Court Opinion

ID: 4467138
Source: CourtListenerOpinion
Date Created: 2019-12-23 20:00:50.769024+00
Date Added: 2024-06-11T14:34:24.371667
License: Public Domain

FILED
                                                                       United States Court of Appeals
                                        PUBLISH                                Tenth Circuit

                          UNITED STATES COURT OF APPEALS                    December 23, 2019

                                                                          Elisabeth A. Shumaker
                                FOR THE TENTH CIRCUIT                         Clerk of Court
                            _________________________________

 ROBERT BARNES,

        Plaintiff - Appellee,

 v.                                                           No. 18-1487

 SECURITY LIFE OF DENVER
 INSURANCE COMPANY,

        Defendant - Amicus Curiae.

 ------------------------------

 JACKSON NATIONAL LIFE
 INSURANCE COMPANY,

        Movant - Appellant.
                       _________________________________

                        Appeal from the United States District Court
                                for the District of Colorado
                          (D.C. No. 1:18-CV-00718-WJM-SKC)
                          _________________________________

Waldemar J. Pflepsen, Jr. (Shaunda Patterson-Strachan, with him on the briefs), Drinker
Biddle & Reath, LLP, Washington, DC, appearing for Appellant.

J. Toji Calabro, Stueve Siegel Hanson, LLP, Kansas City, Missouri (Daniel C. Girard,
Jordan Elias, and Elizabeth A. Kramer, Girard Sharp, LLP, San Francisco, California;
Norman E. Siegel, Stueve Siegel Hanson, LLP, Kansas City, Missouri; and John J.
Schirger and Matthew W. Lytle, Miller Schirger, LLC, Kansas City, Missouri, with him
on the brief), appearing for Appellee.

Kathryn A. Reilly and Chuan (Cici) Cheng, Wheeler Trigg O’Donnell LLP, Denver,
Colorado; Clark C. Johnson and Michael T. Leigh, Kaplan Johnson Abate & Bird LLP,
Louisville, Kentucky, for amicus curiae Security Life Insurance Company.
                       _________________________________

Before BRISCOE, EBEL, and HARTZ, Circuit Judges.
                   _________________________________

BRISCOE, Circuit Judge.
                     _________________________________

      Plaintiff Robert Barnes filed this putative class action against defendant

Security Life of Denver Insurance Company (SLD) alleging that SLD, in the course

of administering life insurance policies purchased by Barnes and other similarly-

situated class members, breached its contractual duties and committed the tort of

conversion by imposing certain administrative costs that were not authorized under

the terms of the policies. Jackson National Life Insurance Company (Jackson)

moved to intervene, asserting that, as a result of reinsurance agreements entered into

by SLD, Jackson was actually the entity responsible for administering Barnes’s

policy and numerous other policies listed within the putative class. The district court

denied Jackson’s motion. Jackson now appeals.

      We have jurisdiction over Jackson’s appeal pursuant to 28 U.S.C. § 1291

“[b]ecause an order denying intervention is final and subject to immediate review if it

prevents the applicant from becoming a party to an action . . . .” WildEarth

Guardians v. United States Forest Serv., 573 F.3d 992, 994 (10th Cir. 2009)

(quotations and brackets omitted). After reviewing the parties’ briefs and the record

on appeal, we conclude that Jackson has established the requirements for intervention

as of right, and accordingly reverse the decision of the district court and remand with

directions to grant Jackson’s motion to intervene.

                                           2
                                           I

      Plaintiff Barnes is a citizen of the State of North Carolina. Defendant SLD is a

corporation incorporated under the laws of the State of Colorado, with its principal

place of business in Denver, Colorado.

      In 1984, Barnes, who was then 29 years of age, purchased from Southland Life

Insurance Company (Southland) a “Flexible Premium Adjustable Life Insurance

Policy” (the Policy), Policy Number 851502124, with an effective date of May 20,

1984, and an initial specified amount of $50,000. Aplt. App., Vol. 1 at 13, 32. In

addition to a death benefit, the Policy provides Barnes with “an investment, savings,

or interest-bearing component that accumulates value over time (‘the Cash Value’).”

Id. at 14. When Barnes receives an account statement, this component is referred to

as “Accumulated Value.” Id.

      The Cash Value on the date the Policy was issued was equal to the amount of

the initial net premium. Thereafter, the Cash Value for any given month was, and

continues to be, “calculated by: (a) adding a percentage of each monthly premium

received to the prior month’s Cash Value; (b) subtracting from that amount the

amounts of any charges assessed and deducted by [SLD]; and (c) adding to that total

one month’s interest earned on the difference between the prior month’s Cash Value

minus the current month’s charges assessed and deducted by [SLD].” Id. at 15.

      The Policy states that the insurer “may assess and deduct only those charges

allowed by the Policy,” and it in turn “expressly defines the specific charges that [the

insurer] may assess and deduct from the Policy’s Cash Value.” Id. The permissible

                                           3
deductible costs under the Policy include “the cost of insurance for the policy

month,” “the sum of the monthly expense charges,” and “the cost of any

supplemental benefits provided by rider.” Id. at 16. Under the terms of the Policy,

“[t]he cost of insurance rate is based on the sex, attained age, and rate classification

of the Insured.” Id. at 17.

      On July 1, 2002, Southland entered into an indemnity reinsurance agreement

with the Life Insurance Company of Georgia (LOG). Under the terms of that

agreement, Southland ceded and transferred certain liabilities arising under a group

of its life insurance policies (the Transferred Policies), including Barnes’s Policy, to

LOG as reinsurer. On that same date, Southland and LOG also entered into an

Administrative Services Agreement covering the Transferred Policies. Together,

these agreements required LOG to assume certain administrative duties on behalf of

Southland, including determining the cost of insurance rates and other administrative

charges. LOG also expressly assumed liability arising out of or relating to the

manner in which LOG set those rates and charges.

      In 2004, Southland merged into Security Life of Denver Insurance Company

(SLD). As a result of this merger, SLD became the effective and liable insurer of the

Policy. But LOG continued to reinsure and administer the Policy and all of the other

Transferred Policies.

      On May 25, 2005, SLD and LOG entered into an Amended and Restated

Administrative Services Agreement. Under the terms of that amended agreement,

                                            4
LOG’s authorization to perform certain administrative functions relevant to the

Transferred Policies continued.

      In 2005, Jackson acquired LOG and assumed the administration of the

Transferred Policies, including the authority to set non-guaranteed elements, such as

the cost of insurance.

      On December 22, 2010, SLD and Jackson entered into an Amended and

Restated Indemnity Reinsurance Agreement. The purpose of that agreement was, in

part, “to make certain changes to the Original Agreement to reflect the results of [the]

mergers.” Id. at 102. A year later, on December 22, 2011, SLD and Jackson entered

into a Second Amended and Restated Indemnity Reinsurance Agreement in order to

make certain changes mandated by New York state insurance laws. These

agreements expressly continued Jackson’s authority to administer the Transferred

Policies. Id. at 235 (“the Company [SLD] continues to desire that the Reinsurer

[Jackson] perform certain administrative functions on behalf of the Company with

respect to the Policies in accordance with the terms of the Administrative Services

Agreement entered into by Southland and LOG”).

      Thus, for many years now, SLD and Jackson have independently administered

separate groups of life insurance policies that were originally issued by SLD. There

is no indication “that SLD and Jackson made the same subjective, discretionary

decisions with respect to policy administration, or that such decisions were supported

by identical reasoning and analysis.” SLD Br. at 3.

                                           5
                                            II

      On March 27, 2018, Barnes initiated this action by filing a complaint against

SLD in the United States District Court for the District of Colorado. The complaint

asserted subject matter jurisdiction pursuant to 28 U.S.C. § 1332(d)(2).

