Town of Chester v. Laroe Estates, Inc.
581 U.S. 433, 2017 U.S. LEXIS 3555, 198 L. Ed. 2d 64 (2017)
Rule of Law:
A litigant seeking to intervene as of right under Federal Rule of Civil Procedure 24(a)(2) must meet the requirements of Article III standing if the intervenor wishes to pursue relief not requested by a plaintiff.
Facts:
- In 2001, land developer Steven Sherman purchased nearly 400 acres in the Town of Chester, New York, with plans to build a housing subdivision.
- Sherman applied for approval of his development plan, but for about a decade, he claimed the Town obstructed his plans, forcing him to spend around $5.5 million and driving him to the brink of bankruptcy.
- In 2003, Laroe Estates, Inc. entered into an agreement with Sherman concerning the MareBrook property, agreeing to make $6 million in payments secured by a mortgage, and Sherman was to sell Laroe parcels of land upon plan approval.
- Laroe paid Sherman more than $2.5 million under their agreement while Sherman pursued regulatory approval.
- In 2013, TD Bank commenced a foreclosure proceeding on Sherman’s property.
- Laroe and Sherman then entered into a new agreement, providing that the purchase price would be the $2.5 million Laroe had already advanced plus any amount Sherman had to pay to settle with TD Bank, deeming Laroe to have paid for the land in full.
- The settlement with TD Bank failed, and TD Bank took over the property, but Laroe never terminated its agreement with Sherman.
Procedural Posture:
- Steven Sherman filed suit against the Town of Chester in New York state court, asserting a regulatory takings claim and other federal- and state-law claims.
- The Town of Chester removed the case to a Federal District Court for the Southern District of New York.
- The District Court dismissed Sherman's takings claim as unripe.
- The Court of Appeals for the Second Circuit reversed the ripeness determination and remanded the case for further proceedings.
- On remand, Laroe Estates, Inc. filed a motion to intervene of right under Federal Rule of Civil Procedure 24(a)(2).
- The District Court denied Laroe's motion to intervene, concluding that its equitable interest did not confer standing.
- Laroe Estates, Inc. appealed the District Court's decision to the Court of Appeals for the Second Circuit.
- The Second Circuit reversed, holding that an intervenor of right is not required to meet Article III's standing requirements.
- The Town of Chester, New York, petitioned the Supreme Court of the United States for a writ of certiorari, which was granted.
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Issue:
Does a litigant seeking to intervene of right under Federal Rule of Civil Procedure 24(a)(2) need to possess Article III standing if the intervenor seeks relief that is different from or in addition to that requested by an existing plaintiff?
Opinions:
Majority - Justice Alito
Yes, an intervenor of right under Federal Rule of Civil Procedure 24(a)(2) must demonstrate Article III standing when it seeks additional relief beyond that which the plaintiff requests. The Court reaffirmed that Article III of the Constitution limits the federal judicial power to actual “Cases” and “Controversies,” a fundamental limitation preserved by the standing doctrine. To establish standing, a plaintiff (or intervenor seeking compensatory relief) must show: (1) an injury in fact, (2) that is fairly traceable to the defendant's challenged conduct, and (3) that is likely to be redressed by a favorable judicial decision. The Court emphasized that 'standing is not dispensed in gross,' meaning a litigant must demonstrate standing for each claim and for each form of relief sought. This principle applies equally to intervenors of right; for all relief sought, there must be a litigant with standing. Therefore, an intervenor must establish its own Article III standing if it seeks relief different from the original plaintiff, such as a separate money judgment in its own name. The Court noted ambiguity in whether Laroe sought the same or different damages than Sherman and remanded for the Court of Appeals to resolve this threshold issue.
Analysis:
This case clarifies a critical aspect of federal court jurisdiction, affirming that the constitutional requirement of Article III standing extends to intervenors of right when they seek relief distinct from that pursued by existing parties. The ruling reinforces the Supreme Court's commitment to strictly limiting the exercise of federal judicial power to genuine 'cases' and 'controversies,' thereby preventing federal courts from adjudicating abstract disputes or issuing advisory opinions. Future cases will require careful scrutiny of an intervenor's requested relief to determine if it aligns with or diverges from the original plaintiff's claims for purposes of Article III standing. This decision underscores the importance of precise pleading regarding requested remedies for all litigants in federal court.
