Audi of America, Inc. v. Bronsberg & Hughes Pontiac, Inc.

Filing 167

MEMORANDUM ORDER ORDER - 1. Napletons Motion to Permissively Intervene (Doc. 52 .) is GRANTED. 2. Napletons request to dissolve the preliminary injunction (Doc. 52 .) is DEEMED MOOT. 3. With respect to Audis contempt show-cause motion, (Doc. 65 .), we DECLINE to certify a contempt at this time. 4. The motions to quash the subpoenas issued in connection with this show- cause motion, (Doc. 101 and 108 .), are DISMISSED without prejudice to renewal. 5. The motions for extension of time in which to indulge in further briefing of this show-cause motion, are DENIED. Signed by Magistrate Judge Martin C. Carlson on May 16, 2017. (kjn)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
AUDI OF AMERICA, INC.,

:
:
Plaintiff
:
:
v.
:
:
BRONSBERG & HUGHES PONTIAC, :
INC. d/b/a WYOMING VALLEY
:
AUDI,
:
:
Defendant
:

Civil No. 3:16-CV-2470
(Judge Jones)
(Magistrate Judge Carlson)

MEMORANDUM ORDER
I.

Factual Background

On December 13, 2016, Audi of America, Inc., (“Audi”) brought a breach of
contract action, alleging that defendant Bronsberg & Hughes Pontiac, Inc., d/b/a
Wyoming Valley Audi (“Wyoming Valley”) breached certain terms of an Audi
Dealer Agreement into which the parties entered on January 1, 1997, when it
entered into an Asset and Real Estate Purchase Agreement (the “Purchase
Agreement”) with the Napleton Group. Audi alleged that this Purchase Agreement
between Wyoming Valley and the Napleton Group, which was signed on July 11,
2016, included the sale of Wyoming Valley’s Audi assets in violation of Audi’s
own right of first refusal and its right to refuse to consent to the transaction on

reasonable grounds. (Doc. 1.) In January of 2017, Audi sought, and obtained, a
preliminary injunction from the district court temporarily enjoining Wyoming
Valley and Napleton from consummating the Purchase Agreement while this
litigation was pending. (Doc. 30.) That order currently remains in effect, but is
now the subject of an array of competing motions filed by the parties.
These motions include: a motion to dismiss this action, and preliminary
injunction, filed by the defendants, (Doc. 42.); a motion to intervene, filed
Napleton, the other participant in this asset purchase agreement, (Doc. 52.); a
motion filed by Audi for rule to show cause why various parties and non-parties
should not be held in contempt for allegedly violating the terms of the district
court’s preliminary injunction, (Doc. 65.); and a motion by Audi to extend its
preliminary injunction, (Doc. 119.). The proliferation of these motions, in turn,
has inspired even further motions practice, as Audi issued subpoenas to a number
of non-party witnesses, seeking to compel their appearance and attendance at the
contempt proceedings which Audi has initiated before this court. Some of these
subpoenaed witnesses have moved to quash the outstanding subpoenas served
upon them. (Docs. 101, 108, and 136.)
This on-going flurry of motions practice has compelled a division of labor
within the court in order to address these various pleadings. Thus, the district court
is addressing the defendants’ motion to dismiss, and Audi’s motion to extend the
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preliminary injunction. (Docs. 42 and 119.) Indeed, a hearing is scheduled by the
district court on June 28, 2017, to determine whether, and to what extent, the
preliminary injunction should remain in effect.
Napleton’s motion to intervene, Audi’s motion to show cause why various
parties and non-parties should be held in contempt, and attendant motions to quash
subpoenas relating to this show-cause hearing, have been referred to the
undersigned. (Docs. 52, 65, 108, 136.) In an effort to create a more orderly
process out of this proliferation of motions, we are addressing six of these pending
motions, as described below.
I.

