In the
United States Court of Appeals
For the Seventh Circuit
No. 10-3544
C ITY OF C HICAGO,
Plaintiff,
v.
F EDERAL E MERGENCY M ANAGEMENT A GENCY and
R. D AVID P AULISON,
Defendants-Appellees.
A PPEAL OF:
U NITED A IR L INES, INC., et al.,
Proposed Intervenors/Appellants.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 1:08-cv-04234—Charles R. Norgle, Judge.
A RGUED S EPTEMBER 9, 2011—D ECIDED O CTOBER 17, 2011
Before C UDAHY, P OSNER, and W ILLIAMS, Circuit Judges.
P OSNER, Circuit Judge. Six airlines appeal from the
denial of their motion to intervene in a suit between the
City of Chicago and the Federal Emergency Manage-
ment Agency (the other defendant, FEMA’s director, is
a superfluous party). The airlines sought intervention
2 No. 10-3544
under Fed. R. Civ. P. 24(a) (intervention as a matter of
right) and alternatively under Rule 24(b) (permissive
intervention).
The airlines are users of the O’Hare and Midway Air-
ports, which are owned by the City of Chicago. Their
rights as users are defined by contracts with the City
that are called “Use Agreements.” In both 1999 and 2000
the airports were crippled for a time by severe snow-
storms. As the airports’ owner the City was responsible
for keeping the runways clear. At the beginning of each
fiscal year the City estimates its annual operation and
maintenance expenses, which include costs of normal
snow removal from airport runways (the City does not
attempt to estimate the removal expense it would bear
as a result of a snowstorm of unpredictable severity),
and the airlines provide the City with their estimate
of aircraft traffic for the year. On the basis of these esti-
mates the City calculates a maintenance charge per
landing, which the airlines pay monthly. At the end of
the year the City compares its incurred maintenance
expenses (less payments from non-airline sources) to
the amounts the airlines have paid in landing charges,
and either charges or reimburses the airlines for the
difference between estimated and actual costs.
The City thought it had an outside source of reimburse-
ment for the snow removal costs caused by the 1999 and
2000 snowstorms—FEMA, which obliged to the tune
of almost $6 million. (As provided by FEMA-State Agree-
ment § 4 (Sept. 25, 1999), this was 75 percent of the City’s
costs. See 42 U.S.C. § 5172(b)(1).) FEMA made the pay-
No. 10-3544 3
ment on the authority of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act, 42 U.S.C. §§ 5121
et seq., which authorizes federal financial assistance “to
a . . . local government for the . . . restoration . . . of a pub-
lic facility [including an airport, § 5122(9)(A)] . . .
damaged . . . by a major disaster.” § 5172(a)(1)(A). One
form that such damage can take is “snow . . . conditions”
so severe that they trigger a declaration of an emergency
or a major disaster. 44 C.F.R. § 206.227.
Years later FEMA ordered the City to return the
money. The order was based on a provision of the
Stafford Act called (in a triumph of bureaucratic obfusca-
tion) “deobligation.” It provides that “a person receiving
Federal assistance for a major disaster or emergency
shall be liable to the United States to the extent that
such assistance duplicates benefits available to the
person for the same purpose from another source.” 42
U.S.C. § 5155(c). FEMA asserted that the Use Agree-
ments entitled the City to reimbursement of the cost
of the snow removal from the airlines, and that this
authorization meant that FEMA’s assistance, which
had financed the City’s removal of the snow, had
“duplicate[d] benefits available to the [recipient of
FEMA’s money—the City] for the same purpose from
any other source [the airlines].” Memorandum from
Tonda L. Hadley, Field Office Director, Office of
Inspector General, Department of Homeland Security, to
Edward G. Buikema, FEMA Region V Director, regarding
City of Chicago, IL, FEMA Disaster Numbers 3134-EM-
IL and 3161-EM-IL (Sept. 26, 2003); Letter from Carlos J.
Castillo, FEMA Disaster Assistance Directorate, to
4 No. 10-3544
David L. Smith, IEMA Chief of Disaster Assistance and
Preparedness (May 1, 2008).
