Court Opinion

ID: 6347797
Source: CourtListenerOpinion
Date Created: 2022-06-08 00:00:20.105204+00
Date Added: 2024-06-11T14:57:00.407780
License: Public Domain

Case: 22-20054     Document: 00516347532         Page: 1     Date Filed: 06/07/2022

           United States Court of Appeals
                for the Fifth Circuit                              United States Court of Appeals
                                                                            Fifth Circuit

                                                                          FILED
                                                                       June 7, 2022
                                  No. 22-20054
                                                                     Lyle W. Cayce
                                                                          Clerk
   Joel Field,

                                                             Plaintiff—Appellee,

                                       versus

   Anadarko Petroleum Corporation,

                                                           Defendant—Appellee,

                                       versus

   Rusco Operating, L.L.C.; Planning Thru Completion,
   L.L.C.,

                                                                       Appellants.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:20-CV-00575

   Before Willett, Engelhardt, and Wilson, Circuit Judges.
   Cory T. Wilson, Circuit Judge:
          A movant attempting to intervene in an action must show that it has a
   sufficient interest in the litigation to do so. Our would-be intervenors today
   are two companies that offer an online application (an “app” in today’s
Case: 22-20054         Document: 00516347532              Page: 2       Date Filed: 06/07/2022

                                          No. 22-20054

   parlance) that connects oil field workers looking for work with oil-and-gas
   operators looking for workers. The companies seek to intervene here because
   some app-using workers have opted-in as plaintiffs alleging claims for unpaid
   overtime, under the Fair Labor Standards Act, against an operator that used
   the app to hire them. The app companies’ asserted interests in the litigation
   relate to arbitration agreements between them and the workers, their belief
   that a win by the workers would destroy their business model, and a demand
   for indemnity allegedly made by the defendant operator for liability it might
   incur as to plaintiffs’ claims. The district court found these interests
   insufficient to justify intervention and denied leave. Because we conclude
   that the arbitration agreements at issue give rise to a sufficient interest in this
   action to support the app companies’ intervention, we reverse the judgment
   of the district court and remand for further proceedings.
                                                I.
           Rusco Operating, L.L.C. and Planning Thru Completion, L.L.C. (the
   Intervenors) developed an app that connects oilfield workers with oil-and-gas
   operators. Using the app, individuals find work, and operators find the
   skilled workers they need for their oilfield endeavors. Before would-be
   workers can use the app, the Intervenors require that they execute
   agreements in which users expressly identify themselves as “independent
   professionals,” and agree to arbitrate “every claim, controversy, allegation,
   or dispute arising out of or relating in any way to [a] Project, the Project
   Details, or this Agreement[.]” 1 These agreements further provide that they

           1
             The contracts define “Project” this way: “From time to time, Companies
   [operators] will post proposed projects via the [app], setting for the nature of the services
   required.” They describe “Project Details” as “desired skills, location, date, start time (as
   applicable), project length (as applicable), proposed pay rate, invoicing terms and any
   required certifications.”

                                                2
Case: 22-20054     Document: 00516347532           Page: 3    Date Filed: 06/07/2022

                                    No. 22-20054

   encompass disputes between the workers, the Intervenors, and “intended
   third party beneficiar[ies] of [the] Dispute Resolution Section[,]” including
   operators that hire “independent professionals” using the app, like
   defendant Anadarko Petroleum Corporation.
         In February 2020, plaintiff Joel Field filed this collective action against
   Anadarko alleging violations of the Fair Labor Standards Act (FLSA), 29
   U.S.C. § 201. Specifically, Field alleged that Anadarko misclassified him and
   others as independent contractors rather than employees and did not pay
   them for overtime as the FLSA requires. Other individual plaintiffs have
   since opted-in to the collective action, including some who connected with
   Anadarko via the Intervenors’ app.
          The Intervenors were served with subpoenas in December 2020, as
   Field sought to discover and contact potential plaintiffs. After workers who
   had used their app opted-in to the collective action, the Intervenors filed a
   motion to intervene of right and, alternatively, for permissive intervention.
   In the motion, the Intervenors asserted that they should be allowed to
   intervene in this case because they have an interest in enforcing their
   arbitration agreements with the plaintiffs and in defending their business
   model, which rests on classifying their users as independent contractors. A
   magistrate judge held a hearing on the motion and recommended that the
   request to intervene be denied. The magistrate judge determined that the
   Intervenors had failed to demonstrate any of the elements necessary for
   intervention of right (beyond timeliness of their motion) and that the
   Intervenors had not offered any compelling argument for permissive
   intervention.    The district court adopted the magistrate judge’s
   recommendations in a brief order over the Intervenors’ objections. The
   Intervenors now appeal.

