United States Court of Appeals,
Eleventh Circuit.
Nos. 94-4831, 94-5079.
John D. PURCELL, et al., Plaintiffs-Appellees,
v.
BANKATLANTIC FINANCIAL CORPORATION, a Florida corporation, et
al., Defendants-Appellees.
William A. SMITH, et al., Plaintiffs-Appellees,
v.
BANKATLANTIC FINANCIAL CORPORATION, a Florida corporation, et
al., Defendants-Appellees.
Timothy J. CHELLING, Plaintiff-Appellee,
v.
BANKATLANTIC FINANCIAL CORPORATION, a Florida corporation, et
al., Defendants-Appellees.
American Broadcasting Companies, Inc., William H. Wilson,
Appellants.
June 25, 1996.
Appeals from the United States District Court for the Southern
District of Florida. (Nos. 89-1284, 89-1605, 89-1850-CIV-KLR),
Kenneth L. Ryskamp, Judge.
Before CARNES and BARKETT, Circuit Judges, and DYER, Senior Circuit
Judge.
CARNES, Circuit Judge:
This appeal arises from the district court's denial of
American Broadcasting Companies, Inc. ("ABC")'s motion to intervene
and from the district court's entry of a stipulated judgment
vacating the jury verdict in a class action in which ABC sought to
intervene. ABC argues that due to the potential collateral
estoppel effect that the jury verdict could have in a separate
libel action between it and certain defendants in the class action,
ABC should be permitted to intervene to argue against the vacatur
of that verdict. For the reasons discussed below, we hold that ABC
lacks sufficient interest in the class action to permit
intervention as of right, and that the district court did not abuse
its discretion in denying ABC's motion for permissive intervention.
I. FACTS AND PROCEDURAL HISTORY
In 1989, the plaintiffs, limited partners in various real
estate limited partnerships, filed three class actions in the
United States District Court for the Southern District of Florida
against, among others, fellow limited partners Alan B. Levan and
BankAtlantic Financial Corporation ("BFC"). The actions were
thereafter consolidated into one class action, which involved
exchange transactions proposed by Levan and BFC in which the
plaintiffs' interests in the limited partnerships were exchanged
for twenty-year, unsecured, BFC subordinated debentures. The
plaintiffs alleged that the exchange transactions violated federal
securities laws, and sought damages and rescission of the
debentures.
In November 1991, ABC aired a story on the television program
"20/20" about the BFC exchange transactions. The program stated
that Levan and BFC knew the transactions were unfair to the
plaintiffs, but that they endorsed them anyway. In February 1992,
Levan and BFC filed a libel action in the United States District
Court for the Southern District of Florida against ABC.
A jury trial was held in the class action suit in December
1992, which resulted in a verdict in favor of the plaintiffs and an
award of $8 million in damages. In the course of reaching its
verdict, the jury was asked to answer the following special
interrogatories:
1. Have the plaintiffs proved, by the greater weight of the
evidence, that the exchange transaction proposed by
BankAtlantic Financial Corporation was "unfair" to the limited
partners ...?
2. Have the plaintiffs proved, by the greater weight of the
evidence, that the managing general partners, or the company
or Alan Levan falsely stated in the prospectus and the
transmittal letter that they believed that the exchange
transaction was "fair" when they knowingly believed otherwise?
The jury answered both questions in the affirmative. The district
court entered final judgment on the verdict on December 18, 1992.
At that time, the plaintiffs' claim for equitable rescission had
not yet been resolved.
In January 1993, Levan and BFC filed motions for remittitur
and for judgment notwithstanding the verdict or for a new trial,
which the district court denied. After motions related to
prejudgment interest were resolved, Levan and BFC filed an appeal
in July 1993. This Court dismissed the appeal in February 1994,
holding that the district court's judgment was not final because it
had not yet disposed of the plaintiffs' claim for equitable
rescission.
In February 1993, ABC moved for summary judgment in the libel
lawsuit, arguing that the collateral estoppel effect of the
December 1992 jury verdict in the class action case precluded a
judgment against ABC in the libel lawsuit. The magistrate judge in
the libel lawsuit recommended that summary judgment be granted in
favor of ABC because the jury's verdict in the class action case
preclusively established the substantial truth of the "20/20"
broadcast. However, the district court in the libel lawsuit stayed
the proceedings until the equitable rescission claim could be
disposed of in the class action case.
