No.

23-___

IN THE

Supreme Court of the United States

————
ELON MUSK,
Petitioner,
v.
U.S. SECURITIES AND E XCHANGE C OMMISSION ,
Respondent.
————
On Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Second Circuit
————
PETITION FOR A WRIT OF CERTIORARI
————
WILLIAM A. BURCK ALEX SPIRO
CHRISTOPHER G. MICHEL ELLYDE R. THOMPSON
RACHEL G. FRANK Counsel of Record
QUINN EMANUEL URQUHART QUINN EMANUEL URQUHART
& SULLIVAN, LLP & SULLIVAN, LLP
1300 I Street NW 51 Madison Avenue
Suite 900 22nd Floor
Washington, DC 20005 New York, NY 10010
(212) 849-8000
ellydethompson@
quinnemanuel.com

Counsel for Petitioner

December 7, 2023
 i

QUESTION PRESENTED

As a condition of settlement, the Securities and Ex-

change Commission demanded that petitioner waive
his First Amendment rights to speak on matters rang-
ing far beyond the charged violations. Petitioner chal-
lenged that requirement as an unconstitutional
condition, but the court of appeals held that he could
not bring such a challenge because he had acquiesced
to the Commission’s demands. The question pre-
sented is:
Whether a party’s acceptance of a benefit prevents
that party from contending that the government vio-
lated the unconstitutional conditions doctrine in re-
quiring a waiver of constitutional rights in exchange
for that benefit.
 ii

TABLE OF CONTENTS

Page

QUESTION PRESENTED ............................................i

TABLE OF AUTHORITIES ......................................... v
PETITION FOR A WRIT OF CERTIORARI ..............1
INTRODUCTION ..........................................................1
OPINION AND ORDER BELOW ................................ 5
JURISDICTION ............................................................5
CONSTITUTIONAL PROVISION INVOLVED .........6
STATEMENT.................................................................6
A. The SEC’s Suit And Demand That
The Consent Decree Contain A
Prior Restraint.........................................6
B. The SEC’s Contempt Motion And
The Amended Final Judgment ..............8
C. The SEC’s Use Of The Pre-
Approval Provision To Chill Mr.
Musk’s Protected Speech ........................9
D. The Decision Below ............................... 12
REASONS FOR GRANTING THE PETITION ........12
I. The Decision Below Conflicts With This
Court’s Authority On The
Unconstitutional Conditions Doctrine ...........12
 iii

TABLE OF CONTENTS – continued

Page

II. The Decision Below Raises Issues Of

Exceptional Importance As To The
Government’s Ability To Avoid Judicial
Scrutiny Of Its Settlement Demands .............18
III. The Court Should Take This
Opportunity To Clarify Whether The
Government May Insulate Its
Settlement Demands From Scrutiny..............22
CONCLUSION ............................................................25

APPENDICES

APPENDIX A: Summary Order, United States

Court of Appeals for the Second Circuit, SEC v.
Elon Musk, No. 22-1291 (May 15, 2023) .................. 1a

APPENDIX B: Opinion and Order, United

States District Court for the Southern District
of New York, SEC v. Elon Musk, No. 18-cv-8865
(Apr. 27, 2022)............................................................. 9a

APPENDIX C: Memo Endorsement Order,

United States District Court for the Southern
District of New York, SEC v. Elon Musk, No.
18-cv-8865 (May 25, 2022) ....................................... 34a

APPENDIX D: Order Amending Final

Judgment as to Defendant Elon Musk, United
States District Court for the Southern District
of New York, SEC v. Elon Musk, No. 18-cv-8865
(Apr. 30, 2019)........................................................... 37a
 iv

TABLE OF CONTENTS – continued

Page

APPENDIX E: Final Judgment as to Defendant

Elon Musk, United States District Court for the
Southern District of New York, SEC v. Elon
Musk, No. 18-cv-8865 (Oct. 16, 2018) ..................... 40a

APPENDIX F: Order Denying Rehearing En

Banc, United States Court of Appeals for the
Second Circuit, SEC v. Elon Musk, No. 22-1291
(July 24, 2023)........................................................... 57a
 v

TABLE OF AUTHORITIES
Page(s)

Cases

Agency for Int’l Dev. v. All. for Open

Soc’y Int’l, Inc.,
570 U.S. 205 (2013) ..................................... 3, 13–16

All. for Open Soc’y Int’l, Inc. v. U.S.

Agency for Int’l Dev.,
651 F.3d 218 (2d Cir. 2011) ...................................15

Cantwell v. Connecticut,
310 U.S. 296 (1940) ................................................19

Cato Inst. v. SEC,

4 F.4th 91 (D.C. Cir. 2021) ............................. 17, 24

Crosby v. Bradstreet Co.,

312 F.2d 483 (2d Cir. 1963) ...................................11

FCC v. League of Women Voters,

468 U.S. 364 (1984) ............................................3, 14

Koontz v. St. John’s River Water Mgmt.

