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finding that third party public interest group could intervene to challenge protective order requiring destruction of documents used at trial
Summary of this case from J.M. Smith Corp. v. Ciolino Pharmacy Wholesale Distributors, LLCOpinion
CIVIL ACTION NO. 06-3774 SECTION: "R"(5).
August 16, 2007
ORDER AND REASONS
Before the Court is a motion to intervene pursuant to Federal Rule of Civil Procedure 24(b) by the Foundation for Taxpayer and Consumer Rights for the purpose of opposing Allstate Insurance Company's motion to seal trial exhibits, see R. Doc. 224. For the following reasons, the Court GRANTS the applicant's motion.
I. BACKGROUND
The facts underlying plaintiff Robert Weiss's dispute with Allstate over the amounts paid to him under his homeowner's and flood policies for property damage from Hurricane Katrina have been described at length in previous Orders of this Court and need not be repeated here. See Weiss v. Allstate Ins. Co., 2007 WL 1075921 (E.D. La. Apr. 9, 2007); Weiss v. Allstate Ins. Co., 2007 WL 1017341 (E.D. La. Mar. 28, 2007); Weiss v. Allstate Ins. Co., 2007 WL 891869 (E.D. La. Mar. 21, 2007). The facts relevant to the motion now before the Court are as follows.
During discovery in this matter, Allstate filed a motion for protective order under Rule 26(c) of the Federal Rules of Civil Procedure, "seeking to protect confidential information contained within produced documents." (R. Doc. 21). Specifically, Allstate sought protection for "its claims manual and other manuals and documents used by field adjusters after Hurricane Katrina who adjusted claims made on Allstate homeowner insurance policies," asserting that "production of these materials not subject to a protective order may put the company at a competitive disadvantage. . . ." (Id.). The magistrate judge then entered a protective order in this matter. (R. Doc. 46). In accordance with the terms of the Protective Order, Allstate produced, before trial, several documents, as well as its property damage claims estimating software, under the label "CONFIDENTIAL SUBJECT TO PROTECTIVE ORDER." In advance of trial, the parties jointly designated three of these documents as trial exhibits, without any effort by either party to offer them under seal or otherwise prevent them from entering the trial record.
When this case proceeded to trial, plaintiff offered several of the documents at issue as evidence, and they were entered into the record without objection from Allstate. These documents were designated Exhibits 7, 31, and 31A. The jury ultimately rendered a verdict in favor of plaintiff on his claims for breach of contract and bad faith penalties on April 16, 2007. The parties represent that they reached an out-of-court confidential settlement agreement in June 2007. On July 16, 2007, Allstate filed a motion seeking the return of the exhibit binders submitted to the Court for trial purposes, or, in the alternative, for all exhibits subject to the Protective Order to be placed under seal. On July 23, 2007, Allstate filed a motion asking the Court to enforce the Protective Order. On July 31, 2007, plaintiff filed an opposition to Allstate's motions on the grounds that the documents made exhibits at trial are now part of the public record and that the documents and/or software not entered into the record are not required to be returned until 30 days after the final conclusion of the litigation. Also on July 31, 2007, the Foundation for Taxpayer and Consumer Rights (FTCR), which describes itself as a nonprofit, nonpartisan consumer research, education, litigation, and advocacy organization interested in, among other issues, the protection of insurance consumers' interests, filed this motion to intervene under Rule 24(b) so that it could oppose Allstate's motion to seal trial exhibits. FTCR contends that Exhibits 7, 31, and 31A are important to the public interest both in Louisiana and nationwide, and that sealing these documents "would directly impede FTCR's mission of educating the public about Allstate's practices — in particular, its handling of claims for damage to policyholders' homes due to natural disasters." (R. Doc. 232). FTCR then submitted its brief in opposition to Allstate's motion to seal trial exhibits on August 2, 2007. The Court has yet to accept it into the record in light of Allstate's opposition to FTCR's motion to intervene, see R. Doc. 244.
In the meantime, on August 3, 2007, the Court dismissed Dr. Weiss's claims with prejudice, upon representation by both parties that all matters have been fully resolved and compromised. (R. Doc. 240). The Court reserved jurisdiction to resolve the dispute over the Protective Order.
II. DISCUSSION
A. Applicable Law
Rule 24(b) provides in relevant part:
Permissive Intervention. Upon timely application anyone may be permitted to intervene in an action . . . when an applicant's claim or defense and the main action have a question of law or fact in common. . . . In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.
