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In re Novatel Wireless Securities Litigation

United States District Court, S.D. California

June 23, 2014




The matter comes before the Court on pro se Proposed-Intervenor Michael A. Sklansky's motion to intervene as of right under Federal Rule of Civil Procedure 24(a), or in the alternative, permissive intervention under Rule 24(b). (Doc. No. 514.) Movant seeks intervention to express his objections to the Proposed Final Settlement Agreement. Plaintiffs and Defendants oppose. The Court heard the matter, as well as argument on the Final Settlement Agreement, on June 20, 2014. After full consideration of the all the Parties' respective positions, the Court GRANTED the motion to intervene on the record during the hearing. This Order outlining the Court's analysis follows.


This class action, commenced on September 15, 2008, involves claims of securities fraud and insider trading against individual defendants and corporate defendant, Novatel Wireless, Inc. ("Novatel"). (Doc. No. 1.) After five years of hard fought litigation and on the eve of trial, the Parties agreed to a settlement, filing a motion for preliminary approval of class action settlement on January 31, 2014. (Doc. No. 508). That motion was granted on March 6, 2014. (Doc. No. 510.) The Proposed Settlement provides for payment of a Settlement Fund consisting of $6 million in cash, Settlement Stock valued at $5 million, and a $5 million note. (Stipulation, Doc. No. 508, Ex. 2.)

Thereafter, on May 6, 2014, Plaintiffs filed their (1) motion for settlement and plan of distribution of settlement proceeds and (2) motion for attorney fees and expenses. (Doc. No. 513.) The Parties represent the Settlement as fair, reasonable and adequate. On May 5, 2014, current shareholder Michael Sklansky (hereinafter "Movant") proceeding pro se, filed a motion to intervene, seeking intervention pursuant to both Rule 24(a), intervention of right, and Rule 24(b), permissive intervention, for the limited purpose of objecting to the proposed Final Settlement. (Doc. No. 514.) Ultimately, Movant seeks to have the Court send the Parties back to the negotiation table to rework a Settlement Agreement that would incorporate the interests of current Novatel shareholders. (Sklansky Affidavit, Doc. No. 514 at 8.)

On June 11, 2014, Defendants filed their Opposition arguing intervention is inappropriate on three grounds: (1) Movant lacks standing to challenge the Settlement; (2) Movant's interests are adequately represented by Defendant Novatel; and (3) the motion is untimely. (Doc. No. 515.) Lead Plaintiffs also filed an Opposition on similar grounds, arguing: (1) Movant lacks standing as he is not a class member; (2) the motion is untimely; and (3) Movant does not satisfy the substantive requirements of Rule 24(a). (Doc. No. 517.)


Intervention is a procedure by which a nonparty can gain party status without the consent of the original parties. United States ex rel. Eisenstein v. City of New York, 556 U.S. 928, 933 (2009) ("Intervention is the requisite method for a nonparty to become a party to a lawsuit"). There are two types of intervention: intervention of right and permissive intervention.

Intervention exists as a matter of right when a federal statute confers the right to intervene or the applicant has a legally protected interest that may be impaired by disposition of the pending action and that interest is not adequately represented by existing parties. Fed.R.Civ.P. 24(a). Courts in the Ninth Circuit apply a four-part test to determine whether intervention as of right should be granted: (1) the applicant must assert a "significantly protectable interest relating to the party or transaction that is the subject of the action; (2) the applicant's interest must be inadequately represented by the parties to the action; (3) disposition of the action without intervention may as a practical matter impair or impeded its ability to protect that interest; and (4) the applicant's motion must be timely. Donnelly v. Glickman, 159 F.3d 405, 409 (9th Cir. 1998). The applicant bears the burden of establishing all of the criteria, and the rule is construed "broadly, in favor of the applicant for intervention." Id. Failure to satisfy any one of the requirements is fatal to the application. Perry v. Proposition 8 Official Proponents, 587 F.3d 947, 950 (9th Cir. 2009). Timeliness is "the threshold question." League of United Latin Am. Citizens v. Wilson, 131 F.3d 1297, 1302 (9th Cir. 1997) (citations omitted).

Courts are to take all well-pleaded, nonconclusory allegations in the motion to intervene as true absent sham, frivolity or other objections. Sw. Ctr. for Biological Diversity v. Berg, 268 F.3d 810, 820 (9th Cir. 2001).


A. Movant Has Standing to Seek Intervention

As an initial matter, the Court finds that Movant has standing to intervene solely for the limited purpose of objecting to the Proposed Final Settlement. The Ninth Circuit has held that a non-party seeking to intervene need not intervene as a full party to the litigation, but may intervene for a limited purpose. See Beckman Indus., Inc. v. International Ins. Co., 966 F.2d 470, 472 (9th Cir. 1992).

Though the Parties argue Movant lacks standing to object under Rule 23 as he is not a member of the class, Movant has properly sought intervention under Rule 24. Accordingly, the Parties' argument is without merit. Courts in this circuit have allowed a non-party, non-class member to intervene during the settlement stage of a class action for limited purposes. See e.g., Moore v. Verizon Communications, 2013 WL 450365, at *5 (N.D. Cal. Feb 5, 2013) (finding non-party had standing to seek intervention to object to the settlement of attorney fees under Rule 24(a), though ultimately denying the motion as untimely). Moreover, the Parties have not cited any authority holding Rule 23 precludes Movant from intervening in this action. Indeed, while non-class members may not have standing to object to a proposed class action settlement, interjection of the opposing views of a non-class member may proceed via ...

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