U.S. Court of Appeals for the First Circuit – 782 F.2d 1084 (1st Cir. 1986)
Argued Oct. 7, 1985. Decided Feb. 7, 1986 1
Leonard B. Boudin, New York City with whom Eric M. Lieberman, Edward Copeland, Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C., New York City, Roger Geller and Geller & Weinberg, Boston, Mass., were on brief for appellant Church of Scientology of California, Inc.
Michael Lee Hertzberg, New York City with whom Roger Geller, and Geller & Weinberg, Boston, Mass., were on brief for appellant Mary Sue Hubbard.
Michael A. Tabb, Boston, Mass., with whom Flynn & Joyce, David M. Bansah, and Hollingsworth & Associates, Boston, Mass., were on brief for appellee.
Before COFFIN, Circuit Judge, TIMBERS,* Senior Circuit Judge, and BOWNES, Circuit Judge.
BOWNES, Circuit Judge.
The question in this case is whether intervention under Federal Rule of Civil Procedure 24(a) (2) or 24(b) (2) was properly denied where the sole named defendant has, as yet, failed to appear. The plaintiff-appellee, Michael J. Flynn, is a Massachusetts attorney who has sued various Churches of Scientology and individual Scientologists over a number of years. L. Ron Hubbard, the defendant, is the founder of Scientology. On September 7, 1983, Flynn brought the complaint in this case naming Hubbard as the sole defendant and alleging that Hubbard had caused a wide range of torts to be committed against him.
The complaint alleges a written conspiracy by Hubbard and his individual and organizational agents and employees “to destroy” Flynn. This conspiracy was carried out, it is alleged, by various named Scientology organizations and individuals over which Hubbard has absolute authority. The torts alleged to have been committed at Hubbard’s direction are: malicious abuse of process; malicious prosecution; intentional infliction of emotional distress; trespass; conversion; interference with contractual rights; invasion of privacy; unfair or deceptive practices in violation of Mass.Gen.Laws Ann. ch. 93A; assault and battery; and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-68. There are no allegations in the complaint that Hubbard, acting by himself, committed any torts against Flynn; all torts it is alleged were committed by Hubbard’s agents and/or employees.
The putative intervenors are the Church of Scientology of California (CSC) and Mary Sue Hubbard, wife of the defendant. Both are named in the complaint as coconspirators. In addition to filing motions to intervene, CSC and Mary Sue Hubbard filed answers to the complaint. Mary Sue Hubbard also filed a counterclaim for malicious prosecution, abuse of process and libel. We note in passing that the tone, tenor, and language of the voluminous pleadings, affidavits and exhibits filed in this case (over 1,500 pages) is, at times, so accusatory, emotional and vitriolic as to make the reading of them a decidedly unpleasant chore.
CSC identified four “interests” that would be impaired or impeded unless intervention was allowed:
1. an interest in preventing its own actions, many of which it claims are protected under the first amendment or state law, from serving as a predicate for a judgment against the founder of the church and its spiritual leader;
2. an interest in defending both its own reputation and that of its revered founder;
3. an economic interest based on its fear that plaintiff will attempt to enforce any judgment by levying on church property;
4. an interest in preventing plaintiff from making offensive collateral estoppel use of a default judgment in the present action in other litigation now pending elsewhere against the church.
We note that all of these interests are based on the assumption that the defendant will not appear and there will be a default judgment against him.
Mrs. Hubbard asserted two interests that would be impaired unless she could intervene:
1. an economic interest based on the claim that she is wholly dependent on the defendant for her support and that a depletion or diminution of his assets will have an adverse effect on her and deprive her of her inheritance;
2. an interest in protecting her reputation which she claims is impugned by the allegations in the complaint.
Her interests, as with those of CSC, are based on the assumption that defendant will not appear and there will be a default judgment.
After a lengthy hearing on April 15, 1985, the district court, on April 22, 1985, denied the motions to intervene. No written opinion stating the reasons for the decision issued. Plaintiff’s motion for substituted service on defendant was granted on May 31, 1985, and service was made accordingly.
In this circuit, an immediate appeal lies from the denial of a motion to intervene under Rule 24(a) (2). Kartell v. Blue Shield of Massachusetts, Inc., 687 F.2d 543, 548 (1st Cir. 1982). The parameters of appellate review are, however, not so clear. We have held that “[t]he district court is to exercise its discretion in determining timeliness, and its ruling will not be disturbed on review unless there is an abuse of discretion.” Chase Manhattan Bank v. Corporacion Hotelera de Puerto Rico, 516 F.2d 1047, 1049 (1st Cir. 1975). The Second Circuit has applied the abuse of discretion standard to all 24(a) (2) findings because of “the great variety of factual circumstances in which intervention motions must be decided.” United States v. Hooker Chemicals & Plastics Corp., 749 F.2d 968, 991 (2d Cir. 1984). But here, we are faced with a question of law: Can intervention be granted when the only defendant in the case has not appeared. This means that the standard of review is whether the court committed legal error in denying intervention.
Both putative intervenors make it clear that it is the failure of defendant to appear that has prompted their motions to intervene. They argue that Hubbard will not appear, a default judgment will be entered against him and they will be irreparably harmed if they cannot intervene. In her counterclaim, Mary Sue Hubbard states: “8. Scientology Founder L. Ron Hubbard went into seclusion in approximately March, 1980, and has not been seen by his family, or by any Church office, since that date.” Plaintiff, on the other hand, asserts that Hubbard will appear to prevent a default judgment.
We are in no position to determine whether Hubbard will or will not appear. We do know, however, that failure of a defendant to appear is a unique reason for intervention. We have been unable to find any federal cases in which intervention has been allowed or denied under Rule 24 because the defendant has failed to appear. This does not, of course, automatically preclude intervention; it does mean, however, that we must examine the law carefully to determine if intervention is warranted.
Federal Rule of Civil Procedure 24(a) (2) provides:
(a) Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action: … (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties.
