Case: 21-10985 Document: 00516391610 Page: 1 Date Filed: 07/12/2022
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
July 12, 2022
No. 21-10985 Lyle W. Cayce
Clerk
Securities and Exchange Commission,
Plaintiff—Appellee,
versus
Christopher A. Novinger; ICAN Investment Group,
L.L.C.,
Defendants—Appellants.
Appeal from the United States District Court
for the Northern District of Texas
USDC No. 4:15-cv-358
Before Jones, Stewart, and Duncan, Circuit Judges.
Carl E. Stewart, Circuit Judge:
The defendants settled a civil enforcement action that the Securities
and Exchange Commission (“SEC”) brought against them for alleged
securities violations. Following its standard policy, the SEC barred the
defendants from denying that they engaged in the charged conduct as a
condition of settlement (the “no-deny policy”). The parties executed
consent agreements containing provisions to that effect and submitted them
to the district court, which entered final judgments. Five years later, the
defendants filed a motion under Rule 60(b)(4) and 60(b)(5) seeking relief
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from the final judgments to the extent that they incorporated the no-deny
policy. They argued that the no-deny policy violates their First Amendment
and due process rights. The district court denied the motion, and the
defendants appealed. For the reasons that follow, we AFFIRM.
I. Facts & Procedural History
Since 1972, the SEC has prohibited defendants who settle civil
enforcement actions without admitting guilt from publicly “denying the
allegations in the complaint” filed against them. 37 Fed. Reg. 25,224 (Nov.
29, 1972). The SEC enacted this no-deny policy, which is codified at
17 C.F.R. 202.5(e), after determining that it was “important to avoid
creating, or permitting to be created, an impression that a decree is being
entered or a sanction imposed, when the conduct alleged did not, in fact,
occur.”
Id. Under the policy, “a refusal to admit the allegations is equivalent
to a denial, unless the defendant or respondent states that he neither admits
nor denies the allegations.”
Id.
In May 2015, the SEC filed a complaint against several defendants
including Christopher A. Novinger and ICAN Investment Group, LLC, a
company that Novinger formed and directed. 1 The SEC alleged that
Novinger and a confederate fraudulently sold $4.3 million worth of securities
by making false or misleading statements to Texas investors, pocketing nearly
$515,000 in commissions. Novinger allegedly funneled some of this money
through ICAN. The SEC claimed that their conduct violated the antifraud
and registration provisions of the securities laws.
The defendants, through counsel, negotiated a settlement with the
SEC and informed the district court that they had amicably resolved the case.
1
Only Novinger and ICAN are parties to this appeal.
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Pursuant to the settlement, the defendants each executed consent
agreements that imposed monetary and injunctive relief. In the consent
agreements, the defendants conceded the district court’s “jurisdiction over
[them] and over the subject matter of this action.” In addition, the
defendants acknowledged that they entered the consent agreements
“voluntarily” and confirmed “that no threats, offers, promises, or
inducements of any kind” caused their agreement.
The defendants also represented that they understood and agreed to
comply with the SEC’s no-deny policy. More precisely, the defendants
agreed that, among other things, they “(i) will not take any action or make or
permit to be made any public statement denying, directly or indirectly, any
allegation in the complaint or creating the impression that the complaint is
without factual basis” and “(ii) will not make or permit to be made any public
statement to the effect that [they do] not admit the allegations of the
complaint, or that this Consent contains no admission of the allegations,
without also stating that [they do] not deny the allegations.” The consent
agreement further provided that if the defendants breached the agreement,
the SEC could “petition the [district court] to vacate the Final Judgment and
restore this action to its active docket.”
