intervention was timely “because the lawsuit was still in its beginning stages and intervention would not cause any prejudice to the existing parties”
How later courts described this case
- intervention was timely “because the lawsuit was still in its beginning stages and intervention would not cause any prejudice to the existing parties”
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
DAVID M. MORRIS, individually
and on behalf of all others
similarly situated,
Plaintiff,
v. CASE NO: 2:24-cv-985-SPC-NPM
THE CHARLES SCHWAB
CORPORATION and CHARLES
SCHWAB & CO., INC.,
Defendants.
/
ORDER
Before the Court are Plaintiffs and Proposed Intervenors Mary
Loughran, Rosemary Orlando, Donald Saunders, Michael Davis, and Terrance
“TJ” McDonald’s (collectively, “Proposed Intervenors”) Motion to Intervene and
to Transfer This Action to the Central District of California (Doc. 13) and
Plaintiff David M. Morris’s, individually and on behalf of all others similarly
situated, response (Doc. 15). Defendants The Charles Schwab Corporation and
Charles Schwab & Co., Inc. (jointly, “Defendants”) did not file a response.1 For
the following reasons, the Court grants the motion to intervene and transfer.
1 Proposed Intervenors state that they conferred with Defendants, and the parties did not
agree to a resolution of the motion. (Doc. 13 at 33).
Morris alleges that Defendants breached their contractual and fiduciary
duties to their customers by sweeping uninvested cash in their customers’
brokerage accounts to deposit accounts held at affiliated banks that paid
unreasonably low, below-market rates of interest. (Doc. 1). Proposed
Intervenors are plaintiffs represented by Interim Class Counsel in In re
Charles Schwab Cash Sweep Litigation, No. 2:24-cv-07344-MRA-E (C.D. Cal.)
(“Schwab Litigation”), a consolidated proposed class action pending against
Defendants in the Central District of California since August 2024. Like
Morris’s lawsuit, their case concerns the underpayment of interest to
customers who were enrolled in the cash sweep programs. However, Morris is
narrower because the proposed class is limited to Schwab clients with
retirement accounts.
There are more than thirty such class actions pending across the
country. The United States Judicial Panel on Multidistrict Litigation
(“JPML”) has under advisement a motion to transfer and consolidate the
cases—including this one—under 28 U.S.C. § 1407. See In Re Cash Sweep
Programs Contract Litig., MDL No. 3136 (J.P.M.L. Oct. 30, 2024).
On November 25, 2024, United States Magistrate Judge Nicholas P.
Mizell stayed and administratively closed this case pending a decision by the
JPML or a decision on a motion by either party in the Schwab Litigation to
transfer this matter. (Doc. 12). That same day, Proposed Intervenors filed this
motion, seeking to intervene for the limited purpose of requesting transfer of
the case under 28 U.S.C. § 1404 to the Central District of California for
consolidation with the Schwab Litigation—the first-filed action. (Doc. 13).
Federal Rule of Civil Procedure 24(a) provides that, upon timely motion,
a party may intervene as of right if that party “claims an interest relating to
the property or transaction that is the subject of the action, and is so situated
that disposing of the action may as a practical matter impair or impede the
movant’s ability to protect its interest, unless existing parties adequately
represent that interest.” Fed. R. Civ. P. 24(a)(2). And under Federal Rule of
Civil Procedure 24(b), a court may allow anyone who timely moves to intervene
in an action so long as they “[have] a claim or defense that shares with the
main action a common question of law or fact.” Fed. R. Civ. P. 24(b)(1)(B).
Courts allow intervention in class actions liberally because of the policy
expressed by Rule 23, which provides that the “court may issue orders . . . to
protect class members and fairly conduct the action.” Fed. R. Civ. P. 23(d)(1).
Intervention as of right under Rule 24(a)(2) must be granted when the
party seeking to intervene demonstrates: “(1) that the intervention application
is timely; (2) that an interest exists relating to the property or transaction
which is the subject of the action; (3) that disposition of the action, as a
practical matter, may impede or impair the ability to protect that interest; and
(4) the existing parties to the lawsuit inadequately represent the interests.”
Nat’l Parks Conservation Ass’n v. U.S. Dep’t of Interior, Nat’l Park Serv., 2012
WL 1060144, at *2 (M.D. Fla. Mar. 29, 2012). “If each of the four requirements
are met, the court must allow the party to intervene in the action.” Id.
