Burke v. Federal National Mortgage Association
Filing
81
MEMORANDUM OPINION. Signed by District Judge Henry E. Hudson on 09/29/2016. (walk, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division
ASHLEY BURKE, individually and
on behalf of a class of similarly
situated persons,
Plaintiff:
v.
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S£P 2 9 2016
Cl.ERK, U.S. DISTRICT COURT
RICHMOND VA
Civil Action No. 3: 16cv 153-HEH
FEDERAL NATIONAL MORTGAGE )
ASSOCIATION,
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Defendant.
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MEMORANDUM OPINION
(Denying Motion to Intervene)
THIS MA TIER is before the Court on a Motion to Intervene (ECF No. 59), filed
on September 2, 2016, through which the Federal Housing Finance Agency (the '"FHFA"
or "movant") seeks to intervene as a defendant in the above-captioned matter. For the
reasons stated herein, the Motion will be denied.
I.
BACKGROUND
Plaintiff Ashley Burke ("Plaintiff') filed a Complaint on behalf of herself and a
putative class of similarly situated persons on March 11, 2016, alleging that the Federal
National Mortgage Association ('•Defendant") violated her rights under the Fair Credit
Reporting Act by unlawfully obtaining her credit report under the false pretense of an
'"account review," even though no account existed. (Compl. if 3.) In claiming that
Defendant violated 15 U .S.C. § 1681 b( f), she contends that her privacy was invaded and
that she was placed at an increased risk of identity theft and/or a data breach, resulting in
anxiety and emotional distress. (Compl. ~~ 24-25.) Plaintiff seeks, inter a/ia, class
certification,
·~actual
and costs. (Compl.
and/or statutory damages and punitive damages," and attorney's fees
~
35.)
Defendant filed its Motion to Dismiss pursuant to Federal Rule of Civil Procedure
12(b)(l) on June 27, 2016. (ECF No. 30.) On August 9, 2016, the Court issued a
Memorandum Opinion and an accompanying Order (ECF Nos. 57, 58) denying
Defendant's Motion. Nearly one month later, on September 2, 2016, the FHFA filed its
1
Motion to Intervene. (ECF No. 59.) Plaintiff filed her Memorandum in Opposition to
the FHFA's Motion to Intervene on September 16, 2016. (ECF No. 68). And the movant
filed its Reply on September 22, 2016. (ECF No. 72.)
Congress established the FHFA as the primary regulatory and oversight authority
of the Defendant through the Housing and Economic Recovery Act of 2008 ("HERA"),
Pub. L. No. 110-289, 122 Stat. 2654. On September 6, 2008, pursuant to HERA, 12
U.S.C. § 46 l 7(a), the FHFA's director placed the Defendant into a conservatorship. In
doing so, the FHF A succeeded to "all rights, titles, powers, and privileges" of the
Defendant and its respective stockholders, boards of directors, and officers. 12 U.S.C. §
4617(b)(2)(A)(i).
As Conservator, the FHFA is authorized to participate in litigation involving the
Defendant and is empowered to "take such action as may be ... appropriate to ...
preserve and conserve the assets and property of [the Defendant]." 12 U.S.C. §
1
The movant claims that it informed Plaintifr s counsel of its intent to intervene on August 26, 2016,
requesting her consent. (Reply in Supp. of Mot. to Intervene 6 n.3.) Plaintiff allegedly did not provide a
substantive response until one week later, on September 2, 2016, when the FHF A filed its Motion.
(Reply in Supp. of Mot. to Intervene 6 n.3.)
2
4617(b)(2)(B)(ii). Further, HERA provides that "no court may take any action to restrain
or affect the exercise of powers or functions of the [FHFA] as conservator ...." 12
u.s.c. § 4617(f).2
In this capacity, the FHFA now seeks to intervene in this suit, two months before
the scheduled trial date of December 5, 2016. (ECF No. 34.)
II.
MOTION TO INTERVENE
Federal Rule of Civil Procedure 24 offers two avenues for intervention into a
lawsuit by a non-party movant-intervcntion as of right and permissive intervention. A
movant may intervene as of right "[o ]n timely motion" if it has been •;given an
unconditional right to intervene by a federal statute." Fed. R. Civ. P. 24(a)(l ).
