REVISED

United States Court of Appeals,

Fifth Circuit.

Nos. 96-11332, 96-11439.

Dorothy L. OZEE, acting individually as attorney in fact for

Louise T. Peter, and as next friend for Louise T. Peter, on behalf

of Louise T. Peter individually and all others similarly situated,

Plaintiff,

Boyd L. Richie, guardian of the estate of Louise T. Peter,

Plaintiff-Appellee,

v.

The AMERICAN COUNCIL ON GIFT ANNUITIES, INC., individually and on

behalf of its members, sponsors and all other similarly situated to

them, and as successor to The Committee on Gift Annuities, an

unincorporated association, et al., Defendants-Appellants,

Dan Morales, Attorney General of Texas, Appellant.

In re AMERICAN COUNCIL ON GIFT ANNUITIES, INC., et al.,

Petitioners.

April 9, 1997.

Appeals from the United States District Court for the Northern

District of Texas.

Before REAVLEY, SMITH and EMILIO M. GARZA, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

This consolidated case consists of an appeal by the various

above-listed defendants from the district court's denial of a

motion to dismiss, a separate appeal by Northwestern University

challenging the denial of summary judgment, a petition by the

defendants for a writ of mandamus, an additional appeal by Texas

Attorney General Dan Morales from the denial of his motion to

intervene as of right, and a motion by Boyd Richie to dismiss the

defendants' and Northwestern's appeals. For the reasons stated
below, we dismiss the defendants' and Northwestern's appeals for

want of jurisdiction, deny the petition for mandamus, reverse the

denial of intervention, and impose sanctions on appeal.

I.

This litigation stems from charitable donations by Louise

Peter, a ninety-six-year-old woman, to the Lutheran Foundation of

Texas, one of the many defendants. Peter, who suffers from

dementia and Alzheimer's disease, inherited a substantial fortune

from her brother late in life. Her guardian, Boyd Richie, alleges

that soon thereafter, the leaders of the Lutheran Church—Missouri

Synod began unscrupulously pressuring Peter to let them manage her

money. After resisting for years, she eventually invested $1.7

million with the Lutheran Foundation of Texas. Approximately $1.5

million of this went into a revocable management trust and a

charitable remainder unitrust; the remaining $200,000 went to buy

charitable gift annuities, the financial products that are the

epicenter of this lawsuit.

Charitable gift annuities are hybrids of altruism and

capitalism. To purchase one, the donor or "annuitant" writes a

check to a charitable organization. The charity, in return,

promises to pay the annuitant a fixed stream of income for the

remainder of his life. Precisely how much the annuitant will

receive per year depends primarily on the size of the "donation"

and the annuitant's age—the older he is, the more he receives,

because the older he is, the less the time is during which the

charity expects to have to pay the annuity.

As with bonds, the annual payout is expressed as a
 

1For tax purposes, the Internal Revenue Service ("IRS")

considers the initial transfer that starts the charitable gift

annuity to be a "bargain sale," i.e., a sale of property for less

than its fair market value. The difference between actuarially

determined fair market value and the transfer price is considered

a gift, and the gift portion of the transfer is required to be at

least 10% of the total. Thus the IRS breaks the transaction in

two: Part of the transfer is deemed to have purchased a normal

commercial annuity that yields taxable income, and part is a

tax-deductible charitable gift. 

percentage, which is referred to as the charitable gift annuity

rate. Unlike with bonds, however, the principal on which this

"interest" is being paid becomes the property of the charity when

the check is handed over. In other words, the annuitant trades a

"donation" to a charity for a guaranteed stream of income that

continues as long as he lives.1

In many respects, then, charitable gift annuities are quite

similar to the commercial annuities sold by life insurance

companies. As with commercial annuities, an annuitant who outlives

his actuarial life expectancy stands to reap a substantial profit,

the gift portion of the "donation" notwithstanding. The difference

is that charitable gift annuities also provide the annuitant a

large tax deduction and the satisfaction of having given to the

charity of his choice, advantages that the plaintiffs in this case

contend make charitable gift annuities competitive with other

financial products.

Enter the principal defendant, the American Council on Gift

Annuities, Inc. (the "Council"). According to Richie, the Council

was formed years ago to suppress competition among charities in

setting gift annuity rates, which competition apparently would have

had the undesirable effect of causing potential donors to shop for
 

2Section 1 of the Sherman Act provides in relevant part that

"[e]very contract, combination in the form of trust or otherwise,

or conspiracy, in restraint of trade or commerce among the

several States, or with foreign nations, is declared to be

illegal...." 15 U.S.C. § 1. 

the best rate. The Council purportedly sets rates that it warns

charities not to exceed, actively monitors compliance, and lobbies

against government regulation of the charitable gift annuity

industry. Richie thus alleges that the Council is the hub of a

vast, sinister price-fixing conspiracy comprising charities across

the country.