After the magistrate judge recommended summary judgment for
ABC in the libel lawsuit, Levan and BFC began working on a
settlement with the plaintiffs in the class action case. They
reached an agreement in which the defendants would pay the
plaintiffs the full amount of the damages that the jury had awarded
them, plus interest,1 in exchange for a stipulated motion to vacate
the jury verdict and resulting judgment. Levan informed the
district court in the libel lawsuit of the impending settlement in
the class action, with the result that the district court rejected
the magistrate's recommendation of summary judgment in favor of
ABC, and referred the case back to the magistrate for further
consideration in light of the impending class action settlement.
Learning of the class action settlement agreement, ABC was
understandably unhappy about the provision for vacatur of the jury
verdict and judgment, upon which it was relying in the libel
lawsuit. ABC moved to intervene in the class action for the
purpose of opposing the vacatur of the jury verdict and judgment.
For obvious reasons, Levan and BFC, two defendants in the class
action, opposed ABC's motion to intervene. The plaintiffs in the
class action also opposed it, because their certain and relatively
1
The settlement agreement provided that $4 million would be
paid into an escrow account by the date of the settlement
agreement approval hearing before the district court, and the
other $4 million would be paid into the escrow account within
thirty months of the execution of the settlement agreement. The
agreement further provided that Levan and BFC would pay an annual
interest rate of 7% on the second $4 million installment, to be
calculated from the date of the execution of the settlement
agreement.
prompt receipt of the $8 million payment, plus interest, through
the settlement agreement was expressly conditioned upon the
vacatur. The district court denied ABC's motion to intervene.
After a hearing on the proposed settlement, the district court
approved the class action settlement agreement and entered a final
judgment vacating the jury verdict and the final judgment entered
thereon.
Thereafter, in April 1995, the magistrate judge in the libel
lawsuit recommended that ABC's motion for summary judgment be
denied in light of the vacatur of the jury verdict in the class
action.
This is ABC's appeal from the denial of its motion to
intervene and from the district court's final judgment approving
the settlement and vacating the verdict and judgment in the class
action case.2 The plaintiffs have moved in this Court to dismiss
this appeal arguing that the appeal is moot because the settlement
extinguished the "case or controversy" that was before the court,
and that ABC lacks standing to challenge the settlement agreement.
We ordered that the motion to dismiss be carried with the case, and
2
ABC filed two notices of appeal. The first notice was
filed within thirty days of the district court's denial of its
motion to intervene as of right. The denial of a motion to
intervene as of right is a final appealable order, e.g., Meek v.
Metropolitan Dade County, Fla., 985 F.2d 1471, 1476 (11th
Cir.1993), and thus, even though the class action had not yet
resulted in a final judgment, ABC's first notice of appeal was
properly filed. After the district court entered final judgment
on the settlement, ABC filed a second notice of appeal within
thirty days with respect to its motion for permissive
intervention, and with respect to the settlement itself. ABC
then filed a motion to consolidate the two appeals, which this
Court granted.
we now deny it.3
II. DISCUSSION
Before the class action parties began negotiating their
settlement agreement, the magistrate judge in the libel lawsuit had
recommended summary judgment in favor of ABC because the class
action jury verdict preclusively established the substantial truth
of the "20/20" broadcast. ABC argues that this recommendation gave
it a sufficient interest in the settlement agreement to entitle it
to intervene in the class action. On the merits, ABC argues that
the district court's approval of the settlement agreement providing
for the vacatur of the jury verdict was an abuse of discretion
because that agreement was designed to manipulate the judicial
system, and the Supreme Court's decision in U.S. Bancorp Mortgage
Co. v. Bonner Mall Partnership, --- U.S. ----, 115 S.Ct. 386, 130
L.Ed.2d 233 (1994), disapproves of such settlement agreements.
We do not reach ABC's argument regarding the propriety of the
district court's approval of the settlement agreement, because, as
we explain below, we are persuaded that the district court properly
denied ABC's motion to intervene. See, e.g., Chiles v. Thornburgh,
865 F.2d 1197, 1212 (11th Cir.1989) ("If we find that the district
3
ABC has standing to appeal the district court's denial of
its motion to intervene. If we conclude that ABC is entitled to
intervene as of right, then ABC has standing as a party to appeal
the district court's judgment based on the approved settlement
agreement, and we would review that judgment. If we determined
that the district court abused its discretion in approving the
settlement agreement, then we would reverse the judgment, which
included vacatur of the jury verdict, and ABC would be granted
the relief it seeks. Because we can potentially grant ABC
effective relief, this appeal is not moot. See, e.g., In re Club
Assoc., 956 F.2d 1065, 1069 (11th Cir.1992) ("Central to a
finding of mootness is a determination by an appellate court that
it cannot grant effective judicial relief.").
court's disposition of the motions to intervene was correct, then
our jurisdiction evaporates...." (citation and quotation marks
omitted)).
