Labor & Employment Law Daily Wrap Up, PROCEDURE—9th Cir.: Employees had right to intervene in proposed settlement that released non-overlapping claims, (Jun 10, 2025)

By Ronald Miller, J.D.

Because the proposed intervenors seek to intervene to represent the state on claims the Chalian/Cabrera plaintiffs were not authorized to pursue or settle, they have a “significantly protectable interest” that warrants intervention as of right.

Because a proposed settlement of wage claims under the California Labor Code included a release of three non-overlapping claims, two proposed intervenors satisfied the requirements for intervention as a right under Rule 24(a), ruled the Ninth Circuit in a 2-1 unpublished decision. The proposed intervenors have a significantly protectable interest in the three non-overlapping claims because they sought to represent the state on claims the Chalian/Cabrera plaintiffs were not authorized to pursue or settle, and the proposed settlement threatened to extinguish those non-overlapping claims, the court found. Thus, the proposed intervenors satisfied the requirements for intervention as of right under Rule 24(a). Judge Bumatay filed a separate dissenting opinion (Chalian v. CVS Pharmacy, Inc., No. 20-55916 (9th Cir. Jun. 6, 2025, unpublished)).

Two proposed intervenors appealed a district court’s order denying their motions for mandatory and permissive intervention in an action brought pursuant to California’s PAGA. Originally, two separate actions were brought against CVS, alleging various labor code violations, but they were consolidated and entered into settlement discussions with CVS.

Entitlement to intervention. The plaintiffs in this action were simultaneously litigating similar claims against CVS, and they sought to intervene in this consolidated action when they received notice of the proposed settlement.

A nonparty is entitled to intervention as of right under Rule 24(a) when it: “(i) timely moves to intervene; (ii) has a significantly protectable interest related to the subject of the action; (iii) may have that interest impaired by the disposition of the action; and (iv) will not be adequately represented by existing parties.”

Timeliness of motion to intervene. Untimeliness alone can be dispositive of a motion to intervene as a matter of right. In determining whether a motion for intervention is timely, the court considers three factors: “(1) the stage of the proceeding at which an applicant seeks to intervene; (2) the prejudice to other parties; and (3) the reason for and length of the delay.” Prejudice is the most important consideration in deciding whether a motion for intervention is untimely.

Under Ninth Circuit precedent, the only relevant prejudice is “that which flows from a prospective intervenor’s failure to intervene after he knew, or reasonably should have known, that his interests were not being adequately represented.”

Proposed intervenors. Here, the proposed intervenors first learned of the Chalian/Cabrera cases in January 2019, when they prepared a joint case management statement with CVS in their separate action. At that time, the Chalian/Cabrera suit included several claims common to the Hyams suit, but the Hyams suit asserted three PAGA claims the Chalian/Cabrera plaintiffs did not: violation of (1) the sick-days notice provision of the California Labor Code; (2) the rest-day provisions in California Labor Code; and (3) the pharmacy-maximum-work provisions in California Labor Code (non-overlapping claims).

The proposed intervenors maintained that the Chalian/Cabrera actions were not related to their case because neither the Chalian nor the Cabrera plaintiffs alleged the three non-overlapping claims. Nor had the Chalian/Cabrera plaintiffs been authorized by the California Labor and Workforce Development Agency (LWDA) to pursue the non-overlapping claims, because they did not satisfy the notice requirements of California Labor Code. Further, the counsel for CVS represented to the proposed intervenors on March 31, 2020 that there were no pending class action settlement agreements that might affect their case, despite fully executing the Chalian/Cabrera settlement agreement earlier that month.

Amended complaint. On June 3, 2020, the Chalian/Cabrera plaintiffs lodged an amended consolidated complaint that included—for the first time—the three non-overlapping claims. The proposed intervenors received notice of the Chalian/Cabrera settlement on June 4, 2020. Realizing the settlement purported to settle the non-overlapping claims, the proposed intervenors moved to intervene the following day. Because the proposed intervenors moved to intervene immediately upon discovering that “their interests were not being adequately represented,” their motion was timely.