Discussion
A. Napleton’s Motion to Intervene is Granted

At the outset, Napleton has moved to intervene in this litigation both as a
matter of right under Rule 24(a)(2) and permissively under Rule 24(b) of the
Federal Rules of Civil Procedure. Under Rule 24 it is well settled that even:
If a party fails to meet the requirements of Rule 24(a) to intervene as a
matter of a right, that party nonetheless may be granted permission to
intervene under Rule 24(b). Rule 24(b) provides, in pertinent part:
“On timely motion, the court may permit anyone to intervene who: ...
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) (emphasis added).
Rule 24(b) further provides that, when a court exercises 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). In exercising its discretion, the court should
consider various factors, including whether the proposed intervenors
will add anything to the litigation and whether the proposed
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intervenors' interests are already adequately represented in the
litigation. Hoots, 672 F.2d at 1136.
Benjamin v. Dep't of Pub. Welfare of Cmwlth., 267 F.R.D. 456, 464–65 (M.D. Pa.
2010), aff'd sub nom. Benjamin v. Dep't of Pub. Welfare of Pennsylvania, 432 F.
App'x 94 (3d Cir. 2011).
As the text of Rule 24(b) implies, decisions regarding requests for
permissive joinder rest in the sound discretion of the court and will not be
disturbed absent an abuse of that discretion. Hoots v. Com. of Pa., 672 F.2d 1133,
1135 (3d Cir. 1982). By its terms Rule 24(b) provides that: “On timely motion,
the court may permit anyone to intervene who: . . . has a claim or defense that
shares with the main action a common question of law or fact.” Fed. R. Civ. P.,
Rule 24(b)(1)(B).

Thus, Rule 24(b), “lists three requirements for permissive

intervention: (1) ‘timely application’; (2) ‘a question of law or fact in common’
between the ‘applicant's claim or defense and the main action’; (3) a determination
that the intervention will not ‘unduly delay or prejudice the adjudication of the
rights of the original parties.’ ” United States v. Columbia Pictures Indus., Inc., 88
F.R.D. 186, 189 (S.D.N.Y. 1980).
Judged by these benchmarks, we conclude that Napleton’s request for
permissive intervention should be granted. This request was made early in the
litigation and is thus timely. Moreover, Napleton undeniably has a direct interest
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in this lawsuit, in the form of claims and defense that share with the main action a
common question of law or fact. Indeed, Napleton is a party to the Purchase
Agreement which lies at the heart of this lawsuit, a transaction that Audi seeks to
defeat, and enjoin. In such instances, where an injunction entered between parties
may adversely affect the prospective contractual rights of a non-party, courts have
in the exercise of their discretion permitted intervention.

United States v.

Columbia Pictures Indus., Inc., 88 F.R.D. 186, 188 (S.D.N.Y. 1980); Usery v.
Brandel, 87 F.R.D. 670, 681 (W.D. Mich. 1980).

Finally, we conclude that

allowing Napleton to intervene will not delay these proceedings.