There is nothing in the Notes of The Advisory Committee on Rules adverting to intervention when the defendant has failed to appear. The wording of the rule itself suggests that it may only apply when the named defendant has appeared and is protecting his or her interests. The last phrase, particularly, referring to “existing parties” suggests a case cast in the traditional mold with a viable dispute between plaintiff and defendant.
We now turn to the case law to determine whether intervention should be permitted when the sole defendant has by deliberate choice failed to appear.1 The seminal case on the scope and meaning of Rule 24 is Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 87 S. Ct. 932, 17 L. Ed. 2d 814 (1967). In that case, the Court reversed the district court’s denial of intervention in a divestiture suit arising from violations of Sec. 7 of the Clayton Act. The Court explored the differences between the present rule and its predecessor. It held that intervention should be granted because Rule 24(a) (2) “recognizes as a proper element in intervention ‘an interest’ in the ‘transaction which is the subject of the action,’ ” id at 135, 87 S. Ct. at 936, and because the existing parties “have fallen far short of representing … [the intervenor’s] interests.” Id. at 136, 87 S. Ct. at 937. Giving Cascade the broadest possible reading, we do not think it affords any basis for the proposition that if an individual has an interest in a case, as defined by the rule, he or she can intervene absent a defendant. The Court gave two reasons for allowing intervention, “an interest in the transaction” and the failure of the “existing parties” to represent the intervenor’s interests. Here, Hubbard has not appeared to date; until or unless he does, it cannot be determined whether he will or can represent adequately the interests of the putative intervenors.
Donaldson v. United States, 400 U.S. 517, 91 S. Ct. 534, 27 L. Ed. 2d 580 (1971), also focused on the scope and meaning of Rule 24(a) (2). Donaldson’s income tax returns were under investigation by the Internal Revenue Service. A special agent of the IRS served summonses on the former corporate employer of Donaldson and its accountant ordering them to testify and produce records pertaining to Donaldson. Shortly prior to the issuance of the summonses, the United States District Court, acting on petitions filed by Donaldson, issued temporary restraining orders and then a preliminary injunction restraining the corporation and its accountant from complying with the summons until the court acted. The government and the IRS agent filed petitions in the same district court for judicial enforcement of the summonses. Id. at 518-20, 91 S. Ct. at 536-37. After a show cause order issued, Donaldson sought to intervene in the enforcement proceedings pursuant to Rule 24(a) (2). The district court denied the motion to intervene and ordered that the summonses be enforced. Id. at 521-22, 91 S. Ct. at 537-38. The Court held that a taxpayer may not intervene of right “simply because it is his tax liability that is the subject of the summons.” Id. at 530, 91 S. Ct. at 542. After considering Donaldson’s particular situation, the Court concluded that he did not have an interest in the enforcement proceedings within the meaning of Rule 24(a) (2). Id. at 531, 91 S. Ct. at 542. Neither the holding nor reasoning of Donaldson is of help to the putative intervenors here.
Mrs. Hubbard relies on SEC v. Flight Transportation Corp., 699 F.2d 943 (8th Cir. 1983), as authority for her right to intervene based on her economic interest in the assets of her husband. In that case, the SEC commenced an action against Flight Transportation Corp., two subsidiary corporations, and William Rubin, President and Chairman of the Board of Directors and Chief Executive Officer of the three corporations. Shortly thereafter, a class action by Flight Transportation’s securities holders was commenced. This was followed by an involuntary bankruptcy petition against Flight Transportation. A stay of the bankruptcy proceedings and all proceedings in any state or federal court against the corporations and William Rubin was ordered. Joyce Rubin, wife of William, had filed a state action for divorce. She moved to intervene and for a modification of the stay order so that her divorce action could proceed. The district court denied her motion to intervene. The court of appeals reversed. It held that “Joyce Rubin may be unable, as a practical matter, to protect her interests if she cannot intervene” and that “the existing parties cannot be expected to represent Joyce Rubin’s interests adequately.” Id. at 949. William Rubin was at all times one of the defendants.
That case may be good authority for the proposition that a wife who has instituted a divorce action has a right to intervene to protect her economic marital interests in a SEC action with bankruptcy overtones against her husband and his corporations. It has no bearing, however, on a tort action like this, where the husband has failed to appear.
As already noted, we have found no federal cases allowing or denying intervention where the defendant has failed to appear. There is, however, one state case directly on point. Not surprisingly, the defendant is the same person as in the case before us, L. Ron Hubbard. In Samuels v. Hubbard, 71 Or.App. 481, 692 P.2d 700 (1984), the court held that the Church of Scientology of California, Inc., and Church of Scientology, Mission of Davis, had no right, under Oregon law, to intervene as of right in a tort action against Hubbard. As here, the plaintiff in the Oregon case alleged that Hubbard directed and controlled others to commit torts against him. The torts alleged are similar to the ones alleged here: conversion, outrageous conduct, defamation and fraud. And, as here, defendant failed to appear and the putative intervenors asserted that he would not appear. The Oregon court was careful to point out: “The record shows only that he [Hubbard] has not yet appeared.” 692 P.2d at 703 n. 1.
What CSC and Mrs. Hubbard really seek here is not intervention, but to be substituted as defendants for the defendant plaintiff chose to sue. There can be no question that plaintiff has stated a cause of action against the defendant. Plaintiff could have sued both CSC and Mrs. Hubbard but deliberately decided not to do so. If we were to allow intervention, despite defendant’s failure to appear, we would be forcing our choice of defendants on plaintiff. We see no reason why, in a tort action, the plaintiff’s choice of defendant should be nullified by substituting under the guise of intervention different joint tort-feasors than the one against whom the suit was brought. Under Federal Rule of Civil Procedure 19, the companion to Rule 24, joint tort-feasors need not be joined since each is liable for the entire amount of the recovery. State of Maine v. United States Department of Labor, 669 F.2d 827, 832 (1st Cir. 1982); 7 C. Wright & A. Miller, Federal Practice and Procedure Sec. 1623 at 241 (1972). The same reasoning applies to intervention under Rule 24(a) (2).