The parties submitted the consent agreements, along with proposed
final judgments, to the district court for entry. The district court granted the
motion and “issue[d] final judgments against all Defendants in the forms
agreed upon by the parties.” The final judgments reiterated that the
defendants “consented to the [district court’s] jurisdiction over [them] and
the subject matter of this action” and that they “consented to entry of this
Final Judgment without admitting or denying the allegations of the
Complaint []except as to jurisdiction.” Finally, the final judgments
referentially incorporated the consent agreements “with the same force and
effect as if fully set forth herein” and stated that the defendants “shall
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comply with all of the undertakings and agreements” established in those
documents. The district court entered the final judgments on June 6, 2016.
Five years later, on June 17, 2021, the defendants filed a motion for
relief from the judgments against them under Federal Rule of Civil Procedure
60(b)(4) and 60(b)(5). The defendants argued that the judgments were void
to the extent that they incorporated the no-deny policy, which the defendants
claimed violated the First Amendment and denied them due process.
Allegedly, the no-deny policy prevents Novinger from “engag[ing] in
truthful public statements concerning SEC’s case against him and ICAN”
for fear of having the case reopened. The district court denied the motion,
concluding that the defendants failed to meet their burden under either Rule
60(b)(4) or 60(b)(5). The defendants timely appealed.
II. Standard of Review
This court reviews de novo a district court’s denial of a Rule 60(b)(4)
motion to set aside a judgment as void. Callon Petroleum Co. v. Frontier Ins.
Co., 351 F.3d 204, 208 (5th Cir. 2003). “Rule 60(b)(4) motions leave no
margin for consideration of the district court’s discretion as the judgments
themselves are by definition either legal nullities or not.” Brumfield v. La.
State Bd. of Educ.,
806 F.3d 289, 296 (5th Cir. 2015) (quoting Carter v.
Fenner,
136 F.3d 1000, 1005 (5th Cir. 1998)).
Rule 60(b)(5) motions, in contrast, “are directed to the sound
discretion of the district court, and its denial of relief upon such motion will
be set aside on appeal only for abuse of that discretion.” Id. (quoting Seven
Elves v. Eskenazi,
635 F.2d 396, 402 (5th Cir. 1981)). “A district court abuses
its discretion if it: (1) relies on clearly erroneous factual findings; (2) relies on
erroneous conclusions of law; or (3) misapplies the law to the facts.” Texas
v. Alabama-Coushatta Tribe of Tex.,
918 F.3d 440, 446–47 (5th Cir. 2019)
(quoting In re Volkswagen of Am., Inc.,
545 F.3d 304, 310 (5th Cir. 2008) (en
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banc)). This court reviews de novo “any questions of law underlying the
district court’s decision.” Id. at 447 (quoting Frew v. Janek,
780 F.3d 320,
326 (5th Cir. 2015)).
III. Discussion
“Rule 60(b) allows a party to seek relief from a final judgment, and
request reopening of his case, under a limited set of circumstances,” making
it “an exception to finality.” Gonzalez v. Crosby, 545 U.S. 524, 528–59
(2005). As relevant here, the rule authorizes a district court to “relieve a
party or its legal representative from a final judgment, order, or proceeding”
because “(4) the judgment is void” or “(5) . . . applying it prospectively is no
longer equitable.” Fed. R. Civ. P. 60(b)(4)–(5). The defendants challenge
the district court’s denial of their Rule 60(b) motion, contending that they
are entitled to relief under Rule 60(b)(4) and 60(b)(5). We address their
arguments in turn.
A. Rule 60(b)(4)
The defendants first argue that they are entitled to Rule 60(b)(4) relief
because certain defects rendered void the final judgments that the district
court entered. “[A] void judgment is one so affected by a fundamental
infirmity that the infirmity may be raised even after the judgment becomes
final. The list of such infirmities is exceedingly short; otherwise, Rule
60(b)(4)’s exception to finality would swallow the rule.” United Student Aid
Funds, Inc. v. Espinosa, 559 U.S. 260, 270 (2010) (citations omitted). A legal
error, standing alone, does not render a judgment void.
Id. Rather, “Rule
60(b)(4) applies only in the rare instance where a judgment is premised either
on a certain type of jurisdictional error or on a violation of due process that
deprives a party of notice or the opportunity to be heard.”