Additionally, the Court must permit anyone to intervene who, "[o]n a timely motion,"
asserts "an interest relating to the property or transaction that is the subject of the action"
such that "disposing of the action ... as a practical matter impair[s] or impede[s] the
movant's ability to protect its interest, unless existing parties adequately represent that
interest." Fed. R. Civ. P. 24(a)(2). Alternatively, at its discretion, the Court may permit
intervention "[ o]n timely motion" by a movant showing "a claim or defense that shares
with the main action a common question of law or fact." Fed. R. Civ. P. 24(b)(l)(B). In
determining whether to permit intervention, the Court must also consider delay or
prejudice to the adjudication of the original parties' rights. Fed. R. Civ. P. 24(b)(3).
2
See Jn re Fed. Home Loan Mortg. Corp. Derivative Litig., 643 F. Supp. 2d 790, 799 (E.D. Va. 2009)
(citing Chemical Futures & Options, Inc. v. Resolution Trust Corp., 832 F. Supp. 1188, 1192-93 (N.D.
Ill. 1993) (internal citation omitted) (holding that this type of provision '"does not elevate the
[conservator] to the position of a sacred cow which may graze upon the rights of others at will, unchecked
by the courts")).
3
The FHF A asserts that it should be granted intervention as of right under Rules
24(a)( 1)3 and 24(a)(2), or, alternatively, it seeks permissive intervention under Rule
24(b)(l). (Mem. in Supp. of Mot. to Intervene 2.) In her Memorandum in Opposition,
Plaintiff"does not contest the FHFA's assertion that it may intervene as a matter of
right;" rather, she contends that the Motion to Intervene is untimely. (Mem. in Opp'n to
Mot. for Intervention 4.) As there appears to be no genuine dispute between the parties
regarding the FHFA's right to intervene in this case as a matter of law, the Court will
focus its analysis on Rule 24's threshold requirement that motions for intervention be
"timely" filed.
III.
LEGAL FRAMEWORK
When assessing the timeliness of a motion to intervene under Rule 24, the Court
"is obliged to assess three factors: first, how far the underlying suit has progressed;
second, the prejudice any resulting delay might cause the other parties; and third, why the
movant was tardy in filing its motion." Alt v. U.S. E.P.A., 758 F.3d 588, 591 (4th Cir.
2014).
Beyond merely considering the factors articulated in Alt, the Fourth Circuit has
noted the importance of this threshold requirement of timeliness and has emphasized that
courts should be reluctant to stall "the momentum of(a] lawsuit" that is in the advanced
stages of litigation. Id. And while "'the timeliness requirement of Rule 24 should not be
as strictly enforced [where intervention is of right] as in a case where intervention is only
permissive,"' Scardelletti v. Debarr, 265 F .3d 195, 203 (4th Cir. 2001) (quoting Brink v.
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Pursuant to 12 U.S.C. § 46 I 7(b)(2)(0)( ii).
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Da lesio, 661F.2d420, 428 (4th Cir. 1981)), rev'd on other grounds by Devlin v.
Scardelletti. 536 U.S. 1 (2002), it remains a "cardinal consideration" that is applicable to
both Rule 24(a) and Rule 24(b).
4
Houston Gen. Ins. Co. v. Moore, 193 F.3d 838, 839
(4th Cir. 1999); Gould v. Alleco, Inc., 883 F.2d 281, 286 (4th Cir. 1989).
Objective timelines are only one component to be used when assessing the
timeliness of a motion to intervene since each case charts its own unique course. What a
court may consider timely in one suit may be untimely in another, even if the same
amount of time has elapsed in both. As such, the determination of timeliness under Rule
24 "is committed to the sound discretion of the trial court," Alt, 758 F.3d at 591, which,
in this regard, is
~'wide."
Gould, 883 F.2d at 286; see also NAACP v. New York, 413 U.S.
345, 365-66 (1973) ("Although the point to which the suit has progressed is one factor in
the determination of timeliness, it is not solely dispositive. Timeliness is to be
determined from all the circumstances.").
IV.
ANALYSIS
After assessing the first Alt factor-how far the underlying suit has progressedthe Court finds that this case has reached an advanced stage. The FI-IFA argues in its
Memorandum in Support of its Motion to Intervene that the suit is still in its early stages
because "[t]he parties have not yet filed motions for summary judgment and will not be
4
Because it is a threshold requirement, most courts do not address the distinction between intervention of
right and permissive intervention when dismissing motions to intervene for timeliness. See e.g.,
Scarde/letti v. Debarr, 265 F.3d I 95(4th Cir. 2001); Communs. E/ec. Indus., LLC v. Cooper (In re CE/,
LLC), Docket No. I: 15-cv-00172, 2016 WL 3556606 (W.D. N.C. June 29, 2016); Woodruffv.
