Philadelphia Electric Co. v. Westinghouse Electric Corp.

HASTIE, Circuit Judge.

On August 2, 1961, the Philadelphia Electric Company brought this “spurious” class action¹ in the district court against suppliers of electrical equipment, asserting representation of “all public utilities furnishing electric service to consumers in Pennsylvania, all of which are subject to regulation by the Pennsylvania Public Utility Commission”. The plaintiff seeks to recover three times the amount of overcharges allegedly unlawful under the federal antitrust laws. The action has not yet progressed much beyond the pleading stage. A month after suit was filed, the Pennsylvania Public Utilities Commission sought leave to intervene. This appeal has been taken by the Commission from the denial of that petition.

In essence, the Commissions’ petition advanced two justifications for the proposed intervention. First, it pointed out that in the event the Electric Company prevailed in this suit, the Commission “may be obliged” to reexamine and decide what benefits the consuming public should receive by virtue of the utility’s recovery. In that event, “without having the status of a party in these proceedings, the Commission will find it difficult, if not impossible, to make * * * allocations or apportionments [between compensatory and punitive damages] nor can it properly determine whether both or only one of these elements of recovery should be considered in determining the benefits, if any, which should be directed to flow to the utility’s consumers.”

Secondly, contemplating the possibility of a settlement, the Commission believes that as “the sole statutory representative of the Pennsylvania public at large”, it is imperative in the public interest that the Commission should be “present in the status of a party at any settlement negotiations” because it “believes that its presence and participation may be helpful toward assuring that any recoveries * * * made by way of settlement shall be proper and adequate, and that the Court will have available, if it desires, the Commission’s special knowledge of public utility operations and regulation which affect the many aspects of these cases.”

In its brief on this appeal, the Commission has suggested yet a third reason for permitting it to intervene: that it is the guardian of the interests of the consuming public, who may be the ultimate beneficiaries of a recovery by the electric company, and if intervention is denied, “once these recoveries are made, whether by judgment or by voluntary settlement, the Commission will be wholly without opportunity to appear or to be heard on the issues of fairness or adequacy.”

The Commission asserts no justiciable-claim against any party to the suit. Although it filed a proposed “complaint”, to comply with Rule 24(c), 28 U.S.C., the pleading seeks no judgment in favor of the Commission but states that the “proposed intervenor incorporates herein and adopts as its own, the averments of plaintiff’s complaint.” In brief, the Commission asks merely that the plaintiff recover in accordance with its complaint.

After argument, the lower court denied leave to intervene. Although no written opinion was filed, the court indicated from the bench the reasons for its decision. It thought that the Commission could seek intervention only as “an agent of the consumers of electric power whe are in the areas affected by the alleged conspiracy * * * ”, and that, acting in such capacity, the Commission had to show a right in the consumers under section 4 of the Clayton Act, 15 U.S.C.A. § 15, which permits suit only by those injured in their property or business. The consumers as a group could not meet this requirement. In sum, the interest sought to be represented by the Commission was in the view of the court below, “entirely too remote to permit the intervention * *

On October 24, 1961, the clerk made a docket entry pursuant to the court’s oral ruling. On November 2nd a written order denying leave to intervene was filed and an appropriate docket entry was made. Out of an abundance of caution the Commission has filed separate timely appeals from these orders.² However, nothing turns on this since the same matter is presented by both appeals. Thereafter, the defendants moved to dismiss this attempted appeal of right for lack of jurisdiction, but this court reserved decision on this question until after argument on the merits.

The first issue for this court is whether the denial of leave to intervene is appealable of right. When an absolute right to intervene in a lawsuit is claimed, and the claim is rejected, the order denying intervention is considered final •and appealable. E. g., Sam Fox Publishing Co. v. United States, 1961, 366 U.S. 683, 687-688, 81 S.Ct. 1309, 6 L.Ed. 2d 604; Sutphen Estates, Inc. v. United States, 1951, 342 U.S. 19, 72 S.Ct. 14, 96 L.Ed. 19; Brotherhood of R. R. Trainmen v. Baltimore & O. R. R., 1947, 331 U.S. 519, 67 S.Ct. 1387, 91 L.Ed. 1646; Allen Calculators, Inc. v. National Cash Register Co., 1944, 322 U.S. 137, 64 S.Ct. '905, 88 L.Ed. 1188; Missouri-Kansas Pipe Line Co. v. United States, 1941, 312 U.S. 502, 61 S.Ct. 666, 85 L.Ed. 975; Hirshorn v. Mine Safety Appliances Co., 3d Cir., 1951, 186 F.2d 1023. But in those situations where the law grants the trial court discretion to permit or deny intervention in the interest of the fair and efficient administration of justice, it is held that an appellate court has no jurisdiction to review a denial of leave to intervene, except upon the issue of alleged abuse of discretion. E. g., Sutphen Estates, Inc. v. United States, supra; Allen Calculators, Inc. v. National Cash Register Co., supra; Kennedy v. Bethlehem Steel Co., 3d Cir. 1939, 102 F.2d 141.

Both the wrongful denial of an absolute right to intervene and, alternatively, an abuse of discretion are claimed here. Therefore, this appeal is well taken and must be decided on its merits.