After exhausting administrative remedies the City
brought the present suit under the Administrative Pro-
cedure Act to challenge FEMA’s ruling, arguing that
“duplicates benefits available . . . from another source”
means “duplicates benefits available to the recipient of
federal financial assistance (the City in this case) under
an insurance policy.” So a recipient of federal assistance
to remedy flood damage who has a private flood
insurance policy has to make a claim under the policy
and reimburse FEMA if the claim is successful; it can’t
stick FEMA with the cost just because it wants to keep
its insurance premiums from being raised by not
making a claim against its insurer. Hawaii v. FEMA, 294
F.3d 1152, 1161 (9th Cir. 2002); FEMA, “Duplication of
Benefits—Non-Government Funds,” Disaster Assistance
Policy 9525.3 §§ VII(C), (D), www.fema.gov/government/
gra n t /p a /9 5 2 5 _ 3 .s h t m ( vis ited Sept. 26, 2011);
FEMA, “Insurance Considerations for Applicants: Disaster
Assistance Fact Sheet Number: 9580.3,” www.fema.gov/
government/grant/pa/9580_3.shtm (visited Sept. 26, 2011);
Kiln Underwriting Ltd. v. Jesuit High School of New
Orleans, No. 06-4350, 2008 WL 4724390, at *4-5 (E.D.
La. Oct. 24, 2008).
But the City is unwilling to put all its eggs in that
basket, because another Ninth Circuit case has inter-
preted section 5155(c) (the “duplicates benefits” provision)
to require that the recipient of FEMA assistance have
sought reimbursement from a co-owner of property
No. 10-3544 5
repaired with FEMA funds, Public Utility District No. 1 v.
FEMA, 371 F.3d 701, 711-12 (9th Cir. 2004), even though
the co-owner is not an insurer. So as a backup the
City has stipulated with FEMA that the snow removal
expenses that the City incurred are covered by a provi-
sion of the Use Agreements that makes the airlines re-
sponsible for “net operating and maintenance expenses”
at the airports. FEMA was willing—indeed happy—to so
stipulate because the airlines are the only arguable
source of duplicate benefits to the City; without such
a source, FEMA is not entitled to reimbursement.
The airlines, naturally, read the provision we quoted
from the Use Agreements differently: as limited to the
ordinary expenses of an airline’s use of an airport, there-
fore excluding expenses incurred to prevent or over-
come a disaster. They add that they’re victims of the
snowstorms and that FEMA is supposed to pay for
disaster relief, not make the victims of the disaster pay.
See 42 U.S.C. § 5121(b)(6); Hawaii v. FEMA, supra, 294
F.3d at 1160; Graham v. FEMA, 149 F.3d 997, 1000, 1004-05
(9th Cir. 1998). They do not claim they’re entitled to
direct reimbursement by FEMA for costs they might
incur under the Use Agreements, even though those
would be disaster costs; were they entitled, this lawsuit
would be academic. Section 5172, the provision that
enabled the City to obtain financial assistance from
FEMA, limits recipients to a state or local government or
the private owner or operator of a public facility, such
as an airport; the airlines do not operate the City’s air-
ports. We imagine that if any other provision would
entitle the airlines to financial assistance from FEMA
6 No. 10-3544
they would have invoked it; as far as we know they
have not.
Instead they argue that victims of disaster, unlike
insurers, shouldn’t be stuck with disaster costs by being
deemed sources of reimbursement for the recipient of
disaster assistance (in this case the City). The City agrees;
it is at loggerheads with the airlines over a different
issue, the meaning of “net operating and maintenance
expenses” in the Use Agreements; that’s the disagree-
ment that triggered the motion to intervene. The air-
lines hope the City prevails in its argument about the
narrow scope of the “duplicates benefits” provision of
the Stafford Act; in this respect they are at one with the
City and the City adequately represents the airlines’
interest. But if FEMA’s interpretation of the Stafford
Act as making the airlines a duplicate source of benefits
prevails (and so FEMA wins this case), the airlines will
face a suit by the City to enforce the City’s under-
standing of the Use Agreements. FEMA can prevail in
such a suit only if the court rules, in accordance with its
stipulation with the City, that the Use Agreements entitle
the City to reimbursement from the airlines—for remem-
ber that otherwise there would be no alternative source
of benefits to trigger the “duplicates benefits” provision.