It would be premature to decide now whether the interests asserted by CSC and Mrs. Hubbard meet the requirements of Rule 24. Although we disagree with both intervenors as to the effect of a default judgment on them,2 it is the defendant’s willful action in failing to appear that has subjected them to whatever risks such a judgment may pose. There is and can be no suggestion that this is a collusive suit between plaintiff and defendant in an attempt to somehow indirectly impose liability on CSC and Mrs. Hubbard. Plaintiff has made defendant the sole target of his action. Whatever carom effect may occur is the direct result of defendant’s failure to appear. We hold that because the sole defendant has chosen not to appear in this tort action, there can be no intervention by the joint tort-feasors under Rule 24(a) (2) until and unless the defendant appears.
Intervention is also sought under Rule 24(b) (2). This allows intervention “when an applicant’s claim or defense and the main action have a question of law or fact in common.” The rule further states: “In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.” Our opinion makes it clear that the district court did not abuse its discretion in denying permissive intervention.
Affirmed. Costs to appellee.
COFFIN, Circuit Judge, (concurring).
I believe the court misapplies Federal Rule of Civil Procedure 24(a) (2) in finding that intervention should not be granted when the only defendant in the case has not appeared. The court holds that the rule can only be applied to cases involving parties actually arguing in court because the rule refers to “existing parties”. The phrase “existing parties” appears in the rule’s third requirement: a party who satisfies the rule’s first two requirements1 shall be permitted to intervene “unless the applicant’s interest is adequately represented by existing parties”. My brothers claim that this requirement can be satisfied only when the named defendant “has appeared and is protecting his or her own interests”. Until that time, they believe “it cannot be determined whether he will or can represent adequately the interests of the putative intervenors”.
I believe this unique interpretation of Rule 24(a) (2) is unsupported by, and is contrary to, the language of the rule, the rule’s purpose, and the relevant case law. But I concur in the judgment of the court because I find that appellants fail to meet the rule’s interest and impairment requirements.
* The reading of “existing parties” as referring solely to named parties who actually appear in court and protect their own interests does not follow from the language of the rule. I think that the reasonable reading of “existing” is that it modifies “parties” to distinguish such from parties not formally in the litigation; that is, “existing parties” refers to the actual parties named in a litigation, as opposed to the nonparties seeking to intervene. See, e.g., Arkansas Power & Light Company v. Arkansas Public Service Commission, 107 F.R.D. 335, 340 (E.D. Ark. 1985) (interests asserted by would-be intervenors are “adequately protected by those that are already parties to this litigation “) (emphasis added). See also Woolworth v. Miscellaneous Warehouseman’s Union, 629 F.2d 1204, 1213 (7th Cir. 1980).
The court’s reading also fails to reconcile its interpretation with the purpose behind the intervention rule. Rule 24(a) (2) is designed to allow participation in a litigation by nonparties whose interests may be impaired.2 To avoid judicial inefficiency, however, the rule contains an adequacy of representation requirement, which precludes intervention when a nonparty’s interests are already adequately represented by an existing party.3 Because this requirement may preclude parties from intervening even when they have protectible interests, applicants need only make a minimal showing of inadequate representation. Trbovich v. United Mine Workers, 404 U.S. 528, 538 n. 10, 92 S. Ct. 630, 636 n. 10, 30 L. Ed. 2d 686 (1972). Intervention will be granted, if the other conditions are satisfied, unless the court is persuaded that the representation of the nonparty is in fact adequate. Wright & Miller, Federal Practice and Procedure 519.4 If the applicant shows that the representation may be inadequate, see Trbovich, 404 U.S. at 538 n. 10, 92 S. Ct. at 636 n. 10, then the court is precluded from finding that the interest is adequately represented. Note, Duke L.J. 117, 129 (1968).
The court’s decision to exclude from this rule’s scope cases in which the named defendant has chosen not to appear runs counter to the goal of protecting those who are not otherwise represented. Indeed, if the other conditions are satisfied, this type of situation presents the clearest need for permitting intervention because the nonparties’ interests will not be represented at all. Wright & Miller, supra, at 524. “An interest that is not represented is surely not adequately represented and intervention must be allowed.” Id.
A denial of intervention might be justifiable if the named defendant was likely to appear and might then adequately represent the interests of the nonparty. That is neither my colleagues’ position nor the posture of this case. Here, the record supports appellants’ assertion that Hubbard will not appear, and it is that very fact on which the court bases its denial of intervention. Yet it provides no justification for declining to decide whether the lack of representation here constitutes “inadequate representation”.
The court interprets the rule to apply only to “cases cast in the traditional mold with a viable dispute between plaintiff and defendant”. Regardless of whether this type of litigation is traditional, it will adjudicate rights and may impair interests of nonparties. The court would apply Rule 24(a) (2) if the defendant appeared in court and defended merely by asserting that the plaintiff’s charges were false, but would not apply it if the defendant stopped short of taking this small step. I fail to see any justification for creating such a formalistic distinction, not required by the rule, when the interests of nonparties may be equally impaired in either situation.5
My brothers suggest that their position finds support from the only court, federal or state, that has addressed intervention in this type of case. In Samuels v. Hubbard, 71 Or.App. 481, 692 P.2d 700 (1984), the Oregon Court of Appeals denied intervention as of right to CSC and others in a tort action against Hubbard. I disagree with my brothers’ suggestion for two reasons. First, the court interpreted a state intervention rule, somewhat stricter than Rule 24(a) (2). Id. at 704 & n. 5. According to the state court, a party entitled to intervene as of right under the federal rules might only qualify for “permissive intervention under Oregon law”. Id. at 704 n. 5. Second, the court did not find the intervention rule inapplicable to a situation where the sole named defendant chooses not to appear, but denied intervention on the ground that any interests the applicants had in the litigation would not be impaired by a judgment against Hubbard. In a footnote, the state court observed that the record did not seem to support the applicants’ assertion that Hubbard would not appear.6 My brethren infer from that statement that the state court denied intervention because Hubbard did not appear. To the contrary, the state court determined that even if there was “inadequate representation”, either because Hubbard would not appear or would appear and inadequately defend applicants’ interests, those interests were insufficient to require intervention. Id. at 705-06.
