It’s strike two for the host of a financial investment radio show who had asked the U.S. Court of Appeals for the Fifth Circuit to let him out of a “no admit, no deny” provision in a 2016 settlement agreement he entered with the U.S. Securities and Exchange Commission.
A three-judge panel of the court issued a ruling Tuesday rejecting Mansfield resident Christopher Novinger’s attempt to get relief via a declaratory judgment. In July 2022, a different three-judge panel of the court rejected Novinger’s attempt to free himself from the gag order provision via a Rule 60(b) motion that argued the “no deny” portion of the policy violated his First Amendment and due process rights.
Novinger had argued the provision that bars him from speaking about the SEC’s case constituted an unconstitutional prior restraint on speech. U.S. District Judge Reed O’Connor in March 2023 found Novinger’s motion for declaratory relief “procedurally improper,” adopting the SEC’s argument.
The Fifth Circuit agreed with Judge O’Connor.
“That presents us with a question of first impression: whether we have jurisdiction to review a procedurally improper motion denied as such,” the panel wrote. “We do not, so we dismiss the appeal.”
The panel — Judges Patrick E. Higginbotham, Jerry E. Smith and Stephen A. Higginson — recognized in its 13-page opinion that the answer to the question of whether a party can bring a declaratory judgment motion in a non-declaratory judgement action has been addressed by both the Ninth Circuit and Eleventh Circuit.
“Both courts held that only final decisions are appealable, but differing procedural histories led to differing conclusions on jurisdiction,” the court explained. “The Ninth had jurisdiction, and the Eleventh did not. The procedural history here mirrors the Eleventh’s, not the Ninth’s.”
The panel also explained what the consequences would be had it exercised appellate jurisdiction in this case.
“Assuming Novinger filed a procedurally improper motion, our exercise of appellate jurisdiction would erroneously establish that our court is willing to consider future post-judgment orders on procedurally improper motions denied as such,” the court wrote. “We decline to open that Pandora’s box of frivolous appeals.”
The SEC had alleged Novinger violated the antifraud and registration provisions of the securities laws by offering and selling $4.3 million in life-settlement securities to Texas investors. He settled the claims after a year of litigation in 2016 by entering the consent decree with the government.
Novinger’s second challenge to the gag order provision came on the heels of Judge Edith Jones’ invitation to challenge the policy, which she outlined in a concurring opinion in July 2022.
“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,” she wrote.
“Given the agency’s current activism, I think it will not be long before the courts are called on to fully consider this policy.”
On Aug. 23, 2022, Novinger filed the motion for declaratory relief that was the subject of this appeal.
Novinger is represented by Margaret A. Little, Kaitlyn Schiraldi and Kara Rollins of the New Civil Liberties Alliance.
The SEC is represented by its own Daniel Young, B. David Fraser and Jeffrey Berger.
The case number is 23-10525.