Court Opinion

ID: 4094210
Source: CourtListenerOpinion
Date Created: 2016-11-01 00:01:00.400014+00
Date Added: 2024-06-11T07:45:29.014237
License: Public Domain

Case: 16-30074      Document: 00513741014         Page: 1    Date Filed: 10/31/2016

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                         United States Court of Appeals

                                      No. 16-30074
                                                                                  Fifth Circuit

                                                                                FILED
                                                                         October 31, 2016

MICHAEL SWOBODA,                                                           Lyle W. Cayce
                                                                                Clerk
              Plaintiff - Appellee

v.

KARL MANDERS; ET AL,

              Defendants

HECKLER & KOCH, INCORPORATED; HECKLER & KOCH GMBH,

              Movants - Appellants

                   Appeal from the United States District Court
                       for the Middle District of Louisiana
                              USDC No. 3:14-CV-19

Before REAVLEY, DAVIS, and JONES, Circuit Judges.
PER CURIAM:*
       Movants-Appellants Heckler & Koch, Inc. and Heckler & Koch, GmbH
(collectively, “HK”) appeal the district court’s denial of its motion to intervene

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 16-30074      Document: 00513741014        Page: 2    Date Filed: 10/31/2016

                                    No. 16-30074
as a matter of right pursuant to Federal Rule of Civil Procedure (“Rule”)
24(a)(2). For the reasons set out below, we REVERSE and REMAND.
                                           I.
      HK is a U.S. based company that manufactures and sells an extensive
range of firearms for military, law enforcement and civilian use, including the
G36 submachine gun. Sometime before May 2012, HK received information
that German Sports Guns GmbH (“GSG”) was illegally manufacturing and
selling an airsoft version of the G36 submachine gun. This prompted HK’s
General Counsel to hire Continental Incorporated, Inc., d/b/a Continental
Enterprises (“Continental”), to investigate GSG, and to help HK determine
whether it should take legal action to protect its trademark.
      Appellee, Michael Swoboda (“Swoboda”), is the president of GSG. He
claims to have been unlawfully arrested as a result of Continental’s
investigation and has filed a lawsuit against Continental and several of its
employees. 1 Pursuant to that lawsuit, Swoboda propounded discovery, seeking
documents and communications related to Continental’s investigation (the
“Documents”). After Continental refused to produce the Documents, Swoboda
moved to compel discovery.
      The district court granted Swodoba’s motion insofar as it held that the
Documents were not protected by either the attorney-client privilege or the
work-product privilege. The court therefore ordered Continental to produce the
Documents and to turn them over to Swoboda. Continental filed a motion for
reconsideration, which was denied, and HK filed a motion to intervene as a
matter of right pursuant to Rule 24(a)(2). HK sought to intervene for the
limited purpose of filing a Motion for Protective Order, in which it sought to

      1   The parties agree, and we have no reason to doubt, that we have subject matter
jurisdiction over this case pursuant to 28 U.S.C. § 1332(a)(2).
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                                       No. 16-30074
allege that the Documents were, inter alia, privileged work product produced
by Continental at the direction of HK and in anticipation of litigation. The
district court denied HK’s motion to intervene, and HK filed the instant
appeal. 2 Our standard of review is de novo. 3
                                             II.
       In order to intervene as a matter of right pursuant to Rule 24(a)(2),
       (1) The application for intervention must be timely;

       (2) The applicant must have an interest relating to the property or
           transaction which is the subject of the action;

       (3) The applicant must be so situated that the disposition of the action
           may, as a practical matter, impair or impede his ability to protect that
           interest; and

       (4) The applicant’s interest must be inadequately represented by the
           existing parties to the suit. 4
       “Determining the timeliness of a motion to intervene entails
consideration of four factors: (1) The length of time during which the would-be
intervenor actually knew or reasonably should have known of its interest in
the case before it petitioned for leave to intervene; (2) the extent of the
prejudice that the existing parties to the litigation may suffer as a result of the
would-be intervenor's failure to apply for intervention as soon as it knew or
reasonably should have known of its interest in the case; (3) the extent of the
prejudice that the would-be intervenor may suffer if intervention is denied; and

