In re Accellion, Inc. Data Breach Litigation, No. 5:2021cv01155 - Document 144 (N.D. Cal. 2023)
Court Description: ORDER Denying 94 Motion to Intervene. Signed by Judge Edward J. Davila on 2/10/2023. (ejdlc2, COURT STAFF) (Filed on 2/10/2023)
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In re Accellion, Inc. Data Breach Litigation Doc. 144 Case 5:21-cv-01155-EJD Document 144 Filed 02/10/23 Page 1 of 6 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 MADALYN BROWN, et al., 8 Plaintiffs, 9 v. 10 ACCELLION, INC., et al., United States District Court Northern District of California 11 Case No. 5:21-cv-01155-EJD ORDER DENYING MOTION TO INTERVENE Re: ECF No. 94 Defendants. 12 Counsel for a class of Washington plaintiffs who were injured by a data breach involving 13 14 Accellion, Inc. and the Washington State Auditor’s Office (“Proposed Intervenors”) seek to 15 intervene in this consolidated action to oppose the preliminary approval of the Parties’ proposed 16 settlement. Notice of Motion and Motion to Intervene (“Mot.”), ECF No. 94. Certain Plaintiffs 17 and Defendants oppose Proposed Intervenors’ motion. Having considered the parties’ and 18 Proposed Intervenors’ submissions, the Court DENIES the motion to intervene. 19 I. BACKGROUND 20 A. 21 Defendant Accellion, Inc. is a cloud-based software company that offered products and 22 services for secure file transfers between third parties. One such product was the File Transfer 23 Appliance (“FTA”). In December 2020, several threat actors exploited vulnerabilities in the FTA 24 product, allowing them to access and steal sensitive data from FTA clients. 25 Accellion and the Data Breach The Washington State Auditor’s Office (“SAO”) was one such institution who had used 26 FTA to transfer files relating to an audit of the State’s unemployment benefits program. As a 27 result, the data breach compromised the personal identifying information of 1.6 million 28 Case No.: 5:21-cv-01155-EJD ORDER DENYING MOTION TO INTERVENE 1 Dockets.Justia.com United States District Court Northern District of California Case 5:21-cv-01155-EJD Document 144 Filed 02/10/23 Page 2 of 6 1 Washington unemployment claimants, including names, Social Security numbers, dates of birth, 2 street and email addresses, and bank and routing numbers. Mot. 3. Proposed Intervenors’ Proceedings 3 B. 4 On February 2, 2021, Proposed Intervenors initiated proceedings in Washington State 5 Superior Court titled, Stone v. Accellion USA LLC, Case No. 21-2-01439-5 SEA. Proposed 6 Intervenors assert claims against both Accellion and the SAO, and no other class action has 7 pursued claims against the SAO. Decl. David Berger (“Berger Decl.”) ¶ 18, ECF No. 94-1. The 8 proceedings in Stone have progressed to dispositive motions, where the SAO’s motion to dismiss 9 was denied and Accellion’s motion to dismiss has been heard but remains pending. Id. ¶¶ 8–15. 10 On January 6, 2022, plaintiffs in a case before this Court—Fehlen, et al. v. Accellion, Case 11 No. 5:21-cv-01353-EJD—filed a stipulation to amend their complaint to include a plaintiff injured 12 in the breach of SAO’s data and information. Shortly thereafter, on January 12, 2022, the Fehlen 13 plaintiffs filed a motion for preliminary approval of a class-wide settlement against Accellion that 14 purported to release the Proposed Intervenors’ claims against Accellion. Mot. 6–7. The 15 Washington state court subsequently stayed the Stone proceedings pending the settlement 16 proceedings in Fehlen. Berger Decl. ¶ 16. 17 On March 14, 2022, the Court consolidated all cases arising from the Accellion data breach 18 except for Cochran v. Kroger Co., Case No. 5:21-cv-01887-EJD. ECF No. 83. This 19 consolidation included the Fehlen action in which the proposed Accellion class settlement was 20 pending preliminary approval. 21 On May 5, 2022, Proposed Intervenors filed their motion with the Court, seeking 22 intervention to stay SAO-related claims against Accellion and to challenge the motion for 23 preliminary approval. ECF No. 94. Accellion and the Fehlen plaintiffs opposed intervention. 24 After the motion to intervene was fully briefed but before it was heard, the Court 25 terminated all pending motions for preliminary approval of class settlement, including the 26 settlement with Accellion. ECF No. 109. 