Banco Popular de Puerto Rico v. Greenblatt

• Decision Date: 04 March 1992
• Docket Number: No. 91-2088,91-2088
• Citation: 964 F.2d 1227
• Parties: BANCO POPULAR de PUERTO RICO, Plaintiff, Appellee, v. David GREENBLATT, et al., Defendants, Appellees. The Official Secured Creditors' Committee of Amfesco Industries, Inc., etc., Intervenor, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1227

964 F.2d 1227

23 Fed.R.Serv.3d 47

BANCO POPULAR de PUERTO RICO, Plaintiff, Appellee, v. David GREENBLATT, et al., Defendants, Appellees.

The Official Secured Creditors' Committee of Amfesco

Industries, Inc., etc., Intervenor, Appellant.

No. 91-2088.

United States Court of Appeals,

First Circuit.

Heard March 4, 1992.

Decided May 13, 1992.

Gabriel B. Schwartz, New York City, with whom Jorge R. Jimenez, San Juan, P.R., Anthony C. Acampora, and Hahn & Hessen, New York City, were on brief, for intervenor, appellant.

Elihu Inselbuch, Caplin & Drysdale, Chartered, Washington, D.C., and Diaz Ascencio, Lopez & Orsini, San Juan, P.R., on brief, for plaintiff, appellee.

Stuart A. Summit, with whom Summit Solomon & Feldesman, New York City, Sanchez-Betances & Sifre, Hato Rey, P.R., Curtis C. Mechling, Stroock & Stroock & Lavan, New York City, and O'Neill & Borges, Hato Rey, P.R., were on brief, for defendants, appellees.

Before SELYA, Circuit Judge, FEINBERG, ^* Senior Circuit Judge, and CYR, Circuit Judge.

SELYA, Circuit Judge.

The Officia1 Secured Creditors' Committee of Amfesco Industries, Inc. sought to intervene in this case for the purpose of modifying a protective order entered as part of the final judgment. The district court refused to allow intervention. We affirm.

I. BACKGROUND

This appeal is a tale of two lawsuits, both rising from the rubble of Amfesco's collapse. In late 1985, Amfesco entered bankruptcy in the Eastern District of New York. The bankruptcy court constituted an Official Secured Creditors' Committee and appointed Irving Trust Company, Chemical Bank, and Banco Popular de Puerto Rico as members of it. On November 18, 1987, the Committee sued Amfesco's former directors in a New York state court. Some seven weeks earlier, however, Banco Popular, acting to its own behoof, had sued Amfesco's former directors and accountants in the United States District Court for the District of Puerto Rico.

The two cases were spun from much the same yarn. The federal action alleged fraud, negligence, and civil conspiracy; the state action alleged waste and mismanagement. An insurer provided counsel for the directors in both forums, acting pursuant to a liability policy purchased by Amfesco in its salad days. Because the policy was a corporate asset, the bankruptcy court enjoined the insurer from disbursing the policy's avails without prior bankruptcy court approval.

On September 9, 1988, the parties to the federal action entered into a confidentiality agreement providing, inter alia, that any person producing discovery material (the "Designating Party") could classify the information as "confidential," thus restricting its dissemination to individuals directly involved in the litigation. The agreement also provided for judicial review of inter-party disputes anent classification. The district court sanctioned the confidentiality agreement, embodying it in a protective order. Paragraph ten of the protective order stipulated that:

Promptly after final termination of this action, each party or other person subject to the terms hereof shall assemble and destroy or return to the Designating Party all material, documents and things in his or its possession or control designated as Confidential Information by any other party, as well as all copies, summaries, and abstracts thereof, and all other materials, memoranda or documents, constituting or containing information designated as Confidential Information and not subsequently relieved of that designation by the Designating Party or by a court. If such material, documents, or things are destroyed, the person shall certify their destruction to the Designating Party in writing. The [nondisclosure] provisions of this Stipulation ... shall continue after the conclusion of this action until such time as the parties may otherwise agree in writing.

In April 1989, following protracted discovery, the director-defendants sought the bankruptcy court's permission to use insurance monies for settlement of the federal action. On May 1, the Committee filed a motion beseeching the bankruptcy judge to condition approval of the directors' application on a requirement that the settling parties share the fruits of their federal-court discovery with the Committee. The bankruptcy judge, hesitant about fiddling with another tribunal's protective order, granted the directors' application but stayed disbursement of the needed funds for sixty days (during which period the Committee, if it so desired, might have asked the Puerto Rico federal district court to modify the protective order). The Committee made no overtures to the district court. After the sixty-day grace period had passed, the district court, unaware of the Committee's misgivings, entered the settlement agreement as a final judgment. The judgment expressly reaffirmed the protective order.

