Youngblood v. Rain C I I Carbon L L C

Filing 118

MEMORANDUM ORDER granting in part and denying in part 87 Amended Motion to Intervene; denying as moot 72 Motion to Intervene. The court grants the amended motion to intervene as to mover American Zurich. The motion is denied as to mover Louisiana Pigment. Signed by Magistrate Judge Kathleen Kay on 06/04/2014. (crt,Yocum, M)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION
DOUGLAS TRENT YOUNGBLOOD

:

DOCKET NO. 12-cv-000287

VS.

:

JUDGE MINALDI

RAIN CII CARBON LLC, ET AL

:

MAGISTRATE JUDGE KAY

MEMORANDUM ORDER

Before the court is a joint Motion to Intervene [doc. 72] and Amended Motion to
Intervene [doc. 87] filed by Louisiana Pigment Company, LP (“Louisiana Pigment’) and
American Zurich Insurance Company (“American Zurich”).

The motions are opposed by

defendant Rain CII Carbon LLC (“Rain”) and plaintiff Douglas Trent Youngblood (“Plaintiff”).
For the reasons stated herein, the Amended Motion to Intervene [doc. 87] is GRANTED
in part and DENIED in part and the Motion to Intervene [doc. 72] is DENIED as moot.
Facts and Procedural History
Plaintiff sustained injuries at Rain’s industrial facility during the course of his
employment as a commercial truck driver for Ron Williams Construction (“Ron Williams”).
Doc. 1, att. 2. Plaintiff was delivering loads of petroleum coke from Rain to Louisiana Pigment
pursuant to an agreement between Ron Williams and Louisiana Pigment. Id. Louisiana Pigment
is the statutory employer of plaintiff. Doc. 87, att. 2, ¶ 14.
American Zurich issued a worker’s compensation insurance policy naming Ron Williams
as the named insured and Louisiana Pigment as an “alternate employer.” Doc. 87, att. 2.

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Louisiana Pigment paid the premiums for the policy. Id. American Zurich acted as a third party
administrator for Louisiana Pigment’s worker’s compensation insurance plan. Doc. 111, p.4.
Following his accident, American Zurich paid plaintiff’s medical expenses and worker’s
compensation benefits. Doc. 87, att. 2. Louisiana Pigment reimbursed American Zurich all
compensation and medical payments under the deductible provision of the policy. Id. Both
American Zurich and Louisiana Pigment jointly move to intervene in order to recover the
benefits paid to plaintiff.
After Louisiana Pigment and American Zurich filed their motion to intervene, the court
issued an order [doc. 83] instructing movants to amend their intervention to set forth the
citizenship of the intervenors in order for the court to determine if the proposed intervention
would destroy diversity. 1 In the amended motion to intervene, Louisiana Pigment asserted that it
is a citizen of the States of Delaware, Texas, Utah and the nation of the Cayman Islands. Doc.
87, att. 2, p. 2. American Zurich alleged that it is a citizen of the State of Illinois. Id. Defendant
Rain is a citizen of the States of Delaware and Connecticut and plaintiff is a citizen of the State
of Louisiana. 2
Louisiana Pigment and American Zurich seek to intervene as “of right” under Rule
24(a)(2) of the Federal Rules of Civil Procedure. They contend that no other party involved in
the suit adequately represents their interest and that if they are not permitted to intervene, they
would be forever barred under the Louisiana Workers Compensation Act from recovering the
amounts they paid from a third party tortfeasor. 3

1

As discussed more fully below, a worker’s compensation intervenor would align itself with the employee-plaintiff
and its citizenship is therefore important for purposes of determining if the court exercises supplemental jurisdiction
under 28 U.S.C. § 1367(b).
2
Since Louisiana Pigment and Rain are both citizens of the State of Delaware, allowing Louisiana Pigment to
intervene would destroy diversity and the basis of this court’s jurisdiction.
3
Movers cite the Louisiana Worker’s Compensation statutes, LA. REV. STAT. ANN. § 23:1101, et seq.
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Initially, both Rain and plaintiff opposed the intervention. They argued that the motion
should be denied because it was untimely and would prejudice the existing parties. They also
maintained, however, that if the court should grant the motion, the court should either remand the
entire matter or sever the intervenor’s claim and remand only the intervention. Docs. 91, 103.
Following oral argument on the motion, the court granted the parties additional time to
file supplemental briefs on the issues of whether Louisiana Pigment, the non-diverse potential
intervenor, is a required party under Rule 19 of the Federal Rules of Civil Procedure and if so,
whether allowing Louisiana Pigment to intervene would require the court to recommend
dismissal of the suit or remand. 4
In its supplemental brief movers argue that, if Louisiana Pigment is allowed to intervene,
remand, rather than dismissal, is appropriate; however, they further submit that the court could
allow American Zurich to proceed as the sole intervenor as it could adequately protect Louisiana
Pigment’s interests in the intervention. This latter option would not require dismissal or remand.
Rain, in its supplemental brief, similarly argues that Louisiana Pigment is not a required party to
this action and urges the court to grant the intervention only as to American Zurich. It agrees
with movers that allowing only American Zurich to intervene would allow the matter to proceed
in this court. Plaintiff submits that Louisiana Pigment is a required party that should be allowed
to intervene and that dismissal is warranted.
Law and Analysis
A. Rule 24 Intervention
Rule 24 of the Federal Rules of Civil Procedure governs intervention.
4

