Flying J Inc v. Van Hollen et al

Filing 65

ORDER signed by Chief Judge Rudolph T Randa on 03/27/2009 denying 52 Motion to Intervene. (cc: all counsel) (Koll, J)

UNITED STATES DISTRICT COURT E A S T E R N DISTRICT OF WISCONSIN

F L Y I N G J, Inc., P l a in tif f , C a s e No. 08-C-110 -vsJ .B . VAN HOLLEN, Attorney General of W is c o n s in , ROD NILSESTUEN, Secretary o f the Wisconsin Department of Agriculture, T r a d e and Consumer Protection, Defendants, and W I S C O N S I N PETROLEUM MARKETERS & CONVENIENCE STORE ASSOCIATION, P ro p o s e d Intervenor.

D E C IS IO N AND ORDER

O n January 29, 2008, Flying J, Inc. ("Flying J") brought the instant lawsuit to enjoin th e defendants, J.B. Van Hollen, Attorney General of Wisconsin, and Rod Nilsestuen, S e c re ta ry of the Wisconsin Department of Agriculture (collectively the "State"), from e n f o rc in g the motor vehicle fuel provisions of Wisconsin's Unfair Sales Act, Wis. Stat. § 100.30. In pertinent part, the Act forbids retailers from selling motor vehicle fuel below c o s t, which is based on the average posted terminal price plus a minimum markup of 9.18%. S e e Wis. Stat. §§ 100.30(2)1m.c; 100.30(2)(a); 100.30(3). O n February 11, 2009, upon consideration of cross-motions for summary judgment, th e Court held that the Act's motor vehicle fuel provisions create an illegal restraint of trade

in violation of the Sherman Act, 15 U.S.C. § 1. The Court also held that this illegal restraint d id not meet the active supervision requirement for antitrust immunity under Parker v. B ro w n , 317 U.S. 341 (1943). Accordingly, the Court issued an order declaring the motor v e h ic le fuel provisions of the Act unconstitutional. The Court also enjoined the State from f u rth e r enforcement of those provisions. On March10, the State announced that it would not a p p e al the Court's ruling. N o w before the Court is Wisconsin Petroleum Marketers & Convenience Store A ss o c iatio n 's ("WPMCA") post-judgment motion to intervene. WPMCA moves to

in te rv e n e for three purposes. First, WPMCA filed a conditional motion to reconsider the C o u rt's final judgment and permanent injunction. Second, WPMCA filed a conditional m o tio n to stay the Court's judgment pending appeal. Third, WPMCA hopes to pursue a d ire c t appeal of the Court's judgment. W P M C A lacks a sufficient interest in the outcome of this case to allow intervention. W P M C A 's post-judgment application is also untimely. Therefore, WPMCA's motion to in te rv e n e is denied in its entirety. I. W PM CA W P M C A is an organization consisting of approximately 500 independent businesses. A s a group, WPMCA members employ more than 10,000 people, operate more than 2,000 sta tio n s and stores and account for more than one-half the entire volume of motor fuel sold in Wisconsin. In addition to convenience stores, truck stops and service stations, WPMCA

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m e m b e r s own and operate related businesses such as rapid oil change facilities, car washes a n d card lock fueling outlets. W P M C A claims that without the threat of enforcement of the Act, predatory pricing w ill result in lost profits and possibly force many of its members out of business. According to WPMCA president Matthew Hauser ("Hauser"), a "significant number of WPMCA's m e m b e r s do not have the ability that a fully integrated retailer has to offer cost or below-cost p ric e s for the sale of motor vehicle fuel, nor can these WPMCA members realistically c o m p e te with retailers who can use lower prices as a loss leader to attract sales to large retail s to re operations, or other ventures." II. I n te r v e n tio n as of right W P M C A moves to intervene as of right. See Fed. R. Civ. P. 24(a)(2). In the absence o f a statutory right to intervene, a proposed intervenor must claim "an interest relating to the p ro p e rty or transaction that is the subject of the action, and [be] so situated that disposing of th e action may as a practical matter impair or impede the movant's ability to protect its in ter e st, unless existing parties adequately represent that interest." Rule 24(a)(2); see also H e a rtw o o d , Inc. v. U.S. Forest Serv., Inc., 316 F.3d 694, 700 (7th Cir. 2003). This language b o ils down to three basic requirements: interest, impairment, and inadequate representation. A. In ter est

"The `interest' required by Rule 24(a)(2) has never been defined with particular p re c is io n ." Sec. Ins. Co. of Hartford v. Schipporeit, Inc., 69 F.3d 1377, 1380 (7th Cir. 1995). T h e baseline requirement is that the interest must be a "direct, significant, legally

