Opinion ID: 591435
Heading Depth: 2
Heading Rank: 1

Heading: ERG as a Member of the Oversight Committee

Text: 17 The rule that only parties to a lawsuit, or those that properly become parties, may appeal an adverse judgment, is well-settled. Marino v. Ortiz, 484 U.S. 301, 304, 108 S.Ct. 586, 587, 98 L.Ed.2d 629 (1988); accord Magicsilk Corp. v. Vinson, 924 F.2d 123, 125 (7th Cir.1991); Bense v. Starling, 719 F.2d 241, 244 (7th Cir.1983). In most cases, this means parties of record at the time the judgment was entered, including such as have become parties by intervention, substitution or third-party practice. 9 Moore's Federal Practice p 203.06 (2d ed. 1985). In its jurisdictional statement filed pursuant to Circuit Rule 28(b), ERG stated that it was appealing as a member of the Oversight Committee. (Jurisdictional Statement of Appellant Equity Resources Group, Inc., filed October 29, 1991, at 1.) Noting that the Oversight Committee was not a party to the class action, this court issued an order on October 31, 1991 directing ERG, VMS and Class Counsel to respond to the following question: 18 Whether a member of the Oversight Committee, not a party to the action below, has standing to appeal orders of the District Court? 19 After considering the responses from VMS, ERG and Class Counsel, we conclude that despite ERG's involvement and interest in this case, it has no right to appeal as a member of the Oversight Committee. 20 The Memorandum of Understanding bestowed on ERG, as a member of the Oversight Committee, authority commensurate with that of the Oversight Committee itself; we agree with Class Counsel, however, that the origin and nature of the Oversight Committee reveal that it is not a party in the Class Action. A creature of the Settlement Agreement, it was devised to compensate Class members for giving irrevocable proxies to the managing partner of each Settling Limited Partnership. Instead of allowing the managing partners to unilaterally deem that a property sale is in order, the parties agreed (with the approval of the district court) to a mechanism for review of each sale. The Oversight Committee can examine a proposed sale and challenge, in a proceeding before the Court, the inadequacy of the consideration being paid or other business considerations deemed appropriate by the Oversight Committee. The Settlement Agreement specifically defined Court as the District Court for the Northern District of Illinois. In effect, then, the Oversight Committee comes before the district court not as a party but as a court-appointed expert to assist the court in implementing and enforcing the Settlement Agreement. The Class remains the party whose interests are at stake, and the named plaintiffs represented by Class Counsel remain the formal representatives of the Class. 21 As a non-party, the Oversight Committee's participation in the proceedings challenging the sale of the Lynnhaven properties does not confer upon it the right to appeal the resulting order. Some courts have regarded a non-party's participation in the proceedings below as well as the equities of the case in assessing a non-party's right to appeal. See, e.g., United States v. Conforte, 643 F.2d 641, 643 (9th Cir.1981) (concluding that in nearly every case where a non-party appeal is allowed, the appellant participated in the district court proceedings and the equities of the case weighed in favor of hearing the appeal). But where, as here, the court's order does not impose any requirements on the non-party Oversight Committee, the Oversight Committee's participation in the proceedings below is an insufficient basis for obtaining appellate review. See Coffey v. Whirlpool Corp., 591 F.2d 618, 619 (10th Cir.1979) (where insurer was not formal party, it could not appeal court's denial of insured's motion to vacate order of dismissal and to amend complaint to substitute insurer as the plaintiff); cf. Brown v. Board of Bar Examiners, 623 F.2d 605, 608 (9th Cir.1980) (although appellants had been dismissed from the suit, court allowed their appeal since district court had granted specific relief against them).