Justices to Tackle Circuit Split on Intervention Standing

(CN) – The Supreme Court has taken up a case that will determine once and for all whether those who intervene in federal civil cases need independent standing to sue.

Per its custom, the justices did not issue any statement Friday alongside their order taking up the case. In its petition for certiorari, the town of Chester, N.Y., had noted that 10 federal appeals courts weighed in on the issue but “are hopelessly divided.”

“The day to resolve that important and difficult question has come,” the filing continues, filed by the firms Sokoloff Stern and Hogan Lovells.

Chester is appealing a Second Circuit decision from July 2016 that found proof of standing unnecessary.

The underlying case involves claims that the town spent a decade constantly changing local zoning regulations to thwart plans for a 400-unit residential subdivision on 400 acres. According to a 2008 article by the Times Herald-Record, Chester worried that developer Steven Sherman would market the MareBrook development to Hasidic Jews who would create an orthodox enclave there similar to the nearby village of Kiryas Joel.

Located in an area of the Catskill Mountains popular in the 1950s as the “Borscht Belt” or Jewish Alps, the town and village sit near Harriman in Orange County, about an hour northwest of New York City.

Sherman’s battle with the town soon drew help from local real estate developer Laroe Estates Inc., which offered some financial relief in exchange for lots on which it could build once the town approved the subdivision. That never happened and the land was lost to bank foreclosure in 2014, court documents show.

Laroe filed to intervene after the Second Circuit revived Sherman’s takings case, which after the developer’s death is now being fought by his widow, Nancy.

Though Laroe says its earlier land deal with Sherman gives it an interest in the dispute, a federal judge denied it intervention as futile.

The District Court ruled in 2015 that the company lacked standing because it was not an owner of the property at the time of the alleged taking.

Laroe appealed successfully to the Second Circuit, which decided in July that a proposed intervenor need not demonstrate independent standing in an existing case.

The Manhattan-based federal appeals court noted that it ruled in 1978 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.”

Recognizing “a circuit split on this issue has persisted for some time,” the three-judge panel tried to divine Supreme Court input. They said the Supreme Court “has certainly suggested – although without deciding – that an intervenor need not independently have standing where the original party has standing.”

Chester now says it wants to hear that from the high court itself, noting the 3-7 split among the circuits on intervenor standing.

“Without resolution, identical requests for intervention will continue to meet different results based on nothing more than geography,” its petition states.

Chester says the six circuits that ruled with the Second improperly put intervenors on equal footing with original litigants, which had to prove their right to bring the complaint.

“‘Standing is not dispensed in gross,’” the town said, citing 1996 Supreme Court precedent. Laroe, in its opposition brief to the certiorari petition, called the Sherman case “a poor vehicle” to resolve the circuit split.

“This court should not devote its resources to a largely academic question that has little practical significance,” the company added, represented by the firms Jones Day and Goshen attorney Joseph Haspel.

Laroe noted there still was a question outstanding in district court on whether it even qualified as an intervenor under the federal rules of civil procedure. If the District Court says no, then “whether intervenors must also possess standing will be moot,” it added.

“Review of the question presented at this interlocutory stage is therefore premature,” the brief continues.

Neal Kumar Katyal of Hogan Lovells in Washington, D.C., is counsel of record for the town; Shay Dvoretzky of Jones Day in Washington represents Laroe.

An amicus brief from the International Municipal Lawyers Association supported the town’s petition, calling any expansion of intervenor status potentially expensive for municipalities.

Allowing Laroe to intervene “sets a dangerous precedent that allows parties without a direct stake in the outcome of a case to prolong and complicate litigation,” wrote Sarah Shalf of the Emory Law School Supreme Court Advocacy Program.