JMCB, LLC v. The Board of Commerce & Industry et al
RULING AND ORDER granting 22 for Reconsideration of 17 Order on Motion to Dismiss, and MOTION to Vacate Plaintiff's Notice of Voluntary Dismissal Or, in the Alternative, MOTION to Intervene. The 23 Consolidated Motion For Clarification o f the Complaint Pursuant to Federal Rule of Civil Procedure 12(E) or 12(F) and Motion For Joinder of Party Pursuant to Federal Rules of Civil Procedure 12(B)(7) and 19 is GRANTED. Plaintiff's 16 Notice of Voluntary Dismissal is VACATED. SPL will be joined in this action as a defendant either as a necessary and indispensable party under Rule 19 or through intervention. Plaintiff is given 28 days to file an amended complaint . The 14 Motion to Dismiss for Failure to State a Claim is DENIED WITHOUT PREJUDICE. Signed by Judge John W. deGravelles on 12/5/2017. Modified on 12/5/2017 (LLH).
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
JMCB, LLC, ON BEHALF OF ITSELF
AND ALL OTHERS SIMILARLY
THE BOARD OF COMMERCE &
DEPARTMENT OF ECONOMIC
DEVELOPMENT; AND SABINE PASS
RULING AND ORDER
This matter comes before the Court on three motions: (1) Sabine Pass Liquefaction,
LLC’s (“SPL’s”) Motion to Reconsider Order and Vacate Plaintiff’s Notice of Voluntary
Dismissal or, in the Alternative, Motion to Intervene (the “Motion to Intervene”) (Doc. 22); (2)
the Consolidated Motion for Clarification of the Complaint Pursuant to Federal Rule of Civil
Procedure 12(e) or 12(f) and Motion for Joinder of Party Pursuant to Federal Rule of Civil
Procedure 12(b)(7) and 19 (the “Motion for Clarification” and “Motion to Join”) (Doc. 23) filed
by Defendants, the Board of Commerce and Industry (the “Board”) and the Louisiana
Department of Economic Development (the “LDED”) (collectively, the “State Defendants”); and
(3) the Motion to Dismiss Certain Claims Pursuant to Federal Rule of Civil Procedure 12(b)(6)
(the “Motion to Dismiss”) (Doc. 14) by the State Defendants. All three motions are opposed
(Docs. 20, 30, 31), and reply memoranda have been filed (Doc. 25, 39, 41). Oral argument is not
necessary. The Court has carefully considered the law, the facts in the record, and the arguments
and submissions of the parties and is prepared to rule.
For the following reasons, the Motion to Intervene and Motion to Join are granted. SPL
will be joined in this action, either as a necessary and indispensable party under Fed. R. Civ. P.
19 or by intervention (of right or permissive) under Rule 24. The Motion for Clarification is also
granted in that Plaintiff is required to file an amended complaint within twenty-eight (28) days of
this order to clarify the allegations against all parties. For that reason, the Motion to Dismiss is
denied without prejudice; the State Defendants can re-urge these arguments, if necessary, after
the Plaintiff has filed its amended complaint.
Relevant Factual and Procedural Background
Article VII, Section 21(F) of the Louisiana Constitution of 1974 provides that the Board,
with approval from the governor, “may enter into contracts for the exemption from ad valorem
taxes of a new manufacturing establishment or an addition to an existing manufacturing
establishment, on such terms and conditions as the [B]oard, with the approval of the governor,
deem in the best interest of the state.” (Doc. 1-2 at 2 (quoting La. Const. art. VII, § 21(F)).) The
constitutional provision specifically defines “manufacturing establishment” and “addition to a
manufacturing establishment” as follows:
The terms “manufacturing establishment” and “addition” as used herein mean a
new plant or establishment or an addition or additions to any existing plant or
establishment which engages in the business of working raw materials into wares
suitable for use or which gives new shapes, qualities or combinations to matter
which already has gone through some artificial process.
(Id. (quoting La. Const. art. VII, § 21(F)).) Additionally, LDED regulations govern the
administration of the exemption. (Doc. 1-2 at 2–3.)
Plaintiff alleges in its Class Action Petition (“Petition”) that it “currently owns property
(land) in Cameron Parish which is subject to ad valorem taxes for which no exemption is
available.” (Doc. 1-2 at 7.) The Petition further claims that SPL applied for and entered into a
contract with the State Defendants for the above tax exemptions. (Doc. 1-2 at 3–5.) According
to the Petition, a LDED worksheet recommending approval during the process stated that the
contract amount was $6 billion and that the “ad valorem tax was $1,447,200,000”. (Doc.1-2 at
Plaintiff now prays for a judgment declaring that the contract between the State
Defendants and SPL is, for certain reasons, “an improper act of the Board in violation of . . .
