United States District Court, W.D. Louisiana, Shreveport Division
MORRIS & DICKSON CO.
MATTHEW G. WHITAKER, ET AL.
HORNSBY, MAGISTRATE Judge.
ELIZABETH ERNY FOOTE, UNITED STATES DISTRICT JUDGE.
& Dickson Co. (“Morris & Dickson”) is a
full-line pharmaceutical wholesaler, part of whose business
consists of distributing controlled substances. [Record
Document 1 at 6]. Concerned that Morris & Dickson had an
insufficient program in place to prevent diversion of
hydrocodone and oxycodone, the Drug Enforcement
Administration (“DEA”) began proceedings to
revoke Morris & Dickson's authorization to distribute
controlled substances. [Id. at 8]. Morris &
Dickson filed the instant action, seeking to enjoin further
proceedings before the DEA's Administrative Law Judge
(“ALJ”) on the grounds that he was
unconstitutionally appointed and is unconstitutionally
shielded from removal at will. [Id. at 13-16].
Because this Court lacks jurisdiction over Morris &
Dickson's challenge to the ongoing administrative
adjudication, this case is DISMISSED WITHOUT
& Dickson holds two DEA registrations that allow it to
distribute controlled substances. [Id. at 5]. On May
2, 2018, the Acting Administrator of the DEA began the
process of revoking these registrations by issuing an Order
to Show Cause and an Immediate Suspension of Registration
(“ISO”), which asserted that Morris & Dickson
maintained an inadequate anti-diversion program.
[Id. at 8]. In response, Morris & Dickson filed
suit to enjoin enforcement of the ISO. [Id.].
Following a hearing before the undersigned, this Court
temporarily restrained enforcement of the ISO, but allowed
the revocation proceeding to go forward. [Id. at 9].
Before a hearing could be held on the motion for a
preliminary injunction against the ISO, the DEA rescinded
that order. [Id.]. This Court then dismissed the
case. Morris & Dickson Co. v. Sessions, No.
5:18-cv-605 (W.D. La. May 22, 2018).
ALJ, Charles Dorman, set the show-cause hearing on the
DEA's allegations for November 13, 2018. [Record Document
1 at 11]. In order to prevent the hearing from going forward,
Morris & Dickson filed this suit, which seeks an
injunction and a declaratory judgment that further
proceedings before Judge Dorman would violate the
Constitution. [Record Documents 1 at 18 and 2 at 2-3].
the Appointments Clause of Article II, inferior officers of
the United States must be appointed by the President, the
courts, or the heads of executive departments. Lucia v.
SEC, 138 S.Ct. 2044, 2051 (2018) (citing U.S. Const.
art. II, § 2, cl. 2). Morris & Dickson argues that
DEA ALJs are inferior officers. [Record Document 1 at 11-13].
If they are, then they must be appointed by one of the three
authorities listed in the Appointments Clause. See
Lucia, 138 S.Ct. at 2051. The Controlled Substances Act
(“CSA”) incorporates by reference provisions of
the Administrative Procedure Act (“APA”)
controlling ALJs' appointments and their employment
protections. See 21 U.S.C. 824 (citing 5 U.S.C.
551-559). In accordance with these provisions, Judge
Dorman was appointed by the DEA Administrator. [Record
Document 1 at 14]. Morris & Dickson contends the DEA is
not an executive department for purposes of the Appointments
Clause because the DEA resides within the Department of
Justice (“DOJ”). [Id. at 14-15]. If that
is true, then the department head with the appointing power
is the Attorney General, not the DEA Administrator.
See 28 U.S.C. § 503. From this, Morris &
Dickson concludes that Judge Dorman was unconstitutionally
appointed. [Record Document 1 at 15].
& Dickson also alleges that the removal procedures for
the DEA ALJs are unconstitutional. [Id. at 15-16].
The Constitution vests the President with the executive
power, U.S. Const. art. II, § 1, cl. 1, and obligates
him to “take Care that the Laws be faithfully executed,
” id. art. II, § 3. These provisions are
violated when officers have more than one layer of protection
against removal at will. Free Enter. Fund v. Public Co.