Thornsbury, Civ. Action No. 2: 13-24001, 2014 WL 6088399 (S.D. W.V. Nov. 13, 2014). However,
courts have dismissed motions on that basis even when the movant, as in this case, has explicitly alleged a
right to intervene under Rule 24(a). See e.g., Houston Gen. Ins. Co. v. Moore, 193 F.3d 838 (4th Cir.
1999); King Lincoln Bronzeville Neighborhood Ass 'n v. Blackwell, Case No. 2:06-cv-0745, 2009 WL
633 192 (S.D. Ohio March 5, 2009).
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required to do so until October 17, 2016." (Mem. in Supp. of Mot. to Intervene 6.) To
bolster its position, the movant cites to United States v. Virginia, 282 F.R.D. 403, 405
(E.D. Va. 2012), where this Court held that "(w]here a case has not progressed beyond
the initial pleading stage, a motion to intervene is timely." However, the underlying
circumstances in Virginia are readily distinguishable from those in this suit.
In Virginia, the Court found that the motion to intervene was filed in a timely
manner because "[t]he United States filed its Complaint on January 26, 2012 [,and) [t]he
Petitioners filed their motion on March 2, 2012-before the initial pleading stage had
finished." 282 F.R.D. at 405. In other words, the petitioners waited a little over one
month to file their motion to intervene, which was well before the Court ruled on a
dispositive motion in that case. The Plaintiff in this suit filed her Complaint on March
11, 2016. (ECF No. 1.) Unlike the petitioners in Virginia, the movant waited nearly six
months to file its Motion to Intervene (ECF No. 59) on September 2, 2016, almost one
month after the Court ruled on the Motion to Dismiss (ECF No. 58) on August 9, 2016.
The six months that elapsed between the filing of the Initial Complaint in this case and
the FHF A's Motion to Intervene, alone, are not dispositive in assessing how far this case
has progressed. See Meek v. Metropolitan Dade County, 985 F .2d 1471, 1479 (11th Cir.
1993) ("'absolute measures of timeliness,' such as ... •the amount of time that may have
elapsed since the institution of the action' are not to be relied upon") (quoting Stallworth
v. Monsanto Co., 558 F.2d 257, 266 (5th Cir. 1977)). However, the deadlines that are
now pressing upon the Court and the parties are determinative.
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The deadline to serve written discovery in this case expired one week after the
movant filed its Motion to Intervene, and discovery is slated to close less than two weeks
after this Order is entered. (ECF No. 19.) Expert deadlines have come and gone. See
Local Civil Rule 26(0)(2). And, perhaps most significantly, the trial is scheduled for
December 5, 2016 (ECF No. 34), which is merely two months away. Therefore,
regardless of the fact that neither party has moved for summary judgment, the case has
clearly progressed to its later stages.
The FHF A argues in its Reply that the impending close of discovery and trial date
are "of little relevance because FHF A's intervention will not require additional
discovery." (Reply in Supp. of to Intervene 5.) In support of this assertion, the movant
cites to several cases, the most persuasive of which is White-Spunner Constr., Inc. v.
Zurich Am. Ins. Co., Civ. Action No. 10-0158, 2011 WL 773230 (S.D. Ala. Feb. 28,
2011 ). In that suit, the trial court found that "allowing intervention should not unduly
delay or prejudice the adjudication of the original parties' rights," even though discovery
had closed, in part, because the intervenor did not request to engage in any discovery. Id.
at *3. But, a significant factor in the White-Spunner court's determination, conspicuously
omitted by the FHFA in their Reply, was that the proposed intervenor also did not request
to submit its own dispositive motions. Id. (noting that allowing intervention at the late
stage of the law suit might delay or prejudice the parties were the proposed intervenor
"'permitted to ... submit its own dispositive motions''). In contrast, the movant in this
case has sought to assert statutory defenses in a Rule 12(c) Motion for Judgment on the
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Pleadings, which it intends to file should it be granted the right to intervene. (Mem. in
Supp. of Mot. to Intervene 9-10.)
Therefore, the Court finds that this case has progressed to its advanced stages in
light of the impending close of discovery and looming trial date. 5 This finding weighs
heavily against intervention.