Federal courts faced with a somewhat similar situation have not taken the approach adopted by the court. These courts have addressed the situation where the named party appears at trial, loses, and chooses not to bring an appeal. An applicant has then sought to intervene for purposes of bringing the appeal. Courts have routinely found that Rule 24(a) (2) applies to this situation, even though the named defendant has not “appeared” for purposes of the appeal and has not “protect(ed) his or her interests”. Moreover, these courts have found that the nonparty has satisfied the inadequacy of representation requirement because there will be no representation by the existing party. See, e.g., United States v. American Telephone and Telegraph Co., 642 F.2d 1285, 1293 (D.C. Cir. 1980) (MCI was not adequately represented by the United States in the decision not to appeal); County of Fresno v. Andrus, 622 F.2d 436, 439 (9th Cir. 1980) (unwillingness to take appeal indicates that existing party does not represent would-be intervenor fully).
For example, in Woolworth v. Miscellaneous Warehouseman’s Union, 629 F.2d 1204 (7th Cir. 1980), discharged employees sought to intervene as defendants in a suit brought by their employer against their union seeking to vacate an arbitration award ordering their reinstatement. The district court had granted the employer’s motion for summary judgment and had vacated the award. After the union chose not to appeal the decision, the discharged employees moved to intervene for purposes of bringing the appeal. The Seventh Circuit found that the employees satisfied the interest and impairment requirements of Rule 24, and then addressed the adequacy of representation requirement. It stated that “since the Union has withdrawn from the case, the interests of the employees would not be adequately represented by existing parties”. 629 F.2d at 1213.
Cases such as Woolworth are characterized as situations where the named party has been nonfeasant in its duty of representation. It is well-settled that nonfeasance constitutes inadequate representation. Cascade National Gas Corp. v. El Paso National Gas Co., 386 U.S. 129, 155, 87 S. Ct. 932, 947, 17 L. Ed. 2d 814 (1967) (Stewart, J., dissenting) (“complete failure of representation by existing parties”); British Airways Board v. Port Authority of New York and New Jersey, 71 F.R.D. 583, 585 (S.D.N.Y. 1976); Moore’s Federal Practice 24.07 (2d ed. 1985). In fact, according to Professors Wright and Miller, “the easiest case is that in which the absentee[‘s] … interest is not represented at all.” Wright & Miller, supra, at 519. A difficult question of adequacy of representation does not arise unless the applicant is represented in the action.7
Nonfeasance of representation also describes the circumstances of the instant case, where the named party does not appear before the trial court. A party who fails to appear for trial and thus receives a default judgment has failed to represent the interests of the would-be intervenor. Thus, if the union in Woolworth failed to appear before the district court to challenge the employer’s motion for summary judgment, the interests of the discharged employees would be left inadequately represented. Where significantly protectible interests of a putative party may be adversely affected in a litigation and the sole defendant chooses not to appear, intervention is warranted.
My disagreement with the court’s rather broad ruling, refusing to apply Rule 24(a) (2) whenever a named party has not appeared, is heightened by my conviction that it is quite unnecessary for the proper disposition of this case. For I conclude that each interest claimed by CSC and Mary Sue Hubbard falls short of the requirement that it be a direct, substantial, legally protectible interest that may be impaired by the disposition of the suit. Accordingly, I concur in the denial of intervention.
CSC claims that it has a First Amendment speech interest in the subject matter of the litigation. This interest comprises speaking out against Flynn and others, filing bar complaints, or pursuing litigation, all acts upon which plaintiff predicates Hubbard’s liability. CSC argues that its ability to protect that speech interest would be impaired or impeded if it did not intervene, because CSC would be “chilled” from continuing to engage in this presumptively protected activity once a default judgment issued against Flynn. This chill would occur, CSC asserts, because it would not continue to speak while parties obtained default judgments against Hubbard based on CSC’s speech.
CSC has asserted a protectible interest, in that it identifies its First Amendment right of expression. CSC failed to show, however, that this interest would be impaired if CSC were not permitted to intervene. It may be that in some cases a nonparty could successfully show that its exercise of its speech right would be chilled by a default judgment against the named party in a litigation. The nonparty would refrain from continuing to engage in certain speech activities, if its speech were the basis for the named party’s liability. The nonparty would have to convince the court that its ability to protect its speech right would be impaired or impeded by the default judgment.
In this case, no such showing was made. In its appellate brief, CSC stated “[i]t would be impossible for the Church to sit back and watch unscrupulous plaintiffs or lawyers take advantage of Mr. Hubbard’s unavailability to obtain huge default judgments based upon the purported acts of the Church, and the unsupported allegations of a complaint.” CSC did not make this argument to the district court in its written motion to intervene, but rather it did so orally in a one-sentence statement during the hearing. Moreover, CSC did not present any evidence as to why it would refrain from future speech activity if this default judgment issued against Hubbard.
Instead, CSC came forth with a purely conclusory statement. It offered no affidavits to support its claim and no evidence at all that a default judgment against Hubbard would have any effect upon CSC. Such conclusory allegations do not entitle CSC to intervention as of right under Rule 24. To find otherwise would suggest that all nonparties could intervene merely by claiming that their special relationship with the named party would chill their speech activities. Obviously, a court is entitled to a sufficiently strong factual showing so that it is assured that the intervenor’s speech would indeed be chilled.
CSC claims that it has a reputation interest in the litigation, because the allegations of the plaintiff “clearly, directly, and substantially” affect the reputation of the church. Moreover, CSC claims that it will suffer direct and serious injury because its founder is accused of serious wrongdoing.
A default judgment against Hubbard is not an adjudication against CSC; such a judgment does not mean that CSC took the actions that were alleged in plaintiff’s complaint. Additionally, a party’s reputation interest has not been found sufficient to require intervention as of right. In Edmondson v. Nebraska, 383 F.2d 123, (8th Cir. 1967), the state sued a prisoner who had recovered a default judgment against a prison guard. The state claimed that the default judgment was the result of fraud and collusion between the prisoner and guard and thus the state sought a declaration that the judgment was void. The guard sought to intervene under Rule 24, claiming that the state’s allegations of fraud adversely affected his reputation. The court stated that the suit against the prisoner would not affect the guard’s legal interest. It added:
“The mere fact that [the guard’s] reputation is thereby injured is not enough. [The guard’s] representative has pointed to no legal detriment flowing from this possible finding [of fraud] by the trial court, and we can find none.” Id. at 127.