It allows

The court specifically instructed the parties to consider the Honorable Patricia Minaldi’s recently published
opinion in Johnson V. Qualawash Holdings, L.L.C., No. 12-885, 2014 WL 60055 (W.D. La. Jan.6, 2014) where she
dismissed the suit under the provisions of Rule 19 because she found that a worker’s compensation insurer seeking
to intervene in a suit against a third party tortfeasor was a required party who could not feasibly be joined without
destroying diversity jurisdiction.
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intervention either “of right” under Rule 24(a) or “permissive” under Rule 24(b). In order to
intervene as of right, the mover must either show that intervention is required under a federal
statute, or he has “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.” FED. R. CIV. P. 24(a)(1)(2). Permissive intervention is allowed when a federal statute
provides a conditional right to intervene, or mover’s claim or defense has a common question of
law or fact with the main demand. FED. R. CIV. P. 24(b)(1)(A)(B).
Here, Louisiana Pigment and American Zurich claim to be intervenors as “of right.”
They argue that the Louisiana Worker’s Compensation Act and Louisiana jurisprudence require
an employer/insurer who has paid worker’s compensation benefits to intervene in the employee’s
suit against the third party tortfeasor in order to recover the amounts paid. Citing, Roche v. Big
Moose Oil Field Truck Serv., 381 So.2d 396, 400 (La.1980), they contend that if they do not
intervene, they are barred from bringing a separate suit against the third party tortfeasor. 5
Movers maintain that they must be made parties to this litigation or they will forever lose their
chance of recovering from the tortfeasor. We agree.
Louisiana worker’s compensation law provides that when an injured employee brings suit
against a third party tortfeasor he must notify the employer of the lawsuit and the employer may
intervene as a party plaintiff in the suit. LA. REV. STAT. ANN. art. 23:1102(A)(1). The First
Circuit explained in Houston Gen. Ins. Co. v. Commercial Union, 649 So.2d 776 (La. Ct. App.
1994) that:
[a]lthough the statute provides that the other may intervene as a party
5

