Johnson v. Rush Enterprises, Inc. ( 2020 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 WILLIAM LEE JOHNSON, et al., No. 1:19-cv-00105-NONE-SAB 12 Plaintiffs, 13 v. ORDER GRANTING MOTION TO INTERVENE 14 RUSH ENTERPRISES, INC., et al., (Doc. No. 53) 15 Defendants. 16 17 Plaintiffs William Lee Johnson, by and through his Guardian ad Litem Jerard Johnson, 18 Joan Johnson, and B & N Trucking, Inc. filed this lawsuit against defendants Natural Gas Fuel 19 Systems, Inc. (doing business as Momentum Fuel Technology), Carleton Technologies, Inc., and 20 Papé Trucks, Inc. after plaintiff William Johnson was injured in an explosion at a gas station 21 allegedly caused by a defective gas fueling system, which was designed, manufactured, and/or 22 sold by defendants. (Doc. No. 13.)1 Currently pending before the court is a motion to intervene 23 filed by Markel American Insurance Company (“Markel”), representing that it is a subrogee of 24 the owner of the gas station where the explosion occurred. (Doc. No. 53-1.) Plaintiffs and 25 defendants do not oppose the motion to intervene. (Doc. Nos. 54, 57, 58, 59.) For the reasons set 26 forth below, the motion to intervene is granted. 27 1 Plaintiffs have previously voluntarily dismissed Cobham PLC as a defendant in this action. 28 (Doc. Nos. 51, 52.) 1 BACKGROUND 2 Plaintiff B & N Trucking purchased a tractor truck, commonly known as a “big rig”, 3 equipped with a compressed natural gas (“CNG”) fueling System, “only days before” the 4 explosion. (Doc. No. 13 ¶ 16.) The CNG System consists of three carbon fiber cylinders 5 attached to the rear of the passenger cabin of the tractor, and also had a side-belly cylinder affixed 6 to the passenger side of the tractor. (Id. ¶¶ 17–18.) On December 21, 2018, plaintiff William 7 Johnson fueled the tractor equipped with the CNG System for the very first time at the gas station 8 in Buttonwillow, California. (Id. ¶ 23.) As plaintiff William Johnson was fueling the tractor, one 9 of the cylinders behind the passenger cabin of the tractor “ruptured.” (Id.) “A catastrophic 10 release of pressure occurred causing a shock wave to emanate outward.” (Id. ¶ 24.) Plaintiff 11 William Johnson who was standing next to the tractor and the ruptured cylinder at the time of the 12 explosion “sustained severe personal injuries including brain damage and multiple fractures.” 13 (Id. ¶ 25.) “The shock wave was so powerful that portion of the Tractor and CNG System flew 14 hundreds of feet in every direction, the Tractor was destroyed and the surrounding [gas station] 15 sustained major structural damage.” (Id. ¶ 26.) 16 Plaintiffs filed their first amended complaint (“FAC”) alleging various theories of strict 17 products liability and negligence, a claim for breach of implied warranty of merchantability, and a 18 loss of consortium claim against defendants due to the explosion at the gas station. (Id. ¶¶ 31– 19 82.) Defendant Natural Gas Fuel Systems designed and manufactured the CNG System (id. ¶ 20 19), defendant Carleton Technologies designed and manufactured the carbon fiber cylinder used 21 in the CNG System that ruptured and exploded (id. ¶ 20), and Papé Trucks installed the CNG 22 System onto the tractor that it subsequently sold to plaintiff B & N Trucking. (Id. ¶¶ 19, 21.)2 23 Defendants have filed crossclaims, counterclaims, or both. (Doc. Nos. 22, 28, 36.) 24 ///// 25 2 Plaintiffs assert this court has diversity jurisdiction over this action. (Doc. No. 13 ¶ 13; see id. 26 ¶¶ 5–11 (alleging plaintiffs are residents of California and defendants are residents of either 27 Texas, Maryland, or Oregon).) Plaintiffs further allege venue is proper in this District because the explosion occurred in Buttonwillow, an unincorporated territory in Kern County, California. 28 (Id. ¶¶ 1, 15.) Defendants do not contest federal jurisdiction or venue. 