Protectable Interest. The proposed intervenors have a significantly protectable interest in the three non-overlapping claims. Under California Labor Code § 2699.3(a)(1)(A), a PAGA claim “shall commence only after” an aggrieved employee gives written notice to LWDA of “the specific provisions of the labor code alleged to have been violated, including the facts and theories to support the alleged violation.” Only the proposed intervenors complied with § 2699.3 for the non-overlapping claims, and thus only they were “authorize[d]” by the state to pursue them.

The appeals court rejected the Chalian/Cabrera plaintiffs and CVS’ contention that they provided sufficient notice to LWDA because they sent LWDA their Second Amended Consolidated Complaint and Notice of Settlement on June 22, 2020. Providing initial notice to the state on the eve of settlement did not satisfy California’s statutory notice requirement, observed the appeals court, ruled the appeals court.

Because the proposed intervenors seek to intervene to represent the state on claims the Chalian/Cabrera plaintiffs were not authorized to pursue or settle, they have a “significantly protectable interest” that warrants intervention as of right.

Prejudice to proposed intervenors. Moreover, the proposed intervenors demonstrated that their interests were at risk of being “impair[ed]” by “the disposition of the action” because the proposed settlement threatened to extinguish the non-overlapping claims.

Inadequate representation. To evaluate adequacy of representation, courts consider three factors: “(1) whether the interest of a present party is such that it will undoubtedly make all of a proposed intervenor’s arguments; (2) whether the present party is capable and willing to make such arguments; and (3) whether a proposed intervenor would offer any necessary elements to the proceeding that other parties would neglect.”

On the first and second factors, CVS and the settling parties appraised the three non-overlapping claims at a fraction of the value the proposed intervenors had assigned. The Chalian/Cabrera plaintiffs did not litigate these claims, but they argue that they were provided some discovery during the course of the mediation and were therefore able to adequately assess the value of the claims.

In order to review this appeal, it was sufficient to recognize that the complete release of the three non-overlapping claims—which the Chalian/Cabrera plaintiffs were not authorized to pursue and that had not been litigated in the Chalian/Cabrera case until the parties entered the settlement phase—amounts to more than mere “disagreement over litigation strategy,” observed the appeals court.

Because the Chalian/Cabrera plaintiffs did not litigate the non-overlapping claims, they were not well positioned to “make all of a proposed intervenor’s arguments” or “capable and willing to make such arguments.” In light of the purpose of the PAGA statute, it was incumbent upon the court to ensure that the broader class membership of all non-exempt CVS employees, not just pharmacy employees, was adequately represented and that counsel was positioned to advocate the merits of the non-overlapping claims.

On the third factor, the proposed intervenors offer a “necessary element to the proceeding” because they are the only plaintiffs authorized by LWDA to pursue the three non-overlapping claims.

Because the appeals court concluded that the proposed settlement included the release of the three non-overlapping claims, the proposed intervenors satisfied the requirements for intervention as of right under Rule 24(a).

Accordingly, the appeals court reversed and remanded the judgment of the district court.

Dissent. In dissent, Judge Bumatay argued that this case follows an unfortunate trend in the Ninth Circuit—of overriding the principles of federalism to reach outcomes unsupported by state law in unpublished memorandum dispositions. Here, the district court concluded that the attempted intervention was untimely and that the proposed intervenors lacked a protectable interest. In reversing, the majority ignores the district court’s timeliness ruling and California courts’ interpretation of PAGA. The dissent argued that the district court did not abuse its discretion in denying permissive intervention since the proposed intervenors’ intervention would delay resolution of the case indefinitely and prejudice the existing parties.

The case is No. 20-55916.

Judge: Per curiam.

Attorneys: R. Craig Clark (Consumer & Employment Lawyers) for Sevag Chalian. Tyler Ryan Andrews (Greenberg Traurig) for CVS Pharmacy, Inc.

Companies: CVS Pharmacy, Inc.

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