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Smith v. Seeco, Inc.

United States Court of Appeals, Eighth Circuit

July 31, 2017

Connie Jean Smith, Individually and on behalf of all others similarly situated Plaintiff- AppelleeJeannie Vanette Hill Thomas Intervenor Plaintiff- Appellant
v.
SEECO, Inc., Now known as SWN Production (Arkansas), LLC; Desoto Gathering Company, LLC; Southwestern Energy Services Company; Southwestern Energy Company Defendants - Appellees

          Submitted: April 4, 2017

         Appeal from United States District Court for the Eastern District of Arkansas - Little Rock

          Before COLLOTON, BEAM, and BENTON, Circuit Judges.

          PER CURIAM.

         Jeannie Vanette Hill Thomas appeals the district court's denial of her motion to intervene in Connie Jean Smith's class action against SEECO, Inc., Desoto Gathering Company, LLC, Southwestern Energy Services Company, and Southwestern Energy Company (collectively, Appellees). Thomas moved to intervene based on her interest in adequacy of representation by the class representative and class counsel. We conclude that the district court's determination on this question was final, and that the district court's rationale for denying the motion was inadequate. We therefore remand the motion for further consideration. Thomas also moved to intervene based on her interest in the adequacy of notice and opt-out procedures for the class. The district court's determination on this issue was not final, so we dismiss this aspect of the appeal for lack of jurisdiction.

         I. BACKGROUND

         Thomas is a member of a certified class in Smith's class action against Appellees for allegedly inflating deductions from royalty payments due under oil and gas leases. After class certification under Federal Rule of Civil Procedure 23(b)(3) and the submission of a proposed notice, but before the district court approved the notice, Thomas moved to intervene, both as of right and, in the alternative, permissively. She sought to challenge the adequacy of representation by the class representative and counsel, and she challenged the proposed notice. Specifically, she alleged that the defendants, class counsel, and class counsel in a parallel state case colluded so as to create a conflict of interest rendering class representation inadequate. She also alleged that certain of class counsel were found to have violated Federal Rule of Civil Procedure 11 in an unrelated class-action case. See Adams v. United Servs. Auto. Ass'n, No. 2:14-cv-02013, 2016 WL 1465433 (W.D. Ark. Apr. 14, 2016), rev'd sub nom. Adams v. USAA Cas. Ins. Co., No. 16-3382, No. 16-3482, 2017 WL 3136919 (8th Cir. July 25, 2017). Thomas also alleged the notices contained unnecessary and onerous requirements for opting out. She sought to have the district court stay the notice procedure while it held a hearing and ruled on the effect of these matters on the adequacy of representation and pending the Adams court's imposition of sanctions. If the notices went ahead, she sought to include in them disclosure of the conflict-of-interest and Rule 11 violations. Finally, she sought an order compelling production of any agreements or memoranda between class counsel and any of the defendants, counsel for defendant, or counsel in the parallel state case.

         The district court denied the motion to intervene because "intervention is either unnecessary or premature." It noted that Thomas was free to pursue her claim with different counsel by opting out and that objection to the proposed notice was premature because it had not yet been approved or distributed. The district court concluded that "the intervenor['s] position that the opt out procedures are 'onerous' or that [she] cannot opt out is premature because those procedures have not been finalized and the intervenor[] [has] not had the opportunity to comply with them." It therefore denied the motion without prejudice. Thomas appeals, pressing only the district court's denial of her motion to intervene as of right.

         II. DISCUSSION

         Appellees and Smith argue that we lack jurisdiction to hear this appeal because the district court's denial of Thomas's motion to intervene was made without prejudice, and is therefore not a final decision. Our jurisdiction in this case is bottomed upon 28 U.S.C. § 1291, which permits us to review "final decisions" by the district court. The general rule is that a final decision under that section is one that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Dieser v. Cont'l Cas. Co., 440 F.3d 920, 923 (8th Cir. 2006) (quoting Borntrager v. Cent. States, Se. & Sw. Areas Pension Fund, 425 F.3d 1087, 1091 (8th Cir. 2005)). As to a district court's denial of a motion to intervene as of right under Federal Rule of Civil Procedure 24(a), we have repeatedly stated the well-settled rule that "[t]he denial of a motion to intervene of right is immediately appealable as a final judgment." United States v. Geranis, 808 F.3d 723, 727 (8th Cir. 2015) (reviewing denial of motion to intervene as of right for lack of Article III standing); see also FTC v. Johnson, 800 F.3d 448, 451 (8th Cir. 2015) (on merits); ACLU of Minn. v. Tarek ibn Ziyad Acad., 643 F.3d 1088, 1092 & n.2 (8th Cir. 2011) (standing); United States v. Metro. St. Louis Sewer Dist., 569 F.3d 829, 833 (8th Cir. 2009) (standing); S.D. ex rel. Barnett v. United States Dep't of Interior, 317 F.3d 783, 785 & n.2 (8th Cir. 2003) (adequacy); Mausolf v. Babbitt, 85 F.3d 1295, 1298 (8th Cir. 1996) (adequacy); EPA v. City of Green Forest, Ark., 921 F.2d 1394, 1401-02 (8th Cir. 1990) (district court's jurisdiction); Corby Recreation, Inc. v. General Elec. Co., 581 F.2d 175, 176 n.1 (8th Cir. 1978).