In this case as well, CSC merely claims a generalized injury to reputation, but identifies no legal detriment arising from a default judgment against Hubbard. Mary Sue Hubbard also argues that her reputation interest is at stake because the complaint names and implicates her as a key individual in the actions against the plaintiff. Her claim fails for the same reason.
CSC asserts that its economic interests are threatened because the plaintiff will seek to enforce its judgment against Hubbard by levying on the assets of the church. CSC also seems to be arguing that it has an interest in preventing the plaintiff from obtaining a judgment in this case because plaintiff will use offensive collateral estoppel in future actions against the church.
If intervention were denied, however, CSC would not be a party to this case. Any action brought by the plaintiff to obtain assets belonging to the church would necessarily provide the church with an opportunity to present its own defense. Moreover, CSC will not be precluded by the default judgment from making any arguments in future cases. None of the allegations proved against Hubbard would be deemed proved against CSC.
Mary Sue Hubbard also claims that she has an interest in maintaining her husband’s assets, which provide support for her and will accrue to her upon his death. She claims that this interest is identical to that which was found sufficient in SEC v. Flight Transportation Corp., 699 F.2d 943 (8th Cir. 1983). In that case, a wife undergoing divorce proceedings was permitted to intervene in the SEC’s fraud action against the husband. The SEC action would determine what property belonged to the husband’s corporation, as opposed to the husband himself. Additionally, the SEC sought a stay on all other proceedings against the husband, including the divorce action, and a court-appointed receiver to take control of the husband’s assets. The court found that this action would have directly affected what assets would be available for distribution to his wife in the ongoing divorce proceedings.
Mary Sue Hubbard’s monetary interests in her husband’s assets are neither identical, nor similar, to the interests of the wife in SEC. Here, her husband’s assets are not the subject of this suit, the court is not attempting to take control of the assets, and she has no ongoing claim against the assets of her husband. If intervention were permitted here, whenever one spouse was displeased with the litigation strategy, the investment decisions, or the charitable donations of his or her spouse, the displeased spouse would be permitted to intervene as of right.
A review of the interests assertedly at stake in the underlying litigation reveal that the district court correctly decided that CSC and Mary Sue Hubbard are not entitled to intervene as of right pursuant to Rule 24(a) (2).
Appellants are asserting, then, either their interests as joint tortfeasors or the interests of Hubbard. Both interests fail to satisfy the requirements of Rule 24. This result explains my brothers’ concern that what appellants truly seek is not to intervene but to be substituted for the named defendant in order to protect his interests. I agree. I arrive at that conclusion only after a review of the appellants’ interests showed that they failed to satisfy the rule’s interest and impairment requirements. Thus, the result we reach, denying intervention, would be no different if Hubbard did appear but inadequately represented the appellants. Whether appellants attempt to substitute for an existing party or impose themselves in the litigation as a second or third named party, Rule 24 still forbids their intervention.
Although the court correctly, in my view, recognizes that intervention should not be granted, I do not accept its basis, i.e., the fact that the named defendant will not appear precludes a nonparty’s right to intervene. To the contrary, that fact itself satisfies the rule’s third requirement. Intervention is inappropriate because of appellants’ failure to show that they have protectible interests that will be impaired by this litigation. Had appellants made such a showing, I would find that they have a right to intervene, even if the named defendant, for whatever reason, chose not to present a defense.*Of the Second Circuit, sitting by designation1No suggestion has been made that defendant’s physical or mental condition has prevented his appearance. We take judicial notice that a science fiction book by him, The Invaders Plan, was published after oral argument and received a favorable review in the Sunday Book Review section of the New York Times2It is black letter law that those not a party to an action are not bound by an adverse judgment against the named defendant1Under the first requirement (the interest requirement), the applicant must claim an interest relating to the property or the transaction that is the subject of the action. The second requirement (the impairment requirement) is that the applicant must show that he or she is so situated that the disposition of the action may as a practical matter impair or impede his or her ability to protect that interest2See e.g., Hilliker, Rule 24: Effective Intervention, 7 Litigation 21, 21 (1981); Shapiro, Some Thoughts on Intervention Before Courts, Agencies, and Arbitrators, 81 Harv. L. Rev. 721, 726-27 (1968)3See e.g., Brunet, A Study in the Allocation of Scarce Judicial Resources: The Efficiency of Federal Intervention Criteria, 12 Ga.L.Rev. 701, 733 (1978)4Under the former Rule 24(a) (2), one of the two conditions of intervention was a showing by the applicant that his representation by the existing parties “is or may be inadequate”. This language was revised in 1966 so that if the other conditions of the rule are satisfied, intervention is of right “unless the applicant’s interest is adequately represented by existing parties”. Wright & Miller, supra, at 519. “It seems entirely clear that the effect of this change is to shift the burden of persuasion.” Id.; See also SEC v. Dresser Industries, 628 F.2d 1368, 1390 (D.C.1980); Shapiro, supra, at 741 n. 915In United States v. Hooker Chemical & Plastics, 749 F.2d 968 (2d Cir. 1984), Judge Friendly stated that “[a]dequacy of representation should be applied so as to provide a functional test of a party’s need to intervene”. Id. at 992 n. 21. He cautioned that courts should not “import into the rule ‘fetishes of form,’ not required by the Rule’s language, that treat adequacy of representation from other than a practical perspective.” Id6The court stated that “[i]ntervenors assert that Hubbard will not appear. The record shows only that he has not yet appeared.” Id. at 703 n. 1. As mentioned previously, the record in the instant case amply supports the appellants’ assertion that Hubbard will not appear7Id. Cases where the question of adequacy of representation is more difficult include those where the party is adverse to the absentee, where the interests of the absentee and of the party are different, though perhaps similar, and where the interest of the absentee is identical with that of one of the existing parties. Id
MICHAEL J. FLYNN vs. CHURCH OF SCIENTOLOGY OF CALIFORNIA, INC., & others. [Note 1]
19 Mass. App. Ct. 59
October 16, 1984 – December 4, 1984
Present: GREANEY, C.J., DREBEN, & FINE, JJ.
