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Bear Ranch, LLC v. Heartbrand Beef

November 1, 2012


The opinion of the court was delivered by: Gregg Costa United States District Judge


Akaushi cattle, a national treasure of Japan, are the subject of this antitrust suit deep in the heart of Texas. The issue before the Court is whether to grant Twinwood Cattle Company's motion to intervene in the lawsuit Plaintiff Bear Ranch, LLC filed against Defendants HeartBrand Beef, Inc., American Akaushi Association, Inc., and Ronald Beeman, the chairman of HeartBrand Beef, Inc. (collectively, the "HeartBrand Defendants"). After considering the facts of the case, the arguments of counsel, and the applicable authorities, this Court is of the opinion that Twinwood's motion must be put out to pasture. Twinwood's motion to intervene is therefore DENIED.


Akaushi cattle are native to Japan. According to the parties, Akaushi meat is predisposed to developing higher marbling than does the meat of ordinary cattle, as well as a higher proportion of monounsaturated fat. The parties allege that this tendency gives Akaushi meat a taste that is renowned for its flavor, tenderness, and juiciness. Japan places severe restrictions on the export of Akaushi cattle.

HeartBrand is the self-proclaimed sole source of 100% pure Akaushi beef in the United States. In 1994, HeartBrand's predecessor exploited, in HeartBrand's own words, a "loophole" in a trade agreement between the United States and Japan, and imported a small number of pure-bred Akaushi cattle to Texas. Our History, HEARTBRAND BEEF, (last visited Oct. 31, 2012). Since that time, HeartBrand has used those original animals to breed a larger herd of pure-bred, or "full blood," Akaushi cattle. HeartBrand uses this herd to supply Akaushi beef products to restaurants, retailers, and consumers. Additionally, it sells Akaushi cattle and semen to other beef producers. When HeartBrand makes these sales, its contracts contain a number of provisions that create obligations and duties for purchasers. Notably, these provisions include requirements that purchasers register all Akaushi offspring with Defendant American Akaushi Association and abide by that Association's regulations. The provisions also forbid purchasers from collecting or selling Akaushi semen and restrict how purchasers may market and sell Akaushi cattle and meat products to third parties.

In 2010 and 2011, Bear Ranch purchased a total of almost 1,200 Akaushi cattle from HeartBrand and other producers, including the proposed intervenor Twinwood, who had themselves purchased cattle from HeartBrand. Then, in March 2012, Bear Ranch brought this suit alleging that the obligations and restrictions contained in HeartBrand's sales contract violate federal antitrust law and are unenforceable under Texas law. In the alternative, if the contractual restrictions are deemed lawful, Bear Ranch contends that the HeartBrand Defendants breached the sales contract by not imposing the same restrictions on other purchasers of Akaushi cattle. The HeartBrand Defendants have counterclaimed for breach of contract.

Twinwood now seeks to join the rodeo. It moves to intervene as a "party-plaintiff" as a matter of right under Federal Rule of Civil Procedure 24(a) and permissively under Rule 24(b). However, unlike Bear Ranch, it does not ask this Court to hold that the purchaser obligations and restrictions in HeartBrand's contracts are invalid. Twinwood requests only a declaratory judgment that the "most favored nations" clause in its contract with HeartBrand entitles its to the same benefits that Bear Ranch has now and will receive if that company prevails in invalidating the obligations and restrictions in its own contract with HeartBrand. Bear Ranch and the HeartBrand Defendants have momentarily ceased stamping their hooves at each other to join forces in opposition to Twinwood's motion.


Twinwood first argues that it is entitled to intervene as a matter of right under Rule 24(a)(2). That rule requires the Court to allow intervention when "(1) the motion to intervene is timely; (2) the potential intervenor asserts an interest that is related to the property or transaction that forms the basis of the controversy in the case into which [it] seeks to intervene; (3) the disposition of that case may impair or impede the potential intervenor's ability to protect [its] interest; and (4) the existing parties do not adequately represent the potential intervenor's interest." John Doe No. 1 v. Glickman, 256 F.3d 371, 375 (5th Cir. 2001); see also Fed. R. Civ. P. 24(a)(2). A "[f]ailure to satisfy any one requirement precludes intervention of right." Edwards v. City of Houston, 78 F.3d 983, 999 (5th Cir. 1996) (en banc). For the reasons discussed below, the Court concludes that Twinwood does not meet the second requirement because it does not have a legally recognized interest in the property or transaction underlying this suit.

