COURT OF APPEALS FOR THE FIFTH CIRCUIT
Higginbotham, Smith, Higginson
SEC v. Novinger
23-10525
Jerry E. Smith
The court's decision emphasized the procedural propriety of motions and the jurisdictional limitations in reviewing procedurally improper motions.
Headnote:
First Amendment - Consent Decrees - The court dismissed the appeal as it lacked jurisdiction to review a procedurally improper motion denied as such. The consent decrees prohibited defendants from casting doubt on the validity of the SEC’s investigation and from proclaiming their lack of guilt without indicating their lack of innocence. Novinger sought relief from judgment under Federal Rule of Civil Procedure 60(b) and moved for declaratory judgment under the Declaratory Judgment Act and Federal Rule of Civil Procedure 57. The court found Novinger's motion procedurally improper and lacking jurisdiction for review.
Fact of the Case:
Christopher Novinger and ICAN Investment Group, L.L.C., entered into consent decrees with the SEC in 2016 as a result of a civil enforcement suit. The decrees prohibited defendants from casting doubt on the validity of the SEC’s investigation and from proclaiming their lack of guilt without indicating their lack of innocence.
Finding of the Court:
The court dismissed the appeal as it lacked jurisdiction to review a procedurally improper motion denied as such. The consent decrees prohibited defendants from casting doubt on the validity of the SEC’s investigation and from proclaiming their lack of guilt without indicating their lack of innocence. Novinger sought relief from judgment under Federal Rule of Civil Procedure 60(b) and moved for declaratory judgment under the Declaratory Judgment Act and Federal Rule of Civil Procedure 57. The court found Novinger's motion procedurally improper and lacking jurisdiction for review.
Issues: The court addressed the jurisdiction to review a procedurally improper motion denied as such, the validity of the consent decrees, and the procedural propriety of Novinger's motion for declaratory judgment.
Ratio Decidendi: The court found that Novinger's motion for declaratory judgment was procedurally improper as it was not an appropriate pleading for purposes of the Declaratory Judgment Act. The court also concluded that it lacked jurisdiction to review a motion properly denied as procedurally improper.
Final Decision: The court dismissed the appeal for want of jurisdiction as it lacked appellate jurisdiction to review a motion properly denied as procedurally improper.
Christopher Novinger and ICAN Investment Group, L.L.C., entered into consent decrees with the SEC in 2016 as a result of a civil enforcement suit.1 Codified in the Code of Federal Regulations and common practice for SEC enforcements, the consent decrees prohibit defendants from casting _____________________ 1 Novinger is a principal and managing member of ICAN. He and the investment group raise the same claims, and the decrees against them do not differ significantly. We refer to both defendants as Novinger. Case: 23-10525 Document: 57-1 Page: 2 Date Filed: 03/19/2024 No. 23-10525 doubt on the validity of the SEC’s investigation into or enforcement against them. See 17 C.F.R. § 202.5 . Additionally, defendants may not proclaim their lack of guilt unless they also indicate their lack of innocence. Five years later, dissatisfied with the benefit of his bargain, Novinger sought judicial review of the decree, contending that it violated his First Amendment rights as a prior restraint that improperly compelled his speech. So, he sought relief from judgment under Federal Rule of Civil Procedure 60(b). But the court denied his motion, and this court affirmed. See SEC v. Novinger (Novinger I), 40 F.4th 297 , 300 (5th Cir. 2022). Disheartened but not dissuaded, Novinger moved for declaratory judgment under the Declaratory Judgment Act (“DJA”), 28 U.S.C. § 2201 , and Federal Rule of Civil Procedure 57. Yet again, the district court denied his motion. It ruled that Novinger had brought a procedurally improper motion and that no change in law or facts called for the court to exercise its discretion to modify the decrees. Novinger appeals, and we agree with the district court—his motion was procedurally improper. That presents us with a question of first impres- sion: whether we have jurisdiction to review a procedurally improper motion denied as such. We do not, so we dismiss the appeal.
I. In 2015, the SEC sued Novinger for fraudulently offering and selling life settlement interests in violation of the Securities and Exchange Acts. The parties entered settlement discussions, and, about a year after the SEC’s initial complaint, they reached an agreement. As part of the “Agreed Final Judgments,” the parties entered joint consent orders. Most importantly to Novinger’s appeal, the parties agreed to comply with 2 Case: 23-10525 Document: 57-1 Page: 3 Date Filed: 03/19/2024 No. 23-10525 the Commission’s policy “not to permit a defendant or respon- dent to consent to a judgment or order that imposes a sanction while denying the allegations in the complaint or order for proceedings,” and “a refusal to admit the allegations is equiva- lent to a denial, unless the defendant or respondent states that he neither admits nor denies the allegations.” . . . [Further,] Defendant: (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; (ii) will not make or permit to be made any public statement to the effect that Defendant does not admit the allegations of the complaint, or that this Consent contains no admission of the allegations, without also stating that defendant does not deny the allegations . . . . The consent agreements explained that “[i]f Defendant breaches this agree- ment, the Commission may petition the Court to vacate the Final Judgment and restore this action to its active docket.” In 2016, the district court entered the final judgments and incorpor- ated the consent agreements. Five years later, though, Novi