1 Markel seeks to intervene as a matter of right in this litigation as the subrogee of 2 American Natural Gas, LLC (“American”) (Doc. No. 53-2.) According to Markel, American has 3 at all relevant times owned the gas station in Buttonwillow where the explosion occurred. (Doc. 4 No. 53-1 ¶ 4.) At the time of the explosion, Markel states an insurance policy was in force 5 covering American’s gas station, “including its structures and contents,” from certain losses. (Id. 6 ¶ 6.) In other words, Markel insured American for structural damage at the time of the explosion. 7 (See id.) As a result, Markel “became obligated pursuant to the terms of its policy to pay benefits 8 in an amount of no less than $498,921.33” as a result of the explosion. (Id. ¶ 22.) Markel 9 attempts to seek this amount in monetary damages by way of a complaint (“proposed 10 complaint”), which is attached to the motion for intervention. (See generally Doc. No. 53-1.) In 11 the proposed complaint, Markel asserts claims for negligence and strict products liability based 12 on a manufacturing defect, design defect, and failure to warn. (Id.)3 American has not been a 13 named a party to this action. (See Doc. No. 53-2 at 23–24 (“Markel’s rights are not represented in 14 this litigation as its insured is not a party to the action.”).) 15 LEGAL STANDARD 16 “[I]ntervention is the requisite method for a nonparty to become a party to a lawsuit.” 17 U.S. v. ex rel. Eisenstein v. City of New York, N.Y., 556 U.S. 928, 933 (2009). Markel moves to 18 intervene pursuant to Federal Rule of Civil Procedure 24(a)(2), which permits nonparties to 19 intervene as a matter of right. Rule 24(a)(2) is “broadly interpreted in favor of intervention” and 20 courts are guided primarily by practical considerations, not technical distinctions.” Citizens for 21 Balanced Use v. Mont. Wilderness Ass’n, 647 F.3d 893, 897 (9th Cir. 2011). 22 Intervention is required for anyone who “claims an interest relating to the property or 23 transaction that is the subject of the action, and is so situated that disposing of the action may as a 24 practical matter impair or impede the movant’s ability to protect its interest, unless existing 25 parties adequately represent that interest.” Fed. R. Civ. P. 24(a)(2). The Ninth Circuit has 26 27 3 Though the caption of the proposed complaint states it asserts a claim for breach of implied warranty of merchantability, there is no such claim asserted in the body of the proposed 28 complaint. (See generally Doc. No. 53-1.) 1 articulated the standard for intervention as a matter of right under Rule 24(a)(2) as follows: 2 (1) the [applicant’s] motion must be timely; (2) the applicant must claim a “significantly protectable” interest relating to the property or 3 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 4 matter impair or impede its ability to protect that interest; and (4) the applicant’s interest must be inadequately represented by the parties 5 to the action. 6 Cal. ex rel. Lockyer v. United States, 450 F.3d 436, 440–41 (9th Cir. 2006) (quoting Sierra Club 7 v. EPA, 995 F.2d 1478, 1481 (9th Cir. 1993)). While the applicant has the burden to demonstrate 8 that each factor is satisfied and “[f]ailure to satisfy any one of the requirements is fatal to the 9 application,” Rule 24(a)(2) is construed broadly in favor of intervention. Freedom from Religion 10 Found., Inc. v. Geithner, 644 F.3d 836, 841 (9th Cir. 2011). 11 DISCUSSION 12 In seeking intervention as a matter of right, Markel argues its application is timely and 13 that it has a “direct and immediate interest” in this lawsuit. (Doc. No. 53-2 at 3:20–6:24.) No 14 party opposes Markel’s motion to intervene. (Doc. Nos. 54, 57, 58, 59.) As discussed in detail 15 below, Markel satisfies all four requirements to intervene as a matter of right under Rule 24(a)(2). 16 A. Timeliness 17 “Timeliness is ‘the threshold requirement’ for intervention as of right.” League of United 18 Latin Am. Citizens v. Wilson, 131 F.3d 1297, 1302 (9th Cir. 1997) (quoting United States v. State 19 of Or., 913 F.2d 576, 588 (9th Cir. 1990)). In determining whether a motion to intervene was 20 timely filed, courts primarily consider “(1) the stage of the proceeding at which an applicant seeks 21 to intervene; (2) the prejudice to other parties; and (3) the reason for and length of the delay.” 