Dist.,
570 U.S. 595 (2013) ....................................... 3–4, 13

Legal Servs. Corp. v. Velazquez,

531 U.S. 533 (2001) ............................................3, 13

NAACP v. Button,
371 U.S. 415 (1963) ................................................18
 vi

TABLE OF AUTHORITIES– continued

Page(s)

Neb. Press Ass’n v. Stuart,

427 U.S. 539 (1976) ......................................... 18–19

O’Hare Truck Serv., Inc. v. City of

Northlake,
518 U.S. 712 (1996) ............................................3, 14

Overbey v. Mayor of Baltimore,

930 F.3d 215 (4th Cir. 2019) .................................22

Perry v. Sindermann,
408 U.S. 593 (1972) ........................... 3–4, 12–14, 16

Rufo v. Inmates of Suffolk Cnty. Jail,

502 U.S. 367 (1992) ................................................24

Rumsfeld v. Forum for Acad. & Inst’l

Rights, Inc.,
547 U.S. 47 (2006) ..................................................14

SEC v. Clifton,
700 F.2d 744 (D.C. Cir. 1983) ........................ 17, 21

SEC v. Moraes,
No. 22-CV-8343 (RA), 2022 WL
15774011 (S.D.N.Y. Oct. 28, 2022) .... 19, 21–22, 24

SEC v. Novinger,
40 F.4th 297 (5th Cir. 2022) .......................... 19, 24

SEC v. Romeril
15 F.4th 166 (2d Cir. 2021) ...................... 11–12, 19
 vii

TABLE OF AUTHORITIES– continued

Page(s)

Speiser v. Randall,
357 U.S. 513 (1958) ................................................19

Zieper v. Metzinger,
474 F.3d 60 (2d Cir. 2007) .....................................24

Constitutional Provisions and Statutes

U.S. Const. Amend. I ..................................................... 6

15 U.S.C. § 78j..................................................... 6–7, 17

28 U.S.C. § 1254(1) ........................................................6

Rules and Regulations

17 C.F.R. § 202.5(e) .......................................................8

17 C.F.R. § 240.10b-5 ....................................................7

Other Authorities

Comments of Andrew N. Vollmer, Office

of Mgmt. & Budget, Request for
Information on Improving and
Reforming Regulatory Enforcement
and Adjudication, OMB-2019-0006
(Mar. 9, 2020),
https://downloads.regulations.gov/O
MB-2019-0006-
0404/attachment_1.pdf ..........................................20
 viii

TABLE OF AUTHORITIES– continued

Page(s)

Richard A. Epstein, Unconstitutional

Conditions, State Power, and the
Limits of Consent, 102 Harv. L. Rev.
4 (1988)....................................................................17

Philip Hamburger, Unconstitutional

Conditions: The Irrelevance Of
Consent, 98 Va. L. Rev. 479 (2012) .......................16

How Investigations Work, SEC (last

modified Jan. 27, 2017),
https://www.sec.gov/enforce-
ment/how-investigations-work ...............................8

Priyah Kaul, Admit or Deny: A Call for

Reform of the SEC’s ‘Neither-Admit-
Nor-Deny’ Policy, 48 U. Mich. J.L.
Ref. 535 (2015)........................................................21

Hester Peirce, Comm’r, SEC, The Why

Behind the No: Remarks at the 50th
Annual Rocky Mountain Securities
Conference (May 11, 2018),
https://www.sec.gov/news/speech/pei
rce-why-behind-no-051118 ....................................20

Kathleen M. Sullivan, Unconstitutional

Conditions, 102 Harv. L. Rev. 1413
(1989) .......................................................................16
 ix

TABLE OF AUTHORITIES– continued

Page(s)

Andrew N. Vollmer, Four Ways to Im-

prove SEC Enforcement, 43 Sec. Reg.
L.J. 333 (2015) ........................................................20
 1

PETITION FOR A WRIT OF CERTIORARI

Petitioner Elon Musk respectfully petitions for a

writ of certiorari to review the judgment of the United
States Court of Appeals for the Second Circuit in this
case.

INTRODUCTION

As a condition of settling a securities enforcement

action, the Securities and Exchange Commission
(SEC) required petitioner Elon Musk to agree to a
sweeping prior restraint on his speech: he must ob-
tain explicit “preapproval” before engaging in “written
communication” on a wide range of subjects.
Mr. Musk challenged that restraint as a violation of
the unconstitutional conditions doctrine. But the SEC
contended, and the courts below accepted, that
Mr. Musk’s claim failed on the categorical basis that
he had accepted the settlement agreement. That hold-
ing squarely conflicts with this Court’s unconstitu-
tional conditions jurisprudence, and it vests
administrative agencies with intolerable power to co-
erce private parties into relinquishing their constitu-
tional rights. This Court should grant review to
clarify the proper scope of the unconstitutional condi-
tions doctrine and to prevent such egregious agency
overreach.

This case arises from one aspect of the SEC’s ongo-

ing campaign against Mr. Musk and his companies.
As part of a consent decree to settle allegations of se-
curities fraud (allegations that a federal jury in a sep-
arate case later found did not constitute securities
 2

fraud), the SEC demanded that Mr. Musk refrain in-

definitely from making any public statements on a
wide range of topics unless he first received approval
from a securities lawyer. Only months later, the SEC
sought to hold Mr. Musk in contempt of court on the
basis that Mr. Musk allegedly had not obtained such
approval for a post on Twitter (now X). In effect, the
SEC sought contempt sanctions—up to and including
imprisonment—for Mr. Musk’s exercise of his First
Amendment rights.

The pre-approval provision in Mr. Musk’s consent

decree, as embodied in the amended final judgment,
is a quintessential prior restraint that the law forbids.
It restricts Mr. Musk’s speech even when truthful and
accurate. It extends to speech not covered by the se-
curities laws and with no relation to the conduct un-
derlying the SEC’s civil action against Mr. Musk. And
it chills Mr. Musk’s speech through the never-ending
threat of contempt, fines, or even imprisonment for
otherwise protected speech if not pre-approved to the
SEC’s or a court’s satisfaction.

In the face of this unconstitutional restriction on

his speech, Mr. Musk asked the court to declare the
provision unenforceable. In response, the SEC con-
tended that the Constitution imposes no limit on what
it can demand of settling defendants—so long as the
defendant accepts the demand in exchange for resolu-
tion of the underlying civil action. Both the district
court and the court of appeals seemingly agreed, di-
recting attention not to whether the SEC had com-
plied with the constitutional limits on what it could
demand but instead on whether Mr. Musk had waived
his constitutional rights in accepting the settlement.
 3

The court of appeals concluded that Mr. Musk either

had to forego a settlement with the SEC or give up his
right to challenge the constitutionality of the SEC’s
demands.

