United States District Court, D. Maryland
JACK BOOTHE, individually and on behalf of all others similarly situated, Plaintiff,
NORTHSTAR REALTY FINANCE CORP., INC., et al, Defendants.
K, BREDAR CHIEF JUDGE.
case involved the merger between Colony Capital, Inc.,
NorthStar Asset Management Group, Inc., and NorthStar Really
Financial Corp. ("Defendants"). A number of public
shareholders-including Jack Boothe ("Plaintiff'), a
shareholder in NorthStar Realty Finance Corp.
("NRF")-challenged the merger. In November 2017,
Plaintiff and Defendants agreed to a settlement, terminating
the case. Now, four former NRF shareholders move to intervene
in the closed case, seeking relief from the judgment so that
they can proceed on their own claims against Defendants. The
motions have been fully briefed, and no hearing is required.
See Local Rule 105.6 (D. Md. 2018). For the reasons
set forth below, the Court will deny the motion to intervene
and for relief from the final order and judgment.
2016, Defendants entered into a planned merger agreement.
(See 11/18/16 S'holder Ltr., ECF No. 36-7.)
Defendants notified their shareholders of the proposed merger
and requested their votes. (Id.) Over the course of
the next few months, several shareholders sued Defendants for
violating § 14(a) and § 20(a) of the Securities
Exchange Act of 1934, 15 U.S.C. §§ 78n(a), 78t(a),
and Securities Exchange Commission ("SEC") Rule
14a-9, 17 C.F.R. §240.14a-9. Plaintiff filed his
complaint on November 18, 2016. (Compl. at 1, ECF No. 1.)
Plaintiff alleged that the joint proxy statement, circulated
to the shareholders, "contain[ed] materially incomplete
and misleading information concerning: (1) the financial
projections for [Defendants], which were relied upon by the
board in assessing the fairness of the Merger Consideration
and by the Company's financial advisor, ... and (ii)
certain information regarding the valuation analyses [the
financial advisor] performed in support of its fairness
opinion." (Id. at 2-3.) Plaintiff sought class
certification and an injunction against the merger.
(Id. at 18.)
Plaintiff s complaint became public immediately. On November
18, Law360 published an article, stating, "A
[NRF] investor on Friday blasted the proposed three-way
merger ... contending in Maryland federal court that the
'unfair' deal shortchanges investors."
(Law360 Article, ECF No. 43-9.) The article named
Jack Boothe as that investor. (Id.) News of the
proposed settlement also promptly became public. On December
9, the parties filed the proposed settlement with the SEC and
noted the "customary release of claims relating to the
Mergers." (12/9/16 Form 8-K at 2, ECF No. 43-8.) One
week later, The DI Wire reported on the proposed
settlement, noting "in exchange for making the
disclosures, defendants will be released from claims relating
to the merger, upon court approval." (The DI
Wire Article, ECF No. 43-10.)
and Defendants agreed to the proposed settlement in June
2017. (Joint Prop. Settlement, ECF No. 10-2.) The proposed
settlement moved the Court to certify a non-opt out class of
all NRF shareholders, preliminarily approve the terms of the
settlement, approve the means of notifying the class of the
settlement, and schedule a fairness hearing. (Id. at
7.) The Court granted preliminary approval. (Order, ECF No.
11.) Plaintiffs and Defendants hired a legal administrative
services company to mail notice of the proposed class action
settlement to all class members who could be identified.
(Fraga Affidavit, ECF No. 22-1.)
Court held a fairness hearing. (Tr., ECF No. 26.) The Court
heard from two objectors: Lawrence Dvores and Howard Hoffman.
Collectively, the objectors argued that counsel had
conflicting interests; that Plaintiff failed to pursue
certain claims; that notice to shareholders was inadequate;
and that the scope of the release was too broad.
(Id. at 19, 23, 30-31.) The Court considered all
these objections, inquiring into each issue. (Id. at
6:21-25, 19:17-20:4, 17:20-19:12, 23-40.) The Court
determined that the settlement was fair and reasonable and,
accordingly, approved it on November 30, 2017. (Judgment, ECF
No. 30.) The settlement dismissed all claims against
Defendants, and Plaintiff agreed to a broad release such that
"all Class Members"-that is, all NRF
shareholders-were deemed to have forever released completely
claims of any kind that related to the merger. (Judgment at
4-6.) Dvores appealed.
