Williams & Humbert Ltd. v. W. & H. Trade Marks (Jersey) Ltd.
| Decision Date | 23 February 1988 |
| Docket Number | No. 87-7025,87-7025 |
| Citation | 840 F.2d 72 |
| Parties | , 10 Fed.R.Serv.3d 199, 5 U.S.P.Q.2d 1870 WILLIAMS & HUMBERT LIMITED v. W. & H. TRADE MARKS (JERSEY) LIMITED, Jose Maria Ruiz-Mateos, et al., Appellants. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (Civil Action No. 83-01905).
James M. Amend, with whom Jeffrey S. Davidson, David G. Norrell and Steven M. Wellner, Washington, D.C., were on the brief, for appellants.
Jack C. Berenzweig, Chicago, Ill., with whom John D. Nies, Arlington, Va., was on the brief, for appellee.
Before D.H. GINSBURG and SENTELLE, Circuit Judges, and MARKEY, * Chief Judge.
Opinion for the Court filed by Circuit Judge SENTELLE.
This is an appeal from an order of the District Court denying an application for intervention under Rule 24 of the Federal Rules of Civil Procedure. Appellants contend that the order of the District Judge denying their application was not supported by the record. We agree and, therefore, reverse and remand.
The appellants are six related individuals 1 known collectively herein as "the family." At one time, the family owned all the shares of Rumasa, S.A. (Rumasa), a Spanish corporation with various holdings including almost complete ownership of Williams & Humbert Group Limited (Group), an English corporation. 2 Group and its wholly owned subsidiary Williams & Humbert International Limited in turn owned all the shares of Williams & Humbert Limited (Williams & Humbert), plaintiff below and appellee here. Williams & Humbert owned the valuable Dry Sack trademarks, registered to it in the United States, the United Kingdom, and other countries, under which it marketed a premium brand of sherry. It is the United States Dry Sack trademarks that are the subject of this action. 3
The family, all citizens of Spain, concerned for some time that the Spanish government would expropriate its direct holdings in Rumasa or Rumasa's holdings, established W. & H. Trade Marks (Jersey) Limited (W & H), a corporation of Jersey in the Channel Isles, in 1976, with all of its shares held by or for the family. Williams & Humbert and W & H executed a Master Agreement that purported to transfer Williams & Humbert's worldwide trademarks, including the United States Dry Sack trademarks, to W & H and grant Williams & Humbert a license to use the trademarks that was nevertheless terminable by W & H in the event () that the stock of Rumasa was expropriated by Spain.
In 1983, Spain did expropriate the family's Rumasa stock, and thereupon W & H purported to terminate Williams & Humbert's worldwide licenses to the trademarks under the Master Agreement. Williams & Humbert, now effectively controlled by the government of Spain by reason of its expropriation of all the shares of the grandparent corporation, brought suit against W & H and the family in Jersey seeking a judgment that W & H's shares were held on constructive trust for Williams & Humbert. In England, Williams & Humbert sued W & H to set aside the Master Agreement and to reclaim the trademarks ostensibly conveyed thereby. (The family intervened as defendants alongside W & H in the English action.) Williams & Humbert also brought this action against W & H (but not the family) in 1983. W & H, although represented, never answered here; instead, the action below was stayed by a consent order pending the outcome of the litigation in the United Kingdom.
In 1986, Williams & Humbert prevailed in both the English and Jersey courts. In the English action, the court set aside the Master Agreement by which Williams & Humbert ostensibly had conveyed the trademarks and entered judgment and injunction against W & H and the family with respect to worldwide rights to the trademarks. The decision ultimately was sustained in the House of Lords. In the Jersey action, the court decreed that all shares of W & H were held on trust for Williams & Humbert.