Article VII, Section 21(F), and declaring that the Contract is null and void and without legal
effect[.]” (Doc. 1-2 at 12–13.) Specifically, Plaintiff asserts that SPL submitted an application to
LDED that said “that it was applying for an exemption under the ‘addition to an existing
manufacturing establishment’ provision of [Article VII, § 21(F)], when, in fact, SPL did not have
an existing manufacturing plant or establishment of any kind at the project location at the time
the Board considered its Application”. (Doc. 1-2 at 7–8.) Plaintiff also alleges that SPL’s facility
does not satisfy the definition of “manufacturing establishment” or “addition” detailed above.
(Doc. 1-2 at 9.)
Plaintiff brings this action on behalf of itself and as representatives of the following class:
Any and all individuals and businesses that own property in Cameron Parish, State
of Louisiana that is subject to ad valorem taxation, and any and all Cameron Parish
governmental bodies that are entitled to receive Cameron Parish ad valorem
property taxes, as of October 12, 2016.
Specifically excluded from the class are Sabine Pass Liquefaction, LLC, its
successors and assigns, and all members of the judiciary, their spouses, and their
immediate family members.
(Doc. 1-2 at 10–11.)
Plaintiff originally named SPL as a defendant. (Doc. 1-2.) After the suit was removed
(Doc. 1), Plaintiff filed a notice of dismissal of SPL pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i)
(Doc. 16), which this Court granted on April 5, 2017. (Doc. 17.) The instant motions have
A. Motion to Intervene and Motion to Join
1. Introduction and Summary
SPL and the State Defendants essentially ask that SPL be allowed to join this case, either
as a necessary party under Fed. R. Civ. P. 19 or through intervention (either of right or
permissive) under Rule 24. State Defendants and SPL thus request that the Court vacate its
earlier order allowing Plaintiff to dismiss SPL.
Plaintiff argues that, when it filed its notice of voluntary dismissal, no order was
necessary; the notice acted automatically and by operation of law. According to Plaintiff, that
notice of voluntary dismissal in effect bars SPL from joining the action.
Putting aside the questions of whether the notice of dismissal operated automatically
without the need for the order (which it does, Yesh Music v. Lakewood Church, 727 F.3d 356,
362 (5th Cir. 2013) (citations omitted)) and the question of whether the Court can vacate that
notice (which it can, id. at 362–63), the first key question before the Court is whether a necessary
or indispensable party can be joined despite a notice of dismissal. The short answer is it can.
The second critical question is whether SPL must or can be joined under Rules 19 or 24. The
Court finds that joinder is required under either provision based on the plain language of the
rules and relevant case law.
2. Effect of Notice of Voluntary Dismissal
In short, the Court rejects the Plaintiff’s argument that its notice of voluntary dismissal
prevents SPL from re-joining the litigation. Plaintiff cites American Cyanamid Co. v. McGhee,
317 F.2d 295 (5th Cir. 1963), among others, for the proposition that “a dismissal under Rule
41(a)(1)(A)(i) is ‘a matter of right running to the plaintiff and may not be extinguished or
circumscribed by adversary or court.’ ” (Doc. 31 at 2 (quoting McGhee, 317 F.2d at 297).) But
the “single issue [in McGhee] [was] whether a voluntary dismissal by order of court after an
initial voluntary dismissal of the same suit by notice in a state court bars the filing of a third suit
in federal court under the provisions of Rule 41(a)[.]” Id., 317 F.2d at 296. McGhee contained
no discussion of indispensable parties.
Plaintiff is correct that it has an interest in controlling the case, but, under Rule 19, this is
not the only issue in play:
As the Fifth Circuit indicated in Schutten v. Shell Oil Company, [421 F.2d 869 (5th
Cir. 1970)], the essence of Rule 19 is to balance the rights of all those whose
interests are involved in the action.
The plaintiff has the right to “control” his own litigation and to
choose his own forum. This “right” is, however, like all other rights,
“defined” by the rights of others. Thus the defendant has the right to
be safe from needless multiple litigation and from incurring
avoidable inconsistent obligations. Likewise the interests of the
outsider who cannot be joined must be considered. Finally there is
the public interest and the interest the court has in seeing that insofar
as possible the litigation will be both effective and expeditious. [Id.
7 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1602 (3d ed. 2017).
Wright & Miller thus recognizes: “Compulsory joinder is an exception to the general practice of
giving plaintiff the right to decide who shall be the parties to a lawsuit.” Id. “Although a court
must take cognizance of this traditional prerogative in exercising its discretion under Rule 19,
As Plaintiff argues, Schutten said this when “deciding whether ‘in equity and good conscience’ the court should
proceed without a person whose joinder is impossible.” Schutten, 421 F.2d at 873. (Doc. 31 at 9). That is, Shutten
was talking about the Rule 19(b) analysis. But Wright & Miller appears to correctly recognize that these interests
underlie Rule 19 as a whole, and the Court agrees with that assessment. Moreover, as will be shown below, this
Court will conduct a Rule 19(b) analysis and determine whether the case can proceed without SPL. In short, it
plaintiff's choice will have to be compromised when significant countervailing considerations
make the joinder of particular absentees desirable.” Id. “[T]hese factors include: “(1) the
interests of the present defendant; (2) the interests of potential but absent plaintiffs and
defendants; [and] (3) the social interest in the orderly, expeditious administration of justice.” Id.