Dorothy Ozee, Peter's grand-niece and next friend, filed suit

in federal district court alleging (1) that the Council and

numerous other organizations (hereinafter, "the defendants") had

violated § 1 of the Sherman Act by agreeing to fix rates of return

on charitable gift annuities; and (2) a number of supplemental

Texas state law claims, including illegal sale of annuities and

breach of fiduciary duty. The defendants moved to dismiss the

antitrust claims on the ground that charitable donations do not

constitute "trade or commerce" within the meaning of the Sherman

Act.2 The district court denied the motion to dismiss and granted

partial summary judgment in Peter's favor on one state law claim of

illegal sale of annuities. A Texas state court later appointed

Richie guardian of Peter's estate, so Ozee's name was dropped from

the suit, and Richie was substituted as the named plaintiff.

Perhaps recognizing that the denial of their first motion to

dismiss did not bode well for their chances of success on the

merits, the defendants decided to attack their problem from another

angle: They persuaded both Congress and the Texas Legislature to
 

3"The provisions of this chapter shall not affect or apply

to ... (3) a corporation serving as trustee of a charitable trust

as provided by Article 2.31, Texas Non-Profit Corporation Act

(Article 1396-2.31, Vernon's Texas Civil Statutes)." TEX. BANKING

CODE ANN. art. 342-1113, -1113(3) (Vernon Supp.1997). 

 

4"A corporation that is described by Section 501(c)(3) or

170(c), Internal Revenue Code of 1986, or a corresponding

provision of a subsequent federal law, may serve as the trustee

of a trust: (1) of which the corporation is a beneficiary; or

(2) benefiting another organization described by one of those

sections of the Internal Revenue Code of 1986, if the service as

trustee is in furtherance of the purposes for which the

corporation was formed." TEX.REV.CIV. STAT. ANN. art. 1396-2.31

(Vernon Supp.1997) (footnote omitted). 

 

5"Sec. 2. (a) The issuance of a qualified charitable gift

annuity does not constitute engaging in the business of insurance

in this state. (b) A charitable gift annuity issued before

September 1, 1995, is a qualified charitable gift annuity for

pass bills specifically designed to squelch this suit. The federal

bill, which the President signed into law on December 8, 1995, was

entitled the Charitable Gift Annuity Antitrust Relief Act (the

"Relief Act"), and provided that

it shall not be unlawful under any of the antitrust laws, or

under a State law similar to any of the antitrust laws, for 2

or more persons described in section 501(c)(3) of Title 26

that are exempt from taxation under section 501(a) of Title 26

to use, or to agree to use, the same annuity rate for the

purpose of issuing 1 or more charitable gift annuities.

15 U.S.C. § 37(a). Congress made the Relief Act explicitly

retroactive. Charitable Gift Annuity Antitrust Relief Act of 1995,

Pub.L. No. 104-63, § 4, 109 Stat. 687, 688 (1995). The Texas

Legislature passed parallel legislation designed to foreclose

Richie's state law claims by retroactively allowing nonprofit

organizations to both sell annuities and operate trusts. See TEX.

BANKING CODE ANN. art. 342-1113(3) (Vernon Supp.1997);3 TEX.REV.CIV.

STAT. ANN. art. 1396-2.31 (Vernon Supp.1997);4 TEX. INS.CODE ANN. art.

1.14-1A § 2(a)-(b) (Vernon Supp.1997).5
purposes of this article and Article 1.14-1 of this code, and the

issuance of that charitable gift annuity does not constitute

engaging in the business of insurance in this state." TEX.

INS.CODE ANN. art. 1.14-1A § 2(a)-(b) (Vernon Supp.1997). 

 

6For convenience, we henceforth refer to such conspiracies

as "hybrid" conspiracies. 

Armed with this new legislation, the defendants filed another

motion to dismiss and, in the case of defendant Northwestern

University ("Northwestern"), a motion for summary judgment. In

response, Richie both challenged some of the defendants' §

501(c)(3) exemptions and amended his complaint to allege a

price-fixing conspiracy between entities that fit the Relief Act's

exemption and entities that do not.6 The district court issued

thirty-five orders, the most important of which, dated September

30, 1996, denied the defendants' motion to dismiss, Northwestern's

motion for summary judgment, and Morales's motion to intervene as

of right. See Richie v. American Council on Gift Annuities, 943

F.Supp. 685 (N.D.Tex.1996). It is from this second refusal to

dismiss that the defendants now appeal.

In addition to the defendants' collective appeal from the

refusal to dismiss, Northwestern individually appeals the denial of

summary judgment. Morales brings a separate interlocutory appeal,

arguing that he should have been allowed to intervene as of right

under FED. R. CIV. P. 24(a). The defendants (again, collectively)

petition for a writ of mandamus, requesting dismissal of both the

state and the federal claims on the grounds that the district court

abused its discretion by (1) refusing to grant the second motion to

dismiss; (2) asserting jurisdiction to consider whether defendants

meet the Relief Act's requirements for antitrust exemption; (3)
refusing to grant the first motion to dismiss; and (4) refusing to

enter summary judgment on the Texas state law issues. Finally,

Richie moves this court to dismiss the defendants' appeals on

numerous grounds, most notably for want of appellate jurisdiction.

