Judge Dana Douglas, who was nominated by President Biden to the Fifth Circuit court of appeals, cast a deciding vote in a 2-1 ruling that dismissed a conservative group’s attack on the Securities and Exchange Commission (SEC) for failing to take action against what it claimed was viewpoint discrimination concerning a company’s equal opportunity policy. Judge Douglas joined Judge James Dennis, who was nominated by President Clinton, in issuing the opinion, to which Judith Edith Jones, who was nominated by President Reagan, dissented. The November 2024 decision was in National Center for Public Policy Research v SEC.
What happened in this case?
The National Center for Public Policy Research is a self-described conservative think tank and advocacy group that is a member of the advisory group of Project 2025. As part of its work concerning business and regulatory policy, the Center became concerned about what it called “blatant leftwing actions” by Kroger Company in adopting an equal opportunity policy. The Center proposed that Kroger include in proxy materials sent to shareholders a statement that it would issue “a public report detailing the potential risks associated with omitting ‘viewpoint’ and ‘ideology’ from its written equal employment opportunity (EEO) policy.”
Kroger initially declined the Center’s proposal and notified the SEC. Agency staff sent Kroger a “no-action” letter, indicating that they saw nothing wrong with Kroger’s decision and intended to take no action, The Commission itself declined to take action, and the Center then filed an appeal with the Fifth Circuit, asserting that the SEC was engaged in “viewpoint discrimination” and “chill[ed] [its] speech.”
Several weeks later, however, Kroger decided to include the Center’s proposal in its proxy materials to shareholders. When put to a vote at a shareholders meeting, support for the Center’s proposal was “sparse” and received “less than 2% of the votes cast,” so it failed. The SEC then moved to dismiss the Center’s appeal in the Fifth Circuit.
How did Judge Douglas and the Fifth Circuit majority rule and why is it important?
In a 2-1 decision, Judges Douglas and Dennis dismissed the Center’s appeal and its case. They explained that the dispute was now moot, since the Center “accomplished the purpose” of getting its proposal before shareholders because of Kroger’s voluntary action without an SEC or court order. In addition, they went on, the court had no jurisdiction over the SEC staff “no-action” guidance letter.
Judges Douglas and Dennis also explained what was wrong with the vigorous assertions to the contrary by the Center and by Judge Jones, who argued that the court should “vacate” the no-action letter. Based on the record and past precedent, they wrote, the Center and the court can “only speculate” as to whether Kroger or another company will take similar action in the future. As a result, they concluded, the Center’s claim is “merely abstract or hypothetical, and thus too speculative to be fit for judicial review at this time.”
In addition, the majority rejected the claim that the court had jurisdiction because the no-action letter should be considered “official’ SEC action. Such letters merely provide informal staff advice, they stated, and a “wealth of judicial authority” has agreed that they cannot be reviewed by a court. Indeed, thy suggested, giving such weight to staff no-action letters would undermine the authority of the SEC itself. “Without an order” or other reviewable action, the majority concluded, “the Center is left tilting at windmills” and there was no proper jurisdiction over its claims.
The decision made possible by Judge Douglas is very important to present and future Kroger employees, and to the SEC. It may also be important in other cases where plaintiffs like the Center try to keep alive challenges to regulatory agencies that have been resolved, especially in the Fifth Circuit, which includes Texas, Louisiana, and Mississippi. In addition, the decision serves as a reminder of the importance of confirming fair-minded judges to our federal courts