Thus, Plaintiff’s attempt to have its notice of dismissal trump all other considerations is directly
contrary to these principles, all of which weigh strongly in favor of SPL joining the case.
Additionally, case law shows that the State Defendants and SPL have the stronger
argument here. “The exception to [the] general principle [that a Rule 41(a)(1) notice of dismissal
can dismiss a single defendant] is that a defendant may not be dismissed if it is an indispensable
party whose joinder is required by Fed. R. Civ. P. 19.” Eckinger v. Xpress Glob. Sys., Inc., No.
15-3147, 2016 WL 738206, at *2 (D. Neb. Feb. 23, 2016) (citing Eniola v. Leasecomm Corp.,
214 F. Supp. 2d 520 (D. Md. 2002)) (finding that defendant at issue was “not a necessary party
so as to bar dismissal”). Other cases have discussed the “maxim that Rule 41(a)(1) may not
properly be used to dismiss an indispensable party”. Frank v. Trilegiant Corp., No. 10-5211,
2012 WL 214100, at *4–*5 (E.D.N.Y. Jan. 24, 2012) (ordering additional briefing on whether
three persons “are indispensable parties under Rule 19, such that their dismissal from the
litigation would be improper pursuant to Rule 41(a)(1).”). Still another has observed that, while
a plaintiff is “entitled as a matter of course” to voluntarily dismiss himself, “[t]he only barrier to
doing so . . . would be a finding of his indispensability under Rule 19”. Smith v. Green Tree
Servicing, LLC, No. 09-710, 2010 WL 1050350, at *3 (S.D.W. Va. Mar. 18, 2010) (ultimately
concluding that a plaintiff dismissing his action was not an indispensable party).
One case found that, when plaintiff had voluntarily dismissed an indispensable party, the
“obvious and appropriate remedy [wa]s joinder,” Nogueras-Cartagena v. Rosello-Gonzalez, 182
F.R.D. 380, 385 (D.P.R. 1998) (citation omitted). See also Glob. Detection & Reporting, Inc. v.
Securetec Detektions-Systeme AG, No. 08-5441, 2008 WL 5054728, at *1 (S.D.N.Y. Nov. 21,
2008) (“GDR has attempted to moot the motion to dismiss by dismissing Securetec U.S. from
the litigation without prejudice, pursuant to Fed. R. Civ. P. 41(a)(1). But this effort fails.
Dismissal of a party cannot restore diversity jurisdiction where that party is ‘indispensable’ to the
litigation.” (citation omitted)).
Other cases (some of which have been noted above) have recognized this rule but have
simply had no need to apply it because the person sought to be dismissed was not an
indispensable party. See Haase v. Mallenkrodt, Inc., 415 F. Supp. 889, 890 n. 1 (S.D.N.Y. 1976)
(“Since Permutit Company, Inc. is not an indispensable party, its removal is both appropriate and
sufficient to assure the requisite diversity among the remaining parties”); Brown v. Texas & P. R.
Co., 392 F. Supp. 1120, 1123–24 (W.D. La. 1975) (stating that “[a] federal district court has the
power to preserve and perfect is diversity jurisdiction over a case by dropping a nondiverse party
providing the nondiverse party is not an indispensable party whose presence in the action is
required under Rule 19,” and finding that it would be an abuse of discretion in that case to
prevent plaintiff from exercising the right to remove nondiverse defendant). All of these
decisions confirm what Wright & Miller stated: “Compulsory joinder is an exception to the
general practice of giving plaintiff the right to decide who shall be the parties to a lawsuit.”
Wright & Miller, Federal Practice and Procedure § 1602.
Plaintiff attacks Eckinger on the grounds that its authority, Enjola, reached the opposite
holding, but this is not so. Plaintiff is correct that, in Enjola, two defendants (Leasecomm and
Bank) opposed the dismissal of a third defendant (Nworgu) on the grounds that he was a
necessary party. Id., 214 F. Supp. 2d at 523. In rejecting the argument, the district court
Fed. R. Civ. P. 41(a)(1) states, in pertinent part: “an action may be dismissed by the
plaintiff without order of court (i) by filing a notice of dismissal at any time before
service of the adverse party of an answer or of a motion for summary judgment,
whichever first occurs....” While Leasecomm and Bank seek to oppose this motion
to dismiss pursuant to Fed. R. Civ.P. 19(b) on the ground that Nworgu is an
indispensable party, Plaintiffs may dismiss Nworgu by right under Rule 41(a)(1)
and do not need leave of court to do so. In effect, the dismissal took place when the
motion was filed. Accordingly, the oppositions filed by Leasecomm and Bank are
moot and Plaintiffs’ motion to dismiss Nworgu will be granted.
