Civil procedure fans, rejoice. Here's one to take you to the weekend.
We say that because although Laroe Estates, Inc. v. Town of Chester, No. 15-1086 (July 6, 2016), was a regulatory takings case, the issue -- whether a third party could intervene -- was not really dependent on the underlying Fifth Amendment claim. In that case, the U.S. Court of Appeals for the Second Circuit held that an intervenor need not show standing in order to intervene; it only needs to meet the requirements for as-of-right or permissive intervention under the federal rules of civil procedure. The rules that in order to intervene, an intervenor only have an interest at stake in the litigation, and need not have a vested "property interest" under the Fifth and Fourteenth Amendments.
Sherman asserted a regulatory takings case against the town in federal court. After a visit to the Second circuit reversing dismissal of the claim, Sherman died. Laroe said that he and Sherman had a deal, and that Laroe (allegedly) now owns the land that the town took. Laroe asserted it was entitled to the same relief as the now-deceased Sherman. Sherman's estate continued to litigate the takings claim.
But the District Court rejected Laroe's motion to intervene in the case, because it concluded that it was futile because Laroe did not have standing: it wasn't the owner of the property at the time the town allegedly took it by overregulation. No property interest, no intervention. That was enough, held the District Court, and it didn't analyze the issue further under Rule 24, which governs intervention in federal court, and look at things like what interest Laroe was claiming (Fed. R. Civ. P. 24(a)(2)), or whether Laroe claimed common issues of law or fact (Fed. R. Civ. P. 25(b)(2)). The District Court's reasoning was limited to no-standing = no intervention.
The Second Circuit again reversed, because standing and intervention are two separate things. Standing goes to whether there is a live case and controversy for federal adjudication, while intervention is focused only on whether a third party has a place at the table. Here, Sherman's estate has standing, so whether there was a live case and controversy wasn't an issue, and the only question should have been whether Laroe met Rule 24's requirements. The court acknowledged a circuit split on the issue, but noted the Supreme Court "has expressly declined to resolve it." Slip op. at 10. And since the Supreme Court isn't going to tackle this issue despite an express circuit split, we're sticking by our approach:
So it is fair to say that while the Supreme Court has not explicitly endorsed our approach, it has sub silentio permitted parties to intervene in cases that satisfy the “case or controversy” requirement without determining whether those parties independently have standing. The District Court therefore erred by denying Laroe’s motion to intervene based on its failure to show it had Article III standing.
Slip op. at 11.
The Second Circuit went though the Rule 24(a) factors for intervention-as-of-right, and concluded that Laroe's motion was timely (even though it was filed after the District Court dismissed Sherman's takings claim), and that Laroe had an interest in the property. While it is true that Laroe didn't own the property at the time the town allegedly took it, it did claim to be an "equitable owner." Laroe's interest in the property might not be fully fleshed out, but "[t]he record certainly suggests that Sherman intended to sell at least a portion of the proposed development to Laroe." Slip op. at 19.
And that was enough for intervention. The court rejected the town's claim that this interest wasn't sufficient because it was not "vested," and thus was not a property interest subject to constitutional protections:
But the Town responds that even if Laroe was the equitable owner, it lacked a “vested property interest” at the time of the alleged taking. Appellee’s Br. 24‐25. Indeed, one way of thinking about the Town’s misguided argument about standing is that it is essentially a challenge to the “interest” requirement of Rule 24(a)(2). But trying to identify the precise nature of Laroe’s interest in the property is difficult at this stage of the litigation, when the factual record has not been fully developed. For example, the 2003 Agreement provided for the sale of certain lots within the proposed MareBrook subdivision, but Laroe now claims to be the owner of the entire property. Nor can we conclude, based on the record before us, that Laroe had an interest in the property when the alleged 1 taking occurred because, as Laroe acknowledged at oral argument, the District Court has yet to determine when the Town’s conduct allegedly became so onerous that it rose to the level of a taking.
Slip op. at 20 (footnote omitted).
Rule 24 doesn't require a "property interest," just an "interest" relating to the property or transaction.
The court then applied the other factors in Rule 24, ultimately concluding that it couldn't resolve each of them, and thus a remand to the District Court was necessary to determine whether Laroe could protect its interests in the absence of intervention.
Laroe Estates, Inc. v. Town of Chester, No. 15-1086 (2d Cir. July 6, 2016)
