Court Opinion

ID: 9805535
Source: CourtListenerOpinion
Date Created: 2023-08-31 18:00:40.815998+00
Date Added: 2024-06-11T10:45:45.511417
License: Public Domain

Case: 22-40707    Document: 00516879635       Page: 1    Date Filed: 08/31/2023

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

                              ____________                                FILED
                                                                    August 31, 2023
                               No. 22-40707                          Lyle W. Cayce
                              ____________                                Clerk

   United States of America, ex rel Caleb Hernandez and
   Jason Whaley, Relators, Et al.,

                                                                  Plaintiff,

                                    versus

   Team Finance, L.L.C.; Team Health, Incorporated; Team
   Health Holdings, Incorporated; Ameriteam Services,
   L.L.C.; HCFS Health Care Financial Services, L.L.C.;
   Quantum Plus, L.L.C., doing business as Teamhealth West,

                                                     Defendants—Appellees,

                                    versus

   Loren Adler,

                                            Movant—Appellant.
                 ______________________________

                 Appeal from the United States District Court
                      for the Eastern District of Texas
                           USDC No. 2:16-CV-432
                 ______________________________

   Before Wiener, Graves, and Douglas, Circuit Judges.
   Jacques L. Wiener, Jr., Circuit Judge:
Case: 22-40707     Document: 00516879635          Page: 2   Date Filed: 08/31/2023

                                   No. 22-40707

          Movant-Appellant Loren Adler seeks to permissively intervene in this
   closed matter to challenge the sealing of records. The district court denied
   Adler’s intervention on three independent grounds, each of which is a subject
   of this appeal. Although courts are afforded great discretion in deciding
   intervention pursuant to Federal Rule of Civil Procedure 24(b), the district
   court’s reasoning was premised on several significant errors. We reverse and
   remand.
                                        I.
          The underlying case against Defendants-Appellees TeamHealth—a
   group of private equity-owned healthcare entities—was brought under the
   qui tam provisions of the False Claims Act, 31 U.S.C. § 3729 et seq.
   Two former TeamHealth employees, Caleb Hernandez and Jason Whaley
   (together, the “Relators”), alleged that TeamHealth routinely billed for non-
   existent doctor examinations and critical care services. The matter was
   unsealed in 2018 after federal and state governments declined to intervene.
   The Relators moved forward with their case, which survived dismissal and
   proceeded through extensive discovery.
          The parties jointly agreed to a protective order but disputed its
   contours. For example, TeamHealth fought to use a special designation of
   “Highly Confidential – Attorneys’ Eyes Only” to protect “highly
   competitive information.” Relators contended that this designation was
   unnecessary because the case “d[id] not involve an intellectual property or
   trade secret[s].” The district court ruled that TeamHealth could implement
   its requested designation as necessary.
          Throughout 2020, Relators proceeded to challenge the confidentiality
   designations of specific swathes of documents. TeamHealth responded by
   seeking additional protective orders. The district court held a hearing and
   granted TeamHealth’s requests for protection with the caveat that the

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   documents could be reconsidered later in the context of trial. As the case
   proceeded, the district court entered orders sealing relevant documents.
          Shortly before trial in July 2021, the parties settled this case. The
   settlement required TeamHealth to pay a total of $48 million to the United
   States and Relators. The district court entered the parties’ stipulation for
   dismissal, but “retain[ed] jurisdiction for the purpose of enforcing the
   settlement agreement between the parties.”
          On December 14, 2021, Adler moved to intervene permissively
   pursuant to Federal Rule of Civil Procedure 24(b)(1) for the limited purpose
   of unsealing records. As “a health care economist who focuses his work on
   health care pricing,” Adler had previously “studied and published
   extensively on TeamHealth” and other private equity-owned companies.
   Adler’s statements online make clear that he followed litigation related to
   TeamHealth. He submitted that “the information in this case would be
   highly informative to his research” and “would be instructive as to how
   providers bill for services generally,” which he contends is of interest to the
   general public.
          The district court denied Adler’s motion to intervene on three
   independent grounds: (1) lack of standing, (2) a failure to demonstrate “a
   claim or defense that shares with the main action a common question of law
   or fact,” and (3) untimeliness. Adler now appeals that decision.
                                         II.
          Adler moved to intervene in this matter pursuant to Rule 24(b)(1),
   which states, “[o]n timely motion, the court may permit anyone to intervene
   who . . . has a claim or defense that shares with the main action a common
   question of law or fact.” Fed. R. Civ. P. 24(b)(1) (“PERMISSIVE
   INTERVENTION . . . In General.”).

