1377, 1381 (7" Cir. 1995). The decision to grant or deny a motion for permissive intervention is
“wholly discretionary with the district court.” Taco Bell Corp. v. Continental Casualty Co., No.
01 C 0438, 2003 WL 124454, at *7 (N.D. Ill. Jan. 13, 2003) (quoting Keith v. Daley, 764 F.2d
1265, 1271 (7" Cir. 1985)). In exercising this discretion, the court “shall consider whether the
intervention will unduly delay or prejudice the adjudication of the rights of the original parties.”
Heartwood, Inc. v. U.S. Forest Service, Inc., 316 F.3d 694, 701 (7" Cir. 2003) (quoting Fed. R.
Civ. P. 24(b)). :

In this case, the petitioners claim that they are entitled to intervene in Barrett’s lawsuit
under both standards. Only Barrett opposes their motions.
A. Intervention as of Right

The petitioners argue that they can intervene as of right because “both the Plaintiff and
the Defendant herein are asserting rights in money to which [they] each have an equal right, and
the disposition of the instant action may as a practical matter impede [their] ability to protect
[their] respective interests.” Motions 13/15.” Barrett’s primary objection is that the petitioners
do not have any interest in the subject matter of the action.

The “interest” required by Rule 24(a) “has never been defined with particular precision.”
In re Discovery Zone Securities Litigation, 181 F.R.D. 582, 593 (N.D. Ill. 1998) (quoting
Security Insurance Co. of Hartford, 69 F.3d at 1380). A potential intervener’s interest must be a
“direct, significant, legally protectable one . . . It is something more than a mere ‘betting’ interest,
but less than a property right.” Jn re Discovery Zone, 181 F.R.D. at 593; Reich, 64 F.3d at 322.

“Tn ascertaining a potential intervenor’s interest in a case, our cases focus on the issues to be


an

receivables should be applied against the obligations of the Firm to outside creditors before any
further distributions of deferred compensation would be made to participants.” Motion of Fox et
al. 16. This agreement was confirmed — albeit more than a year later — by the retroactive May
21, 2002 amendment, which was prompted by the directors’ uncertainty about the firm’s ability
to pay all Plan participants after repaying its outstanding debts. When this Court determined that
questions of fact exist as to whether the amendment is valid, the petitioners first realized that
they needed to intervene in order to protect their respective interests in the Plan funds. Jd.

The Court finds that the petitioners’ motions to intervene are timely. The earliest that the
petitioners should have known of their need to intervene was when it became clear that the firm
would likely not have sufficient funds to pay all Plan participants. The petitioners did not move
to intervene at that time, however, in the belief that the Plan amendment was valid and would
protect their interests by ensuring that no individual participant would receive any payments
unless all other participants received a proportionate share. There is little case law regarding
modification of top hat plans and the Plan does state that it can be amended or terminated “at any
time.” Plan §§8.1, 8.2. Thus, the petitioners were not unreasonable in believing that the Plan
amendment was valid and that their interests would be protected, regardless of Barrett’s lawsuit.
Once the Court determined that the Plan was ambiguous on the issue of amendment, the
petitioners first received notice that their rights may not be protected by the amendment, and they
requested leave to intervene less than three weeks later.

3. Prejudice or Delay

Contrary to Barrett’s assertion, allowing the petitioners to intervene will not unduly delay

or prejudice these proceedings. Barrett’s only claim of prejudice is that he will need extensive



The Court is not certain that this provides an adequate basis for intervention as of right in
a case involving an unfunded ERISA top hat plan, See Reich, 64 F.3d at 322 (intervention under
Rule 24(a) is not proper where “a third party who has some outstanding monetary claim from one
of the parties attempts to intervene to ensure that the outcome of the case preserves as much of its
claim as possible”); Mountain Top Condominium Ass'n v. Dave Stabbert Master Builder, Inc., 72
F.3d 361, 366 (3d Cir. 1995) (mere economic interest in the outcome of litigation is insufficient
to support the right to intervene, but “an intervener’s interest in a specific fund is sufficient to
entitle intervention in a case affecting that fund”); Reliable Home Health Care, Inc. v. Union
Central Insurance Co., 295 F.3d 505, 513 (5" Cir. 2002) (an unfunded plan, such as a top hat
plan, is “paid solely from the general assets of the employer”); Motions 6, 7 (“because the Plan
was unfunded, there were no funds ‘earmarked? for distribution to the participants as of March
31, 2001”). Neither the petitioners nor the parties have addressed any of the issues raised by
these cases.