II.

A.

The central issue is this court's jurisdiction to hear the

appeal. The statute codifying the final judgment rule, 28 U.S.C.

§ 1291, provides that "[t]he courts of appeals shall have

jurisdiction of appeals from all final decisions of the district

courts of the United States." Appeal is thereby precluded from

decisions that are "tentative, informal, or incomplete," as well as

from "fully consummated decisions" that are "but steps towards

final judgment in which they will merge." Cohen v. Beneficial

Indus. Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed.

1528 (1949). As the refusal to dismiss is obviously not a "final

decision," Newball v. Offshore Logistics Int'l, 803 F.2d 821, 824

(1986) (citing Fluor Ocean Servs. v. Hampton, 502 F.2d 1169, 1170

(5th Cir.1974)), the only way the defendants can hope to assert

jurisdiction is through the collateral order doctrine.

The collateral order doctrine permits appeal of non-final

decisions that "fall in that small class [of interlocutory

decisions] which finally determine claims of right separable from,

and collateral to, rights asserted in the action, too important to

be denied review and too independent of the cause itself to require

that appellate consideration be deferred until the whole case is

adjudicated." Cohen, 337 U.S. at 546, 69 S.Ct. at 1225-26. The
 

7See, e.g., Morin v. Caire, 77 F.3d 116, 119 (5th Cir.1996)

("Ordinarily, this court does not have jurisdiction over the

denial of a Rule 12(b)(6) motion to dismiss for no cause of

action, because such an order is interlocutory in nature."); 

Holloway v. Walker, 765 F.2d 517, 525 (5th Cir.) (same), cert.

denied, 474 U.S. 1037, 106 S.Ct. 605, 88 L.Ed.2d 583 (1985). 

Accord Briggs & Stratton v. Local 232 Int'l Union, 36 F.3d 712,

714 (7th Cir.1994) ("To the extent the union wants us to review

the district court's failure to dismiss the case outright, it

hasn't a leg to stand on."), cert. denied, --- U.S. ----, 115

S.Ct. 1998, 131 L.Ed.2d 1000 (1995); Hill v. City of New York,

45 F.3d 653, 663 (2d Cir.1995); Figueroa v. United States, 7

F.3d 1405, 1408 (9th Cir.1993), cert. denied, 511 U.S. 1030, 114

S.Ct. 1537, 128 L.Ed.2d 190 (1994). 

doctrine thus allows review of orders that (1) conclusively

determine the disputed question; (2) resolve an issue that is

completely separate from the merits of the action; and (3) would

be effectively unreviewable on appeal from a final judgement. See

Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 867,

114 S.Ct. 1992, 1995-96, 128 L.Ed.2d 842 (1994); see also Cohen,

337 U.S. at 545-47, 69 S.Ct. at 1224-26. As its stringent

requirements indicate, the collateral order doctrine is not to be

applied liberally. Rather, the doctrine "is "extraordinarily

limited' in its application." Pan Eastern Exploration Co. v. Hufo

Oils, 798 F.2d 837, 839 (5th Cir.1986) (citation omitted).

Moreover—and particularly apposite to this case—appealability under

the collateral order doctrine must be determined "without regard to

the chance that the litigation might be speeded, or a "particular

injustice' averted by a prompt appellate court decision." Digital

Equip., 511 U.S. at 868, 114 S.Ct. at 1993.

 As a general matter, the refusal to dismiss an action under

FED. R. CIV. P. 12(b)(6) is not appealable.7 Recognizing the

predicament in which these decisions place them, the defendants
 

8See Digital Equip., 511 U.S. at 871, 114 S.Ct. at 1997; 

Williams v. Collins, 728 F.2d 721, 724-26 (5th Cir.1984); see

also Mitchell v. Forsyth, 472 U.S. 511, 524, 105 S.Ct. 2806,

2814, 86 L.Ed.2d 411 (1985); Nixon v. Fitzgerald, 457 U.S. 731,

741-43, 102 S.Ct. 2690, 2696-97, 73 L.Ed.2d 349 (1982). 

 

9Besides the obviously eleemosynary organizations, Richie's

ever-expanding list of defendants includes a number of law firms,

insurance companies, and commercial banks that apparently are

associated with the administration of charitable gift annuities. 

argue that the Relief Act gives them an immunity from suit and that

the refusal to dismiss denied them that immunity, as denials of

motions to dismiss on the basis of qualified or absolute immunity

frequently are appealable as collateral orders.8

The defendants' immunity arguments completely miss the mark,

however. After the Relief Act was passed, Richie amended his

complaint to allege that some of the defendants had procured their

26 U.S.C. § 501(c)(3) tax-exemption determination letters by fraud,

and Richie added some plainly non-charitable defendants so as to

allege a conspiracy between § 501(c)(3) exempt entities and

non-exempt entities.9 Accordingly, the order denying the motion to

dismiss rested on two grounds: (1) That Richie has at least stated

a claim as to the defendants he claims are non-exempt; and (2)

that he also states a claim insofar as he alleges a § 1 conspiracy

between exempt and non-exempt organizations.