In Roche v. Big Moose Oil Field Truck Serv., 381 So.2d 396, 400 (La.1980) the Louisiana Supreme Court stated
“the jurisprudence holds that an employer’s failure to intervene in a suit filed by the employee, after prior notice,
bars the employer from bringing a separate suit against the third party tortfeasor.” Citations omitted.
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plaintiff if either the employee or the employer brings suit against a third
person (tortfeasor), the jurisprudence holds that an employer's failure to
intervene in a suit filed by the employee, after proper notice, bars the
employer from bringing a separate suit against a third party tortfeasor.
Id. at 728 (citing Roche v. Big Moose Oil Field Truck Serv., 381 So.2d 396, 400 (La.1980)), See
also Duchane v. Gallagher Kaiser Corp., No. 05-0171, 2005 WL 1959151, *2 (W.D. La. Aug.
10, 2005)(“If the employer fails to intervene, he is precluded from filing his own action against
the tortfeasor. … Only by intervening in the employee’s lawsuit will the employer’s right to
reimbursement of benefits already paid be preserved and protected.”)(empahasis original).
Thus, unless Louisiana Pigment and/or American Zurich are allowed to intervene, they will lose
their right to reimbursement. For this reason they are intevenors as of right.
B. 28 U.S.C. §1367(b) Supplemental Jurisdiction
Since we conclude that the potential intervenors are intevornors as of right, we must now
consider 28 U.S.C. §1367(b) which prohibits diversity-destroying interventions under Rule 24.
In any civil action of which the district courts have original jurisdiction
founded solely on section 1332 of this title, the district courts shall not
have supplemental jurisdiction under subsection (a) over claims by
plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the
Federal Rules of Civil Procedure, or over claims by persons proposed to
be joined as plaintiffs under Rule 19 of such rules, or seeking to
intervene as plaintiffs under Rule 24 of such rules, when exercising
supplemental jurisdiction over such claims would be inconsistent with
the jurisdictional requirements of section 1332. (emphasis added).
28 U.S.C.A. § 1367(b) (emphasis added). Simply put, Section 1367(b) denies supplemental
jurisdiction to any Rule 24 intervenor seeking to intervene as a plaintiff when the intervention
would destroy the court’s diversity jurisdiction. Here, if either Louisiana Pigment or American
Zurich destroys this court’s diversity jurisdiction, this court cannot grant their motion to
intervene. The first step in resolving this jurisdictional question is determining whether the
purported intervenors would be aligned with the plaintiff or with the defendants.
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In Dushane v. Gallagher Kaiser Corp., supra, a case in which a worker’s compensation
provider (General Motor’s Corporation) sought to intervene in order to recover benefits paid to
its employee, the court found that it lacked “supplemental jurisdiction over the employer’s
intervention, when the employer [was] not diverse from all defendants but [was] diverse from the
plaintiff.” Id. at *1. The court in analyzing the alignment issue stated:
[a]fter careful consideration, the court finds GM is more properly
considered an intervenor-plaintiff. If allowed to intervene, GM no doubt
will align itself with Plaintiffs, as it is in GM's interest for Plaintiffs to
maximize their recovery against Defendants and thereby increase the
potential for GM to recover all of the worker's compensation benefits it
already has paid Plaintiffs. The less Plaintiffs recover, the less
reimbursement GM will receive. If Plaintiffs had not filed a suit at all,
and GM filed its own suit against Defendants to seek reimbursement,
GM would be considered a plaintiff in every sense of the word. The
difference here is that the injured employee filed his own suit, thus
relegating GM to the status of putative intervenor.
Id. at *6. See also Paxton v. Kirk Key Interlock Co., LLC, No. 08-583, 2008 WL 4977299, *7
n.27 (M.D. La. Oct. 21, 2008)(aligning a party seeking reimbursement for worker’s
compensation with the plaintiff), Head v. Chesapeake Operating, Inc., No. 10-0444, 2010 WL
2246394, *1 (W.D. La. May 26, 2010)(“The worker’s compensation intervenor in a case like this
is aligned as a plaintiff, so its citizenship must be diverse from that of all defendants or diversity
will be destroyed.”). We agree with the court’s analysis and we find that Louisiana Pigment and
American Zurich are aligned as potential plaintiff-intervenors.
American Zurich is a citizen of Illinois and allowing it to intervene would not destroy
diversity. Louisiana Pigment, on the other hand, has Delaware citizenship as does defendant
Rain. Thus, allowing Louisiana Pigment to intervene would destroy diversity in contravention of
28 U.S.C. §1367(b).

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C. Rule 19 Joinder of Parties
Proceeding to the next step, we are instructed in Johnson v. Qualawash Holdings, L.L.C.,
No. 12-885, 2014 WL 60055 (W.D. La. Jan.6, 2014), that when faced with a diversity-destroying
potential intervenor, we are required to consider whether the party seeking to intervene is a
required party under Rule 19. When the diversity-destroying potential intervenor is a required
party in whose absence an adequate judgment cannot be rendered, under Rule 19, the lawsuit
cannot proceed in that party’s absence and the suit must be dismissed for lack of complete
diversity. Id. at *5. (citing B. Fernandez & Hnos., Inc. v. Kellogg USA., 440 F.3d 541, 544-47
(1st Cir.2006)). Thus, at this point we must determine if Louisiana Pigment is a required party
under Rule 19.
Rule 19(a) requires that a party who will not destroy subject matter jurisdiction and who
is subject to service of process must be joined 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 the impede the person’s ability to
protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligation because of the
interest.
FED. R. CIV. PRO. 19(a)(1)(B).
American Zurich falls under the first section of Rule 19 since its joinder will not destroy
diversity and it claims an interest in the suit between plaintiff and the third party tortfeasor that it
must assert in this action. Thus, we find that American Zurich is a required party and is entitled
to intervene.
We now turn to the more difficult question of whether Louisiana Pigment is a required
party and, if so, whether the lawsuit should proceed in its absence or whether the suit should be