        Section I of the complaint, titled “NATURE OF ACTION,” stated, in

pertinent part: “This is a class action for breach of contract and conversion to recover

amounts that [SLD] charged Plaintiff and the proposed class in excess of the amounts

authorized by the express terms of their life insurance policies.” Id. at 11. Section I

further stated that “[t]he terms of Plaintiff’s life insurance policy provide for a ‘Cash

Value’ consisting of monies held in trust by [SLD] for Plaintiff, and [SLD] is

contractually bound to deduct from the Cash Value only those charges that are

explicitly identified and authorized by the policy’s terms,” yet, “[d]espite

unambiguous language in the policy, . . . [SLD] breaches the policy by deducting

charges from Plaintiff’s Cash Value in amounts exceeding those specifically

permitted by the policy, and those breaches are continuous and ongoing.” Id. at 12.

More specifically, the complaint alleged that, although SLD was authorized under the

Policy “to use only its ‘expectations as to future mortality experience’ when

determining Cost of Insurance Rates,” SLD actually “used other factors not

authorized by the Policy when determining such rates, including without limitation:

expense experience, persistency, taxes, profit assumptions, investment earnings,

capital and reserve requirement, and other unspecified factors.” Id. at 18.

      The complaint identified the class as

                                            6
       [a]ll persons who own or owned a life insurance policy issued or
       administered by [SLD], or its predecessors in interest, the terms of
       which provide or provided for: 1) an insurance or cost of insurance
       charge or deduction calculated using a rate that is determined based on
       [SLD]’s expectations as to future mortality experience; 2) additional but
       separate policy charges, deductions, or expenses; 3) an investment,
       interest-bearing, or savings component; and 4) a death benefit.

Id. at 20.

       Counts I through III of the complaint asserted distinct breach of contract

claims. Count I alleged, in pertinent part, that, “[b]y including unauthorized and

undisclosed factors in the monthly Cost of Insurance Rates, [SLD] deducts amounts

in excess of those contractually authorized under the terms of the [p]olicies” owned

by the class members. Id. at 23. Count II alleged, in pertinent part, that, “[b]y

including unauthorized expense factors in monthly Cost of Insurance Rates, [SLD]

impermissibly deducts expense charges from the Cash Values of Plaintiff and the

class in amounts in excess of the fixed and maximum expense charges expressly

authorized by their policies.” Id. at 24. Count III alleged, in pertinent part, that

SLD’s “failure to lower” the monthly Cost of Insurance Rates for the policies owned

by the class members, “even though its expectations of future mortality experience

improved[,] constitutes a breach of the [p]olicies.” Id.

       Count IV of the complaint asserted a claim for conversion. Id. at 25. It

alleged that “Plaintiff and the class had a property interest in the funds [SLD]

deducted from the Cash Values in excess of the amounts permitted by the terms of

the Policies” and that, “[b]y deducting Cost of Insurance charges and expense

charges in unauthorized amounts from the Cash Values of Plaintiff and the class,

                                            7
[SLD] assumed and exercised ownership over, and misappropriated or misapplied,

specific funds held in trust for the benefit of Plaintiff and the class, without

authorization or consent and in hostility to the rights of Plaintiff and class members.”

Id. Lastly, Count V of the complaint asserted a claim for declaratory and injunctive

relief.

          On August 1, 2018, Jackson filed a motion for leave to intervene in the

proceedings. Jackson argued that it should be allowed to intervene as of right

because it has an interest related to the property or transaction that is the subject of

plaintiff’s action. Jackson explained that, “as the entity that currently administers

and reinsures the [plaintiff’s] Policy, [it] has a direct, substantial, and legally

protectable interest in defending the manner in which the Policy has been

administered by it.” Id. at 69. In other words, Jackson stated that, “[a]s

administrator, [it] has responsibility for certain administrative functions, including

the authority to set the [cost of insurance] rates and other charges at issue” in this

lawsuit. Id. at 69–70. Jackson in turn asserted that its interest might be impaired or

impeded if intervention was not permitted. Jackson noted, for example, that the

complaint effectively “challenges current activities and decision making by Jackson

and seeks declaratory and injunctive relief that seek to mandate that Jackson make

material changes to its administrative practices, specifically, its administration and

management of the relevant policies, including the ongoing determination of the

policy rates and charges at issue.” Id. at 70 (emphasis in original). Jackson noted

that “[f]or Plaintiff to obtain this prospective relief would require Jackson to stop

                                             8
collecting charges and expenses in the amounts it determines are contractually

permissible, because Jackson is the entity currently responsible for administering the

[plaintiff’s] Policy.” Id. at 71 (emphasis in original). Jackson argued that it “would

[also] be ultimately responsible for damages awarded to Plaintiff and the putative

class for the past amounts [it] collected . . . .” Id. Lastly, Jackson argued that SLD

could not adequately represent Jackson’s interest. Jackson emphasized that there

were “two groups of policies implicated here [by the complaint’s class definition]—

those Jackson administered and those it did not,” and it noted that, as a result of this,

“the manner in which the charges and expenses at issue have been administered for

the two groups of policies . . . would have varied, and likely significantly so as

different entities were independently responsible for the actions alleged in the

Complaint . . . .” Id. Thus, Jackson argued, “there is a distinct possibility that [its]

and SLD’s interests and defense strategies may diverge in this litigation.” Id.

      Jackson also argued that it met the requirements for permissive intervention.

Jackson noted that it sought “to intervene to defend its conduct with regard to the

administration of the reinsured policies” and that its “defense [wa]s central to the

essence of this case, which will turn on questions about how Jackson (or LOG before

it) administered the Policy and whether those acts constitute a breach of the Policy

terms.” Id. at 72. Jackson further argued that its “presence in this case w[ould] add

value to this litigation” because it “holds documents and controls witnesses that bear

on the administration of the rates and charges for Plaintiff’s Policy and other

Jackson-administered Southland policies challenged in this litigation.” Id. at 73.

                                            9
       Barnes opposed Jackson’s motion for leave to intervene. From a factual

perspective, Barnes asserted that he “never entered into a contract with Jackson,” and

that “SLD remain[ed] the insurer obligated to pay any insurance claims arising under

his policy.” Id. at 107–08. Barnes also asserted that the reinsurance agreement

afforded Jackson “the right to ‘assume the defense and control’ of the litigation,” as

well as the right to approve any settlement entered into between SLD and Barnes. Id.

at 111. In addition, Barnes noted that the reinsurance agreement required “Jackson

. . . to cooperate with any litigation against SLD relating to the policies subject to the

reinsurance agreement, including by producing documents and witnesses for

deposition.” Id.

       As for his legal arguments, Barnes argued that Jackson’s “interest, if any,

relate[d] only to a subset of policies within the putative class period, and only for a

portion of the time relevant here.” Id. at 112. Barnes argued that he “should not be

required to litigate separately against Jackson . . . when Jackson . . . can direct the

defense of [his] claims and its interests in avoiding liability under the form policy

language are derivative of—and thus adequately represented by—SLD.” Id. In

terms of Jackson’s purported interest in the action, Barnes argued that Jackson’s

“assumption of liability would give it an indirect derivative interest, at most, in the

outcome of [his] claims.” Id. at 113. Barnes also argued that Jackson’s “objectives

in this litigation would be no different from SLD’s” because “[b]oth entities . . .

[we]re interested in successfully defending Plaintiff’s claim of breach of a form

contract, and hence in obtaining a ruling that the policy’s provisions permitted SLD

                                            10
(whether acting through Jackson . . . or otherwise) to make the deductions it did.” Id.

at 117.

      On October 29, 2018, Jackson filed a motion for leave to file a supplemental

brief in support of its motion for leave to intervene. Jackson noted in its motion for

leave “that recent [factual] developments in the litigation,” specifically a September

18, 2018 “Discovery Hearing” before the magistrate judge, “further confirm[ed] that

intervention . . . [wa]s appropriate.” Id. at 314. Those “discovery developments,”

Jackson asserted, “reveal[ed] that . . . Jackson, not having been served with either

party or non-party discovery, nevertheless [wa]s placed in an untenable position of

being without an appropriate forum in which to fully protect its interest as the current

parties proceed[ed] to make discovery demands on it.” Id. at 315. “For example,”

Jackson noted, it “lack[ed] appropriate standing under the Federal Rules of Civil

Procedure” to dispute the parties’ “contract interpretation” regarding Jackson’s

discovery obligations. Id.