 This second ground is important, for even assuming that the

Relief Act creates an immunity from suit rather than a substantive

rule of decision on the merits (a question we do not reach), the

defendants may not reap its benefits. As the Relief Act covers

only agreements between "2 or more persons described in section

501(c)(3) of Title 26 that are exempt from taxation under section
 

10Even were we to look beyond the plain language of the

Relief Act, our conclusion that hybrid conspiracies are outside

its reach would still be supported by the rule of forfeiture. 

Under this rule, entities normally exempt from the antitrust laws

lose their exemption when they conspire with non-exempt entities. 

See Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205,

231, 99 S.Ct. 1067, 1083, 59 L.Ed.2d 261 (1979). In Hartford

Fire Ins. Co. v. California, 509 U.S. 764, 782-84, 113 S.Ct.

2891, 2901-03, 125 L.Ed.2d 612 (1993), the Court's most recent

pronouncement on this subject, the Court drew a distinction

between status-based and conduct-based exemptions, finding the

rule of forfeiture applicable to the former but not necessarily

to the latter. The exemption created by the Relief Act is based

on both status ("persons described in section 501(c)(3)") and

conduct ("to use, or to agree to use"), and is thus much more

like the Capper-Volstead Act, which has both status and conduct

elements, than it is like the McCarran-Ferguson Act, which

creates a purely conduct-based exemption. Status is the key, and

because Richie is alleging a conspiracy in which some entities

have the requisite status-based exemption and some do not, the

rule applies. 

501(a) of Title 26 ...," its plain language does not reach

conspiracies involving both exempt and non-exempt entities.

 The defendants argue that the statute means something other

than what it says, citing a House report suggesting that the

exemption was intended to extend to attorneys, consultants, and

other professionals retained by a § 501(c)(3) entity. See H.R. REP.

NO. 104-336 (1995), reprinted in 1995 U.S.C.C.A.N. 632, 637. We

find this suggestion thoroughly unpersuasive. As we stated above,

the plain terms of the Relief Act cover conspiracies by § 501(c)(3)

organizations only; had Congress wished to exempt hybrid

agreements, it easily could have done so. As the plain language of

the statute is unambiguous, we need not concern ourselves with its

legislative history, which appears not to support the defendants'

proposition, in any event.10 See United States v. Ron Pair Enters.,

489 U.S. 235, 241, 109 S.Ct. 1026, 1030, 103 L.Ed.2d 290 (1989);

United States v. Barlow, 41 F.3d 935, 942 (5th Cir.1994), cert.
 

11Even were we to assume arguendo that the Relief Act

legalizes conspiracies between exempt and non-exempt entities,

there would not be an appealable immunity issue, as the bases on

which Richie has challenged the defendants' § 501(c)(3)

determinations are factual. See Hale v. Townley, 45 F.3d 914,

918 (5th Cir.1995) ("An appellate court has jurisdiction to

review an interlocutory denial of qualified immunity only to the

extent that it "turns on an issue of law.' ") (quoting Mitchell,

472 U.S. at 530, 105 S.Ct. at 2817); Feagley v. Waddill, 868

F.2d 1437, 1439 (5th Cir.1989) (same). 

denied, --- U.S. ----, 115 S.Ct. 1389, 131 L.Ed.2d 241, and cert.

denied, --- U.S. ----, 115 S.Ct. 1804, 131 L.Ed.2d 730, and cert.

denied, --- U.S. ----, 115 S.Ct. 1804, 131 L.Ed.2d 730 (1995);

Dillon v. Mississippi Military Dep't, 23 F.3d 915, 919 n. 8 (5th

Cir.1994).

It should be evident, from the above, that because the

refusal to dismiss was predicated on Richie's claims of non-exempt

defendants and a hybrid conspiracy involving them, the matters it

addressed were neither conclusively determined nor separate from

the merits of the case. To the contrary, the district court went

out of its way to state that it would reconsider the defendants'

claims of exemption as soon as there was sufficient evidence to do

so. Given that the ruling was based on the possibility of a hybrid

conspiracy, we need not consider whether the Relief Act grants §

501(c)(3) organizations some sort of immunity or right not to stand

trial. It follows that because the denial of the motion to dismiss

did not actually require a finding of no immunity, it is not a

collateral order, and we lack jurisdiction to entertain the

appeal.11

B.

The charitable defendants protest that Richie may not
challenge their exempt status, because the district court lacks

jurisdiction to reconsider the IRS's determination that they are §

501(c)(3) entities. In effect, they contend that their letters

from the IRS finding them to be § 501(c)(3) entities for tax

purposes grant an unassailable, irrevocable status as exempt

organizations under the Relief Act, and that no one may litigate

this issue. Even were we to agree with this, the fact that Richie

has alleged a conspiracy between exempt and non-exempt entities

would deprive us of jurisdiction to hear this appeal. Our want of

jurisdiction, moreover, precludes us from addressing the question

of the § 501(c)(3) determination.