Nor do the petitioners argue that their status as Plan participants gives them a direct
interest in any interpretation of the Plan language or the May 21, 2002 amendment. And they
similarly fail to address how a decision in this case on the amendment’s validity would affect
their right to challenge its validity in a separate lawsuit or to sue for full payment under the Plan.
See, e.g., Shea, 19 F.3d at 347 (quoting Meridian Homes Corp. v. Nicholas W. Prassas & Co.,
683 F.2d 201, 204 (7 Cir. 1982)) (*{i}mpairment exists when the decision of a legal question . . .
would, as a practical matter, foreclose the rights of the proposed intervenor in a subsequent

proceeding”). All the petitioners offer is a conclusory assertion that “disposition of the instant


resolved by the litigation and whether the potential intervenor has an interest in those issues.”
Reich, 64 F.3d at 322.

Barrett argues that the petitioners do not have any interest in his personal deferred
compensation account because they are shareholders of the firm. According to Barrett, the
petitioner-shareholders are trying to “reinvent themselves” as creditors to avoid “the corporate
law maxim that makes shareholders inferior to creditors when a business dissolves.” Barrett says
that only he is a true creditor so he has a superior claim to the Plan benefits. Pl. Mem., pp. 4-5.
However, nothing in the language of the Plan suggests that shareholder status has any bearing on
a participant’s eligibility for benefits. To the contrary, the Plan states that any participant who

“leaves the employ” of the firm will be paid benefits. Plan §5.1. The Plan also states that
participants entitled to receive payments are to be treated as general unsecured creditors of the
firm. Plan §9.2. Like Barrett, the petitioners have left the employ of Fox & Grove, are eligible
for benefits under the Plan, and are seeking to assert their rights as Plan participants. 29 U.S.C.
§1132(a)(1)(B). Thus, the Court does not see how the creditor-shareholder distinction is relevant
to whether the petitioners have an interest in this lawsuit.

For their part, the petitioners focus on the fact that their right to collect funds under the
Plan will be impaired if Barrett is successful in this litigation. If the May 21, 2002 amendment is
found to be invalid, then each participant will immediately be entitled to the full value of his or
her deferred compensation account. According'to the petitioners, however, there will likely not
be sufficient funds available to pay each participant in full. Thus, a decision in Barrett’s favor

would impair the petitioners’ ability to recover the monies owed them under the Plan.


legal or factual questions. To the contrary, the interpretation of the Plan and its amendment is
common to the claims of all Plan participants, including Barrett and the petitioners. And
intervention will prevent the petitioners from filing nine separate lawsuits, each requiring a
determination regarding the validity of the Plan amendment. See E.E.0.C. v. Regis Corp., No.
99 C 8270, 2001 WL 1911025, at *1 (N.D. IIL. Jan. 17, 2001) (“[t]he purpose of the rule allowing
intervention is to prevent a multiplicity of suits where common questions of law or fact are
involved”). This, in turn, will help preserve judicial resources and prevent prejudice to the
petitioners from the “precedential impact of an unfavorable decision in another lawsuit.” Jd.

2. Timeliness

Barrett next argues that the petitioners’ motions are untimely. The test for timeliness is
“essentially one of reasonableness: potential intervenors need to be reasonably diligent in
learning of a suit that might affect their rights, and upon so learning they need to act reasonably
promptly.” Reich, 64 F.3d at 321 (citation omitted). In determining whether a petition to
intervene is timely, the court must consider four factors: (1) the length of time the intervener
knew or should have known of his or her interest in this case, (2) the prejudice to the original
party caused by the delay, (3) the resulting prejudice to the intervener if the motion is denied, and
(4) any unusual circumstances.” In re Discovery Zone Securities Litigation, 181 F.R.D. at 594
(quoting Ragsdale v. Turnock, 941 F.2d 501, 504 (7 Cir. 1991)). Whether a petition is timely
presented is within the court’s discretion. United States v. City of Chicago, 908 F.2d 197, 199
(7* Cir. 1990).

In this case, the petitioners claim that a majority of the participants met shortly after the

firm ceased operations on March 31, 2001 and, ‘out of a sense of fairness, agreed that “all



Minake Order Form (06/97)

United States District Court, Northern District of Illinois

serge Maginate Jude Nan R. Nolan “antaasigned Judge

CASE NUMBER 01 C5910 DATE 3/27/2003
CASE Barrett vs. Fox & Grove Chtd
TITLE

{In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of the motion being presented.]

