Canada et al v. Meracord, LLC et al, No. 3:2012cv05657 - Document 284 (W.D. Wash. 2015)
Court Description: ORDER denying 264 Motion to Intervene. Signed by Judge Benjamin H. Settle.(MGC)
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1 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 2 3 4 AMRISH RAJAGOPALAN, MARIE 5 JOHNSON-PEREDO, ROBERT HEWSON, DONTE CHEEKS, 6 DEBORAH HORTON, RICHARD PIERCE, ERMA SUE CLYATT, 7 ROBERT JOYCE, AMY JOYCE, ARTHUR FULLER, DAWN MEADE, 8 WAHAB EKUNSUMI, KAREN HEA, and ALEX CASIANO, on behalf of 9 themselves and all others similarly situated, 10 Plaintiffs, 11 v. 12 MERACORD, INC., 13 Defendant, 14 and 15 FIDELITY AND DEPOSIT COMPANY 16 OF MARYLAND and PLATT RIVER INSURANCE COMPANY, 17 Proposed DefendantIntervenors. 18 CASE NO. C12-5657 BHS ORDER DENYING INTEVENORS’ MOTION TO INTERVENE 19 20 21 22 This matter comes before the Court on Intervenor Defendants Fidelity and Deposit Company of Maryland and Platte River Insurance Company’s (“Intervenors”) motion to intervene (Dkt. 264). The Court has considered the pleadings filed in support of and in ORDER - 1 1 opposition to the motion and the remainder of the file and hereby denies the motion for 2 the reasons stated herein. 3 I. PROCEDURAL HISTORY 4 On July 24, 2012, Plaintiffs Marie Johnson-Peredo, Dinah Canada, and Robert 5 Hewson filed a class action complaint against Defendant Meracord, LLC, (“Meracord”) 6 and its CEO, Linda Remsberg. Dkt. 1. 7 On March 2, 2015, after an appeal and a consolidation, Plaintiffs Alex Casiano, 8 Donte Cheeks, Erma Sue Clyatt, Wahab Ekunsumi, Arthur Fuller, Karen Hea, Robert 9 Hewson, Deborah Horton, Marie Johnson-Peredo, Amy Joyce, Robert Joyce, Dawn 10 Meade, Richard Pierce, and Amrish Rajagopalan (“Plaintiffs”) filed an amended 11 complaint against Meracord. Dkt. 251. In relevant part, Plaintiffs now seek to certify a 12 class of “[a]ll persons in a Surety State who established an account with Meracord LLC” 13 during defined “Bond Periods.” Id., ¶ 182–183. 14 On March 26, 2015, Intervenors filed the instant motion. Dkt. 264. On April 6, 15 2014, Plaintiffs responded (Dkt. 273) and voluntarily dismissed Count IX in their 16 complaint (Dkt. 275). On April 10, 2015, Intervenors replied. Dkt. 276. 17 II. DISCUSSION 18 Intervenors request that the Court allow them to intervene either as a matter of 19 right or under principles of permissive intervention. 20 A. Matter of Right 21 “The party seeking to intervene bears the burden of showing that all the 22 requirements for intervention have been met.” United States v. Alisal Water Corp., 370 ORDER - 2 1 F.3d 915, 919 (9th Cir. 2004). In order to intervene as a matter of right under Fed. R. 2 Civ. P. 24(a), the applicant must establish that: 3 4 5 (1) the applicant’s motion is timely; (2) the applicant has asserted an interest relating to the property or transaction which is the subject of the action; (3) the applicant is so situated that without intervention the disposition may, as a practical matter, impair or impede its ability to protect that interest; and (4) the applicant’s interest is not adequately represented by the existing parties. 6 Orange Cnty. v. Air California, 799 F.2d 535, 537 (9th Cir. 1986). 7 1. Timeliness 8 Three factors should be evaluated to determine whether a motion to intervene is 9 10 timely: “(1) the stage of the proceeding at which an applicant seeks to intervene; (2) the prejudice to other parties; and (3) the reason for and length of the delay.” United States 11 v. State of Washington, 86 F.3d 1499, 1503 (9th Cir. 1996). 12 In this case, Plaintiffs contest all elements of the timeliness inquiry. Although 13 Plaintiffs cite and analyze numerous cases in which courts have denied motions to 14 intervene, they fail to offer any case with similar procedural and factual circumstances as 15 16 are before this Court. First, Plaintiffs argue that “the litigation is at . . . [an] advanced stage . . . .” Dkt. 273 at 11. While it is true that the original complaint was filed almost 17 three years ago, the procedural posture as to the Intervenors is in its infancy. On 18 February 23, 2015, the Court entered an order lifting the stay in this matter. After that 19 order, Plaintiffs stipulated to the dismissal of all claims against Linda Remsberg (Dkt. 20 246), filed an amended complaint explicitly attacking the Intervenors (Dkt. 251), 21 Meracord’s attorneys withdrew (Dkt. 263), Plaintiffs filed a motion for default against 22 ORDER - 3 1 Meracord (Dkt. 266), and mail that was sent by the Court to Meracord has been returned 2 as undeliverable (Dkt. 282). Intervenors claim that they have been essentially set-up to 3 back-door bond claims by Plaintiffs’ “side-deal” settlements and agreements with the 4 original defendants. Dkt. 276 at 45. While the Court is unable to find improper motives 5 on behalf of Plaintiffs, the procedural posture is at least interesting. Regardless, the 6 Court finds that the stage of litigation for class action claims against the Intervenors is not 7 at an advanced stage. 8 Second, Plaintiffs argue that “[i]ntervention would greatly prejudice Plaintiffs . . . 9 .” Dkt. 273 at 11. Specifically, Plaintiffs contend that (1) intervention would interfere 10 with their litigation strategy of dismissing claims against the Remsbergs on the condition 11 that the Remsbergs would not oppose a default against Meracord and (2) discovery this 12 late in the proceeding would be more difficult or, at most, non-existent. Dkt. 273 at 13– 13 14. With regard to the former, the Court finds no prejudice disrupting a strategy based on 14 obtaining a default judgment instead of litigating the case on the merits. With regard to 15 the latter, the Court finds that it is not the Intervenors’ fault that Plaintiffs didn’t obtain 16 discovery when it was available or, at least, more convenient. Therefore, the Court finds 17 that Plaintiffs have failed to establish sufficient prejudice to deny the motion. 