22 Smith v. L.A. Unified School Dist., 830 F.3d 843, 854 (9th Cir. 2016) (citation omitted). “[T]he 23 timeliness requirement for intervention as of right should be treated more leniently than for 24 permissive intervention because of the likelihood of more serious harm.” United States v. State of 25 Or., 745 F.2d 550, 552 (9th Cir. 1984). 26 “[P]rejudice to existing parties is ‘the most important consideration in deciding whether a 27 motion for intervention is untimely.’” L.A. Unified School Dist., 830 F.3d at 857 (quoting State 28 of Or., 745 F.2d at 552). Since no existing party opposes Markel’s intervention, the court must 1 conclude that Markel’s intervention will not prejudice the existing parties. See Venegas v. 2 Skaggs, 867 F.2d 527, 530 (9th Cir. 1989). Because prejudice is not an issue here, the court will 3 limit its discussion to the first and third factors of timeliness, i.e., assessing the stage of litigation 4 at which intervention was sought and the length of and reason for any delay. 5 Here, Markel sought to intervene at a relatively early stage in the litigation, even though it 6 appears it could have done so earlier. Compare League of United Latin Am. Citizens, 131 F.3d at 7 1303 (noting that when a moving party waits 27 months after the action commenced, “it fights an 8 uphill battle in its effort to intervene”), with Idaho Farm Bureau Fed’n v. Babbitt, 58 F.3d 1392, 9 1397 (9th Cir. 1995) (stating that the motion to intervene, which was sought four months after the 10 action commenced, “was filed at a very early stage”). The explosion occurred on December 21, 11 2018, (Doc. No. 13 ¶ 1), and plaintiffs commenced this litigation about a month later on January 12 24, 2019. (Doc. Nos. 1, 4.) Markel moved to intervene on November 12, 2019, about 10 months 13 after litigation began and 11 months after the explosion occurred. (Doc. No. 53.) Several months 14 after Markel moved to intervene, on May 1, 2020, the assigned magistrate judge ordered that 15 nonexpert discovery will close in this action on February 12, 2021. (Doc. No. 67 at 2.) The court 16 vacated all other discovery deadlines, including the cutoff for expert discovery, in light of “the 17 COVID-19 restrictions in place across the nation.” (Id. at 1.) Accordingly, given the status of 18 this case, 10 to 11 months is not a “substantial length of time” amounting to undue delay. See 19 League of United Latin Am. Citizens, 131 F.3d at 1302; United States v. State of Wash., 86 F.3d 20 1499, 1503 (9th Cir. 1996) (“Although the length of the delay is not determinative, any 21 substantial lapse of time weighs heavily against intervention.”). The court has not 22 “substantively—and substantially—engaged the issues.” See League of United Latin Am. 23 Citizens, 131 F.3d at 1303. Given the progress of the proceedings, Markel moved to intervene at 24 a relatively early point in this litigation. See Idaho Farm Bureau Fed’n, 58 F.3d at 1397. 25 Accordingly, Markel has filed a “timely motion” to intervene under Rule 24(a). 26 B. Significantly Protectable Interest 27 “The requirement of a significantly protectable interest is generally satisfied when ‘the 28 interest is protectable under some law, and that there is a relationship between the legally 1 protected interest and the claims at issue.’” Arakaki v. Cayetano, 324 F.3d 1078, 1084 (9th Cir. 2 2003) (quoting Sierra Club, 995 F.2d at 1484). A proposed intervenor’s interest has a 3 “relationship” with the pending action “only if the resolution of the plaintiff’s claims actually will 4 affect the applicant.” Id. (quoting Donnelly v. Glickman, 159 F.3d 405, 410 (9th Cir. 1998)). 