UESUGI Farms, Inc. et al v. Michael J. Navilio & Son, Inc. et al
Filing
73
MEMORANDUM Opinion and Order. Signed by the Honorable John W. Darrah on 6/25/2015. Mailed notice (kp, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UESUGI FARMS, INC., et al.,
Plaintiffs,
v.
MICHAEL J. NAVILIO & SON, INC.,
d/b/a NAVILIO AND SON, INC., et al.,
Defendants.
)
)
)
)
)
)
)
)
)
)
No. 15-CV-1724
Judge John W. Darrah
MEMORANDUM OPINION AND ORDER
Plaintiffs Uesugi Farms, Inc. and San Joaquin Tomato Growers, Inc. have brought this
lawsuit for alleged violations of the Perishable Agricultural Commodities Act (“PACA”),
7 U.S.C. § 499e, et seq., against Defendants. Third Party Quality Food Products, Inc.
(“Quality”) has moved to intervene as an Intervenor-Plaintiff in the action. Defendants have
opposed Quality’s Motion. For the reasons discussed below, Quality’s Motion [53] is granted.
BACKGROUND
On February 26, 2015, Plaintiffs, sellers and shippers of perishable agricultural
commodities, filed their Complaint and a Motion for a Temporary Restraining Order (“TRO”)
against Defendants. Plaintiffs alleged that they had not been paid for produce that was shipped
to Defendants and sought to preserve their beneficiary interests in trust assets created pursuant to
PACA, 7 U.S.C. § 499e. 1 On February 27, 2015, the Court granted Plaintiffs’ TRO.
On March 19, 2015, by Agreed Order, the Court granted motions to intervene filed by
Anthony Marano Co. (“Marano”) and Strube Celery & Vegetable Co. (“Strube”). The
1
PACA provides for the establishment of a statutory trust in favor of unpaid suppliers of
perishable agricultural commodities. See 7 U.S.C. § 499e(c)(1)–(2); In re Ebro Foods, Inc.,
449 B.R. 759, 762 (N.D. Ill. 2011).
March 19, 2015 Agreed Order further reflected that the parties were negotiating a settlement. On
March 24, 2015, another third party, Bebo Distributing Co., Inc. (“Bebo”), filed a Motion to
Intervene. On March 25, 2015, with the parties’ agreement, the TRO was dissolved.
On March 27, 2015, Quality filed its Motion to Intervene as a Plaintiff. Quality alleges
that it is a perfected PACA trust creditor of Defendants and has claims to the same PACA trust
as the other Plaintiffs.
On April 16, 2015, two Agreed Orders were entered: one granted Bebo’s Motion to
Intervene, reflected that the parties had reached a settlement and dismissed Bebo’s Intervening
Complaint; the other reflected that the action was dismissed and that Marano and Strube had
withdrawn their Motions to Intervene. However, at that time, Quality’s Motion to Intervene was
still pending, and, for this reason, the action was not closed.
LEGAL STANDARD
Rule 24(a) of the Federal Rules of Civil Procedure governs intervention as a matter of
right. Under this rule, a party must establish: (1) a timely motion; (2) an interest relating to the
property or transaction that is the subject of the lawsuit; (3) potential impairment to its interest by
the disposition of the lawsuit; and (4) lack of adequate representation of its interest by the
existing parties. Sokaogon Chippewa Comm. v. Babbitt, 214 F.3d 941, 945-46 (7th Cir. 2003).
“[A]t some fundamental level, the proposed intervenor must have a stake in the litigation.” Id. at
946. Failure to meet any of these four factors requires the denial of the motion to intervene.
Reich v. ABC/York-Estes Corp., 64 F.3d 316, 321 (7th Cir. 1995).
2
ANALYSIS
Timeliness
A district court holds the discretion on the issue of timeliness and considers the following
factors: “(1) length of time the intervenor knew or should have known of his interest in the case;
(2) prejudice caused to the original parties by the delay; (3) prejudice to the intervenor if the
motion is denied; and (4) unusual circumstances.” Heartwood, Inc. v. U.S. Forest Serv., Inc.,
316 F.3d 694, 701 (7th Cir. 2003). “The test for timeliness is essentially one of reasonableness:
potential intervenors need to be reasonably diligent in learning of a suit that might affect their
rights, and upon so learning they need to act reasonably promptly.” Reich, 64 F.3d at 321
(internal citations and quotations omitted).
Here, Quality filed its Motion within a reasonable time of learning of the lawsuit. The
Complaint was filed on February 26, 2015, and Quality filed its Motion roughly one month later.
See, e.g., In re Discovery Zone Sec. Litig., 181 F.R.D. 582, 594 (N.D. Ill. 1998) (finding one
month to be a reasonable time); Reich, 64 F.3d at 321 (finding motion to intervene filed thirtythree days after party learned of interest in case timely); United States v. City of Chicago, 870
F.2d 1256, 1263 (7th Cir. 1989) (finding six weeks timely). Although Defendants argue that
Quality knew of its claims for months after the first missed payment, the analysis focuses on
when Quality acted diligently in pursuing its interest in this lawsuit. Clearly, Quality acted
diligently in filing its Motion within a short time of learning of the lawsuit.
This short amount of time also weighs against a finding of prejudice to the original
parties. Although Defendants argue that they will be prejudiced because they have entered into
settlement agreements with the other Plaintiffs, this prejudice is not based on Quality’s delay in
the case.
3
Defendants cite to the cases Sokaogon, 214 F.3d at 948, and City of Bloomington v.