Some three weeks thereafter (on August 10, 1989, to be exact), the Committee moved to intervene in the federal action for the purpose of enjoining the destruction of discovery documents. All parties to the federal action objected. The district court pondered the motion for over two years. ¹ On September 6, 1991, the court finally heard oral argument.

The objectors (appellees before us) urged that intervention should be denied for four reasons: (1) the motion was untimely; (2) the Committee had no standing to intervene; (3) the court lacked authority to grant the relief requested; and (4) modification of the protective order would undermine the settlement. Five days later, the district court ruled. The court stated that it lacked authority to impose "new, affirmative requirements" on the appellees after the underlying litigation had been concluded. Accordingly, the court denied the application for intervention without addressing appellees' other asseverations. This appeal ensued.

II. DISCUSSION

The matter of when, and under what circumstances, a protective order may be lifted at the insistence of a nonparty after entry of final judgment is a complicated one. It is unnecessary for us to meet that issue head-on. After all, an appellate court is not wedded to the district court's reasoning but, instead, can affirm a judgment on any independently sufficient ground reflected in the record, see, e.g., Garside v. Osco Drug, Inc., 895 F.2d 46, 48-49 (1st Cir.1990); Polyplastics, Inc. v. Transconex, Inc., 827 F.2d 859, 860-61 (1st Cir.1987); and in cases of this stripe there is a prevenient question: timeliness stands as a sentinel at the gates whenever intervention is requested and opposed. ² Here, the temporal inquiry is dispositive.

We have made it pellucidly clear that Rule 24's timeliness requirement is of great importance. See Caterino v. Barry, 922 F.2d 37, 40 (1st Cir.1990); United Nuclear Corp. v. Cannon, 696 F.2d 141, 143 (1st Cir.1982); see also NAACP v. New York, 413 U.S. 345, 365, 93 S.Ct. 2591, 2602, 37 L.Ed.2d 648 (1973). When, as here, the district court fails to make an explicit timeliness determination, the court of appeals can nevertheless do so, provided that the record is adequately developed. See, e.g., Fiandaca v. Cunningham, 827 F.2d 825, 832-35 (1st Cir.1987) (conducting a timeliness analysis, "a step not taken by the district court," in deciding that the court erred in denying intervention). ³ In this case, we are well positioned to conduct the inquiry ab initio: the record is ample to allow an independent timeliness determination; the parties have briefed and argued the point; and the Rule 24 motion was pending before the district court, without resolution, for over two years--a circumstance which makes the further delay that remand would entail particularly rebarbative.

There is no bright-line rule delineating when a motion to intervene is or is not timeous. Instead, courts must decide the question on a case by case basis, examining the totality of the relevant circumstances. See NAACP, 413 U.S. at 366, 93 S.Ct. at 2603; Public Citizen v. Liggett Group, Inc., 858 F.2d 775, 784 (1st Cir.1988), cert. denied, 488 U.S. 1030, 109 S.Ct. 838, 102 L.Ed.2d 970 (1989); Culbreath v Dukakis, 630 F.2d 15, 17 (1st Cir.1980). One highly relevant circumstance implicates the status of the case at the time when intervention is attempted. See Fiandaca, 827 F.2d at 833. The more advanced the litigation, the more searching the scrutiny which the motion must withstand. Cf. Garrity v. Gallen, 697 F.2d 452, 455 n. 6 (1st Cir.1983) (commenting that courts ordinarily "look with some disfavor upon motions to intervene filed after entry of final judgment").

In this circuit, four factors--all of which are informed to some degree by the case's posture--must be considered in ruling on the timeliness of a motion to intervene: (1) the length of time the applicant knew or reasonably should have known that its interest was imperilled before it moved to intervene; (2) the foreseeable prejudice to existing parties if intervention is granted; (3) the foreseeable prejudice to the applicant if intervention is denied; and (4) idiocratic circumstances which, fairly viewed, militate for or against intervention. See Public Citizen, 858 F.2d at 785-87; Fiandaca, 827 F.2d at 834; Culbreath, 630 F.2d at 20-25. We will examine these factors seriatim.

1. Knowledge. The first factor focuses on actual or constructive knowledge of possible jeopardy. While knowledge of the existence of litigation, simpliciter, does not invariably trigger one's obligation to seek intervention, the count begins no later than the time "when the intervenor became aware that its interest in the case would no longer be adequately protected by the [existing] parties." Public Citizen, 858 F.2d at 785. This does not mean, however, that a potential intervenor can sit idly by and await the receipt of infinitely precise information about every ramification of a pending case. Complete knowledge is unlikely to be attained short of final judgment. Leaving aside constructive...