5 Markel satisfies the two-prong test for a significantly protectable interest. The explosion, 6 which is at the very heart of this litigation, occurred at a gas station owned by Markel’s insured, 7 American. (Doc. No. 53-1 ¶ 5.) Under California law, Markel “stands in the shoes” of 8 American, as its subrogee, to recover for damages caused by third-party tortfeasors such as 9 defendants. See, e.g., Griffin v. Calistro, 229 Cal. App. 3d 193, 196 (1991). Markel has legally 10 cognizable claims, standing in the shoes of American, against defendants for their alleged roles in 11 causing the explosion at American’s gas station. See id. The proposed complaint asserts various 12 causes of action against defendants for their respective roles in designing, manufacturing, and/or 13 selling the allegedly defective CNG System. (Doc. No. 53-1 ¶¶ 25, 28–29, 36–37.) Therefore, 14 Markel has an interest that “is protectable under some law,” and the first prong is satisfied. See 15 Arakaki, 324 F.3d at 1084. 16 Additionally, Markel satisfies the second prong because the causes of action asserted in 17 the proposed complaint have a “relationship” with “the claims at issue” in the FAC. Id. Before 18 the explosion occurred, plaintiff William Johnson drove to the gas station owned by American in 19 a tractor with the allegedly defective CNG System. (See Doc. No. 13 ¶ 23.) The resulting 20 explosion caused physical injury to plaintiff William Johnson, property damage to the tractor 21 owned by plaintiff B & N Trucking, and property damage to the gas station owned by American 22 and insured by Markel. (Id. ¶¶ 25–26.) All victims’ purported injuries resulted from the same 23 incident (i.e., the December 21, 2018 explosion at the gas station in Buttonwillow, California), 24 involving the same product (i.e., the CNG System as installed on the tractor) which was designed, 25 manufactured, and/or sold by the same defendants. Indeed, the factual allegations underlying the 26 claims in the FAC and proposed complaint are nearly identical. (Compare Doc. Nos. 13 ¶¶ 35, 27 66–67, with 53-1 ¶¶ 25, 28–29, 36–37.) If the court or the trier of fact determines certain issues 28 in this litigation, ranging from breach to application of California strict products liability law, 1 those determinations and the “resolution of the plaintiff’s claims actually will affect” Markel. See 2 Arakaki, 324 F.3d at 1084 (quoting Donnelly, 159 F.3d at 410). 3 For these reasons, the court finds that Markel has a significantly protectible interest in the 4 litigation. See, e.g., Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1219 (9th Cir. 1995) 5 (noting in passing the intervention of a property insurer in litigation brought by lessee of property 6 against the manufacturer of a circuit breaker for an alleged defect which caused a fire).4 7 C. Impairment on Ability to Protect Interest 8 The disposition of the action, without the proposed intervenor’s involvement, must have a 9 “potential adverse impact” on the would-be intervenor’s interest, i.e., “disposing of the action 10 may as a practical matter impair or impede the movant’s ability to protect its interest.” See S.E.C. 11 v. Navin, 166 F.R.D. 435, 440 (N.D. Cal. 1995); Fed. R. Civ. P. 24(a). Importantly, “intervention 12 as of right does not require an absolute certainty that a party’s interest will be impaired[.]” 13 Citizens for Balanced Use, 647 F.3d at 898. 14 Markel notes that a party’s interest may be impaired or impeded under Rule 24(a) “if a 15 determination in the action may result in ‘potential stare decisis effects.’” (Doc. No. 53-2 at 11– 16 13) (quoting Mich. State AFL-CIO v. Miller, 103 F.3d 1240, 1247 (6th Cir. 1997).) Indeed, 17 “[i]ntervention may be required when considerations of stare decisis indicate that an applicant’s 18 interest will be practically impaired.” Greene v. United States, 996 F.2d 973, 977 (9th Cir. 1993). 