The family moved on October 27, 1986 to intervene as defendants in the present action and to vacate the stay of proceedings because W & H, now effectively controlled by plaintiff under the Jersey decree, no longer could be relied upon to litigate in the family's interest. The motion was accompanied by the family's proposed answer to Williams & Humbert's complaint and counterclaims seeking recognition of the family's claim to the United States trademarks, anti-infringement injunctive relief, and an accounting. Williams & Humbert did not respond directly to the family's application, but instead moved to stay all proceedings on that motion and then filed a motion for summary judgment, offering the English judgment as evidence that the action below was res judicata. Since the family had not been permitted to intervene and since the nominal defendant was now owned for the benefit of the plaintiff, no one filed opposition to the motion for summary judgment. The District Court denied the formally unopposed motion to intervene without stating a basis, allowed the formally unopposed motion for summary judgment, and denied the family's subsequent request that the judgment be amended to clarify that certain injunctive prohibitions thereof do not apply to them. The family appealed the order denying intervention. Appellants and appellee agree that the summary judgment is not before the Court, but that if the family is permitted to intervene, it will be in a position to attack that judgment by proper motion. See Fed.R.Civ.P. 60.
The family's claim in this litigation is founded on its allegation that the Spanish government has not compensated the family for expropriation of the family's Rumasa stock and that the family is therefore the owner of the American trademarks. The family acknowledges the act of state doctrine, under which we ordinarily would refrain from examining or questioning the validity of the taking by Spain in Spain of property having a situs in Spain. See generally Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964); Dayton v. Czechoslovak Socialist Republic, 834 F.2d 203, 206 (D.C.Cir.1987). The family contends, however, that owners of an entity that is taken without compensation by a foreign state are entitled, under American case law, to the entity's assets having a situs in the United States, particularly United States trademark registrations. The family contends further that, on this narrow issue, the English judgment is not res judicata and that it is entitled to intervene below on the strength of the allegations in its proposed answer and counterclaim. We are unable to decide the substantive questions presented by the family on the basis of the present record and, indeed, need not do so. Since the District Court did not set forth its reasons for denying the intervention, and since, for the reasons set forth below, we are unable to affirm that court's decision on the question of intervention without a further record, we remand this matter for further proceedings at the district level.
Rule 24(a) of the Federal Rules of Civil Procedure governs intervention of right, providing, in pertinent part:
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 his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.
The grounds for intervention of right may be stated as: (1) timeliness, (2) cognizable interest, (3) impairment, and (4) lack of adequate representation. Williams & Humbert does not dispute that the family's interest is not represented at present, Brief for Appellant at 13 n. 17, and each of the other three requirements will be discussed in turn.
Williams & Humbert protests on appeal that the family's application is not timely, complaining that the family knew of this litigation all along, but chose to sit on the sidelines. The family argues that there was no need to intervene until W & H lost both in Jersey and in England and thereby became incapable of representing the family's interests in this case.
Timeliness of intervention is a matter for the sound discretion of the trial court, NAACP v. New York, 413 U.S. 345, 365-66, 93 S.Ct. 2591, 2602-03, 37 L.Ed.2d 648 (1973), but a court should be more reluctant to refuse when intervention is sought of right, as here. United States v. American Telephone & Telegraph Co., 642 F.2d 1285, 1295 (D.C.Cir.1980).
Since the District Court did not state the grounds upon which it denied the family's application, we are unable to say whether the District Judge exercised her discretion and, if so, whether she abused it, or whether the decision was made on the basis of a perceived lack of some other element necessary for intervention of right. Since, as we will demonstrate below, all of the other necessary elements were present, we must remand this cause for reconsideration of the motion to intervene in light of this opinion.
An application to intervene should be viewed on the tendered pleadings--that is, whether those pleadings allege a legally sufficient claim or defense and not whether the applicant is likely to prevail on the merits. United States v. American Telephone & Telegraph Co., 642 F.2d 1285, 1291 (D.C.Cir.1980); Lake Investors Development Group v. Egidi Development Group, 715 F.2d 1256, 1258 (7th Cir.1983). The family's proposed pleadings meet that standard.
The family has alleged that, through a four-link chain of corporate ownership,...
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