Filed: Aug. 25, 2015
Latest Update: Mar. 02, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 14-3286 _ Federal Trade Commission lllllllllllllllllllll Plaintiff - Appellee v. Eric L. Johnson lllllllllllllllllllllReceiver - Appellee BF Labs, Inc. a Wyoming corporation, doing business as Butterfly Labs; Darla Drake, an individual; Nasser Ghoseiri, an individual; Sonny Vleisides, an individual lllllllllllllllllllll Defendants - Appellees - Kyle Alexander; Dylan Symington lllllllllllllllllllllMovants - Appellants _ Appeal from Unite
Summary: United States Court of Appeals For the Eighth Circuit _ No. 14-3286 _ Federal Trade Commission lllllllllllllllllllll Plaintiff - Appellee v. Eric L. Johnson lllllllllllllllllllllReceiver - Appellee BF Labs, Inc. a Wyoming corporation, doing business as Butterfly Labs; Darla Drake, an individual; Nasser Ghoseiri, an individual; Sonny Vleisides, an individual lllllllllllllllllllll Defendants - Appellees - Kyle Alexander; Dylan Symington lllllllllllllllllllllMovants - Appellants _ Appeal from United..
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United States Court of Appeals
For the Eighth Circuit
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No. 14-3286
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Federal Trade Commission
lllllllllllllllllllll Plaintiff - Appellee
v.
Eric L. Johnson
lllllllllllllllllllllReceiver - Appellee
BF Labs, Inc. a Wyoming corporation, doing business as Butterfly Labs; Darla
Drake, an individual; Nasser Ghoseiri, an individual; Sonny Vleisides, an individual
lllllllllllllllllllll Defendants - Appellees
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Kyle Alexander; Dylan Symington
lllllllllllllllllllllMovants - Appellants
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Appeal from United States District Court
for the Western District of Missouri - Kansas City
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Submitted: June 11, 2015
Filed: August 25, 2015
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Before GRUENDER, BEAM, and BENTON, Circuit Judges.
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BENTON, Circuit Judge.
The Federal Trade Commission sued BF Labs, Inc. (BFL) for unfair and
deceptive acts. Two consumers, Kyle Alexander and Dylan Symington, moved to
intervene. The district court1 denied their motion. Having jurisdiction under 28
U.S.C. § 1291, this court affirms.
In April 2014, the two consumers filed a class action against BFL. They
challenged its “deceptive and unconscionable business practices” in marketing and
selling Bitcoin mining machines.
This case began five months later when the FTC sued BFL to enjoin it from
“deceptive acts or practices” in marketing and selling Bitcoin mining machines. See
15 U.S.C. § 45(a) (“Unfair methods of competition unlawful”). The FTC sought
preliminary injunctive relief “to avert the likelihood of consumer injury,” a permanent
injunction, and other relief “necessary to redress injury to consumers resulting from
Defendants’ violations of the FTC Act, including . . . rescission or reformation of
contracts, restitution [and] the refund of monies paid . . . .” The district court granted
a temporary restraining order, establishing a receivership and staying all suits against
BFL. The FTC suit is pending; the district court has wound down the receivership
and lifted the stay.
On behalf of their class, the consumers moved to intervene permissively and
of right. The FTC opposed the motion and, in a footnote, said the consumers “failed
to establish that they have standing to intervene.” The district court denied the
consumers’ motion on the merits.
1
The Honorable Brian C. Wimes, United States District Judge for the Western
District of Missouri.
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The parties brief the standing issue. The consumers appeal the denial of their
motion to intervene of right. “The denial of a motion to intervene of right is
immediately appealable as a final judgment . . . and our review is de novo.” United
States v. Metro. St. Louis Sewer Dist.,
569 F.3d 829, 833 (8th Cir. 2009).
I.
An intervenor must establish Article III standing. Nat’l Parks Conservation
Ass’n v. EPA,
759 F.3d 969, 974 (8th Cir. 2014). The intervenor must show (1)
injury, (2) causation, and (3) redressability.