Rule 24(a) of the Federal Rules of Civil Procedure deals with the subject of intervention of right.³ That rule confers upon an interested person an unqualified right to intervene in an action “(2) When the representation of the applicant’s interest by existing parties is or may be inadequate and the applicant is or may be bound by a judgment in the action”. Even if the phrase “bound by a judgment in the action” is construed to embrace any prejudice to the legal rights or interests of the would be inter-venor, no such prospective injury has been shown here.

The Commission argues that it may undertake to require that at least part of any recovery in this suit be reflected in reduced rates of the plaintiff’s customers, consumers whose interests the Commission serves and protects. It is anxious, therefore, that the amount of recovery, whether by settlement or otherwise, shall be as large as may be proper and that the Commission be fully informed as to all transactions connected with the prosecution and disposition of the litigation that may help it in determining what part of any recovery shall be allocated to the reduction of rates.

To the extent that the concern of the Commission is that the plaintiff recover the full amount to which it is entitled, the Commission’s interest and that of the plaintiff are identical. There is no suggestion that the plaintiff does not have highly competent counsel. Nowhere has the Commission suggested any fear or any basis of apprehension that the plaintiff will not pursue its suit with vigor as well as skill. Indeed, at oral argument counsel for the Commission expressly stated that no such contention was made. In these circumstances, if the Commission desires to make witnesses available who have some information relevant to the plaintiff’s claim, or if it thinks it can supply useful expert opinion as a friend of the court, there is no reason to believe that the plaintiff or the district court, as the case may be, would reject any proper tender of assistance in the just disposition of the pending litigation. We conclude, therefore, that any interest the Commission may have in the adequacy of the plaintiff’s prospective recovery cannot be a basis for intervention of right, particularly since Rule 24(a) (2) expressly requires that the would be in-tervenor shall show that “the representation of the applicant’s interest by existing parties is or may be inadequate”.

An additional point argued in this connection is plainly without merit. The Commission expresses fear that it will not be informed how much of any recovery is compensatory and how much represents punitive damages. Section 4 of the Clayton Act, 15 U.S.C.A. § 15, under which the plaintiff claims damages, expressly provides that the injured person “shall recover threefold the damages by him sustained * * In practice, decisions under this section indicate both the amount of actual damage and the trebled amount for which judgment is entered. But even if only the total amount of the recovery should be stated, the actual damages are determinable merely by dividing the amount of the judgment by three.

Only brief mention need be made of the Commission’s contention that it desires to know what takes place in the course of litigation and particularly the circumstances underlying any settlement. The Pennsylvania Public Utility Code gives the Commission broad power to require that utilities supply “reports concerning any matter whatsoever about which the commission is authorized to inquire, * * * or which it is required to enforce”, and “furnish any and all * * * information to the commission * * * required, in any inspection, examination, inquiry, investigation, hearing, or determination [of the value of the utility’s property].” 66 P.S. §§ 1345, 1346. These provisions give the Commission simple and direct means of obtaining the complete details of any settlement which increases the assets of a utility and may affect its rates.

All of these factors considered, we are satisfied that no basis was shown for intervention of right under the mandate of Rule 24(a) (2). It may well be, as the Commission contends, that in special circumstances a court should allow intervention to protect an applicant against hurtful practical consequences, of a pending suit that are not technically within the language of Rule 24(a) (2), as was done in Securities and Exchange Commission v. United States Realty & Improvement Co., 1940, 310 U.S. 434, 60 S.Ct. 1044, 84 L.Ed. 1293. But what, has already been said indicates that the requested intervention here has not been shown to be vital to the protection of the public interests of which the Commission is the guardian. Certainly it. does not appear that as a result of not being a party to this suit the Commission will suffer any substantial handicap in performing its duty with reference to any recovery by the plaintiff in this suit.

A fortiori, if the Commission’s application is viewed as a request for permissive intervention, there is no showing of such clear and substantial advantage from the allowance of intervention as-could make its denial arbitrary or an abuse of discretion. It is always a consideration against permissive intervention that additional parties “take additional time. Even if they have no' witnesses of their own, they are the source of additional questions, objections, briefs, arguments, motions and the like * * See Crosby Steam Gage & Valve Co. v.. Manning, Maxwell & Moore, Inc., D. Mass.1943, 51 F.Supp. 972, 973. Of course, Rule 24(a) (2) expressly commands that in exercising its discretion upon an application for permissive intervention the court shall consider the delay involved.

In thus disposing of this appeal we have not found it necessary to consider the conclusion of the court below that the stated interest of the Commission in the pending litigation is not even the kind of a claim upon which a court may, in its discretion, grant permissive intervention. Cf. Commonwealth Edison Co. v. Allis-Chalmers Mfg. Co., 1962, 207 F.Supp. 252, in the District Court for the Northern District of Illinois.

On the appeal at our No. 13,876, the judgment will be affirmed. The separate appeal on identical grounds at our No. 13,875 will be dismissed.

1 . This is one of the several similar suits and we are told that the parties have stipulated that our decision on this appeal sliall control the issue of intervention in all.

2 . In addition, tbe Commission asked us to entertain an appeal as from an interlocutory order, as we are permitted to do under 28 U.S.C. § 1292(b). On December 18, 1961, we denied that motion.

3 . “(a) Intekvention oe Right. Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute of the United States confers an unconditional right to intervene; or (2) when the representation of the applicant’s interest by existing parties is or may be inadequate and the applicant is or may be bound by a judgment in the action ; or (3) when the applicant is so situated as to be adversely affected by a distribution or other disposition of property which is in the custody or subject to the control or disposition of the court or an officer thereof.”