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p ro te c ta b le " one. American Nat'l Bank v. City of Chicago, 865 F.2d 144, 146 (7th Cir. 1 9 8 9 ). It is "something more than a mere `betting' interest, but less than a property right." S c h ip p o re it, 69 F.3d at 1380-81 (internal citations omitted). For example, "an intervenor's in terest in a specific fund is sufficient to entitle intervention in a case affecting the fund." M o u n ta in Top Condo. Ass'n v. Dave Stabbert Master Builder, Inc., 72 F.3d 361, 366 (3d Cir. 1 9 9 5 ). T o establish their interest in this lawsuit, WPMCA submitted declarations from v a rio u s members who are "concerned that without this law, we may and probably will see p re d a to ry pricing of motor vehicle fuels by new competitors that will use this method to e lim in a te competition." D. 52-5, Declaration of Randy Meffert, ¶ 3. Some WPMCA m e m b e r s are unsure whether their businesses are "strong enough to stay in business and c o m p e te effectively during the time the order granting the injunction is considered on a p p e al." D. 52-7, Declaration of Linda Kaplan, ¶ 12. Others note that predatory pricing has a lre a d y started in the wake of the Court's decision. See, e.g., D. 52-8, Declaration of Denise T h o m a s, ¶ 4 ("I am concerned that the ability of Renew, and other similarly situated o p e r a to r s , to offer discounted prices will result in my Mobil stations incurring significant loss o f sales"). An "economic interest that might be adversely affected by the outcome of the case a l o n e is insufficient to warrant intervention under Rule 24(a)(2)." NBD Bank, N.A. v. B e n n e tt, 159 F.R.D. 505, 506 (S.D. Ind. 1994) (quoting Getty Oil Co. v. Department of E n e rg y , 865 F.2d 270, 276 (Tem. Em. Ct. App. 1988)). By "requiring that the applicant's

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in t e re s t be . . . `legally protectable,' it is plain that something more than an economic interest i s necessary. What is required is that the interest be one which the substantive law

re c o g n iz e s as belonging to or being owned by the applicant." United States v. South Fla. W a ter Mgt. Dist., 922 F.2d 704, 710 (11th Cir. 1991) (emphasis in original); see also M o u n ta in Top, 72 F.3d at 366 ("[i]n general, a mere economic interest in the outcome of the litig atio n is insufficient to support a motion to intervene").1 W P M C A members are concerned that other gasoline retailers will use predatory p ric in g to steal business from them. This economic interest in the future loss of business is c o n t in g e n t on the hypothetical actions of third parties. In fact, it is contingent on market f o rc e s beyond those that are influenced by the Court's injunction. If the loss of business did o c c u r, inefficient business practices would theoretically be as much to blame as would the u s e of loss leaders by third parties. WPMCA members are also protected by federal antitrust la w which prohibits predatory pricing. See, e.g., Bathke v. Casey's General Stores, Inc., 64 F .3 d 340, 343-44 (8th Cir. 1995) (describing the contours of a predatory pricing claim for g a so lin e retailers under the Sherman Act [15 U.S.C. § 2] and the Robinson-Patman Act [15 U .S .C . § 13(a)]). WPMCA's speculative interest in the outcome of this lawsuit is not enough to establish a legally protectable interest for mandatory intervention. See, e.g., Standard H e a tin g and Air Conditioning Co. v. City of Minneapolis, 137 F.3d 567, 571 (8th Cir. 1998) (in te re sts asserted by proposed intervenors are "too speculative to be `direct, substantial and

W P M C A cites Baude v. Heath, 538 F.3d 608 (7th Cir. 2008) for the proposition that "an economic interest is b y itself enough to allow a trade association to intervene." Baude contains no discussion of the interest required for m a n d a to r y intervention under Rule 24(a)(2). Judge Easterbrook merely mentioned in passing that a trade association " in te r v e n e d to protect its economic interest." Id. at 612.

