Energy Law

Fifth Circuit Reverses, Allows Texas to Intervene in Cy Pres

By Marie Carlisle

On May 28, 2009, the Fifth Circuit decided In the Matter of: Lease Oil Antitrust Litigation, case no. 08-40230, reversing the District Court's denial of the State of Texas' motion to intervene in a matter concerning unclaimed settlement money from the oil antitrust action. The Fifth Circuit found that Texas met the requirements to intervene as it presented a timely motion, demonstrated an interest in the litigation which was direct and substantial and would be impaired without intervention, and that Texas' interest was not represented by any of the existing parties.   The appeal stemmed from a 1999 settlement in a class action where the Plaintiffs claimed oil companies were not paying the fair market value of oil at the well. After distribution of settlement checks to members of the class who could be located, $4,638,283 in funds remained and were owed to class members who could not be located, but whose last known addresses were in the State of Texas. The District Court decided to distribute the funds to a third party, under the doctrine of cy pres. The State of Texas was not a party to these hearings. On December 12, 2007, the district court approved the cy pres distribution but, anticipating an intervention and appeal by the State, set the funds aside rather than immediately distributing them. On January 11, 2008, Texas filed a motion to intervene and a motion to reconsider with the district court. Both motions were denied and Texas then appealed the denials to the Fifth Circuit, arguing that it should have been granted leave to intervene in the district court. The Fifth Circuit reversed the district court, finding that Texas met the requirements for intervention as of right—it filed a timely motion, presented a direct and substantial interest in the litigation which would be impaired absent intervention, and had demonstrated that its interests were not represented by the existing parties.
 

Full post as published by The Energy Law Blog on June 02, 2009 (boomark / email).