Where the case against one of several defendants in a civil action had been terminated by the plaintiff’s timely filing of a notice of voluntary dismissal under Mass.R.Civ.P. 41(a)(1), 365 Mass. 803 (1974), it was error for a judge, in ruling on a subsequent motion to dismiss, to include that defendant in an order dismissing the action with prejudice. [64-65]
Where the plaintiff in a civil action had moved for voluntary dismissal under Mass.R.Civ.P. 41(a)(2), 365 Mass. 803 (1974), it was error for the judge hearing the motion to order dismissal of the action with prejudice before first affording the plaintiff an opportunity to withdraw his motion to dismiss, when he sought to do so upon the judge’s announcement in open court of his ruling on the motion. [66-67]
CIVIL ACTION commenced in the Superior Court Department on April 9, 1982.
A motion to dismiss was heard by Hiller B. Zobel, J.
Harvey A. Silverglate for Church of Scientology of California, Inc., & others.
David M. Banash for the plaintiff.
Charles W. Rankin for Kevin Tighe.
FINE, J. On April 9, 1982, Michael J. Flynn, an attorney, brought an action against the Church of Scientology of California, Inc., The Church of Scientology of Boston, Inc., and three individuals, each of whom is alleged to have been associated with the Church of Scientology of Boston, Inc., either as a staff member or as an officer. Mr. Flynn claims that the defendants were responsible for the unlawful taking of documents
from his law offices in Boston and from a dumpster located outside his office. He alleges that these acts occurred over a period from December of 1979 until the fall of 1981, and that, among the documents taken, were confidential client communications. He sought injunctive relief, compensatory damages, and an award of multiple damages and attorney’s fees under G. L. c. 93A.
On October 12, 1983, a judge of the Superior Court dismissed the lawsuit with prejudice following a hearing on Mr. Flynn’s motion for voluntary dismissal under Mass.R.Civ.P. 41(a)(2), 365 Mass. 803 (1974). [Note 2] The question posed by Mr. Flynn’s appeal in this case is whether that action was proper. In order to answer it, we must examine the history of the particular litigation, as well as other material which was before the judge when he acted on the plaintiff’s motion. Although a considerable amount of other material has been brought to our attention by the parties, we focus our attention exclusively on that material which was before the judge when he rendered his decision. Because the language of the sections of the rules with which we are concerned is almost identical to the equivalent sections of the Federal Rules of Civil Procedure, we look for guidance to Federal law in interpreting those rules. Rollins Environmental Servs., Inc. v. Superior Court, 368 Mass. 174 , 179-180 (1975).
The following is a summary of the relevant events that occurred in the case after the complaint was filed and prior to the hearing. On April 13, 1982, a hearing was held on the plaintiff’s motion for a preliminary injunction, at which all parties except the Church of Scientology of California, Inc., were represented. There was a discussion of proceedings which had taken place in a case pending in the United States District Court in Boston, Van Schaick v. Church of Scientology of California, Inc., No. 79-2491-G (D. Mass. filed Dec. 13,
1979), and of certain orders which had been entered in that case relating to the documents allegedly taken from Mr. Flynn’s office or trash, which were the same documents as those referred to in the instant case. [Note 3] Perhaps because those orders provide some protection to Mr. Flynn as to the use that could be made of the documents, on the day it was heard the motion for preliminary injunction was denied. It was again denied after an interlocutory review by a single justice of this court (pursuant to G. L. c. 231, Section 118, first par.) a few days later. On May 10, 1982, all parties except the Church of Scientology of California, Inc., filed answers. On May 17, 1982, Mr. Flynn filed a demand for jury trial. On September 12, 1983, Mr. Flynn filed a notice, dated August 29, 1983, of voluntary dismissal as to the Church of Scientology of California, Inc. On September 19 and 22, 1983, respectively, the defendants gave notice that they would take the depositions of Mr. Flynn on September 29, 1983, and of four other individuals on various other dates. On September 29, 1983, Mr. Flynn filed his motion to dismiss and also a motion to stay discovery pending resolution of the motion to dismiss. The motion to stay discovery was allowed. The motion to dismiss was heard and allowed with prejudice on October 12, 1983, all parties having been represented at the hearing except the Church of Scientology of California, Inc.
The judge at the dismissal hearing had before him three affidavits, one from Mr. Flynn, one from Eric D. Blumenson, an attorney representing the Church of Scientology of Boston, Inc., and one from Harvey A. Silverglate, an attorney representing the Church of Scientology of Boston, Inc., the Church of Scientology of California, Inc., and some of the individual defendants. A considerable portion of all of the affidavits from both sides contained cross-charges of harassment and abuse of the judicial process. Mr. Flynn’s affidavit referred, in addition, to the orders which had been entered by the United States District Court in the Van Schaick litigation and to a complaint in a case filed in the United States District Court on his behalf on September 7, 1983. The complaint in that case (Flynn v. Hubbard, No. 83-2642-C [D. Mass.]), alleges that Hubbard [Note 4] and his agents are engaged in a broad conspiracy to “destroy” Mr. Flynn. Numerous wrongful acts are alleged to have been committed, including the same acts involving documents taken from Mr. Flynn’s office and trash which form the basis of the instant suit. The affidavit of Mr. Blumenson, on the other hand, relates the difficulties encountered in the attempt to schedule Mr. Flynn’s deposition and refers to the age and history of the case. In addition, Mr. Blumenson speculates as to Mr. Flynn’s “hit and run” strategy, characterized by the filing of numerous lawsuits for purposes, he says, other than the receipt of legal redress. He asserts further that Mr. Flynn has shown no reason why the allegations made in this lawsuit should be tried in a different forum, and he states that, if the motion to dismiss without prejudice is allowed, his client’s name will remain tarnished, Hubbard being the only named defendant in Mr. Flynn’s Federal District Court case. Mr. Silverglate’s affidavit refers to correspondence from Mr. Flynn seeking settlement of pending cases against the various church organizations and threatening to file numerous additional lawsuits if settlement is not reached. Mr. Silverglate refers to an
alleged scheme on the part of Mr. Flynn for development of additional litigation against the various church entities and alleges that Mr. Flynn’s general litigation strategy is to file duplicative cases and dismiss them whenever faced with adverse rulings. The affidavit refers to the expense incurred in defending the litigation brought against the church. Mr. Silverglate also describes the proceedings in the Van Schaick litigation regarding the documents. And, finally, he speculates that in the Federal District Court litigation against Hubbard Mr. Flynn’s strategy is to obtain a default judgment against Hubbard, whom he expects not to appear, and then to collect damages from the parties who are the defendants in this litigation.
