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Team Worldwide Corp. v. Wal-Mart Stores, Inc.

United States District Court, E.D. Texas, Marshall Division

December 7, 2017

TEAM WORLDWIDE CORPORATION, Plaintiff,
v.
WAL-MART STORES, INC., WAL-MART STORES TEXAS, LLC, WAL-MART.COM USA LLC, SAM'S WEST, INC. D/B/A SAM'S CLUB, Defendants.

          MEMORANDUM OPINION AND ORDER

          RODNEY GILSCRAP, UNITED STATES DISTRICT JUDGE

         Before the Court are three motions: (1) Intex Recreation Corp. and Intex Trading Ltd.'s Motion to Intervene (Dkt. No. 29); (2) the Coleman Company, Inc.'s Motion to Intervene (Dkt. No. 35); and (3) Bestway (USA), Inc.'s Motion to Intervene (Dkt. No. 64). Having considered these Motions and the relevant authorities, the Court is of the opinion that each of the Motions should be GRANTED as set forth herein.

         I. BACKGROUND

         On March 29, 2017, Team Worldwide Corporation (“TWW”) filed suit against Wal-Mart Stores, Inc., Wal-Mart Stores Texas, LLC, Wal-Mart.com USA LLC, Sam's West, Inc. d/b/a Sam's Club (collectively, “Walmart” or “Defendants”), alleging infringement of U.S. Pat. No. 9, 211, 018, U.S. Pat. No. 7, 346, 950, and U.S. Pat. No. 7, 246, 394 (collectively, the “Asserted Patents”). On June 5, 2017, Walmart filed its answer. (Dkt. No. 16.) In July, this Court held a scheduling conference where counsel for TWW and Walmart appeared before the Court.

         On August 2, 2017, Intex Recreation Corp. and Intex Trading Ltd. (collectively, “Intex”) sought this Court's permission to intervene pursuant to Fed.R.Civ.P. 24. (Dkt. No. 29.) Intex Recreation Corp. (“IRC”) is responsible for importing, marketing, sales, and domestic distribution of all Intex brand products. (Id.; Dkt. No. 29-1 ¶ 10.) Intex Trading Ltd. (“ITL”) is a trading entity that enters directly into sales contracts with domestic retailers that purchase Intex products from ITL. (Id. ¶¶ 10, 14, 22.) Both IRC and ITL have entered into supplier agreements and sales contracts with Walmart covering the Accused Products. The agreements include provisions in which IRC and ITL have agreed to indemnify Walmart as to certain claims relating to the Accused Products, including patent infringement. (Dkt. No. 29 at 9; Dkt. No. 29-1 ¶¶ 16-17.) After TWW filed this suit, Walmart requested indemnification from IRC and ITL; IRC acknowledged its indemnification obligations on May 12, 2017 and ITL acknowledged its obligations on May 15, 2017. (Id.)

         On August 3, 2017, the Coleman Company, Inc. (“Coleman”) sought this Court's permission to intervene pursuant to Fed.R.Civ.P. 24. (Dkt. No. 35.) Coleman sells the accused Coleman and Aerobed branded air mattresses to Walmart and other retailers. (Id. at 7; Dkt. No.35-1 ¶¶ 13, 15.) Coleman's employees assist in the design, development, marketing, and distribution of the Coleman Accused Products. (Id. ¶ 13.) Coleman also directly executes sales contracts and supply agreements with retailers and sells Coleman and Aero-Bed branded inventory to retailers and wholesalers. (Id. ¶¶ 13, 15.) Coleman has entered into indemnification agreements with Walmart in which Coleman specifically agreed to indemnify Walmart for claims of patent infringement asserted against the Accused Products. (Id. ¶ 15.) After TWW filed their suit, Walmart requested indemnification from Coleman for the claims asserted against the Coleman and Aerobed branded products. Coleman acknowledged its indemnification obligations on April 27, 2017. (Id. ¶ 16).

         On October 5, 2017, Bestway (USA), Inc. (“Bestway”) sought this Court's permission to intervene pursuant to Fed.R.Civ.P. 24. (Dkt. No. 64.) TWW's infringement contentions, which were served on July 21, 2017, listed products supplied by Bestway as Accused Products. (See Dkt. No. 64-3 at 3.) Bestway is the domestic importer of the Bestway branded Accused Products and also supplies a variety of other inflatable products to Walmart. (Id. at 4.) Bestway has a supply agreement with Walmart in which Bestway is obligated to indemnify Walmart for claims of patent infringement asserted against the Accused Products. (Dkt. No. 64-3 at 4.) On August 11, 2017, Walmart requested indemnification from Bestway for the claims against the Accused Bestway Products, and Bestway acknowledged its indemnification obligations on September 26, 2017. (Id. at 4-5.)

         In short, these proposed intervenors-Intex, Coleman, and Bestway-have moved to intervene as defendants in this case. (See Dkt. Nos. 29, 36, and 64.) Each proposed intervenor asserts that they are a “true defendant” in this lawsuit-in the spirit of the “customer-suit” exception-and fulfill the requirements of Federal Rule of Civil Procedure 24(a)(2) and must be allowed into the case as intervenor-defendants.[1] (Id.) In the alternative, all the proposed intervenors ask that the Court allow them to intervene under Fed.R.Civ.P. 24(b)(2)-i.e. permissive intervention. (Id.)

         II. LEGAL STANDARD

         A. Mandatory Intervention.

         Federal Rule of Civil Procedure 24(a)(2) provides that “[o]n timely motion, the court must permit anyone to intervene who: 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.” A proposed intervenor is entitled to mandatory intervention if all of the following elements are satisfied:

(1) the application for intervention must be timely; (2) the applicant must have an interest relating to the property or transaction which is the subject of the action; (3) the applicant must be so situated that the disposition of the action may, as a practical matter, impair or impede his ability to protect that interest; and (4) the applicant's interest must be inadequately represented by the existing parties to the suit.

Texas v. United States, 805 F.3d 653, 657 (5th Cir. 2015) (citing New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co., 732 F.2d 452, 463 (5th Cir.1984)) (en banc). “Failure to satisfy one requirement precludes intervention of right.” Haspel & Davis Milling & Planting Co. v. Bd. of Levee Comm'rs of the Orleans Levee Dist., 493 F.3d 570, 578 (5th Cir. 2007).[2]

         B. Permissive Intervention.

         Federal Rule of Civil Procedure 24(b)(1) provides that “[o]n timely motion, the court may permit anyone to intervene who: (A) is given a conditional right to intervene by a federal statute; or (B) 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). “In exercising its discretion, the court must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights.” Fed.R.Civ.P. 24(b)(3). Allowing permissive intervention under Rule 24(b) is wholly discretionary even where there is a common question of law or fact. See New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co., 732 F.2d 452, 471 (5th Cir. 1984).

         III. ANALYSIS

         A. Mandatory Intervention.

         Each of the proposed intervenors argue that they meet all of the four requirements of Rule 24(a)(2) and, therefore, that the Court must allow each to intervene. The Court now addresses each requirement in turn.

         i. ...


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