UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 98-50528

TAYLOR COMMUNICATIONS GROUP, INC.,

Appellant,

VERSUS

SOUTHWESTERN BELL TELEPHONE COMPANY,

Plaintiff-Appellee.

VERSUS

PUBLIC UTILITY COMMISSION OF TEXAS; PAT WOOD, III;

JUDY WALSH; PATRICIA CURRAN; TIME WARNER COMMUNICATIONS

OF AUSTIN, L.P.; TIME WARNER COMMUNICATIONS OF HOUSTON, L.P.;

AND FIBRCOM, INC.

Defendant-Appellees.

Appeal from the United States District Court

for the Western District of Texas

April 13, 1999

Before WISDOM, STEWART, and DENNIS, Circuit Judges.

WISDOM, Circuit Judge:

Introducti on

Appellant T aylor Communications Group, Inc. (Taylor) sought to intervene in litigation

invo lving Southwestern Bell Telephone Co. (So ut hwestern Bell) as plaintiff, and Time Warner

Communications, Inc. (Time Warner) and the Texas Public Utilities Commissio n (TPUC) as1 SBC Communications, Inc. v. F.C.C. , 138 F.3d 410, 413 (D.C. Cir. 1998).

2 47 U.S.C. § 252 (d) (2).

2 defendants. The district court denied Taylor’s motion to intervene as of right, or, in the alternative,

for permissive intervention. Taylor now appeals. All parties to the litigation oppose Taylor’s appeal.

We affirm.

Background and Facts

Congress passed the Federal Telecommunications Act of 1996 (the Act) with the specific

intention of opening all telecommunication markets to the public. 1 Southwestern Bell had previously

held a monopoly on telephone service in this region of the country. Upon passage of the Act, Time

Warner entered the market in competition with Southwestern Bell.

The Act imposes several duties on companies which had previously held monopolies in this

field. One of the duties created by the Act required Southwestern Bell to allow Time Warner to

interconnect its own facilit ies with Southwestern Bell’s network as a means of pr o viding service.

Under the Act, each company may charge the other for the use of its facilit ies, and those charges must

be mutual and reciprocal. 2 Time Warner and Southwestern Bell entered into such an agreement, and

the Texas Public Utilities Commission appr o ved t he deal. Not long after, Time Warner filed a

complaint with TPUC, asserting that Southwe st ern Bell had failed to comply with the reciprocal

compensation provisions for local telephone traffic. Southwestern Bell asserted that it had, in fact,

complied to the degree required by the agreement.

The question of compliance comes down to whether calls to an Internet Ser vice Provi der

(ISP) constitute local or long-distance traffic. Upon administrative review, TPUC held that the calls

were local, and therefore subject to th e reciprocal compensation agreement. Southwestern Bell,3 Ceres Gulf v. Cooper, 957 F.2d 1199, 1202 n.8 (5th Cir. 1992).

4 Woolen v. Surtran Taxicabs, Inc. , 684 F.2d 324, 330- 331 (5th Cir. 1982).

3 objecting t o this ruling, filed suit in federal district court, seeking declaratory and injunctive relief

preventing the implementation of the TPUC ruling.

Taylor also had an interconnection agreement with Southwestern Bell, separate and distinct

from that of Time Warner. That agreement was the subject of a different administrative review which

was still pending at the time Southwestern Bell filed suit. After Southwestern Bell filed suit, Taylor

sought to intervene. Taylor asserts that its agreement wit h So ut hwestern Bell is factually

distinguishable from that of Time Warne r. Nevertheless, Taylor asserts that the determination

whether calls to ISP’s are local in the Time Warner case would necessarily become precedent in

Taylor’s pending administrative conflict with Southwestern Bell.

Citing these stare decisis concerns, Taylor sought to in t ervene as of right, or, in the

alternative, by permission of the district court. The district court denied these motions. Taylor now

appeals.