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le g a lly protectable'" because a "sequence of events would have to occur for the interests of th e associations to be impacted by a successful challenge to the rules"); Washington Elec. C o - o p , Inc. v. Massachusetts Mun. Wholesale Elec. Co., 922 F.2d 92, 97 (2d Cir. 1990) (in ter e st based on double contingency is not sufficiently direct or substantial); City of Stilwell v . Ozarks Rural Elec. Co-op. Corp., 79 F.3d 1038, 1042 (10th Cir. 1996) (contingent fin an cia l interest in subject of action was too attenuated to justify intervention). E v e n to the extent that WPMCA members are currently losing sales or are likely to lo s e sales in the near future because competitors are allowed to charge lower prices, W P M C A 's interest in this lawsuit is still insufficient to allow intervention. "A claim based o n ly on an indirect economic effect of some action is rarely considered the same as a p ro te c ta b le right or interest sufficient to justify intervention." MOORE'S FED. PRACTICE 3D 2 4 .0 3 [ 2 ][ b ]; see also American Maritime Transport, Inc. v. United States, 15 Cl. Ct. 29, 30 (C l. Ct. 1988) (applicants "have alleged nothing more than an indirect and contingent e c o n o m ic interest in this suit based upon the possibility of increased competition"); Curry v . Regents of Univ. of Minn., 167 F.3d 420, 422 (8th Cir. 1999) ("economic interest in u p h o ld in g the current fee system simply does not rise to the level of a legally protectable in te re st necessary for mandatory intervention"). While the Court is "mindful that its decision in the underlying lawsuit may have a significant effect on petitioners' members' livelihoods,

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th e y are not entitled to intervention as of right based on this economic interest." NBD Bank, 1 5 9 F.R.D. at 507.2 B. T im e lin e s s

E v e n if WPMCA had an interest sufficient to support intervention as of right, its m o tio n to intervene is untimely. See Rule 24(a). Courts generally apply a four-factor test to determine whether an application to intervene is timely: (1) the length of time during w h ich the would-be intervenor actually or reasonably should have known of his interest in th e case before he petitioned for leave to intervene; (2) the extent of prejudice that the e x istin g parties to the litigation may suffer as a result of the would-be intervenor's failure to a p p ly for intervention as soon as he actually knew or reasonably should have known of his in te re st in the case; (3) the extent of the prejudice that the would-be intervenor may suffer if his petition for leave to intervene is denied; and (4) the existence of unusual circumstances m ilita tin g either for or against a determination that the application is timely. See Stallworth v . Monsanto Co., 558 F.2d 257, 264-66 (5th Cir. 1977); see also Heartwood, 316 F.3d at 701. A n attempt to intervene "after final judgment is ordinarily looked upon with a ja u n d ic e d eye." McDonald v. E.J. Lavino, 430 F.2d 1065, 1072 (5th Cir. 1970). "The ra tio n a le which seems to underlie this general principle . . . is the assumption that allowing in te rv e n tio n after judgment will either (1) prejudice the rights of the existing parties to the

Because W P M C A does not have a an interest sufficient to allow intervention as of right, it is unnecessary to c o n s id e r whether W P M C A has standing to intervene in this case. "Some disagreement remains among the circuits about h o w Article III standing rules intersect with the requirements for Rule 24 intervention. . . . From a pragmatic standpoint, th is court has observed that `[a]ny interest of such magnitude [as to support Rule 24(a) intervention of right] is sufficient to satisfy the Article III standing requirement as well.'" Sokaogon Chippewa Community v. Babbitt, 214 F.3d 941, 946 ( 7 t h Cir. 2000) (internal citations omitted).

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litig a tio n or (2) substantially interfere with the orderly processes of the court." Id. However, th e Fifth Circuit later clarified that there are no "absolute measures of timeliness." Sierra C lu b v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994). "`[W]hether the request for intervention c a m e before or after the entry of judgment [is] of limited significance,' . . . intervention could b e allowed post-judgment provided that the rights of existing parties were not prejudiced and in te rv e n tio n did not interfere with the orderly processes of the court." Ross v. Marshall, 426 F .3 d 745, 754 (5th Cir. 2005) (quoting Stallworth, 558 F.2d at 266). 1. A w a r e n e s s of interest

T h ere can be no doubt that WPMCA was aware of the instant litigation from the very o u ts e t of the case. WPMCA does not argue to the contrary. Rather, WPMCA argues that it simply never thought that Flying J would be victorious. The Court finds this hard to b e lie v e , especially in light of Judge Callahan's ruling that preceded this lawsuit. See Lotus B u s in e ss Group LLC v. Flying J, Inc., 532 F. Supp. 2d 1011 (E.D. Wis. 2007). WPMCA f e ig n s surprise because the Act withstood numerous constitutional challenges in the past, but th e Act never withstood the challenge brought against it by Flying J in this case and in Lotus B u s in e ss Group. Even if WPMCA's surprise were justified, "a failure of imagination is not g e rm a n e to the law governing intervention." Staley v. Harris County, Tex., 223 F.R.D. 458, 4 6 2 (S.D. Tex. 2004). O f course, this discussion slightly misstates the relevant inquiry ­ namely, the length o f time WPMCA knew or reasonably should have known that its interests were jeopardized b y the instant lawsuit. "A prospective intervenor must move promptly to intervene as soon