FED. R. CIV. P. 24(b). The Fifth Circuit has stated: "The purpose of intervention is to admit, by leave of court, a person who is not an original party into a proceeding. The intervening party then becomes a "party" for the purpose of protecting some right or interest alleged by the intervenor to be affected by the proceeding." Deus v. Allstate Ins. Co., 15 F.3d 506, 525 (5th Cir. 1994). Intervention through Rule 24 is "the procedurally correct course" for nonparties to seek to challenge or modify protective orders. See In re Beef Indus. Antitrust Litig., 589 F.2d 786, 789 (5th Cir. 1979). In determining whether to grant permissive intervention under Rule 24(b)(2), the Court must first decide whether, as a matter of law, the applicant's "claim or defense and the main action have a question of law or fact in common." Newby v. Enron Corp., 443 F.3d 416, 421 (5th Cir. 2006) (quoting Howse v. S/V "Canada Goose I", 641 F.2d 317, 322 (5th Cir. 1981)). Next, the court must exercise its discretion as to whether to allow intervention. See New Orleans Public Service, Inc. v. United Gas Pipe Line Co., 732 F.2d 452, 471 (5th Cir. 1984) (quoting 7C Wright, A. Miller, M. Kane, Federal Practice and Procedure § 1913, at 376-77 (2d ed. 1986)) ("Permissive intervention is wholly discretionary with the [district] court . . . even though there is a common question of law or fact, or the requirements of Rule 24(b) are otherwise satisfied."). Courts are directed to consider such factors as whether the intervenors' interests are adequately represented by other parties, whether they will significantly contribute to full development of the underlying factual issues of the suit, the nature and extent of the intervenors' interests, the standing of the intervenors to raise relevant legal issues, and whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties. See id. at 472; see also Mac Sales Inc., et al. v. E.I. Dupont de Nemours, 1995 WL 581790, at *4 (Sept. 29, 1995).
FTCR does not seek to intervene under Rule 24(a), which provides for "intervention of right."
Rule 24(c) states in part:
Procedure. A person desiring to intervene shall serve a motion to intervene upon the parties as provided in Rule 5. The motion shall state the grounds therefor and shall be accompanied by a pleading setting forth the claim or defense for which intervention is sought.
FED. R. CIV. P. 24(c).
B. Analysis
Allstate argues that intervention is impermissible under Rule 24 because FTCR does not have an independent jurisdictional basis for intervention, i.e., FTCR does not have a claim or defense with a question of law or fact in common with the underlying action. See Deus, 15 F.3d at 525 ("The desire to intervene to pursue the vacating of the protective order and/or the unsealing of the record is not a justiciable controversy or claim, absent some underlying right creating standing for the movants."). The Fifth Circuit recently limited the application of Deus to cases in which there is an "absence of a live controversy." Newby, 443 F.3d at 422. In those cases, the Newby court acknowledged that "an intervenor would need standing to intervene." Id. By contrast, the Newby court held that "there is no Article III requirement that intervenors have standing in a pending case." Id. (emphasis in original). It explained: "Article III does not require intervenors to independently possess standing where the intervention is into a subsisting and continuing Article III case or controversy and the ultimate relief sought by the intervenors is also being sought by at least one subsisting party with standing to do so." Id. (quoting Ruiz v. Estelle, 161 F.3d 814, 830 (5th Cir. 1998).
There is still a live controversy in this case, as the Court made clear when it explicitly retained "jurisdiction to resolve the pending dispute regarding the protective order." (R. Doc. 240). Thus, Deus is inapplicable here. Moreover, the ultimate relief being sought by FTCR — the prevention of the sealing of certain trial exhibits — is also being sought by plaintiff in this dispute, meaning that FTCR is not required under Article III to independently possess standing. Finally, the Court finds that FTCR has questions of law and fact in common with the Weiss litigation. FTCR's founder Harvey Rosenfield avers that FTCR is currently a party to a proceeding before the California Department of Insurance "to require Allstate to lower its homeowner and automobile insurance rates." (R. Doc. 232-3, at ¶ 6). Further, as an advocacy group "dedicated to the protection of insurance consumers' interests both in California and nationwide," FTCR contends that the sealing of the exhibits at issue will harm its efforts to educate consumers about certain practices of the insurance industry. (Id., at ¶¶ 3, 11-13). These interests plainly satisfy Rule 24(b)(2)'s "claim or defense" requirement, which is "construed liberally." See Newby, 443 F.3d at 422-23 (citing cases).
The Court also notes that FTCR filed its motion to intervene on July 31, 2007, which was before the Court granted the parties' motion to dismiss.
Having determined the threshold "claim or defense" issue, the Court finds it appropriate to exercise its discretion to permit FTCR to intervene in this dispute. First, FTCR's interest may not be adequately represented by plaintiff. As the Supreme Court has stated, "The requirement of [Rule 24] is satisfied if the applicant shows that representation of his interest `may be' inadequate; and the burden of making that showing should be treated as minimal." Trbovich v. United Mine Workers of Am., 404 U.S. 528, 538 n. 10 (1972). The nature of Allstate's motions has required plaintiff's counsel to focus on addressing defendant's allegations that he has violated the Protective Order, and is thus subject to sanctions. By contrast, as FTCR argues, it is more focused on the broader issue of public access to insurance documents that have been placed into the public record. FTCR has thus satisfied its minimal burden. Second, there can be no argument that FTCR's intervention has or will unduly delay or prejudice the adjudication of the rights of the original parties. FTCR filed its motion to intervene on July 31, 2007, more than a week before Allstate's motions to enforce protective order and motion for return of exhibit binders or, in the alternative, for certain exhibits to be placed under seal were set for hearing before this Court. It submitted its opposition to Allstate's motions on August 3, 2007, which was also before the underlying motions were set for hearing. Allstate was then provided an opportunity to oppose FTCR's intervention, which it did on August 7, 2007. The motion for intervention was then heard on August 8, 2007, the same day as Allstate's motions. Quite simply, FTCR's intervention has not caused any undue delay in resolution of the Protective Order dispute. Thus, the Court finds that FTCR is a proper intervenor under Rule 24(b).
III. CONCLUSION
For the foregoing reasons, the Court GRANTS the motion for intervention.