Whether the likely effect of that stipulation in this
litigation entitles the airlines to intervene as a matter
of right depends on whether they are claiming “an
interest relating to the property or transaction that is
the subject of the action” and are “so situated that dis-
posing of the action may as a practical matter impair or
impede [their] ability to protect [their] interest, unless
No. 10-3544 7
existing parties adequately represent that interest.” Fed.
R. Civ. P. 24(a)(2).
There is no doubt that the airlines’ interest in the
lawsuit satisfies the constitutional requirement of
standing; their ability to retain almost $6 million may
depend on whether the court sides with FEMA, which the
court won’t do unless it rules that the Use Agreements
entitle the City to obtain reimbursement of the snow
removal expenses from the airlines. The district court
(or this court on appeal) will decide that issue only
if the airlines are parties, because only the airlines
contend that the Use Agreements disentitle the City to
that reimbursement. If they are not parties, the district
court will doubtless accept the stipulation.
Article III standing, however, does not suffice to estab-
lish the required Rule 24(a) “interest,” as we’ll see
shortly—though before taking up that matter we should
note the conflict among the circuits, left unresolved by
the Supreme Court in Diamond v. Charles, 476 U.S. 54, 68-
69 (1986), over whether an intervenor need have
Article III standing if, as is true in this case, the existing
parties remain in the case. Compare Flying J, Inc. v. Van
Hollen, 578 F.3d 569, 571 (7th Cir. 2009); Solid Waste Agency
v. United States Army Corps of Engineers, 101 F.3d 503, 507
(7th Cir. 1996); South Dakota v. Ubbelohde, 330 F.3d 1014,
1023 (8th Cir. 2003), and Fund for Animals, Inc. v. Norton,
322 F.3d 728, 731-32 (D.C. Cir. 2003), holding that the
intervenor must have Article III standing even in such a
case, with San Juan County v. United States, 503 F.3d 1163,
1171-72 (10th Cir. 2007) (en banc); Dillard v. Chilton County
8 No. 10-3544
Commission, 495 F.3d 1324, 1336-37 and n. 10 (11th Cir.
2007); United States v. Tennessee, 260 F.3d 587, 595 (6th
Cir. 2001) (per curiam), and Ruiz v. Estelle, 161 F.3d
814, 829-30 (5th Cir. 1998), holding that he need not.
The cases that dispense with the requirement overlook
the fact that even if a case is securely within federal
jurisdiction by virtue of the stakes of the existing
parties, an intervenor may be seeking relief different
from that sought by any of the original parties. His pres-
ence may turn the case in a new direction—may make
it really a new case, Bethune Plaza, Inc. v. Lumpkin, 863
F.2d 525, 530-31 (7th Cir. 1988); cf. City of Cleveland v.
Nuclear Regulatory Commission, 17 F.3d 1515, 1517 (D.C.
Cir. 1994) (per curiam), and no case can be maintained
in a federal court by a party who lacks Article III standing.
What’s odd about the conflict is that so little is required
for Article III standing that if no more were required
for intervention as a matter of right, intervention would
be too easy and clutter too many lawsuits with too many
parties. Flying J, Inc. v. Van Hollen, supra, 578 F.3d at
571; Natural Resources Defense Council v. Costle, 561 F.2d
904, 911 (D.C. Cir. 1977); 7C Charles Alan Wright et al.,
Federal Practice and Procedure § 1909, pp. 391-92 (3d ed.
2007). More must be required. “[T]he effects of a judg-
ment in or a settlement of a lawsuit can ramify
throughout the economy, inflicting hurt difficult to
prove on countless strangers to the litigation. Remote-
ness of injury is a standard ground for denying a person
the rights of a party to a lawsuit.” Flying J, Inc. v. Van
Hollen, supra, 578 F.3d at 571. Limiting principles such as
No. 10-3544 9
remoteness must be added atop the requirement of
Article III standing to place essential limits on the scope
of intervention as a matter of right.
But since more than Article III standing must be re-
quired, why bother to require Article III standing at all?
