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Securities and Exchange Commission v. Van Gilder

United States District Court, D. Colorado

April 24, 2014

SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
MICHAEL VAN GILDER, Defendant, and STEPHEN DILTZ, Relief Defendant.

MEMORANDUM OPINION AND ORDER CONCERNING DENIAL OF MOTION FOR ENTRY OF PROPOSED FINAL JUDGMENTS

JOHN L. KANE, District Judge.

On February 26, 2014, Plaintiff Securities and Exchange Commission ("SEC") filed an unopposed motion for entry of proposed final judgments against Defendant Michael Van Gilder ("Van Gilder") and Relief Defendant Stephen Diltz ("Diltz"). Doc. 50. The case involves Van Gilder's admitted insider trading. On April 1, 2014, I issued an order denying the motion and stated that a further order specifying the reasons for denying the motion was forthcoming. Doc. 52.

I.

The Proposed Final Judgment as to Van Gilder contains provisions and recitations that I will not endorse, namely: (1) a waiver of findings of fact and conclusions of law that is directly contrary to F.R.Civ.P. 52; (2) a waiver of the right to appeal, the acceptance of which is indisputably a matter of judicial discretion and for which no reasons are given to support the exercise of that discretion; (3) a statement that Van Gilder neither admits nor denies the allegations of the Complaint without providing any basis therefor; and (4) a permanent injunction prohibiting future violations of existing statutory law.

A. Findings of Fact and Conclusions of Law

Federal Rules of Civil Procedure 52(a)(1) states:

In General. In an action tried on the facts without a jury or with an advisory jury, the court must find the facts specially and state its conclusions of law separately. The findings and conclusions may be stated on the record after the close of the evidence or may appear in an opinion or a memorandum of decision filed by the court. Judgment must be entered under Rule 58.

The Rule itself provides no exceptions. As Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2571 explains:

One purpose of requiring findings of fact by the trial court, as has been recognized in a significant number of cases, is to aid the appellate court by affording it a clear understanding of the ground or basis of the decision of the trial court. Another purpose is to make definite precisely what is being decided by the case in order to apply the doctrines of estoppel and res judicata in future cases and promote confidence in the trial judge's decision-making. The final, and possibly most important, function of the requirement that findings of fact be made is to evoke care on the part of the trial judge in ascertaining and applying the facts. All three of these very important purposes are served by Rule 52.

A final reason for findings of fact, not mentioned by Wright, Miller & Kane, is that trial courts are public institutions with a duty to make their decisions available so the public can be informed.

There are cases recognizing that findings and conclusions may be waived and not issued unless and until an appellate court wishes to review the decision, in which event the case is remanded for those findings. See Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 2574. I find this misguided. If findings and conclusions are waived, the delay between the trial court's entry of judgment and an appellate remand presents an increased risk of error. And if the trial court retains jurisdiction and later decides to modify, vacate or impose sanctions adverse to the waiving or non-waiving party, what then? Moreover, if findings and conclusions are waived, how can the judgment create estoppel and res judicata? More fundamentally still, if trial judges do not have to make findings and conclusions, what incentive do they have to exercise care in ascertaining and applying the facts? Approval is relegated to a mindless formalism and transparency is rendered void.

B. Waiver of the Right to Appeal

Dismissing the functions and mission of a court and implying that appellate review is an inconvenience treads on dangerous ground. Article III of the Constitution vests the judicial power of the United States "in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish." If one feature of the judiciary is paramount, it is that Athere is no liberty, if the power of judgment be not separated from the legislative and executive powers." Hamilton, Federalist No. 78. A waiver of the right to appeal instituted by an executive branch agency is an affront to the very basis of judicial independence.

It may be that parties, wishing to put an end to their dispute, may enter into a private settlement agreement that includes a bilateral waiver of the right to litigate further, properly called a release, or to an appeal, but a public agency that asks a court to maintain continuing jurisdiction over its enforcement action has no such license or authority. If Congress had wanted ...


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