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a s it knows or has reason to know that its interests might be adversely affected by the o u tc o m e of the litigation." Heartwood, 316 F.3d at 701. WPMCA takes particular issue w ith the nature and scope of the injunction entered by the Court. Once again, this argument rin g s hollow because WPMCA was actively monitoring this litigation. Therefore, WPMCA w a s aware that the State of Wisconsin could be enjoined from enforcing the Act when this la w s u it was filed. It should have intervened earlier if it was so concerned that an injunction c o u ld be entered. 2. P r e ju d i c e to Flying J

P r e ju d ic e to existing parties is the "most important consideration" in determining the tim elin e ss of an application for intervention. See Nissei Sangyo America, Ltd. v. United S ta te s, 31 F.3d 435, 439 (7th Cir. 1994). "This factor is concerned only with the prejudice c a u se d by the applicants' delay, not that prejudice which may result if intervention is a llo w e d ." Edwards v. City of Houston, 78 F.3d 983, 1002 (5th Cir. 1996); People Who Care v . Rockford Bd. of Educ., 68 F.3d 172, 176 (7th Cir. 1995). In other words, the only relevant p r e ju d ic e is that which "would result from the would-be intervenor's failure to request in te rv e n tio n as soon as he knew or reasonably should have known about his interest in the a c tio n ." Schultz v. Connery, 863 F.2d 551, 554 (7th Cir. 1988) (quoting Stallworth, 558 F.2d at 265). W P M C A argues that there would be no prejudice to Flying J because the State itself c o u ld have appealed and moved for reconsideration and to stay the judgment pending appeal. H o w e v e r, this argument conveniently ignores that WPMCA seeks to inject additional

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e v id e n c e and arguments that were not presented by the State in the original litigation of this m atter. As discussed above, WPMCA offers numerous declarations from its members re g a rd in g the irreparable harm they will allegedly suffer if the Court's injunction is not re v e rs e d or stayed pending an appeal. See D. 52. WPMCA also provides extensive evidence re g a rd in g the mechanics of the minimum markup law as it relates to gasoline in support of its motion for reconsideration. See D. 53, 55. Finally, WPMCA argues that the State (and F lying J) failed to cite supposedly controlling Seventh Circuit law in the course of summary ju d g m e n t briefing.3 T h e re f o re , the prejudice to Flying J is not simply the result of the fact that it would h a v e to defend against these motions. WPMCA's proposed intervention is prejudicial b e c au s e Flying J would be forced to defend against arguments and evidence that it is seeing f o r the very first time after the Court entered its final judgment. For whatever reason,

W P M C A waited until now to intervene and to bring this evidence before the Court and F lyin g J. Assuming that WPMCA's interest was sufficient to intervene as of right (which it wasn't), the foregoing evidence should have been presented much earlier in the normal c o u rs e of this litigation. See, e.g., People Who Care, 68 F.3d at 176 (proposed intervenor "is c o rre c t that prejudice resulting from delay is the operative issue. However, the prejudice h e re does result from delay") (emphasis in original) (internal citations omitted).

See Fuchs v. Rural Electric Convenience Cooperative, 848 F.2d 1210 (7th Cir. 1988). The Court does not a g r e e that Fuchs is controlling.

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W P M C A 's untimely, post-judgment attempt to intervene and completely shift the f o c u s of this lawsuit is prejudicial to Flying J. See Sokaogon Chippewa Community v. B a b b itt, 214 F.3d 941, 949 (7th Cir. 2000) ("The purpose of the [timeliness] requirement is to prevent a tardy intervenor from derailing a lawsuit within sight of the terminal"); see also S ie rr a Club, 18 F.3d at 1206 n.3 (intervenor must "accept the proceedings as he finds them" a n d "has no right to relitigate issues already decided"); Massachusetts Mun. Wholesale Elec. C o ., 922 F.2d at 97 (intervenors must take the pleadings in a case as they find them). 3. P r e ju d i c e to WPMCA; Unusual Circumstances