A. Intervention as of Right
In this circuit, a movant must establish the following
requirements to intervene as of right under Federal Rule of Civil
Procedure 24(a)(2):
(1) his application to intervene is timely; (2) he has an
interest relating to the property or transaction which is the
subject of the action; (3) he is so situated that disposition
of the action, as a practical matter, may impede or impair his
ability to protect that interest; and (4) his interest is
represented inadequately by the existing parties to the suit.
Chiles, 865 F.2d at 1213. We review the district court's denial of
ABC's motion to intervene as of right de novo. See Federal Sav. &
Loan Ins. Corp. v. Falls Chase Special Taxing Dist., 983 F.2d 211,
214-15 (11th Cir.1993). "Once a party establishes all the
prerequisites to intervention, the district court has no discretion
to deny the motion." United States v. State of Ga., 19 F.3d 1388,
1393 (11th Cir.1994).
The plaintiffs and the defendants in the class action focus
primarily on ABC's failure to establish the second requirement for
intervention—that ABC have "an interest relating to the property or
transaction which is the subject of the action." Chiles, 865 F.2d
at 1213. "In determining sufficiency of interest, this circuit
requires that the intervenor must be at least a real party in
interest in the transaction which is the subject of the proceeding.
This interest has also been described as a direct, substantial,
legally protectable interest in the proceedings." Worlds v.
Department of Health and Rehabilitative Serv., 929 F.2d 591, 594
(11th Cir.1991) (per curiam) (footnotes, citations, and quotation
marks omitted).4
The transactions that were the subject of the class action
proceeding are the debenture exchange transactions. ABC admits
that it is not a real party in interest as to those exchange
transactions. Instead, ABC argues that preventing the vacatur of
a judgment that has been deemed by a magistrate judge to be
preclusive in another lawsuit in which it is a party is sufficient
for ABC to meet the interest requirement for intervening as of
right. ABC has not cited any binding authority to support its
position, and we are not convinced by the authority ABC has cited:
a Ninth Circuit case, National Union Fire Ins. Co. v. Seafirst
Corp., 891 F.2d 762 (9th Cir.1989), and Justice Stevens's
dissenting opinion from the Supreme Court's dismissal of certiorari
in Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S. Philips Corp., 510
U.S. 27, ----, 114 S.Ct. 425, 429, 126 L.Ed.2d 396 (1993).
In National Union, the issue was whether the district court
abused its discretion in denying a motion to vacate its judgment as
part of a settlement agreement. Intervention was not an issue on
appeal. The district court in that case had permitted third
parties to intervene in an action between an insurance company and
an insured for the limited purpose of objecting to the vacatur of
4
Although some courts have held that the requirements for
intervention are equivalent to the requirements for Article III
standing, e.g., Southern Christian Leadership Conference, (SCLC)
v. Kelley, 747 F.2d 777, 779 (D.C.Cir.1984), this Court has held
that "a party seeking to intervene need not demonstrate that he
has standing in addition to meeting the requirements of Rule 24
as long as there exists a justiciable case and controversy
between the parties already in the lawsuit." Chiles, 865 F.2d at
1213.
the court's judgment as part of a settlement agreement. 891 F.2d
at 764. It is not apparent from the opinion in National Union
whether the intervenors had been allowed to intervene as of right
or permissively. What is apparent is that the intervenors in
National Union had a more direct interest in the transaction that
was the subject of that case, because those intervenors were
defending a separate lawsuit brought by the National Union
plaintiffs arising out of the very same insurance contract
transaction at issue in the that case. Id. at 763.
This case is distinguishable from National Union, because the
libel lawsuit ABC is defending against Levan and BFC did not arise
out of the same transactions at issue in this class action.
Instead, the libel lawsuit arose out of a separate incident—a
"20/20" broadcast—that reported about the transactions at issue in
the class action. In other words, the intervenors in National
Union were real parties in interest as to the transactions that
were the subject of that case; by contrast, ABC is not a real
party in interest as to the transactions that are the subject of
the class action lawsuit in this case. Therefore, even if National
Union were binding precedent, it does not support the proposition
that ABC has a sufficient interest for intervention as of right in
this case.
As for ABC's reliance on Justice Stevens's dissent in Izumi,
a dissenting Supreme Court opinion is not binding precedent. E.g.,
United States v. Goodrich, 871 F.2d 1011, 1013 (11th Cir.1989).
Justice Stevens's opinion dissenting from the Court's order
dismissing the writ of certiorari as improvidently granted in Izumi
does not tell us how a majority of the Court would decide this
case.