      On November 21, 2018, the district court issued a written order denying

Jackson’s motion to intervene and denying as moot Jackson’s motion to supplement.

At the outset of its order, the district court recounted the relevant factual history and

noted, in pertinent part, that “[i]n 2005, Jackson acquired LOG and assumed

responsibility for the administration and reinsurance of the Barnes Policy and

others.” Id. at 362. The district court in turn concluded that “[t]he administrative

services and reinsurance agreement” that Jackson inherited from LOG “address[ed]

SLD and Jackson’s rights and obligations when faced with litigation over the

                                            11
Jackson-administered policies.” Id. The district court proceeded to describe those

rights and obligations. “Generally,” the district court noted, “Jackson ‘shall sue or

defend, at its own expense and in the name of [SLD] when necessary . . . any action

brought upon a Policy.’” Id. (quoting ECF No. 42-5 at 14, § 2.3(c)). “However,

SLD retains ‘the exclusive right to exercise control of and direction over any claim or

litigation involving Retained Liabilities.’” Id. “When SLD makes a timely notice of

a third-party claim, Jackson may ‘assume the defense and control’ of the litigation

and may, under certain circumstances, settle litigation without the consent of SLD.”

Id. at 362–363 (quoting ECF No. 42-6 at 42, § 1). “Importantly, however, SLD

cannot settle litigation without Jackson’s prior written consent,” and “[i]f Jackson

exercises its right to assume defense and control of the claim, SLD has the right (but

not the obligation) to reasonably participate in (but not control) the defense of claims

with its own counsel and at its own expense.” Id. at 363.

      The district court in turn noted that “[o]n April 26, 2018, SLD sent a notice of

claim to Jackson informing Jackson of Barnes’ claim implicating life insurance

policies for which Jackson had assumed responsibility.” Id. The district court

further noted that, “[o]n May 7, 2018, Jackson responded to SLD’s letter

acknowledging its responsibility to indemnify SLD with respect to the Barnes

Policy.” Id.

      The district court then proceeded to analyze Jackson’s request to intervene as

of right, concluding that “Jackson . . . fail[ed] to establish inadequate representation,

thus foreclosing intervention as of right.” Id. at 366. The district court explained

                                           12
that “[t]wo facts persuade[d] [it] that Jackson’s interests [we]re already adequately

protected by SLD.” Id. at 367. “First,” the district court stated, “Jackson and SLD

have identical interests in the litigation: defending the cost of insurance coverage, as

well as the administration of the subject policies, including the Barnes Policy, from

1984 to present.” Id. Second, the district court noted that “Jackson ha[d] failed to

show that its interests would be inadequately represented [by SLD] absent

intervention,” and that, in fact, “Jackson has a contractual right to control this

litigation.” Id. at 368 (emphasis in original). Although the district court

acknowledged “Jackson[’s] conten[tion] that SLD ha[d] prevented it from exercising

its contractual right to direct and control the litigation,” the district court concluded

that Jackson’s remedy was to “assert a separate breach of contract claim in an

independent action against SLD,” or to “possibly assert breach of contract as a

defense if SLD [wa]s ultimately held liable in this litigation.” Id.

       As for Jackson’s request for permissive intervention, the district court

concluded “that Jackson ha[d] not shown that permissive intervention would

contribute to the just resolution of this lawsuit.” Id. The district court acknowledged

that “Jackson’s control of documents and witnesses [wa]s admittedly complicated by

its ambiguous status (neither third party nor defendant).” Id. “However,” the district

court stated, “Jackson ha[d] not adequately addressed why party status [wa]s

preferable for the purposes of discovery, particularly in light of the availability to

Barnes of the issuance of third-party subpoenas, as well as Jackson’s contractual

                                            13
obligations during litigation under the reinsurance and administrative service

contracts.” Id.

       On December 20, 2018, Jackson filed a notice of appeal from the district

court’s order denying its motion to intervene.

                                            III

       Jackson argues on appeal that the district court erred in holding that Jackson

failed to satisfy the requirements for intervention as of right, and also abused its

discretion in holding that Jackson failed to satisfy the requirements for permissive

intervention. For the reasons that follow, we agree that the district court erred in

denying Jackson’s motion to intervene as of right. Consequently, we need not

address Jackson’s permissive intervention arguments.

            Intervention as of right – requirements and standard of review

       Intervention as of right is governed by Federal Rule of Civil Procedure

24(a)(2), which states:

       On timely motion, the court must permit anyone to intervene who . . .
       claims an interest relating to the property or transaction that is the
       subject of the action, and is so situated that disposing of the action may
       as a practical matter impair or impede the movant’s ability to protect its
       interest, unless existing parties adequately represent that interest.

Fed. R. Civ. P. 24(a)(2). We have construed the plain language of this rule to mean

that “a nonparty seeking to intervene as of right must establish (1) timeliness, (2) an

interest relating to the property or transaction that is the subject of the action, (3) the

potential impairment of that interest, and (4) inadequate representation by existing

parties.” Kane Cty. v. United States, 928 F.3d 877, 889 (10th Cir. 2019).

                                            14
       Notably, we “follow[] a somewhat liberal line in allowing intervention.” Utah

Ass’n of Counties v. Clinton, 255 F.3d 1246, 1249 (10th Cir. 2001) (quotations

omitted). “The central concern in deciding whether intervention is proper is the

practical effect of the litigation on the applicant for intervention.” San Juan Cty. v.

United States, 503 F.3d 1163, 1193 (10th Cir. 2007) (en banc).

       “We review a district court’s timeliness ruling for an abuse of discretion,

unless the district court makes no findings on timeliness; in that case, we review de

novo.” Kane Cty., 92 F.3d at 889. We review de novo the district court’s rulings on

the remaining three requirements. Id.

                 Analysis of Jackson’s motion to intervene as of right

       Because it is undisputed that Jackson’s motion to intervene was timely, we

focus our analysis on the remaining three requirements for intervention as of right

and apply de novo review.

       A. Barnes’s interest in the subject of the action

       “Whether an applicant has an interest sufficient to warrant intervention as a

matter of right is a highly fact-specific determination, and the interest test is

primarily a practical guide to disposing of lawsuits by involving as many apparently

concerned persons as is compatible with efficiency and due process.” Id. (citations

and quotations omitted). Coal. of Ariz./N.M. Ctys. for Stable Econ. Growth v. Dep’t

of Interior, 100 F.3d 837, 840 (10th Cir. 1996). We “require that the interest in the

proceedings be direct, substantial, and legally protectable.” Id. (quotations and

brackets omitted). “A protectable interest is one that would be impeded by the

                                            15
disposition of the action.” W. Energy All. v. Zinke, 877 F.3d 1157, 1165 (10th Cir.

2017) (quotations omitted).

      Jackson makes a number of compelling arguments for why its interest in this

proceeding satisfies these requirements. To begin with, Jackson notes that “the

subject of the underlying action is the Barnes Policy,” and Jackson in turn asserts

that, “as the entity that currently administers (and reinsures)” the Barnes Policy, it

“has a direct, substantial, and legally protectable interest in defending the manner in

which the Policy has been administered by it.” Aplt. Br. at 17. “More specifically,”

Jackson argues that, “as administrator, [it] has contractual responsibility for certain

administrative functions, including the authority to set the [cost of insurance] rates

and other charges — the principal activity challenged here.” Id. at 18 (emphasis in

original). Further, Jackson asserts, “[a]s the 100% indemnity reinsurer, [it] also has

the responsibility for any covered liabilities that arise under or relate to the Barnes

Policy, including its administration, and thereby may ultimately be liable to SLD for

any nonmonetary judgment imposed against SLD for the reinsured policies, including

the Barnes Policy.” Id. Lastly, Jackson notes that the declaratory and injunctive

relief sought by Barnes, if granted, would effectively “compel Jackson prospectively

to make material changes to its administrative practices.”1 Id. (emphasis in original).