Accounting Oversight Bd., 561 U.S. 477, 496 (2010). DEA
ALJs, such as Judge Dorman, may be removed by the agency
“only for good cause established and determined by the
Merit Systems Protection Board.” 5 U.S.C. §
7521(a). Members of that board, in turn, “may be
removed by the President only for inefficiency, neglect of
duty, or malfeasance in office.” 5 U.S.C. §
1202(d). Morris & Dickson argues that this double layer
of for-cause protection unconstitutionally interferes with
the President's obligation to take care that the laws are
faithfully executed. [Record Document 1 at 16].
reviewing Morris & Dickson's complaint, this Court
ordered briefing on the question of jurisdiction. [Record
Document 15]. Two days later, Judge Dorman cancelled the
show-cause hearing, thereby mooting Morris &
Dickson's request for an interim order enjoining it.
[Record Documents 22 at 3 and 23 at 1]. After this Court set
a schedule for ruling on jurisdiction and, if necessary, on
the merits, Judge Dorman stayed the enforcement proceeding
pending this Court's resolution of Morris &
Dickson's constitutional case. [Record Documents 27, 28,
Matthew G. Whitaker (the Acting Attorney General), Uttam
Dhillon (the Acting Administrator of the DEA), the DEA, the
DOJ, and the United States (collectively,
“Defendants”) argue that this Court lacks
jurisdiction and that Morris & Dickson's claims are
unripe. [Record Document 24 at 7-19]. They believe that
Supreme Court precedent requires Morris & Dickson to
complete the administrative process and obtain a final order
from the DEA Administrator before pursuing its constitutional
claims in an appeals court. [Id. at 9-14]. Morris
& Dickson contends that this Court has jurisdiction to
enjoin unconstitutional administrative proceedings at any
time and that, if this Court declines to exercise
jurisdiction, Morris & Dickson will face the irreparable
harm of forced participation in such a proceeding. [Record
Document 26 at 2-8].
Law and Analysis
courts are courts of limited jurisdiction . . . .”
Quinn v. Guerrero, 863 F.3d 353, 358 (5th Cir. 2017)
(citing Arbaugh v. Y&H Corp., 546 U.S. 500, 513
(2006)). As a result, they have a “duty to continually,
and sua sponte, assess their jurisdiction.”
USPPS, Ltd. v. Avery Dennison Corp., 647 F.3d 274,
284 (5th Cir. 2011). Thus, this Court must determine whether
it has subject matter jurisdiction over Morris &
Dickson's constitutional claims, which have been raised
in response to the ongoing administrative adjudication before
The Statutory Scheme
grants the DEA the authority to regulate, among other things,
the distribution of controlled substances “with the
goal of creating a closed system of distribution.”
Keysource Med. Inc. v. Holder, No. 1:11-cv-393, 2011
WL 3608097, at *1 (S.D. Ohio Aug. 16, 2011). Companies that
distribute controlled substances, such as Morris &
Dickson, must annually obtain a DEA registration. 21 U.S.C.
§ 822(a)(1); 21 C.F.R. § 1301.11(a). When
evaluating a distributor's application, the DEA considers
whether the registration is “inconsistent with the
public interest” in light of the following factors:
(1) maintenance of effective control against diversion of
particular controlled substances into other than legitimate
medical, scientific, and industrial channels;
(2) compliance with applicable State and local law;
(3) prior conviction record of applicant under Federal or
State laws relating to the manufacture, distribution, or
dispensing of such substances;
(4) past experience in the distribution of controlled
(5) such other factors as may be relevant to and consistent
with the public health and safety.
21 U.S.C. § 823(b). In order to reduce the risk of
diversion, a distributor
shall design and operate a system to disclose to the
registrant suspicious orders of controlled substances. The
registrant shall inform the Field Division Office of the
Administration in his area of suspicious orders when
discovered by the registrant. Suspicious orders include
orders of unusual size, orders deviating substantially from a
normal pattern, and orders of unusual frequency.
21 C.F.R. § 1301.74(b).
Administrator may suspend or revoke a license on various
grounds, including a “finding that the registrant . . .
has committed such acts as would render his registration
under section 823 of this title inconsistent with the public
interest as determined under such section.” 21 U.S.C.
§ 824(a)(4). Before revoking a registration, the DEA
must issue a rule to show cause describing the grounds for
revocation and conduct a hearing in accordance with the APA.