III.

Northwestern University separately appeals the denial of its

motion for summary judgment, arguing that it has incontrovertibly

demonstrated that it is exempt under the Relief Act. As with the

defendants' motion to dismiss, Northwestern's motion was denied by

the September 30, 1996, memorandum opinion and order on the bases

described above. See Richie, 943 F.Supp. at 687-88 n. 1. Also as

with the motion to dismiss, the order specifically stated—in

boldface, no less—that it was denying Northwestern's motion without

prejudice. The court went out of its way to note that further

discovery was necessary before it could "fairly and correctly rule"

on the summary judgment motions before it.

 Ordinarily, a denial of summary judgment is an unappealable

interlocutory order. Aldy v. Valmet Paper Mach., 74 F.3d 72, 75

(5th Cir.), cert. denied, --- U.S. ----, 117 S.Ct. 68, 136 L.Ed.2d

29 (1996); Schaper v. City of Huntsville, 813 F.2d 709, 713 (5th
 

12Although they are technically petitioners with respect to

this portion of the case, we will continue to refer to the

defendants as defendants in the interests of clarity. 

Cir.1987). The denial of Northwestern's motion falls squarely

within this general rule, for the obvious lack of a conclusive and

unreviewable determination renders the collateral order doctrine

inapplicable. To the extent Northwestern argues that the district

court disallowed it an immunity defense, its argument is foreclosed

by the same factual issues that precluded the motion to dismiss:

Richie's allegations that some of the defendants are non-exempt and

that exempt entities conspired with non-exempt ones. As we

previously have held, "if disputed factual issues material to

immunity are present, the district court's denial of summary

judgment sought on the basis of immunity is not appealable."

Feagley, 868 F.2d at 1439. In short, then, we lack jurisdiction to

hear Northwestern's claims for largely the same reasons that we

lack jurisdiction to hear the defendants'.

IV.

In addition to the above appeals, the defendants12 also

petition for a writ of mandamus, alleging that the district court

abused its discretion in (1) refusing to grant the second motion to

dismiss; (2) asserting jurisdiction to consider whether defendants

meet the Relief Act's requirements for antitrust exemption; (3)

refusing to grant the first motion to dismiss; and (4) refusing to

enter summary judgment on the Texas state law issues. The relief

they seek is dismissal with prejudice of Richie's federal and state

claims.

Most of the petition simply recycles the arguments of
defendants' appeal in the substantially stricter mandamus context.

Mandamus is "an extraordinary remedy for extraordinary causes,"

United States v. Denson, 603 F.2d 1143, 1146 (5th Cir.1979) (en

banc), and is not intended as a "substitute for appeal," In re

American Airlines, 972 F.2d 605, 608 (5th Cir.1992), cert. denied,

507 U.S. 912, 113 S.Ct. 1262, 122 L.Ed.2d 659 (1993). It is not

justified merely because "hardship may result from delay or from an

unnecessary trial," In re Fibreboard Corp., 893 F.2d 706, 707 (5th

Cir. 1990). Rather, the writ issues only where the district court

has committed a "clear abuse of discretion" or engaged in "conduct

amounting to "usurpation of power.' " Mallard v. United States

District Court, 490 U.S. 296, 309, 109 S.Ct. 1814, 1822, 104

L.Ed.2d 318 (1989). To succeed, the defendants must show (1) that

they lack adequate alternative means to obtain the relief they seek

and (2) that their right to issuance of the writ is "clear and

indisputable." Mallard, 490 U.S. at 309, 109 S.Ct. at 1822;

American Airlines, 972 F.2d at 608; Fibreboard, 893 F.2d at 707.

This the defendants cannot show. As to the first two

challenged actions—the refusal to grant the second motion to

dismiss and the assertion of jurisdiction over the defendants'

status as exempt entities—our discussion above explains why

defendants' right to the relief they seek is anything but "clear

and indisputable."

They fare little better on the refusal to grant the first

motion to dismiss, which was predicated on a finding that the

conduct challenged in this case is "trade or commerce" within the

meaning of the Sherman Act. As Richie points out, the "exchange of
 

13See TEX. BANKING CODE ANN. art. 342-1113, -1113(3) (Vernon

Supp.1997); TEX.REV.CIV. STAT. ANN. art. 1396-2.31 (Vernon

Supp.1997); TEX. INS.CODE ANN. art. 1.14-1A, § 2(a)-(b) (Vernon

Supp.1997). 

money for services, even by a nonprofit organization, is a

quintessential commercial transaction." United States v. Brown

Univ., 5 F.3d 658, 666 (3d Cir.1993).