                                          3
Case: 22-20054         Document: 00516347532              Page: 4       Date Filed: 06/07/2022

                                          No. 22-20054

                                               II.
           We have jurisdiction over a denial of a motion to intervene of right
   because it is an appealable final order. Edwards v. City of Hous., 78 F.3d 983,
   992 (5th Cir. 1996) (citing Ceres Gulf v. Cooper, 957 F.2d 1199, 1202 n.5 (5th
   Cir. 1992); Piambino v. Bailey, 610 F.2d 1306, 1320 (5th Cir. 1980)). We
   review such a denial de novo. Rotstain v. Mendez, 986 F.3d 931, 936 (5th Cir.
   2021). 2
           To intervene of right under Federal Rule of Civil Procedure 24(a), a
   putative intervenor must show that “(1) the application . . . [was] timely”;
   (2) that it has “an interest relating to the property or transaction which is the
   subject of the action”; (3) that it is “so situated that the disposition of the
   action may, as a practical matter, impair or impede [its] ability to protect that
   interest”; and, finally, (4) that its interest is “inadequately represented by
   the existing parties to the suit.” DeOtte v. State, 20 F.4th 1055, 1067 (5th Cir.
   2021) (quoting Wal-Mart Stores, Inc. v. Tex. Alcoholic Beverage Comm’n, 834
   F.3d 562, 565 (5th Cir. 2016)).
                                               A.
           “‘Timeliness is to be determined from all the circumstances’ and ‘the
   point to which [a] suit has progressed is . . . not solely dispositive[.]”
   Cameron v. EMW Women’s Surgical Ctr., P.S.C., 142 S. Ct. 1002, 1012 (2022)
   (quoting NAACP v. New York, 413 U.S. 345, 365–66 (1973)). Generally, filing

           2
             We have “‘provisional jurisdiction’ to review a district court’s order denying
   permissive intervention.” Turner v. Cincinnati Ins. Co., 9 F.4th 300, 308 (5th Cir. 2021)
   (internal quotation marks omitted) (quoting Rotstain, 986 F.3d at 942). This means that
   we review a denial of a motion for permissive intervention for abuse of discretion and, if we
   find the district court did not abuse its discretion in denying the intervention, we “must
   dismiss the appeal for lack of jurisdiction.” Id. (internal quotation marks omitted) (quoting
   Rotstain, 986 F.3d at 942). Because we conclude that the Intervenors may properly
   intervene of right, we do not address their alternative request for permissive intervention.

                                                4
Case: 22-20054      Document: 00516347532          Page: 5    Date Filed: 06/07/2022

                                    No. 22-20054

   a motion to intervene as soon as an intervenor realizes its interests are not
   adequately protected is sufficient to meet the timeliness requirement. Id.
   (citing United Airlines, Inc. v. McDonald, 432 U.S. 385, 394 (1977)). A district
   court’s determination of whether a motion to intervene is timely “is
   generally reviewed for abuse of discretion[.]” Sierra Club v. Espy, 18 F.3d
   1202, 1250 n.2 (5th Cir. 1994) (citing Jones v. Caddo Parish Sch. Bd., 735 F.2d
   923, 926 (5th Cir. 1984)).
          Here, the magistrate judge and the district court determined that the
   Intervenors timely filed their motion to intervene on December 17, 2021.
   The Intervenors attached to their motion a declaration asserting that they
   first learned on December 2, 2021, that eleven individuals, hired by Anadarko
   using their app, had opted in as plaintiffs on September 17, 2021. Field does
   not challenge the veracity of this statement. Instead, Field asserts that the
   Intervenors should have been aware of the potential impact on their interests
   as soon as the class-action lawsuit was filed, or at least by the time they were
   served with third party subpoenas in December of 2020.
          Field argues the wrong standard. The question “is ‘not when [an
   intervenor] knew or should have known that [its] interests would be adversely
   affected but, instead, when [it] knew that it had an interest in the case.’” St.
   Bernard Par. v. Lafarge N. Am., Inc., 914 F.3d 969, 974 (5th Cir. 2019)
   (quoting Sommers v. Bank of Am., N.A., 835 F.3d 509, 513 (5th Cir. 2016)).
   The Intervenors’ alleged interests (considered substantively infra) of
   enforcing arbitration agreements with the plaintiffs, protecting their business
   model, and, to the extent timely raised, indemnity obligations as to Anadarko,
   only materialized when individuals with whom the Intervenors had actually
   contracted became party to the lawsuit. That was September 17, 2021. Field
   does not dispute this timeline. Field also does not dispute the district court’s
   finding that the Intervenors did not learn of these plaintiffs until December
   2, 2021, and then moved to intervene just over two weeks later. Therefore,