Such a result cannot be reconciled with this

Court’s precedent on unconstitutional conditions,
which “forbids burdening the Constitution’s enumer-
ated rights by coercively withholding benefits from
those who exercise them.” Koontz v. St. John’s River
Water Mgmt. Dist., 570 U.S. 595, 606 (2013). The gov-
ernment “may not deny a benefit to a person on a basis
that infringes his constitutionally protected inter-
ests—especially, his interest in freedom of speech.”
Perry v. Sindermann, 408 U.S. 593, 597 (1972). Re-
gardless of any defendant’s acquiescence to such a
condition, the government’s “interference with consti-
tutional rights is impermissible.” Id.

This Court has long addressed—and invali-

dated—unconstitutional conditions attached to a gov-
ernment benefit even when the complaining party
accepted a benefit in exchange for compliance with the
condition. See, e.g., Agency for Int’l Dev. v. All. for
Open Soc’y Int’l, Inc., 570 U.S. 205 (2013); Legal Servs.
Corp. v. Velazquez, 531 U.S. 533 (2001); O’Hare Truck
Serv., Inc. v. City of Northlake, 518 U.S. 712 (1996);
FCC v. League of Women Voters, 468 U.S. 364 (1984);
Perry, 408 U.S. 593. Consistent with the judiciary’s
role in ensuring that government agencies comply
with the Constitution, this Court’s unconstitutional
conditions cases do not treat the acceptance of a gov-
ernment benefit as a bar to a challenge to the condi-
tion. Rather, time and again this Court has applied
the unconstitutional conditions framework to analyze
 4

whether the government has obtained “a result which

(it) could not command directly,” id. at 597 (citation
omitted), regardless of whether the benefit was ac-
cepted. Particularly in the context of the First
Amendment, which serves as a restraint on the gov-
ernment’s ability to restrict speech, the Constitution
limits what the government may do, and any individ-
ual relinquishment of that right cannot grant the gov-
ernment a power denied to it by the Constitution.

The Second Circuit’s conclusion that Mr. Musk

simply could have “chose[n]” not to sign the consent
decree and “negotiate[d] a different agreement,” (Pet.
App. 7a (emphasis in original)), contradicts this well-
established law. Indeed, such a conclusion highlights
the exact problem that the unconstitutional condi-
tions doctrine seeks to address: the government “co-
ercively withholding benefits from those who exercise
them.” Koontz, 570 U.S. at 606.

This case raises questions of exceptional im-

portance. Before the court of appeals, the SEC as-
serted that the unconstitutional conditions doctrine is
“inapplicable” to SEC settlements. SEC v. Musk, No.
22-1291, (2d Cir.), Dkt. 44 at 50–51. The startling im-
plication of that position is that the SEC could require
as a condition of settlement a waiver of any constitu-
tional right—e.g., to criticize the government, to prac-
tice a religion, or to obtain a jury trial in any future
action—without any judicial scrutiny of the waiver if
the defendant relented to the agency’s demands. That
position would allow the SEC to do precisely what the
unconstitutional doctrine exists to prevent: obtaining
“a result which (it) could not command directly.”
Perry, 408 U.S. at 597 (citation omitted).
 5

And the pre-approval provision at issue continues

to cast an unconstitutional chill over Mr. Musk’s
speech whenever he considers making public commu-
nications. Given that 98 percent of defendants in SEC
actions settle, the implications of the court of appeals’
failure to consider whether an administrative agency
may demand that settling defendants forego First
Amendment rights to resolve actions filed against
them extend far beyond Mr. Musk and the pre-ap-
proval provision here.

This Court should make clear now that the SEC

may not insulate its settlement demands from judicial
scrutiny and confirm instead that the judiciary must
ensure that the SEC’s use of its considerable power to
inhibit such speech comports with the Constitution.

OPINION AND ORDER BELOW

The opinion of the court of appeals (Pet. App. 1a–

8a) is not published in the Federal Reporter but is
available at 2023 WL 3451402. The opinion of the dis-
trict court denying, inter alia, Mr. Musk’s motion to
modify the amended judgment (Pet. App. 9a–33a) is
not published in the Federal Supplement but is avail-
able at 2022 WL 1239252.

JURISDICTION

The judgment of the court of appeals was entered

on May 15, 2023. Mr. Musk timely sought rehearing
or rehearing en banc, which the court of appeals de-
nied on July 24, 2023. On October 18, 2023, Justice
Sotomayor extended the time for filing a petition for a
 6

writ of certiorari to December 7, 2023. This Court has

jurisdiction under 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISION INVOLVED

U.S. Const. Amend. I: Congress shall make no law

respecting an establishment of religion, or prohibiting
the free exercise thereof; or abridging the freedom of
speech, or of the press; or the right of the people peace-
ably to assemble, and to petition the government for a
redress of grievances.

STATEMENT

A. The SEC’s Suit And Demand That The

Consent Decree Contain A Prior Restraint

Mr. Musk is the CEO and co-founder of Tesla, Inc.

On September 27, 2018, the SEC filed suit against
Mr. Musk alleging that statements that Mr. Musk
posted to his Twitter account concerning a potential
transaction to take Tesla private violated Section
10(b) of the Exchange Act. A16–38.1 The SEC alleged
that Mr. Musk’s tweets concerning the fact that
Mr. Musk was considering taking Tesla private and
had secured funding were materially false and mis-
leading. 2 Id.

