In City of Livonia Employees’ Retirement System, et al. v. Intercontinental Exchange, Inc., et al., No. 20-1492, the Court of Appeals for the Second Circuit granted leave for DYJ Holdings, LLC (“DYJ”) to intervene in a pending appeal, and denied a motion to dismiss the appeal as moot, in the wake of the plaintiff-appellants’ announced intention to withdraw from the suit.
Before the district court, plaintiffs had brought claims alleging that defendants, a large number of banks and other financial institutions, had manipulated the ICE LIBOR, a financial benchmark that affects interest rates. Plaintiffs bought claims of conspiracy under Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1, alleging that defendants had profited by paying lower interest rates on affected financial instruments, to the detriment of plaintiffs and the proposed class, which consisted of investors who were the recipients of interest payments on those instruments.
By order dated March 26, 2020, United States District Judge George B. Daniels dismissed the complaint for failure to state a claim, and declined to certify a class. Judge Daniels found that the amended complaint was “essentially devoid of any evidence, direct or circumstantial, to support the conclusion that Defendants colluded with one another.” Plaintiffs filed a notice of appeal on April 27, 2020 and briefing began but, before it was completed, all plaintiffs-appellants either withdrew from the action, or announced their intention to do so, for reasons unrelated to the merits.
DYJ, an assignee of claims within the class that plaintiffs-appellants had unsuccessfully sought to certify, moved to intervene in the appeal. Defendants-appellees opposed intervention and moved to dismiss the appeal as moot, which DYJ opposed.
By order dated April 6, 2021, the Court of Appeals granted DYJ leave to intervene, and denied the motion to dismiss. As the single-page order engaged in no analysis, we review the contentions of the parties regarding mootness and intervention, to provide context for the Order.
Defendants-appellees argued that plaintiffs-appellants’ decision to stop pursuing the litigation rendered the appeal moot. Defendants-appellees further argued that, even if DYJ were allowed to intervene despite their opposition, that would not cure the mootness because DYJ had not submitted a proposed complaint, or otherwise provided sufficient information about the nature of its injury to demonstrate “injury in fact” as required for Article III standing.
DYJ responded that all but one of defendants-appellees’ authorities on mootness concerned parties that had actually withdrawn, not merely announced an intention to do so. And the one other authority — Geismann v. ZocDoc, Inc., 850 F.3d 507, 515 (2d. Cir. 2017) – expressly held that dismissal on mootness grounds was not warranted where a named plaintiff remains in the action. Moreover, after the still-present plaintiffs-appellants had stated their intention to withdraw, the Court of Appeals granted their motion for an extension of their time to file a reply brief, which DYJ argued recognized that the mere statement of intention to withdraw did not prevent Article III standing. In addition, DJY cited In re Brewer, 863 F.3d 861, 870 (D.C. Cir. 2017) for the proposition that mootness alone does not strip the court of jurisdiction to hear a motion to intervene by an applicant with Article III standing for the purpose of appealing the dismissal of pending claims. Article III standing was established because DJY had submitted a valid assignment of claims with its opposition brief, and a complaint or further pleading was not necessary because DJY did not seek to assert new claims, but only to pursue claims already pleaded in the existing amended complaint.
DYJ noted that the Rules of Appellate Procedure neither address the standards governing intervention, nor prohibit it. Citing In re Brewer, 863 F.3d 861, 870 (D.C. Cir. 2017) and Romasantav v. United Airlines, 537 F.2d 915 (7th Cir. 1976), DYJ argued that circuit courts may look to the analytical framework laid out in Federal Rule of Civil Procedure 24, governing intervention before the district court, when considering intervention at the appellate level.
Citing Eckert v. Equitable Life Assur. Soc’y of the U.S., 227 F.R.D. 60, 64 (E.D.N.Y 2005), DYJ argued that intervention as of right under Fed. R. Civ. P. 24(a) is appropriate because, given their stated intention to withdraw, the named representatives could not adequately represent the interests of the putative class while DYJ, as a putative member, could do so. Alternatively, citing Shahriav Smith & Wollensky Rest. Group, Inc., 659 F.3d 234, 253 (2d Cir. 2011) and numerous district court authorities from the Second Circuit and beyond allowing substitution of a new party as class representative, DYJ argued that permissive intervention was appropriate under Fed. R. Civ. P. 24(b). As a putative class member alleging injury from suppressed payments linked to the ICE LIBOR benchmark as a result of defendants-appellees’ alleged conspiracy, DYJ possessed claims that presented common questions of law and fact with the claims of the other class members.
Defendants-appellees argued that DYJ’s general allegations of assignee status were insufficient to establish it was a bona fide assignee. It appears that DYJ addressed this to the Court of Appeals’ satisfaction by attaching the assignment papers to its subsequent opposition to the motion to dismiss, as noted above. Alternatively, Defendants-appellees argued that, because DYJ conceded that it could commence its own action, it could not establish that it had the required “direct, substantial, and legally protectable” interest in the litigation or that, without intervention, disposition of the action might as a practical matter impair or impede its interest.
The April 6, 2021 Order and its aftermath
Because the April 6 Order granted intervention and denied dismissal without analysis, it did not explain its reasoning, or even specify whether intervention was based on the factors set forth in Fed. R. Civ. P. 24(a), 24(b), or otherwise. Nor did it address whether Plaintiff-appellants’ stated intention to withdraw had failed to moot the appeal, or whether the Court had instead accepted DYJ’s alternative argument that any mootness was irrelevant in light of the principle articulated in In re Brewer, 863 F.3d 861, 870 (D.C. Cir. 2017).
In any event, the Court must have found that DYJ had standing and a protectable interest that intervention would allow it to better protect, and must have either found that the appeal was not moot, or that mootness, if present, did not prevent DYJ from taking up the positions that the withdrawing parties were expected to abandon.
On April 12, 2021, the Court of Appeals issued an order directing that: (1) Plaintiff-appellants indicate whether they intend to continue as parties to the appeal; (2) DYJ and Defendants-appellees indicate whether they plan on moving to file a supplemental brief, or request that the appeal be considered on the merits briefs already submitted.
This post was written by Schlam Stone & Dolan partner Thomas A. Kissane.
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