Id. at 271; see also
Brumfield,
806 F.3d at 298 (“An order ‘is void only if the court that rendered
it lacked jurisdiction of the subject matter, or of the parties, or it acted in a
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manner inconsistent with due process of law.’” (quoting Williams v. New
Orleans Pub. Serv., Inc., 728 F.2d 730, 735 (5th Cir. 1984))).
i. Jurisdiction
The Supreme Court has not “define[d] the precise circumstances in
which a jurisdictional error will render a judgment void.” Espinosa, 559 U.S.
at 271; see also Brumfield,
806 F.3d 301 (“The Supreme Court . . . has not
definitively interpreted this rule.”). This court has previously held that “a
Rule 60(b)(4) challenge to jurisdiction should be sustained only where there
is a ‘clear usurpation of power’ or ‘total want of jurisdiction.’” Callon,
351 F.3d at 208 (quoting Nemaizer v. Baker,
793 F.2d 58, 64–65 (2d Cir.
1986)). Here, however, the parties agree that no jurisdictional error renders
void the relevant judgments. As the defendants wrote in their appellate brief,
“Novinger does not contest the [district] court’s jurisdiction for SEC’s
prosecution of him under the securities laws.” Moreover, the defendants
repeatedly acknowledged the district court’s personal and subject matter
jurisdiction below in the consent agreements and agreed final judgments. 2
And even without these concessions, the district court had jurisdiction over
the parties and the subject matter under the federal securities laws and
federal question statute. See 15 U.S.C. §§ 77t(b), 78u(d)–(e), 78aa; 28 U.S.C.
2
The district court considered these concessions, along with its own independent
analysis, “an arguable basis for jurisdiction” that defeated the defendants’ Rule 60(b)(4)
motion to the extent that it asserted a jurisdictional defect. See Espinosa, 559 U.S. at 271
(“Federal courts considering Rule 60(b)(4) motions that assert a judgment is void because
of a jurisdictional defect generally have reserved relief only for the exceptional case in which
the court that rendered judgment lacked even an ‘arguable basis’ for jurisdiction.” (quoting
Nemaizer,
793 F.2d at 65)). Because the defendants do not challenge the consent judgments
on jurisdictional grounds, “[t]his case presents no occasion to engage in such an ‘arguable
basis’ inquiry or to define the precise circumstances in which a jurisdictional error will
render a judgment void.”
Id.
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§ 1331. The defendants therefore must offer another basis for receiving relief
under Rule 60(b)(4).
ii. Due Process
Although the defendants concede that the district court had
jurisdiction to enter the final judgments, they contend that the judgments are
void under Rule 60(b)(4) based on purported due process violations. As the
defendants put it, their due process claims “hinge on the non-voluntariness
of an ‘agreement’ to an SEC-mandated gag and . . . consists of more than just
notice and an opportunity to be heard.” They assert that the SEC has denied
them a fundamental due process right by penalizing them for attempting to
“speak truthfully.” The defendants also lodge numerous other purported
due process violations, including that the no-deny policy is unconstitutionally
vague, ultra vires, and lacks any time restriction.
The SEC responds that, despite their broad ranging allegations, the
defendants have not identified a due process violation of the type that Rule
60(b)(4) contemplates. It notes that, under Espinosa, the due process
violation must be one that “deprives a party of notice or the opportunity to
be heard.” 559 U.S. at 271. Espinosa further explained that the due process
right that Rule 60(b)(4) implicates is the right to “notice ‘reasonably
calculated, under all the circumstances, to apprise interested parties of the
pendency of the action and afford them an opportunity to present their
objections.’”
Id. at 272 (quoting Mullane v. Central Hanover Bank & Trust
Co.,
339 U.S. 306, 314 (1950)). Finally, it observed that “jurisdictional and
notice failings . . . define void judgments that qualify for relief under Rule
60(b)(4).” Id. at 273 (emphasis added).
