Clear-View Technologies, Inc., v. Rasnick et al

Filing 187

Order by Hon. Beth Labson Freeman denying 155 Motion to Intervene. (blflc3S, COURT STAFF) (Filed on 4/28/2015)

1
2
3

UNITED STATES DISTRICT COURT

4

NORTHERN DISTRICT OF CALIFORNIA

5

SAN JOSE DIVISION

6
7

CLEAR-VIEW TECHNOLOGIES, INC.,

Case No. 13-cv-02744-BLF

Plaintiff,
8
v.

ORDER DENYING MOTION TO
INTERVENE

9
10

JOHN H. RASNICK, et al.,

[Re: ECF 155]

Defendants.

United States District Court
Northern District of California

11
12
13

Proposed intervenor Stroz Friedberg seeks to intervene in the above-captioned dispute,

14

scheduled to begin trial on June 8, 2015. Defendants oppose. Plaintiff has filed a conditional non-

15

opposition, stating that it does not oppose intervention so long as it would not delay trial. Because

16

the Court finds that Stroz Friedberg does not meet the conditions for permissive intervention, the

17

Court DENIES the motion.

18
19

I.

BACKGROUND
On September 9, 2014, Magistrate Judge Paul Grewal granted Plaintiff’s motion to compel

20

further discovery responses to Plaintiff’s interrogatories and requests for admission and an

21

independent inspection of Defendants’ electronic databases and media. See ECF 76; cf. ECF 62 at

22

13-18. The parties were instructed to meet and confer on a plan to retain an independent consultant

23

to perform a limited forensic collection and analysis of Defendants’ electronic media. See id. The

24

parties were unable to reach agreement between two forensic analysts – LogicForce Consulting,

25

LLC and Stroz Friedberg. See, e.g., ECF 100, 101 (discovery dispute letters). Defendants preferred

26

LogicForce because they submitted a lower estimate for the examination. ECF 100 at 1-2. The

27

court ultimately ordered the parties to engage Stroz Friedberg to undertake the independent

28

inspection, the cost of which would be borne by Defendants. See ECF 103.

1

Stroz Friedberg quoted Defendants high and low cost estimates for the examination, with a

2

low estimate of $52,375 and a high estimate of $108,000. See ECF 100; see also Mot., ECF 155 at

3

2-3. Defendants paid Stroz Friedberg a retainer of $25,000. See Haimovici Decl. Exh. D at 1. Stroz

4

Friedberg contends that Defendants obstructed and delayed the investigation, resulting in a total

5

cost of over $214,000, nearly double its high estimate. Defendants counter that they promptly

6

provided all media to Stroz Freidberg. Stroz Friedberg states that Defendants refused to pay the

7

amount due on January 22, 2015. See Mot. at 5 (citing Haimovici Decl. Exh. E).

8

On April 2, 2015, Stroz Friedberg moved to intervene in this action pursuant to Federal
Rule of Civil Procedure 24(b)(1), and moved to shorten time in which the motion could be heard.

10

See ECF 169. The Court denied the motion to shorten time, but submitted the underlying motion

11
United States District Court
Northern District of California

9

to intervene without oral argument upon the filing of Stroz Friedberg’s Reply on April 23, 2015.

12

See ECF 172 at 2 (citing Civil L.R. 7-1(b)).

13

II.

14

LEGAL STANDARD
Rule 24(b) governs permissive intervention. A court may grant permissive intervention if

15

three conditions are met: (1) the movant must show an independent ground for jurisdiction; (2) the

16

motion must be timely; and (3) the movant’s claim or defense and the main action must have a

17

question of law or fact in common. See Venegas v. Skaggs, 867 F.2d 527, 529 (9th Cir. 1989).

18

The existence of a common question or law or fact “does not automatically entitle an applicant to

19

intervene.” Id. at 530. Rather, Rule 24(b) “vests discretion in the district court to determine the

20

fairest and most efficient method of handling the case.” Id. (citing SEC v. Everest Mgmt. Corp.,

21

475 F.32d 1236, 1240 (2d Cir. 1972)). This means that the court must determine whether

22

intervention will “unduly prejudice the adjudication of the rights of the original parties” to the

23

underlying suit. Fed. R. Civ. P. 24(b). The proposed intervenor bears the burden to show that all

24

conditions for intervention are satisfied. See, e.g., Citizens for a Balanced Use v. Montana

25

Wilderness Ass’n, 647 F.3d 893, 897 (9th Cir. 2011) (noting, however, that the “review is guided

26

primarily by practical considerations, not technical distinctions”).