Westinghouse Electric Corp., 824 F.2d 531, 535 (7th Cir. 1987) in support of their argument that
motions to intervene may prejudice the other parties where they have entered into settlement
agreements. However, Defendants ignore that, in both those cases, the settlement negotiations
involved much longer time periods than this case. In Sokaogon, 214 F.3d at 950, settlement
negotiations had been going on for six months. The settlement process in City of Bloomington,
824 F.2d at 535, spanned twenty months. Furthermore, there is no reason to think that Quality
waited to intervene in order to disrupt settlement agreements in this case. Cf. Sokaogon, 214
F.3d at 948 (“[That intervenor] waited until settlement was imminent strongly suggests that
[intervenor] was not interested in intervening in the litigation but in blocking a settlement
between the parties – or, at a minimum, this settlement.”).
Furthermore, Quality will suffer prejudice if its Motion is denied and the PACA trust
assets are dissipated. Also, Quality would be required to file a separate lawsuit, which would be
duplicative of the current lawsuit. See Larson v. JPMorgan Chase & Co., 530 F.3d 578, 583
(7th Cir. 2008) (finding motion to intervene timely because it not make sense to bring an
independent lawsuit and “clog[] up the courts with another suit they don’t need”). The Court
finds that Quality’s Motion is timely.
Interest Relating to the Subject Matter of the Action and Potential Impairment
The next factor is whether Quality has asserted an interest related to the main subject
matter of the action. An intervenor’s interest must be a “direct, significant legally protectable
one.” Reich, 64 F.3d at 322. “The clearest example of such an interest . . . is where the wouldbe intervenor has a legal claim that could be made the basis of an independent suit against the
defendant in the action in which he seeks to intervene.” Solid Waste Agency of N. Cook Cnty. v.
4
U.S. Army Corps of Eng’rs, 101 F.3d 503, 506 (7th Cir. 1996). “While a mere economic interest
may be insufficient to support the right to intervene, an intervenor’s interest in a specific fund is
sufficient to entitle intervention in a case affecting that fund.” Mountain Top Condo Ass’n v.
Dave Stabbert Master Builder, Inc., 72 F.3d 361, 366 (3d Cir. 1995).
Quality argues that it has the same claims against Defendants as the other Plaintiffs and
has an interest in a pro rata share of the PACA trust assets. Specifically, Quality claims that
Defendants owe it $43,458.50, plus interest, for produce sold to them. (Mot. Ex. 2 ¶ 9.) Quality
further alleges that it has preserved its trust benefits by fulfilling PACA notice requirements.
Quality has sufficiently established it has an interest in this litigation. See e.g.,
In re Milton Poulos, Inc., 947 F.2d 1351 (9th Cir. 1991); J.R. Brooks & Son, Inc. v.
Norman's Country Mkt., Inc., 98 B.R. 47, 51 (Bankr. N.D. Fla. 1989) (“Where the trust assets are
not sufficient to pay all PACA claims, the trust assets should be distributed on a pro rata basis to
all beneficiaries who have protected their rights to the trust benefits”); Matter of United Fruit &
Produce Co., Inc., 119 B.R. 10, 12 (Bankr. D. Conn. 1990) (“To date, all courts which have
addressed the question of claimed priority between PACA beneficiaries have ruled that a pro
rata distribution is required to trust beneficiaries when there are insufficient trust assets to meet
the trust obligations.”); In re Kornblum & Co., Inc., 81 F.3d 280, 286 (2d Cir. 1996) (“a single
PACA trust exists for the benefit of all of the sellers to a Produce Debtor”).
Likewise, Quality has established that its interest may be impaired. As a qualified trust
beneficiary, Quality is entitled to share in the PACA trust assets, and its potential recovery may
be adversely impacted if the funds are dissipated without its participation. “In some limited
situations, the fact that the first action might deplete specific, identifiable funds before the court
5
so as to make it unlikely that the proposed intervenor could be fully compensated has been
considered sufficient impairment of interest to meet the Rule 24(a)(2) standard.”
Zurich Capital Markets Inc. v. Coglianese, 236 F.R.D. 379, 386 (N.D. Ill. 2006) (quoting
Jet Traders Inv. Corp. v. Tekair, Ltd., 89 F.R.D. 560, 569-70 (D. Del. 1981) (“[T]hese cases are
limited to situations where a discrete, distinguishable fund exists and where the intervenor has
some presently, legally enforceable interest in that fund.”)). Quality has satisfied this factor as
well.
Lack of Adequate Representation
The last factor to consider is whether any existing party to the litigation adequately
represents Quality’s interests. “[T]he Supreme Court in articulating the standard under this . . . .
element of Rule 24(a)(2) has stated that this ‘requirement of the Rule is satisfied if the applicant
shows that representation of his interest may be inadequate; and the burden of making that
showing should be treated as minimal.’” Lake Investors Dev. Grp., Inc. v. Egidi Dev. Grp., 715
F.2d 1256, 1261 (7th Cir. 1983) (citing Trbovich v. United Mine Workers of Am., 404 U.S. 528,
538 n.10 (1972) (internal quotations omitted)).
Here, the other Plaintiffs have entered into settlement agreements with Defendants and
have no motivation to represent Quality’s share in the settlement or PACA trust assets. Indeed,
the other Plaintiffs’ interests are potentially adverse to Quality, as they are competing for the
same funds. Quality has demonstrated that no party in the litigation adequately represents their
interests and has satisfied this factor as well.
Consequently, Quality has established that it should be permitted to intervene as a matter
of right.
6
CONCLUSION
For the reasons stated above, Quality’s Motion to Intervene [53] is granted.
Date: June 25, 2015
______________________________
JOHN W. DARRAH
United States District Court Judge
7
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?