Similarly, this court has held that “[i]f a court has both subject matter
and personal jurisdiction,” then “the ‘only inquiry is whether the district
court acted in a manner so inconsistent with due process as to render the
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judgment void.’” Callon, 351 F.3d at 210 (quoting New York Life Ins. Co. v.
Brown,
84 F.3d 137, 143 (5th Cir. 1996)). This rule applies in “rare”
circumstances “because due process in civil cases usually requires only
proper notice and service of process and a court of competent jurisdiction.”
Id. Thus, the SEC argues that the defendants, who undoubtedly had notice
of this matter below, failed to allege a relevant due process violation under
Rule 60(b)(4).
We agree that the defendants have not alleged a due process violation
of the type that Rule 60(b)(4) contemplates. To show otherwise, the
defendants contend that it is an “all-too-common error” to “reduc[e] due
process to notice and opportunity to be heard” where there would have been
“no settlement” absent their capitulation to the no-deny policy. But this
general assertion does not upend Espinosa’s holding that a relevant due
process violation must “deprive[] a party of notice or the opportunity to be
heard.” 559 U.S. at 271. The defendants, represented by counsel, waived
service in this case, answered the SEC’s complaint, and litigated the case for
nearly a year before proposing a settlement. The defendants then executed
consent agreements, stipulating that they did so “voluntarily” and without
“inducements of any kind.” Because the defendants “received actual notice
of the filing and contents of” the judgments, their due process rights were
“more than satisfied.”
Id. (emphasis in original). In sum, “[t]he due process
right implicated by Rule 60(b)(4) does not extend to the claims of due process
asserted . . . here.” SEC v. Romeril,
15 F.4th 166, 174 (2d Cir. 2021), cert.
denied sub nom. Romeril v. SEC, No. 21-1284,
2022 WL 2203361 (U.S. June
21, 2022). Accordingly, the defendants are not entitled to relief under Rule
60(b)(4) for any purported due process violations.
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iii. First Amendment
The Supreme Court has rejected attempts “to expand the universe of
judgment defects that support Rule 60(b)(4) relief” where parties are
“[u]nable to demonstrate a jurisdictional error or a due process violation.”
Espinosa, 559 U.S. at 273. Yet that is exactly what the defendants seek to do.
Specifically, they argue that the judgments are void because the district court
lacked authority to issue them considering the First Amendment violations
that allegedly flow from the no-deny policy. They assert a grab bag of First
Amendment challenges against the no-deny policy. Allegedly, the policy,
among other things, is a prior restraint, compels and restricts the content of
speech, forbids truthful speech, and improperly conditions settlement on the
renunciation of First Amendment rights. Given these alleged First
Amendment violations, the defendants contend that the judgments
incorporating the no-deny policy must be set aside under Rule 60(b)(4).
The defendants primarily rely on Crosby, 312 F.2d 483, a 59-year-old
Second Circuit case that the defendants describe as “the seminal case on
Rule 60(b)(4) voidness for violation of the First Amendment.” In Crosby, a
district court entered an agreed order enjoining a litigant from publishing
statements about certain individuals. 312 F.2d at 484–85. The Second Circuit
then held that the order was an unconstitutional prior restraint on speech that
the district court was “without power to make” notwithstanding the parties’
agreement.
312 F.2d at 485. Because the district court lacked authority to
enter an order that violated the First Amendment, the Second Circuit
declared the order “void” and granted relief from it under Rule 60(b)(4).
Id.
According to the defendants, Crosby justifies granting Rule 60(b)(4) relief
here.
This argument is unavailing. To begin with, Crosby is an out-of-circuit
case that does not bind this court. What is more, the Second Circuit recently
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declined to apply Crosby in this exact context. See Romeril, 15 F.4th at 173
(“Crosby does not control this case.”). Like the defendants here, the Romeril
defendant sought Rule 60(b)(4) relief from an agreed judgment incorporating
the no-deny policy because it allegedly violated the First Amendment.