The purchasers of charitable gift annuities pay money and

receive benefits in return: the annuity, substantial tax

advantages, and the satisfaction of having given to charity. As

the IRS recognizes, at least part of the transaction is undoubtedly

commercial, and the transaction as a whole is a far cry from the

sort of "antithesis of commercial activity" that it need be in

order to fall outside the scope of the Sherman Act. Brown, 5 F.3d

at 666.

 Nor can the defendants succeed in their arguments regarding

the summary judgment on Richie's state law claims. Twenty days

after the district court entered that summary judgment, the

governor signed into law two pieces of legislation that purport to

"clarify" the Texas Insurance Code, the Free Enterprise and

Antitrust Act, and the Deceptive Trade Practices Act, so as to

leave no doubt that charities need not be licensed insurance

companies in order to issue charitable gift annuities.13 Much as

it might want to, however, the legislature cannot reverse a federal

district court. The defendants, the Texas legislature, and the two

state courts that have construed this legislation have consistently

vacillated as to whether H.B. 3104 merely "clarified," or instead

retroactively changed the law. They appear to want it both ways:
They would like retroactivity to get rid of Richie's suit, and

"clarification" so as not to run afoul of the "open courts"

provision of TEXAS CONST. art. 1, § 13.

Fortunately, we need not delve into matters of state law,

federalism, and separation of powers to resolve this issue, for the

defendants have failed to demonstrate that they meet the first

requirement for mandamus relief, the unavailability of alternative

means. The summary judgment they complain of is addressable both

through certified appeal under 28 U.S.C. § 1292(b) and through

direct appeal after final judgment. See In re El Paso Elec. Co.,

77 F.3d 793, 795 (5th Cir.1996). The grant of summary judgment was

neither an abuse of discretion nor an "usurpation of power," and

whatever right petitioners might have to relief on the merits is

far from being "clear and indisputable." The petition for writ of

mandamus is denied.

V.

We have jurisdiction over the appeal of the denial of

intervention as of right under FED. R. CIV. P. 24(a), because such

orders are appealable collateral orders. See Edwards v. City of

Houston, 78 F.3d 983, 992 (5th Cir.1996) (en banc) (citing Ceres

Gulf v. Cooper, 957 F.2d 1199, 1202 n. 5 (5th Cir.1992)). Our

standard of review is de novo. Id. at 995.

Morales's brief bitterly recounts how he has been left out of

this case. As Attorney General, he is charged with representing

the public interest in charitable trusts. Under TEX. PROP.CODE ANN.

§ 123.003 (Vernon 1995), interested parties in proceedings

involving charitable trusts must give him notice of the proceeding
by sending him "a certified copy of the petition or other

instrument initiating the party's involvement in the proceeding."

Richie did this, and Morales received his notice on January 9,

1995.

After that, however, things appear to have gone downhill.

Morales apparently was not served with most of the pleadings, and

he claims that he was unaware of most of the activity in this case

until April 1995, at which time he learned that Richie had filed

the motion for partial summary judgment on his state law claims.

On April 18, 1995, Morales moved for leave to intervene

permissively, and the district court denied his request shortly

thereafter. He filed two motions to reconsider this ruling on May

16, 1995, and September 25, 1995, respectively.

On October 17, 1995, Morales filed a second motion for leave

to intervene, this time both permissively and as of right. On

September 30, 1996, nearly a year later, the district court denied

this motion as moot, for the grant of partial summary judgment on

Richie's state law claims by then had disposed of all the issues in

which the court believed Morales might have an interest. Morales

now appeals, challenging only the denial of his motion to intervene

as of right.

A.

Morales argues that the district court erred because he meets

all the requirements for rule 24(a) intervention: He timely

applied; he has an interest in the charitable gift annuities and

trusts that are the subject of this suit; disposition of the case

without him would impair his ability to protect that interest; and
his interest is not adequately represented by the existing parties.

See FED. R. CIV. P. 24(a); Sierra Club v. Espy, 18 F.3d 1202, 1204-

05 (5th Cir.1994); 6 JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE §

24.03[1][b], at 24-23 (3d ed.1997). The test is conjunctive;

failure to meet any one of these requirements means that Morales

may not intervene as a matter of right. Sierra Club, 18 F.3d at

1205 (citing Kneeland v. National Collegiate Athletic Ass'n, 806

F.2d 1285, 1287 (5th Cir.), cert. denied, 484 U.S. 817, 108 S.Ct.

72, 98 L.Ed.2d 35 (1987)). We agree, however, that he meets each

of these criteria.

The first part of the intervention calculus is whether

Morales's motion was timely filed. The test for timeliness under

Rule 24(a) requires us to consider

(1) The length of time during which the would-be intervenor

actually knew or reasonably should have known of his interest

in the case before he petitioned for leave to intervene;

(2) The extent of the prejudice that the existing parties to the

litigation may suffer as a result of the would-be intervenor's

failure to apply for intervention as soon as he actually knew

or reasonably should have known of his interest in the case;

(3) The extent of the prejudice that the would-be intervenor may

suffer if his petition for leave to intervene is denied; and

(4) The existence of unusual circumstances militating either for or

against a determination that the application is timely.