      1
         As SLD itself notes in its appellate brief, “[a]n order entered in an action
Jackson was not named to and was not allowed to join would at a minimum raise
serious questions about its enforceability—and very likely would be ineffective—as
to the Jackson block” of policies. SLD Br. at 2 n.2. Notably, the dissent wholly
ignores Barnes’s request for prospective injunctive relief. Further, the dissent
concludes, incorrectly, that “Jackson’s only interest in the Barnes litigation is in its
                                            16
      Barnes argues, in response, that the interests identified by Jackson are not

direct interests, but rather interests that “are derivative of SLD’s.” Aple. Br. at 15.

In support, Barnes asserts that, under the terms of the Amended and Restated

Administrative Services Agreement entered into between SLD and LOG and assumed

by Jackson, “Jackson makes ‘recommendations’ regarding all ‘Non-Guaranteed

Elements of the Policies’ such as the cost of insurance rates, and SLD has the right to

reject those recommendations.” Id. at 15–16. But Barnes misreads the terms of the

Amended and Restated Administrative Services Agreement in making this argument.

That agreement gave Jackson, in pertinent part, the responsibility of “(i) making

recommendations to, and consulting with, [SLD] with respect to the reserving

methodology related to the Policies . . . and (ii) the establishment and variance of all

Non-Guaranteed Elements of the Policies,” including the cost of insurance rates.

Aplt. App., Vol. I at 208. The phrase “making recommendations” modified only the

duties outlined in subsection (i), and not the duties outlined in subsection (ii).

Subsection (ii) quite clearly gave Jackson the responsibility of “establishing” and

“varying” cost of insurance rates, and not just making recommendations about those

rates to SLD. Thus, the allegations in Barnes’s complaint quite clearly implicate,

with respect to the Transferred Policies, a duty that SLD and Jackson expressly

agreed to allocate exclusively to Jackson, and that Jackson and its predecessor LOG

capacity as an indemnitor of SLD.” Dissent at 9. As noted, Jackson’s role as
administrator of the Transferred Policies gives it a significant interest in the outcome
of this case.
                                            17
have been carrying out since 2002. See SLD Br. at 1 (“[F]or most of this century,

Jackson has made all challenged decisions with respect to Barnes’s policy.”).

       Barnes also argues that Jackson’s “indemnity obligation is a derivative interest

too.” Aple. Br. at 16. More specifically, Barnes argues that “SLD is the effective

and liable insurer of the putative class Policies,” and Jackson’s financial

responsibility “is to SLD—not Barnes—and arises out of SLD’s indemnification

claim.” Id. (quotations and brackets omitted). Again, however, Barnes misreads or

misrepresents the relevant facts. To be sure, under the terms of the Second Amended

and Restated Indemnity Reinsurance Agreement, Jackson acts as the indemnity

reinsurer for all of the Transferred Policies, including Barnes’s Policy, and thus

effectively indemnifies SLD for any “gross liabilities and obligations arising under or

relating to” the Transferred Policies. Aplt. App., Vol. I at 237, 241. That indemnity

reinsurance obligation does not extend, however, to “extra contractual obligations”

relating to the policies, including “consequential, exemplary or other form[s] of

extra-contractual damages, which liabilities or obligations arise from any act, error or

omission . . . relating to . . . administration of the Policies.” Id. at 237. Instead,

under the terms of the Second Amended and Restated Indemnity Reinsurance

Agreement, Jackson “agree[d] to assume and discharge one hundred percent (100%)

of all Extra Contractual Obligations,” and thus bears the sole “responsibility for

paying or otherwise discharging, as and when due, all Extra Contractual

Obligations.” Id. at 242. Thus, it appears that Jackson, and not SLD, will bear the

responsibility for paying any liability arising out of the misadministration of the

                                            18
Transferred Policies. Further, even assuming, for purposes of argument, that the

Second Amended and Restated Indemnity Reinsurance Agreement did obligate

Jackson to reimburse SLD for any liability imposed in this action, it is clear that

Jackson has a financial interest in the proceeding that is sufficient to satisfy the

minimal burden we have imposed for intervention as of right.

       For these reasons, we conclude that Jackson has established an interest in this

action that is direct, substantial, and legally protectable for the purposes of

intervention under Rule 24(a)(2). Further and relatedly, we conclude that Jackson

has established that its participation in this action would be “compatible with

efficiency and due process.”2 Coal. of Ariz., 100 F.3d at 841.

       b) Impairment of Jackson’s interest if intervention is denied

       “To satisfy [the impairment] element of the intervention test, a would-be

intervenor must show only that impairment of its substantial legal interest is possible

if intervention is denied. This burden is minimal.” WildEarth, 573 F.3d at 995

(quotations omitted). “Such impairment or impediment need not be of a strictly legal

nature.” Coal. of Ariz., 100 F.3d at 844 (quotations omitted). Rather, this court

“may consider any significant legal effect in the applicant’s interest and [is] not

restricted to a rigid res judicata test.” Id. (quotations and brackets omitted). “If an

absentee would be substantially affected in a practical sense by the determination

       2
      The dissent’s suggested approach—requiring Jackson to await a final
judgment in this case and then, perhaps, being subjected to a subsequent suit by
SLD—is counter to the notions of efficiency and due process.

                                            19
made in an action, he should, as a general rule, be entitled to intervene.” WildEarth,

573 F.3d at 995 (quotations omitted).

       Jackson argues that its “legally protectable interest in the Barnes Policy—

including its ability to manage the Policy in its economic interest and its potential

responsibility for liabilities that arise under or relate to the Policy—may be impaired

if [it] is not permitted to intervene.” Aplt. Br. at 19. In other words, Jackson argues,

“the very foundation for the economic benefits that Jackson obtained in acquiring

[from SLD] the block of policies it administers and reinsures are directly threatened

by Barnes’s Complaint.” Id.

       Barnes argues, however, that “[b]ecause Jackson has no direct interest at issue

in this litigation, Jackson cannot establish that this case sufficiently threatens to

impair its interests to warrant intervention.” Aple. Br. at 20. Having already

concluded that Jackson does indeed have a direct interest at issue in this litigation,

we reject Barnes’s argument.

       Moreover, for essentially the reasons outlined above, we conclude that this

case does pose a threat of impairment to Jackson’s interests. To begin with, Jackson

is responsible for administering the Transferred Policies, including Barnes’s Policy,

and Barnes’s claims directly implicate those administrative duties. Specifically,

Barnes’s complaint effectively alleges (although it mentions only SLD) that Jackson

acted improperly in calculating and deducting certain administrative costs with

respect to the Transferred Policies. And, if Barnes were to prevail in this action, that

would impact Jackson both monetarily and practically, in terms of having to modify

                                            20
(or at least deciding whether or not to modify) the manner in which it carries out its

administrative duties with respect to the Transferred Policies.

      Thus, we conclude that Jackson easily satisfies the minimal burden of showing

the potential for impairment of its interests.

      c) Will SLD adequately represent Jackson’s interest?

      “The remaining requisite for intervention is that [Jackson’s] interest not be

adequately represented by the existing parties to the litigation.” WildEarth, 573 F.3d

at 996. Notably, we have also characterized this burden as “minimal.” Id.

(quotations omitted). “The possibility of divergence need not be great in order to

satisfy th[is] burden.” Id. (quotations and brackets omitted). “An intervenor need

only show the possibility of inadequate representation.” Id. (brackets and quotations

omitted; emphasis in original). Only “when the objective of the applicant for

intervention is identical to that of one of the parties” is representation considered to

be adequate.3 Coal. of Ariz., 100 F.3d at 845 (quotations omitted).

