S.E.C. v. Worthen
| Decision Date | 17 October 1996 |
| Docket Number | No. 95-56768,95-56768 |
| Citation | 98 F.3d 480 |
| Parties | , 96 Cal. Daily Op. Serv. 7685, 96 Daily Journal D.A.R. 12,653 SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. John E. WORTHEN, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Knut S. Johnson, McKenna & Cuneo, San Diego, CA, for defendant-appellant.
James A. Brigagliano, Assistant General Counsel, Securities and Exchange Commission, Washington, DC, for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of California, Leland C. Nielsen, District Judge, Presiding. D.C. No. CV-74-00202-LCN.
Before: FLETCHER and TASHIMA, Circuit Judges, and RESTANI, * Judge, United States Court of International Trade.
John Worthen appeals from the district court's denial of his motion for relief from a judgment of permanent injunction entered against him by default in 1974 in a civil case brought by the Securities and Exchange Commission ("SEC" or "Commission"). We affirm.
In 1974, the Commission sued Worthen and others alleging violations of the federal securities laws. The docket sheet indicates that on 7 May 1974, a summons and complaint were served on Worthen, who at the time was incarcerated in Utah on pending charges of unrelated federal securities violations. Worthen apparently never responded to the complaint, as the SEC filed a request for entry of default. The default was granted, and the SEC moved for entry of a default judgment. The court entered the default judgment, which included a permanent injunction ordering Worthen not to violate certain provisions of the federal securities laws. Worthen was served with a copy of the Order for Default Judgment of Permanent Injunction on 24 July 1974.
In 1987, Worthen was indicted on 12 counts of criminal contempt of the injunction. According to the SEC, he was a fugitive from the time of the indictment until January 1989. Worthen pled guilty to four counts of criminal contempt of the injunction and was sentenced to time served and probation.
The SEC represents that it began another investigation into Worthen's securities activities in 1994 and that the investigation is currently ongoing.
Worthen's motion under Federal Rule of Civil Procedure 60(b) for relief from the 1974 permanent injunction was made in August 1995. In preparing the motion, Worthen's counsel attempted to consult the district court's record of the 1974 proceedings. The district court informed counsel that the record had been sent to the Federal Records Center, but when retrieved from the Center the record contained only numerous depositions filed in the 1974 action. The district court has been unable to locate the clerk's record containing the pleadings and other filings of the parties as well as the orders and judgments of the court; only the docket sheet documenting those filings and orders is currently available.
The Commission opposed Worthen's motion for relief and filed copies of certain documents from the 1974 proceedings. The district court denied the motion, making clear that it was not relying on the SEC's copies but only on the entries on the docket sheet. Worthen timely appeals.
The district court had jurisdiction over the SEC's 1974 complaint under 15 U.S.C. §§ 77v, 78aa. It therefore had jurisdiction over proceedings to modify the judgment
entered on that complaint. We have jurisdiction over the appeal under 28 U.S.C. § 1291.
The denial of a Rule 60(b) motion for relief from judgment is reviewed for an abuse of discretion. Export Group v. Reef Indus., Inc., 54 F.3d 1466, 1469 (9th Cir.1995).
Under Rule 60(b)(5), a court "may relieve a party ... from a final judgment" if "it is no longer equitable that the judgment should have prospective application". With respect to permanent injunctions, we have held that "Rule 60(b)(5) represents a codification of preexisting law, recognizing the inherent power of a court sitting in equity to modify its decrees prospectively to achieve equity". Transgo, Inc. v. Ajac Transmission Parts Corp., 911 F.2d 363, 365 (9th Cir.1990) (internal quotation marks and citation omitted). Such modification, we have explained, "is extraordinary relief, and requires a showing of extraordinary circumstances". Id. We have articulated three requirements for this extraordinary relief: clear showings of "a substantial change in circumstances or law since the orders were entered, extreme and unexpected hardship in compliance with the injunction['s] terms, and a good reason why [the court] should modify the permanent injunction[ ]". Id.
In 1992, the Supreme Court held that "a party seeking modification of a consent decree bears the burden of establishing that a significant change in circumstances warrants revision of the decree". Rufo v. Inmates of Suffolk County Jail, 502 U.S. 367, 383, 112 S.Ct. 748, 760, 116 L.Ed.2d 867 (1992). The applicability of Rufo to this case, and its effect on this circuit's Transgo standard, are not entirely clear. We need not resolve this uncertainty, however, because Worthen has not met either standard.