Id. at
168. In response to his reliance on Crosby, the Second Circuit stated that
Crosby “was decided more than fifty years ago, long before Espinosa and . . .
other cases . . . limited the grounds for relief under Rule 60(b)(4).”
Id. at 173.
It added that “Crosby is distinguishable, as the rights of non-parties were
implicated by the prohibition on public comment at issue in the case.”
Id. “In
that sense, the district court lacked jurisdiction over these other persons, who
were not before the court and likely had not had notice of the proceedings or
an opportunity to be heard.”
Id. at 174. In contrast, the judgment at issue in
Romeril affected only the defendant, “who was before the court and had an
opportunity to be heard.”
Id. Crosby was therefore inapposite.
Id. Likewise,
because the judgments binding the present defendants to the no-deny policy
affect only them, Crosby—which, in any event, is nonbinding authority—
does not help the defendants.
This court’s opinions in Brumfield, 806 F.3d 289, and Carter,
136 F.3d
1000, are not to the contrary. The defendants argue that, in denying their
motion for Rule 60(b)(4) relief, the district court adopted a cribbed view of
Espinosa that this court rejected in Brumfield. In Brumfield, this court
explained that Espinosa did not “definitively interpret[]” Rule 60(b)(4) as it
relates to jurisdictional errors because the parties there, as here, agreed that
the judgment at issue was jurisdictionally sound.
806 F.3d at 301 (citing
Espinosa,
559 U.S. at 270). Emphasizing this statement, the defendants argue
that Brumfield confirms that Rule 60(b)(4) relief is not limited to
jurisdictional defects or due process violations implicating notice. The SEC
counters that Brumfield did not break new ground in this court’s Rule 60(b)
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jurisprudence and instead merely “illustrate[s] when a judgment may be void
for lack of jurisdiction.”
The defendants read Brumfield too broadly. That decision expressly
recognized that “a judgment is void under Rule 60(b)(4) only if the court
lacked jurisdiction of the subject matter, or of the parties, ‘or it acted in a
manner inconsistent with due process of law.’” Id. (quoting Williams,
728
F.2d at 735). As explained above, no jurisdictional error renders the relevant
judgments void. The defendants suggest, however, that Brumfield adopted an
expansive view of “due process” authorizing them to challenge their
judgments as void on constitutional grounds. But Brumfield granted Rule
60(b)(4) relief based on a jurisdictional defect, not a due process violation of
the type that Espinosa sanctioned. The district court in Brumfield “retained
continuing jurisdiction for the remedial purpose laid out in [an earlier] order,
which was to prevent future state aid to discriminatory private schools.” Id.
at 298. Although the district court’s continuing jurisdiction extended only to
“the correction of the constitutional infirmity,” the challenged order went
“beyond correcting—and indeed ha[d] nothing to do with—the violation
originally litigated in [the] case.” Id. (quotation omitted). Accordingly, this
court held that the challenged order was “void for lack of subject matter
jurisdiction” because it exceeded “the scope of the district court’s
continuing jurisdiction.” Id. at 291. Put simply, the opinion did not turn on a
due process violation, and the defendants’ reliance on Brumfield is therefore
misplaced. Cf. Matter of Novoa,
690 F. App’x 223, 227 (5th Cir. 2017)
(“Brumfield does not endorse the view that an order exceeding
nonjurisdictional limits on a court’s statutory authority is void.”).
Additionally, the defendants make several passing references to
Carter, 136 F.3d 1000. There, this court held that a consent judgment
memorializing a settlement in a wrongful-death action brought by a mother
on behalf of her minor child was void for Rule 60(b)(4) purposes.
136 F.3d at
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1009. That was because she failed to comply with a Louisiana statute
requiring her to obtain state-court approval before settling the minor’s claim.