      The district court concluded “that Jackson’s interests are already adequately

protected by SLD.” Aplt. App., Vol. 2 at 367. In support, the district court noted

that “Jackson and SLD have identical interests in the litigation: defending the cost of

insurance coverage, as well as the administration of the subject policies, including

      3
        The dissent suggests that “a concrete showing of inadequacy is necessary.”
Dissent at 15. But that assumes, incorrectly, that the interests of Jackson and SLD
are identical. Quite clearly they are not. Under the express terms of the Second
Amended and Restated Indemnity Reinsurance Agreement, only Jackson is
responsible for administering the Transferred Policies and, in turn, for discharging
any liabilities arising out of errors or improprieties in that administration.
                                            21
the Barnes Policy, from 1984 to present.” Id. The district court also noted that

“Jackson has a contractual right to control this litigation.” Id. at 368 (emphasis in

original). The district court noted that “[i]f SLD has prevented Jackson from

exercising a contractual obligation under the reinsurance and administrative services

agreements, Jackson may assert a separate breach of contract claim in an independent

action against SLD, or could possibly assert breach of contract as a defense if SLD is

ultimately held liable in this litigation.” Id.

       We conclude that the district court erred in both regards. To begin with, we

conclude that the interests of Jackson and SLD are not identical. To be sure, Jackson

and SLD are both undoubtedly interested in defending against, and ultimately

defeating, the claims asserted in Barnes’s complaint. From there, however, their

interests clearly diverge. SLD will presumably defend against Barnes’s claims, in

part, by asserting that it was Jackson, and not SLD, that was responsible for

administering the Transferred Policies. Moreover, as Jackson asserts on appeal,

“given that the charges and expenses for the two distinct groups of policies

implicated here have been managed by different insurers, there is no good reason to

assume that Jackson’s and SLD’s interests and defense strategies will coincide in all

respects at every stage in this litigation with respect to what amounts to two different

sub-classes of policies.” Aplt. Br. at 21. “Differences in their pertinent

administrative practices could prompt different factual defenses and strategies, both

as to class certification-related arguments and the merits.” Id. Further, and relatedly,

SLD’s counsel cannot be expected to act in the best interests of both SLD and

                                            22
Jackson. Rather, SLD’s counsel will, and should, act only in the best interests of its

client, SLD. And, indeed, SLD admits as much in its appellate brief, noting that it

“has no incentive to reduce liabilities imposed on Jackson for Jackson’s unique

conduct.”4 SLD Br. at 4. We therefore conclude that Jackson easily satisfies the

“minimal” burden of establishing a “possibility” that its interests will not be

adequately represented by SLD.

      As for Jackson’s purported right to control the litigation, SLD correctly notes

in its appellate brief that, “[b]ecause of the way Barnes pled his Complaint, there is

no simple solution for a single party to control the entire defense of this matter.” Id.

at 6. Jackson and SLD are each entitled to control the defense of the claims asserted

against them: Jackson with respect to the Transferred Policies that it administers, and

SLD with respect to the other policies that it administers. Consequently, and

understandably, SLD is “unwilling to cede unfettered control of the [entire] litigation

to Jackson, because to do so would be to allow Jackson to control the defense of

claims for which SLD (and not Jackson) is liable.” Id. at 4.

      Jackson argues, and correctly so, that the district court erred in concluding that

Jackson made “an unsupported allegation that SLD has withheld authorization for

Jackson to direct the litigation because of a divergence of interests.” Aplt. App., Vol.

2 at 368 (emphasis in original). The district court characterized this as a “sweeping,

      4
         Notably, SLD fully supports Jackson’s position regarding intervention and
asserts that “the district court erred in denying Jackson’s Rule 24 motion to
intervene.” SLD Br. at 1.
                                           23
unsupported claim[].” Id. As a matter of fact, however, Jackson’s assertion is

correct. As noted, SLD acknowledges in its appellate brief that it has refused to

allow Jackson to control the litigation because SLD believes, and reasonably so, that

its own unique interests are at stake, i.e., the fact that SLD was and is responsible for

administering a sub-class of the policies at issue.

       In sum, we conclude that Jackson has “made the minimal showing necessary to

suggest that [SLD]’s representation may be inadequate.” Coal. of Ariz., 100 F.3d at

846.

       d) Conclusion

       Because Jackson has satisfied each of the four requirements for intervention as

of right under Rule 24(a)(2), we conclude that the district court erred in denying

Jackson’s motion to intervene.

                                           III

       We REVERSE the district court’s denial of Jackson’s motion to intervene as

of right and REMAND with directions to grant that motion.

                                           24
18-1487, Barnes v. Security Life

HARTZ, Circuit Judge, dissenting.

       The question before this court is whether Jackson is entitled to intervene as of

right in litigation by Barnes (and other potential class members) against SLD. Jackson

has a contractual duty to indemnify SLD with respect to Barnes’s claims based on SLD

insurance policies administered by Jackson. In holding that Jackson is entitled to

intervene, the majority opinion determines that Jackson has made a sufficient showing

that SLD may not adequately represent Jackson’s interests regarding claims on those

policies. I disagree and respectfully dissent.

       I.     Overview

       The majority opinion ignores the impact of the law of judgments on the

relationship between an indemnitor (such as Jackson) and an indemnitee (such as SLD).

I will discuss the law of judgments at some length below. For the present purpose of

introducing my dissent, an abbreviated version will suffice. In light of the law of

judgments, it would ordinarily be irrational of SLD not to forcefully represent Jackson’s

interests in the Barnes litigation. This is because if SLD does not adequately represent

Jackson’s interests, a judgment against SLD in the Barnes litigation will have no

preclusive effect against Jackson if SLD seeks indemnification from Jackson. To obtain

indemnification, SLD would thus need to prove from scratch in litigation against Jackson

that SLD was truly liable to the Barnes plaintiffs with respect to the insurance policies

administered by Jackson. The risk is obvious. If SLD does a poor job of defending itself
with respect to the Jackson-administered policies (for which it expects to be indemnified

by Jackson), it could find itself stuck with paying the Barnes judgment on its own.

       The only circumstance that could justify SLD in not vigorously representing

Jackson’s interests would be if the two insurers had a true conflict of interest—that is, if

SLD could not represent an interest of Jackson without harming its own interests. Yet

Jackson does not even articulate such a conflict of interest. All it does is speculate that it

and SLD have differed in the way they compute cost-of-insurance expenses for the

insurance policies they administer. It does not suggest in any way that for SLD to defend

the computations by Jackson, it (SLD) would have to undermine its defense of its own

computations. Moreover, Jackson does not even provide any evidence that it and SLD in

fact differ in the way they compute cost-of-insurance expenses, despite the fact that it

would be easy to obtain that information.

       For this court to reverse the district court’s denial of intervention as of right on the

slim (devoid of evidence) record before us is to read the inadequate-representation

requirement out of the rule governing intervention as of right. The majority may believe

that it is no big deal to add an additional party whenever that party thinks it is

advantageous to join the litigation; but that is not the law. Adding a party necessarily

imposes additional burdens on the court and other parties. To do so when there is every

reason to expect (and no reason not to expect) that the interests of the party will be well

represented in its absence hardly increases the efficiency of the judicial process. That is

why the rulemakers included the inadequate-representation requirement. We should

respect that decision.

                                              2
       The majority opinion relies on the general rule that a movant seeking intervention

as of right has a “minimal” burden to show inadequate representation when the movant

has interests different from those of any of the existing parties. To begin with, I question

whether even that “minimal” standard has been satisfied. Jackson’s argument for

intervention amounts to a claim that Jackson and SLD may have calculated (and may still

be calculating) cost-of-insurance expenses in a different manner from one another and

that SLD may not adequately defend Jackson’s method of calculation. But Jackson

provides no reason to believe that its method of calculation differs from SLD’s nor does

it explain why they might differ. This is remarkable given how easy it would be for

Jackson to show the difference, particularly when SLD is supporting Jackson’s motion to

intervene (even going so far as to submit a brief in this court). One can only conclude

that Jackson has failed to make any effort to determine whether its method of calculation

is different from that of SLD. And the obvious inference from that failure is that

Jackson’s desire to intervene has nothing to do with the possibility of different methods

of calculation. Some other motive is at play. Perhaps Jackson’s motive for intervention

(and SLD’s motive for supporting intervention) is simply to enable the two insurers to tag

team the Barnes plaintiffs. In the circumstances presented here, I would say that not even

the “minimal” standard has been met.