Id. However, what the State Defendants correctly argue is that the Enjola court specifically
noted that Nworgu was not an indispensable party and that jurisdictional defects can be cured by
the dismissal of dispensable parties:
Bank argues in its motion to dismiss, and the court recognizes, that, because both
Nworgu and Plaintiffs are Maryland residents, there was not complete diversity at
the time the case was filed. In a diversity case, diversity must be complete for the
court to have subject matter jurisdiction. Strawbridge v. Curtiss, 7 U.S. 267, 3
Cranch 267, 2 L. Ed. 435 (1806). However, jurisdictional defects may be cured and
complete diversity established before trial commences by the dismissal of
dispensable nondiverse parties. Newman–Green, Inc. v. Alfonzo–Larrain, 490 U.S.
826, 831, 109 S. Ct. 2218, 104 L.Ed.2d 893 (1989), citing Fed. R. Civ. P. 21; see
also Caterpillar, Inc. v. Lewis, 519 U.S. 61, 73, 117 S. Ct. 467, 136 L. Ed. 2d 437
(1996). In light of the previous lawsuits involving the same transaction and
occurrence, and the decision on the merits by the Massachusetts state court,
Defendants cannot argue that Nworgu is an indispensable party to this suit.
Therefore, the jurisdictional defect has now been cured by Nworgu’s dismissal.
Eniola, 214 F. Supp. 2d at 523 n. 2. Thus, it is likely this footnote that Eckinger was referring to,
and it in fact supports the position of that (and this) Court.
Thus, based on these cases, the critical question is whether SPL is an indispensable party.
“A party is indispensable if it is both ‘necessary’ under Fed. R. Civ. P. Rule 19(a) and
indispensable to the action under Rule 19(b).” Glob. Detection & Reporting, 2008 WL 5054728,
at *1 (citing ConnTech Dev. Co. v. Univ. of Conn. Educ. Props., Inc., 102 F.3d 677, 681 (2d Cir.
1996)); see also Siemens Bldg. Techs., Inc. v. Jefferson Par., No. 03-2272, 2004 WL 1837386, at
*4 (E.D. La. Aug. 16, 2004) (explaining that a party who satisfies the requirements of Rule 19(a)
is a “necessary” party while Rule 19(b) governs whether a necessary party is “indispensable”
(citing Fed. R. Civ. P. 19(a), (b))). The Court now turns to this question.
3. Indispensable Party
a. Rule 19 Standard
Rule 19(a), entitled “Persons Required to Be Joined if Feasible,” provides in
(1) Required Party. A person who is subject to service of process and whose joinder
will not deprive the court of subject-matter jurisdiction must be joined as a party if:
. . . (B) that person claims an interest relating to the subject of the action and is so
situated that disposing of the action in the person’s absence may: (i) as a practical
matter impair or impede the person’s ability to protect the interest;
Fed. R. Civ. P. 19(a)(1)(B)(i). The Court notes, as the State Defendants did, that this rule is
written in the mandatory; a necessary party “must be joined”. Id. Rule 19(a)(1)(B)(i)
“recognizes the importance of protecting the person whose joinder is in question against the
practical prejudice to him which may arise through a disposition of the action in his absence.”
Fed. R. Civ. P. 19, Notes of Advisory Committee on Rules—1966 Amendment.
Rule 19(b) provides:
(b) When Joinder Is Not Feasible. If a person who is required to be joined if feasible
cannot be joined, the court must determine whether, in equity and good conscience,
the action should proceed among the existing parties or should be dismissed. The
factors for the court to consider include: (1) the extent to which a judgment rendered
in the person's absence might prejudice that person or the existing parties; (2) the
extent to which any prejudice could be lessened or avoided by: (A) protective
provisions in the judgment; (B) shaping the relief; or (C) other measures; (3)
whether a judgment rendered in the person's absence would be adequate; and (4)
whether the plaintiff would have an adequate remedy if the action were dismissed
Fed. R. Civ. P. 19(b).
The Fifth Circuit recognizes that “Rule 19 provides for the joinder of all parties whose
presence in a lawsuit is required for the fair and complete resolution of the dispute at issue.” HS
Res., Inc. v. Wingate, 327 F.3d 432, 438 (5th Cir. 2003). A related provision, Rule 12(b)(7), allows
for dismissal for “failure to join a party under Rule 19.” Id. As the Fifth Circuit has stated:
Rule 12(b)(7) analysis entails two inquiries under Rule 19. The court must first
determine under Rule 19(a) whether a person should be joined to the lawsuit. If
joinder is warranted, then the person will be brought into the lawsuit. But if such
joinder would destroy the court’s jurisdiction, then the court must determine under
Rule 19(b) whether to press forward without the person or to dismiss the litigation.