What work does the requirement do? But it could do
some work, simply by virtue of the inescapable vague-
ness of the other limiting principles.
We needn’t push the analysis further; none of the
limiting principles is applicable to the airlines’ attempt
to intervene to argue their interpretation of the Use
Agreements. And they unquestionably have “an interest
relating to the . . . transaction that is the subject of the
action.” But are they “so situated that disposing of the
action may as a practical matter impair or impede
[their] ability to protect [their] interest”? The determina-
tion in this litigation of the meaning of the Use Agree-
ments will have no preclusive effect on the airlines if
they are not admitted as parties. They will not be bound
by anything the court says about the agreements. They’ll
be free—when the City (if it loses its suit against
FEMA) sues them—to try to show that the phrase “net
operating and maintenance expenses” excludes expenses
incurred in responding to disasters.
But the possibility that the would-be intervenor if
refused intervention might have an opportunity in the
future to litigate his claim has been held not to be an
automatic bar to intervention. Natural Resources Defense
Council v. Costle, supra, 561 F.2d at 909. Cases allow inter-
vention as a matter of right when an original party does
10 No. 10-3544
not advance a ground that if upheld by the court would
confer a tangible benefit on an intervenor who wants to
litigate that ground. Flying J, Inc. v. Van Hollen, supra, 578
F.3d at 572-73; Security Ins. Co. v. Schipporeit, Inc., 69 F.3d
1377, 1380-81 (7th Cir. 1995); Reich v. ABC/York-Estes Corp.,
64 F.3d 316, 321-22 (7th Cir. 1995); Kleissler v. U.S. Forest
Service, 157 F.3d 964, 969-70, 973-74 (3d Cir. 1998). Flying J,
for example, was a suit to invalidate a statute, and
the would-be intervenors were the statute’s intended
beneficiaries and sought intervention to defend the
statute on appeal after the state attorney general aban-
doned its defense. Reich permitted intervention as a
matter of right so that employees could urge a position
that their employer had failed to argue. Schipporeit
granted intervention so that the intervenor could oppose
a default judgment. Kleissler, which may be the case
closest to the present one, permitted timber companies
to intervene in an action to bar logging in a national
forest even though they had no logging contracts and
merely wanted an opportunity to bid for such contracts
in the future. They were allowed to intervene as a
matter of right because the timber companies that were
defending the right to log might have been tempted to
agree to a settlement that excluded the would-be
intervenors from competing with them for future
logging contracts. In this case too the City, though
opposed like the airlines to FEMA, has a conflict of
interest with the airlines when it comes to settlement
possibilities, since the City might accept “deobligation” in
return for modest concessions from FEMA if confident
that the airlines would reimburse it. In light of Kleissler
No. 10-3544 11
the airlines may have a sufficient interest to be entitled
to intervene, especially since Kleissler treated “the
benefits derived from consolidation of disputes into
one proceeding” as a factor favoring intervention as a
matter of right. 157 F.3d at 970. It is present here as well.
But we need not decide whether the airlines were
entitled to intervene as a matter of right; for they should
have been permitted to intervene under Fed. R. Civ.
P. 24(b), and so clear is this that we believe the district
court was unreasonable to rule otherwise. The rule pro-
vides that the court “may permit anyone to intervene
who . . . has a claim or defense that shares with the main
action a common question of law or fact”—a requirement
obviously satisfied by the airlines’ motion to inter-
vene—unless intervention would “unduly delay or preju-
dice the adjudication of the original parties’ rights.” The
district judge did not mention those grounds but in
his very brief discussion of permissive intervention
pitched his denial on the ground that admitting six
airlines as parties would make the litigation “unwieldy.”
He may not have realized that the six airlines would be
litigating as if they were a single party; they filed a
single motion to intervene and have promised to litigate
as if they were a single airline.
Granting the airlines’ motion to intervene could not
have produced a net delay when one considers that
allowing the airlines into this litigation might head off a
second suit. True, the airlines may seek some very
limited discovery. FEMA contends that the airlines have
already reimbursed the City for the 75 percent of the
12 No. 10-3544
snow removal costs that FEMA paid, and the City
contests this. (The airlines must know, yet take no
position on the issue.) Conceivably the parties may need
discovery to verify the accuracy of this contention.
