Free Reply to Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 00-cv-01841-LTB-PAC RICKY EUGENE CLARK, on behalf of himself and all others similarly situated, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois Corporation, Defendant

REPLY IN SUPPORT OF MOTION TO INTERVENE ______________________________________________________________________________

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TABLE OF CONTENTS PAGE I. II. INTRODUCTION ...............................................................................................................1 ARGUMENT.......................................................................................................................2 A. The Proposed Intervention Is Timely ......................................................................3 1. 2. 3. 4. B. III. The relevant authorities from the class action context demonstrate that the intervention is timely..................................................4 State Farm will not be prejudiced by the intervention.................................5 The interests of judicial efficiency and fairness to all parties will best be served by allowing the proposed intervention..........................7 Upon a finding of timeliness, permissive intervention should be granted.....................................................................................................8

Because the Intervenors' Interests May Be Impaired If Intervention Is Denied, Intervention of Right Is Also Appropriate..............................................8

CONCLUSION....................................................................................................................9

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Proposed intervenor Plaintiffs Roy McIntosh, Florinda Reed and Matthias Hobza, by and through their attorneys of record, hereby submit their Reply in Support of Motion to Intervene. I. INTRODUCTION

State Farm's strategy could hardly be clearer: it seeks to continue to delay making good on its obligations to the proposed Class of injured pedestrians as long as it possibly can. At least since the Tenth Circuit decided Clark I, 1 it has been beyond dispute that State Farm has obligations to the proposed Class, and the policies covering the Class members are subject to mandatory reformation to include extended PIP coverage. Yet even after Clark I was decided, and even after this Court reformed the governing policy in Clark II, 2 State Farm still made no effort to find any of the Class members ­ let alone make good on its obligations to them. At the same time, State Farm prevailed on its motion to delay this Court's consideration of the certification motion until after the resolution of the claims of the original Class Representative Ricky Eugene Clark. State Farm now seeks to capitalize on the procedural posture of this case by simultaneously attacking Mr. Clark's standing to serve as a Class Representative, and, out of the other side of its mouth, claiming that the intervenors' motion is "untimely." Were State Farm to succeed, the result would be still further delay, as the intervenors would be forced to file a new class action complaint in order to preserve the claims of themselves and the proposed Class of injured pedestrians who should have all long since received the additional PIP benefits to which they are indisputably entitled. State Farm's dilatory tactics should not be rewarded.

1 2

Clark v. State Farm Mut. Auto. Ins. Co., 319 F.3d 1234 (10th Cir. 2003) ("Clark I"). Clark v. State Farm Mut. Auto. Ins. Co., 292 F. Supp. 2d 1252 (D. Colo. 2003) ("Clark II"). -1-

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Ironically enough, State Farm's major argument against the proposed intervention is to claim that the intervention is untimely. Indeed, timeliness is the only argument State Farm makes against permissive intervention under Fed. R. Civ. P. 24(b). Tellingly, State Farm ignores the relevant case law concerning the timeliness of intervention in the class action context. Instead, State Farm cites a smattering of cases that arose in unrelated contexts to support its claim that the proposed intervention is untimely because the intervenors should be treated as "parties" who are "charged with knowledge" of both the procedural history of this case and State Farm's argument that Mr. Clark is an inadequate Class Representative as a result of that history. See Def. Mem. at 9. However, the relevant authorities are uniform that intervention in a class action is timely where, as here, a challenge is made to the adequacy of the existing Representative Plaintiff that, if successful, would result in the denial of class certification. It is disingenuous in the extreme for State Farm to argue that the additional matter of weeks it will need to depose the intervenors constitutes the sort of "prejudice" that would justify the denial of the proposed intervention. Accordingly, the proposed intervention should be allowed so that the claims of the proposed Class may be finally and fairly resolved. II. ARGUMENT

State Farm's predominant argument against allowing the proposed intervention is the claim that intervention is untimely. Indeed, that is State Farm's only argument against permissive intervention pursuant to Rule 24(b). Hence, if the Court rejects State Farm's argument on timeliness, it should allow the proposed intervention pursuant to Rule 24(b).