Standard of Review

We review a denial of

int ervention as of right d e novo

. 3 We review a denial of permissive

intervention for an abuse of discretion. 4

Intervention as of Right

To intervene as o f right , Taylor must meet four prerequisites: (1) the application for

intervention must be t imely; (2) t he applicant must have an interest relating to the property or

transaction whic h is t he subject of the action; (3) the applicant must be so situated that the

disposition of the action may, as a practical matter, impair his ability to protect that interest; (4) the5 New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co. , 732 F.2d 452, 463 (5th Cir.),

cert. denied , 469 U.S. 1019 (1984).

6 Kneeland v. NCAA , 806 F.2d 1285, 1287 (5th Cir.), cert. denied , 484 U.S. 817 (1987).

4 applicant’s interest must be inadequately represented by the existing parties to the suit. 5 Failure to

meet any one of these requirements is fatal to a claim of intervention as of right. 6

Timeliness

Taylor’s Moti on to Intervene was filed three weeks after Southwestern Bell had initiated the

underlying proceedings in district court. At that point the district court had taken little substantive

action on the matter. Further, both TPUC and Time Warner concede that Taylor’s motion was timely

filed. Sout hwest ern Bell contends that the motion was untimely as premature, not as delinquent.

Southwestern Bell’s argument that Taylor filed its motion prior to the adjudication by the TPUC of

its own dispute with Southwestern Bell go es to the issue of whether Taylor has an interest in the

proceedings, not toward the issue of timeliness. Taylor’s motion is therefore timely.

Taylor’s Interest

Does Taylor have an interest relating to the property or transaction which is the subject of the

action?

To answer this question we must first address the necessary preliminary issue: what is the

property or transaction which is the subject of the action? Taylor is seeking to intervene in litigation

between Southwestern Bell (the plaint iff) and Time Warner and TPUC (the defendants). The subject

of the litigation is TPUC’s interpretation of a provision in a contract between Southwestern Bell and

Time Warner. Does Taylor have an interest in this dispute?7 18 F.3d 1202 (5th Cir. 1994).

8 Id . at 1207.

9 Appellants Brief at 19.

5 Taylo r asserts that this analysis is controlled by our opinion in S ierra Club v. Espy

. 7 Espy

involved a motion to intervene filed by two forest industry trade associations, seeking intervention

in litigation between three environmental organizations and the Secretary of Agriculture. This Court

held that the movants had “lega lly pro t ectable property interests in existing timber contracts...

threatened by the potential bar on even-aged management.” 8 Taylor contends that it, similarly, has

a legally protectable property interest in its contract with Southwestern Bell which is threatened by

a potential finding that calls to ISP’s are not subject to the reciprocity agreement.

Our Espy holding is factually distinguishable from the case at bar. In E spy

, a ruling contrary

to the position of the timber industry was certain to affect the already-existing contracts. That is not

the case here. In the case before us, a ruling in favor of Southwestern Bell’s position m ight adversely

affect Taylor’s position, but not necessarily. Taylor concedes this point in its arguments to this Court.

First, in its brief, Taylor addresses the fou rt h requirement for intervention as of right, that the

movants interests must be inadequately represented by the existing parties to the suit. In arguing that

Time Warner could not adequately represent Tayl or’s int erests, Tay lor notes “[A]s a result of the

difference in the negotiation postures of the respective interconnection agreements, Time W arner

cannot assert certain claims and defenses available to Taylor.” 9 In short, Taylor’s agreement with

Southwestern Bell is factually distinct from Time Warner’s agreement with Southwestern Bell. It

would be pure speculation to say that a judicial pronouncement as to the Time Warner case would

necessarily affe ct Taylo r’s agreement with Southwestern Bell. Because the cases are factually10 Espy at 1207 (internal citations omitted).

6 different, the resulting application of existing law may necessitate a different result. Taylor’s counsel

co nceded this point at oral argument, stating Taylor “might not be bound” by the district co urt ’s

decision in this case. In essence, Taylor seeks to intervene as of right in litigat io n which Taylor

concedes may have no impact on its contract with Southwestern Bell. Taylor has no such right.