       2 We have appellate jurisdiction. See Trans Chem. Ltd. v. China Nat’l Mach. Imp. &
Exp. Corp., 332 F.3d 815, 821 (5th Cir. 2003) (citing Edwards v. City of Hous., 78 F.3d 983,
992 (5th Cir. 1996) (en banc)).
       3 Id. at 822 (citing Edwards, 78 F.3d at 995); see also Ceres Gulf v. Cooper, 957 F.2d
1199, 1202 n.8 (5th Cir. 1992) (citing Mothersill D.I.S.C. Corp. v. Petroleos Mexicanos, S.A.,
831 F.2d 59, 62 (5th Cir. 1987)).
       4 Entergy Gulf States Louisiana, L.L.C. v. U.S. E.P.A., 817 F.3d 198, 203 (5th Cir.

2016) (quoting Haspel & Davis Milling & Planting Co. v. Bd. of Levee Comm’rs of the Orleans
Levee Dist., 493 F.3d 570, 578 (5th Cir. 2007)).
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                                          No. 16-30074
(4) the existence of unusual circumstances militating either for or against a
determination that the application is timely.” 5 Swoboda asserts that this case
has been pending for more than 625 days and that to allow HK to intervene
would only further delay the discovery process. We, however, have “rejected
the notion that the date on which the would-be intervenor became aware of the
pendency of the action should be used to determine whether it acted promptly,”
and have held that “[a] better gauge of promptness is the speed with which the
would-be intervenor acted when it became aware that its interests would no
longer be protected by the original parties.” 6
        The record reflects that the district court first ordered Continental to
produce the Documents on April 20, 2015. The Documents allegedly include,
but are not limited to, communications between HK’s General Counsel and
Continental, and reports that Continental produced, on behalf of HK, in
anticipation of litigation. On May 18, 2015, Continental filed a motion for
reconsideration, which was rejected on June 12, 2015. It was at that point that
HK became aware that its privilege would not be protected by Continental. HK
filed its motion to intervene less than two months later, on July 27, 2015. We
hold that HK’s decision to wait 45 days before seeking to intervene was not
unreasonable and that HK’s motion was timely under the circumstances of this
case.
        Swoboda does not contest that HK has an interest relating to the
property or transaction that is the subject of this litigation, nor does Swoboda
contest that HK is so situated that the disposition of this action may, as a
practical matter, impair or impede its ability to protect that interest. Our

        5   Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994).
        6   Id.
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                                        No. 16-30074
examination of the record also persuades us that factors two and three favor
intervention, so we move to address factor four.
      The district court held that HK’s interest was adequately represented by
Continental because Continental asserted the work product privilege that HK
would have asserted if HK had been allowed to intervene. We disagree with
the district court’s conclusion that Continental’s work product privilege and
HK’s work product privilege are one and the same. Continental’s work product
privilege argument was overruled because Continental is a company that
engages in investigative work, and the district court concluded that the
discovery that Swoboda sought was produced in Continental’s ordinary course
of business, i.e., in the course of a Continental investigation. HK is a gun
manufacturer. Investigations are not a part of HK’s ordinary course of
business. Some of the discovery that Swoboda sought was, from HK’s
perspective, prepared in anticipation of litigation. We have held that an
applicant-intervenor should be allowed to intervene when it “has a defense not
available to the present defendant.” 7 HK has a defense unavailable to
Continental, and it should have been allowed to present that defense in the
district court.
                                             III.
      We REVERSE the district court’s denial of HK’s motion to intervene
and REMAND to the district court with instructions to allow HK to intervene.

      7   See Bush v. Viterna, 740 F.2d 350, 357 (5th Cir. 1984).
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