MOTION:
DOCKET ENTRY:
qd) oO Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) a Answer brief to motion due. . Reply to answer briefdue___.
(4) Oo Ruling/Hearing on setfor______at
(5) a Status hearing[held/continued to] [set for/re-set for]on___setfor___at
(6) a Pretrial conference[held/continued to] [set for/re-set for]on__setfor__———at__—.
(7) o Trial[set for/re-set for]on__—_saat
(8) im} [Bench/Jury trial] [Hearing] held/continued to____—at
(9) Qa This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) O Local Rule 41.1 OFRCP41(a)(i) O FRCP41(a)(2).
ao) [Other docket entry] For the reasons stated in the attached Memorandum Opinion and Order, the

petitioners’ motions for leave to intervene are granted (37-1, 38-1, 39-1, 40-1, 41-1]. Status hearing held.
Settlement conference set for April 29, 2003 at 1:30 p.m. Enter Memorandum Opinion and Order.

(ii) ff [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required. number of notices

Document
Number

Notices maited by judge’s staff.

AR 28 2003_.,

Notified counsel by telephone, diate dockered,

o& | Docketing to mail notices.

LYnag
Mail AO 450 form. Ly, .
Copy 10 judge/magistrate judge. nyatesig sin
Gl:
coutoom Sid lz aney
av7777 deputy's fel 83 aa
“lel ecetin in

LE



discovery on the issue of whether the petitioners are shareholders or creditors. Assuming this is
true, any potential prejudice or delay is outweighed by the burden on the petitioners, who would
have to bear the expense of filing their own lawsuits and “would likely be burdened by
unfavorable rulings in the pending litigation, though they were not parties to it.” Regis Corp.,
2001 WL 1911025, at *2. In addition, the petitioners would not be adequately represented by the
original parties. Barrett claims that the amendment is invalid and that he is entitled to full
payment of his Plan benefits without regard to any other participant. Fox & Grove argues that it
will not have sufficient funds to pay all Plan participants and that the valid amendment mandates
a pro rata distribution of benefits. Seven of the petitioners agree with Fox & Grove, but two of
them claim that the amendment, valid or not, should not apply to them because they left the
firm’s employ prior to March 31, 2001. Goldman Motion 11; Blakely Motion 411. The Court
finds that on balance, the original parties would not adequately represent the interests of all
petitioners and they should be allowed to intervene in this case. See Regis Corp., 2001 WL
1911025, at *2 (citing Jochims vy. Isuzu Motors, Ltd., 148 F.R.D. 624, 626 (S.D. lowa 1993))
(‘Rule 24 is to be construed liberally with all doubts resolved in favor of permitting
intervention”).
CONCLUSION
For the reasons stated above, the petitioners’ Motions for Leave to Intervene (Docket

Entry #37-1, 38-1, 39-1, 40-1 and 41-1) are granted.

Yow R hetev

NAN R. NOLAN
United States Magistrate Judge
Dated: March 27, 2003

10


action may as a practical matter impede our ability to protect our respective interests.” Motions
913/15. ,

In short, the petitioners failed to properly develop their arguments in support of Rule
24(a) intervention, and the Court is under no duty to research and analyze the arguments for
them. See United States v. Amerson, 185 F.3d 676, 689 (7 Cir. 1999) (“[g]iven our adversarial
system of litigation, it is not the role of this court to research and construct the legal arguments
open to parties, especially when they are represented by counsel”). In any event, the Court need
not reach this issue because it finds that the petitioners may intervene under Rule 24(b).
B. Permissive Intervention we

As noted, permissive intervention is proper if a common question of law or fact exists,
the petition to intervene was timely made, and there is an independent basis for the court’s
jurisdiction. Security Insurance Co. of Hartford, 69 F.3d at 1381. The parties do not dispute
jurisdiction over the petitioners pursuant to 29 U.S.C. §1132(a)(1)(B), but Barrett argues that (1)
there are no common questions involved, (2) the motions are untimely, and (3) he will suffer
prejudice and delay if intervention is granted.

1, Common Question of Law or Fact

The petitioners argue that “our right to relief arises out of the same series of transactions
(i.e., the termination of our employment, the Firm’s cessation of operations, and the retroactive
Plan amendment) that give rise to the claims already before the court.” Motions 414/16. Barrett
claims that “not a single item of evidence will overlap,” again focusing on his theory that the
petitioners are shareholders while he is a creditor of Fox & Grove. Pl. Mem., p. 7. The Court

has finds Barrett’s creditor-shareholder theory insufficient to demonstrate an absence of common



that each participant “shall be entitled” to benefits which “shall be paid” when the participant
leaves the firm, Plan §§3.1, 5.1, and (2) it is for a factfinder to resolve this ambiguity. Barrett,
2002 WL 31761410, at *4-5. As a result, nine other former equity partners who were
participants in the Plan (the “petitioners”) now seek leave to intervene in this lawsuit.
DISCUSSION