Quite the

contrary, it may streamline the proceedings by avoiding the current curious posture
of this litigation where Napleton has a vital interest in the outcome of the lawsuit,
and is subject to numerous discovery demands, but has no seat at the litigation
table.
Finding that the discretionary prerequisites for intervention under Rule 24(b)
are fully satisfied in this case, the motion to intervene is (Doc. 52.) is GRANTED.
B. A Number of Remaining Motions Referred to the Undersigned
Should Be Denied, Dismissed or Deferred Pending Resolution
of the Motion for Preliminary Injunction Scheduled for a June
28, 2017 Hearing Before the District Court
In our view, several immediate consequences flow both from this decision
granting Napleton’s motion to intervene, and from the leading and active role
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being taken by the district court in addressing the pending motion to dismiss and
motion to extend the preliminary injunction.
At the outset, we note that the district court’s decision to schedule further
hearings relating to whether, and to what extent, Audi’s preliminary injunction
should remain in place in our view cautions against any immediate or premature
action concerning the contempt show cause motion referred to us for our
consideration. (Doc. 65.) We reach this conclusion mindful of the fact that the
role of United States Magistrate Judges in civil contempt proceedings is narrowly
defined by statute. Title 28, United States Code, Section 636(e), describes our role
in this process in the following fashion: “[I]n any other case or proceeding. . . ,
where– the act constitutes a civil contempt, the magistrate judge shall forthwith
certify the facts to a district judge . . . . The district judge shall thereupon hear the
evidence as to the act or conduct complained of and, if it is such as to warrant
punishment, punish such person in the same manner and to the same extent as for a
contempt committed before a district judge.” 28 U.S.C. § 636 (e)(6)(B)(iii). “To
prove civil contempt the court must find that (1) a valid court order existed, (2) the
defendant had knowledge of the order, and (3) the defendant disobeyed the order.”
John T. ex rel. Paul T. v. Delaware Cty. Intermediate Unit, 318 F.3d 545, 552 (3d
Cir. 2003). Each of these “must be proven by ‘clear and convincing’ evidence, and
ambiguities must be resolved in favor of the party charged with contempt.” Id.
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Questions regarding the scope, reach and continuing vitality of any court
order enjoining parties thus lie at the heart of any civil contempt proceeding.
These are precisely the issues which we anticipate the district court will assess and
address when it considers whether to continue, modify or terminate this
preliminary injunction on June 28, 2017. While the district court is undertaking
this important task for the parties it would be both premature and improvident for
us to attempt to certify, or decline to certify, any alleged contempt. Instead, we
believe that the question of contempt litigation should await resolution of the
threshold question of whether this preliminary injunction has any continuing force
or vitality. Accordingly, for these reasons, we DECLINE to certify this contempt
motion, (Doc. 65.), at this time, but do so without prejudice to the parties renewing
this collateral litigation once the district court has addressed the question of the
continuing vitality, scope and reach of this preliminary injunction.
Likewise we note that in their motion to intervene, the Napleton Group also
sought to dissolve this preliminary injunction. (Doc. 52.) Since the time that
Napleton filed this motion to intervene, the district court has both: (1) extended
that preliminary injunction; and (2) scheduled a full hearing regarding the
continuation of the injunction. In light of these subsequent actions by the district
court, we deem the request to dissolve the preliminary injunction set forth in the
motion to intervene (Doc. 52.) to be MOOT, and direct the parties to make any
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claims that they wish to advance on this issue in the context of the scheduled
preliminary injunction hearing before Judge Jones.
Our decision to decline to certify this contempt motion at present, in turn,
affects the continuing vitality of a series of other motions, including motions to
quash subpoenas issued in connection with, and in anticipation of, this contempt
hearing. (Docs. 101 and 108.) Those motions will also be DISMISSED without
prejudice to renewal in the event that Audi renews its contempt show cause motion
once the district court rules upon the motion to continue the preliminary injunction.
Finally, having concluded that these show cause proceedings are premature
and improvident at this time, we will DENY the motions for extension of time in
which to indulge in further briefing of this show cause motion, without prejudice to
further briefing if the show cause motion is renewed following the district court’s
decision concerning Audi’s request to further extend this preliminary injunction.
(Docs. 160 and 161.)
An appropriate order follows:
II.

Order

AND NOW, this 16th day of May, 2017, IT IS ORDERED as follows:
1. Napleton’s Motion to Permissively Intervene (Doc. 52.) is GRANTED.

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2. Napleton’s request to dissolve the preliminary injunction (Doc. 52.) is
DEEMED MOOT, subject to examination of this issue by the district
court in the course of the hearing scheduled on Audi’s motion to extend
the preliminary injunction.
3. With respect to Audi’s contempt show-cause motion, (Doc. 65.), we
DECLINE to certify a contempt at this time, but do so without prejudice
to the parties renewing this collateral litigation once the district court has
addressed the question of the continuing vitality, scope and reach of this
preliminary injunction.
4. The motions to quash the subpoenas issued in connection with this showcause motion, (Doc. 101 and 108.), are DISMISSED without prejudice to
renewal in the event that Audi renews its contempt show-cause motion
once the district court rules upon the motion to continue the preliminary
injunction.
5. The motions for extension of time in which to indulge in further briefing
of this show-cause motion, are DENIED without prejudice to further
briefing if the show-cause motion is renewed following the district
court’s decision concerning Audi’s request to further extend the
preliminary injunction. (Docs. 160 and 161.)

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So ordered this 16th day of May, 2017.

S/Martin C. Carlson
Martin C. Carlson
United States Magistrate Judge

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