       More importantly, however, Jackson has failed to show that it has any interest in

the litigation that is not shared by its indemnitee, SLD. It is important to understand what

is meant by interest in this context. Courts care whether the person moving to intervene

and a party to the litigation have different interests only if that difference could cause the

                                              3
party not to adequately represent the interests of the movant. The relevant interest,

therefore, is an interest in proving or disproving something in the litigation. If the

movant and a party have identical interests in what ultimately is proved or disproved in

the case—that is, they share the same litigation objectives—then it is of no concern to the

court whether they have different interests in some other dimension. This meaning of

interests in the adequate-representation context is of the utmost importance in this case,

because, as already mentioned and as will be more fully explained below, an indemnitee

has compelling reasons to adopt all the litigation objectives of its indemnitor in litigation

against the indemnitee. To do otherwise, is to invite disaster; the indemnitee would risk

having a judgment against it for which it could not obtain indemnification from the

indemnitor. An indemnitee’s failure to adopt the interests of the indemnitor could be

justified only if there was a true conflict of interest between the indemnitor and

indemnitee, not just differing interests that the indemnitee could accommodate without

sacrificing its own interests. But there is zero evidence of such conflict in this case.

Indeed, Jackson does not even allege such a conflict, only a difference of interests.

       The remainder of this opinion will (1) analyze the relevant interests of Jackson at

stake in the Barnes litigation, (2) discuss the relevant law-of-judgments doctrine, (3)

summarize the relevant portions of the law governing intervention as of right,1 and (4)

apply the law to the facts of this case.

1
   I do not address permissive intervention. The majority opinion does not suggest that
the district court abused its discretion in denying permissive intervention.
                                              4
       II.    Jackson’s Interests in the Barnes Litigation

       Barnes’s suit alleges that SLD improperly calculated cost-of-insurance expenses,

thereby reducing the cash value of life-insurance policies issued to Barnes and putative

class members beyond what was contractually authorized. Barnes and some other

putative class members have SLD policies administered by Jackson. A contract between

SLD and Jackson requires Jackson to indemnify SLD for any liabilities arising from

Jackson’s administration of those policies. It also provides that Jackson has a right to

assume and control the defense of such claims against SLD (which, of course, protects

SLD against any claim that it did not adequately defend Jackson’s interests in any suit

against SLD arising out of those policies). The other putative class members, however,

have SLD policies not administered by Jackson. This complicates matters because SLD

reasonably desires to maintain its own representation to defend claims by those policy

owners. Jackson may be willing to defend those claims as well as the claims based on

policies administered by Jackson. But Jackson would have no skin in the game regarding

those policies that it does not administer; if it unsuccessfully defends against claims

based on policies it does not administer, it has no duty to indemnify SLD for any

judgment against SLD on those policies. One can understand why SLD would not wish

to turn over defense of the claims to someone who has no financial interest in a

successful defense of the claims.

       On the other hand, leaving the defense of the Barnes litigation solely to SLD

could, theoretically, also be problematic. Jackson expresses concern that if SLD controls

the defense of all the claims against it under the Barnes litigation, SLD will not

                                              5
adequately represent Jackson’s interests with respect to the claims based on policies

administered by Jackson, for which Jackson has a duty to indemnify SLD. (Perhaps

Jackson has not been aware that SLD would have strong incentives to properly represent

Jackson because of the effect of the law of judgments, which is never referenced in its

briefing.)

       It is therefore necessary to examine carefully what interests Jackson has in the

Barnes litigation. Before identifying those interests, however, it is necessary to clear a

little smoke from the air. The majority opinion makes an incorrect statement about the

nature of the potential liabilities of Jackson and SLD to the Barnes plaintiffs; and even if

it were true, it would be irrelevant to the intervention issue. The opinion says that “it

appears that Jackson, and not SLD, will bear the responsibility for paying any liability

arising out of the misadministration of the [policies administered by Jackson].” Maj. Op.

at 18–19. I read this as saying that SLD would not be liable to the plaintiffs for

miscalculating the cost-of-insurance expenses but that Jackson could be held liable. This

is incorrect. The opinion relies on a contract provision between Jackson and SLD stating

that Jackson “agrees to assume and discharge one hundred percent (100%) of all Extra

Contractual Obligations.” Aplt. App., Vol. I at 242. But the Barnes complaint is not

based on any extracontractual obligations. It alleges only violations of SLD’s contracts

with the plaintiffs.2 So the above-quoted language of the contract between Jackson and

2
  Barnes’s complaint also contains a conversion claim. But the claim is essentially the
same as the contract claim; it alleges only that SLD took funds that, under the insurance
contracts, belong to the insureds.
                                              6
SLD does not even apply on its face. In addition, the plaintiffs entered into contracts

with SLD, not Jackson. If the contracts were, as alleged in the Barnes complaint,

administered in violation of the contract, liability lies with the contractual partner of the

plaintiffs, which is SLD, not Jackson. Further, I do not see how a contract between

Jackson and SLD could relieve SLD of its contractual obligations (or any other

obligations for that matter) to policyholders.

       In any event, even if the statement in the majority opinion were true, it would not

present a reason why Jackson should be allowed to, or even want to, intervene. If the

Barnes court determined that liability rests with Jackson rather than SLD, Jackson would

have nothing to fear. In that circumstance, SLD would be exonerated and would not be

seeking any indemnification from Jackson. And the determination that liability lies with

Jackson could have no effect on Jackson. The majority opinion does not explain how

liability could be imposed directly on Jackson when it is not a defendant in the Barnes

litigation. Thus, Jackson (if it is not permitted to intervene) would hardly suffer if the

Barnes litigation determines that it is Jackson, rather than SLD, that is liable to the

plaintiffs. The fact that Jackson, rather than SLD, might be the insurer liable to the

Barnes plaintiffs would not be a reason for Jackson to wish to intervene; on the contrary,

it would be a reason for Jackson to stay out of the litigation to avoid an adverse judgment

against it.

                                                 7
       Now to Jackson’s actual interests. As I understand the briefs, Jackson has

expressed concerns about two possible rulings against SLD. The first is that Barnes will

obtain a judgment that SLD has miscomputed the cash value of the class members’

insurance policies by deducting too much in cost-of-insurance expenses over the years. (I

suspect that for many, perhaps most, policyholders the judgment will require nothing

more than changes in bookkeeping entries.3) Jackson apparently assumes that if such a

judgment is entered against SLD, it will be required to indemnify SLD for any loss

sustained on the policies that Jackson administered.

       The second possible ruling that Jackson is worried about is a declaratory judgment

and injunction requiring a change for the future in how the cost-of-insurance expenses are

calculated. As far as I can tell, this is essentially the same claim as the one for past

excessive deductions for cost-of-insurance expenses; it just requires that the corrective

actions be continued in future years. Although Jackson characterizes such a judgment as

affecting its administration of the policies, the judgment would not, for example, tell

Jackson what its hiring or compensation practices would have to be. The plaintiffs have

no particular interest in the administrative practices of SLD (or Jackson). They are

interested in the bottom line—money, the cash value of their policies. The first

paragraph of the Barnes complaint states that it is “a class action for breach of contract

3
  There will, however, be occasions on which the cash-value entry has already had
financial consequences. For example, (1) if the policyholder died, the beneficiaries
should have received the policy death benefit plus the cash value of the policy; and (2) if
the cash value has disappeared because of deductions for improper expenses, the
policyholder may have had to make premium payments that should have come out of the
cash value.
                                               8
and conversion to recover amounts that [SLD] charged [Barnes] and the proposed class

in excess of the amounts authorized by the express terms of their life insurance policies.”