27 28 Case No.: 5:21-cv-01155-EJD ORDER DENYING MOTION TO INTERVENE 2 Case 5:21-cv-01155-EJD Document 144 Filed 02/10/23 Page 3 of 6 1 II. LEGAL STANDARD A court must permit a nonparty to intervene in a pending lawsuit and gain party status if a 2 3 federal statute confers an unconditional right to intervene. Fed. R. Civ. P. 24(a)(1). Where, as 4 here, the nonparty does not claim a right to intervene by a federal statute, the party must show that: 5 (1) it has a ‘significant protectable interest’ relating to the property or transaction that is the subject of the action; (2) the disposition of the action may, as a practical matter, impair or impede the applicant’s ability to protect its interest; (3) the application is timely; and (4) the existing parties may not adequately represent the applicant’s interest. 6 United States District Court Northern District of California 7 8 Donnelly v. Glickman, 159 F.3d 405, 409 (9th Cir. 1998) (citation and quotation marks omitted); 9 see also Fed. R. Civ. P. 24(a)(2); U.S. ex rel. McGough v. Covington Techs. Co., 967 F.2d 1391 10 (“Generally, Rule 24(a)(2) is construed broadly in favor of proposed intervenors and ‘we are 11 guided primarily by practical considerations.’”) (quoting United States v. Stringfellow, 783 F.2d 12 821, 826 (9th Cir. 1986)). If a party cannot meet the standard to intervene as of right, the Court may still allow 13 14 permissive intervention. See Fed. R. Civ. P. 24(b)(1)(B) (allowing intervention if the party has a 15 claim or defense that shares with the main action a common question of law or fact). An applicant 16 who seeks permissive intervention must prove that it meets three threshold requirements: “(1) it 17 shares a common question of law or fact with the main action; (2) its motion is timely; and (3) the 18 court has an independent basis for jurisdiction over the applicant's claims.” Donnelly, 159 F.3d at 19 412. Even if an applicant satisfies those threshold requirements, the court retains discretion to 20 deny intervention. See Orange Cty. v. Air Cal., 799 F.2d 535, 539 (9th Cir. 1986) (“Permissive 21 intervention is committed to the broad discretion of the district court . . . .”). 22 III. 23 DISCUSSION Proposed Intervenors argue that they satisfy the requirements for intervention as of right 24 under Rule 24(a)(2) and, in the alternative, that they should be allowed to permissively intervene 25 under Rule 24(b)(1)(B). The Court addresses each request in turn. 26 A. 27 To establish a right to intervene, Proposed Intervenors must show they have (1) a 28 Intervention of Right Case No.: 5:21-cv-01155-EJD ORDER DENYING MOTION TO INTERVENE 3 Case 5:21-cv-01155-EJD Document 144 Filed 02/10/23 Page 4 of 6 1 significant protectable interest, (2) which may be impaired or impeded, (3) the application is 2 timely, and (4) lack of adequate representation by the existing parties. “Failure to satisfy any one 3 of the requirements is fatal to the application, and [the Court] need not reach the remaining 4 elements if one of the elements is not satisfied.” Perry v. Proposition 8 Off. Proponents, 587 F.3d 5 947, 950 (9th Cir. 2009). The Court finds that Proposed Intervenors has failed to show that their 6 interests may be impaired or impeded if they are not permitted to intervene and, therefore, the 7 Court does not proceed to address the remaining elements. 8 United States District Court Northern District of California 9 Proposed Intervenors argue that preliminary approval of the settlement against Accellion would impair their interests in litigating their claims against the SAO in Washington. Mot. 13–14. 10 They claim that these interests would be harmed regardless of the ability to object or opt out of 11 any proposed class settlement. Id. 12 However, it has been the well-established law in this circuit that class members’ interests 13 are not impaired “if they have ‘other means’ to protect them.” California ex rel. Lockyer v. United 14 States, 450 F.3d 436, 442 (9th Cir. 2006). Specifically, courts have consistently held that “the 15 ability to file objections and opt out of a class settlement, as dictated by Rule 23, are sufficient to 16 protect the interests of class members in a typical case seeking damages.” Gonzalez v. CoreCivic 17 of Tennessee, LLC, 2018 WL 3689564, at *3 (E.D. Cal. Aug. 1, 2018) (collecting cases); see also, 18 e.g., Cody v. SoulCycle, Inc., 2017 WL 8811114, at *4 (C.D. Cal. Sept. 20, 2017) (“Many district 19 courts have similarly denied intervention where putative class members can adequately protect 20 their interests via the Rule 23 mechanisms.”) (collecting cases); In re: Volkswagen “Clean 21 Diesel” Mktg., Sales Pracs., & Prod. Liab. Litig., 2016 WL 4376623, at *4 (N.D. Cal. Aug. 17, 22 2016) (“[Class member] may opt out of the Settlement and litigate his claims independently, or he 23 may instead object to it. These options adequately protect his interests.”) (collecting cases). 