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RLI Insurance Co. v. Nexus Services, Inc.

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

October 30, 2018

RLI INSURANCE COMPANY, Plaintiff,
v.
NEXUS SERVICES, INC., Defendant,
v.
JUAN VALOY, et al. Intervenors.

          MEMORANDUM OPINION

          Michael F. Urbanski, Chief United States District Judge

         This matter is before the court on a motion to intervene filed by Juan Valoy, Edgar Alfredo Ramos-Ramos, Marcelino Ramirez-Sanchez, Cesar Augusto Gramajo, and Gerson Castro Segeda. ECF No. 8. The matter has been fully briefed. The court dispenses with oral argument because the legal contentions are adequately presented in the materials before the court and argument would not aid the decisional process. For the following reasons, the motion to intervene is DENIED.

         I.

         RLI Insurance Company ("RLI") and Nexus Services, Inc. ("Nexus") entered into an indemnity agreement on January 20, 2016 ("Indemnity Agreement") as consideration for RLI's agreement to issue immigration bonds. As detailed in the court's opinion on the extensively litigated preliminary injunction, RLI alleges that Nexus breached the Indemnity Agreement for a variety of reasons, including failure to provide access to Nexus' books, records and accounts. ECF No. 59. The court granted RLI a preliminary injunction that required Nexus to give access to a selection of its books, records and accounts. ECF No. 60.

         During the course of briefing and argument for the preliminary injunction, Juan Valoy, Edgar Alfredo Ramos-Ramos, Marcelino Ramirez-Sanchez, Cesar Augusto Gramajo, and Gerson Castro Segeda (the "Intervenors") moved to intervene as defendants in this action. ECF No. 8. The Intervenors claim they have a right to intervene under Federal Rule of Civil Procedure 24(a) because (1) they have a legally protected interest at stake-their sensitive and confidential personal information located in documents held by Nexus and requested by RLI; (2) their interest is impaired once the personal information is disclosed; and (3) neither RLI nor Nexus adequately represents their interests because of the parties' financial interests in compliance with the bond terms. ECF No. 8, at 3-10. The Intervenors also argue that the court could grant permissive intervention under Rule 24(b) because they intend to directly oppose the relief sought by RLI and their defenses share the same questions of law and fact at issue in this action. ECF No. 8, at 10-12. Additionally, the Intervenors note that they have standing because disclosure of their personal information is an injury directly caused by RLI's request, which would be redressed by a favorable decision by this court. ECF No. 8, at 12-13.

         RLI objects to the intervention as a Nexus-created strategy to frustrate RLFs enforcement of its contractual rights. ECF No. 71, at 2. RLI argues that the Intervenors have not carried their burden of demonstrating their right to intervention or that circumstances support permissive intervention. ECF No. 71, at 4-14. RLI claims: (1) the alleged harm of the information's future use is speculative; (2) the Intervenors and Nexus have nearly identical interests in opposing enforcement of the Indemnity Agreement for privacy purposes, as well as defenses and relief sought; (3) orders in this proceeding preclude RLI from disclosing this information to most third parties; (4) the Intervenors have not shown adversity of interest, collusion, or nonfeasance; and (5) the Intervenors have not pled facts connecting them to the Indemnity Agreement or the immigration bonds, including for purposes of standing. Id. Moreover, RLI contends that intervention could open the floodgates to the 2, 400 other bond principals, their families, and friends, and could prejudice RLI because the Intervenors may work with Nexus to frustrate RLI's enforcement efforts through dilatory litigation tactics. ECF No. 71, at 14-17.

         In response, the Intervenors denied RLI's accusations that their proposed intervention was a litigation tactic benefiting Nexus. ECF No. 75, at 2. Nexus, for its part, agreed with the Intervenors' motion and notes that counsel for the Intervenors possesses knowledge about immigration proceedings and Nexus' clients. ECF No. 78.

         II.

         Rule 24(a)(2) governs intervention by right, and provides as follows,

On timely motion, the court must permit anyone 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 movant's ability to protect its interest, unless existing parties adequately represent that interest.

Fed. R. Civ. P. 24(a)(2). Thus, in addition to demonstrating timeliness of the motion, an applicant must show: (1) interest in the subject matter of the action; (2) that the protection of this interest would be impaired because of the action; and (3) that the applicant's interest is not adequately represented by existing parties to the litigation. See Teague v. Bakker, 931 F.2d 259, 260-61 (4th Cir. 1991). "[A] district court is 'entitled to the full range of reasonable discretion' to determine whether the requirements of intervention as a matter of right have been met." Liberty Mut. Fire Ins. Co. v. Lumber Liquidators. Inc., 314 F.R.D. 180, 183 (E.D. Va. 2016) (quoting Com, of Va. v. Westinghouse Elec. Corp., 542 F.2d 214, 216 (4th Cir. 1976)).

         Rule 24(b) provides for permissive intervention of parties. Rule 24(b)(1)(B) states 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. 24(b)(1)(B). The court enjoys substantial discretion over allowing or rejecting motions to intervene under Rule 24(b). See Smith v. Pennington, 352 F.3d 884, 892 (4th Cir. 2003); Hill v. Western Elec. Co., 672 F.2d 381, 385-86 (4th Cir. 1982).

         III.

         The Interveners argue that they are entitled to intervene as a matter of right under Federal Rule of Civil Procedure 24(a), or alternatively, that the court should permit them to intervene under Rule 24(b). The court finds that the Intervenors ...


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