At the outset of the hearing, the judge outlined three possible resolutions of the motion to dismiss: “dismissal with prejudice; denial of the motion to dismiss; and denial of the motion to dismiss with a stay of the Federal court proceedings” against Hubbard. Mr. Flynn’s attorney declined to accept any of the three alternatives and proceeded to argue against them and in support of the motion to dismiss without prejudice. In the course of the argument, an offer was made on Mr. Flynn’s behalf that he bind himself by an agreement not to sue the defendants in this case on these claims and to pay just costs. Mr. Flynn’s attorney stated that a dismissal without prejudice was sought because of fear that a dismissal with prejudice would preclude him from litigating certain issues in the Federal case against Hubbard. He stated further that his client had no interest in pursuing the instant case at this time. Counsel for the defendants only reiterated their position that Mr. Flynn would seek to recover damages from the defendants in this case should the Federal case against Hubbard be won by default. Without hearing further from counsel for any of the defendants, the judge announced his decision from the bench to allow the motion with prejudice. Immediately thereafter, Mr. Flynn’s attorney sought to withdraw the motion to dismiss but was not permitted to do so. Further material was filed by the plaintiff with the court after the ruling, and a request for reconsideration was filed and denied.
1. The position of the Church of Scientology of California, Inc., is different from that of the other defendants. The case against that party was effectively terminated on September 12, 1983, as a result of the filing by the plaintiff of a notice of dismissal under Massachusetts Rule of Civil Procedure 41(a)(1), 365 Mass. 803 (1974), which allows dismissal “without order of court . . . by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever first occurs . . . .” No answer or motion for summary judgment had been served on the plaintiff by the Church of Scientology of California, Inc., on or before that date. In these circumstances, the plaintiff had an absolute right to dismiss that party without prejudice. There was no occasion for the exercise of discretion, and no conditions could be placed on the exercise of that right. American Cyanamid Co. v. McGhee, 317 F.2d 295, 297 (5th Cir. 1963). D.C. Electronics, Inc. v. Nartron Corp., 511 F.2d 294 (6th Cir. 1975). This is so even if the party being dismissed is not the only defendant in the case and even if one or more of the other defendants had filed answers. Plains Growers, Inc. v. Ickes-Braun Glasshouses, Inc., 474 F.2d 250, 254-255 (5th Cir. 1973). Terry v. Pearlman, 42 F.R.D. 335, 337 (D. Mass. 1967). Smith & Zobel, Rules Practice Section 41.3, at 48 (1977). [Note 5] The particular status of the Church of Scientology of California, Inc., with respect to the notice of dismissal was not addressed by the judge or by counsel at the hearing or in any of the documentation provided to the judge before the hearing. Whether the inclusion of the Church of Scientology of California, Inc., within the order dismissing the action with prejudice was intentional or the result of oversight, it was error. To the extent that a defendant needs to be protected against the abuse by a plaintiff of his right unilaterally
to dismiss a party without prejudice, the “two-dismissal rule” of rule 41(a)(1) provides that protection. [Note 6]
2. The dismissal of the case against the remaining defendants, with prejudice, poses greater difficulty. Normally a judge is accorded wide discretion in setting “terms and conditions” when dismissing a case under Mass.R.Civ.P. 41(a)(2). GAF Corp. v. Transamerica Ins. Co., $no$665 F.2d 364, 368 (D.C. Cir. 1981). The question presented here would be whether the attachment of the ultimate condition, prejudice, was called for in the somewhat unusual and confusing circumstances of this case. The test we would apply is whether to have done otherwise would have caused substantial prejudice to the defendants. Selas Corp. v. Wilshire Oil Co., 57 F.R.D. 3, 7 (D.C. Pa. 1972). See Wright & Miller, supra Section 2364, at 196.
In arguing that the action of the judge should be upheld, the defendants rely on a number of factors, no one of which by itself would be sufficient to justify the dismissal with prejudice. [Note 7]
“[T]he sanction of dismissal is the most severe sanction that a court may apply, and its use must be tempered by a careful exercise of judicial discretion” (emphasis original). Durham v. Florida East Coast Ry., 385 F.2d 366, 368 (5th Cir. 1967). The offer by the plaintiff to pay costs and to enter into a covenant not to sue would appear to satisfy many of the reasonable concerns of the defendants. See Goldlawr, Inc. v. Shubert, 32 F.R.D. 467 (S.D. N.Y. 1962). It may be, nevertheless, that, considering all of the circumstances together, in light of the complex background of the litigation between the parties, the numerous other cases filed in various courts by these and related parties, the heavy civil caseload of the Superior Court, and the broad discretion accorded to a judge, the determination that dismissal of the action ought to be with prejudice fell within the bounds of reasonableness. We would be reluctant to rule otherwise. For another reason, however, it is not necessary for us to make that determination.