Aplt. App. at 11 (emphasis added). The judgment would be purely financial in nature,

simply ordering that certain expenses not be deducted from the cash value of the policies

in the future. A Barnes judgment could require SLD to credit the insured with a greater

policy cash value. But it could not in itself require Jackson, who is not a party, to do

anything. In particular, it could not require Jackson to pay out any more money than it

believes is due or even to change its bookkeeping practices. And SLD could not compel

Jackson to do anything different without either showing that Jackson is bound by the

Barnes judgment or proving in litigation against Jackson that the judgment against SLD

was correct.4

       In short, Jackson’s only interest in the Barnes litigation is in its capacity as an

indemnitor of SLD. Its concern is that if judgment is entered against SLD, requiring SLD

to credit and pay money to the Barnes plaintiffs, SLD will make Jackson assume the duty

to credit and pay that money to the plaintiffs. Although the majority opinion insists that

Jackson has an interest as an administrator, not just as an indemnitor, the opinion does

not identify anything that a Barnes judgment could ultimately compel Jackson to do

except credit and pay money. Moreover, the opinion does not explain why the label for

4
  The majority opinion interprets the agreement between SLD and Jackson as permitting
Jackson to compute the cost-of-insurance expenses without obtaining approval from
SLD.

                                               9
Jackson’s duties (administrator, as opposed to indemnitor) makes any difference in the

analysis of the ultimate issue—whether SLD (because of the law of judgments) has the

same litigation objectives as Jackson and is therefore presumed to adequately represent

Jackson’s interests.

       Hence it is necessary to examine the effects on Jackson of a potential judgment

against SLD in the Barnes litigation. This is a matter addressed by the law of judgments.

       III.    Indemnitees Under the Law of Judgments

       The Restatement (Second) of Judgments (the Restatement) § 57 (1982), entitled

“Effect on Indemnitor of Judgment Against Indemnitee,” addresses when an indemnitor

(such as Jackson) is bound by a judgment against the indemnitee (such as SLD). (Section

58, which addresses the same issue when the indemnitor has an independent duty to

defend the indemnitee, is not applicable here.) As it turns out, § 57 provides Jackson

with the protection it seeks in this case—it cannot be bound as an indemnitor to SLD

unless either (1) SLD adequately represents Jackson’s interests in the Barnes litigation or

(2) it has an opportunity to defend against the Barnes allegations (by challenging those

allegations in a separate suit against it by SLD for indemnification). The blackletter of §

57 states in full:

       (1) Except as stated in Subsection (2), when one person (the indemnitor)
       has an obligation to indemnify another (the indemnitee) for a liability of the
       indemnitee to a third person, and an action is brought by the injured person
       against the indemnitee and the indemnitor is given reasonable notice of the
       action and an opportunity to assume or participate in its defense, a
       judgment for the injured person has the following effects on the indemnitor
       in a subsequent action by the indemnitee for indemnification:

                                            10
              (a) The indemnitor is estopped from disputing the existence and
              extent of the indemnitee’s liability to the injured person; and
              (b) The indemnitor is precluded from relitigating issues determined
              in the action against the indemnitee if:
                     (i) the indemnitor defended the action against the indemnitee;
                     or
                     (ii) the indemnitee defended the action with due diligence and
                     reasonable prudence.
       (2) If there is a conflict of interest between the indemnitee and the
       indemnitor regarding the injured person’s claim against the indemnitee, so
       that the indemnitor could not properly have assumed the defense of the
       indemnitee, a judgment for the injured person precludes the indemnitor
       only with respect to issues determined in that action as to which:
              (a) there was no conflict of interest between the indemnitee and the
              indemnitor; and
              (b) the indemnitee conducted a defense with due diligence and
              reasonable prudence.
       (3) A “conflict of interest” for purposes of this Section exists when the
       injured person’s claim against the indemnitee is such that it could be
       sustained on different grounds, one of which is within the scope of the
       indemnitor’s obligation to indemnify and another of which is not.

(emphasis added).

       Thus, if SLD defends the suit brought against it by Barnes, then Jackson may be

“estopped from disputing the existence and extent of [Jackson’s] liability to [the Barnes

plaintiffs]” and may be “precluded from relitigating issues determined in the action

against [SLD],” but only if SLD “defended the [Barnes] action with due diligence and

reasonable prudence.” Restatement § 57. (If SLD does not adequately defend Jackson’s

interests, it could still obtain indemnification from Jackson, but it would have to prove

from scratch that it was liable to Barnes in the amount of the judgment.) Also, if there is

a conflict of interest between Jackson and SLD regarding the Barnes claims against SLD,

                                             11
then Jackson can be bound “only with respect to issues determined in [the Barnes

litigation] as to which . . . there was no conflict of interest between [SLD] and [Jackson].”

       The comments to this Restatement section express the rule in terms of adequate

representation. Comment a to § 57 explains, “[I]f the indemnitor does not assume control

of the defense, he can be bound by the determinations in the action only to the extent the

indemnitee can be said to have adequately represented him in defending the action.”

(emphasis added). Comment c addresses conflicts of interest: “Accordingly, when the

claim against the indemnitee is one as to which he and the indemnitor have a conflict of

interest, the indemnitor is not estopped in a subsequent action on the indemnity obligation

to dispute the existence or extent of the indemnitee’s liability to the injured person.”

Later the comment explains:

       When, because of conflict of interest between the indemnitee and
       indemnitor, the indemnitor cannot properly take over the defense of the
       indemnitee, the situation is one of a justified refusal by the indemnitor to
       defend the action. If the indemnitee defaults or otherwise does not conduct
       a reasonably proper defense of the action, the judgment has no effects on
       the indemnitor because it cannot be said that the indemnitee adequately
       represented him.

(emphasis added).

       In other words, if SLD has a conflict of interest with Jackson or otherwise does not

adequately represent Jackson’s interests in the Barnes litigation, then Jackson is not

bound by a judgment in the Barnes litigation as far as its indemnification of SLD is

concerned.

       Given this law, it is apparent that a defendant-indemnitee has powerful reasons for

vigorously representing the interests of the indemnitor when it is sued if it wishes

                                             12
ultimately to be indemnified by the indemnitor. If the defendant adequately defends the

plaintiff’s claims against it but nevertheless loses, the indemnitor cannot later challenge

the existence and extent of the defendant’s liability to the plaintiff. To obtain

indemnification, the defendant need only show that the indemnification contract

encompasses the liability incurred. If, on the other hand, the defendant does not

adequately defend the plaintiff’s claim, it can be whipsawed. It will be liable on the

judgment obtained by the plaintiff against it; but in seeking indemnification from the

indemnitor, it will need to prove its own case that it was in fact liable to the plaintiff. It

faces the possibility that the plaintiff will succeed in proving liability against it but that it

will fail to prove its own liability in seeking indemnification against the indemnitor. To

avoid this whipsaw, the indemnitee will, absent special circumstances, align its interests

with those of its indemnitor.

       IV.     Intervention/Adequate Representation

       Fed. R. Civ. P. 24(a) governs whether a movant is entitled to intervene as of right

in ongoing litigation. The movant must make certain showings. Among them is that its

interests will not be adequately represented by existing parties. See Fed. R. Civ. P.

24(a)(2); Nat. Res. Def. Council, Inc. v. U.S. Nuclear Regulatory Comm’n, 578 F.2d

1341, 1345 (10th Cir. 1978) (burden is on movant to show inadequate representation).

The Supreme Court and this court have said that this is a minimal burden of showing that

the representation of its interests “may be” inadequate. Trbovich v. United Mine Workers

of Am., 404 U.S. 528, 538 n.10 (1972) (citing 3B J. Moore, Federal Practice 24.09—1 [4]

(1969)); Nat. Res. Def. Council, 578 F.2d at 1345. But the requirement “may not be

                                               13
ignored entirely.” 6 James Wm. Moore et al., Moore’s Federal Practice § 24.03[4][a]

(3d ed. 2011) (“For example, a difference between the existing parties and the movants to

intervene as to the motives for litigation does not establish inadequacy of representation

in the litigation.”); see Kane Cty., Utah v. United States, 928 F.3d 877, 892 (10th Cir.

