Opinion ID: 65811
Heading Depth: 2
Heading Rank: 2

Heading: Additional Intervention Factors.

Text: In addition to timeliness, Texas must demonstrate an interest that will be impaired or impeded if Texas cannot intervene and that is not adequately represented by the existing parties. To support intervention as of right, Texas must show that it has a direct, substantial, legally protectable interest in the action, meaning `that the interest be one which the substantive law recognizes as belonging to or being owned by the applicant'. Cajun Elect. Power Coop. v. Gulf States Utils., Inc., 940 F.2d 117, 119 (5th Cir.1991) (quoting New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co., 732 F.2d 452 (5th Cir.1984) (en banc) (NOPSI)). Texas asserts two interests. First, it claims that it stands in the shoes of the owners of the unclaimed property and protects their interests under state law. Second, it claims an interest in the investment income that can be earned on the property until it is claimed. Texas argues that neither of these interests is adequately represented by class counsel. We reject Texas's first purported interest. Texas does not a represent the property owners. State law does not create a custodial trust relationship between them and the state. See Clark v. Strayhorn, 184 S.W.3d 906, 912-13 (Tex.App. Austin 2006, pet. denied). The state is not required to pay interest earned from the property to the original owners. See id. It must surrender only the original value of the property when the owner claims it. This relationship does not allow Texas to stand in the shoes of the property owners, because Texas is not representing the interests that the property owners would claim for themselves and may indeed have conflicting interests. [4] Even if Texas were permitted to represent the interests of unclaimed property owners, it would still not satisfy the final prong of the intervention test under this theory, because class counsel has been charged with representing the interests of the absent property owners. When class counsel has been properly appointed, the state cannot intervene under the guise of representing owners of unclaimed property. See Paterson v. Texas, 308 F.3d 448, 451 (5th Cir.2002). The class members are represented by class representatives, who satisfied the district court that they met the representation requirements of federal law and that the settlement was fair. The class representatives, not the State, are by federal law the parties authorized to prosecute and settle the claims of the class members. Id. [5] Texas does have its own interest in the litigation, however. Texas law assigns the interest accrued from unclaimed property to the state, which thus has a financial interest in the investment income generated by the funds until the principal is claimed by the owners. That interest is not directly related to the underlying dispute but is sufficiently related to the litigation. Texas presents a substantial interest in a fund that is being distributed in the settlement of the underlying action. [6] An interest solely related to the terms of a settlement can support intervention. [7] Additionally, Texas's claims relate to the distribution of unclaimed settlement funds, which is an issue that must be decided in the action regardless of whether it intervenes. This distinguishes the present situation from interventions that would add new issues to an existing case. [8] [A]n economic interest alone is insufficient to intervene. NOPSI, 732 F.2d at 466. In NOPSI, the city and several other customers of an electric company moved to intervene in a rate dispute between two electric companies, on the theory that the rates charged between the companies would affect the rates ultimately paid by consumers. Id. at 460-61. We held that an economic interest alone is insufficient, as a legally protectable interest is required for intervention under Rule 24(a)(2), and such intervention is improper where the intervenor does not itself possess the only substantive legal right it seeks to assert in the action. Id. at 466. Unlike the putative intervenor in NOPSI, Texas does have a legally protectable interest: a property right in interest from the unclaimed funds that is recognized under state law. See TEX. PROP.CODE § 74.709 (Vernon 2007). Texas's situation is therefore distinguishable from the unsupported economic interest in NOPSI. There is no question that Texas's interest will be impaired or impeded if it is not permitted to intervene. Barring intervention, the funds will be distributed to the air quality monitoring project, and the state will not be able to claim the interest. The possibility of bringing a state action to compel the settlement administrator to turn over the unclaimed property, as described above, does not change the analysis. The cy pres distribution order creates a strong possibility of a practical harm to Texas's property interest, which is sufficient to show impairment. See 6 MOORE'S FEDERAL PRACTICE, supra, § 24.03[3][a], at 24-41 through 24-42. Lastly, Texas must show that its interest is not adequately represented by existing parties. That determination is also straightforward. Class counsel was appointed to represent the interests of the plaintiff class, including the owners of unclaimed property. The interests of the class members may be served indirectly by giving unclaimed funds to a charity project that benefits their industry. The interests of the state in holding those funds and receiving interest, however, is quite different. In summary, Texas has met the requirements for intervention as of right. Its motion was timely, and it presented an interest in the litigationthe property interest in investment income from unclaimed settlement fundsthat is direct and substantial, would be impaired absent intervention, and is not represented by any of the existing parties. We therefore REVERSE the denial of intervention and REMAND for further proceedings.