19 20 4 California law provides that “the rule against splitting a cause of action is violated where both the insurer and insured pursue separate actions” to recover against a third-party tortfeasor. (Doc. 21 No. 53-2 at 6:4–6.) According to Markel, “[t]o avoid a violation of the rule against splitting a cause of action, the insured and insurer ‘should join in a single suit against the tortfeasor.’” (Id. at 22 13–15) (citing Ferraro v. S. Cal. Gas Co., 102 Cal. App. 3d 37, 43 (1980).) This explains why 23 Markel would want to bring claims on behalf of itself and American in a single action, but this does not explain why Markel must be allowed to intervene in this action. Here, the insured (i.e., 24 American) is not and has never been a party to this litigation. (See Doc. No. 53-2 at 23–24.) It is therefore unclear how the “rule against splitting a cause of action” is implicated by the pending 25 motion. Cf. Cummings v. United States, 704 F.2d 437, 441 (9th Cir. 1983) (finding that an insurer that paid an insured’s claims and had been subrogated to its insured’s rights against 26 another had the right to intervene in the insured’s lawsuit to protect its subrogation rights). 27 Because Markel’s insured is not a party to this action, the court cannot conclude that Markel has a significantly protectible interest based solely on the rule against splitting causes of actions 28 between an insured and insurer. 1 However, a court is not required to strictly apply principles of res judicata or collateral estoppel in 2 order to find that an intervenor’s interest may be impaired or impeded. See Yniguez v. State of 3 Ariz., 939 F.2d 727, 735 (9th Cir. 1991) (concluding res judicata would not apply to proposed 4 intervenors in federal court’s application of state law). Even where an earlier court’s decision 5 would have a “persuasive” effect on a later court, regardless of res judicata or collateral estoppel, 6 an intervenor’s interests could be impaired or impeded for purposes of intervention as of right. 7 Id. (“[T]he question here is whether the district court’s decision will result in practical 8 impairment of the interests of [the proposed intervenors], not whether the decision itself binds 9 them.”). As the Ninth Circuit has explained, a court cannot “wholly overlook” the fact that a later 10 court may find an earlier court’s reasoning of certain issues “more persuasive than they might 11 otherwise find a similar argument to be.” Id. at 737. 12 Here, Markel’s interest may be impaired or impeded as a practical matter. Markel has an 13 interest in its legal claims asserted in the proposed complaint, which may, potentially, be impeded 14 or impaired by this court’s ultimate determination on certain issues in this case. For example, if 15 the court finds that the existing plaintiffs cannot hold defendants strictly liable—for whatever 16 reason—such a decision will likely have a “persuasive” effect on any later litigation in any court 17 if Markel brings a strict products liability claim against defendants. See Yniguez, 939 F.2d at 737 18 (explaining that a subsequent court may “choose to accept the district court’s reasoning to avoid 19 confusion, lack of finality, and disrespect for law”). Accordingly, Markel satisfies the third 20 element of intervention as of right under Rule 24(a). 21 D. Inadequate Representation of Interest 22 Even if a proposed intervenor demonstrates it has a sufficient interest in the case that may 23 be impaired if intervention is not granted, intervention is nonetheless improper if “existing parties 24 adequately represent that interest.” Fed. R. Civ. P. 24(a)(2). Although the burden establishing 25 inadequacy of representation is “minimal,” courts should consider three factors: “(1) whether the 26 interest of a present party is such that it will undoubtedly make all of a proposed intervenor’s 27 arguments; (2) whether the present party is capable and willing to make such arguments; and 28 (3) whether a proposed intervenor would offer any necessary elements to the proceeding that 1 other parties would neglect.” Arakaki, 324 F.3d at 1086. “The most important factor in 2 determining the adequacy of