Id. at 439. “The burden [on a Rule 12(b)(7) motion] is on the party raising the defense to show
that the person who was not joined is needed for a just adjudication.” 7 Charles A. Wright &
Arthur R. Miller, Federal Practice and Procedure § 1609 (3d ed. 2017). Nevertheless:
[W]hen an initial appraisal of the facts reveals the possibility that an unjoined party
whose joinder is required under Rule 19 exists, the burden devolves on the party
whose interests are adverse to the unjoined party to negate this conclusion and a
failure to meet that burden will result in the joinder of the party or dismissal of the
Id. Ultimately, Rule 19 recognizes that, “[w]henever feasible, the persons materially interested
in the subject of an action . . . should be joined as parties so that they may be heard and a
complete disposition made.” Fed. R. Civ. P. 19, Notes of Advisory Committee on Rules—1966
b. Rule 19(a): Necessary Party Analysis
Here, SPL certainly has an “interest relating to the subject of the action[.]” Plaintiff
seeks to invalidate a contract between the State Defendants and SPL on the grounds that it is
unconstitutional. If successful, SPL will lose their property tax exemptions and face over a
billion dollars in additional tax liability, after SPL spent billions building a facility allegedly in
reliance on those exemptions.
Additionally, deciding the case in SPL’s absence would, “as a practical matter impair or
impede [SPL’s] ability to protect the interest[.]” If SPL were excluded from this case, SPL
would essentially be at risk of losing its rights under the contract without any ability to voice an
objection. Such a situation would be manifestly unjust and certainly qualify as an impairment or
impediment to protecting its interest.
As a result, the Court finds that the requirements for joinder under Rules 19(a) have been
met. Thus, if the notice of voluntary dismissal is not a bar, then SPL must be joined in the case.
To answer this question, the Court will look at whether SPL is an indispensable party under Rule
19(b). The Court notes a Rule 19(b) analysis is usually done only when joinder under Rule 19(a)
would result in the loss of subject matter jurisdiction. This is not the case here. Nevertheless,
the Court believes that the above cases reflect that this discussion is at least advisable (and
potentially required) when there has been a notice of voluntary dismissal.
c. Rule 19(b): Indispensable Party Analysis
Again, under Rule 19(b), the Court must determine whether “in equity and good
conscience, the action should proceed” in light of the following four factors:
(1) the extent to which a judgment rendered in the person's absence might prejudice
that person or the existing parties; (2) the extent to which any prejudice could be
lessened or avoided by: (A) protective provisions in the judgment; (B) shaping the
relief; or (C) other measures; (3) whether a judgment rendered in the person's
absence would be adequate; and (4) whether the plaintiff would have an adequate
remedy if the action were dismissed for nonjoinder.
Fed. R. Civ. P. 19(b).
Here, the Court finds that SPL is indispensable. A judgment rendered in SPL’s absence
would be extraordinarily prejudicial to it, and the Court sees little way of lessening that
prejudice. Further, the Court believes that a judgment rendered without SPL would be
inadequate, as SPL is not a party to this case and could bring its own action seeking to validate
the contract. The fourth factor is not really an issue, as SPL can be joined in this suit without
depriving the Court of subject matter jurisdiction. Further, even if the fourth factor did weigh in
Plaintiff’s favor, it would not outweigh the other factors. Consequently, the Court concludes
that, in equity and good conscience, this suit cannot proceed without SPL as a party.
Case law supports the Court’s conclusion. As SPL argued in briefing, the Eastern
District of Louisiana concisely summarized the position of courts on this issue:
“[I]n an action to set aside a contract, all persons who are parties to the contract
may be affected by the determination of the action and are indispensable parties for
the purposes of Rule 19.” Niagra Mohawk Power v. Tonawanda Band, 862 F. Supp.
995 (W.D.N.Y. 1994) aff'd, 94 F.3d 747 (2nd Cir. 1996). Federal courts
consistently hold that a party to an agreement in dispute is an indispensable party
under F. Rule Civ. P. 19(a) in a suit seeking to rescind, annul, or interpret that
agreement. See, e.g., Niagra Mohawk Power, 862 F. Supp. 995; Lomayaktewa v.
Hathaway, 520 F.2d 1324, 1325 (9th Cir. 1975) cert denied, 424 U.S. 903, 96 S.
Ct. 1492 (1976); Moore v. Ashland Oil, 901 F.2d 1445 (7th Cir. 1990); The
Torrington Co. v. Youst, 139 F.R.D. 91 (Dist. S.C. 1990); Denkmann Assoc. v..
International Paper Co., 132 F.R.D. 168 (M.D. La. 1990).
Siemens Bldg. Techs., Inc., 2004 WL 1837386, at *6 (“In essence, Siemens seeks a declaration
that the contract between JCI and the Parish is null and void. The Court finds that JCI is an
indispensable party that must be joined pursuant to Rule 19.”); see also 7 Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure § 1613 (3d ed. 2017) (“In cases seeking
reformation, cancellation, rescission, or otherwise challenging the validity of a contract, all
parties to the contract probably will have a substantial interest in the outcome of the litigation
and their joinder will be required.”). Thus, case law confirms the Court’s interpretation of the
Plaintiff responds that “this case is unique and distinguishable” because it concerns a
taxpayer challenge to a tax exemption “merely memorialized in a contract.” (Doc. 31 at 9–10.)