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dismissed outright. See Johnson v. Qualawash, supra at *5-6. To answer this we look to Rule
19(b) which deals with required parties whose joinder is not feasible. Rule 19(b) governs
whether the court should proceed without one who should be joined but who cannot because
their joinder would defeat jurisdiction. The factors the court should consider when making this
decision as listed in Rule 19(b) 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 for nonjoinder.
FED. R. CIV.PRO. 19(b). The court has considered the factors in Rule 19(b), argument of counsel,
and evidence of record and concludes that while Louisiana Pigment is a required party, it need
not be included in this suit in order to adequately protect its right to reimbursement.
First and foremost, counsel representing Louisiana Pigment concedes in its supplemental
brief that American Zurich, as the third party administrator over Louisiana Pigment’s worker’s
compensation plan, has the right to recover any amounts paid to plaintiff under Louisiana
worker’s compensation law. It stated in its brief, “[b]ecause American Zurich ‘stands in the
shoes of the employer,’ Louisiana Pigment’s (the statutory employer) interests are adequately
represented by American Zurich as long as American Zurich’s Motion to Intervene is granted.” 6
Doc. 111, p. 4.
Next, the court has examined the insurance policy issued by American Zurich to Ron
Williams and Louisiana Pigment. Doc. 72, att. 4. Pointedly, a clause in the policy entitled
6

Movers cite Blackwell v. Gallagher Bassett Services, Inc., No. 220-520, 2006 WL 4701989 *2 (La. 9th Dist. Ct.
Dec. 18, 2006) which noted that a third party administrator “effectively ‘stands in the shoes’ of the employer.”
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“Subrogation” provides that:
We [American Zurich] have your [Louisiana Pigment] rights and the
rights of persons entitled to the benefits of this insurance to recover
losses that are reimbursable under this endorsement and any deductible
amount from anyone liable for the injury. You will do everything to
protect for us and to help us enforce them.
If we [American Zurich] recover any payment made under this policy
from anyone liable for the injury, the amount we recover will first be
applied to any payments made by us on this injury in excess of the
deductible amount; only then will the remainder of that recovery, if any,
be applied to reduce the deductible amount paid or reimbursed or
reimbursable by you [Louisiana Pigment] on this injury.
While the first paragraph is a typical subrogation clause, the second paragraph
specifically states that if American Zurich recovers any amount from a party liable for the injury
(a third party tortfeasor), it will first reimburse itself for any payments it made in excess of the
deductible and will next reimburse Louisiana Pigment for the amount it paid toward its
deductible. Here, the parties allege that American Zurich paid plaintiff benefits and medical
expenses totaling over $125,000. Doc. 87, att. 2, p. 4. Louisiana Pigment has, however,
reimbursed American Zurich this entire amount under the deductible portion of the insurance
policy. Id. Consequently, under the express provisions of the insurance contract, if American
Zurich is allowed to intervene and plaintiff recovers from the third party tortfeasor, it is obligated
to reimburse Louisiana Pigment for the amount it paid toward its deductible. In short, Louisiana
Pigment’s right to reimbursement is protected under the terms of its contract with American
Zurich.
Interestingly enough the only current opposition to the motion to intervene is submitted
by plaintiff who argues that Louisiana Pigment is a required party whose absence would
“prejudice it greatly because it would have the ultimate effect of depriving them of any
mechanism with which to recoup payments made to their insured that resulted from the acts of
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third-party tortfeasors.” Doc. 112, p. 9. Plaintiff goes on to submit that the suit should be
dismissed without prejudice so that he can proceed in state court. Id. Plaintiff is not in Federal
Court by choice and, we believe, argues this position so that he can return to the court from
whence he came. At the same time, Louisiana Pigment itself, well represented by its own
advocate, has conceded that Louisiana Pigment’s interests will be protected if American Zurich
is allowed to intervene. While we find plaintiff’s motive to be understandable we are not
persuaded by his arguent.
Considering the factors outlined in Rule 19(b), the court concludes that this case should
be allowed to proceed among the current parties and with American Zurich as an intervenor.
The court finds no basis to dismiss the suit as it finds that Louisiana Pigment’s interests are
adequately protected by allowing American Zurich to intervene and Louisiana Pigment will not
be prejudiced by any judgment rendered in its absence.
Conclusion
For the reasons stated, the court hereby GRANTS the Amended Motion to Intervene
[doc. 87] as to mover American Zurich; the motion is DENIED as to mover Louisiana Pigment.
The Motion to Intervene [doc. 72] is DENIED as moot.
THUS DONE AND SIGNED in Chambers this 4th day of June, 2014.

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