Id. § 824(c); 21 C.F.R. § 1301.37(c).
Following the hearing, the presiding ALJ issues a report
recommending findings of fact and conclusions of law; the ALJ
forwards this report and the administrative record to the DEA
Administrator. Id. § 1316.65(a), (c). The
Administrator, as the Attorney General's delegate, then
issues a final order, supported by findings of fact and
conclusions of law. Id. § 1316.67. A party
“aggrieved by a final decision” of the DEA
Administrator may then appeal to the Court of Appeals for the
District of Columbia Circuit or for the circuit in which the
party's principal place of business is located. 21 U.S.C.
The Legal Framework
district courts typically have jurisdiction over all
questions arising under the Constitution, 28 U.S.C. §
1331, Congress may impliedly preclude that jurisdiction and
route review of agency actions through other courts, see,
e.g., Thunder Basin Coal Co. v. Reich, 510 U.S.
200, 207 (1994). To determine whether jurisdiction is
impliedly precluded, a court must first ask whether
congressional intent to preclude jurisdiction is
“fairly discernable” from the text, structure,
and purpose of the statute establishing the agency review
scheme. Elgin v. Dep't of Treasury, 567 U.S. 1,
10 (2012) (citing Thunder Basin, 510 U.S. at 207;
United States v. Fausto, 484 U.S. 439, 443 (1988),
superseded by statute on other grounds, Civil
Service Due Process Amendments, Pub. L. No. 101-376, 104
Stat. 461 (1990)). If so, the court must turn to a second
question: are “the claims at issue ‘ . . . of the
type Congress intended to be reviewed within th[e] statutory
structure?'” Free Enter. Fund, 561 U.S. at
489 (quoting Thunder Basin, 510 U.S. at 212). To
answer this question, a court must apply the Thunder
Basin factors: (1) whether “a finding of
preclusion could foreclose all meaningful judicial
review;” (2) whether the claims are “wholly
‘collateral' to a statute's review
provisions;” and (3) whether the claims fall
“outside the agency's expertise.” Thunder
Basin, 510 U.S. at 212-13.
framework evolved through three Supreme Court decisions. As
these decisions will control this Court's determination
of its own jurisdiction, a somewhat detailed presentation of
them is required. In the first, Thunder Basin Coal Co. v.
Reich, miners at a non-union mine selected two
non-employee union organizers to serve as their
representatives during mine inspections. Id. at 204.
Federal regulations require a mine operator to post
information identifying the employees' representatives.
Id. Thunder Basin argued to the Mine Safety and
Health Administration (“MSHA”) that the
miners' selection violated the company's right under
the National Labor Relations Act (“NLRA”) to
exclude union organizers from company property. Id.
at 204-05. Thunder Basin further contended that requiring it
to post the representatives' information would deny due
process by forcing the company to choose between violating
the Mine Act and incurring penalties or complying with the
act and suffering irreparable harm. Id. The MSHA
responded with a letter instructing Thunder Basin to post the
required information. Id. at 204. Before receiving
the letter, the company filed suit in district court seeking
to enjoin any enforcement actions by the Secretary of Labor.
Id. at 205.
Supreme Court held that the district court lacked
jurisdiction over this challenge to a prospective agency
determination. Id. at 216. A mine operator who
objects to sanctions imposed by the Secretary of Labor for
violations of the Mine Act may seek review before the Mine
Safety and Health Review Commission
(“Commission”), an independent agency, and then,
if still aggrieved, before a court of appeals. Id.
at 204 (citing 30 U.S.C. §§ 815-816, 823). The
Court first concluded that the structure and legislative
history of the Mine Act indicate congressional intent to
channel review of all violations of the Mine Act through the
Commission and the appeals courts. Id. at 208-09. In
the Court's view, it was particularly significant that
Congress created two exceptions to the statutory review
process, both of which allow the Secretary (but not an
aggrieved operator) to seek an injunction in district court.
Id. at 209. The Court then held that Thunder
Basin's statutory and constitutional claims could both
receive meaningful judicial review. Id. at 213-215.
Although the Commission has no particular expertise in
applying the NLRA, the Court concluded that the
Commission's familiarity with mine operations could
helpfully inform any decision regarding the application of
the NLRA. Id. at 214-15. When ...