Field v. Rusco Operating ( 2022 )

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.”
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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.
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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.
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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,
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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
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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
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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.
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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
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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.
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