Judge Kavanaugh, Lorenzo v. SEC, & the Post-Kennedy Supreme Court

Abstract

This Article analyzes an upcoming Supreme Court case, Lorenzo v. Securities and Exchange Commission (Lorenzo), and explains why it provides a valuable window into the Court’s future now that Justice Kennedy has retired and his seat has been filled by Justice Brett Kavanaugh. Lorenzo is an important case that raises fundamental interpretative questions about the reach of federal securities statutes. But most significant is its unique procedural posture: when the Supreme Court issues its decision on Lorenzo in 2019, Justice Kavanaugh will be recused while the other eight Justices rule on a lower court opinion from the D.C. Circuit in which he 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. Then-Judge Kavanaugh’s dissent also goes on to identify how the legal deficiencies specific to Lorenzo 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 the newest Supreme Court Justice is on full display. More broadly, this Article demonstrates that the deeper import of Lorenzo is not what it reveals about the views of Justice Kavanaugh. Rather, it is the reception those views will meet from the other eight Justices on the Court. In addressing the argument set forth in the Lorenzo dissent, the current members of the Court will be confronting the positions of a peer and colleague. By necessity, they will also signal their openness to being persuaded by Justice Kavanaugh on the issues where he speaks with greatest authority, and can be expected to act as a forceful advocate for his vision of the law on the Court. Lorenzo can therefore be seen as a bellwether for Justice Kavanaugh’s influence as a judicial entrepreneur on behalf of his trademark theory of the constitutional separation of powers in administrative law. Most importantly, the case bears directly on the area of administrative law where the stakes are highest of all—the role that Justice Kavanaugh may play in the demise of the Chevron doctrine and the collapse of judicial deference toward the administrative state.