1 Citations to A, SA, and CA refer to the Joint Appendix (Dkt.

25), Supplemental Appendix (Dkt. 45), and Confidential Appen-
dix (Dkt. 29), respectively, filed in the Second Circuit, No. 22-
1291.
2 More than four years later, following a jury trial, Mr. Musk
obtained the judgment of a court in the Northern District of Cal-
ifornia that the same challenged statements did not constitute a
 7

As the SEC acknowledged in initiating the action

against Mr. Musk (and a separate action against
Tesla), Tesla was in a precarious financial position at
the time, with “stock analysts and investors increas-
ingly beg[inning] to question whether Tesla could
meet its previously announced production targets and
begin to earn sufficient cash in order to sustain its op-
erations and pay its existing debt load.” A20. After
the SEC’s action jeopardized Tesla’s financing,
Mr. Musk entered into a consent decree to resolve the
suit two days after the SEC filed it. A39–49.

The consent decree permanently restrains and en-

joins Mr. Musk from violating Section 10(b) of the Ex-
change Act and SEC Rule 10b-5. A43. Mr. Musk
agreed to pay a civil penalty of $20 million. Id.
Mr. Musk further agreed to resign from his role as
Chairman of the Board of Directors of Tesla and not
resume that role for three years. A44–45.

In addition, as part of the consent decree, the SEC

required Mr. Musk to agree to certain restrictions on
his ability to communicate about a broad category of
information regarding Tesla. Specifically, the consent
decree requires Mr. Musk to obtain “the pre-approval
of any such written communications that contain, or
reasonably could contain, information material to the
Company or its shareholders.” A45. This require-
ment extends beyond the topic of the 2018 tweets at
issue in the SEC’s underlying lawsuit.

fraud under Section 10(b). In re Tesla, Inc. Sec. Litig., No. 3:18-
cv-04865-EMC (N.D. Cal.), Dkt. 698.
 8

Separately, the consent decree contains the SEC’s

so-called gag rule set forth in 17 C.F.R. § 202.5(e) (the
“gag rule”). A47. The consent decree requires
Mr. Musk to comply with the gag rule, and refrain
from denying the allegations in the SEC’s complaint,
with an exception for certain legal proceedings. Id.

The district court entered the consent decree as a

final judgment. A50–54

B. The SEC’s Contempt Motion And The

Amended Final Judgment

Only months after the district court entered final

judgment, the SEC sought to hold Mr. Musk in con-
tempt of court for a tweet it believed violated the pre-
approval provision. As the SEC’s own guidance to the
public advises, “[a] person who violates the court’s or-
der may be found in contempt and be subject to addi-
tional fines or imprisonment.” 3

The SEC sought contempt solely based on its view

that Mr. Musk had failed to comply with the pre-ap-
proval provision in the consent decree and final judg-
ment related to a single tweet. In the tweet, Mr. Musk
repeated information that previously had been dis-
closed in Tesla’s SEC filings and that Mr. Musk did
not believe would be “material to Tesla or its share-
holders.” A90–92.

Faced with the possibility of being held in con-

tempt of court for publishing a tweet, Mr. Musk

3 How Investigations Work, SEC (last modified Jan. 27, 2017),

https://www.sec.gov/enforcement/how-investigations-work.
 9

agreed to amendments to the initial consent decree,

which replaced the materiality standard of the pre-ap-
proval provision with wide-ranging categories of infor-
mation. A225–26. In lieu of a materiality standard,
the amended consent decree requires pre-approval “of
any written communication that contains infor-
mation” on an expansive list of topics, including “the
Company’s financial condition, statements, or results,
including earnings or guidance,” “production numbers
or sales or delivery numbers (whether actual, fore-
casted, or projected) that have not been previously
published via pre-approved written communications
issued by the Company,” “events regarding the Com-
pany’s securities,” and “new or proposed business
lines that are unrelated to then-existing business
lines.” Id. The amended judgment directly requires
Mr. Musk to “obtain the pre-approval of an experi-
enced securities lawyer employed by the Company.”
A225. The pre-approval provision in the amended
judgment has no sunset provision, conditions prece-
dent to its dissolution, or any other contemplation of
cessation.

The district court entered an amended judgment,

the terms of which subject Mr. Musk to the possibility
of being held in contempt of court even for publishing
truthful, non-material information about Tesla.
A231–32.

C. The SEC’s Use Of The Pre-Approval

Provision To Chill Mr. Musk’s Protected
Speech

Following entry of the amended judgment, the

SEC continued to inquire whether Mr. Musk’s tweets
 10

had been submitted for pre-approval. A253–54; SA33.

In November 2021, the SEC launched an investiga-
tion into Mr. Musk’s compliance with the consent de-
cree and amended judgment. CA24–25.

The investigation related to a pair of November 6,

2021 tweets that Mr. Musk posted in response to well-
publicized proposals for revising the federal tax code
and criticism that unrealized capital gains are not
subject to income tax, asking the question: “Much is
made lately of unrealized gains being a means of tax
avoidance, so I propose selling 10% of my Tesla stock.
Do you support this?” SA18. Six minutes later, he
tweeted, “I will abide by the results of this poll, which-
ever way it goes.” Id. Ultimately, 57.9% of the votes
(3,519,252 in total) voted “yes.” Id.

The SEC first sent a letter and then subpoenaed

Tesla, directing it to produce documents and infor-
mation concerning these tweets and Mr. Musk’s com-
pliance with the consent decree. CA15–25. The SEC
next subpoenaed Mr. Musk, demanding he produce
“[a]ll Documents and Communications Concerning”
the tweets and “submission of the 12:17 tweet and/or
the 12:23 tweet to Tesla’s General Counsel or Securi-
ties Counsel, or any counsel acting in either capacity,
for pre-approval or review before they were published.”
CA12 (emphasis added). The subpoena and accompa-
nying cover letter that the SEC sent to Mr. Musk both
noted that a failure to comply with the subpoena could
result in fines and/or imprisonment. CA3, CA8.