But, Plaintiff cites to no authority for this argument. Further, the heart of this dispute is whether
SPL’s contract with the State Defendants is invalid so as to subject SPL to about $1.4 billion in
additional taxes it contracted out of. It defies logic to hold that the general rule does not apply in
Accordingly, SPL and the State Defendants have demonstrated that SPL must be joined
in this case. The Court’s previous order dismissing SPL (Doc. 17), even though unnecessary to
begin with, was, under these peculiar circumstances, manifestly unjust, and the Court will thus
vacate it. See Yesh Music, 727 F.3d at 363. Similarly, the Plaintiff’s notice of dismissal (Doc.
16) will be set aside. SML will be joined in this action.
a. Rule 24(a) Standard
As SPL correctly argues, intervention is an additional ground for joining SPL. Fed. R.
Civ. P. 24(a), entitled “Intervention of Right,” provides in relevant part:
On timely motion, the court must permit anyone to intervene who: . . . (2) claims
an interest relating to the property or transaction that is the subject of the action,
and is so situated that disposing of the action may as a practical matter impair or
impede the movant’s ability to protect its interest, unless existing parties adequately
represent that interest.
The Court notes, as SPL did, that this rule is also written as mandatory; the Court “must permit
anyone to intervene” who satisfies the requirements of the rule. Id. Those four requirements are:
(1) The application must be timely; (2) the applicant must have an interest relating
to the property or transaction that is the subject of the action; (3) the applicant must
be so situated that the disposition of the action may, as a practical matter, impair or
impede its ability to protect its interest; and (4) the applicant’s interest must be
inadequately represented by the existing parties to the suit.
Brumfield v. Dodd, 749 F.3d 339, 341 (5th Cir. 2014) (citing Sierra Club v. Espy, 18 F.3d 1202,
1204–05 (5th Cir. 1994)). “Although the movant bears the burden of establishing its right to
intervene, Rule 24 is to be liberally construed.” Id. (citation omitted). “The inquiry is a flexible
one, and a practical analysis of the facts and circumstances of each case is appropriate.” Id.
(citations and quotations omitted). The Fifth Circuit precedent recognizes a “broad policy
favoring intervention[.]” Wal–Mart Stores, Inc. v. Texas Alcoholic Beverage Comm'n, 834 F.3d
562, 569 (5th Cir. 2016).
b. First Requirement under Rule 24(a): Timeliness
First, SPL’s motion was timely. “The timeliness inquiry is contextual; absolute measures
of timelines should be ignored.” Wal–Mart Stores, 834 F.3d at 565 (citations and quotations
omitted). “Timeliness is not limited to chronological considerations but is to be determined from
all the circumstances.” Id. (citations and quotations omitted). The Fifth Circuit has stated:
“Determining the timeliness of a motion to intervene entails consideration of four
factors: (1) The length of time during which the would-be intervenor actually knew
or reasonably should have known of its interest in the case before it petitioned for
leave to intervene; (2) the extent of the prejudice that the existing parties to the
litigation may suffer as a result of the would-be intervenor's failure to apply for
intervention as soon as it knew or reasonably should have known of its interest in
the case; (3) the extent of the prejudice that the would-be intervenor may suffer if
intervention is denied; and (4) the existence of unusual circumstances militating
either for or against a determination that the application is timely.” . . . We . . . have
“rejected the notion that the date on which the would-be intervenor became aware
of the pendency of the action should be used to determine whether it acted
promptly,” and have held that “[a] better gauge of promptness is the speed with
which the would-be intervenor acted when it became aware that its interests would
no longer be protected by the original parties.”
Swoboda v. Manders, 665 F. App'x 312, 314 (5th Cir. 2016) (quoting Sierra Club, 18 F.3d at
Here, SPL made its motion less than three weeks after the Court’s order dismissing it
from the case. (See Docs. 16, 17, 22.) Plaintiff has failed to make a convincing showing of
prejudice from SPL’s slight delay, while SPL’s prejudice if left out of the case would be
extremely high. By any measure, SPL acted promptly “when it became aware that its interests
would no longer be protected by the original parties.” Swoboda, 665 F. App'x at 314 (finding that
motion to intervene was “not unreasonable” and “timely under the circumstances of this case”
when made forty-five days after intervenor “became aware that its privilege would not be
protected” by another party). In short, the motion to intervene was timely.
c. Second and Third Requirements under Rule 24(a): SPL’s
Interest in the Case and Impairment of that Interest.