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Accordingly, Plaintiffs will first address the timeliness argument before turning to State Farm's argument that intervention of right is improper because the intervenor Plaintiffs' interests cannot be impaired by the denial of intervention. A. The Proposed Intervention Is Timely As Plaintiffs made clear in their opening brief, the assessment of timeliness is not a mechanical calculation that merely looks at the time that has passed since the date of filing of the suit or some other date, but instead must assessed "in light of all the circumstances." See United Nuclear Corp. v. Cranford Ins. Co., 905 F.2d 1424, 1427 (10th Cir. 1990). The Tenth Circuit has recognized that: The requirement of timeliness is not a tool of retribution to punish the tardy would-be intervenor, but rather a guard against prejudicing the original parties by the failure to apply sooner. Federal courts should allow intervention `where no one would be hurt and greater justice could be attained.' Utah Ass'n of Counties v. Clinton, 255 F.3d 1246, 1250 (10th Cir. 2001) (quoting Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994)). Indeed, even after final judgment, intervention has generally been permitted where, as here, there is no prejudice to the rights of the existing parties or substantial interference with the orderly processes of the court. See 7C CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE, § 1916, at 451 (2d ed. 1986) (noting that "in a significant number of cases intervention has been allowed even after judgment."); id. § 1916, n.20 pp. 451-54 (discussing 19 cases where intervention was allowed after judgment); id., 2003 Pocket Part, § 1916, n. 20, pp. 84-85 (discussing 13 cases where intervention was allowed after judgment).

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1.

The relevant authorities from the class action context demonstrate that the intervention is timely

According to State Farm, as putative Class members the intervenor Plaintiffs should be treated as "parties" who should have been aware ever since this case was filed that there was "a putative class action in which they might have an interest." Def. Mem. at 9. Thus, says State Farm, the intervention is untimely because the intervenors run afoul of the maxim that "[a] party seeking to intervene must act as soon as he knows or has reason to know that his interests might be adversely affected by the outcome of the litigation." Id. at 10 (citing Utah v. Kennecott Corp., 232 F.R.D. 392, 396 (D. Utah 2005)). State Farm's argument is wholly inapposite to the circumstances of this case. Indeed, in the context of a class action: [A]pplications for intervention filled prior to the court's determination of the class should generally be held in abeyance until the court has ruled on the class. However, if it appears that the representation of the original representative plaintiff may potentially be inadequate, the court may permit intervention by another class member in order to bolster class representation. 7 ALBA CONTE AND HERBERT B. NEWBERG, NEWBERG ON CLASS ACTIONS § 22:78 (4th ed. 2002). For this reason, courts have found that intervention by putative class members is timely when filed pre-certification but after possible adequacy concerns are raised. See, e.g., Bohne v. Closings of Tulsa, LLC, 2006 U.S. Dist. Lexis 20841 (D. Okla. Apr. 10, 2006); In re Bridgestone Secs. Litig., 430 F. Supp. 2d 728 (M.D. Tenn. 2006) (motion to intervene timely when it occurred after Sixth Circuit ruled that prior lead plaintiff could no longer serve as class representative). If anything, the Court could find the intervenors' motion to be premature, and

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defer ruling on it until and unless it denies certification. See 7 NEWBERG ON CLASS ACTIONS, supra, § 22:78. To the extent that State Farm suggests the intervenors are "charged with knowledge" of the facts and procedural history of this case such that they should have been aware that State Farm would challenge Mr. Clark's standing, see Def. Mem. at 9, the argument is untenable. Indeed, unlike the litigant in United States v. Windrix, 405 F.3d 1146 (10th Cir. 2005), the intervenors are absent Class members who are not "parties," and cannot be "charged" with any such knowledge. 3 2. State Farm will not be prejudiced by the intervention

