DENISE COTE, District Judge.
Almost sixteen years after entering a consent agreement ("Consent") with the Securities and Exchange Commission ("SEC"), defendant Barry D. Romeril ("Romeril") moves pursuant to Rule 60(b)(4), Fed. R. Civ. P., to vacate it. Romeril argues that a no-deny provision in the Consent, which was incorporated into an Order of Final Judgment ("Judgment"), violates the First Amendment by forbidding him from publicly denying allegations in the SEC complaint. Romeril's motion is untimely and, in any event, fails to allege a jurisdictional defect or violation of due process that would permit relief under Rule 60(b)(4).
On May 3, 2002, Xerox Corp. ("Xerox") agreed to restate its financial results, pay a $10 million penalty, and enter a consent judgment to resolve a multibillion dollar accounting fraud action brought against Xerox by the SEC. This was the largest corporate penalty imposed as of that date through an SEC action.
On June 5, 2003, the SEC filed a complaint against Romeril and the others alleging their participation in the accounting fraud at Xerox. Romeril was the Chief Financial Officer of Xerox and a central figure in the SEC's complaint.
Romeril promptly settled with the SEC and signed the Consent, which was incorporated into the Judgment entered on June 13, 2003. In the Consent, Romeril admitted "the Court's jurisdiction over [him] and over the subject matter of this action." Without admitting or denying the allegations of the SEC complaint (except as to personal and subject matter jurisdiction), he agreed to pay disgorgement, prejudgment interest, and civil penalties in excess of $5 million and to be enjoined from violating specified securities laws in the future. Romeril further agreed that he had entered into the Consent voluntarily and that "no threats, offers, promises, or inducements of any kind" had been made by the SEC to induce him to enter into the Consent. He agreed that the Consent would be incorporated into the Judgment and that this Court would retain jurisdiction to enforce it. He waived, however, the entry of findings of fact and conclusions of law, as well as any right he may have to appeal the Judgment.
The Consent contains a no-deny provision. That provision states, in pertinent part:
The no-deny provision reflects a policy of the SEC, enacted in 1972, to prohibit settlement agreements in which a defendant consents to a judgment that imposes a sanction while denying the allegations in the complaint.
On May 6, 2019, Romeril moved under Rule 60(b)(4) to vacate the Judgment to the extent it incorporates the no-deny provision of the Consent. He asserts that he now wishes to engage in truthful speech concerning the SEC's claims against him, even if that speech directly or indirectly denies allegations in the SEC complaint or creates an impression that the complaint is without factual basis. Romeril has submitted a proposed amended consent excising the offending language.
"Relief under Rule 60(b) is generally not favored and is properly granted only upon a showing of exceptional circumstances."
Relief from a judgment pursuant to Rule 60(b)(4) will be "rare"; it is available in only two circumstances.
To qualify for relief under Rule 60(b)(4), an alleged jurisdictional defect will not render a judgment void unless the court that entered the judgment "lacked even an `arguable basis' for jurisdiction."
Separately, a motion for relief pursuant to Rule 60(b)(4) must be made "within a reasonable time." Fed. R. Civ. P. 60(b)(4). Federal courts have been lenient in defining the term "reasonable time" with respect to voidness challenges to judgments entered in default.
Romeril's motion is denied for two independent reasons. First, the motion was not brought within a reasonable time. Romeril brings this motion nearly sixteen years after the Judgment was entered. While the SEC does not explicitly oppose Romeril's motion on the ground that it is untimely, its opposition highlights that Romeril has enjoyed the benefits of his settlement with the SEC for the entirety of the sixteen years between the Judgment and Romeril's motion. Even now, Romeril does not seek a trial; he seeks to keep the Consent in place while excising its no-deny provision. But Romeril does not contend that he lacked notice of the terms of the Consent or the Judgment. At the time he executed the Consent, he was represented by competent and experienced counsel. Nor does he suggest that any interim action by the SEC contributed to his extraordinary delay in bringing this motion. Romeril's sixteen-year delay is unreasonable.
Second, even if the motion could be found to be timely, and it cannot, Romeril has not identified a jurisdictional defect or violation of due process that would render the Judgment void for purposes of Rule 60(b)(4). Romeril does not dispute personal jurisdiction. And this Court properly exercised subject matter jurisdiction over the SEC's claims pursuant to 15 U.S.C. §§ 78u(d) and 78aa (jurisdiction to enforce Securities Act of 1933 and Securities Exchange Act of 1934), as well as 28 U.S.C § 1331 (federal question jurisdiction). In the Consent, Romeril acknowledged this Court's jurisdiction over him and the subject matter of the action. In his proposed amended consent and judgment, he continues to acknowledge this Court's jurisdiction.
Romeril's motion likewise does not suggest that the Judgment is void due to a violation of his due process rights. He does not, and could not, argue that he was deprived of notice of the SEC action or of an opportunity to be heard. While represented by counsel, he executed the Consent and waived his right to trial. Had he chosen to contest the SEC's claims, he would have been able to present his defense to a jury and appeal any adverse verdict.
Romeril argues that, because a judgment containing a no-deny provision is an unconstitutional prior restraint in violation of the First Amendment, the Judgment is void for purposes of Rule 60(b)(4).
Even assuming
Romeril's May 6, 2019 motion for relief from the Judgment is denied.