Bumgardner, William Pennington, John Wood, and Marjorie Wood
("Intervenors") seek to intervene in this case.
(Mot. Intervene, ECF No. 36.) In July 2018, Intervenors filed
complaints in California courts, alleging that Defendants
violated different provisions of the Securities Exchange Act.
See 15 U.S.C. §§ 77k, 771(a)(2), 77o.
(Cal. Compls., ECF No. 36-4, 36-5, 36-6.) At the end of July,
Intervenors filed an amicus brief in Dvores's appeal, but
Dvores settled in September. (Notice Dismissal, ECF No.
43-7.) On November 13, Intervenors moved to intervene,
asserting that, as former NRF shareholders, they were members
of the non-opt out class certified by this Court and, as
such, their claims were released by Plaintiffs settlement
agreement. (Mot. Intervene Mem. at 2, ECF No, 36-1.) To this
Court, Intervenors argue that the judgment must be vacated or
amended because Plaintiff (1) failed to investigate claims
that were subsequently released; (2) misrepresented to the
Court the nature of the claims being released; (3) made
misstatements in the Registration Statement; and (4) did not
comply with the Private Securities Litigation Reform Act
("PSLRA"). (Id. at 12-20.)
Court addresses the motion to intervene first. See In re
Corneal, JFM-00-3536, 2001 WL 34388125, at *3 n.2 (D.
Md. Oct. 1, 2001). "[W]hether one may intervene
logically precedes whether one may do so to reopen a
judgment." Bunge Agribusiness Singapore Pte. Ltd. v.
Dalian HualiangEnter. Grp., 581 Fed.Appx. 548, 551 (7th
Cir, 2014). Because absent class members are generally
treated as non-parties to a class action, "it has long
been the general rule that some form of participation in the
litigation is necessary before an unnamed class member can
seek relief under Rule 60(b)." Adelson v. Ocwen Fin.
Corp., 621 Fed.Appx. 348, 351 (7th Cir. 2015); cf.
Devlin v. Scardelletti, 536 U.S. 1, 14 (2005) (holding
nonnamed class members who object to approval of a class
action settlement at the fairness hearing have the power to
appeal without moving to intervene). Intervenors are unnamed
class members, who have not objected to the settlement until
now; therefore, they must first prevail on intervention
before claiming relief from the judgment.
Motion to Intervene
courts have broad discretion to grant or deny intervention.
Stuart v. Huff, 706 F.3d 345, 350 (4th Cir. 2013)
("Rule 24's requirements are based on dynamics that
develop in the trial court and ... the court is accordingly
in the best position to evaluate [them]."). Liberal
intervention is desirable to involve as many concerned
individuals and dispose of as much of the controversy as
comports with efficiency and due process. Feller v.
Brock, 802 F.2d 722, 729 (4th Cir. 1986). But, courts
are reluctant to grant intervention where the intervenor
appears to have known of the litigation and delayed unduly in
seeking to intervene. Mary Kay Kane, 7C Charles Alan Wright
& Arthur R. Miller, Federal Practice and
Procedure § 1916 (3d ed. 2018).
seek intervention of right or, alternatively, permissive
intervention. A court must permit anyone to
intervene who, on "timely motion," "claims an
interest relating to the property or transaction that is the
subject of the action, and is so situated that disposing of
the action may as a practical matter impair or impede the
movant's ability to protect its interest, unless existing
parties adequately represent that interest."
Fed.R.Civ.P. 24(a)(2). A court may permit anyone to
intervene, who, on "timely motion," "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),
Regardless of whether intervention is claimed of right or
permissively, the claim must be timely; therefore, the court,
in which the motion to intervene is pending, must first be
satisfied that the motion is timely." Nat'l
Ass'n for Advancement of Colored People v. New York,
413 U.S. 345, 365-66 (1973) [hereinafter NAACP]
("If it is untimely, intervention must be
assert that their motion is timely because they acted
diligently. The standard for determining timeliness depends
on the type of intervention sought. For intervention of
right, "the timeliness requirement of Rule 24 should not
be as strictly enforced as in a case where intervention is
only permissive." Brink v. Dalesio, 667 F.2d
420, 428 (4th Cir. 1981); see also Gottlieb v. Lincoln
Nat'l Life Ins. Co., 388 F.Supp.2d 574, 578 (D. Md.
