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8th Circuit Rules on Motion to Intervene in Class Action Law Suits

The Eighth Circuit Court has remanded a claim of the right to intervene in class action law suits to district court on the basis that despite class members’ option to opt-out of class action law suits, the right to intervene is not extinguished.  This determination followed the filing of a class action law suit by a specific class member against a company for allegedly inflating deductions from royalty payments that were due under oil and gas leases.  The class member moved to intervene after class certification and the submission of proposed notice, but before the district court approved the notice under the Federal Rule of Civil Procedure 24.

The requested intervention was based upon both the class member’s interest in adequate representation by the class representative and counsel and an interest in notice and opt-out procedures that are informative and non-onerous.  The class member claimed that the defendants in the case, class counsel, and counsel in a parallel case colluded to create a conflict of interest which rendered the representation by class counsel inadequate.  The district court denied the motion to intervene on the grounds that the motion was unnecessary because the class member had the ability to opt-out of the class litigation and pursue the claims with different counsel.

The class member also alleged that the notices of class action contained unnecessary and onerous requirements for opting out.  The district court denied this motion as well on the grounds that the claim was premature because the procedures for opting out had not yet been finalized and therefore the class member had not had the chance to comply with them.

The class member appealed to the Circuit Court, but the Circuit Court’s jurisdiction to hear the matter was challenged by the appellees because the district court’s denial of the motion to intervene was made without prejudice, and therefore not a final decision.  The Circuit Court is only permitted to review final decisions, which are ones that end the litigation on the merits and leave nothing for the court to do but execute the judgment.  The Circuit Court stated that to determine whether it has proper jurisdiction it would have to decide whether the order from the district court amounted to a final decision as to the class member’s right to intervene.  Citing many previous decisions, the Circuit Court held that it did have proper jurisdiction.

The Circuit Court also deemed the district court’s reasoning for denying the motion for intervention flawed, stating that if its holding was correct then it would mean a class member could never intervene in a class action since the member could always have the ability to opt-out, and this is contrary to the intent of Rule 24, which specifically contemplates that a member of a class should have the right to intervene in a class action if he can show the inadequacy of the representation of his interest.  This portion of the district court’s order was remanded for further consideration.  The class member’s second claim of onerous notice and opt-out procedures was dismissed by the Circuit Court for lack of jurisdiction.

For more information, the opinion can be found here: http://media.ca8.uscourts.gov/opndir/17/07/162798P.pdf.