27
28

III.

DISCUSSION
Defendants do not challenge Stroz Friedberg’s assertion that diversity jurisdiction exists
2

1

over the proposed action. See generally Opp. The Court therefore looks to the remaining two

2

conditions that Stroz Friedberg must show in order to intervene, timeliness and common questions

3

of law or fact. The Court finds that neither is met here, for the reasons outlined below.

4

A.

Timeliness

5

Rule 24(b)’s timeliness inquiry concerns three factors: (1) the stage of the proceedings at

6

which intervention is sought, (2) the reason for and length of delay in seeking intervention, and (3)

7

the prejudice that would be suffered by other parties were intervention to be granted. See, e.g.,

8

State of Alaska v. Suburban Propane Gas Corp., 123 F.3d 1317, 1320 (9th Cir. 1997).

9

As to the first and third factors, the motion to intervene was filed just two months before
trial is scheduled to begin in this action, and over two months after the close of fact discovery.

11
United States District Court
Northern District of California

10

Stroz Friedberg contends that its motion is timely because it was filed “at the first opportunity

12

once it became clear that Defendants would not pay what they owe.” Mot. at 5. Though Stroz

13

Friedberg filed its motion just over two months after Defendants indicated they disputed the

14

amount owed, even this delay is significant when trial is rapidly approaching. The late stage of the

15

litigation, and the pleadings, motions, and discovery necessary to position Stroz Friedberg’s

16

claims for trial counsel against permitting intervention due to the third Rule 24(b) factor, prejudice

17

to the original parties to the litigation.

18

Courts have repeatedly held that prejudice to the parties is the “most important factor in

19

determining the timeliness of a motion to intervene.” Petrol Stops Nw. v. Continental Oil Co., 647

20

F.2d 1005, 1010 (9th Cir. 1981). It is clear to the Court that Stroz Friedberg’s intervention would

21

necessitate a delay in trial, prejudicing all original parties. Though Stroz Friedberg claims that it

22

would need only “limited discovery” and that it “does not seek to modify the current trial date,”

23

see Mot. at 5, the Court finds these assertions untenable. Stroz Friedberg would first need to file a

24

Complaint, which would be subject to a responsive pleading or motion(s) from Defendants; it

25

would then need to formulate a discovery plan, adjudicate any disputes over discovery, and engage

26

in depositions and document production. Plainly, even setting the pleadings would take more time

27

than is available prior to the scheduled first day of trial. The “limited discovery” Stroz Friedberg

28
3

1

seeks to take could itself require substantial time.1 Further, even attempting to fit the entirety of a

2

new case from complaint to trial in six weeks would prejudice Defendants, who would be forced

3

while preparing to defend themselves against Plaintiff’s claims to also litigate a whole new

4

controversy against Stroz Friedberg in a substantially limited timeframe. Cf., e.g., Yniguez at 731-

5

32.

6
7

The Court therefore finds that intervention is not timely because it would delay trial and
prejudice the ability of all original parties’ to adjudicate their interests in this litigation.

8

B.

Common Questions of Law or Fact

9

Though the Court may deny a motion to intervene on grounds of timeliness alone, see Nw.
Forest Res. Council v. Glickman, 82 F.3d 825, 839 (denying a motion to intervene under Rule

11
United States District Court
Northern District of California

10

24(b) because the proposed intervenor failed to show one of the three prongs needed for

12

intervention), the Court also finds that Stroz Friedberg has not shown a common question of law

13

or fact with the underlying litigation such that intervention would be appropriate. Stroz Friedberg

14

identifies as its common question of law or fact “Defendants’ discovery conduct,” noting that the

15

Court is “currently considering a motion for sanctions alleging that Defendants spoliated evidence

16

[and] have not produced requested materials.” Mot. at 5. It further argues that its claims “depend

17

heavily on this Court’s order adopting the parties’ agreement that Defendants bear the costs of

18

Stroz Friedberg’s services.” Id. at 6. Neither of these arguments is persuasive.
First, Stroz Friedberg’s identified common question of law, Defendants’ alleged improper

19
20

discovery conduct, is not a question common to the claims Plaintiff is asserting in this litigation or

21

the facts that give rise to this dispute – namely alleging that Defendants tortuously interfered with

22

a contractual relationship, engaged in unfair competition under California Business & Professions

23

Code § 17200, breached a contract, or engaged in a civil conspiracy. See First Amended

24

Complaint, ECF 37 at 1. Stroz Friedberg’s claim for fees related to its forensic investigation arises