As to the second and third requirement for intervention, again, “the applicant must have
an interest relating to the property or transaction that is the subject of the action,” and “the
applicant must be so situated that the disposition of the action may, as a practical matter, impair
or impede its ability to protect its interest.” Brumfield, 749 F.3d at 341 (citation omitted). Under
Rule 24(a), “an applicant is entitled to intervene in an action when his position is comparable to
that of a person under Rule 19(a)(2)(i),2 as amended, unless his interest is already adequately
represented in the action by existing parties.” Fed. R. Civ. P. 24, Notes of Advisory Committee
on Rules—1966 Amendment. Thus, the second and third requirement are essentially the same as
the Rule 19(a) analysis. For the same reasons articulated above, the Court finds that these
prerequisites for intervention have been met.
d. Fourth Requirement under Rule 24(a): Adequacy of State
Defendants Representing SPL
Lastly, SPL’s interest is not adequately represented by the State Defendants. “The
applicant has the burden of demonstrating inadequate representation, but this burden is
‘minimal.’ ” Brumfield, 749 F.3d at 345 (citation omitted). “This requirement, however, must
have some teeth, so there are two presumptions of adequate representation.” Id. (citation
omitted). While the first presumption is not implicated here, “[t]he second presumption arises
The current version of Rule 19(a)(1)(B)(i) mirrors the old Rule 19(a)(2)(i). Compare Fed. R. Civ. P. 19(a)(1)(B)(i)
(2017), with Schutten v. Shell Oil Co., 421 F.2d 869, 871 (5th Cir. 1970) (quoting Fed. R. Civ. P. 19(a)(2)(i) (1966)).
when the would-be intervenor has the same ultimate objective as a party to the lawsuit, in which
event the applicant for intervention must show adversity of interest, collusion, or nonfeasance on
the part of the existing party to overcome the presumption.” Id. (citations and quotations
SPL points to several cases providing support for allowing SPL to intervene, but the
Court finds two particularly convincing. First, in Wal–Mart Stores, Inc. v. Texas Alcoholic
Beverage Comm'n, 834 F.3d 562, 569 (5th Cir. 2016), a trade group (“Association”) sought to
intervene in a lawsuit between Wal-Mart and the Texas Alcoholic Beverage Commission. Id. at
564. Wal-Mart claimed that the “regulatory system administered by the Commission operate[d]
exclusively for the benefit of the Association’s members” in violation of various constitutional
provisions. Id. The Association sought “to intervene in defense of the regulatory system.” Id. In
reversing the denial of the Association’s motion to intervene, the Fifth Circuit discussed the
adequacy requirement, stating:
Even assuming, arguendo, that either of the two presumptions of adequate
representation applies, the Association has shown “adversity of interest” and “that
its interest is in fact different from that of the [governmental entity] and that the
interest will not be represented by [it].” [(citation omitted).] The Association has
offered several reasons that the Commission's representation may be inadequate.
The Commission seeks to defend all portions of the litigation, which limits the
range of arguments it can advance, while the Association does not seek to defend
the Hotel Exception. The Association intends to seek a declaratory judgment that
the regulatory scheme is constitutionally valid; the Commission merely seeks to
defend the present suit and would accept a procedural victory. The Association
argues that its interests—protecting its members' businesses—are narrower than the
Commission's broad public mission. It highlights arguments that the Commission
cannot make given the differences in the objectives of the Commission and the
Association. Given the broad policy favoring intervention in our precedent, we are
satisfied that the Association has demonstrated that it may be inadequately
represented in the lawsuit.
Wal-Mart Stores, 834 F.3d at 569.
Similarly, in Brumfield, the Fifth Circuit found that the “second presumption [did] not
[I]n Sierra Club we bolstered our reasoning by noting that “[t]he government must
represent the broad public interest, not just the economic concerns of the timber
industry,” and therefore the timber groups satisfied the minimal burden of showing
Although a private group does not always satisfy this prong just because a
governmental entity is on the same side of an issue, in this case the parents have
easily met their minimal burden. The state has many interests in this case—
maintaining not only the Scholarship Program but also its relationship with the
federal government and with the courts that have continuing desegregation
jurisdiction. The parents do not have the latter two interests; their only concern is
keeping their vouchers. We cannot say for sure that the state's more extensive
interests will in fact result in inadequate representation, but surely they might,
which is all that the rule requires.
Brumfield, 749 F.3d at 346 (reversing denial of motion to intervene of right).
The same reasoning applies here. Contrary to Plaintiff’s arguments, the State Defendants
and SPL may not have completely aligned interests. In the motion to dismiss filed by SPL
before its dismissal (Doc. 15), SPL made different arguments than the State Defendants did in
their motion to dismiss, and differing arguments was a factor in Wal-Mart. (Doc. 14.) But even
more importantly, as in Brumfield and as SPL contends, the State Defendants are concerned with
the administration of their tax program generally whereas SPL is directly invested in ensuring
that these particular tax exemptions remain in effect. SPL stands to lose over a billion dollars if
Plaintiff prevails; the State Defendants may have no monetary loss.