Id. at 1008–09. The defendants offer Carter as an example of this court
“setting aside [a] judgment[] in whole or in part for reasons other than a total
want of jurisdiction.” According to them, Carter “involved neither a
jurisdictional defect nor a due process claim” and yet granted Rule 60(b)(4)
relief. They also generally rely on language from Carter stating that Rule
60(b)(4) “should be construed in order to do substantial justice.”
136 F.3d at
1007. The SEC implies in response that Carter is inconsistent with Espinosa
and its progeny. To the extent that the cases are consistent, the SEC argues
that they are distinguishable because Carter involved relevant due process
issues.
Carter does not support granting Rule 60(b)(4) relief here. That case
is best understood as involving a judgment rendered void by a due process
violation: the mother’s failure to follow applicable procedural safeguards
before “compromising the claim of her son.” 136 F.3d at 1008. 3 Accordingly,
Carter and Espinosa are reconcilable. And to the extent that they are
irreconcilable, Espinosa—which the Supreme Court decided a decade after
this court decided Carter—controls. See, e.g., United States v. Short,
181 F.3d
620, 624 (5th Cir. 1999) (“[T]his panel is bound by the precedent of previous
panels absent an intervening Supreme Court case explicitly or implicitly
overruling that prior precedent . . . .”). In either case, the defendants’ claim
for Rule 60(b)(4) relief fails.
Finally, the defendants also cite Klapprott v. United States, 335 U.S.
601 (1949), to support their argument that Espinosa did not “define[] the
3
See, e.g., 11 Charles Alan Wright & Arthur Miller, Federal
Practice & Procedure § 2862 n.11 (3d ed.) (including Carter in its discussion of
voidness based on actions “inconsistent with due process of law”).
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entire universe of cases where relief is justified under Rule 60(b)(4).” In their
view, Klapprot demonstrates that the Supreme Court has declared a
judgment void for Rule 60(b)(4) purposes based on a district court’s alleged
lack of statutory power to act. They say that Espinosa did not implicitly
overturn Klapprot, which predates Espinosa by sixty-one years. This
argument is unpersuasive. As an initial matter, the defendants did not raise
this argument either before the district court or in their opening appellate
brief, making it arguably waived. See Sindhi v. Raina, 905 F.3d 327, 333 (5th
Cir. 2018) (“[A]rguments not raised before the district court are waived and
cannot be raised for the first time on appeal.” (quotation omitted)); Jones v.
Cain,
600 F.3d 527, 541 (5th Cir. 2010) (“Arguments raised for the first time
in a reply brief are generally waived.”).
In any event, Klapprot is consistent with Espinosa’s statement that
Rule 60(b)(4) applies only where a judgment is either jurisdictionally or
procedurally defective. Espinosa, 559 U.S. at 271. “The Klapprot case was a
case of extraordinary circumstances.” Ackermann v. United States,
340 U.S.
193, 199 (1950). It concerned whether Rule 60(b)(4) afforded relief from a
district court’s entry of a default judgment depriving a naturalized citizen of
his “citizenship without hearings or evidence.” Klapprott,
335 U.S. at 602.
Demonstrating the “unfairness” of the situation, the default judgment
stripped the defendant of his citizenship even though he was “absent” and
unrepresented by counsel.
Id. at 610. Moreover, the government offered “no
evidence,” and “the only basis for action was a complaint containing
allegations” that were “questionable from a procedural and substantive
standpoint” and that were acquired “from looking at hearsay statements.”
Id. In other words, the judgment in Klapprott resulted from “a violation of
due process that deprive[d] a party of notice or the opportunity to be heard,”
rendering it void. Espinosa,
559 U.S. at 271. As Justice Frankfurter recognized
in dissent, “[t]he only possible provision on which an argument can be based
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that citizenship cannot be canceled by a default judgment is the Due Process
Clause of the Fifth Amendment.” Klapprott, 335 U.S. at 627–28
(Frankfurter, J., dissenting) (rejecting the “suggestion” that a due process
violation occurred). Thus, Klapprott and Espinosa are of a piece; neither
supports the defendants’ expansive reading of Rule 60(b)(4). It follows that
the defendants are not entitled to relief under this provision of the rule based
on any alleged First Amendment violations. 4
B. Rule 60(b)(5)
The defendants alternatively argue that they are entitled to relief
under Rule 60(b)(5). That provision authorizes relief from a final judgment
if, among other things, “applying it prospectively is no longer equitable.”
