Atlantic Mut. Ins. Co. v. Northwest Airlines, Inc., 93-2877

• Decision Date: 18 May 1994
• Docket Number: No. 93-2877,93-2877
• Citation: 24 F.3d 958
• Parties: ATLANTIC MUTUAL INSURANCE COMPANY and Tacoma Boatbuilding Company, Inc., Plaintiffs-Appellees, v. NORTHWEST AIRLINES, INC., Defendant-Appellee. Coordination Council for North American Affairs, Intervenor-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 958

24 F.3d 958

29 Fed.R.Serv.3d 312

ATLANTIC MUTUAL INSURANCE COMPANY and Tacoma Boatbuilding Company, Inc., Plaintiffs-Appellees, v. NORTHWEST AIRLINES, INC., Defendant-Appellee Coordination Council for North American Affairs, Intervenor-Appellant.

No. 93-2877.

United States Court of Appeals Seventh Circuit.

Argued April 11, 1994.

Decided May 18, 1994.

Thomas J. Lonzo, Milwaukee, WI, for plaintiffs-appellees.

Steven B. Belgrade (argued), John A. O'Donnell, Belgrade & O'Donnell, Chicago, IL, and Ellis R. Herbon, and Geoffrey M. Herbon, Herbon, McLaughlin & Herbon, Milwaukee, WI, for defendant-appellee.

David C. Keating (argued), Gerald S. Walsh, Walsh & Keating; Samuel Becker, Milwaukee, WI, and Thomas G. Corcoran, Berliner, Corcoran & Rowe, Washington, DC, for intervenor-appellant.

Before CUDAHY, EASTERBROOK, and ROVNER, Circuit Judges.

EASTERBROOK, Circuit Judge.

Is Taiwan a province of the People's Republic of China? The district court answered "yes" in the course of deciding not to remand a case Northwest Airlines had removed to federal court. Cargo was damaged en route from Milwaukee to Taipei. If the Warsaw Convention, 49 U.S.C.App. Sec. 1502 note, applies, there is federal jurisdiction, otherwise not. The district court concluded that, as a part of the People's Republic, Taiwan necessarily subscribes to the Warsaw Convention, and it denied the motion to remand. 796 F.Supp. 1188 (E.D.Wis.1992). Ten months later the parties settled their dispute, and the case was dismissed.

Two days after the action died, the Coordination Council for North American Affairs attempted to resuscitate it. The Council represents the interests of Taiwan (the Republic of China) in the United States following the end of diplomatic relations that accompanied the United States' recognition of the People's Republic of China. The Council sought to intervene in order to ask the district judge to change his mind about the status of Taiwan. Pointing to the Taiwan Relations Act, 22 U.S.C. Secs. 3301-09, the Council contended that international agreements between the United States and Taiwan were frozen as of December 31, 1978, unless specifically altered, see Sec. 3303(c), and that on that date Taiwan was not a signatory to the Warsaw Convention. (It still isn't, and, unless it is bound by the action of the People's Republic of China, or a decision of the Kuomintang government of China in 1928, while Taiwan was governed by Japan, it never has been.) The district court denied the motion as untimely, and the Council has appealed.

An arcane jurisdictional problem complicates this esoteric case. After the district judge ruled that the Warsaw Convention applies, the litigants agreed that further proceedings would take place before a magistrate judge, who would have the power to enter a final judgment. 28 U.S.C. Sec. 636(c). After dismissing the case in the wake of the parties' settlement, the magistrate judge denied the Council's petition to intervene. Final decision by a magistrate judge, followed by appeal to the court of appeals, depends on the written consent of all parties--including those who intervene after other parties have consented and the magistrate judge has assumed control. Jaliwala v. United States, 945 F.2d 221 (7th Cir.1991). The Council did not consent to final (or any) decision by a magistrate judge, and the question therefore arises whether we have jurisdiction. Unlike the intervenor in Jaliwala, however, the Council is only a would-be intervenor. It never acquired the status of a party, and Sec. 636(c)(1) requires consent only by the "parties". Until it became a party, the Council had no statutory entitlement to exercise choice over the type of adjudicator.

One might respond that every federal litigant is presumptively entitled to decision by a judge with the tenure and salary protections in Article III of the Constitution. Entry of final decision by a magistrate judge depends on the parties' consent. See Geras v. Lafayette Display Fixtures, Inc., 742 F.2d 1037 (7th Cir.1984). Entry of a final decision by a federal judge lacking tenure of office during good behavior, without the consent of the person adversely affected by that decision, is difficult to justify under either statute or Constitution. The magistrate judge therefore would have been well advised to seek the Council's consent or refer the Council's petition to the district judge for decision.

Whether Article III or the statute entitles the Council to a decision by a district judge is not, however, the question we confront. The Council does not protest the magistrate judge's role and has forfeited any argument based on Article III. Our only question is whether we have appellate jurisdiction, which depends on the satisfaction of the formal elements under Sec. 636(c)(1). To this question the answer must be yes. All of the parties consented to decision by a magistrate judge. The Council wanted to become a party but failed in that quest. The case therefore remained before the magistrate judge, whose decision may be appealed to us under Sec. 636(c)(3).

Permissive intervention into a case that had been dismissed would be improvident here, so the only question deserving attention is whether the Council is entitled to intervene as of right under Fed.R.Civ.P. 24(a), which provides:

Upon timely application anyone shall be permitted to intervene in an action ... when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.

The district court held that the Council's request was not "timely." We may assume that settlement of litigation by the original parties is not conclusive if a third party possessing an interest in "the property or transaction which is the subject of the action" has been excluded from the negotiations. Intervention permits such an entity to prevent the original litigants from bargaining away its interests. If they beat the intervenor to the punch, the court may annul the settlement in order to give all interested persons adequate opportunity to participate in the negotiations and proceedings. Fleming v. Citizens for Albemarle, Inc., 577 F.2d 236 (4th Cir.1978); McDonald v. E.J. Lavino Co., 430 F.2d 1065 (5th Cir.1970); Hurd v Illinois Bell Telephone Co., 234 F.2d 942, 944 (7th Cir.1956); Cuthill v. Ortman-Miller Machine Co., 216 F.2d 336, 338 (7th Cir.1954).

Still, a would-be intervenor must act with dispatch, NAACP v. New York, 413 U.S. 345, 365-67, 93 S.Ct. 2591, 2602-04, 37 L.Ed.2d 648 (1973), and the Council did not. The suit was filed on March 27, 1992, and removed on May 1, 1992. Judge Gordon denied the motion to remand on August 5, 1992, and filed...