Mr. Musk and Tesla produced to the SEC a privi-

lege log addressing these requests and providing doc-
umentation that Mr. Musk and Tesla’s acting head of
 11

legal had a conversation regarding Mr. Musk’s public

pre-announcement of his intent to sell Tesla stock.
A250. The SEC nevertheless continued to press its
investigation.

Mr. Musk moved in the district court not only to

quash the subpoena issued to him, but also for relief
from the amended judgment. A243. Mr. Musk ex-
plained that the pre-approval provision constitutes an
unconstitutional prior restraint that the SEC has
abused to police Mr. Musk’s constitutionally protected
speech. SA36–39. Mr. Musk thus sought to terminate
the consent decree or modify the final judgment to re-
move the unlawful and unenforceable pre-approval
provision, which had a chilling effect on this speech.
In support of his arguments, Mr. Musk cited to Crosby
v. Bradstreet Co., 312 F.2d 483 (2d Cir. 1963), in which
the Second Circuit vacated a consent decree on First
Amendment grounds, and which remains the control-
ling law in the Second Circuit. SA54. Mr. Musk
quoted from Crosby the proposition that a court may
not enforce a prior restraint even if the parties con-
sented to it because “that the parties may have agreed
to it is immaterial.” Id. (citing Crosby, 312 F.2d at
485). Mr. Musk expressly requested that “the Court
should modify the consent decree to remove the prior
restraint on Mr. Musk’s speech,” which “impermissi-
bly infringes on First Amendment rights.” SA38.

The district court denied the motion to modify or

terminate the consent decree, citing to the Second Cir-
cuit’s holding in SEC v. Romeril, 15 F.4th 166, 172 (2d
Cir. 2021), related to the enforceability of the SEC’s
gag rule requirement. Pet. App. 28a–29a. The district
court reasoned that “parties can waive their First
 12

Amendment rights in consent decrees and other set-

tlements of judicial proceedings.” Id. at 28a. Based
on this logic, the court declined to reach the question
of whether the pre-approval provision “would pass
muster under the First Amendment,” id. at 27a n.5,
or was enforceable notwithstanding any waiver.

D. The Decision Below

The court of appeals affirmed in an unpublished

decision. Pet. App. 1a–8a. Like the district court, it
declined to “express [any] view as to the substance of
[the] underlying First Amendment claims” because
Mr. Musk had agreed to the consent decree. Id. at 7a–
8a. The court reasoned as a categorical matter that
“[p]arties entering into consent decrees may voluntar-
ily waive their First Amendment and other rights,”
and that the mechanism for parties to avoid such
waivers is not to agree to them in the first place. Id.
at 7a (citing Romeril, 15 F.4th at 172).4

REASONS FOR GRANTING THE PETITION

I. The Decision Below Conflicts With This

Court’s Authority On The
Unconstitutional Conditions Doctrine

As this Court has long recognized, the government

“may not deny a benefit to a person on a basis that
infringes his constitutionally protected interests—es-
pecially, his interest in freedom of speech.” Perry, 408

4 While the Second Circuit deemed Mr. Musk unable to chal-

lenge the SEC’s demand that he agree to the prior restraint, it
did not address Mr. Musk’s arguments as to the enforceability of
the waiver. Pet. App. 7a–8a.
 13

U.S. at 597; see also All. for Open Soc’y Int’l, 570 U.S.
at 214. This doctrine, known as the unconstitutional
conditions doctrine, limits the government’s ability to
condition benefits on the relinquishment of constitu-
tional rights. See Koontz, 570 U.S. at 608 (“We have
repeatedly rejected the argument that if the govern-
ment need not confer a benefit at all, it can withhold
the benefit because someone refuses to give up consti-
tutional rights.”). In effect, the unconstitutional con-
ditions doctrine serves to prevent the government
from coercing from a party what the government could
not otherwise legally obtain. Perry, 408 U.S. at 597.

Application of the doctrine, however, does not de-

pend upon whether the challenging party accepts or
rejects the benefit. Rather, “regardless of whether the
government ultimately succeeds in pressuring someone
into forfeiting a constitutional right, the unconstitu-
tional conditions doctrine forbids burdening the Con-
stitution’s enumerated rights by coercively
withholding benefits from those who exercise them.”
Koontz, 570 U.S. at 606 (emphasis added). In this re-
gard, the doctrine focuses just as much on the need to
ensure that government actors stay within the bounds
of their constitutional authority as it does on the
rights of the challenging party.

This Court therefore has long addressed—and in-

validated if warranted—unconstitutional conditions
attached to a government benefit regardless of
whether the complaining party accepted the benefit in
exchange for relinquishing a constitutional right. See,
e.g., All. for Open Soc’y Int’l, 570 U.S. 205 (considering
challenge by domestic organization received funding
under the challenged act); Velazquez, 531 U.S. at 539
 14

(acceptance of funds no bar to challenge); O’Hare

Truck Serv., 518 U.S. at 720–21 (addressing challenge
by independent contractor that accepted employment
offer); League of Women Voters, 468 U.S. at 370–73
(analyzing challenge by public broadcasting stations
that accepted and disbursed federal funds); Perry, 408
U.S. at 597 (holding that unconstitutional conditions
doctrine applies “regardless of the public employee’s
contractual or other claim to a job”); see also Rumsfeld
v. Forum for Acad. & Inst’l Rights, Inc., 547 U.S. 47,
59–60 (2006) (addressing challenge by law schools
that received federal funding and holding funding con-
dition did not violate unconstitutional conditions doc-
trine).

