American Maritime Transport, Inc. v. U.S.

• Decision Date: 23 March 1989
• Docket Number: No. 88-1510,88-1510
• Citation: 870 F.2d 1559
• Parties: AMERICAN MARITIME TRANSPORT, INC., Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellee, Aeron Marine Shipping Company, American Shipping, Inc. and Archon Marine Company, Applicants for Intervention-Appellants.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1559

870 F.2d 1559

AMERICAN MARITIME TRANSPORT, INC., Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellee,

Aeron Marine Shipping Company, American Shipping, Inc. and

Archon Marine Company, Applicants for

Intervention-Appellants.

No. 88-1510.

United States Court of Appeals, Federal Circuit.

March 23, 1989.

John P. Meade, O'Connor & Hannan, of Washington, D.C., argued for plaintiff-appellee. With him on the brief was George J. Mannina, Jr.

Genevieve Holm, Commercial Litigation Branch, Dept. of Justice, of Washington, D.C., argued for defendant-appellee. With her on the brief were John R. Bolton, Asst. Atty. Gen., David M. Cohen, Director and Thomas W. Petersen, Assistant Director.

Michael Joseph, Dyer, Ellis, Joseph & Mills, of Washington, D.C., argued for applicants for intervention-appellants. With him on the brief were Thomas L. Mills and Constantine G. Papavizas.

Before MAYER and MICHEL, Circuit Judges, and NICHOLS, Senior Circuit Judge.

MICHEL, Circuit Judge.

Aeron Marine Shipping Company, American Shipping, Inc. and Archon Marine Company (Aeron) appeal the Claims Court order of June 22, 1988, 15 Cl.Ct. 29 denying Aeron's motion for intervention as of right in an action between American Maritime Transport, Inc. (AMT) and the United States Maritime Administration. We affirm.

Background

Aeron seeks to intervene in a lawsuit between AMT and the Maritime Administration about a shipping subsidy. Specifically, AMT claims entitlement to an "operating-differential subsidy" which is provided for in its contract with the Maritime Administration, and which is incorporated into the contract pursuant to section 603 of the Merchant Marine Act of 1936, 46 U.S.C.App. Sec. 1173 (1982). ¹ The purpose of such The Maritime Administration determined that certain grain cargoes being carried by AMT vessels to Israel cannot be considered "commercial" since the grain cargoes are reserved for U.S.-flag vessels by the Government of Israel. Accordingly, AMT's vessels do not compete "commercially" with foreign-flag vessels for carriage of the grain, and thus cannot be said to need an operating-differential subsidy in order to meet foreign competition. AMT challenged in the Claims Court the Maritime Administration's interpretation of "commercial" cargo. ²

subsidies is to provide financial assistance to U.S.-flag ships in international competition to make the U.S. ships price competitive. 46 U.S.C.App. Sec. 1172 (1982). Specifically, the contract provides that the Maritime Administration will pay AMT the subsidy for AMT vessels operating "in world-wide carriage of liquid and dry bulk cargo in the foreign ocean-borne commerce of the United States...." The subsidy is payable, however, only if the cargoes are "commercial."

Aeron sought to intervene as of right as provided by Claims Court Rule 24(a). ³ Rule 24(a) mandates intervention when:

[T]he applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.

Essentially, Aeron asserted, that because AMT will likely be in a better competitive position vis-a-vis Aeron if AMT's Israeli shipments were determined to be eligible for an operating-differential subsidy, Aeron has a cognizable interest in the outcome of the subsidies dispute between AMT and the Maritime Administration. Further, Aeron argued that disposition of the Claims Court action would possibly impede Aeron's ability to protect its interest, and that because of differences in their interests, the Maritime Administration cannot adequately represent Aeron's interest.

The Claims Court held that to intervene as of right Aeron must have a "direct, substantial, legally protectable interest in the proceedings," but that Aeron had "alleged nothing more than an indirect and contingent economic interest in this suit based upon the possibility of increased competition." The Claims Court also determined that Aeron's interests were being adequately represented by the Maritime Administration. Accordingly, the Claims Court denied Aeron's motion for intervention. Aeron appeals.

OPINION

I.