We conclude that, measured against the Rule 24 requirement
that it be "a direct, substantial, legally protectable interest,"
Worlds, 929 F.2d at 594, ABC's interest in the collateral estoppel
effect of the jury's verdict in this case is too collateral,
indirect, and insubstantial to support intervention as of right.
Broadening the right of intervention to cover the circumstances of
this case would not only be unprecedented, it would also run
counter to the public policy values that are furthered by
permitting parties to settle a case without the interference of
interlopers. The district court did not err in denying ABC's
motion to intervene as of right.
B. Permissive Intervention
This Court has previously explained that:
"If there is no right to intervene under Rule 24(a), it is
wholly discretionary with the court whether to allow
intervention under Rule 24(b) and even though there is a
common question of law or fact, or the requirements of Rule
24(b) are otherwise satisfied, the court may refuse to allow
intervention."
Worlds, 929 F.2d at 595 (quoting 7C Charles A. Wright, et al.,
Federal Practice and Procedure § 1913, at 376-77 (2d ed. 1986)
(footnotes omitted)). "[O]ur task is not to determine whether the
factors of Rule 24(b) were present, but is rather to determine
whether the trial court committed a clear abuse of discretion in
denying the motion." Id. (citations and quotation marks omitted).
We must affirm under the abuse of discretion standard "unless
we at least determine that the district court has made a clear
error of judgment, or has applied an incorrect legal standard."
SunAmerica Corp. v. Sun Life Assurance Co. of Canada, 77 F.3d 1325,
1333 (11th Cir.1996) (citations and quotation marks omitted).
By definition, ... under the abuse of discretion standard of
review there will be occasions in which we affirm the district
court even though we would have gone the other way had it been
our call. That is how an abuse of discretion standard differs
from a de novo standard of review. As we have stated
previously, the abuse of discretion standard allows a range of
choice for the district court, so long as that choice does not
constitute a clear error of judgment.
Macklin v. Singletary, 24 F.3d 1307, 1311 (11th Cir.1994)
(citations and quotation marks omitted), cert. denied, --- U.S. ---
-, 115 S.Ct. 1122, 130 L.Ed.2d 1085 (1995).
ABC's arguments related to permissive intervention are
primarily aimed at establishing that it met both requirements for
permissive intervention: (1) the application to intervene was
timely; and (2) the intervenor's claim or defense and the main
action have a question of law or fact in common. E.g., Chiles, 865
F.2d at 1213. However, that is not really the focus of our
inquiry, because we do not address the matter in the first
instance. As a reviewing court, we are concerned only with "clear
error[s] of judgment" that the district court may have made, or
with "incorrect legal standard[s]" that it may have applied.
SunAmerica, 77 F.3d at 1333. ABC has not argued that the district
court did either, except to the extent that it contends that the
parties in the class action case could not be prejudiced by
allowing ABC's intervention, and that ABC must be permitted to
intervene because it is unable to challenge by any other means the
vacatur's impact on the preclusive effect of the class action jury
verdict in the libel lawsuit.
ABC's argument that its intervention will not prejudice the
parties in the class action lawsuit is premised upon its assertion
that preventing the parties in that action from vacating the jury
verdict and judgment will not prejudice them. Of course, that
assertion is woefully unconvincing insofar as it concerns Levan and
BFC, whose interest in the vacatur is the converse of ABC's
interest. Permitting ABC to intervene for the purpose of blocking
the vacatur would substantially prejudice Levan and BFC, because
unless vacated, the jury verdict and judgment in the class action
will preclude their libel claim against ABC. Moreover, permitting
ABC to intervene in the class action would also substantially
prejudice the plaintiffs, because the result ABC seeks would
effectively vitiate the settlement agreement through which the
plaintiffs are receiving payments from the damage award.
As for ABC's assertion that without intervention it will have
no way to preserve the preclusive effect of the jury verdict and
judgment in the class action, that is true. But a nonparty is not
necessarily entitled to preserve the beneficial effects of a jury
verdict and judgment, however much the nonparty may cherish those
effects. Moreover, ABC will have its day in court. In the trial
of the libel lawsuit, ABC will have an opportunity to establish in
the old-fashioned way the defense that it sought to preclusively
establish with the class action jury verdict and judgment. Under
these circumstances, it was certainly not a clear abuse of
discretion for the district court to deny ABC's motion for
permissive intervention.
III. CONCLUSION
The plaintiffs' motion to dismiss this appeal as moot is
DENIED. The district court's denial of ABC's motion to intervene,
both as of right and permissively, is AFFIRMED. The remaining
issues raised in this appeal are DISMISSED for lack of
jurisdiction.