W P M C A argues that it will be prejudiced because of the ongoing irreparable harm c a u se d by the Court's injunction. Even taking WPMCA's claims of prejudice at face value, th e lateness of WPMCA's request to intervene combined with the prejudice to Flying J o u tw eigh the potential prejudice to WPMCA. "Neither the Federal Rules of Civil Procedure n o r the law of equity rewards those who slumber on their rights . . ." Staley, 223 F.R.D. at 463. M o reo v er, as noted above, WPMCA made a strategic decision to rely upon the State's d e f en s e of the Act. When the "representative party is a governmental body charged by law w ith protecting the interests of the proposed intervenors, the representative is presumed to a d e q u ate ly represent their interests unless there is a showing of gross negligence or bad f a ith ." Ligas v. Maram, 478 F.3d 771, 774 (7th Cir. 2007). WPMCA even participated b e h in d the scenes and made suggestions on how to attack the arguments presented by Flying J 's motion papers. See, e.g., D. 59, Ex. H (17-page advocacy memorandum describing what

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W P M C A "believe[s] to be the problems and weaknesses underlying Flying J's arguments"). F in a lly, WPMCA affirmatively applauded the State's efforts after the conclusion of this litig a tio n . See, e.g., D. 59, Ex. J ("We appreciate your efforts to defend the constitutionality o f this long-standing Wisconsin law as well as the unique role you hold as Attorney General an d the defender of state law"). Under these circumstances, WPMCA's interests were a d e q u ate ly represented by the State, and it cannot now complain about the effects of the C o u rt's judgment. III. P e r m is s iv e intervention P e rm is s iv e intervention is allowed when the application is timely and the applicant " h a s a claim or defense that shares with the main action a common question of law or fact." R u le 24(b). In exercising its discretion, the Court "must consider whether the intervention w ill unduly delay or prejudice the adjudication of the original parties' rights." Rule 24(b)(3). The Court considers "any prejudice that the existing parties may incur if intervention is a llo w e d ," not the prejudice resulting from the delay in requesting intervention. See South D a k o ta ex rel Barnett v. U.S. Dept. of Interior, 317 F.3d 783, 787 (8th Cir. 2003) (the " p rin c ip a l consideration" in ruling on a Rule 24(b) motion is whether the proposed in ter v e n tio n would unduly delay or prejudice the adjudication of the parties' rights); see also S ta llw o rth , 558 F.2d at 265 (noting the distinction between prejudice for purposes of p erm iss iv e intervention and prejudice in the timeliness inquiry). A s discussed above, WPMCA's post-judgment motion to intervene is in many re sp e c ts untimely. However, post-judgment intervention is normally allowed when the

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e x is tin g parties indicate that they will not pursue an appeal. See, e.g., Ross, 426 F.3d at 755 (a "common example of post-judgment intervention that satisfies [the timeliness] criteria is in te rv e n tio n for purposes of appealing a decision that the existing parties to a suit have d e c i d e d not to pursue") (citing United States v. McDonald, 432 U.S. 385, 395-96 (1977)). In these circumstances, "a post-judgment motion to intervene in order to prosecute an appeal is timely (if filed within the time period for appeal) because `the potential inadequacy of re p re se n ta tio n came into existence only at the appellate stage.'" Smoke v. Norton, 252 F.3d 4 6 8 , 471 (D.C. Cir. 2001) (quoting Dimond v. District of Columbia, 792 F.2d 179, 193 (D.C. C ir. 1986)). If this theory of timeliness applies to an application for permissive intervention, W P M C A 's post-judgment motion to intervene for purposes of pursuing an appeal could be c o n sid e re d timely. However, the Court will not allow permissive intervention because it w o u ld result in an appeal that is otherwise not forthcoming. Therefore, permissive

i n t e rv e n tio n would cause further delay in the adjudication of Flying J's rights. See, e.g., D a g g e tt v. Commission on Governmental Ethics & Election Practices, 172 F.3d 104, 113 (1 st Cir. 1999) (relevant factor militating against addition of intervenors was need to expedite re so lu tio n of case); United States v. 36.96 Acres of Land, 754 F.2d 855, 860 (7th Cir. 1985) (in ter v e n tio n properly denied to avoid prolonging an already lengthy lawsuit). Flying J is a lso subject to heightened prejudice because it already shouldered the burden of two lawsuits w h ic h litigated essentially the same issues pertaining to the constitutionality of the Act. See, e .g ., United States v. Texas Educ. Agency (Lubbock Independent Sch. Dist.), 138 F.R.D. 503,

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5 1 8 (N.D. Tex. 1991) (denying intervention where it would require party to incur additional lega l fees). N O W , THEREFORE, BASED ON THE FOREGOING, IT IS HEREBY O R D E R E D THAT WPMCA's motion to intervene [D. 52] is DENIED. D a te d at Milwaukee, Wisconsin, this 27th day of March, 2009. S O ORDERED,

s / Rudolph T. Randa HON. RUDOLPH T. RANDA Chief Judge

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