Case: 11-20068 Document: 00511734130 Page: 1 Date Filed: 01/24/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 24, 2012
No. 11-20068 Lyle W. Cayce
Clerk
CITY OF HOUSTON,
Plaintiff - Appellee
v.
AMERICAN TRAFFIC SOLUTIONS, INC.,
Defendant - Appellee
v.
RANDALL KUBOSH; FRANCIS KUBOSH,
Amici Curiae - Appellants
Appeal from the United States District Court
for the Southern District of Texas
Before JONES, Chief Judge, and HIGGINBOTHAM and SMITH, Circuit Judges.
EDITH H. JONES, Chief Judge:
This is an interlocutory appeal from the denial of a motion to intervene as
of right, FED. R. CIV. P. 24(a )(2), brought by citizens of Houston, Texas in regard
to litigation between the City and the contractor hired to run a red light camera
system that generated millions of dollars annually to the City and the
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No. 11-20068
contractor. Because the district court erred in denying intervention, we reverse
that order, and the associated denial of a new trial, and remand for further
proceedings.
After the City passed an ordinance approving the use of red light cameras,
it entered a contract with American Traffic Solutions (“ATS”) in 2005 to run the
system. Before the underlying litigation began in late 2010, the City had
collected millions of dollars from electronically generated traffic tickets, and ATS
had received $9 million. Francis and Randall Kubosh launched a political
campaign, spending over $200,000 of their personal funds, to force the City to
cease using this system. They organized a petition drive, and of course signed
petitions, for a city charter amendment vote on whether the system's use could
be continued. The requisite signatures were obtained and certified, and the City
placed the charter amendment on a ballot in November, 2010. The City
vigorously opposed the Kuboshes’ efforts, but their grass roots campaign
succeeded. The charter amendment vote repudiated the system.
On the day that the City Council enacted an ordinance reflecting the
election results, the City terminated ATS’s contract and sued for a declaratory
judgment in federal court, seeking a declaration of rights between ATS and the
City over the contract’s status. ATS promptly demanded that the City cease its
termination effort. The company counterclaimed, alleging that the charter
amendment election and subsequent ordinances were invalid, ultra vires, and
unconstitutional. By mutual agreement of the City and ATS, in what is in
essence a preliminary injunction order (the November 2010 0rder), the red light
cameras were not to be removed from city intersections during the litigation.
The court placed the suit on a fast track. When the Kuboshes read about the
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suit on a local newspaper reporter’s blog, they immediately sought to intervene
of right, a motion the court soon denied, although it allowed them to participate
as amici. The court denied a motion for new trial concerning this ruling. The
Kuboshes timely appealed these and all related orders of the court.
During the pendency of this appeal, the district court issued an
interlocutory judgment in favor of ATS on cross motions for summary judgment
in June 2011. The court held that the charter amendment election constituted
an untimely referendum under state law, rendering its result invalid to cancel
the prior authorization of the red light camera system. Almost immediately, the
City turned on the cameras again and began generating traffic tickets with
them. The public, however, expressed such a level of dissatisfaction with this
maneuver that the City Council, in August, took various measures including the
passage of a new ordinance formally repealing the red light cameras'
authorization.1
The denial of intervention of right is a final order for appeal purposes.
Edwards v. City of Houston, 78 F.3d 983, 992 (5th Cir. 1996 )(en banc). Because
the motion to intervene is not argued to have been untimely, this court reviews
the standards for intervention of right de novo. Edwards, 78 F.3d at 995. To
succeed as an intervenor of right, a party must show, in addition to timeliness,
that it has “an interest” relating to the property or transaction in the litigation;
that the disposition of the action may impair or impede, as a practical matter,
1
This court was not informed about the repeal ordinance until just prior to oral
argument in January 2012. Moreover, the court has only just been alerted about the City's
motion to modify the November 2010 order to allow removal of the cameras. And via the
newspaper, this court is informed that the City will attempt to settle its litigation with ATS
within a few days.
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its ability to protect that interest; and that the intervenor’s interest is
inadequately represented by existing parties to the suit. Edwards, at 999.
Failure to satisfy any of these standards precludes intervention of right. Id.
Nevertheless, “ ‘the inquiry under subsection (a)(2) is a flexible one, which
focuses on the particular facts and circumstances surrounding each
application . . . [and] intervention of right must be measured by a practical
rather than technical yardstick.’ ” Id. (quotation omitted).
The Kuboshes describe their “interest” as that of voters, petition
organizers for a city charter amendment, and concerned citizens who signed the
petitions and spent a small fortune in support of a successful campaign to
change the City’s charter. Their interest is or may be severely impaired, they
contend, if the City is allowed to pursue this litigation to conclusion in such a
way that results either in the repudiation of their charter amendment (as the
court has already determined) or the repeal of the August 2011 repeal ordinance
that, absent a valid charter amendment, could presage revival of the red light
cameras at any time. Finally, the Kuboshes contend that the City failed to raise
substantial arguments and evidence against ATS before the district court. The
City allegedly relinquished its ability to present the strongest defense of the
charter amendment because it opposed the Kuboshes’ position from the outset,
attempted to reinstate the cameras before the litigation had concluded, and
stands to lose millions of dollars in potential revenue, or in lawsuit termination
costs, from a successful defense of the charter amendment.
Briefing does not reveal any cases directly on point. A court must be
circumspect about allowing intervention of right by public-spirited citizens in
suits by or against a public entity for simple reasons of expediency and judicial
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efficiency. Compare League of Latin Am. Citizens, Dist. 19 v. City of Boerne,
659 F.3d 421 (5th Cir. 2011) (finding voter’s interest sufficient for intervention
as of right). More important, the public entity must normally be presumed to
represent the interest of its citizens and to mount a good faith defense of its
laws. See, e.g., Edwards, supra at 1005; United States v. S. Bend Cmty. Sch.
Corp., 692 F.2d 623, 628 (7th Cir. 1982). But there is no federal authority nor
state law prohibiting intervention of right in this type of case. These intervenors
are unique because they engineered the drive that led to a city charter
amendment over the nearly unanimous, well funded, and longstanding
opposition of the Mayor and City Council. They have demonstrated a particular
interest in cementing their electoral victory and defending the charter
amendment itself. If the amendment is overturned, their money and time will
have been spent in vain. Finally, they have raised substantial doubts about the
City's motives and conduct in its defense of the litigation with ATS. Without
these intervenors’ participation, the City might well be inclined to settle the
litigation on terms that preserve the adverse ruling on the charter amendment
and thus preserve its flexibility to reinstate red light cameras in the future. This
is no matter of simply defending City policy of one sort or another: it involves
millions of dollars of revenue to City coffers during a period of considerable
economic uncertainty. The district court erred in declaring that the Kuboshes
had to prove a “meaningful probability [of inadequate representation] derived
from actual facts.” Under the totality of circumstances here, including the haste
of the litigation, the City’s pecuniary motives, the extended opposition to the
charter amendment, the agreed order to leave the cameras in place, and the
attempt to reinstate them before the suit had concluded (although this act
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occurred after the denial of the intervention motion), it is sufficient to conclude
that the intervenors’ interests “may be” inadequately represented. See Trbovich
v. United Mine Workers, 404 U.S. 528, 538 n. 10, 92 S. Ct. 630, 636 n.10 (1972);
Edwards, 78 F.3d at 1005.
For these reasons, the district court’s orders denying intervention and a
new trial are REVERSED, and the case is REMANDED for further
proceedings in accord herewith.
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