When considering the second Alt factor-the prejudice that any resulting delay
granting the FHFA's Motion to Intervene might cause Plaintiff-the Court is aware of
the Fourth Circuit's direction that this is the most important factor in determining
whether a motion to intervene is timely. See Spring Constr. Co. v. Harris, 614 F.2d 374,
377 (4th Cir. 1980); Hill Phoenix, Inc. v. Systematic Refrigeration, Inc., 117 F. Supp. 2d
508, 514 (E.D. Va. 2000). With this in mind, the Court finds that allowing the movant's
intervention would be prejudicial to the Plaintiff.
In its Memorandum in Support of its Motion to Intervene, the FHF A argues that
its intervention "will not cause any delay that will prejudice other parties because the case
has not moved beyond the pleadings stage and it will not be necessary to alter the
sOther trial courts have made similar detenninations. See, e.g., Caterino v. Barry, 922 F.2d 37 (1st Cir.
1990) (affirming the trial court's denial of a motion to intervene, in part, because the motion was made
after the close of discovery and three months before trial); Slllpak-Thrall v. Glickman, 226 F.3d 467 (6th
Cir. 2000) (holding that the trial court did not abuse its discretion by denying a motion to intervene filed
less than seven months after the complaint, two months after discovery closed, and almost two months
before the deadline for filing dispositive motions); Equal Employment Opportunity Comm 'n v. Bok Fin.
Corp., Civ. No. 11-1132, 2012 WL 12841485, at *3n.4 (D.N.M. Dec. 3, 2012) (R&R later adopted by the
trial court in 2013 WL 11955288 denying a motion to intervene where "only a little over 30 days
remained before discovery closed. The motion to intervene was not briefed until just days before
discovery closed."); United States v. E. Shoshone Tribe, Civ. No. IO-CY-093, 2010 WL 11435111, at *3
(D. Wyo. Dec. 15, 20 I 0) (holding that an intervenor "fail[ed] to adequately demonstrate timeliness"
because it "was very likely aware of the proceedings since the lawsuit's inception .... [but] waited until
the late stages of discovery to file its motion").
6
The Defendant consents to the movant's attempt to join this lawsuit. (Mem. in Supp. of Mot. to
Intervene l .) Therefore, the Court gives no weight to any potential prejudice that it may face.
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schedule for motions for summary judgment or trial." (Mem. in Supp. of Mot. to
Intervene 6.) As discussed above, however, the Court finds that this case is in its
advanced stages, even though motions for summary judgment have not been filed. In
light of this finding, the issue must be examined more closely.
The FHFA has made clear in both its Memorandum in Support of its Motion to
Intervene and its Reply that, if granted the right to intervene, it intends to assert defenses
under 12 U.S.C. § 46170), which provides that "in any case in which the Agency is
acting as a conservator ... [t]he Agency shall not be liable for any amounts in the nature
of penalties or fines ...." The movant expects "to argue that certain relief that Plaintiff
seeks is 'in the nature of penalties' and that such relief cannot be imposed on Fannie Mae
during conservatorship because this would render FHFA as Conservator 'liable."' (Reply
in Supp. of Mot. to Intervene 3.) The FHF A asserts that this is a purely legal question of
statutory interpretation that will not require discovery. (Reply in Supp. of Mot. to
Intervene 3.) The FHF A cites to several cases where courts have reached a similar
conclusion in support of this position. See, e.g., Fed. Hous. Fin. Agency v. City of
Chicago, 962 F. Supp. 2d 1044, 1055 (N.D. Ill. 2013); Mwangi v. Fed. Nat'! Mortg.
Ass'n, No. 4:14-CV-79, 2015 WL 12434327 (N.D. Ga. Mar. 9, 2015). 7
The movant notes that, while its defense under 12 U.S.C. § 46170) is only one of
the eighteen affirmative defenses that it included in its proposed answer, (Mem. in Supp.
of Mot. to Intervene App. A), the remaining seventeen defenses are the same as those
7
Significantly, the Mwangi court also found that the Federal National Mortgage Association was not
subject to punitive damages under the same statute-without the FHFA's intervention in the casebecause it is under the conservatorship of the FHFA. Mwangi, 2015 WL 12434327 at *4.
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initially made by the Defendant. (Reply in Supp. of Mot. to Intervene 4.) Therefore, the
FHFA argues, there will be no need for any additional discovery. Moreover, the FHFA
alleges that it "does not believe that it has any discoverable information anyway ....
[b]ased on its current understanding of the case." (Reply in Mot. to Intervene 4-5.)