25

only from the conduct of one of the parties in this litigation, not from the underlying causes of

26
27
28

1

Because the Court finds that a trial continuance would be necessary were Stroz Friedberg to
intervene, it interprets Plaintiff’s conditional non-opposition, which was premised on no delay to
the trial schedule, as an opposition to the motion to intervene.
4

1
2

action at issue in this litigation.
Stroz Friedberg’s argument relies heavily on Venegas v. Skaggs, a Ninth Circuit case in

3

which the court found that the district court had abused its discretion when it denied a motion to

4

intervene. In Venegas, a plaintiff alleged various causes of action regarding a civil rights violation,

5

including a claim under 42 U.S.C. § 1988. Plaintiff and his attorney had entered into a contingent

6

fee agreement, in which the attorney was entitled to 40 percent of the damages awarded at trial,

7

but that any statutory fees awarded under Section 1988 would be deducted from this amount. The

8

agreement between the parties further “allowed [counsel’s] intervention to protect his interest in

9

the fees.” 867 F.2d 527, 529. In post-trial motions, plaintiff’s trial counsel successfully obtained a
fee award. The district court also found that Section 1988 did not put a ceiling on trial counsel’s

11
United States District Court
Northern District of California

10

fees and confirmed as reasonable the contractual 40 percent contingent fee arrangement. On

12

appeal plaintiff obtained new counsel and the trial attorney moved to intervene in the district court

13

action to confirm a lien on the judgment to protect his fees. The district court denied the motion to

14

intervene even though no party opposed it. See id. at 529-30. The Ninth Circuit found that ruling

15

to be an abuse of discretion. Id. at 531.

16

In this case, the circumstances are quite different. Defendants oppose intervention, and

17

Plaintiff’s conditional non-opposition is predicated on no delay in the trial schedule, which the

18

Court has found infeasible. Stroz Friedberg also has no explicit contractual right to intervene in

19

the action to protect its interest. Here, Stroz Friedberg is not attempting to protect its earned

20

percentage interest in a judgment, but instead wants payment on an amount of fees disputed by a

21

party to the litigation. Stroz Friedberg’s right, if any, to the over $214,000 it seeks from

22

Defendants is not implicated by any determination that could be made by the Court or a jury in

23

this action. There is no relationship between Stroz Friedberg’s claim against Defendants and the

24

claims or facts that give rise to Plaintiff’s action against Defendants. A dispute over the payment

25

of fees for litigation services is not rendered common to the underlying action simply because both

26

parties allege that Defendants have engaged in bad behavior during discovery. Tellingly, Stroz

27

Friedberg cites no cases in its motion or reply where a court appointed expert (or any expert) was

28

permitted to intervene in an underlying action simply by virtue of a fee dispute with one of the
5

1

parties to that action.

2

Stroz Friedberg’s argument that the Court must determine whether the fees are reasonable,

3

and that these fees are taxable costs, see Mot. at 6-7, is irrelevant to determining whether the claim

4

raised by Stroz Friedberg has questions of law or fact common to the underlying litigation. Stroz

5

Friedberg’s argument, taken to its logical conclusion, would expand Rule 24(b) to permit

6

intervention by any expert or litigation support services provider in litigation where fees are

7

disputed.

8

Rule 24(b) was designed to promote efficiency by allowing the Court to adjudicate

9

disputes between multiple parties when it would be fair to do so and when the questions raised by
the intervenor are common to those raised by the plaintiff or defendant in the action. See, e.g.,

11
United States District Court
Northern District of California

10

Venegas at 529-31. Such a situation is not present here. Were Stroz Friedberg able to intervene in

12

this action at this late stage of the litigation, it would prejudice both parties to the underlying

13

action Additionally, Stroz Friedberg has not shown that its fee dispute with Defendants shares

14

common questions of law or fact with the underlying litigation.

15

IV.

16

ORDER
Stroz Friedberg has not shown that its motion is timely or that its claim (or claims)

17

against Defendants has questions of law or fact common to this action,2 and therefore fails to meet

18

its burden to show that permissive intervention is appropriate. For these reasons, Stroz Friedberg’s

19

motion to intervene is DENIED.

20
21

IT IS SO ORDERED.
Dated: April 28, 2015
______________________________________
BETH LABSON FREEMAN
United States District Judge

22
23
24
25
26
27
28

2

Because Stroz Friedberg has not filed a proposed complaint with its motion to intervene, the
Court is unclear as to how many causes of action it would seek to assert against Defendants in
order to vindicate its allegations for breach of contract.
6