CITY OF HOUSTON v. AMERICAN TRAFFIC SOLUTIONS
668 F.3d 291 (2012)
CITY OF HOUSTON, Plaintiff-Appellee,
AMERICAN TRAFFIC SOLUTIONS, INC., Defendant-Appellee,
Randall Kubosh; Francis Kubosh, Amici Curiae-Appellants.
United States Court of Appeals, Fifth Circuit.
January 24, 2012.
Andy Taylor (argued), Andy Taylor & Associates, P.C., Brenham, TX, Roger Gordon, Thomas Royal Phillips, Baker Botts, L.L.P., Austin, TX, Christopher Paul Hanslik, BoyarMiller, Kathleen E. Weir, Baker Botts, L.L.P., Houston, TX, for Defendant-Appellee.
David Allen Furlow (argued), Matthew R. Reed, Thompson & Knight, L.L.P., Houston, TX, Levi James Benton, Benton Massey, P.L.L.C., Houston, TX, for Amici Curiae-Appellant.
Before JONES, Chief Judge, and HIGGINBOTHAM and SMITH, Circuit Judges.
EDITH H. JONES, Chief Judge:
This is an interlocutory appeal from the denial of a motion to intervene as of right, FED.R.CIV.P. 24(a)(2), brought by citizens of Houston, Texas in regard to litigation between the City and the contractor hired to run a red light camera system that generated millions of dollars annually to the City and the contractor. Because the district court erred in denying intervention, we reverse that order, and the associated denial of a new trial, and remand for further proceedings.
After the City passed an ordinance approving the use of red light cameras, it entered a contract with American Traffic Solutions ("ATS") in 2005 to run the system. Before the underlying litigation began in late 2010, the City had collected millions of dollars from electronically generated traffic tickets, and ATS had received $9 million. Francis and Randall Kubosh launched a political campaign, spending over $200,000 of their personal funds, to force the City to cease using this system. They organized a petition drive, and of course signed petitions, for a city charter amendment vote on whether the system's use could be continued. The requisite
signatures were obtained and certified, and the City placed the charter amendment on a ballot in November, 2010. The City vigorously opposed the Kuboshes' efforts, but their grass roots campaign succeeded. The charter amendment vote repudiated the system.
On the day that the City Council enacted an ordinance reflecting the election results, the City terminated ATS's contract and sued for a declaratory judgment in federal court, seeking a declaration of rights between ATS and the City over the contract's status. ATS promptly demanded that the City cease its termination effort. The company counterclaimed, alleging that the charter amendment election and subsequent ordinances were invalid, ultra vires, and unconstitutional. By mutual agreement of the City and ATS, in what is in essence a preliminary injunction order (the November 2010 Order), the red light cameras were not to be removed from city intersections during the litigation. The court placed the suit on a fast track. When the Kuboshes read about the suit on a local newspaper reporter's blog, they immediately sought to intervene of right, a motion the court soon denied, although it allowed them to participate as amici. The court denied a motion for new trial concerning this ruling. The Kuboshes timely appealed these and all related orders of the court.
During the pendency of this appeal, the district court issued an interlocutory judgment in favor of ATS on cross motions for summary judgment in June 2011. The court held that the charter amendment election constituted an untimely referendum under state law, rendering its result invalid to cancel the prior authorization of the red light camera system. Almost immediately, the City turned on the cameras again and began generating traffic tickets with them. The public, however, expressed such a level of dissatisfaction with this maneuver that the City Council, in August, took various measures including the passage of a new ordinance formally repealing the red light cameras' authorization.1 The denial of intervention of right is a final order for appeal purposes. Edwards v. City of Houston, 78 F.3d 983, 992 (5th Cir.1996) (en banc). Because the motion to intervene is not argued to have been untimely, this court reviews the standards for intervention of right de novo. Edwards, 78 F.3d at 995. To succeed as an intervenor of right, a party must show, in addition to timeliness, that it has "an interest" relating to the property or transaction in the litigation; that the disposition of the action may impair or impede, as a practical matter, its ability to protect that interest; and that the intervenor's interest is inadequately represented by existing parties to the suit. Edwards, at 999. Failure to satisfy any of these standards precludes intervention of right. Id. Nevertheless, "`the inquiry under subsection (a)(2) is a flexible one, which focuses on the particular facts and circumstances surrounding each application ... [and] intervention of right must be measured by a practical rather than technical yardstick.'" Id. (quotation omitted). The Kuboshes describe their "interest" as that of voters, petition organizers for a city charter amendment, and concerned citizens who signed the petitions
and spent a small fortune in support of a successful campaign to change the City's charter. Their interest is or may be severely impaired, they contend, if the City is allowed to pursue this litigation to conclusion in such a way that results either in the repudiation of their charter amendment (as the court has already determined) or the repeal of the August 2011 repeal ordinance that, absent a valid charter amendment, could presage revival of the red light cameras at any time. Finally, the Kuboshes contend that the City failed to raise substantial arguments and evidence against ATS before the district court. The City allegedly relinquished its ability to present the strongest defense of the charter amendment because it opposed the Kuboshes' position from the outset, attempted to reinstate the cameras before the litigation had concluded, and stands to lose millions of dollars in potential revenue, or in lawsuit termination costs, from a successful defense of the charter amendment.