However, the FHF A's "belie[ f]" that it does not have any discoverable
information does not negate the Plaintiffs right to seek discovery and reach that
conclusion on her own. As neither the FHF A nor any of its employees were disclosed as
potential witnesses, Plaintiff has not yet had an opportunity to seek discovery from them.
Consequently, the Court would have to modify its scheduling order, extend discovery,
and postpone the deadline for motions for summary judgment and the trial date in order
to accommodate the FHFA's intervention at this late stage in the proceedings. See Stuart
v. Huff, 106 F.3d 345, 350 (4th Cir. 2013) (holding that motions to intervene can have
"profound implications" for courts' trial management tasks due to additional parties
complicating even routine matters). Moreover, if its Motion to Intervene is granted, the
FHFA's "understanding of the case" may change, 8 and it could assert further defenses not
contemplated by the parties during the discovery period.
Therefore, the Court finds that granting the FHF A's Motion to Intervene would
prejudice the Plaintiff, which weighs even more against allowing the proposed
intervention.
8
The movant seems to have contemplated this in its proposed eighteenth affinnative defense: The "FHF A
gives notice that it intends to rely upon such other defenses as may become available at law or pursuant to
statute, or during any further discovery proceedings of this case, and hereby reserves the right to amend
its answer and assert such defenses." (Mem. in Supp. of Mot. to Intervene Ex. A, 17).
10
Finally, upon assessing the third Alt factor-why the movant was tardy in filing
its motion-the Court finds that the FHFA's excuse is not compelling for allowing it to
intervene at this late stage in the suit. In its Memorandum in Support of its Motion to
Intervene, the FHFA freely admits that, while it was aware of the underlying case, it
"chose not to expend its own or the Court's resources on an intervention motion until the
9
Motion to Dismiss was resolved." (Mem. in Supp. of Mot. to Intervene 7.) In other
words, the movant "admits that it gambled and lost in the execution of its litigation
strategy" by waiting until the Court ruled on the earlier Motion. Alt, 758 at 591. The
Fourth Circuit has noted under analogous circumstances that "such deliberate forbearance
... engenders little sympathy." Id.
In an attempt to resuscitate its explanation for tardiness in its Reply, the movant
cites to Nationwide Prop. & Cas. /ns. Co. v. Jacobsen, Civ. Action No. 7:14-0516, 2015
WL 4207201, at *2 (W.D. Va. July 10, 2015) (holding that intervention was timely even
though the proposed intervenor did not provide a reason for his delay in moving to
intervene because his intervention would neither "derail the process or prejudice
plaintiffs"), in arguing that ''the reasons for the timing of intervention are of minimal
importance" when late intervention would nether cause prejudice nor delay litigation.
(Reply in Supp. of Mot. to Intervene 6-7.) However, even if the Court had not already
found that the FHFA's intervention would cause prejudice to the Plaintiff, to take the
view espoused by the movant would be to eliminate one of the three factors articulated by
9
It is of note that, while the movant blames the Plaintiff for being the source of this delay, see supra note
l, the FHF A offers no excuse for why it waited two weeks after the Court ruled on the Motion to Dismiss
on August 9, 2016, to inform Plaintiffs counsel of its intent to intervene on August 26, 2016.
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the Fourth Circuit in Alt solely because it went against the FHFA's position. The Court
does not have the authority to remove enumerated factors on its own accord because a
moving party disfavors them.
Therefore, the Court finds that the FHFA knew of the underlying litigation and
intentionally delayed in raising suspected violations of its rights because it hoped that the
case would be resolved in the earlier Motion to Dismiss. Consequently, the Court
concludes that the movant "tarr[ied] at [its] own peril" and lost, thereby slumbering on its
right to intervene. Blue Water Baltimore v. Mayor & City Council of Baltimore, Md., 583
F. App'x 157, 158 (4th Cir. 2014).
V.
CONCLUSION
For the preceding reasons, the Court finds that, while the movant has a right to
intervene in this case, it failed to meet the timeliness requirement of Fed. R. Civ. P. 24.
Therefore, the FHFA's Motion to Intervene (ECF No. 59) will be DENIED.
An appropriate Order will accompany this Memorandum Opinion.
The Clerk is DIRECTED to send a copy of this Memorandum Opinion to all
counselofrecord.
~
Isl
Henry E. Hudson
United States District Judge
Date: j,•1. 24 2ol(,
Richmond, Virgi~ia
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