Taylor relies on a second aspect of the Espy decision to support its theory of an interest in

the underlying litigation. E spy sta t es t hat “the ‘interest’ test is primarily a practical guide to

disposing of lawsuits by invo lving as many apparently co ncerned persons as is compatible with

efficiency and due process.” 10 Taylor emphasizes t o t his Court the language “involving as many

apparently concerned persons,” while ignoring the phrase “as is compatible with efficiency and due

process.” Taylor was not the only party seeking to intervene in this mat t er. Waller Creek

Communications Co. also filed a motion to intervene. Further, an additional six telecommunications

companies sought leave to participate as amicus curiae . This leaves the district court with no less

than ten telecommunications companies, including Time Warner and Southwestern Bell, not to

mention TPUC, all attempting to have their say in this litigation. Had these other companies sought

to follow the route chosen by Taylor, each of these companies could seek to litigate different factual

aspects of their individual contracts, as Taylor admittedly sought to do, in seeking to prevail. We fail

to see how litigating nine different contracts simultaneously is compatible with efficiency and due

process. The district court instead properly permitted t he filing of a micus briefs. As the Seventh

Circuit has noted

When should the prospect of an appellate decision cutting off further litigation

in the circuit (or the nation as a whole, if the Supreme Court decides the case)

be enough to support intervention? “Infrequently” is one response, an essential11 Bethune Plaza, Inc. v. Lumpkin , 863 F.2d 525, 532-533 (7th Cir. 1988).

7 one if cases are to remain manageable. Trade associations, labor unions,

consumers, and many others may be affected by (and hence colloquially

“interested” in) the rules of law established by appellate courts. To allow them

to intervene as of right would turn the court into a forum for competing interest

groups, submerging the ability of the original parties to settle their own

dispute (or to have the court resolve it expeditiously). Participation as amicus

curiae will alert the court to the legal contentions of concerned bystanders, and

because it leaves the parties free to run their own case is the strongly preferred

option. 11

In analyzing the facts of this case, we conclude that, unlike the appellants in the Espy case,

Taylor’s interest in the underlying litigation is too speculative and general to support intervention as

of right.

Having determined that Taylor does not have an interest in the underlying litigation sufficient

to meet the second requirement for intervention as of right, we need not address the third and fourth

requirements outlined above.

Permissive Intervention

Taylor asserts that the district court abused its discretion in denying Taylor’s motion for

permissive intervention. Permissive interventio n is governed by Federal Rule of Civil Procedure

24(b), which states, in pertinent part: “Upon timely application anyone may be permitted to intervene

in an action...when an applicant’s claim or defense and the main action have a question of law or fact

in common. In exercising its discretion the court shall consider whether the intervention will unduly

delay or prejudice the adjudication of the rights of the original parties.”

Taylor contends that, because the motion to intervene was timely filed, granting the motion

for permissive intervention will not unduly delay or prejudice the adjudicat io n o f t he underlying

litigation. One does not necessarily follow the other. In analyzing the issue o f intervention as of8

right, we have di scussed the manner by which a broad definition of “interest” can lead to

unmanageable litigation. Our analysis of “undue delay” leads us to the same conclusion.

Taylor asserts that its negotiating posture in agreeing to the contract differs markedly from

that of Time Warner. Taylor further asserts that it has claims and defenses with regard to its contract

which are not available to Time Warner. Taylor makes t hese assertions based on a belief that the

facts surrounding the Taylor co nt ract are so different from those surrounding the Time Warner

contract as to possibly bring about a different result. Yet at the same t ime, Tay lor contends that

intervening in the underlying litigation will not cause undue d elay. Again, we cannot see how

litigating facts that are wholly unrelated to the underlying litigation can be achieved without causing

undue delay to the parties involved in the suit. In seeking to bring the litigat io n to an expeditious

clo se, t he district court did not abuse its discretion in denying Taylor’s motion for permissive

intervention.

Conclusion

The order of the district court denying Taylor’s motion for intervention as of right, or, in the

alternative, permissive intervention, is AFFIRMED.