2019) (“[R]epresentation is not inadequate simply because the applicant and the

representative disagree regarding the facts or law of the case.” (internal quotation marks

omitted)). After the Civil Rules Committee liberalized the standard for intervention as of

right in 1966, the summary of the revisions by the Reporter for the Committee spoke in

terms of “thrash[ing] out” whether representation would be adequate in the particular

case. Benjamin Kaplan, Continuing Work of the Civil Committee: 1966 Amendments of

the Federal Rules of Civil Procedure (I), 81 Harv. L. Rev. 356, 402 (1967). Thrashing

out, I would think, requires a more vigorous examination by the court than mere passive

acceptance of assertions unsupported by concrete evidence.

       The movant’s burden cannot be satisfied by mere speculation. See Students for

Fair Admissions, Inc. v. President & Fellows of Harvard College, 807 F.3d 472, 475 (1st

Cir. 2015) (the potential intervenors—a group of current and prospective Harvard

students—had to produce “something more than speculation as to the purported

inadequacy of representation” by Harvard College in a suit challenging the college’s

consideration of race in admissions decisions, and the students failed to meet this

minimal burden because they had adopted “four-square” Harvard’s goal of defending its

admission policies (internal quotation marks omitted)).

                                             14
       The burden of showing the likelihood of inadequacy of representation is

particularly important when, as in this case, a party and the prospective intervenor have

the same objectives. In that circumstance, we require more than a showing that

representation may be inadequate; a concrete showing of inadequacy is necessary. See,

e.g., Tri-State Generation & Transmission Ass’n, Inc. v. New Mexico Pub. Regulation

Comm’n, 787 F.3d 1068, 1072–73 (10th Cir. 2015) (applying a presumption of adequate

representation, which can be overcome only by a “concrete showing,” when the

prospective intervenor, a member of the plaintiff regional electric distribution

cooperative, shared the same litigation objective as the government defendant:

preserving the defendant’s jurisdiction over the cooperatives’ wholesale electricity rates);

City of Stilwell, Okl. v. Ozarks Rural Elec. Co-op. Corp., 79 F.3d 1038, 1042–43 (10th

Cir. 1996) (requiring a cooperative that supplies electric power to member distributors to

make a concrete showing of inadequate representation by its member in order to

intervene in a condemnation action brought against the member by the city); Bottoms v.

Dresser Indus., Inc., 797 F.2d 869, 872 (10th Cir. 1986) (applying a presumption of

adequate representation where the prospective intervenor, although claiming that the

plaintiff owed him a 50% interest in a patent, nonetheless shared the plaintiff’s goal of

obtaining the greatest possible recovery for defendant’s alleged breach of the patent

licensing agreement). Other circuits agree. See, e.g, Stuart v. Huff, 706 F.3d 345, 350–

52 (4th Cir. 2013) (applying a presumption of adequate representation, which could be

overcome only by a strong showing, because the government agency in the suit and the

would-be intervenors both sought to have an abortion-related statute upheld as

                                             15
constitutional); Maine v. Dir., U.S. Fish & Wildlife Serv., 262 F.3d 13, 19 (1st Cir. 2001)

(employing an “assumption, subject to evidence to the contrary,” that federal agencies

would adequately defend their designation of an endangered species against a challenge

brought by Maine and several business groups; district court did not abuse its discretion

in concluding that proposed intervenors did not give adequate explanation of why their

interests would not be adequately represented); United States v. Hooker Chems. &

Plastics, 749 F.2d 968, 984–90 (2d Cir. 1975) (environmental groups had to make a

strong affirmative showing of inadequate representation by the United States government

in order to intervene in the government’s action against a chemical-and-plastics

corporation for illegal disposal of chemical waste).

       V.     Resolution of this Dispute

       Applying the above legal principles to the present case, I do not see how one could

say that Jackson has made an acceptable showing that SLD would not adequately

represent its interests in the Barnes litigation. To begin with, SLD has all the litigation

objectives that Jackson would have. Because of the law of judgments, it will be in the

interest of SLD to prove everything Jackson would want to prove and to disapprove

everything Jackson would want to disapprove. As is true for any defendant-indemnitee,

SLD has a compelling incentive to vigorously defend claims for which it may seek

indemnification. It is very much in SLD’s interest to avoid any challenge by Jackson that

it has not adequately represented Jackson’s interests, because a successful challenge

could defeat an indemnification claim against Jackson. SLD would hardly want to be in

the position of having to prove (in an indemnification suit against it by Jackson) that it

                                             16
was liable to Barnes on the Jackson policies in order to obtain indemnification from

Jackson. Given this shared litigation objective, our precedents presume that SLD will

adequately represent Jackson’s interests, yet Jackson has presented no concrete evidence

to overcome the presumption. To be sure, as pointed out by the majority opinion, SLD’s

brief on appeal asserts that it “has no incentive to reduce liabilities imposed on Jackson

for Jackson’s unique conduct.” SLD Br. at 5. But SLD never made that remarkable

assertion before the district court denied intervention; and the assertion could hardly have

withstood cross-examination based on the law of judgments.

       This is not to say that there are no occasions in which a defendant-indemnitee

could rationally decide to forgo arguments or evidence that could defeat the indemnified

claim. For example, the arguments or evidence might undermine the defense of a claim

that would not be covered by an indemnification agreement. If the indemnification is

only for negligence, and not for willful misconduct, the indemnitee could rationally

decide not to argue its own willfulness, even though proof of willfulness would be quite

helpful to the indemnitor.

       In this case, however, there is no reason to think that a defense of Jackson’s

calculations of cost-of-insurance expenses would contradict or undermine SLD’s defense

of its own calculations of those expenses. It would be quite easy for Jackson to compare

notes with SLD (which supports Jackson’s intervention) to determine whether their

calculations are inconsistent with one another. (It would not be enough that the two

companies simply have different ways of calculating cost-of-insurance expenses. The

question is whether defending Jackson’s calculations would make it harder to defend

                                             17
SLD’s). Yet Jackson has not even gone so far as to assert that there are such

contradictions, much less provide supporting evidence. (Nor, for that matter, has SLD.)

In fact, Jackson has even questioned whether the calculations by Jackson and SLD

differed in any respect. See Aplt. Reply Br. at 10 (“Barnes . . . fails even to allege that

[cost-of-insurance] rates were ever changed [after Jackson assumed administration of

SLD policies].”).

       With absolutely no evidence to the contrary, it appears that the interests of SLD

and Jackson in prevailing against Barnes on the Jackson policies are fully congruent.

Hence, Jackson must make a strong showing that SLD will not represent its interests.

This case fits well within the precedents holding that a movant with the same litigation

objectives as a party has not made an acceptable showing that its interests will not be

adequately represented. It would be offensive to the adequate-representation requirement

of Fed. R. Civ. P. 24(a) to permit Jackson to intervene when it has not attempted even the

easily-made showing that it has departed from SLD’s prior method of calculating cost-of-

insurance expenses, much less provided evidence of divergent litigation objectives.

       It is important to keep in mind that Jackson’s interest in intervention is not of great

moment. To an extent, Jackson would be better off if it did not intervene.

Nonintervention would give it two bites at the apple. First, SLD may successfully defend

the Barnes lawsuit. In that event, Jackson has no exposure. Second, if SLD is held liable

with respect to the Jackson policies, Jackson can argue against indemnification on the

grounds that SLD did not adequately represent its interests and that Barnes’s claims with

respect to the Jackson policies are not meritorious. Perhaps this is why there appear to be

                                              18
no federal-court decisions holding that an indemnitor is entitled to intervene as of right as

a party to dispute the plaintiff’s claims against the indemnitee. Neither Jackson nor the

majority opinion cite any such cases, nor am I aware of any.

       Barnes argues that the real reason why Jackson and SLD want Jackson to

intervene is so that they can double-team Barnes. I have no opinion on that allegation.

But the very possibility of improper motives should make us cautious about ignoring the

requirements of Rule 24(a).

       I would affirm the decision of the district court denying intervention. The

affirmance would, however, be without prejudice to allowing intervention if evidence of

a true conflict of interest were later shown.

                                                19