While prejudice is "[t]he most important consideration in deciding whether a motion for intervention is untimely," 7C WRIGHT, supra, § 1916 at 435, State Farm cannot establish that it will be prejudiced by the granting of the motion. Indeed, State Farm's only claim of prejudice is that intervention will "delay the ultimate disposition of the case" by causing the Court to conduct further proceedings to determine the date of reformation. Def. Mem. at 11. Yet several pages earlier, and out of the other side of its mouth, State Farm claims the intervention is unnecessary because the proposed intervenors can commence an additional action in the event the intervention motion is denied! As State Farm ignores, the prejudice to be considered "is that created by the intervenor's delay in seeking to intervene after it has learned of its interest in the action, not prejudice to existing parties if intervention is allowed." Ceres Gulf v. Cooper, 957 F.2d 1199, 1203 (5th Cir. State Farm makes much of the fact that one of the three proposed intervenors ­ Florinda Reed ­ has been represented by proposed Class counsel since the year 2000. Even if that fact made any difference, Class counsel's representation of the other proposed intervenors commenced shortly before the filing of the intervention motion. -5001434-11 175360 V1 3

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1992); accord Utah Ass'n of Counties v. Clinton, 255 F.3d at 1251 (facts that "adding additional parties would double the work load and add issues" is not part of the prejudice inquiry since "[t]hese factors . . . are a function of intervention itself rather than the timing of the motion to intervene"). Thus State Farm can make no headway by claiming prejudice from the fact that it will have to participate in a Class-wide reformation hearing if the Class is ultimately certified. It would have to do so in any event. Finally, while the Court need not now take up State Farm's argument that the proper reformation date must be assessed on a person-by-person basis, Plaintiffs note that such a procedure (if it were indeed necessary) would itself prejudice all the parties and the Court by necessitating an endless recycling of the very same arguments in each case. Such a procedure would only serve State Farm's interest in causing further delay. In any event, such a procedure is plainly unnecessary. The analysis utilized in determining the appropriate date of reformation focuses almost exclusively on the conduct of State Farm, and upon the impact on State Farm of that date. Just as it did in setting the proper reformation date in Mr. Clark's case, in determining the appropriate reformation date with respect to the remaining members of the proposed Class, this Court will consider: (1) the degree to which reformation from a particular effective date would upset past practices on which the parties may have relied and whether State Farm anticipated the rule in Brennan; (2) how reformation from a particular effective date would further or retard the purpose of the rule in Brennan; and (3) the degree of injustice or hardship reformation from a particular effective date would cause the parties. These factors do not necessarily have equal weight but are to be evaluated on the basis of the strength of the equitable and policy considerations underlying each. Relevant evidence might include, for example, whether State Farm anticipated the Brennan decision, compiled information of Brennan's effect on claims processing, relied on the interpretation -6001434-11 175360 V1

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of CAARA rejected in Brennan, or had the ability to notify or considered notification of insureds and third-party beneficiaries about the Brennan decision. Clark II, 292 F. Supp. 2d at 1260 (quoting Clark I, 319 F.3d at 1243-44 (internal citations and quotations omitted)). Plaintiffs suspect that State Farm will claim that in each instance the date should be the date when the Court's order enters. In any event, the analysis can and should be conducted on a Class-wide basis. In sum, the additional matter of weeks required to depose the intervenors cannot constitute the sort of prejudice that would justify the denial of intervention on timeliness grounds. 3. The interests of judicial efficiency and fairness to all parties will best be served by allowing the proposed intervention

Finally, the cases make clear that this Court can consider "the existence of any unusual circumstances" in determining whether a proposed intervention is timely. Utah Ass'n of Counties v. Clinton, 255 F.3d at 1250. Here, the circumstance arising from the unusual procedural posture of this case counsel in favor of allowing the intervention. Having succeeded in delaying this Court's consideration of certification, State Farm should not be allowed to benefit from the additional delay that would be occasioned in the event that intervention is denied and the proposed intervenors are forced to file a new Complaint. Under the circumstances, the interests of judicial efficiency and procedural fairness will be well-served by allowing the proposed intervention.

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4.