That is because the analysis turns on whether the

government has conditioned the benefit on an agree-
ment to forego constitutional protections. For in-
stance, in FCC v. League of Women Voters of
California, the Court addressed a challenge to an act
of Congress in which federal funds for noncommercial
television and radio stations directed toward station
operations and education programming prohibited
“any ‘noncommercial educational broadcasting station
which receives a grant from the Corporation [for Pub-
lic Broadcasting]’ to ‘engage in editorializing.’” 468
U.S. at 366. Among the challengers to the law was a
nonprofit corporation whose licensees had “received
and w[ere] presently receiving grants from the Corpo-
ration.” Id. at 370. That the challengers accepted the
grant presented no bar to the challenge. Ultimately,
the Court held that the funding condition violated the
First Amendment. Id. at 402.
 15

More recently, in Alliance for Open Society Inter-

national, a group of domestic organizations engaged
in combating HIV/AIDS overseas “receive[d] billions
annually in financial assistance from the United
States, including under the Leadership Act,” which
imposed a funding condition that funds could not be
used by an organization “that does not have a policy
explicitly opposing prostitution and sex trafficking.”
570 U.S. at 208, 210–11 (quotation marks omitted).
That the organization had received the funding did
not waive its right to seek a declaratory judgment that
the policy violated their First Amendment rights. Id.
at 211. The Court thus applied the unconstitutional
conditions doctrine in analyzing the challenge, id. at
214, and held that the funding condition “violates the
First Amendment and cannot be sustained,” id. at
221.

While “[a]s a general matter, if a party objects to a

condition on the receipt of federal funding, its recourse
is to decline the funds,” id. at 214, “[p]ursuant to this
‘unconstitutional conditions’ doctrine, as it has come
to be known, the government may not place a condi-
tion on the receipt of a benefit or subsidy that in-
fringes upon the recipient’s constitutionally protected
rights, even if the government has no obligation to of-
fer the benefit in the first instance.” All. for Open
Soc’y Int’l, Inc. v. U.S. Agency for Int’l Dev., 651 F.3d
218, 231 (2d Cir. 2011), aff’d sub nom. All. for Open
Soc’y Int’l, 570 U.S. 205.

That accepting the government benefit does not

foreclose a challenge to the constitutionality of a con-
dition makes sense because otherwise the government
would succeed in obtaining “a result which (it) could
 16

not command directly,” Perry, 408 U.S. at 597 (cita-

tion omitted)—exactly what the doctrine seeks to pre-
vent. See, e.g., Philip Hamburger, Unconstitutional
Conditions: The Irrelevance Of Consent, 98 Va. L. Rev.
479, 480 (2012) (“Consent is irrelevant for conditions
that go beyond the government's power.”).

The court of appeals’ decision conflicts with this

well-settled authority. The Second Circuit concluded
as a categorical matter that “[p]arties entering into
consent decrees may voluntarily waive their First
Amendment and other rights” and that the mecha-
nism to avoid such waivers is not to agree to them in
the first place. Pet. App. 7a (reasoning that Mr. Musk
had “‘the right to litigate and defend against the
[SEC’s] charges’ or to negotiate a different agree-
ment—but he chose not to do so”).

Not only does such logic undermine the entire pur-

pose of the unconstitutional conditions doctrine, but,
in Alliance for Open Society International, this Court
expressly rejected the idea that a condition must have
been “actually coercive, in the sense of an offer that
cannot be refused,” for the unconstitutional conditions
doctrine to apply. 570 U.S. at 214. “It is perhaps the
worst mistake in [an] unconstitutional conditions
analysis” to “immunize” “flagrant instances of rights-
pressuring intent . . . on the theory that government
has committed no coercive act.” Kathleen M. Sullivan,
Unconstitutional Conditions, 102 Harv. L. Rev. 1413,
1501 (1989).

To be sure, if a condition withstands scrutiny un-

der the unconstitutional conditions doctrine, the party
can avoid the condition only by electing not to receive
 17

the benefit. But the scrutiny attaches to the govern-

ment’s condition—not to the action of the benefitting
party. “The problem of unconstitutional conditions
arises whenever a government seeks to achieve its de-
sired result by obtaining bargained-for consent of the
party whose conduct is to be restricted.” Richard A.
Epstein, Unconstitutional Conditions, State Power,
and the Limits of Consent, 102 Harv. L. Rev. 4, 7
(1988). Thus, while there exists “an ordinary first
amendment issue when the government seeks to im-
pose prior restraints on publication[,] [t]hat question
is transformed into an unconstitutional conditions is-
sue when a government benefit is conditioned upon
acceptance of prior restraint.” Id.

Here, the SEC conditioned the settlement of the

underlying action and contempt motion on Mr. Musk’s
agreement to a provision requiring pre-approval of
statements on a range of topics subject to SEC over-
sight and the court’s contempt powers, with no expi-
ration date. 5 This prior restraint on Mr. Musk’s
speech extends beyond the statements that the SEC
had alleged in the settled 2018 action violated the se-
curities laws (statements that a nine-member jury
unanimously determined did not violate Section 10(b)
of the Exchange Act, see In re Tesla, Inc. Sec. Litig.,

5 There is little doubt that “[d]efendants who enter into consent

decrees with the SEC gain certain benefits: they may settle the
complaint against them without admitting the SEC’s allegations,
and often ‘seek and receive concessions concerning the violations
to be alleged in the complaint, the language and factual allega-
tions in the complaint, and the collateral, administrative conse-
quences of the consent decree.’” Cato Inst. v. SEC, 4 F.4th 91, 93
(D.C. Cir. 2021) (quoting SEC v. Clifton, 700 F.2d 744, 748 (D.C.
Cir. 1983)).
 18

No. 3:18-cv-04865-EMC (N.D. Cal.), Dkt. 671). The

court of appeals’ conclusion that Mr. Musk was free to
negotiate or litigate the underlying action—but not
challenge the constitutionality of the SEC’s condition
of settlement—cannot be reconciled with this Court’s
precedent on unconstitutional conditions, which seeks
to prevent the government from obtaining via agree-
ment what it could not otherwise legally obtain.