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           Adler raises three issues on appeal related to each of the district
   court’s reasons for denying his motion: (1) standing, which is required to
   intervene in a closed case; (2) adherence to Rule 24(b)(1), which requires that
   Adler have a “claim or defense that shares with the main action a common
   question of law or fact”; and (3) timeliness, which considers delay in filing
   for intervention and any related prejudice to the litigants. 1 These issues were
   sufficiently raised and argued below in Adler’s motion to intervene. While
   the district court is afforded great discretion in deciding permissive
   intervention, its reasons for denial were premised on erroneous statements
   of law which warrant reversal. See United States v. Chambliss, 948 F.3d 691,
   693 (5th Cir. 2020) (A district court abuses its discretion when it “bases its
   decision on an error of law or a clearly erroneous assessment of the
   evidence.” (quoting United States v. Chapple, 847 F.3d 227, 229 (5th Cir.
   2017))).
                                                 A.
           We first examine standing. Clear precedent dictates that, “[i]n the
   absence of a live controversy in a pending case, an intervenor would need
   standing to intervene.” Newby v. Enron Corp., 443 F.3d 416, 422 (5th Cir.
   2006) (discussing that principle as set forth in Deus v. Allstate Insurance Co.,
   15 F.3d 506, 526 (5th Cir. 1994)); accord Bond v. Utreras, 585 F.3d 1061, 1072
   (7th Cir. 2009) (“[T]he Fifth Circuit has concluded that a third party seeking
   to intervene to challenge a protective order after the main controversy has
   been disposed of must demonstrate standing.”). Adler contends that the
           _____________________
           1
             TeamHealth also contends that Adler failed to file a pleading in accordance with
   Rule 24(c). We observe no such deficiency in Adler’s motion to intervene, proposed
   motion to unseal, and supporting declaration. See In re Beef Indus. Antitrust Litig., 589 F.2d
   786, 789 (5th Cir. 1979); see also Beckman Indus., Inc. v. Int’l Ins. Co., 966 F.2d 470, 475 (9th
   Cir. 1992) (Movants must “describe[] the basis for intervention with sufficient specificity
   to allow the district court to rule.”).

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   court’s inherent “supervisory power over its own records and files” means
   that no standing is required to intervene for the limited purpose of unsealing
   records. SEC v. Van Waeyenberghe, 990 F.2d 845, 848 (5th Cir. 1993)
   (quoting Nixon v. Warner Commc’ns, Inc., 435 U.S. 589, 598 (1978)).
   However, Deus contradicts Adler’s position and remains good law. See Allen-
   Pieroni v. White, 694 F. App’x 339, 340 (5th Cir. 2017) (recently applying
   Deus). Deus’s reasoning—although related to intervention as of right—
   naturally flows to all attempts to intervene in a closed case for the purpose of
   unsealing records. See Newby, 443 F.3d at 422 (“Article III does not require
   intervenors to independently possess standing where the intervention is into
   a subsisting and continuing Article III case or controversy.”). We thus affirm
   the district court’s reasoning that Adler must satisfy standing to intervene in
   this matter.
          That said, we disagree with the notion that Deus completely forecloses
   standing to intervene when a movant seeks only to unseal records. Standing
   here is assessed through the ordinary lens of Article III: a “plaintiff must have
   suffered an injury in fact” that is “fairly traceable to the challenged action”
   and that likely “will be redressed by a favorable decision.” Lujan v. Defs. of
   Wildlife, 504 U.S. 555, 560–61 (1992). As a matter of subject matter
   jurisdiction, we review for standing de novo. Moss v. Princip, 913 F.3d 508, 513
   (5th Cir. 2019).
          The court in Deus concluded that its movants lacked standing because
   “[t]he desire to intervene to pursue the vacating of the protective order
   and/or the unsealing of the record is not a justiciable controversy or claim, .
   . . .” 15 F.3d at 525. The district court here relied on this language to conclude
   that Adler had no standing, but that sentence continues with an important
   caveat: “. . . absent some underlying right creating standing for the movants.” Id.
   (emphasis added). We conclude that Adler presents one such “underlying
   right”—he seeks to vindicate the public’s right to access court documents.