Intervention is the proper mechanism for nonparties to protect interests that may be
adversely affected by a trial court’s judgment. Felzen y. Andreas, 134 F.3d 873, 874 (7* Cir.
1998). Fed. R. Civ. P. 24 contemplates two types of intervention: intervention as of right and
permissive intervention. A petitioner may intervene as a matter of right by satisfying the
following four criteria: “(1) timely application; (2) an interest relating to the subject matter of the
action; (3) potential impairment, as a practical matter, of that interest by the disposition of the
action; and (4) lack of adequate representation of the interest by the existing parties to the
action.” Reich y. ABC/York-Estes Corp., 64 F.3d 316, 321 (7 Cir. 1995) (quoting Shea v.
Angulo, 19 F.3d 343, 344 (7" Cir. 1994)); Fed. R. Civ. P. 24(a). A motion to intervene as of
right “should not be dismissed unless it appears to a certainty that the intervenor is not entitled to
relief under any set of facts which could be proved under the complaint.” Reich, 64F.3d at 321
(quoting Lake Investors Development Group, Inc. v. Egidi Development Group, 715 F.2d 1256,
1258 (7" Cir. 1983)). Because rightful intervention cases are highly fact specific they tend to
resist comparison to prior cases. Reich, 64 F.3d at 321.

Permissive intervention under Rule 24(b) requires a petitioner to show that (1) a common
question of law or fact exists; (2) the petition was timely made; and (3) the court has independent

jurisdiction over the claims. Security Insurance Co. of Hartford v. Schipporeit, Inc., 69 F.3d



for the purpose of providing deferred compensation to a select group of management or highly
compensated employees.” 29 U.S.C. §§1051(2), 1081(3), 1101(a); Garratt v. Knowles, 245 F.3d
941, 946 n.4 (7" Cir. 2001). On March 31, 2001, Fox & Grove ceased its operations, terminated
the employment of all of its attorneys, commenced liquidation, and stopped making payments to
Barrett under the Plan. As of that date, Barrett was one of eleven Plan participants entitled to
benefits.

On August 1, 2001, Barrett filed suit in federal court alleging a state law contract claim
for unpaid wages and an ERISA claim based on the firm’s (1) failure to pay him any installments
of deferred compensation after March 31, 2001; and (2) erroneous calculation of the total value
of his deferred compensation account. On May 21, 2002, the directors of Fox & Grove amended
the Plan, retroactive to March 31, 2001, to provide that no participant would receive any payment
of deferred compensation “until such time as the [Plan] Committee, in its reasonable judgment,
decides that all debts of the [firm] other than obligations under the plan have been paid or
settled.” The directors amended the Plan due to uncertainty about the firm’s ability to pay all
Plan participants the entirety of their deferred compensation accounts after repaying all
outstanding debts, and their determination that no individual participant should receive any
payments unless all other participants received a proportionate share.

On or about July 17, 2002, Fox & Grove filed a Motion to Dismiss Barrett’s lawsuit,
claiming that the retroactive amendment to the Plan defeated his claim for any further payment
until the liquidation process was complete. This Court denied that motion on December 2, 2002,
finding that (1) the Plan’s language permitting amendment “at any time” is ambiguous to the

extent that it would allow Fox & Grove to take away vested benefits despite language in the Plan



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
WILLIAM HENRY BARRETT, )
)
Plaintiff, )
)
vs. ) Case No. 01 C 5910
)
FOX AND GROVE, CHARTERED, )
)
Defendant. ) D 0c
MEMORANDUM OPINION AND ORDER MAR 2 8 2003
NAN R. NOLAN, Magistrate Judge: ©

Plaintiff William Henry Barrett filed suit against defendant Fox & Grove, Chartered
(“Fox & Grove”) to recover monies allegedly owed him under an ERISA deferred compensation
plan (Count 1) and unpaid wages and compensation (Count 2). The parties have consented to the
jurisdiction of the United States Magistrate Judge pursuant to 28 U.S.C. §636(c). This matter is
now before the Court on the motions of nine former equity partners of Fox & Grove for leave to
intervene in this lawsuit. For the reasons set forth below, the motions are granted.

BACKGROUND'

Barrett is a licensed Illinois attomey who worked at the law firm of Fox & Grove until he

resigned in December 2000. After his resignation, Barrett started receiving benefits under Fox &

Grove’s Deferred Compensation Plan (the “Plan”), an ERISA top hat plan maintained “primarily

1 The Court assumes the reader’s familiarity with its prior opinion in this case,

Barrett v, Fox and Grove, Chartered, No. 01 C 5910, 2002 WL 31761410 (N.D. Ill. Dec. 9,
2002), and will not repeat background information unless necessary for an understanding of the

pending motions. Lb