Edwards, 78 F.3d at 1000. Accord 6 MOORE, supra, § 24.21[3], at 24-

71. As we stated in Sierra Club,

[This] analysis is contextual; absolute measures of

timeliness should be ignored. 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.

18 F.3d at 1205 (citations and internal quotations omitted).
Richie attacks Morales's motion on the ground that it is

untimely, citing the district court's rejection of his earlier

motion to intervene permissively as untimely. Because the first

motion was untimely when filed on April 18, 1995, Richie reasons,

the second motion cannot possibly have been timely when filed on

October 17 of that year.

This is incorrect. We have consistently held that a

"district court should apply a more lenient standard of timeliness

if the would-be intervenor qualifies for intervention under section

(a) [of Rule 24] than if he qualified for intervention under

section (b)." Stallworth v. Monsanto Co., 558 F.2d 257, 266 (5th

Cir.1977); see also McDonald, 430 F.2d at 1073. Given the

difference in standards and the fact that this Court reviews

timeliness de novo, the determination that Morales's first motion

was untimely has little or no bearing on the timeliness of his

second motion.

 Applying the test for timeliness, we find that the first of

the four factors is neutral. It does appear that Morales waited

over nine months from the time that he received his statutorily

mandated notice to the time that he moved to intervene as of right.

Timeliness is dependent on the surrounding circumstances, however,

and we have rejected the notion that "the date on which the

would-be intervenor became aware of the pendency of the action

should be used to determine whether it acted promptly." Sierra

Club, 18 F.3d at 1206; see also Corley v. Jackson Police Dep't,

755 F.2d 1207, 1209 (5th Cir.1985). The correct measure of

promptness is the extent to which the would-be intervenor delayed
action after it became aware that the original parties would not

protect its interests. Sierra Club, 18 F.3d at 1206.

Under this standard, Morales's delay was lengthy, but not

nearly so lengthy as it appears at first blush. It was not until

April 1995 that Richie's summary judgment motion alerted Morales to

the immediate danger to his interests. He moved to intervene

permissively shortly thereafter, and moved to intervene as of right

a few months later, after it became apparent that the court would

not permit him to do so permissively. Although his actions in

moving to intervene as of right were not as prompt as they could

have been, neither were they excessively tardy. The first factor

is neutral.

The second factor—prejudice to the existing parties resulting

from delay—weighs in Morales's favor. "[P]rejudice must be

measured by the delay in seeking intervention, not the

inconvenience to the existing parties of allowing the intervenor to

participate in the litigation." Sierra Club, 18 F.3d at 1206. We

fail to see, and Richie has failed to point to, any way in which

Morales's delayed entry into the suit will prejudice the existing

parties. At most, his entry will cause only inconvenience, which

does not weigh into our decision.

The third prong—prejudice to the would-be intervenor—also

weighs in favor of Morales. This suit's potential for prejudice to

the interests of the people of Texas is obvious. Morales's

position is unique, for the people's interests are not represented

by any of the existing parties. Although Morales suggests that his

course of action in the litigation thus far would have paralleled
that of the charitable defendants, there could quite easily be some

point in the litigation at which his interests will diverge. The

fourth factor, which weighs "unusual circumstances," is neutral.

The test for timeliness is not a mathematical formula by which

a court simply sums its determinations on each of the four factors

to reach an answer. Edwards, 78 F.3d at 1004. On balance,

however, we think that Morales satisfies the test and that his

application was timely, particularly in light of the potential for

this litigation to prejudice the interests of the people of Texas.

B.

In order to have a sufficient interest in this case to

support rule 24(a) intervention, Morales also must demonstrate that

he has a "direct, substantial, legally protectable interest in the

proceedings." New Orleans Pub. Serv., Inc. v. United Gas Pipe Line

Co., 732 F.2d 452, 463 (5th Cir.) (en banc) (quoting Diaz v.

Southern Drilling Corp., 427 F.2d 1118, 1124 (5th Cir.1970)), cert.

denied, 469 U.S. 1019, 105 S.Ct. 434, 83 L.Ed.2d 360 (1984). This

means that the interest he is asserting must be one that the law

recognizes as his. Id. at 464. Rule 24(a) also requires him to

demonstrate that "disposition of the action may as a practical

matter impair or impede [his] ability to protect that interest."

Morales's status as the public protector of charities and

charitable trusts satisfies these requirements. See TEX. PROP.CODE

ANN. §§ 123.001-005 (Vernon 1995). There can be no serious debate

that Richie's suit, if successful, would impair the ability of

Texas charities to operate, at least until the charities persuade

Congress or the legislature to pass additional exemptions for their
 

14See Resolution Trust Corp. v. United States Fidelity and

Guar. Co., 27 F.3d 122, 125 (5th Cir.1994) ("The general rule in

the federal courts, of course, is that partial summary judgments

are not appealable."); Bodden v. Osgood, 879 F.2d 184, 186-87

(5th Cir.1989); Way v. Reliance Ins. Co., 815 F.2d 1033, 1034

(5th Cir.1987). 

conduct.