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          In Deus, the movants sought to intervene solely for their own private
   benefit in separate litigation. 15 F.3d at 526 (“[H]e can protect any interest
   he has in these materials by filing a discovery request in that case.”). Allen-
   Pieroni, which our district court also relied on, similarly concerns a movant
   seeking documents for separate litigation. 694 F. App’x at 340 (“Although
   White argues . . . that allowing access to the discovery would reduce the
   burden on the respective parties in her case, she has not demonstrated that
   she has standing in this case.”). Adler, on the other hand, seeks to represent
   an important public interest not implicated in Deus or Allen-Pieroni. He
   makes clear in his declaration that “the information [he seeks to unseal] is
   also highly likely to be of public interest because the cost of medical care in
   the United States is of high public interest.”
          Alleged violations of the public right to access judicial records and
   proceedings and to gather news are cognizable injuries-in-fact sufficient to
   establish standing. See United States v. Aldawsari, 683 F.3d 660, 665 (5th Cir.
   2012) (finding standing when a “gag order affected [a journalist’s] right to
   gather news”); Davis v. E. Baton Rouge Par. Sch. Bd., 78 F.3d 920, 926 (5th
   Cir. 1996) (“Several courts have held that news agencies have standing to
   challenge confidentiality orders in an effort to obtain information or access to
   judicial proceedings, although they are neither parties to the litigation nor
   restrained directly by the orders.”). Adler also alleges an individualized harm
   from “being deprived of information that he is uniquely well-qualified to
   study and publicize in his academic work, and which information he can get
   nowhere else.” Such injuries are fairly traceable to this action and can be
   remedied through the unsealing of appropriate records. See id. Reviewed de
   novo, Adler has satisfied standing to bring his motion to intervene in this
   otherwise closed matter.

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                                           B.
            We next examine the district court’s reasoning that Adler has failed
   to satisfy the requirements of Rule 24(b)(1). Although permissive
   intervention is “committed to the discretion of the court,” the district court
   abused its discretion in concluding that Adler has not brought a “claim or
   defense” in his motion to intervene. Cameron v. EMW Women’s Surgical Ctr.,
   P.S.C., 142 S. Ct. 1002, 1011-12 (2022) (“[A] court fails to exercise its
   discretion soundly when it base[s] its ruling on an erroneous view of the law.”
   (internal quotation marks omitted)). The district court relied again on Deus:
             “The desire to intervene to pursue the vacating of the protective
            order and/or the unsealing of the record is not a justiciable
            controversy or claim . . . .” Deus, 15 F.3d at 525. Thus, Adler’s request
            to unseal documents is not a “claim” under Rule 24(b)(1)(B). Adler
            has alleged no other “claim or defense” that provides a basis for
            permissive intervention under Rule 24(b). Whether or not Adler’s
            alleged “interest” shares a nexus with the main action a common
            question of law or fact is beside the point.
   United States ex rel. Caleb Hernandez & Jason Whaley v. Team Fin., L.L.C.,
   No. 2:16-CV-00432-JRG, 2022 WL 16550318, at *5 (E.D. Tex. Sept. 28,
   2022).
            Deus’s strong statement regarding “justiciable controversary or
   claim” was made in the limited context of standing. See Newby, 443 F.3d at
   421-23. Reading this passage more expansively would categorically bar all
   nonparty record-related challenges in federal court made with public access
   in mind. This outcome is untenable when intervention is “the procedurally
   correct course” for the public to challenge such restrictions. In re Beef Indus.
   Antitrust Litig., 589 F.2d at 789. It would also fly in the face of precedent.
            Our circuit has accepted that “[t]he ‘claim or defense’ portion of Rule
   24(b) . . . [is to be] construed liberally.” Newby, 443 F.3d at 422 (citing In re