Fed. R. Civ. P. 60(b)(5). Rule 60(b)(5) does not provide relief “when it is
no longer convenient to live with the terms of a [judgment].” Rufo v. Inmates
of Suffolk Cnty. Jail, 502 U.S. 367, 383 (1992). Rather, it “provides a means
by which a party can ask a court to modify or vacate a judgment or order if ‘a
significant change either in factual conditions or in law’ renders continued
enforcement ‘detrimental to the public interest.’” Horne v. Flores,
557 U.S.
433, 447 (2009) (quoting Rufo,
502 U.S. at 384). “Ordinarily, however,
modification should not be granted where a party relies upon events that
actually were anticipated at the time it entered into a [consent judgment].”
Rufo,
502 U.S. at 385. The movant “bears the burden of establishing that
changed circumstances warrant relief.” Horne,
557 U.S. at 447.
The defendants assert that the judgments here should “be set aside as
violating the public interest under Rule 60(b)(5).” They argue that retaining
the no-deny policy in the judgments harms the public interest in two ways:
(1) it eliminates “healthy criticism” of the SEC’s tactics, cloaking the SEC’s
4
The Second Circuit reached the same conclusion in Romeril, 15 F.4th 166.
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“expansion of powers” and its unfair settlement practices; and (2) it gives
judicial approval to unconstitutional provisions, which inherently harms the
public interest. The SEC responds that the defendants are not entitled to
relief because they failed to identify any unexpected changes in the facts or
law. The defendants do not address the SEC’s arguments concerning this
issue in their reply brief.
The district court correctly denied the defendants’ Rule 60(b)(5)
motion because the defendants have not shown that it has become “no longer
equitable” to apply the judgment prospectively. Fed. R. Civ. P. 60(b)(5).
On appeal, the defendants have not attempted to demonstrate a significant
factual or legal change that justifies relief, much less one that was
unanticipated when they entered the consent judgments. Although the
defendants argue that the terms incorporated into the judgments produce
harmful effects, those are the terms to which they agreed. The defendants
are not entitled to relief simply because “it is no longer convenient to live
with [those] terms.” Rufo, 502 U.S. at 383. Accordingly, the defendants
failed to meet their “burden of establishing that changed circumstances
warrant relief,” Horne,
557 U.S. at 447, and the district court properly denied
their motion as a result.
IV. Conclusion
For the foregoing reasons, we AFFIRM the judgment of the district
court.
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Edith H. Jones, Circuit Judge, joined by Duncan, Circuit Judge,
concurring:
I am pleased to concur in my colleague’s opinion denying relief on
these defendants’ post-judgment motions. I write to note that nothing in the
opinion (or in the district court opinion, for that matter) approves of or
acquiesces in the SEC’s longstanding policy that conditions settlement of any
enforcement action on parties’ giving up First Amendment rights. 17 C.F.R.
§ 202.5(e). If you want to settle, SEC’s policy says, “Hold your tongue, and
don’t say anything truthful--ever”—or get bankrupted by having to continue
litigating with the SEC. A more effective prior restraint is hard to imagine.
The defendants’ brief informed us that a petition to review and revoke this
SEC policy was filed nearly four years ago. New Civil Liberties Alliance,
Petition to Amend (Oct. 30, 2018), available at http://bit.ly/2xfFD3Z.
However, SEC never responded to the petition. Given the agency’s current
activism, I think it will not be long before the courts are called on to fully
consider this policy.
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