         Although this precedent would appear to settle the issue of our jurisdiction (at least as to intervention as of right), it is important to observe that the denials appealed from in these and other cases from our circuit, to the extent the matter was discussed, constituted the district court's conclusive ruling that a movant would not be permitted to become a party to the case. A movant's failure to, for example, possess Article III standing or meet the requirements of Rule 24(a), is not an infirmity that will evolve as the circumstances or stages of litigation in the case progress. In such a situation, because the movant "cannot appeal from any subsequent order or judgment in the proceeding unless he does intervene, the order denying intervention has the degree of definitiveness which supports an appeal therefrom." Bhd. of R.R. Trainmen v. Baltimore & Ohio R.R. Co., 331 U.S. 519, 524 (1947) (emphasis added). Requiring finality is consistent with the Supreme Court's observation that appealability from the denial of a motion to intervene is, like the collateral-order doctrine, "one of the narrow categories of decisions that we have deemed final for purposes of review, even though the entire dispute has not yet been resolved." Stringfellow v. Concerned Neighbors in Action, 480 U.S. 370, 375 (1987); id. at 377 ("[W]hen an order prevents a putative intervenor from becoming a party in any respect, the order is subject to immediate review."). Where, instead, the district court provisionally denies intervention of right, indicating that the right may materialize later in the litigation, permitting the movant to appeal would undermine the objectives of § 1291's "firm finality principle": preventing piecemeal litigation and preserving the partitioned relationship between trial and appellate courts. Microsoft Corp. v. Baker, No. 15-457, slip op. at 2-4 (June 12, 2017).

         Therefore, we agree with Appellees and Smith that the district court's order, made without prejudice and inviting Thomas to reassert her right to intervene at a later time, warrants a closer look to determine if the requisite finality is present for purposes of our jurisdiction. As the Seventh Circuit has observed, the words "without prejudice" should not be given "talismanic importance, " United States v. City of Milwaukee, 144 F.3d 524, 528 n.7 (7th Cir. 1998); the issue is whether, as a practical matter, the order amounts to a "final decision" under § 1291 with respect to the movant and her claimed right to intervene. Cf. Great Rivers Coop. of Se. Iowa v. Farmland Indus., Inc., 198 F.3d 685, 689 (8th Cir. 1999) ("A dismissal without prejudice can be an appealable final order."). Because Thomas moved to intervene under Rule 24(a)(2), her asserted right to intervene arises out of a claimed interest.[1]Her motion claimed two: (1) her interest in adequate representation by the class representative and counsel; and (2) her interest in notice and opt-out procedures that are informative and non-onerous.

         With respect to adequacy, the district court stated in its order, "[i]f class members are not satisfied by class counsel or they wish to pursue their claims with different counsel, they may opt out." It is apparent that the district court considered opting out, rather than intervention, to be the appropriate way for Thomas to protect her interest in adequate representation, and that this was a final conclusion not subject to later events in the litigation. This determination seems to us to contain the necessary finality for § 1291.

         We conclude that the district court gave an inadequate rationale for denying Thomas's motion to intervene as of right based on her interest in the adequacy of representation. Although some district courts, like the district court here, have ruled that class members are not entitled to intervene because they can protect their interests by opting out of the class, we think this reasoning is flawed. As one leading treatise explains, SEECO's proposed reading of Rule 24 "is surely wrong: it would mean a class member could never intervene in a (b)(3) class action (since she can always opt out), yet both Rule 23 and the history of Rule 24 explicitly envision intervention as a means of securing adequacy of representation." 3 William B. Rubenstein, Newberg on Class Actions § 9:34 (5th ed. 2013 & Supp. 2017). Rule 23(d)(1)(B)(iii) provides that the court may issue orders that give class members notice of their opportunity "to intervene and present claims or defenses, or to otherwise come into the action." Rule 23(c)(2)(B)(iv), applicable to Rule 23(b)(3) classes like this one, states that notice to class members must explain "that a class member may enter an appearance through an attorney if the member so desires." When Rule 24 on intervention was amended in 1966, the advisory committee specifically contemplated that "a member of a class should have the right to intervene in a class action if he can show the inadequacy of the representation of his interest by the representative parties before the court." Fed.R.Civ.P. 24 advisory committee's note to 1966 amendment. These provisions and notes would be unnecessary if intervention as of right could be rejected simply because a class member may opt out and litigate separately. Accord 7B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and ...


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