The opinion of the court was delivered by: Sidney H. Stein, U.S. District Judge.
The Wayne County Employees' Retirement System ("Wayne County") and the Trustees of the Police and Fire Retirement System of the City of Detroit ("Detroit," collectively the "Proposed Intervenors") have moved (1) to intervene in this consolidated shareholder derivative action, (2) to be designated as co-lead plaintiffs for purposes of claims based on defendants' alleged failure of oversight over the Ambac Financial Group, Inc., and (3) to have their attorneys appointed as co-lead counsel for those same oversight claims. The three plaintiffs who brought the three original actions derivatively on behalf of Ambac oppose the motion on the grounds that they are quite capable of pursuing what they perceive to be the interests of the corporation and need no help from the Proposed Intervenors.
This Document Relates To: ALL ACTIONS.
In April of 2008, this Court consolidated the three separate derivative actions brought by Ambac shareholders against Ambac officers and directors into this single, consolidated action. Plaintiffs subsequently filed an Amended Consolidated Shareholder Derivative Complaint ("Amended Consolidated Complaint") alleging claims on behalf of Ambac against the named officers and directors for breach of fiduciary duty, corporate waste, and unjust enrichment pursuant to Delaware Law, as well as violations of the Securities Exchange Act of 1934. See Rubery v. Callen et al., No. 08 Civ. 854 (S.D.N.Y. filed Jan. 24, 2008); Clark v. Callen et al., No. 08 Civ. 856 (S.D.N.Y. filed Jan. 24, 2008); Yaokasin et al v. Callen et al., No. 08 Civ. 1312 (S.D.N.Y. filed Feb. 8, 2008); see also In Re Ambac Financial Group, Inc. Derivative Litigation, No. 08 Civ. 854 (S.D.N.Y. April 16, 2008) (order consolidating individual shareholder derivative actions); Verified Am. Comp. dated Dec. 17, 2008.
Wayne County and Detroit initiated similar derivative actions in the Delaware Court of Chancery in February 2008, asserting claims for breach of fiduciary duty based on the defendants' alleged failure to oversee the affairs of Ambac according to the standard set forth in In re Caremark Int'l, 698 A.2d 959 (Del. Ch. 1996), along with other state law claims. See Wayne County Employees' Retirement System v. Callen, C.A. No. 3521-VCL (Del. Ch. filed Feb. 1, 2008); The Trustees of the Police and Fire Retirement System of the City of Detroit, C.A. No. 3541-VCL (Del. Ch. filed Feb. 13, 2008). The Chancery Court consolidated those actions one month later, and in July 2008, the defendants moved to dismiss the consolidated complaint, or in the alternative, to stay that litigation pending the outcome of the action before this Court. The Chancery Court granted the defendants' motion to stay in December 2008, finding that the complaint before this Court was broader in scope than that in the Delaware action, but it still "fairly encompasses" the Delaware claims. (In re Ambac Financial Group Shareholder Derivative Litigation, C.A. No. 3521-VCL (Del. Ch. Dec. 30, 2008), Ex. B to Decl. or Demet Basar dated Jan. 20, 2009 ("Basar Decl.").)
Twenty-one days later, on January 20, 2009, Wayne County and Detroit moved to intervene as co-lead plaintiffs for the Caremark claims in this action, either pursuant to Fed. R. Civ. P. 24(a), as of right, or pursuant to Fed. R. Civ. P. 24(b), with the Court's permission. In doing so, they contend that any judgment in this action is likely to bind them and that plaintiffs do not adequately represent the interests of the Proposed Intervenors. Specifically, the Proposed Intervenors contend that the demand allegations and those supporting their claim for breach of fiduciary duty set forth in their proposed Complaint in Intervention are more "particularized" than those found in the Amended Consolidated Complaint in this action.
Defendants do not oppose the motion to intervene as long as any intervention results in (1) a single consolidated derivative complaint joined by all plaintiffs and plaintiff-intervenors, and (2) no increase in the number of lead and liaison counsel for all plaintiffs and plaintiff-intervenors. As noted, plaintiffs do oppose the motion.
A party may intervene as of right pursuant to Fed. R. Civ. P. 24(a)(2) if: "(1) the motion is timely; (2) the applicant asserts an interest relating to the property or transaction that is the subject of the action; (3) the applicant is so situated that without intervention, disposition of the action may, as a practical matter, impair or impede the applicant's ability to protect its interest; and (4) the applicant's interest is not adequately represented by the other parties." MasterCard Intern., Inc. v. Visa Intern. Service Ass'n, Inc., 471 F.3d 377, 389 (2d Cir. 2006); see also United States v. Pitney Bowes, Inc., 25 F.3d 66, 70 (2d Cir. 1994). "Failure to satisfy any one of these requirements is a sufficient ground to deny the application." In re Bank of New York Derivative Litigation, 320 F.3d 291, 300 (2d Cir. 2003) (quotation and citation omitted); see also Pitney Bowes, Inc., 25 F.3d at 70.
In addition, courts have the authority to permit intervention by anyone who "has a claim or defense that shares with the main action a common question of law or fact," Fed. R. Civ. P. 24(b)(1)(b), although they must consider "whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights," Fed. R. Civ. P. 24(b)(3). Courts consider substantially the same factors for permissive intervention under Rule 24(b) as for intervention as of right under Rule 24(a), see In re Bank of New York Derivative Litig., 320 F.3d at 300 n.5, and the decision regarding whether to grant permissive intervention "is wholly discretionary with the trial court." U.S. Postal Service v. Brennan, 579 F.2d 188, 191 (2d Cir. 1978).