Here, Proposed Intervenors are entitled to intervention as of right. First,
their motion is timely. It was filed within weeks of the commencement of this
action; the pretrial conference has not occurred; Defendants have not filed an
answer; and no discovery has been conducted. See Collegiate Licensing Co. v.
Am. Cas. Co., 713 F.3d 71, 76 (11th Cir. 2013) (intervention was timely
“because the lawsuit was still in its beginning stages and intervention would
not cause any prejudice to the existing parties”).
Next, the Proposed Intervenors have a “significantly protectable”
interest that may be impaired by the disposition of this case. The Schwab
Litigation class encompasses the proposed class here, and Proposed
Intervenors are prosecuting substantially overlapping claims.
Finally, Proposed Intervenors’ interests are not adequately represented
here. The Schwab Litigation is the first-filed case, and the judge there
consolidated the related actions and appointed Interim Class Counsel to
ensure that the claims are properly managed prior to class certification.
Next, the Court considers whether transfer is appropriate. It is. “The
decision to transfer a case to another district is left to the sound discretion of
the trial court.” Mitchell v. Edwards, 2009 WL 10667876, at *1 (M. D. Fla.
Aug. 21, 2009) (quoting Brown v. Connecticut Gen. Life Ins. Co., 934 F.2d 1193,
1197 (11th Cir. 1991)). An action may be transferred to another district under
§ 1404 if the action “might have [originally] been brought” in the other district
and transfer would be in the interests of convenience and justice. See, e.g.,
Hampton-Muhamed v. James B. Nutter & Co., 687 F. App’x 890, 892 (11th Cir.
2017).
Without question, this case could have been brought in the Central
District of California. Numerous related class actions were filed there, as
Defendants are subject to that court’s jurisdiction. The Charles Schwab
Corporation has substantial business operations there, and California is
Charles Schwab & Co. Inc.’s state of incorporation. (Doc. 13 at 22 (citing Exs.
E, F)). Both Defendants regularly litigate in the Central District of California.
(Id.)
Moreover, transfer is in the interests of convenience and justice. The
Schwab Litigation already represents the consolidation of several related
cases, combined to promote judicial economy and conserve both the court’s and
the parties’ resources. (See Schwab Litigation, Doc. 29 at 4). If the Court did
not transfer this case, it could result in conflicting rulings on critical issues.
And Proposed Intervenors emphasize that allowing this case to proceed
parallel to the Schwab Litigation “would undermine the leadership
appointment” in that case. (Doc. 13 at 23).
Morris argues that the Court should not act on the motion. (Doc. 15 at
4). Instead, he argues that the Court should wait for the JPML to rule, lift the
stay, and then consider the instant motion. But why wait? See, e.g., Williams
v. Delta Air Lines, Inc., 2009 WL 2256018, at *3 (M.D. Fla. July 28, 2009)
(rejecting plaintiff’s argument that “the Court take no action on the Motion to
Transfer” pending the outcome of the MDL Motion because “expediency is not
served by waiting for a Panel decision”). As Proposed Intervenors point out,
transfer under § 1404 is preferable to § 1407 centralization because the former
transfer is for all purposes, including trial. (Doc. 13 at 26 (citing In re Gerber
Probiotic Prods. Mktg. & Sales Pracs. Litig., 899 F. Supp. 2d 1378, 1380
(J.P.M.L. 2012))). By contrast, § 1407 transfer permits transfer for pre-trial
purposes only, and transferred cases must be remanded to their originating
courts absent a waiver. (Id.). Under these circumstances, § 1404 provides the
more streamlined option.
Having considered the parties’ arguments, the Court concludes that
transfer to the Central District of California under § 1404 is the best course.
Accordingly, it is
ORDERED:
1. The Clerk is DIRECTED to reopen this case and lift the stay (Doc.
12).
2. Plaintiffs and Proposed Intervenors’ Motion to Intervene and to
Transfer This Action to the Central District of California (Doc. 18) is
GRANTED.
3. This case is TRANSFERRED to the United States District Court for
the Central District of California for consolidation with In re Charles
Schwab Cash Sweep Litigation, No. 2:24-cv-07344-MRA-E (C.D. Cal).
4. The Clerk is DIRECTED to TRANSFER this case to the United
States District Court for the Central District of California and
CLOSE the Fort Myers Division file.
DONE and ORDERED in Fort Myers, Florida on December 16, 2024.
UNITED STATES DISTRICT JUDGE
Copies: All parties of record