'Who's along for the ride?'

SCOTUS will see a long-divisive development case

De Novo Review

Michael A. Scodro

Michael Scodro is a partner in the Supreme Court and appellate practice at Mayer Brown. Previously, he served for more than six years as Illinois solicitor general. Scodro also teaches a seminar on the U.S. Supreme Court at the University of Chicago Law School and is the immediate past president of the Appellate Lawyers Association.

April 2017

Naturally, much of the attention on the U.S. Supreme Court this term concerns the future of the seat once held by the late Justice Antonin G, Scalia. Meanwhile, however, the court’s day-to-day work proceeds and among the cases on the April docket is one seeking resolution of a civil procedure question that has divided the lower courts for years.

This term, it seems, we’ll have the answer.

The case originates in the Town of Chester, in Orange County, N.Y., where Steven Sherman set out to develop nearly 400 housing units and accompanying recreational facilities in a project called MareBrook. Responding to a succession of demands from the town barring Sherman from starting work on the project, he ultimately pursued a regulatory takings claim (among other causes of action) against the town. Sherman v. Town of Chester, 752 F.3d 554, 558-60 (2d Cir. 2014).

As the town continued to resist Sherman’s efforts, a developer named Laroe Estates Inc. contributed substantial sums to the project. Town of Chester v. Laroe Estates Inc., 828 F.3d 60, 63 (2d Cir. 2016). Claiming that its arrangement with Sherman gave Laroe equitable ownership of the MareBrook property, Laroe later sought to intervene as a plaintiff in Sherman’s suit against the town. Specifically, as relevant for purposes of the pending Supreme Court appeal, Laroe sought to intervene as a matter of right under Fed. R. Civ. P. 24(a)(2), which requires the movant to “claim[] an interest relating to the property or transaction that is the subject of the action, and [be] 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.”

The U.S. District Court denied Laroe’s motion, reasoning that the developer owned no interest in the MareBrook property at the time of the taking alleged in Sherman’s complaint, meaning Laroe lacked Article III standing to pursue the takings claim. Sherman v. Town of Chester, 2015 WL 1473430, at *15-16 (S.D.N.Y. 2015). Without establishing its own constitutional standing, the court concluded, Laroe was not entitled to intervene as of right under Rule 24. Id.

The 2nd U.S. Circuit Court of Appeals reversed, rejecting the district court’s requirement that intervenors possess Article III standing. Quoting one of its prior decisions, the court explained that “‘there [is] no need to impose the standing requirement upon [a] proposed intervenor’ where ‘[t]he existence of a case or controversy [has] been established’ in the underlying litigation.” Town of Chester, 828 F.3d at 64. The court acknowledged, however, that the question of whether an intervenor as of right must establish its own standing to join an existing suit — originally filed by a party with standing — has long divided the federal courts of appeals. Id. at 64-65.

In fact, the Supreme Court has recognized the open question on two occasions, declining to resolve it in either case. See Diamond v. Charles, 476 U.S. 54, 69 (1986); McConnell v. Federal Election Commission, 540 U.S. 93, 233 (2003). The certiorari petition that the court has granted in Town of Chester, however, presents the question squarely.

The parties’ merits briefs were not yet available when this article went to press in March, but the certiorari-stage filings preview the parties’ theories. The town, seeking to limit intervention to those with standing, stresses that intervenors enjoy the rights of the original litigants, “including such privileges as the right to seek discovery, demand a jury trial, request remedies, block settlements, receive attorney’s fees, and (in some circumstances) raise new claims.” Certiorari Petition 19. Why, the town asks, should the law compel the original plaintiff to satisfy Article III’s standing requirements, without subjecting intervenors — who may exert just as much control over the litigation — to these same demands? Id.

In response, Laroe contends that limits on constitutional standing exist to give effect to Article III’s case-or-controversy requirement for federal jurisdiction. Brief in Opposition 16. And a case or controversy exists, the argument continues, so long as at least one plaintiff (here Sherman) has constitutional standing. Id. at 17.

The case, set for oral argument on April 17, should provide long-awaited guidance on this recurring issue. To be sure, the court’s decision will not affect every would-be intervenor as of right under Rule 24(a)(2). Some will readily meet the rule’s criteria and establish constitutional standing. For those who satisfy the rule’s elements but fall short under Article III, however, Town of Chester asks the dispositive question, and the answer to that question will speak meaningfully to the breadth of federal intervention.