24 Proposed Intervenors seek to intervene “for the sole reason that preliminary approval of the 25 proposed settlement would cause harm to them.” Reply 1. However, as members of the proposed 26 settlement class, they can also protect their interests by opting out or objecting to the settlement in 27 the fairness hearing process. With those means available to Proposed Intervenors, the Court 28 Case No.: 5:21-cv-01155-EJD ORDER DENYING MOTION TO INTERVENE 4 Case 5:21-cv-01155-EJD Document 144 Filed 02/10/23 Page 5 of 6 1 cannot say that their interests would be impaired or impeded in this case.1 Proposed Intervenors argue that their interests would be impaired notwithstanding the Rule 2 3 23 safeguards, relying primarily on a decision from the Eighth Circuit, Swinton v. SquareTrade, 4 Inc., 960 F.3d 1001 (8th Cir. 2020). Although Swinton does support Proposed Intervenors’ theory, 5 the Eighth Circuit also acknowledged that its decision parts company with the holdings of several 6 district courts that have “ruled that class members are not entitled to intervene because they can 7 protect their interests by opting out of the class.” Id. at 1004–05. To the Court’s knowledge, there 8 is no analogous authority in the Ninth Circuit to support Proposed Intervenors’ position. Given the overall weight of cases that have rejected the type of argument Proposed United States District Court Northern District of California 9 10 Intervenors raise here and the absence of in-circuit authority supporting Proposed Intervenors’ 11 interpretation of Rules 23 and 24, the Court finds that Proposed Intervenors’ interests would not 12 be impaired or impeded if they were unable to intervene. Accordingly, Proposed intervenors have 13 not demonstrated that they are entitled to intervene as of right under Rule 24(a)(2). 14 B. 15 Proposed Intervenors have also moved for permissive intervention pursuant to Rule 24(b), Permissive Intervention 16 though they have not presented any arguments separate from their Rule 24(a) arguments. Mot. 17 24–25. A court may grant permissive intervention when the applicant for intervention shows (1) 18 independent grounds for jurisdiction, (2) that the motion is timely, and (3) a common question of 19 law or fact with the applicant’s claim or defense and the main action. Nw. Forest Res. Council v. 20 Glickman, 82 F.3d 825, 839 (9th Cir. 1996). In the context of permissive intervention, however, 21 the Court must analyze the timeliness element “more strictly than [it does] with intervention as of 22 right.” League of United Latin Am. Citizens, 131 F.3d at 1308. The Court recognizes that the impairment of an interest is not a required showing for the 23 24 Court to permit Proposed Intervenors to intervene. However, Proposed Intervenors’ “sole reason” 25 26 27 28 1 The Court further notes that, since Proposed Intervenors completed their briefing, the Court has terminated all motions for preliminary approval of settlement in this consolidated matter, including the settlement that was the “sole reason” for Proposed Intervenors’ motion. ECF No. 109 (terminating ECF No. 99). Case No.: 5:21-cv-01155-EJD ORDER DENYING MOTION TO INTERVENE 5 United States District Court Northern District of California Case 5:21-cv-01155-EJD Document 144 Filed 02/10/23 Page 6 of 6 1 for intervening in this action was to protect their interests from any prejudice that may arise from 2 preliminary approval of the settlement against Accellion. Reply 1. They had also represented that 3 their interests would not be adequately represented by the counsel who had reached settlement 4 with Accellion and other defendants prior to the appointment of interim class counsel. See, e.g., 5 Mot. 16–20. Presently, all motions for preliminary approval of settlements have been terminated, 6 ECF No. 109, and the Court has appointed interim co-lead counsel to review the proposed 7 settlements on the table who were not involved in the settlement negotiations with Accellion. 8 ECF No. 143. Having mitigated Proposed Intervenors’ “sole reason” for intervention, as well as 9 their concerns of “procedural irregularities” with the proposed settlements, the Court declines to 10 exercise its discretion to permit intervention. 11 IV. CONCLUSION 12 Based on the foregoing, Proposed Intervenors’ motion to intervene is DENIED. 13 IT IS SO ORDERED. 14 Dated: February 10, 2023 15 16 EDWARD J. DAVILA United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 Case No.: 5:21-cv-01155-EJD ORDER DENYING MOTION TO INTERVENE 6
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