Court: Colorado Court of Appeals; August 1, 2013; Colorado; State Appellate Court
State Farm Mutual Automobile Insurance Company (State Farm) appealed a district court order that denied its motion to intervene in a personal injury case involving Maranda G. Mauro, who was injured in a vehicle accident caused by B.C., the driver insured by State Farm. Maranda's father filed a complaint against B.C. and the vehicle owner, S.O. State Farm sought to intervene to oppose a protective order filed by the Mauros requesting confidentiality for their medical, school, employment, and tax records, arguing that compliance would impose undue burdens and conflict with its legal obligations. The Mauros did not object to State Farm's intervention request. However, the district court issued a protective order without ruling on the intervention motion, leading State Farm to interpret this as a denial and appeal. The appeal was initially dismissed for lack of a final order. In May 2012, State Farm renewed its motion to intervene, which the Mauros opposed, arguing that State Farm's interests were adequately represented by B.C. and S.O.’s corporate counsel and that allowing intervention would enable insurance companies to selectively enter lawsuits. The district court denied State Farm's renewed motion, adopting the Mauros' arguments as its rationale. State Farm subsequently appealed this denial.
State Farm argues that the district court wrongly denied its motion to intervene as a matter of right in order to challenge a protective order. The protective order restricts State Farm's use of the Mauros' records solely to litigation purposes and mandates their return or destruction post-litigation, which State Farm claims hinders its compliance with state and federal insurance laws, obstructs functions authorized by these regulations, conflicts with its electronic claims systems, and poses a risk of economic harm. State Farm asserts that these interests are inadequately represented by its counsel for B.C. and S.O. in the ongoing tort claims defense.
Under C.R.C.P. 24(a), intervention as a right requires (1) the applicant to claim an interest in the litigation subject matter, (2) the potential impairment of the applicant's ability to protect that interest, and (3) inadequate representation by existing parties. The rule is intended to be interpreted liberally to combine related issues within the same lawsuit efficiently. Colorado's approach to determining intervention interest is flexible, suggesting that the interest requirement should not be overly formalistic and is a prerequisite for intervention rather than a strict criterion.
The evaluation of intervention focuses on the claimed interest rather than the potential success of the intervenor's claims. While parties often use Rule 24(b) to challenge protective orders, State Farm's interests are directly tied to the terms of the protective order in this case, distinguishing its situation from typical cases that address intervention for separate litigation purposes. Therefore, State Farm's need to comply with relevant state law and insurance regulations regarding Ms. Mauro's claim qualifies as an interest related to the subject of the action, fulfilling the first requirement of C.R.C.P. 24(a)(2).
An intervenor's interest is considered impaired if the outcome of the action prevents future attempts to pursue that interest. If alternative forums exist for addressing the issue, the intervenor is not impaired under C.R.C.P. 24(a)(2). In this case, State Farm lacks practical alternatives for contesting a protective order and thus has a legitimate basis for intervention. While parties can challenge protective orders via a writ of prohibition, it is uncertain if nonparties can do so after the underlying case concludes. Generally, prohibition serves to prevent future actions rather than reverse completed ones.
The "impairment" criterion evaluates whether there is a clear alternative venue for the intervenor to seek relief. Previous cases indicate that intervention is appropriate when no clear alternatives exist, and this case similarly shows that intervention is the proper procedural course for addressing the protective order. The third requirement for intervention is that the intervenor's interests must not be adequately represented by current parties. State Farm’s interests concerning the protective order are not aligned with those of B.C. and S.O., the insured clients represented by defense counsel, who primarily focus on minimizing their liability.
Thus, State Farm has demonstrated that its interests are not adequately represented. The principle of intervention allows a litigant to safeguard against the repercussions of actions affecting them. State Farm is entitled to contest the protective order that directly impacts it. Consequently, it fulfills all conditions of C.R.C.P. 24(a) and is granted a limited right to intervene, leading to the reversal of the district court’s denial of its motion to intervene.
The order denying State Farm's intervention as a matter of right is reversed, negating the need to address State Farm's further arguments under C.R.C.P. 24(b) or the necessity for an evidentiary hearing. The court declines to vacate the protective order issued by the district court but remands the case to allow State Farm to formally challenge it. The court does not express any opinion on the merits of the protective order, as it is not currently before them on appeal. The June 2012 order is reversed, instructing the district court to grant State Farm's motion to intervene specifically for the purpose of contesting the protective order. Additionally, it is noted that federal interpretations of the rules support intervention as the standard method for objecting to protective orders, establishing a consistent procedural approach across various circuits.