Id. To satisfy the first element, an
intervenor “must clearly allege facts showing an injury in fact, which is an injury to
a legally protected interest that is concrete, particularized, and either actual or
imminent.” Metro. St. Louis Sewer
Dist., 569 F.3d at 834. “Abstract injury is not
enough.” City of Los Angeles v. Lyons,
461 U.S. 95, 101 (1983). The intervenor
must show “the injury or threat of injury must be both real and immediate, not
conjectural or hypothetical.” See
id. at 101-02 (quotations omitted).
The consumers argue that a successful FTC suit “will eliminate class members’
contractual right to obtain possession of the Bitcoin mining equipment . . . and will
extinguish class members’ ability to recover damages . . . .” This alleged “injury” is
not actual or imminent. See Metro. St. Louis Sewer
Dist., 569 F.3d at 834. Rather,
it is conjectural and hypothetical. See
Lyons, 461 U.S. at 101-02. The FTC suit is
pending, and there has been no adjudication of the FTC’s claims.
Citing National Parks, the consumers argue that their “alleged risk of financial
harm . . . satisfies the actual or imminent injury in fact requirement.” But this case
is like Metropolitan St. Louis Sewer
District, 569 F.3d at 836, “where the potential
intervenor’s financial injury [is] contingent on several conditions.” See Nat’l
Parks,
759 F.3d at 975. The FTC must first prevail, the district court must then award relief
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that precludes a consumer recovery, the consumers’ class must be certified, and the
class must prevail.
The consumers also cite United States v. White Plume,
447 F.3d 1067 (8th Cir.
2006). That case is inapposite. The question there was not the intervenors’ standing
to intervene—they had already intervened—but their standing to bring constitutional
claims. White
Plume, 447 F.3d at 1074-75.
The consumers lack standing to intervene of right.
II.
Even if the consumers had standing to intervene, they must meet Rule 24(a)
requirements. “[A] putative intervenor must establish that it: (1) has a recognized
interest in the subject matter of the litigation that (2) might be impaired by the
disposition of the case and that (3) will not be adequately protected by the existing
parties.” N. Dakota ex rel. Stenehjem v. United States,
787 F.3d 918, 921 (8th Cir.
2015) (brackets omitted).
“[I]f an existing party to the suit is charged with the responsibility of
representing the intervenor’s interests, a presumption of adequate representation
arises.” Chiglo v. City of Preston,
104 F.3d 185, 187 (8th Cir. 1997). “[T]he burden
is greater if the named party is a government entity that represents interests common
to the public.” Little Rock Sch. Dist. v. N. Little Rock Sch. Dist.,
378 F.3d 774, 780
(8th Cir. 2004), citing Curry v. Regents of Univ. of Minn.,
167 F.3d 420, 423 (8th
Cir. 1999) (describing parens patriae doctrine). “We presume that the government
entity adequately represents the public, and we require the party seeking to intervene
to make a strong showing of inadequate representation; for example, it may show that
its interests are distinct and cannot be subsumed within the public interest represented
by the government entity.”
Id. “A difference of opinion concerning litigation
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strategy or individual aspects of a remedy does not overcome the presumption of
adequate representation.” Jenkins ex rel. Jenkins v. State of Mo.,
78 F.3d 1270,
1275 (8th Cir. 1996).
Congress “empowered and directed” the FTC “to prevent . . . corporations . .
. from using . . . unfair or deceptive acts or practices in or affecting commerce.” 15
U.S.C. § 45(a)(2). In fact, “there is no private cause of action for violations of the
Federal Trade Commission Act.” See Morrison v. Back Yard Burgers, Inc.,
91 F.3d
1184, 1187 (8th Cir. 1996). The interests of the consumers’ proposed class are
subsumed within the public interest because the FTC, on behalf of consumers, seeks
relief for the same “deceptive and unconscionable business practices” alleged by the
consumers. The consumers have not made the necessary “strong showing of
inadequate representation.” See Little Rock Sch.
Dist., 378 F.3d at 780.
The district court properly denied the consumers’ motion to intervene of right.
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The judgment is affirmed.
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