                                          5
Case: 22-20054         Document: 00516347532                Page: 6        Date Filed: 06/07/2022

                                           No. 22-20054

   Field has failed to demonstrate that the district court abused its discretion in
   finding the Intervenors’ motion to have been timely filed.
                                                 B.
           The second element, an interest in the action, is met when an
   intervenor shows a “direct, substantial, legally protectable interest in the
   proceedings.” DeOtte, 20 F.4th at 1068 (internal quotation marks omitted)
   (quoting Edwards v. City of Hous., 78 F.3d 983, 1004 (5th Cir. 1996)).
   Essentially, “[w]hat is important is ‘whether the intervenor has a stake in the
   matter that goes beyond a generalized preference that the case come out a
   certain way[.]’” Id. (quoting Texas v. United States, 805 F.3d 653, 657 (5th
   Cir. 2015)). “Property interests are the quintessential rights Rule 24(a)
   protects,” but they are not the only interests that may support intervention.
   La Union del Pueblo Entero v. Abbott, 29 F.4th 299, 305 (5th Cir. 2022).
   However, a purported interest “is insufficiently direct when it requires
   vindication in a separate legal action or the intervenor is too removed from
   the dispute.” DeOtte, 20 F.4th at 1068 (internal quotation marks omitted)
   (citing Wal-Mart Stores, 834 F.3d at 568). An interest that is “purely
   ‘ideological, economic, or precedential’” is also insufficient. La Union del
   Pueblo Entero, 29 F.4th at 305 (quoting Texas, 805 F.3d at 657).
           The Intervenors posit three interests in this case that they contend
   warrant intervention: enforcement of their arbitration agreements with the
   plaintiffs; the impact of this case on their business model; and, perhaps
   belatedly, 3 potential indemnity obligations to Anadarko.                      We begin by

           3
              The Intervenors may have forfeited their argument related to possible indemnity,
   at least based on the record before us, because it is not clear they raised this issue until they
   filed objections to the magistrate judge’s report and recommendation to deny their motion
   to intervene. See Cupit v. Whitley, 28 F.3d 532, 535 (5th Cir. 1994) (“By waiting until after
   the magistrate court had issued its findings and recommendations . . . Respondent has
   waived [the arguments].”). But we need not delve more deeply into this question given

                                                  6
Case: 22-20054        Document: 00516347532              Page: 7      Date Filed: 06/07/2022

                                         No. 22-20054

   examining the Intervenors’ contractual rights and obligations. We end there
   too, as we conclude Intervenors’ arbitration agreements with the plaintiffs
   give the Intervenors “a stake in the matter” sufficient to warrant
   intervention. DeOtte, 20 F.4th at 1068 (internal quotation marks and citation
   omitted). And, at least to some degree, the Intervenors’ other proffered
   grounds dovetail with their contractual interest.
           The Intervenors entered contracts with both the plaintiffs who used
   their app and Anadarko. Those agreements define a choreographed set of
   relationships between app-using workers, the Intervenors, and Anadarko,
   well beyond simple check-the-box boilerplate terms for using the
   Intervenors’ app. For instance, while their work was assigned by Anadarko,
   the workers were actually compensated by the Intervenors. The contracts
   with individual plaintiffs stipulate, among other things, that the plaintiffs are
   “independent professionals.” The contracts also provide that any disputes
   between the plaintiffs and the Intervenors, or between the plaintiffs and
   “intended third party beneficiar[ies],” including operators like Anadarko
   that use the app to hire workers for “Projects,” are subject to binding
   arbitration. The contract with Anadarko obligates the Intervenors to provide
   independent contractors to Anadarko and allows Anadarko to hold the
   Intervenors liable if they misclassify individuals as independent contractors. 4

   that the Intervenors’ arbitration agreements with the plaintiffs constitute a sufficient
   interest to justify intervention.
           4
             The Master Services Agreement (MSA) between the Intervenors and Anadarko
   addresses the relationship between workers referred by the Intervenors’ app and Anadarko
   in some detail. As examples, the MSA provides that a worker hired through the app “shall
   be an independent contractor with respect to all Services,” and shall have no right “to any
   pension or welfare plans, including, without limitation, savings, retirement, medical,
   dental, insurance, or vacation plans sponsored by [Anadarko].” Workers also must agree
   “to comply with all applicable state and federal payroll tax withholding requirements”
   themselves. Because the Intervenors do not invoke their agreement with Anadarko as a

