F.T.C. v. American Legal Distributors, Inc., 88-8912

Decision Date11 December 1989
Docket NumberNo. 88-8912,88-8912
Citation890 F.2d 363
Parties1989-2 Trade Cases 68,867, 15 Fed.R.Serv.3d 738 FEDERAL TRADE COMMISSION, Plaintiff, v. AMERICAN LEGAL DISTRIBUTORS, INC., a corporation, et al., Defendants-Appellees, Reed Daugherity, et al., Proposed Intervenors-Appellants.
CourtU.S. Court of Appeals — Eleventh Circuit

Joel S. Sansone, Pittsburg, Pa., Michael Funderburk, Lilburn, Ga., for proposed intervenors-appellants.

H. Robert Ronick, Atlanta, Ga., for American Legal Distributors, Inc.

Frederick E. Dooley, Jr., F.T.C., Office of Gen. Counsel, Washington, D.C., John F. Neiley, F.T.C., R. Norman Cramer, Jr., Denver, Colo., for F.T.C.

Appeal from the United States District Court for the Northern District of Georgia.

Before KRAVITCH, Circuit Judge, HILL *, Senior Circuit Judge, and POINTER **, Chief District Judge.

PER CURIAM:

Appellants were victims of a fraudulent scheme. After obtaining a final judgment in United States District Court in Arizona, appellants filed a Motion to Intervene in an FTC suit against the same defendants in the United States District Court for the Northern District of Georgia. Appellants' Motion to Intervene as of Right was denied. Because we find the denial was appropriate as to issues already determined in the Georgia suit but was an abuse of discretion as to issues not yet decided, we hereby AFFIRM in part, REVERSE in part, and REMAND for further proceedings not inconsistent with this Opinion.

Background

American Legal Distributors and other defendants (hereinafter "defendants") operated a fraudulent legal services program. Appellants were victims of defendants' scheme who discovered it and brought it to the attention of federal authorities. Appellants also filed a civil RICO suit against defendants in federal district court in Arizona. In that suit, appellants requested--but were not granted--an attachment on defendants' property. Sixteen days after appellants filed their Arizona suit, the FTC filed the instant action against defendants in federal district court in Georgia. The FTC obtained an order freezing defendants' assets.

On April 26, 1988, appellants obtained a default judgment against defendants in Arizona. Sixteen days later, the FTC obtained a default judgment against defendants in Georgia, without opposition. Defendants then filed a motion to set aside the judgment in the Arizona case; appellants allege the FTC was a party to this motion. 1 The motion was denied on August 8, 1988.

On July 22, 1988, the FTC filed a motion requesting authorization to sell or dispose of certain property subject to the Georgia court's asset freeze. Appellants were invited to respond to this request, but did not. On August 4, 1988, appellants' lead counsel called the Georgia court and informed the judge's staff that he had been hospitalized for emergency surgery on July 29; that he had only just been released; and that he wished to respond to the FTC motion. On August 18, 1988, the trial court granted the FTC motion; appellants still had not filed a response. On September 22, prior to their receipt of the August 18 Order, appellants mailed their original Motion to Intervene. This motion was returned by the Clerk for failure to comply with local rules; it was not filed. On October 7, appellants filed their Amended Motion to Intervene. On November 10, 1988, the trial court denied the Motion to Intervene, concluding it was untimely and was unnecessary to protect the interests of the proposed intervenors. From that Order, proposed intervenors appeal.

Jurisdiction

The first issue is whether this court has jurisdiction to hear this appeal. The denial of a petition to intervene is not considered an appealable final order. E.E.O.C. v. Eastern Airlines, Inc., 736 F.2d 635 (11th Cir.1984). There is, however, limited jurisdiction to hear the appeal under this circuit's "anomalous rule." Id. Under this rule, the court has jurisdiction to determine whether the denial of intervention was proper. If the district court was correct in denying the motion to intervene, this court's jurisdiction evaporates and we must dismiss the appeal for want of jurisdiction. If the district court erred, we retain jurisdiction and must reverse. Id.

Motion to Intervene

Federal Rule of Civil Procedure 24 provides in pertinent part:

(a) Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action: ... (2) 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.

In determining whether a motion to intervene as of right is timely, a court should look to the purpose for which intervention is sought, the necessity for intervention as a means of preserving the applicant's rights, and the improbability of prejudice to those already parties in the case. Hodgson v. United Mine Workers of America, 473 F.2d 118, 129 (D.C.Cir.1972). "Timeliness presents no automatic barrier to intervention in post-judgment proceedings where substantial problems in formulating relief remain to be resolved." Id. A decision that a Motion to Intervene was untimely should not be reversed unless the district court abused its discretion in so deciding. NAACP v. New York, 413 U.S. 345, 93 S.Ct. 2591, 37 L.Ed.2d 648 (1973).

Appellants first submitted their Motion to Intervene on September 22, 1988--four months after judgment was entered in the Georgia suit and one month after the court granted the FTC motion to sell certain assets. Appellants' Motion to Intervene was not properly filed until October 7, 1988, more than two weeks later. Nonetheless, appellants assert their motion should have been granted. Appellants argue they did not have a final judgment--and therefore did not have a protectable interest--until the Arizona court denied defendants' Motion...

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    ...320 (5th Cir. Unit B 1981). For example, we reversed the denial of a motion to intervene as untimely in FTC v. American Legal Distributors, Inc. , 890 F.2d 363, 365–66 (11th Cir. 1989). The circumstances in American Legal Distributors , however, differed from those here. First, in that case......
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