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Volvo Group North America, LLC v. Truck Enterprises, Inc.

United States District Court, W.D. Virginia, Roanoke Division

April 13, 2016

VOLVO GROUP NORTH AMERICA, LLC d/b/a VOLVO TRUCKS NORTH AMERICA, Plaintiff,
v.
TRUCK ENTERPRISES, INC., et al., Defendants.

MEMORANDUM OPINION

Elizabeth K. Dillon United States District Judge

Kenworth Truck Company, a division of PACCAR Inc., moves to intervene as a plaintiff in this case under Federal Rule of Civil Procedure 24. Because Kenworth satisfies the requirements for mandatory intervention, the court will grant the motion.

I. BACKGROUND

This case arises from the proposed sale of a group of mid-Atlantic commercial-truck dealerships. Defendants Truck Enterprises, Inc., James E. Hartman, Truck Enterprises Roanoke, Inc., Truck Enterprises Lynchburg, Inc., and Truck Enterprises Hagerstown, Inc. (collectively, Dealers) own and operate seven commercial-truck dealerships, selling Volvo, Kenworth, and Isuzu trucks. Four of the dealerships sell both Volvo and Kenworth trucks, and two of them sell both Kenworth and Isuzu trucks. The remaining dealership offers only Kenworth trucks. The dealerships that sell two brands are known as “dualed dealerships” in the commercial-truck business.

Dealers now wish to sell all of their dealerships to Transportation Equipment Company, Inc. (TEC) in a package deal. To that end, Dealers and TEC entered into a stock purchase agreement on December 18, 2015. The sale is currently scheduled to close on June 1, 2016. Plaintiff Volvo Group North America, LLC, does not want the deal to go forward. Instead, if the price is right, Volvo desires to exercise its contractual and statutory rights of first refusal and purchase just the Volvo portions of the dualed dealerships. Dealers do not dispute that Volvo has rights of first refusal under the parties’ dealer agreements and Virginia law. Rather, Dealers insist that if Volvo chooses to exercise those rights, then under Virginia law, it must stand in the shoes of TEC and buy all of the dealerships-not just the Volvo portions of the dualed dealerships-for the same (or greater) consideration set forth in the stock purchase agreement.

Volvo disagrees with Dealers’ assessment of Virginia law. It thus brought this suit against Dealers on January 26, 2016, seeking declaratory and injunctive relief. Along with its complaint, Volvo filed a motion for a preliminary injunction, asking the court to stop Dealers from going through with the proposed sale of the dealerships until the scope of Volvo’s rights of first refusal is determined and to require Dealers to provide Volvo with the terms of the sale that are specific to the Volvo portions of the dualed dealerships.

The court held a hearing on Volvo’s motion for a preliminary injunction on February 2. At the conclusion of that hearing, the court took the motion under advisement, and Volvo and Dealers agreed to extend all contractual and statutory deadlines relating to Volvo’s rights of first refusal and to mediate their dispute concerning the proposed sale of the dealerships. Volvo and Dealers further agreed to invite TEC and Kenworth to participate in the mediation.

On March 1, Volvo informed the court that the parties, together with TEC and Kenworth, had participated in a mediation, but that it was unsuccessful. Volvo also reported that Dealers have not changed their position as to Volvo’s rights of first refusal. Hence, Volvo requested that the court rule on the motion for a preliminary injunction.

Less than a week later, on March 7, Kenworth filed this motion to intervene, arguing that it meets the requirements for both mandatory and permissive intervention under Rule 24. It is okay with Dealers’ selling the dealerships to TEC, which already represents Kenworth in other markets. But Kenworth is not okay with Dealers’ selling the dealerships to Volvo, as Dealers propose in the alternative. Further, if Volvo prevails and is allowed to purchase just the Volvo portions of the dualed dealerships, then Kenworth wants to be involved in separating those portions from the Kenworth portions and in valuing them. So in its proposed complaint in intervention, Kenworth seeks a declaration that its own contractual and statutory rights of first refusal are triggered anew if the proposed sale of the dealerships does not proceed as it currently stands.

Volvo opposes Kenworth’s motion to intervene, arguing that Kenworth fails to satisfy the requirements of either mandatory or permissive intervention. Dealers, on the other hand, consent to the motion.

II. DISCUSSION

A. Standards for Mandatory and Permissive Intervention

Rule 24 provides for mandatory and permissive intervention. Under Rule 24(a), the court must, “[o]n timely motion, ” allow an applicant to intervene who “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 [applicant’s] ability to protect [his] interest, unless existing parties adequately represent that interest.” To intervene as a matter of right, then, an applicant must meet the following requirements:

(1) the application to intervene must be timely; (2) the applicant must have an interest in the subject matter of the underlying action; (3) the denial of the motion to intervene would impair or impede the applicant’s ability to protect [his] interest; and (4) the applicant’s ...

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