II. The Decision Below Raises Issues Of

Exceptional Importance As To The
Government’s Ability To Avoid Judicial
Scrutiny Of Its Settlement Demands

This case presents a question of exceptional im-

portance—whether the government can insulate its
demands that settling defendants waive constitu-
tional rights from judicial scrutiny.

The unconstitutional conditions doctrine is in-

tended to serve as an important safeguard on consti-
tutional rights. In the context of SEC settlements,
however, the SEC routinely demands constitutionally
suspect concessions from defendants who generally
are ill-suited to resist government overreach.

A prior restraint is among “the most serious and

the least tolerable infringement on First Amendment
rights.” Neb. Press Ass’n v. Stuart, 427 U.S. 539, 559
(1976). It does not just “chill” speech, it effectively
“freezes” it. Id. Because “[t]he threat of sanctions
may deter” the exercise of First Amendment rights
“almost as potently as the actual application of sanc-
tions,” the “government may regulate in the area only
with narrow specificity.” NAACP v. Button, 371 U.S.
 19

415, 433 (1963) (citing Cantwell v. Connecticut, 310

U.S. 296, 311 (1940)).

Notwithstanding this Court’s view that prior re-

straints are one of “the least tolerable infringement[s]
on First Amendment rights,” Neb. Press Ass’n, 427
U.S. at 559, the SEC historically has engaged in a pat-
tern of chilling and restricting the constitutionally
protected speech of settling defendants. See, e.g.,
Romeril, 15 F.4th 166. The SEC’s standard gag rule
threatens settling defendants that any public refuta-
tion of the SEC’s allegations—even if truthful—is
punishable with contempt. The SEC therefore pre-
vents criticism of its official decisions because settling
defendants who so much as “create the impression the
SEC got something wrong,” face “the risk of enormous
financial and professional penalties, if not imprison-
ment.” SEC v. Moraes, No. 22-CV-8343 (RA), 2022
WL 15774011, at *1 (S.D.N.Y. Oct. 28, 2022) (quota-
tion marks omitted).

The SEC has employed this approach even though

it is well-established that the government may not
“place limitations upon the freedom of speech which if
directly attempted would be unconstitutional.”
Speiser v. Randall, 357 U.S. 513, 518 (1958). The fed-
eral judiciary’s frequent “complicit[y]” in approving
the SEC’s “lifetime gag orders” is at odds with the
“growing chorus of circuits” that have concluded that,
in other contexts, “the Constitution prevents courts
from enforcing the waiver of First Amendment rights
as a condition of settlements.” Moraes, 2022 WL
15774011, at *1, *4; see also SEC v. Novinger, 40 F.4th
297, 308 (5th Cir. 2022) (Jones, J. and Duncan, J., con-
 20

curring) (questioning SEC’s policy of conditioning set-

tlement of enforcement actions on parties giving up
their First Amendment rights).

At the same time, defendants in SEC actions may

be particularly vulnerable to government coercion.
Current SEC Commissioner Hester Peirce has
acknowledged that, “[o]ften, given the time and costs
of enforcement investigations, it is easier for a private
party just to settle than to litigate a matter.” Hester
Peirce, Comm’r, SEC, The Why Behind the No: Re-
marks at the 50th Annual Rocky Mountain Securities
Conference, (May 11, 2018), https://www.sec.gov/
news/speech/peirce-why-behind-no-051118.

SEC defendants either “must incur the costs, dis-

tress, and adverse publicity associated with a defense
or succumb and settle, and the pressure to settle is
overwhelming even when the SEC case lacks merit.”
Andrew N. Vollmer, Four Ways to Improve SEC En-
forcement, 43 Sec. Reg. L.J. 333, 336 (2015). “Defend-
ants settle because their business, job, or personal
relationships will not survive sustained adverse pub-
licity repeating the SEC’s allegations over and over
during the long life of litigation, because they cannot
be at odds with their main regulator, because they
want the matter behind them, or because they do not
have the financial resources to fight the government.”
Comments of Andrew N. Vollmer, Office of Mgmt. &
Budget, Request for Information on Improving and
Reforming Regulatory Enforcement and Adjudication,
OMB-2019-0006, 4–5 (Mar. 9, 2020), https://down-
loads.regulations.gov/OMB-2019-0006-0404/attach-
ment_1.pdf.
 21

Indeed, the SEC routinely settles the actions it

brings—by its own estimate, it settles 98 percent of
enforcement actions. Moraes, 2022 WL 15774011, at
*2 & n.5 ((citing Luis A. Aguilar, Comm’r, SEC, Re-
marks Before the 20th Annual Securities and Regula-
tory Enforcement Seminar (Oct. 25, 2013) (“The SEC
currently settles approximately 98% of its Enforce-
ment cases.”)).6 Yet the SEC has asserted that the un-
constitutional conditions doctrine is “inapplicable” to
SEC settlements. SEC v. Musk, No. 22-1291 (2d Cir.),
Dkt. 44 at 50–51.

