Antitrust Law Daily Wrap Up, ANTITRUST—E.D. Pa.: New intervention in long-running Jiffy Lube class action would have slowed gears of justice, (Dec 14, 2023)

By Justin Marcus Smith, J.D.

The court concluded the proposed intervenor was inefficiently and prejudicially trying to file a new case in the docket of a much older one that settled.

Intervention would have been inappropriate in a five-year-old class action, where the proposed intervenor was aware of the litigation, but sat on his rights, held the federal district court in Philadelphia. The new intervenor was not afforded a presumption of timeliness where an intervening settlement now excluded him from the action. In considering the totality of the circumstances, the court noted that late stage interventions in class actions tended to undermine efficiency. Permitting intervention at this late stage would also have lacked any limiting principle leading to a potentially endless series interventions that would prejudice party efforts to resolve the dispute (Fuentes v. Jiffy Lube International, Inc., December 13, 2023, Brody, A.).

Background. Jiffy Lube International, Inc., the largest chain of quick automotive oil changes chain in the United States, incorporated a clause into its franchise agreement prohibiting franchisees from soliciting or hiring employees from other Jiffy Lube franchises (the no-poach agreements). Fuentes, one such former franchise employee, filed a complaint against Jiffy Lube individually on behalf of a nationwide class. After four years of litigation, Fuentes and Jiffy Lube moved for preliminary approval of their settlement on or about July 22, 2022, but only as to employees who worked at Jiffy Lube in the greater Philadelphia metro area. The court preliminarily approved the Fuentes settlement over a year later, on September 15, 2023.

In the meantime, six weeks after Fuentes moved for approval of the Philadelphia area settlement, a former Jiffy Lube California franchise employee, Jimenez, sought intervention as the representative of a nationwide class. Jimenez attached a new complaint alleging violations of antitrust law on behalf of himself and a nationwide class of former Jiffy Lube workers. The court permitted Jimenez to intervene, but after Jimenez began to litigate and moved to access the discovery record, the court granted Jiffy Lube’s motion to compel Jimenez to arbitrate, dismissed Jimenez from the action, and disposed of his pending motions as moot. That included a motion to amend containing a footnote that apparently attempted to hold the intervention door open for yet another potential intervenor, Hernandez.

Intervention denied. On September 21, 2023, Hernandez, with the same attorney as Jimenez, sought to intervene to pursue a nationwide action, but the court denied this new attempt to intervene as untimely under Fed. R. Civ. P. 24(a) and (b). The presumption of timeliness afforded to unnamed class members seeking to intervene did not apply to Hernandez, despite his inclusion in the complaint’s original class definition. He was outside the Philadelphia area, so he was no longer a putative class member. What mattered now was timeliness in light of the totality of circumstances: Hernandez’ delay in filing in relation to the late stage of the proceeding; his unjustified reason for delay; and additional permissive delays that could cause prejudice.

Hernandez’ delay. The court found the jeopardy to Hernandez’ rights accrued over a year earlier, on July 22, 2022, when Fuentes filed his motion for approval of the settlement and the second amended complaint that excluded Hernandez and Jimenez from the putative class. Jimenez moved to intervene on September 2, 2022. Hernandez should have also been aware of the change in the class definition at that time, not measured from over a year later when Jimenez was sent to arbitration on September 14, 2023. The court concluded here that Hernandez delayed in pressing his claims as a class representative by about a year and two months.

The court also found that Hernandez did not have cause to excuse his delay on the basis that he relied on Jimenez’ leave to amend motion for Hernandez’ own inclusion in the case. Instead, he waited, at his own jeopardy, to see if Jimenez could adequately represent his interests. The court said the Supreme Court rejected this very “wait and see” approach in China Agritech, Inc. v. Resh, 138 S. Ct. 1800, 1810–11 (2018), even where a lead plaintiff’s deficiencies, like Jimenez’ arbitration agreement here, were not immediately known. The court said Hernandez’ cite to United States v. Alcan Aluminum, Inc., 25 F.3d 1174, 1182 (3d Cir. 1994) was “inapposite” because the reason for Hernandez’ delay, waiting for the disposition of Jimenez’ motions, was “not relevant to the analysis of his motion.”

Reliance on the footnote in Jimenez’ reply brief, which asked the court to construe Jimenez’ motion for leave to amend as a Hernandez motion to intervene, was misplaced. The footnote was not enough to safeguard Hernandez’ rights because the court’s order compelling Jimenez to arbitrate his claims dismissed Jimenez from the case and made all of Jimenez’ outstanding motions moot.

Proceeding stage. Hernandez’ delay, alone, was not determinative, but the court held the late stage of the proceedings also mattered. The merits had been litigated for five years, and again, the court had already granted a Philadelphia class certification. The circumstances here, with Hernandez seeking to intervene after preliminary approval of a class action settlement agreement, were like those in Brennan v. Community Bank, N.A., 314 F.R.D. 541, 543–44 (M.D. Pa. 2016). The court said the stage of a proceeding was especially important in the context of a class action because courts need time to consider competing claims for class representation to discover and address any plaintiff or class counsel deficiencies at the earliest moment. Late-stage interventions tended to undermine efficiency.

A key point here was that Jimenez and Hernandez had the same counsel. The court interpreted, therefore, that Hernandez was not trying to join the Fuentes suit as much as he was trying to “resuscitate” the Jimenez nationwide class action complaint. The court reasoned here that class membership was “still in flux” when Jimenez intervened to the extent the court had not preliminarily certified Fuentes’ class. The court rejected Hernandez’ claim that he was “simply pursuing” the Jimenez claims in the way Jimenez would have done if the court had not sent Jimenez to arbitration. The court perceived that Hernandez was trying to file a new case on a five-year-old docket, where attempting to intervene in a class action near the end of litigation was “particularly disfavored.”

Prejudicial delay. The court continued that allowing Hernandez to intervene at such a late stage would equally call for letting other prospective lead plaintiffs intervene. Without a limiting principle, successive interventions would endlessly resuscitate the litigation and delay finalization of class certification and settlement to the prejudice of existing parties trying to conclude the case.

The Case is No. 2:18-cv-05174-AB.

Attorneys: George R. Brand (Paul LLP) for Victor Fuentes. Anne M. Rodgers (Norton Rose Fulbright US LLP) for Jiffy Lube International, Inc.

Companies: Jiffy Lube International, Inc.

Cases: Antitrust FranchisingDistribution PennsylvaniaNews GCNNews