2005) (granting intervention of right because "delay in
seeking to intervene is minor and has not prejudiced
[existing parties] as this matter is in its early
stages"). The Court concludes that Intervenors have not
established timeliness for intervention of right.
determine the timeliness of a motion to intervene of right, a
court must assess: (1) "how far the underlying suit has
progressed"; (2) "why the movant was tardy in
filing its motion"; and (3) "the prejudice any
resulting delay, might cause the other parties." Alt
v. U.S. Env 't Prot. Agency, 758 F.3d 588, 591 (4th
Cir. 2014); see also NAACP, 413 U.S. at 366
("Timeliness is to be determined from all the
circumstances."). "A district court has wide
discretion in determining what is timely." Bond v.
Cricket Commc'ns, LLC, Civ. No. MJG-15-923, 2017 WL
4838754, at *5(D. Md. Oct. 26, 2017).
filed their motion to intervene late in the underlying
proceedings: after the preliminary settlement, judgment, and
termination of the case. See Scott v. Bond, 734
Fed.Appx. 188, 191 (4th Cir. 2018) ("A settlement in
principle raises a strong interest in finality.").
"A motion to intervene filed after judgment must make a
'strong showing' to overcome the presumption that it
is untimely." Sewell v. Int'l Longshoremen's
Ass'n, Local No. 333, Civ. No. SKG-12-44, 2013 WL
6992150, at *2 (D. Md. Oct. 29, 2013) (quoting Houston
Gen. Ins. Co. v. Moore, 193 F.3d 838, 840 (4th Cir.
1999)). The underlying suit has progressed to completion, and
Intervenors move at the latest stage in the proceeding.
See Scott, 734 Fed.Appx. at 191 ("[I]n relation
to the stage of the proceedings, the timeliness requirement
is intended to prevent an intervenor from 'derailing a
lawsuit within sight of the terminal.'" (quoting
Alt, 758 F.3d at 591)).
not only file late in the proceedings; they also appear to
have been on notice of the lawsuit from the beginning.
See, e.g., Reaching Hearts Int'l, Inc. v. Prince
George's Cnty., Civ. No. RWT-11-1959, 2011 WL
4459095, at *3 (D. Md. Sept. 23, 2011) (denying post-judgment
motion to intervene where "intervenors were fully
cognizant of the ongoing litigation"). In December 2016,
the proposed settlement was filed with the SEC. (12/9/16 Form
8-K at 2.) After Plaintiff and Defendants received the
Court's preliminary approval of the settlement, they
hired a legal administrative services company to mail notice
of the proposed class action settlement to all class members
who could be identified. (Fraga Affidavit.) The company has
since confirmed that notice was mailed to two Intervenors and
was not returned to sender. (Amin-Gwiner Decl. ¶ 7, ECF
No. 42-3.) This Court spent a large portion of the fairness
hearing investigating the sufficiency of the notice provided
to shareholders. (Tr. at 23-40.) Even though Intervenors must
establish the timeliness of their motion, they offer nothing
but an assertion that they were unaware of the class action
settlement to rebut the evidence that they had notice of the
settlement as early as December 2016. (See Mot.
Intervene Mem. at 22.) Because Intervenors file late in the
proceedings and were on notice of the settlement, the first
factor weighs against intervention.
the reason for this delay, Intervenors argue that they acted
as diligently as they could and that, upon learning the truth
about the merger, they filed securities complaints, an amicus
brief for Dvores's appeal, and the motion to intervene.
(Id.) "[A] rnovant seeking intervention must
provide a plausible justification for a tardy motion to
intervene." Scott, 734 Fed.Appx. at 192.
Plausible justifications include never receiving notice of a
class action or a substantial change in circumstances in the
case. Id; see also Gould v. Alleco, Inc., 883 F.2d
281, 287 (4th Cir. 1989) (concluding health problems did not
justify tardy intervention where intervenor was capable of
filing motions and was doing so in other cases). Intervenors
argue that, until March 2018, "they were not on notice
that valuable claims had been released by the Order."
(Reply at 12, ECF No 48. According to the undisputed evidence,
however, Intervenors were on notice of the release starting
in December 2016. (Fraga ...