Likewise, the government settles cases every

day—via settlement, consent decree, and plea deals.
If the SEC’s view prevails, then such logic would ex-
tend to all government settlements, which would be
immune from review under the unconstitutional con-
ditions doctrine.

The implications of the SEC’s position are particu-

larly severe because the pre-approval provision im-
posed upon Mr. Musk extends to future speech not at
issue in the underlying case. Under the SEC’s ap-
proach, there is no limit on what it can demand of set-
tling defendants. If the SEC has the right to require
a defendant to waive the right to speak in the future
on a wide-range of topics, that same logic would per-
mit the SEC to require a settling party to waive the

6 “Since 2002, the SEC’s settlement rate has remained constant

at about ninety-eight percent.” Priyah Kaul, Admit or Deny: A
Call for Reform of the SEC’s ‘Neither-Admit-Nor-Deny’ Policy, 48
U. Mich. J.L. Ref. 535, 536 (2015); see also Clifton, 700 F.2d at
748 (“SEC has traditionally entered into consent decrees to settle
most of its injunctive actions.”).
 22

right to a jury trial in any future action—even based

on completely different conduct.

The SEC advocates for an abdication of the Court’s

duty to safeguard the constitutional rights of settling
defendants. This Court should not “turn a blind eye
to First Amendment rights being used as a bargaining
chip.” Moraes, 2022 WL 15774011, at *1.

III. The Court Should Take This Opportunity

To Clarify Whether The Government May
Insulate Its Settlement Demands From
Scrutiny

This petition presents an apt opportunity for the

Court to clarify that government settlements are not
immune from constitutional scrutiny, to the immedi-
ate benefit of the hundreds of defendants who settle
cases with the SEC each year.

First, the amended final judgment here contains a

quintessential prior restraint—restraining speech
that extends far beyond the conduct giving rise to the
settlement. And the SEC has sought to hold Mr. Musk
in contempt for an alleged violation of this provision.
This case thus presents a prime example of the exact
harm that results from the SEC’s practice of suppress-
ing speech through settlements. In other contexts,
courts have recognized that restrictions like the one
at issue here are contrary to the Constitution. See,
e.g., Overbey v. Mayor of Baltimore, 930 F.3d 215, 222
(4th Cir. 2019) (addressing waiver of constitutional
rights in settlement in light of the “strong public in-
terests rooted in the First Amendment”).
 23

Second, the instant case presents a rare oppor-

tunity to ensure that the conditions the government
demands in settlements do not evade judicial review.
Many defendants against whom the government
brings actions settle because they cannot afford to lit-
igate. Under such circumstances, they are unlikely to
challenge the conditions imposed on a settlement.

In the typical case, the party settling the action

does not appeal the settlement. As a result, although
consent decrees are embodied in final judgments that
subject settling defendants to the courts’ contempt
powers, such judgments are rarely subject to review
on appeal or by this court. That means the Court will
be presented with few opportunities to weigh in on the
question that this petition presents of whether the
government may insulate its settlement demands
from scrutiny.

Third, granting review will provide meaningful

guidance to not only the SEC—which currently main-
tains that the Constitution imposes no limitation on
the concessions it may seek in settlements—but also
to the 98 percent of defendants who settle enforce-
ment actions with the SEC, who may lack the re-
sources to fight the SEC’s charge or challenge the
SEC’s practice of mandating constitutionally suspect
concessions in settlements. Such guidance will extend
beyond SEC settlements to all instances in which the
government settles.

Finally, the ever-present chilling effect that re-

sults from the pre-approval provision here counsels in
favor of granting review now. The SEC argued below
that Mr. Musk may seek relief from the prior restraint
 24

only when it seeks to enforce the consent decree. But

the prospect of a future contempt motion underscores
the importance of granting review now. 7 What the
government seeks is to control when—and if ever—its
demand for the broad and indefinite prior restraint in
the amended final judgment is subject to review. In
the meantime, the SEC will opt for a never-ending in-
vestigative campaign that violates Mr. Musk’s free-
dom of speech through “the chilling effect of
governmental action.” Zieper v. Metzinger, 474 F.3d
60, 65–66 (2d Cir. 2007).

In the past three years, the SEC has at all times

kept at least one investigation open regarding
Mr. Musk or Tesla. The SEC’s actions—in seeking
contempt and then maintaining a steady stream of in-
vestigations—chills Mr. Musk’s speech. Mr. Musk
should not have to “[h]old [his] tongue” and refrain
from making truthful statements to avoid the risk of
unending “litigati[on] with the SEC.” Moraes, 2022
WL 15774011, at *2 (quoting Novinger, 40 F.4th at
308 (Jones, J. and Duncan, J., concurring)).

7 “‘A consent decree . . . [is] a judicial decree that is subject

to the rules generally applicable to other judgments and decrees.’
Violations of court orders are punishable by criminal contempt,
and a court may institute criminal contempt proceedings against
an SEC defendant who violates a . . . provision contained in a
consent decree issued by that court even absent the SEC’s con-
sent.” Cato Inst., 4 F.4th at 95 (citations omitted) (quoting Rufo
v. Inmates of Suffolk Cnty. Jail, 502 U.S. 367, 378 (1992)).
 25

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted,
WILLIAM A. BURCK ALEX SPIRO
CHRISTOPHER G. MICHEL ELLYDE R. THOMPSON
RACHEL G. FRANK Counsel of Record
QUINN EMANUEL URQUHART QUINN EMANUEL URQUHART
& SULLIVAN, LLP & SULLIVAN, LLP
1300 I Street NW 51 Madison Avenue
Suite 900 22nd Floor
Washington, DC 20005 New York, NY 10010
(212) 849-8000
ellydethompson@
quinnemanuel.com
Counsel for Petitioner
December 7, 2023