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   Estelle, 516 F.2d 480, 485 (5th Cir. 1975)). Adler’s challenge falls squarely
   within the legal definition of “claim”—an “interest or remedy recognized at
   law.” Claim, Black’s Law Dictionary (11th ed. 2019).           We have long
   recognized the public’s “common law right to inspect and copy judicial
   records.” See Bradley ex rel. AJW v. Ackal, 954 F.3d 216, 224 (5th Cir. 2020)
   (quoting United States v. Sealed Search Warrants, 868 F.3d 385, 395 (5th Cir.
   2017)) (observing that this right “promotes the trustworthiness of the
   judicial process, curbs judicial abuses, and provides the public with a better
   understanding of the judicial process, including its fairness”).
          We have accordingly permitted intervention by nonparties who seek
   only to challenge record-related restrictions. See In re Beef Indus. Antitrust
   Litig., 589 F.2d at 789 (permitting nonparty intervenors to challenge a
   protective order). So have all other circuits. See EEOC v. Nat’l Children’s
   Ctr., 146 F.3d 1042, 1045 (D.C. Cir. 1998) (observing that “every circuit
   court that has considered the question has come to the conclusion that
   nonparties may permissively intervene for the purpose of challenging
   confidentiality orders” and compiling cases).
          We also conclude that Adler’s claim shares a common question of law
   with the district court’s decisions related to sealing records: Whether there
   are compelling reasons for sealing that outweigh the public’s right of access.
   We reverse the district court’s determination that Adler has failed to satisfy
   the requirements of Rule 24(b)(1). That said, we remain in the realm of
   permissive intervention. The next issue allows us to explore the discretion
   afforded to the district court on remand.
                                         C.
          Rule 24(b)(1) makes clear reference to timeliness, which this circuit
   assesses through the factors set forth in Stallworth v. Monsanto Co.: (1) the
   length of time the movant waited to file, (2) the prejudice to the existing

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   parties from any delay, (3) the prejudice to the movant if the intervention is
   denied, and (4) any unusual circumstances. 558 F.2d 257 (5th Cir. 1977); see
   also St. Bernard Par. v. Lafarge N. Am., Inc., 914 F.3d 969, 976 (5th Cir. 2019)
   (applying Stallworth in the context of permissive intervention). “[W]hether .
   . . intervention is timely is largely committed to the discretion of the district
   court, and its determination will not be overturned on appeal unless an abuse
   of discretion is shown.” Stallworth, 558 F.2d at 263.
          Unfortunately, the district court strikes out with its last independent
   reason for denying Adler’s intervention. That court abused its discretion
   when assessing Stallworth’s first factor. See Cameron, 142 S. Ct. at 1012. It is
   well established that the length of time to file is measured from the moment
   that the prospective intervenor knew that his interests would “no longer be
   protected.” Stallworth, 558 F.2d at 264. Yet, the district court instead
   considered Adler’s delay from the time of the case’s unsealing and Adler’s
   general awareness of the case based on his activity online, placing Adler’s
   delay at “approximately 1.5 to 2.5 years.” Stallworth expressly rejected such
   measurement. Id. at 264. Indeed, the need for intervention is not immediately
   apparent at the onset of litigation, and encouraging premature action is not
   in the parties’, or the court’s, interest. See id. at 264-65 (“[A] rule making
   knowledge of the pendency of the litigation the critical event . . . would
   encourage individuals to seek intervention at a time . . . when the probability
   that they will misjudge the need for intervention is correspondingly high.”).
          A nonparty movant’s awareness of a case’s existence says little about
   whether their interests are protected. A court must also look to the actions of
   the litigants. For example, it would be error to measure the length of delay
   solely from the parties’ motions regarding sealing—a court would need to
   observe that the parties were complacent or non-adversarial as to not protect
   the interests of potential intervenors. In this case, Adler’s interests were

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   protected by the Relators’ litigation of the protective orders and
   confidentiality designations.
          The district court gave great weight to the fact that Adler had an
   “unexplained delay of anywhere from 1.5 to 2.5 years (after when he should
   have known of his interest in the case until attempting to intervene).” That
   length of delay is in stark difference from the months implicated by the
   settlement of the case or the time it took for Adler to realize that the
   documents would not be unsealed after the case’s close. Although this error
   relates to only one Stallworth factor, it was a significant one.
          We reverse the district court’s decision on Adler’s motion to
   intervene and remand it for reconsideration of timeliness and other
   unexplored reasons for denial, if any. Although we firmly hold that Adler has
   satisfied standing and the requirements of Rule 24(b)(1), we reiterate the
   district court’s discretion in ultimately deciding Adler’s motion. The district
   court is better situated to assess the exact length of Adler’s delay, any
   explanations for such delay, and prejudice to the parties—along with
   ancillary considerations such as the contents of the sealed documents, prior
   consideration by the court and litigants, and the tentative nature of the
   court’s evidentiary rulings in light of an upcoming, but ultimately averted,
   trial. These considerations do not serve as an exhaustive list, but as aspects
   of the matter we observe relevant. The decision to grant or deny Adler’s
   intervention is firmly in the district court’s hands. See Turner v. Cincinnati
   Ins. Co., 9 F.4th 300, 317 (5th Cir. 2021).
                                          III.
          The district court’s denial of Adler’s motion to intervene is
   REVERSED and REMANDED in accordance with the foregoing.

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