Opinion
Civil No. 3:03-CV-2670-H
March 29, 2004
MEMORANDUM OPINION AND ORDER
Before the Court is Dymatize Enterprises, Inc.'s, Notice and Motion for Leave to Intervene, filed February 20, 2004, and the response thereto. For the following reasons, the motion is GRANTED in part and DENIED in part.
I. Background
The instant case, which was filed on October 31, 2003, involves a contract dispute between Plaintiff John's Lone Star Distribution, Inc., d/b/a Lone Star Distribution ("Lone Star") and Defendant Juice Bar Concepts, Inc., d/b/a Extreme Blendz Products ("Extreme Blendz"). Extreme Blendz, as licensor of the Extreme Blendz label of powdered drink products, purportedly contracted with Lone Star for Lone Star to be the exclusive distributor of Extreme Blendz products to Extreme Blendz's licensees ("Lone Star/Extreme Blendz Contract"). Lone Star, allegedly pursuant to the Lone Star/Extreme Blendz Contract, proceeded to contract with Dymatize Enterprises, Inc. ("Dymatize"), for Dymatize to manufacture the Extreme Blendz products under the Extreme Blendz label ("Lone Star/Dymatize Contract"). According to Dymatize, the Lone Star/Dymatize Contract gave Dymatize certain rights with respect to the Extreme Blendz name and products, which rights arose out of the Lone Star/Extreme Blendz Contract. To be clear, however, only the disputes regarding the Lone Star/Extreme Blendz Contract are before this Court.
In December 2003, Extreme Blendz brought suit against Dymatize in Mississippi state court, asserting various causes of action relating to Dymatize's conduct under the Lone Star/Dymatize Contract. On January 23, 2004, Dymatize removed that case to the United State District Court for the Northern District of Mississippi. Also on January 23, 2004, Extreme Blendz brought suit against Dymatize in the United States District Court for the Central District of California, asserting additional causes of action relating to Dymatize's conduct under the Lone Star/Dymatize Contract. According to Dymatize, in both the Mississippi case and the California case, Dymatize intends to defend itself, at least in part, by demonstrating that it acted in accordance with rights ultimately flowing from the Lone Star/Extreme Blendz Contract.
Dymatize now seeks to intervene in this case to represent its interest in asserting the validity of the Lone Star/Extreme Blendz Contract. Dymatize contends that it is entitled to intervene either as of right or permissively. Extreme Blendz opposes the motion. For the following reasons, the Court concludes that Dymatize is entitled to intervene as of right pursuant to Rule 24(a)(2) of the Federal Rules of Civil Procedure.
II. Legal Standards
An applicant may intervene as of right pursuant to Rule 24(a)(2) if it satisfies the following requirements: "(1) the applicant must file a timely application; (2) the applicant must claim an interest in the subject matter of the action; (3) the applicant must show that disposition of the action may impair or impede the applicant's ability to protect that interest; and (4) the applicant's interest must not be adequately represented by existing parties to the litigation." Heaton v. Monogram Credit Card Bank of Georgia, 297 F.3d 416, 422 (5th Cir. 2002) (quoting United States v. Franklin Parish Sch. Bd., 47 F.3d 755, 756 (5th Cir. 1995)) (internal quotations omitted). The applicant has the burden of showing that it is entitled to intervention, and the "[f]ailure to satisfy any one requirement precludes intervention of right." Edwards v. City of Houston, 78 F.3d 983, 999 (5th Cir. 1996). See United States v. Texas Eastern Transmission Corp., 923 F.2d 410, 414 (5th Cir. 1991). Nonetheless, "[f]ederal courts should allow intervention where no one would be hurt and the greater justice could be attained." Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1995) (quoting McDonald v. E.J. Lavino Co., 430 F.2d 1065, 1074 (5th Cir. 1970)) (internal quotations omitted). Whereas a district court's finding as to timeliness is reviewed for abuse of discretion, the district court's findings as to the remaining requirements are reviewed de novo. See Sierra Club v. Glickman, 82 F.3d 106, 108 (5th Cir. 1996).
III. Analysis
Extreme Blendz does not challenge the timeliness of Dymatize's motion for leave to intervene. Accordingly, the Court will only address whether Dymatize satisfies the three remaining requirements for intervention as of right. First, Dymatize claims an interest in this action insofar as the validity of the Lone Star/Extreme Blendz Contract will bear on the validity of the Lone Star/Dymatize Contract. See Sierra Club v. Glickman, 82 F.3d 106, 109 (5th Cir. 1996) (concluding that a party has sufficient interest to intervene in an action when the action threatens the party's contracts). Second, an adverse determination in this action could implicitly invalidate the Lone Star/Dymatize Contract, in whole or in part, such that Dymatize could be deprived of a legal defense in the Mississippi and California cases. See Doe #1 v. Glickman, 256 F.3d 371, 380 (5th Cir. 2001) (allowing a party to intervene in an action where an adverse determination in the action would collaterally estop the party from re-litigating the issue in another court). Finally, although Lone Star generally shares Dymatize's interest in asserting the validity of the Lone Star/Extreme Blendz Contract, the Court concludes that Lone Star might not adequately represent Dymatize's interest. See Trbovich v. United Mine Workers of America, 404 U.S. 528, 538 n. 10 (1972) ("The requirement of the Rule is satisfied if the applicant shows that representation of his interest `may be' inadequate."). The Court notes that Dymatize's interest could diverge from that of Lone Star in that Dymatize has an interest in interpreting the Lone Star/Extreme Blendz Contract in such a manner as to maximize Dymatize's likelihood of successfully defending itself in the Mississippi and California cases. Accordingly, Dymatize may intervene in this action as of right pursuant to Rule 24(a)(2), and Dymatize's motion for leave to intervene is GRANTED to that extent.
However, Dymatize's proposed complaint in intervention asserts claims that substantially exceed the scope of this case. For example, Dymatize seeks damages from Extreme Blendz for tortious interference with contract, unfair competition, and conspiracy. These claims would require the Court to consider the merits of the Lone Star/Dymatize Contract, and, therefore, they are more properly asserted as counterclaims in the Mississippi or California cases where the Lone Star/Dymatize Contract is at issue. As noted above, only the disputes regarding the Lone Star/Extreme Blendz Contract are before this Court. Accordingly, Dymatize's motion for leave to intervene is DENIED to the extent that it seeks to introduce issues that would require the Court to consider the merits of the Lone Star/Dymatize Contract. Thus, as a restriction on intervention, Dymatize may maintain only its declaratory judgment action in this case on issues regarding the validity and interpretation of the Lone Star/Extreme Blendz Contract. See Beauregard, Inc. v. Sword Services, L.L.C., 107 F.3d 351, 352-53 (5th Cir. 1997) (concluding that "it is now a firmly established principle that reasonable conditions may be imposed even upon one who intervenes as of right"). See also FED. R. CIV. P. 24 (Advisory Committee Note, 1966 Am.) ("An intervention of right under the amended rule may be subject to appropriate conditions or restrictions responsive among other things to the requirements of efficient conduct of the proceedings.").
IV. Conclusion
For the foregoing reasons, Dymatize's motion for leave to intervene is GRANTED in part and DENIED in part. Dymatize is DIRECTED to submit a proposed complaint in intervention that is consistent with the Court's analysis above. An original and a copy of the proposed complaint in intervention should be submitted to chambers-not filed-no later than noon. April 5, 2004.
SO ORDERED.