C.

Under this circuit's caselaw and FED. R. CIV. P. 24(a),

Morales also bears a "minimal" burden of showing that his interest

is inadequately represented by the existing parties. Sierra Club,

18 F.3d at 1207 (citing Trbovich v. United Mine Workers, 404 U.S.

528, 538 n. 10, 92 S.Ct. 630, 636 n. 10, 30 L.Ed.2d 686 (1972)).

He need not show that the existing representation necessarily will

be inadequate, but only that it "may be" so. Id. This prong of the

rule 24(a) test sets a low standard. That he meets it is virtually

self-evident, for none of the existing defendants can claim

directly to represent the interests of the citizens of Texas.

This leads us to conclude that the district court erred in

denying Morales's motion to intervene as of right. The relevant

portion of the September 30, 1996, order is therefore reversed.

D.

Morales's final contention is that we should reverse and

render judgment on Richie's Texas state law claims. This is

effectively an appeal from both the partial summary judgment

against the Lutheran Foundation of Texas and the refusal to grant

summary judgment for the other defendants. As such, we lack

jurisdiction to hear it, and this portion of Morales's appeal is

accordingly dismissed.14
 

15See Olympia Co., Inc. v. Celotex Corp., 771 F.2d 888, 893

(5th Cir.1985), cert. denied, 493 U.S. 818, 110 S.Ct. 73, 107

L.Ed.2d 39 (1989); Coghlan v. Starkey, 852 F.2d 806, 810 (5th

Cir.1988) (per curiam) (stating that rule 38 sanctions are

appropriate where the outcome of the appeal "is obvious from the

comprehensive and decisive exposition of the law by the judge

below"). 

VI.

Richie's motion to dismiss asks us to acknowledge that the

defendants' appeals are frivolous and to award sanctions

accordingly. Under FED. R.APP. P. 38, we may award "just damages

and single or double costs to the appellee" if we determine that an

appeal is frivolous. Unlike sanctions under FED. R. CIV. P. 11,

rule 38 sanctions are discretionary.

 The threshold consideration is frivolity. In this circuit,

a frivolous appeal is either one that pursues legal points not

arguable on the merits or one in which the result is obvious.15

We find that the defendants' and Northwestern's appeals meet

this test. For all their arguments about the Relief Act creating

immunity, the defendants and Northwestern have blithely ignored

that Richie is alleging some of them to be non-exempt, which

creates factual issues, and that he is alleging a hybrid

conspiracy. The September 30, 1996, order was unambiguous on this

point. Although they throw up a good smoke screen, it defies

reality for the defendants to continue to argue that they can

collaterally appeal the district court's ruling in the face of its

true basis.

As the district court correctly noted, it has never been at

issue in this case whether a bona fide § 501(c)(3) organization is

exempt from liability under the Relief Act. Rather, the real issue
 

16We note, in the interest of clarity, that by "defendants

and Northwestern" we do not mean to refer to Morales, who was not

a defendant in the district court and whose appeal is not

frivolous. 

has been, and continues to be, whether the defendants are genuine

§ 501(c)(3) organizations within the meaning of the Act, and

whether any agreements they may have made meet the test for

exemption. The briefs in this case are voluminous, and the

pleadings filed in the district court even more so. As the

district court's response to the petition for mandamus put it,

"[T]he paper keeps flowing and the meter keeps running. There are

765 documents filed thus far in the district court and my docket

sheet in this case rocks on for 116 pages." Yet nowhere do the

defendants come to grips with the real issues.

In light of this, we deem it appropriate to assess sanctions

that, though not fully compensatory of Richie's costs, are

nonetheless substantial enough unequivocally to alert the

defendants to the error of their ways. See Atwood v. Union Carbide

Corp., 850 F.2d 1093, 1094 (5th Cir.1988) (per curiam) (assessing

attorney's fees "that are more than nominal but considerably less

than fully compensatory"), cert. denied, 489 U.S. 1079, 109 S.Ct.

1531, 103 L.Ed.2d 836 (1989). The defendants and Northwestern

shall pay to Richie $15,000 in partial compensation of his costs

and attorney's fees.16 Counsel for the defendants and Northwestern

are admonished henceforth to undertake a more thorough examination

of both the decision being appealed and the rules governing our

appellate jurisdiction.

VII.
In summary, Richie's motion to dismiss is GRANTED, and the

defendants' and Northwestern's appeals accordingly are DISMISSED.

Pursuant to rule 38, the defendants and Northwestern are SANCTIONED

$15,000 for their frivolous appeals and are hereby ORDERED to remit

that sum to Richie. The petition for writ of mandamus is DENIED.

The order denying Morales's motion to intervene as of right is

REVERSED, and this case is REMANDED for further proceedings

consistent with this opinion.