Upon a finding of timeliness, permissive intervention should be granted

Of the requirements for permissive intervention pursuant to Rule 24(b), State Farm challenges only the timeliness prong. Therefore, upon a finding of timeliness, the intervenor Plaintiffs' motion should be granted. B. Because the Intervenors' Interests May Be Impaired If Intervention Is Denied, Intervention of Right Is Also Appropriate In its only other argument against intervention as of right, State Farm asserts that the intervenors have not shown that that "impairment of their substantial legal interest is possible if intervention is denied." Def. Mem. at 7. As State Farm ignores, however, the intervenors need only show that their interests "may be impaired or impeded." Elliot Indus. v. BP Am. Prod. Co., 407 F.3d 1091, 1103 (10th Cir. 2005) (quoting Rule 24(a)(2)) (emphasis added). Thus, though Plaintiffs believe that Mr. Clark has standing, the possibility that the Court might rule otherwise is sufficient to allow intervention of right. As the Tenth Circuit has recognized, in assessing whether the intervenors' interests might be impaired if intervention is denied, "the court is not limited to consequences of a strictly legal nature. To satisfy this element of the intervention test, a would-be intervenor must show only that impairment of its substantial legal interest is possible if intervention is denied. This burden is minimal." Utah Ass'n of Counties v. Clinton, 255 F.3d at 1253 (emphasis added, internal citations omitted). In the class action context, the intervenors' minimal burden is satisfied where, as here, an adequacy attack is lodged against the representative plaintiff. See, e.g., Bohne, 2006 U.S. Dist. Lexis 20841, at *4 (allowing intervention where "the disposition of the action in [the intervenors'] absence may impair or impeded their ability to protect their interests if the Court were to determine that Donovan, the sole remaining named plaintiff, released his claims and -8001434-11 175360 V1

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thus, is subject to dismissal"). Contrary to State Farm's argument, the fact that the intervenors would be able to file a separate action does not warrant denial of their motion to intervene. "[T]he mere availability of alternative forums is not sufficient to justify denial of a motion to intervene." Utah Ass'n of Counties v. Clinton, 255 F.3d at 1254 (quoting Commodity Futures Trading Comm'n v. Heritage Capital Advisory Serv., 736 F.2d 384, 387 (7th Cir. 1984)); accord In re Bridgestone Secs. Litig., 430 F. Supp. 2d at 740 ("Although Defendants contend that IPERS may protect its interests by filing its own individual action, the Court concludes that requiring individual parties to file separate lawsuits while a potential class action is pending would unnecessarily multiply litigation, lead to potentially different results and defeat the purpose of class action lawsuits."). Because the denial of certification would be prejudicial to the intervenor Plaintiffs in that it would deprive them of any potential remedy in this action, the intervenors satisfy the "impairment" requirement of Rule 24(a)(2). Accordingly, they should be allowed intervention as of right pursuant to Rule 24(a)(2). III. CONCLUSION

For the reasons stated above as well as those set forth in their opening Memorandum, the intervenor Plaintiffs respectfully request that they be permitted to intervene in this action so that they may serve as Class representatives with respect to the claims asserted in the Plaintiffs' Complaint. Respectfully submitted this 15th day of June, 2007. .

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s/ Leif Garrison Robert B. Carey Leif Garrison The Carey Law Firm 2301 East Pikes Peak Colorado Springs, CO 80909 Telephone: (719) 635-0377 L. Dan Rector Franklin D. Azar & Associates, P.C. 5536 Library Lane Colorado Springs, CO 80918 Telephone: (719) 527-8000 Andrew M. Volk Hagens Berman Sobol Shapiro LLP 1301 Fifth Avenue, Suite 2900 Seattle, WA 98101 Telephone: (206) 623-7292 Attorneys for Plaintiff and proposed intervenor Plaintiffs

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CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on this 15th day of June, 2007, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following email addresses: [email protected] [email protected] [email protected] s/Leif Garrison Robert B. Carey Leif Garrison The Carey Law Firm 2301 East Pikes Peak Colorado Springs, CO 80909 Telephone: (719) 635-0377

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