representation is how the interest compares with the interests of 3 existing parties.” Id. “Where the party and the proposed intervenor share the same ‘ultimate 4 objective,’ a presumption of adequacy of representation applies, and the intervenor can rebut that 5 presumption only with a ‘compelling showing’ to the contrary.” Perry v. Proposition 8 Official 6 Proponents, 587 F.3d 947, 951 (9th Cir. 2009) (quoting League of United Latin Am. Citizens, 131 7 F.3d at 1305). But the presumption of adequate representation does not apply if the proposed 8 intervenor demonstrates that the existing parties’ representation of its interest “‘may be’ 9 inadequate.” Arakaki, 324 F.3d at 1086 (quoting Trbovich v. United Mine Workers of Am., 404 10 U.S. 528, 538 (1972)). Therefore, a proposed intervenor must simply show that it “may” have an 11 “adverse” interest to the existing parties. Citizens for Balanced Use, 647 F.3d at 898 (“We stress 12 that intervention of right does not require an absolute certainty that a party’s interests will be 13 impaired or that existing parties will not adequately represent its interests.”). 14 Markel notes that its “rights are not represented in this litigation as its insured is not a 15 party to this action.” (Doc. No. 53-2 at 6:23–24.) Although Markel’s argument is not a model for 16 specificity, the court nonetheless concludes Markel satisfies its minimal burden demonstrating 17 that it would not be adequately represented by the existing parties during this litigation. Initially, 18 it does not appear that plaintiffs and Markel “share the same ‘ultimate objective.’” Proposition 8 19 Official Proponents, 587 F.3d at 951 (quoting League of United Latin Am. Citizens, 131 F.3d at 20 1305). While both assert identical claims against defendants, the “ultimate objective” of plaintiffs 21 and Markel is to recover for their own damages—no matter which party is at fault. See Forsyth v. 22 HP Inc., No. 5:16-cv-04775-EJD, 2020 WL 71379, *4 (N.D. Cal. Jan. 7, 2020) (“The standard is 23 not whether the intervenor and present party share identical claims.”). For these reasons, it does 24 not appear that plaintiffs “will undoubtedly make all of [Markel’s] arguments” during the course 25 of this litigation as the factual record develops. Arakaki, 324 F.3d at 1086. Markel and the 26 existing plaintiffs may attempt to place blame on each other if (full) liability does not attach to 27 defendants, and the existing plaintiffs therefore may not be “capable and willing” to make all the 28 arguments Markel may want to raise. See id. Adding Markel to this litigation will also provide 4.49 VV EIN INN SAN VUITTON eT AY A tl 1 | some “necessary elements to the proceeding that other parties would neglect,” given Markel’s 2 | insured owns the gas station where the explosion occurred as well as the fueling equipment used 3 | by plaintiff William Johnson immediately before the explosion. See id. Because Markel “may” 4 | have an “adverse” interest to the existing plaintiffs, Markel’s interest will not be adequately 5 || represented if intervention is denied. See Citizens for Balanced Use, 647 F.3d at 898 6 For the reasons discussed above, Markel satisfies all four elements to intervene as a matter 7 | of right under Rule 24(a)(2). See Cal. ex rel. Lockyer, 450 F.3d at 440-41.° 8 CONCLUSION 9 Accordingly: 10 1. The motion to intervene (Doc. No. 53) is granted; and 11 2. Markel American Insurance Company is ordered to file its complaint as a separate docket 12 entry within fourteen (14) days of entry of this order. 13 | IT IS SO ORDERED. me □ Dated: _ June 2, 2020 Yel A Low 15 UNITED STATES DISTRICT JUDGE 16 17 18 19 20 21 22 23 24 25 26 | Although Markel mentions permissive intervention as an alternative basis for entering this 27 | lawsuit, it does not discuss permissive intervention in any detail. In any event, because the court is granting Markel’s motion to intervene as of right, it is not necessary to discuss permissive 28 | intervention. 10