18 Third, Plaintiffs argue that the delay in filing a motion to intervene is not justified. 19 Dkt. 273 at 14–18. While Intervenors had knowledge of potential liability some time 20 ago, it has only been a month since Plaintiffs publically exposed their strategy to amend 21 their claims to explicitly attack Intervenors’ bonds and then obtain an unopposed default 22 judgment on those claims. The Court finds that a month delay in filing a motion to ORDER - 4 1 intervene is not unjustified delay. Therefore, the Court concludes that Intervenors have 2 met the element of timeliness. 3 2. 4 In addition to timeliness, Intervenors must also show a “significant protectable Other Elements 5 interest relating to the transaction that is the subject of the litigation,” such that 6 disposition of the action may “impair or impede [their] ability to protect that interest.” 7 League of United Latin Am. Citizens v. Wilson, 131 F.3d 1297, 1302 (9th Cir. 1997). 8 This showing requires a “direct, non-contingent, substantial and legally protectable” 9 interest in the subject of the action. S. California Edison Co. v. Lynch, 307 F.3d 794, 803 10 (9th Cir. 2002). 11 In this case, the parties dispute whether Intervenors have met their burden by 12 establishing a significant, protectable interest. Originally, Intervenors contested Count 13 IX in Plaintiffs’ complaint, which is a cause of action for violating state licensing 14 statutes. Dkt. 265, Declaration of David Veis, ¶ 6 (“Plaintiffs’ Count IX (Second 15 Amended Complaint ¶¶275-327) directly targets the Sureties and the bonds.”). In 16 addition to their response, Plaintiffs voluntarily dismissed this claim. See Dkt. 275. 17 Although this would have seemed to resolve the dispute, Intervenors counter as follows: 18 19 If Count IX were the only reason for the Sureties’ intervention, then the Sureties would have withdrawn their motion for leave to intervene. But Count IX is not the sole tie to the Sureties’ potential exposure and not the sole basis for seeking intervention. 20 Dkt. 276 at 7. There are at least three problems with this argument. First, based on a fair 21 reading of Intervenors’ motion and supporting documentation, Count IX was the only 22 ORDER - 5 1 reason Intervenors moved to intervene. For example, Intervenors asserted that “[i]f 2 allowed to intervene, the Sureties will vigorously defend against Plaintiffs’ claims in 3 Court IX.” Dkt. 264 at 6. Thus, Intervenors’ previous assertions undermine their current 4 arguments. 5 Second, Intervenors’ current arguments contradict their current argument. 6 Immediately after Intervenors assert that “Count IX is not the sole tie to the Sureties’ 7 potential exposure,” Intervenors only reference Count IX in arguing that “it is apparent 8 that the real target of this newly refocused and repurposed action is Bond liability.” Dkt. 9 276 at 7–8. While the Court agrees that defining the proposed classes based on issued 10 bonds evidences a desire to expose liability under the bonds, class definitions do not 11 confer liability. Thus, Intervenors must show some other violation of law that confers 12 liability. 13 Third, other than conclusory arguments, Intervenors fail to identify any other 14 claim that affects their interests and fail to submit any actual bond language in support of 15 their assertion that they still have an interest in this litigation. In other words, Intervenors 16 fail to show that Plaintiffs’ claims under federal statutes (Counts I–II), Washington 17 consumer protection statutes (Counts III–IV), or Washington common law (Counts V– 18 VIII) implicate liability under a state licensing bond. Such failure to identify any actual 19 or potential liability is fatal to Intervenors’ motion. Therefore, the Court denies 20 Intervenors’ motion for intervention of a matter of right because Intervenors have failed 21 to identify a protectable interest in Plaintiffs’ remaining claims. 22 ORDER - 6 1 B. Permissive Intervention 2 For permissive intervention under Rule 24(b), “the applicant for intervention 3 [must] show[] (1) independent grounds for jurisdiction; (2) the motion is timely; and (3) 4 the applicant’s claim or defense, and the main action, have a question of law or a question 5 of fact in common.” Wilson, 131 F.3d at 1308 (9th Cir. 1997). 6 In this case, Intervenors fail to show a common question of law or fact. 7 Intervenors’ original argument under this type of intervention was based on dismissed 8 Count IX. Dkt. 264 at 11. After Plaintiffs dismissed that claim, Intervenors simply assert 9 that the Ninth Circuit directs courts to give liberal construction to requests for permissive 10 intervention. Dkt. 276 at 10–11. No matter how liberal the Court construes the rules of 11 permissive intervention or Plaintiffs’ complaint, Intervenors have failed to show a 12 common question of law or fact that relates to state licensing bonds. Therefore, the Court 13 denies Intervenors’ motion for permissive intervention. III. ORDER 14 15 Therefore, it is hereby ORDERED that Intervenors’ motion to intervene (Dkt. 16 264) is DENIED. 17 Dated this 12th day of May, 2015. 18 19 A BENJAMIN H. SETTLE United States District Judge 20 21 22 ORDER - 7
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