independent counsel

In 2002 Congress enacted the Sarbanes-Oxley Act, which created the Public Company Accounting Oversight Board as a five-member entity appointed by the Securities and Exchange Commission. The Board oversees audits of public companies and possesses authority to inspect registered accounting firms, initiate investigations, and issue sanctions. Beckstead and Watts, LLP, a Nevada accounting firm, registered with the Board. The Board inspected the firm, released a report critical of its auditing procedures, and began a formal investigation. Free Enterprise Fund, a nonprofit organization of which the firm is a member, and Beckstead and Watts sued the Board and its members, the Commission, and the United States in federal district court. They sought declaratory and injunctive relief alleging that the Board's structure violated the Constitution. The district court determined it had jurisdiction and granted summary judgment to the defendants. The Court of Appeals for the District of Columbia Circuit affirmed the district court's judgment in full. The Supreme Court granted certiorari.

Following the 2008 financial crisis, Congress created the Consumer Financial Protection Bureau as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The agency was tasked with implementing and enforcing a large body of federal consumer financial protection statutes, including the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and the Truth in Lending Act, along with a new prohibition on unfair, deceptive, or abusive acts or practices in the consumer-finance sector. The CFPB is led by a single Director appointed by the President with the advice and consent of the Senate for a five-year term, during which the President may remove the Director only for inefficiency, neglect of duty, or malfeasance in office. The agency receives its funding directly from the Federal Reserve rather than through the annual appropriations process. In 2017, the CFPB issued a civil investigative demand to Seila Law LLC, a California-based law firm that provides debt-related legal services to clients. The demand sought information and documents related to the firm’s business practices to determine whether Seila Law had engaged in unlawful acts or practices in the advertising, marketing, or sale of debt relief services. Seila Law asked the CFPB to set aside the demand on the ground that the agency’s single-Director structure with for-cause removal protection violated the separation of powers. When the CFPB declined, Seila Law refused to comply, and the CFPB filed a petition in federal district court to enforce the demand. The district court rejected Seila Law’s constitutional challenge and ordered the firm to comply with the demand. The Ninth Circuit affirmed, concluding that Seila Law’s arguments were foreclosed by Humphrey’s Executor v. United States and Morrison v. Olson. The Supreme Court granted certiorari to address the constitutionality of the CFPB’s structure and, if necessary, the severability of the Director’s removal protection from the remainder of the Dodd-Frank Act.

In August 1994, an Independent Counsel was appointed to investigate possible violations of federal law relating to the Whitewater Development Corporation. In December 1994, Webster Hubbell pleaded guilty to charges of mail fraud and tax evasion arising out of his billing practices as a member of an Arkansas law firm from 1989 to 1992. He was sentenced to 21 months in prison. As part of the plea agreement, Hubbell promised to provide the Independent Counsel with full, complete, accurate, and truthful information about matters relating to the Whitewater investigation. While Hubbell was incarcerated in October 1996, the Independent Counsel served him with a subpoena duces tecum calling for the production of 11 categories of documents before a grand jury sitting in Little Rock, Arkansas. Hubbell appeared before the grand jury and initially invoked his Fifth Amendment privilege. After being granted immunity pursuant to an order under 18 U.S.C. § 6003(a), he produced 13,120 pages of documents and records. The documents provided the Independent Counsel with information that led to a second prosecution. On April 30, 1998, a grand jury in the District of Columbia returned a 10-count indictment charging Hubbell with tax-related crimes and mail and wire fraud. The District Court dismissed the indictment on the ground that the Independent Counsel's use of the subpoenaed documents violated 18 U.S.C. § 6002. The Court of Appeals vacated the judgment and remanded for further proceedings to determine the extent of the Government's independent knowledge of the documents. On remand, the Independent Counsel acknowledged that he could not satisfy the reasonable particularity standard and entered into a conditional plea agreement with Hubbell. The Supreme Court granted certiorari to determine the precise scope of a grant of immunity with respect to the production of documents in response to a subpoena.

In 1984, Congress enacted the Sentencing Reform Act to address widespread criticisms that federal sentencing was a national scandal marked by unwarranted disparities and uncertainty. The legislation created the United States Sentencing Commission as an independent commission in the judicial branch consisting of seven voting members. The President appoints the members with the advice and consent of the Senate, and at least three members must be federal judges selected after consideration of recommendations from the Judicial Conference of the United States, while the Attorney General serves as an ex officio nonvoting member. Petitioner John M. Mistretta was indicted in the United States District Court for the Western District of Missouri on three counts centering on a cocaine sale. He pleaded guilty to one count of conspiracy to distribute cocaine. The district court sentenced him under the Guidelines to 18 months' imprisonment to be followed by a three-year term of supervised release, along with a $1,000 fine and a $50 assessment. Mistretta appealed his sentence to the United States Court of Appeals for the Eighth Circuit, challenging the constitutionality of the Sentencing Commission and the Guidelines. Both Mistretta and the United States petitioned the Supreme Court for certiorari before judgment in the Eighth Circuit. The Court granted the petitions because of the imperative public importance of the issue and the disarray among the federal district courts.