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holding that proposed intervenors' motion would prejudice the parties because "it would force them to expand the scope of this case to include issues collateral" to the main dispute and would require "additional motion practice and . . . additional discovery"
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02-CV-0682E(Sr).
March 30, 2004
MEMORANDUM and ORDER
This decision may be cited in whole or in any part.
This ERISA action was filed on September 20, 2002, stemming from a stock sale transaction that occurred on September 21, 1999. The State of New York and the Town of North East (collectively the "Proposed Intervenors") filed a motion seeking to intervene as a matter of right pursuant to Rule 24(a)(2) of the Federal Rules of Civil Procedure ("FRCvP") on December 12, 2003. Plaintiffs and defendants oppose this motion, which was argued and submitted on February 6, 2004. For the reasons set forth below, this motion will be denied.
Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.
Azon Corp. ("Azon") insiders sold $25 million of Azon stock to the Azon Employee Stock Ownership Plan ("AESOP") in a transaction on September 21, 1999 ("the Stock Sale"). Plaintiffs claim, inter alia, that the Azon insiders obtained an excessive price for the Azon shares in the Stock Sale.
The Proposed Intervenors sued Azon in a CERCLA action in the Southern District of New York. This suit resulted in a Consent Decree among Azon and the Proposed Intervenors that was entered on October 15, 2001. As a result of the Consent Decree, Azon agreed to pay the Proposed Intervenors, inter alia, $1.2 million over six years. After making two payments, Azon declared bankruptcy and stopped making payments under the Consent Decree.
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq.
In order to intervene as a matter of right under FRCvP 24(a)(2), the Proposed Intervenors must satisfy the following four requirements: (1) that the motion to intervene is timely, (2) that they claim an interest relating to the subject matter of the action, (3) that their interest may be impaired by the disposition of the action and (4) that their interest is not adequately protected by an existing party. "Failure to satisfy any one of these requirements is a sufficient ground to deny the application [for intervention]." As discussed below, the Proposed Intervenors' motion will be denied as untimely.
See In re Bank of New York Derivative Litig., 320 F.3d 291, 300 (2d Cir. 2003); Jones v. Richter, 2001 WL 392079, at *1 (W.D.N.Y. 2001).
In re Bank of New York Derivative Litig., supra note 4, at 300; Jones, supra note 4, at *1 (citing United States v. State of New York, 820 F.2d 554, 556 (2d Cir. 1987)).
"Determining whether a motion to intervene is timely is determined from the totality of the circumstances and is within the sound discretion of the trial judge." In making such a determination, courts should consider
Jones, supra note 4, at *2 (citing United States v. Pitney Bowes Inc., 25 F.3d 66, 70 (2d Cir. 1994)); In re Bank of New York Derivative Litig., supra note 4, at 300 ("The determination of whether an application is timely is subject to the district court's discretion.").
"(1) how long the applicant had notice of the interest before it made the motion to intervene; (2) prejudice to existing parties resulting from any delay; (3) prejudice to the applicant if the motion is denied; and (4) any unusual circumstances militating for or against a finding of timeliness."
In re Bank of New York Derivative Litig., supra note 4, at 300 (affirming denial of motion to intervene as untimely where, inter alia, it was filed more than two years after the action was commenced).
The Court will apply these factors to the Proposed Intervenors' motion.
First, the State of New York admits that it had notice of this action in February of 2003 — ten months before the present motion was filed. Moreover, this action was filed fifteen months before the present motion was filed. As documented by counsel for the class plaintiffs, this action was highly publicized between September of 2002 when it was filed and February of 2003 when one of the Proposed Intervenors purportedly became aware of the action. Consequently, this factor supports denial of the Proposed Intervenors' motion because they had ten months of actual notice and fifteen months of constructive notice before they filed a motion to intervene.
See Reply Decl. ¶ 3 ("I learned of the pendency of this action in February 2003.").
For example, this action was publicized in a story reported by Business Wire on September 23, 2002. See Funke v. Life Fin. Corp., 2003 WL 194204, at *4 (S.D.N.Y. 2003) (noting that Business Wire is "a widely circulated national business-oriented wire service"). Accordingly, the Proposed Intervenors had constructive notice as of September of 2002.
See, e.g., Pitney Bowes, supra note 6 at 70-71 (affirming denial of motion to intervene on ground of untimeliness where intervenor filed motion for intervention eight months after becoming aware of the action and fifteen months after having constructive notice of the action); id. at 71 (citing cases where intervention motions were denied when intervenors waited between four and eleven months to seek intervention); Jones, supra note 4, at *2 (denying motion to intervene as untimely where it was filed eight months after intervenor admittedly had knowledge of the action). The Proposed Intervenors' motion is less timely than the motion that was denied in Pitney Bowes because they had two additional months of actual notice of this action — and the same amount of constructive notice as the proposed intervenors in Pitney Bowes — to wit, fifteen months. Pitney Bowes, supra note 6, at 70-71. Although some courts have permitted intervention despite lengthy delays of up to two years, such is the result of the fact-intensive nature of the timeliness inquiry. Id. at 71; Mortgage Lenders Network, Inc. v. Rosenblum, 218 F.R.D. 381, 383-384 (E.D.N.Y. 2003). Moreover, the Proposed Intervenors' explanation for their delay — researching their claims and tending to other cases while seeking to negotiate with the plaintiffs on October 31, 2003 — is an insufficient justification. Ibid. (rejecting intervenors' attempts to negotiate with the parties as a justification for eight-month delay in seeking intervention).
Second, the parties would suffer prejudice if the Proposed Intervenors' motion were granted. For example, this action would be delayed by additional motion practice and the need for additional discovery. More importantly, however, granting the Proposed Intervenors' motion would inject additional issues that would exacerbate the complexity of the existing legal issues. The effect of this complexity on jurors is discussed below with respect to the fourth factor. The added complexity would also prejudice the parties because it would force them to expand the scope of this case to include issues collateral to the Stock Sale.
Third, the Proposed Intervenors would not be greatly prejudiced by denial of their motion because they can litigate this issue in either state court or the bankruptcy court where Azon's bankruptcy is currently pending.
In re Bank of New York Derivative Litig., supra note 4, at 300; Provident Life Casualty Ins. Co. v. Ginther, 1997 WL 436743, at *1 (W.D.N.Y. 1997) (denying motion to intervene and finding no prejudice to the intervenor because it was "free to commence an independent action" in state court); see also Pitney Bowes, supra note 6, at 73 (denying motion to intervene despite some prejudice to the proposed intervenors).
Fourth, another factor militating against granting the Proposed Intervenors' motion is the fact that their claims would further complicate an action that is presently complex enough. The alleged efficiency of having the Proposed Intervenors' claims litigated in this Court is outweighed by the injection of new issues at this stage of the litigation — not to mention the maze of financial transactions with which a jury would have to deal. Moreover, the parties oppose the Proposed Intervenors' motion by raising several substantial legal questions that further militate against granting the present motion. Consequently, all four factors support denial of the Proposed Intervenors' motion on grounds of untimeliness; the three remaining requirements, therefore, need not be addressed.
Jones, supra note 4, at *4.
Accordingly, it is hereby ORDERED that the Proposed Intervenors' motion to intervene as of right is denied.