Worthen first argues that the district court abused its discretion in denying his motion for relief because 21 years have passed since the entry of the injunction and 10 years have allegedly passed since his last known violation of federal securities laws. 2 The mere passage of time, however, does not constitute a ground for relief from an "obey the law" injunction or a reason why prospective application of a judgment is no longer equitable: Securities and Exchange Comm'n v. Advance Growth Capital Corp., 539 F.2d 649, 652 (7th Cir.1976) (footnote, internal quotation marks, and citation omitted). See also Wirtz v. Graham Transfer and Storage Co., 322 F.2d 650, 652 (5th Cir.1963). The district court did not abuse its discretion in deciding that Worthen had not shown that the mere passage of time constituted a significant change in circumstances justifying relief.
Worthen argues that he was unable to avoid the default judgment because he was incarcerated in Utah at the time of the 1974 proceedings against him in California and the government refused his request to release or transfer him in order to allow him to defend himself. Worthen has offered no explanation as to why he did not seek relief from the default on this ground in 1977, when he was released from custody. Any claim for relief based on his incarceration is time barred by the requirement of Rule 60(b) that a motion for relief be made "within a reasonable time". The district court properly denied relief on this ground.
Worthen argues that he is entitled to relief from judgment because the SEC's original complaint and the court's order granting The SEC provided copies of both the complaint and the order for default judgment to the district court. Worthen argues strenuously, however, that there is no proof that those copies are authentic or that they are identical to those in the court's missing record.
the injunction are missing from the district court's records. Worthen argues first that Rule 54(c) requires that a default judgment "not be different in kind from ... that prayed for in the demand for judgment". Because the demand for judgment is contained in the complaint, Fed.R.Civ.P. 8(a), and because the complaint and the default judgment are missing from the court's records, Worthen argues that it is not possible to tell whether or not the default judgment conforms to Rule 54(c). Next, Worthen argues that the absence of the complaint deprives him of his right to contest the legal sufficiency of the complaint's allegations to support the judgment. See Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir.1978); Alan Neuman Prods., Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir.1988), cert. denied 493 U.S. 858, 110 S.Ct. 168, 107 L.Ed.2d 124 (1989). Finally, Worthen argues that because the actual order for default judgment is missing, there is no evidence that the injunction complied with the requirements of Rule 65(d) that it "set forth the reasons for its issuance; ... be specific in terms; [and] describe in reasonable detail, and not by reference to the complaint or other document, the act or acts sought to be restrained".
While it is unfortunate that the district court's actual records in this case have not been located, the district court's refusal to vacate the injunction on that ground was not an abuse of discretion. In the first place, a "presumption of regularity" is accorded to the proceedings leading to the district court's final judgment. The Supreme Court has described this presumption as "deeply rooted in our jurisprudence". Parke v. Raley, 506 U.S. 20, 29, 113 S.Ct. 517, 523, 121 L.Ed.2d 391 (1992). See also Voorhees v. Jackson, 35 U.S. (10 Pet.) 449, 472, 9 L.Ed. 490 (1836) (). Worthen has presented no affirmative evidence to negate this presumption as to the form of the complaint or the judgment.
...
To continue reading
Request your trial
-
Orantes-Hernandez v. Gonzales, CV82-01107-MMM(VBKX).
...is a factor that supports dissolution of an injunction. See Coldicutt, 258 F.3d at 943 ("Consistent with our decision in [SEC v.] Worthen, [98 F.3d 480 (9th Cir. 1996)], and with the views expressed by the Third and D.C. Circuits [in Building and Constr. Trades Council, 64 F.3d at 880, and ......
-
Doe v. Briley
...must be justified by a valid excuse." First Republic Bank v. Norglass, Inc., 958 F.2d 117, 121 (5th Cir.1992); see also SEC v. Worthen, 98 F.3d 480, 482 (9th Cir.1996) (requiring that Rule 60(b) motions be "made within a reasonable time" and the movant to provide "an explanation as to why" ......
-
Chathas et al v. Local 134 IBEW et al, 99-4314
...the injunction was invalid, as would be obvious if the injunction had been entered after the defendants defaulted, as in SEC v. Worthen, 98 F.3d 480, 481 (9th Cir. 1996). Although Rule 65(d) does require that the order granting the injunction "set forth the reasons for its issuance," they n......
-
In re Coffman
...avenue to establish a missing court record when that record was necessary to another court proceeding. See Sec. & Exch. Comm'n v. Worthen, 98 F.3d 480, 482–83 (9th Cir.1996) (“If legitimate concerns exist about what the terms of the injunction are ... or about what the allegations of the co......