                                               7
Case: 22-20054        Document: 00516347532              Page: 8      Date Filed: 06/07/2022

                                         No. 22-20054

           The plaintiffs thus represented in their contracts with the Intervenors
   that they were “independent professionals”—somewhat in tension with the
   plaintiffs’ current litigation position that they were really Anadarko’s
   employees. More importantly, the plaintiffs agreed to arbitrate “every claim,
   controversy, allegation, or dispute arising out of or relating in any way to”
   not only their relationship with the Intervenors, but also their resulting work
   placements with Anadarko. And the contracts expressly encompass third
   party beneficiaries like Anadarko.              Thus the Intervenors’ interest in
   enforcing their arbitration agreements, particularly given the interrelatedness
   of the parties’ contractual relationships and the plaintiffs’ claims, is “a stake
   in the matter that goes beyond a generalized preference that the case come
   out a certain way[.]” DeOtte, 20 F.4th at 1068.
                                              C.
           Regarding the third element, “[t]hough the impairment must be
   ‘practical’ and not merely ‘theoretical,’ the [intervenor] need only show that
   if [it] cannot intervene, there is a possibility that [its] interest could be
   impaired or impeded.” La Union del Pueblo Entero, 29 F.4th at 307 (citing
   Brumfield v. Dodd, 749 F.3d 339, 344–45 (5th Cir. 2014)).
           The Intervenors more easily demonstrate this element. To date in the
   litigation, Anadarko has not taken any action to compel arbitration against
   any of the plaintiffs who contracted with the Intervenors. Indeed, as a non-
   signatory to the agreements, there is at least some question as to whether
   Anadarko could invoke the Intervenors’ arbitration agreements with the
   plaintiffs. See Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 921
   F.3d 522, 530–31 (5th Cir. 2019) (listing some situations where non-parties

   basis for intervening, other than the contract’s indemnity provisions, see supra n.3, we do
   not address that contract in detail here.

                                               8
Case: 22-20054      Document: 00516347532           Page: 9     Date Filed: 06/07/2022

                                     No. 22-20054

   may enforce arbitration agreements, i.e., through “assumption, piercing the
   corporate veil, alter ego, incorporation by reference, third-party beneficiary
   theories, waiver and estoppel” (quoting Arthur Andersen LLP v. Carlisle, 556
   U.S. 624, 631 (2009))). But as long as that question remains a hypothetical
   one, the Intervenors’ interest in enforcing their arbitration agreements with
   the plaintiffs is, as a practical matter, at risk of being lost as this litigation
   proceeds.
          More broadly, while Anadarko’s incentives to vindicate the other
   terms of the plaintiffs’ contracts may be somewhat aligned with those of the
   Intervenors, the respective motivations of Anadarko and the Intervenors are
   not so compatible to ensure that the Intervenors’ contracts are not “impaired
   or impeded” during the course of the litigation. La Union del Pueblo Entero,
   29 F.4th at 307 (citation omitted). This is particularly so given that the
   plaintiffs seemingly are essentially flaunting the terms of the contracts they
   entered with the Intervenors, including their agreement to arbitrate, by
   opting-in to this action and alleging that they were really Anadarko’s
   employees all along.
                                          D.
          Finally, the fourth element, inadequate representation, requires that
   the would-be intervenors at least establish “adversity of interest, collusion,
   or nonfeasance on the part of the existing party” that “has the same ultimate
   objective” for the lawsuit as the party seeking to intervene. Id. at 308
   (internal quotation marks omitted) (quoting Edwards, 78 F.3d at 1005; Texas,
   805 F.3d at 661–62). The Intervenors substantiate “adversity of interest”
   between Anadarko and them sufficient to merit intervention. Id. (citations
   omitted). Anadarko has thus far not pressed the plaintiffs’ agreement to
   arbitrate their disputes. No one else in this action will, to be sure. By
   contrast, Anadarko has given every indication that it intends to exercise the

                                           9
Case: 22-20054     Document: 00516347532            Page: 10   Date Filed: 06/07/2022

                                     No. 22-20054

   rights it has under its own contract with the Intervenors, including the
   possibility of seeking indemnity against them for liability as to the plaintiffs’
   claims. That in itself demonstrates that Anadarko’s and the Intervenors’
   respective interests are adverse for the purposes of Rule 24(a)(2).
                                         III.
          Rusco Operating, L.L.C. and Planning Thru Completion, L.L.C.
   timely moved to intervene in this action. They have shown an adequate
   interest in the subject of this lawsuit by virtue of their contracts with the
   parties, and “disposing of the action may as a practical matter impair or
   impede the [Intervenors’] ability to protect [their] interest.” Fed. R. Civ.
   P. 24(a)(2). By contrast, no other party in this action will adequately
   represent the Intervenors’ interest. They should therefore be allowed to
   intervene of right, and the district court erred in denying their motion to do
   so. We REVERSE the district court’s ruling and REMAND for further
   proceedings consistent with this opinion.
                                          REVERSED AND REMANDED.

                                          10