While the contention is irrelevant to FEMA’s claim for
reimbursement, since the existence of duplicate benefits
turns on their availability rather than on actual receipt,
Hawaii v. FEMA, supra, 294 F.3d at 1159, it is relevant to
the damages to which the City would be entitled if the
court ruled that the Use Agreements cover the City’s
snow removal costs, because the City’s damages would
be reduced by whatever reimbursement it had already
received. But discovery is very unlikely to extend to any
other issue in the case. The airlines are seeking judicial
review of agency action, and in such litigation the
record is compiled in the agency and the room for
evidence-taking in the district court, the role of which
is appellate, is extremely limited. Florida Power & Light
Co. v. Lorion, 470 U.S. 729, 743-44 (1985); School District
of Wisconsin Dells v. Z.S., 295 F.3d 671, 675 (7th Cir. 2002);
Safe Extensions, Inc. v. FAA, 509 F.3d 593, 599 (D.C. Cir.
2007).
What is true is that insofar as the airlines want to estab-
lish the meaning of the relevant provision of the Use
Agreements, they will if allowed to intervene be
litigating an original action rather than seeking judicial
review of an agency determination; but they don’t want
to conduct discovery on that issue. Might the City want
to conduct discovery? Conceivably, but it is notable
that the City supports the airlines’ motion for interven-
No. 10-3544 13
tion and has not bothered to file a brief in this appeal.
It may be indifferent between litigating over the con-
tract in the present proceeding and (should it lose) in a
separate suit against the airlines. And neither the district
judge in denying intervention nor FEMA in opposing
it suggested that there might be discovery concerning
the meaning of the contract. Most disputes over the
meaning of written contracts are resolved on the basis of
the language of the contract and the purpose that can be
inferred from that language and from the contract’s
subject matter, rather than on the basis, or with the aid,
of extrinsic evidence. This may be such a case, but
maybe not, since the Use Agreements do not contain
integration clauses. Still, we have no basis for thinking
that it would be as efficient to litigate this three-
cornered dispute in two lawsuits rather than one.
We close with a cautionary note: courts must be careful
not to collapse the two inquiries—the inquiry under
Rule 24(a) and the inquiry under Rule 24(b)—into the
single question whether intervention is sensible from a
practical standpoint in consideration of such concerns
as remoteness and of the economies and diseconomies
of consolidation. More is at stake in a Rule 24(a) inquiry:
the would-be intervenor is claiming that a significant
interest of his is likely to be impaired if he is not permit-
ted to intervene. Rule 24(b) is just about economy in
litigation. Because less is at stake for a party seeking
intervention under Rule 24(b) than under Rule 24(a), it
is not surprising that in some circuits, including our
own, the standard of appellate review is more
deferential (“abuse of discretion”) under Rule 24(b).
14 No. 10-3544
Compare Ligas ex rel. Foster v. Maram, 478 F.3d 771, 773,
775-76 (7th Cir. 2007); Sokaogon Chippewa Community v.
Babbitt, 214 F.3d 941, 949 (7th Cir. 2000), and Medical
Liability Mutual Ins. Co. v. Alan Curtis LLC, 485 F.3d 1006,
1008 (8th Cir. 2007), with Ungar v. Arafat, 634 F.3d 46, 51
(1st Cir. 2011); Oneida Indian Nation v. Madison County, 605
F.3d 149, 161 (2d Cir. 2010), and Liberty Mutual Ins. Co. v.
Treesdale, Inc., 419 F.3d 216, 220 n. 4 (3d Cir. 2005). (Odd
that the circuits can’t agree.)
And since preclusion is not a condition of intervention
under Rule 24(a) and analysis under that rule also
includes consideration of the practical effect of denying
intervention, reversal in this case might actually be
easier under Rule 24(a) than under Rule 24(b), since the
standard of appellate review is less deferential under
the former. But all that matters in this case is that what-
ever the precise standard of review, the order of the
district court must be reversed with directions to grant
the motion to intervene.
R EVERSED.
10-17-11