To be entitled to intervention, a party must have a "direct, substantial, legally protectable interest in the proceedings." New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co. (NOPSI), 732 F.2d 452, 463 (5th Cir. 1984) (en banc) (citations and quotation marks omitted). Under this standard, "something more than an economic interest is necessary." Id. at 464. The interest asserted must be one "that the substantive law recognizes as belonging to or . . . owned by the applicant" for intervention. Edwards, 78 F.3d at 1004.

Decisions within the Fifth Circuit demarcate those interests that are sufficient to warrant intervention as of right. In In re Lease Oil Antitrust Litigation, 570 F.3d 244 (5th Cir. 2009), the State of Texas had the right to intervene to contest the distribution of unclaimed funds from a class action settlement. This was because, under state law, the State had a right to unclaimed or abandoned property, and thus had "a property right in interest from the unclaimed funds that [was] recognized under state law." Id. at 251. Likewise, an interest sufficient for intervention as a matter of right was found in United Rentals, Inc. v. Martitrend, Inc., No. 00-3600, 2002 WL 230816 (E.D. La. Feb. 13, 2002), a case that arose out of a breached contract for the sale of damaged forklifts. Id. at *1. The plaintiff in that case, the owner of the forklifts, brought suit against the company that damaged the forklifts. Id. At the same time, the plaintiff agreed to sell the damaged forklifts to the intervenor, but breached the sales contract and sold instead to a different bidder. Id. The intervenor's asserted interest was sufficient because it had a contractual interest in the actual property underlying the suit-the damaged forklifts-the value of which was at issue in the plaintiff's claim for damages against the defendant. Id. at *3.

In contrast, courts have found that asserted interests are not sufficient to justify intervention when either no legally recognized interest existed or when the interest asserted was too contingent, speculative, or remote from the subject of the case. In NOPSI, the plaintiff, a private utility company providing electric power to the City of New Orleans, filed suit against the defendant, a seller of natural gas, over a contractual dispute concerning fuel prices. NOPSI, 732 F.2d at 454--55. The Mayor of New Orleans and a number of other citizens attempted to intervene on the ground that the electricity rates they paid would be increased if the fuel-pricing dispute was decided against the plaintiff utility company. Id. at 460--61. The NOPSI court held this "purely economic interest" to be insufficient to justify intervention. Id. at 466.

The district court relied on similar reasoning in Adams v. Consol. Wood Prods. Emp. Benefit Plan, No. 2:10-cv-310-TJW, 2011 WL 665821 (E.D. Tex. Feb. 14, 2011). In that case, two workers, a grandfather and grandson, were badly injured while unloading wooden pallets from a tractor-trailer. Id. at *1. The grandfather filed a claim against his employer's ERISA plan, and the grandson, who was not covered by the plan, attempted to intervene because the employer's total insurance was capped at $1 million, such that any ERISA payment to the grandfather would limit the insurance money available to pay off the grandson's separate negligence suit. Id. at *1, *4. Despite the significant economic impact the case might have on the grandson, the court denied intervention because the grandson had no legal interest in the ERISA plan itself. Id. at *4.

Texas v. Dep't of Energy, 754 F.2d 550 (5th Cir. 1985), demonstrates that speculative interests are insufficient. In that case, the State of Texas filed for review of the U.S. Department of Energy's designation of several west Texas sites as nuclear waste depositories. Id. at 551. A large number of electrical utilities operating nuclear power plants moved to intervene, arguing that any delay caused by the review would increase their statutory obligations to pay into the Department's nuclear waste offset fund. Id. While the court noted that intervention might be appropriate if the legality of the offset fund itself was challenged, it stated that the asserted interest was too indirect; the intervenors' interest in ...

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