Although Aeron agrees with the Maritime Administration's determination regarding the subsidy provisions in its contract with AMT, the Administration opposes Aeron's intervention, and contends that the denial of Aeron's motion for intervention is not even appealable. Specifically, the Maritime Administration argues that, while an order denying a motion to intervene is generally appealable, because Aeron did not have a valid claim for intervention, the denial of its motion is not appealable, and, therefore, the appeal should be dismissed. Administration Brief at 9. The Administration cites United States v. American Telephone and Telegraph Co., 642 F.2d 1285, 1290-91 (D.C.Cir.1980), which considered intervention as of right by MCI Communications Corporation under Federal Rule of Civil Procedure 24(a), which is virtually identical to Claims Court Rule 24(a). ⁴

The Administration's suggestion of dismissal for nonappealability is not well taken. As the AT & T court explained, the appealability question centers on the validity of the claim for intervention and thus necessarily requires a review of the merits of the intervention claim. AT & T, 642 F.2d at 1290. Thus, both the issues of dismissal and of validity of the intervention claim "are resolved by the same inquiry." Id. The Administration's statement of its position implicitly acknowledges as much--denial is not appealable because the claim for intervention is not valid. Accordingly, simple logic requires that we look past the Administration's argument regarding dismissal, as such, and address the merits of Aeron's claim.

II.

A.

We need not resolve an issue debated by Aeron and the parties as to whether we are to review the Claims Court's decision under an abuse of discretion or de novo standard. See Aeron Brief at p. 8; Administration Brief at p. 16; AMT Brief at p. 23; and Aeron Reply Brief at p. 13. Even under a de novo standard of review, Aeron must establish that it has "an interest relating to the property or transaction which is the subject of the action" between AMT and the Maritime Administration in order to convince us that the Claims Court erred in denying intervention. Cl.Ct.R. 24(a). Aeron has emphatically expressed concern as to the possibilities that the Maritime Administration's decision might be declared to be incorrect, and that AMT would then benefit from an operating-differential subsidy in any subsequent competition between AMT and Aeron for carriage of grain cargoes to Israel. Although the requirements for intervention are to be construed in favor of intervention, see Westlands Water District v. United States, 700 F.2d 561, 563 (9th Cir.1983), we agree with the Claims Court that Aeron's fear of future subsidized competition, which may never arise, does not reflect an interest in the property or transaction at issue in this action.

Intervention is proper only to protect those interests which are " 'of such a direct and immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment.' " AT & T, 642 F.2d at 1292 (emphasis added) (quoting Smith v. Gale, 144 U.S. 509, 518, 12 S.Ct. 674, 676, 36 L.Ed. 521 (1892)). The interest thus may not be either indirect or contingent. See, e.g., New Orleans Public Service, Inc. v. United Gas Pipe Line Co., 732 F.2d 452, 463 (5th Cir.1984), cert. denied, 469 U.S. 1019, 105 S.Ct. 434, 83 L.Ed.2d 360 (1984); Dilks v. Aloha Airlines, Inc., 642 F.2d 1155, 1157 (9th Cir.1981) (per curiam). The interest must also be a "legally protectible interest." Westlands Water District, 700 F.2d at 563.

Aeron's interest is both indirect and contingent. Even in the event of a Claims Court decision making AMT eligible for the subsidy, Aeron could be exposed to "subsidized competition" only if each and every one of a chain of other possible, but not certain, events were to take place. First, the Israeli Government would have to continue to make grain cargoes available for carriage by U.S.-flag vessels. AMT and Aeron would then have to be among those shipping companies having U.S.-flag vessels available to carry the Israeli grain cargoes. Next, both AMT and Aeron would have to seek the Israeli cargoes. And finally, AMT and Aeron would actually have to compete for the carriage of the same grain shipments. Short of the actual occurrence of each event in this chain, a Claims Court decision in favor of AMT could not have the competitive effect envisioned by Aeron. Compare Rosebud Coal Sales Co. v. Andrus, 644 F.2d 849, 851 (10th Cir.1981) (although would-be intervenor did not have "legally protectable" interest, its interest was direct since the royalty rate for coal to be paid by would-be intervenor necessarily would be determined by outcome of the case between the plaintiff, another coal company, and the Department of Interior); AT & T, 642 F.2d at 1292 (MCI's legal interest in protecting its work product would have been directly lost through operation of a discovery order in the case between AT & T and the government). Thus, Aeron's interest is indirect, because no consequence to it flows immediately from a Claims Court ruling, and contingent because of the uncertainty that other events will actually follow, causing Aeron to suffer any harm.

Furthermore, Aeron cannot meet the requirement of a "legally protectable interest" which has been held to require something more than merely an economic interest. New Orleans Public Service, 732 F.2d at 464. What has been required is that "the interest be one which the substantive law recognizes as belonging to or being owned by the applicant." Id. (emphasis in original). Nor does a general...