In sum, at the very least, SPL and the State Defendant’s interests “might” differ, and that
“is all that the rule requires.” Brumfield, 749 F.3d at 346. For these reasons, the fourth
requirement is satisfied, particularly given the “minimal” burden and the “broad policy favoring
intervention”. All four prerequisites for intervention of right have thus been met.
e. Effect of Notice of Voluntary Dismissal (Revisited)
The Court also finds that Plaintiff’s voluntary dismissal of SPL does not bar SPL from
intervening as a matter of right. First, as stated above, Rule 24(a) is written in mandatory
language; the Court “must permit anyone to intervene” who satisfies the requirements of the rule.
Fed. R. Civ. P. 24(a). Second, the Fifth Circuit has stated that “[t]he effect of a Rule 41(a)(1)
dismissal is to put the plaintiff in a legal position as if he had never brought the first suit.” Yesh
Music, 727 F.2d at 359 (quoting Harvey Specialty & Supply, Inc. v. Anson Flowline Equip. Inc.,
434 F.3d 320, 324 (5th Cir. 2005)). By Plaintiff’s reasoning, a notice of voluntary dismissal
would in fact put Plaintiff in a better position than he otherwise would have been, as this would
preclude the joinder of parties entitled to intervene as a matter of right. As a result, the Court
finds that SPL should join the case—not only as an indispensable party under Rule 19 but also
through intervention of right under Rule 24(a).
f. Additional Ground: Permissive Intervention under Rule 24(b)
Additionally, the Court finds that SPL may also intervene under Rule 24(b), entitled
“Permissive Intervention.” This section provides in relevant part: “On timely motion, the court
may permit anyone to intervene who: (1) . . . (B) has a claim or defense that shares with the
main action a common question of law or fact.” Fed. R. Civ. P. 24(b)(1)(B). “In exercising its
discretion, the court must consider whether the intervention will unduly delay or prejudice the
adjudication of the original parties’ rights.” Fed. R. Civ. P. 24(b)(3).
Here, SPL has a claim and/or defense that shares with this case a common question of
law or fact: the validity of SPL’s contract with the State Defendants. Plaintiff will not be unduly
prejudiced by SPL’s involvement in the case; indeed, it is difficult to see any undue prejudice to
Plaintiff by SPL intervening in the case when Plaintiff initially brought suit against SPL. These
proceedings (which are still relatively new) will hardly be delayed. And, again, Plaintiff cannot
be in a better position than it otherwise would have been without the voluntary dismissal, so it
cannot bar SPL from intervening permissively. Consequently, the Court will allow SPL to
intervene on this alternative ground.
B. Motion for Clarification
State Defendants argue that Plaintiff needs to clarify its petition and identify what claims
remain after Plaintiff’s dismissal of SPL. Though Plaintiff states in the status report that its only
claim is to nullify the contract at issue, the State Defendants contend that this is not reflected in
the Petition. Plaintiff responds that its claim for damages has now been eliminated but that “all
other claims and causes of action for declaratory relief remain against the State Defendants.”
(Doc. 30 at 2.) State Defendants retort that the presence of dismissed claims in the Petition
means that the Court should order the Petition to be amended.
The Court agrees with the State Defendants. Since SPL has now re-joined the suit, the
Court believes that Plaintiff should file a First Amended Complaint identifying what precise
claims are still in the case, including what claims remain against SPL. The Court believes this is
appropriate given the shifting procedural posture of the litigation and the confusion surrounding
C. Motion to Dismiss
In light of the Plaintiff’s upcoming amended complaint, the State Defendant’s Motion to
Dismiss Certain Claims Pursuant to Federal Rule of Civil Procedure 12(b)(6) will be dismissed
without prejudice. State Defendants may re-urge the same arguments, if necessary, after Plaintiff
submits its amended complaint.
IT IS ORDERED that Sabine Pass Liquefaction, LLC’s Motion to Reconsider Order
and Vacate Plaintiff’s Notice of Voluntary Dismissal or, in the Alternative, Motion to Intervene
(Doc. 22), and the State Defendant’s Consolidated Motion for Clarification of the Complaint
Pursuant to Federal Rule of Civil Procedure 12(e) or 12(f) and Motion for Joinder of Party
Pursuant to Federal Rule of Civil Procedure 12(b)(7) and 19 (Doc. 23) are GRANTED.
IT IS FURTHER ORDERED that the Plaintiff’s notice of voluntary dismissal (Doc.
16) is SET ASIDE, and the Court’s April 5, 2017, order dismissing SPL from this case (Doc.
17) is VACATED.
IT IS FURTHER ORDERED that SPL will be joined in this action as a defendant
either as a necessary and indispensable party under Rule 19 or through intervention (of right and
permissive) under Rule 24.
IT IS FURTHER ORDERED that Plaintiff is given twenty-eight (28) days in which to
file an amended complaint clarifying the claims against the parties.
IT IS FURTHER ORDERED that the State Defendant’s Motion to Dismiss Certain
Claims Pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. 14) is DENIED WITHOUT
PREJUDICE. The State Defendants may re-urge their objections, if necessary, after the
Plaintiff files its amended complaint.
Signed in Baton Rouge, Louisiana, on December 5, 2017.
JUDGE JOHN W. deGRAVELLES
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
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