## Facts

- The SEC brought a 2018 civil enforcement action against Elon Musk based on public statements about taking Tesla private.
- Musk and the SEC resolved the case through a consent decree entered in the Southern District of New York.
- As amended, the decree required Musk to obtain advance review/approval from Tesla securities counsel before publishing certain written communications (including tweets) that could be material to Tesla or its shareholders.
- The decree also contemplated ongoing SEC oversight, including requests for information to assess compliance.
- After later compliance disputes and SEC investigative steps (including subpoenas related to Musk’s tweets), Musk moved under Federal Rule of Civil Procedure 60(b) to modify or terminate the decree.
- Musk argued that the SEC’s enforcement conduct and the decree’s burdens justified relief and that the preapproval provision operated as an unconstitutional prior restraint and invalid waiver of First Amendment rights.
- The district court denied the Rule 60(b) motion, and Musk appealed.

## Issues

1. Whether Musk established a “significant change” in factual conditions or law warranting modification or termination of the consent decree under Rule 60(b)(5).
2. Whether Musk showed “extraordinary circumstances” justifying relief under Rule 60(b)(6).
3. Whether the decree’s preapproval requirement constituted an unconstitutional prior restraint or rested on an invalid or unenforceable waiver of First Amendment rights.

## Decision

- The Second Circuit affirmed the order denying Rule 60(b) relief.
- Musk did not show the “significant change” required for relief under Rule 60(b)(5).
- Musk did not show “extraordinary circumstances” required for relief under Rule 60(b)(6).
- The court rejected Musk’s First Amendment challenges, concluding he knowingly and voluntarily agreed to the decree’s speech-related provisions as part of a negotiated settlement.

## Legal Principles

- Relief from a consent decree under Rule 60(b)(5) requires a threshold showing of a significant change in facts or law such that continued prospective enforcement would be inequitable.
- Rule 60(b)(6) relief is available only in extraordinary circumstances and is not a vehicle to escape the consequences of a litigation settlement.
- A party may knowingly and voluntarily waive constitutional rights in a consent decree resolving a civil enforcement action; such waivers are enforceable absent coercion, illegality, or clear conflict with public policy.
- Ongoing investigative actions that fall within the decree’s contemplated oversight and the agency’s statutory authority generally do not, without more, establish inequity or extraordinary circumstances warranting modification.

## Conclusion

The Second Circuit held that Musk remained bound by the negotiated consent decree, including its preapproval requirement for potentially market-moving communications, because he failed to meet Rule 60(b)’s demanding standards and because his First Amendment objections did not overcome his knowing, voluntary settlement commitment.


Sec. & Exch. Comm’n v. Musk, 2023 WL 3451402 (2d Cir. 2023)