement in judicial proceedings. Congress did give the SEC the authority to seek “injunctions” and “equitable relief,” but disgorgement—a monetary penalty requiring payment to the sovereign, not for compensation—is nothing like an “injunction” or “equitable relief.” The SEC may think disgorgement is a good idea as a policy matter, but that view is not a substitute for legal authority. The SEC relies heavily on the doctrine of “ratification,” which theorizes that lower-court decisions conferring a power, coupled with Congress’s subsequent enactment of statutes in the same general area, are enough to infer that Congress implicitly approved of the lower-court decisions. But the doctrine of implicit ratification should find no favor here. And there is a far easier way for Congress to ratify lower-court decisions: pass a
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