3. Even if we were to regard the dismissal with prejudice to have been a proper exercise of discretion, we think the judge should have permitted Mr. Flynn to withdraw his motion to dismiss when he sought to do so immediately upon the announcement in open court of the ruling on the motion. The defendants argue that because the denial of the plaintiff’s motion to dismiss was one of the three options offered by the judge to counsel at the outset of the hearing, and because counsel did not accept that offer, the plaintiff should have been foreclosed from withdrawing the motion. He had no notice, however, that a possible consequence of his failure to accept
that option at the outset of the hearing might be waiver of that option, and it was reasonable for him to avail himself of the opportunity to be heard orally in support of the motion he had filed. It is generally recognized that a plaintiff, having moved to dismiss voluntarily, and being faced with conditions he finds too onerous, may, if he acts promptly, decline to have the action dismissed and go forward on its merits. Scam Instrument Corp. v. Control Data Corp., 458 F.2d 885, 889 (7th Cir. 1972). Yoffe v. Keller Indus., Inc., 580 F.2d 126, 131 n.13 (5th Cir. 1978), cert. denied, 440 U.S. 915 (1979). GAF Corp. v. Transamerica Ins. Co., 665 F.2d at 367-368. Wright & Miller, supra Section 2366, at 183. 5 Moore’s Federal Practice Paragraph 41.06, at 41-80 (1984). We are aware that on occasion it has been stated that a plaintiff filing a motion voluntarily to dismiss an action should be prepared to take the consequences, including the possibility that the court might dismiss with prejudice. American Cyanamid Co. v. McGhee, 317 F.2d at 298. Considerations of fairness would seem to require, however, that, except in extraordinary situations, a party should not be penalized for having filed a motion to dismiss. The cases which recognize an option on the part of the moving party, when faced with conditions he finds unacceptable, to fall back to the position of litigating the merits of the controversy in the forum of his original choice appear to be based upon such a concept of fairness. Except to the extent that the defendants are called upon to oppose the motion to dismiss, a consideration which can be satisfied by the imposition of costs, the recognition of such an option leaves the defendants no worse off than they would have been had no such motion been filed. They may still have their day in court.
Accordingly, we reverse the judgment and remand the case to the Superior Court for further proceedings.
[Note 1] Church of Scientology of Boston, Inc., Kevin Tighe, Robert Johnson, and David Aden.
[Note 2] The rule provides: “By Order of Court. Except as provided in paragraph (1) of this subdivision (a) [voluntary dismissal by plaintiff by filing a timely notice of dismissal or by filing a stipulation of all parties], an action shall not be dismissed at the plaintiff’s instance save upon order of the court and upon such terms and conditions as the court deems proper. . . .”
[Note 3] The complaint in the Van Schaick case involved, inter alia, allegations of fraud, unrelated to the alleged theft of documents. Mr. Flynn, on behalf of the plaintiff in that case, filed a “Motion for a Temporary Restraining Order, for a Preliminary Injunction for Return of Stolen Property and for an Evidentiary Hearing.” After hearing, an order was entered on September 14, 1981, whereby copies of any documents taken were to be furnished to Mr. Flynn and, until further order of the court, the defendants in the case were enjoined from delivering, transferring, distributing, disseminating, or destroying the documents. Further motions were filed, and on April 5, 1982, after a hearing on “Defendants’ Request for Modification of Order,” during which hearing counsel for the defendants agreed to return certain documents to Mr. Flynn, a conditional order was entered vacating the order of September 14, 1981, effective ten days after (1) delivery to Mr. Flynn of all the subject documents in the possession of the defendants’ attorney and (2) the filing of certain representations by defendants’ counsel, including a representation that the defendants would not use the documents for harassment purposes. Also included was an order that the Church of Scientology of California, Inc., produce copies of the documents taken.
[Note 4] Lafayette Ronald Hubbard, also known as L. Ronald Hubbard, according to allegations in the complaint last resided in Hemet, California, and is the “founder, controller, principal and absolute authority over the Scientology organizations and individuals.”
[Note 5] Although there are cases to the contrary, see Harvey Aluminum, Inc. v. American Cyanamid Co., 203 F.2d 105, 107-108 (2d Cir.), cert. denied, 345 U.S. 964 (1953), according to “[t]he sounder view and the weight of authority” a defendant may be dismissed even if there are other defendants remaining in the case. 9 Wright & Miller, Federal Practice and Procedure Section 2362, at 149-150 (1971).
[Note 6] Rule 41(a)(1) provides in pertinent part: “[A] notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of this or any other state an action based on or including the same claim.”
[Note 7] They refer first to the length of time during which the case was pending and the absence of diligence on the part of the plaintiff in bringing it forward. We do not view the delay as so unreasonable as to constitute an abuse, particularly in light of the absence of any effort by the defendants to move the case along. Next, the defendants point to Mr. Flynn’s unavailability for the deposition and the timing of the filing of the motion for a voluntary dismissal, on the very day of Mr. Flynn’s scheduled deposition. The effort to schedule Mr. Flynn’s deposition for that date, however, was the first effort by the defendants in this case to schedule the deposition or to conduct any discovery. Mr. Flynn may not have acted promptly or as courteously as one would have liked in an effort to work out a mutually convenient date but, in the absence of a determination that Mr. Flynn was in fact available for the deposition on September 29, 1983, and that he refused to appear, we do not view the deposition scheduling problem as a sufficient basis for the action taken. The defendants argue further that the action was justified because the allegations in the complaint lacked merit. Yet we note that they were sufficiently meritorious to form the basis for some relief afforded by the Federal District Court in the Van Schaick case and for some concessions to be made by counsel for the defendants. The defendants also refer to the expense of the litigation to date as a valid basis for the action taken. The imposition of costs, including counsel fees, as a condition of dismissal, however, ought to have satisfied these interests. Finally, the defendants urge that the action taken was proper because they ought to be allowed to defend themselves in this action and in the forum selected by the plaintiff and not be faced with the same claims at a later time. Mr. Flynn offered assurance that he would not sue these defendants on these claims, and, even if that assurance does not provide complete protection to the defendants, it is not altogether clear why, in fairness, they are entitled to more. (We express no view as to the effect a dismissal with prejudice would have on Flynn’s Federal District Court case.) Moreover, Mr. Flynn’s interest in suing another individual on a broader claim, of which the instant claim is a part, in a different forum is, on the surface at least, a plausible explanation of his desire to have this case dismissed.