United States District Court, E.D. Texas, Marshall Division
MEMORANDUM OPINION AND ORDER
GILSCRAP, UNITED STATES DISTRICT JUDGE
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
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.
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.
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).
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.)
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. (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
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
(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.
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).
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.