United States District Court, D. Arizona
G. Campbell United States District Judge.
Tindall, Britt Nederhood, Eng Kwang Tan, and Eric Feigin
(“Derivative Plaintiffs”) move to lift the stay
of the above-captioned action (“Securities Class
Action”), intervene permissively under Rule 24(b), and
unseal all court records filed in connection with the summary
judgment motion filed by First Solar, Inc. (“First
Solar”) and the individual defendants (collectively,
“Defendants”). In the alternative, Derivate
Plaintiffs move for access to the sealed records. The motion
has been fully briefed (Docs. 410-412), and the Court
concludes that oral argument will not aid its decision. For
the reasons stated below, the Court will deny Derivative
Securities Class Action alleges that First Solar and various
officers and directors committed securities fraud between
2008 and 2012 by failing to disclose the existence of an
“LPM defect” and a “hot climate
defect” in solar panels produced by the company. Doc.
93. The class plaintiffs allege that the failure to disclose
these defects resulted in their purchasing First Solar stock
at inflated prices and suffering financial losses when the
defects eventually were disclosed. Id.
April 12, 2012, Derivative Plaintiffs filed a Derivative
Action on behalf of First Solar against fourteen of its
directors and officers (“Derivative Defendants”).
The Derivative Action alleged that the defendants breached
fiduciary duties owed to First Solar and violated various
laws by failing to disclose the LPM and hot climate defects,
resulting in “hundreds of millions of dollars in
damages to First Solar's reputation, goodwill, and
standing in the business community.” Tindall v.
Ahearn, Case 2:12-cv-00769-DGC, Doc. (“Derivative
Doc.”) 1, ¶ 1. Derivative Plaintiffs did not make
a demand on the First Solar board of directors before filing
the complaint, but instead alleged that any demand would be
futile. Id. Later in 2012, Derivative Plaintiffs
filed an amended complaint, again asserting that demand would
be futile. Derivative Doc. 36.
Court stayed the Derivative Action pending resolution of the
Securities Class Action. Derivative Doc. 45. The stay lasted
more than three years, but was lifted by the Court in
February 2016. Derivative Doc. 65. Once the stay was lifted,
Derivative Plaintiffs filed a second amended complaint
asserting claims for breach of fiduciary duty, insider
trading, and unjust enrichment. Derivative Doc. 67.
Derivative Defendants responded with a motion to dismiss,
arguing that Derivative Plaintiffs had not shown demand
futility as required by Federal Rule of Civil Procedure 23.1.
Derivative Doc. 70. The Court agreed, and on June 30, 2106,
dismissed the insider trading and unjust enrichment claims
without leave to amend. In re First Solar Derivative
Litig., No. CV-12-00769-PHX-DGC, 2016 WL 3548758 (D.
Ariz. June 30, 2016). The Court dismissed the
breach-of-fiduciary-duty claim with leave to amend and denied
Derivative Plaintiffs' request to unseal evidence in the
Securities Class Action, finding that “discovery should
not be permitted to supplement allegations of demand futility
- allegations that should reflect facts known to Plaintiffs
when they elected not to make a demand on First Solar's
board.” Id. at *14 (quoting Derivative Doc. 65
Plaintiffs now seek to intervene in the Securities Class
Action and obtain access to the sealed information, hoping to
find support for their demand futility claim. Derivative
Plaintiffs argue that the Court should allow permissive
intervention because the requirements of Rule 24(b) are met.
Doc. 410 at 5-6. They further argue that the Court should
unseal the documents because the Derivative Defendants have
not overcome the strong presumption favoring public access to
court records. Id. at 8.
Defendants argue that the common claim or defense requirement
of Rule 24(b) has not been met. Doc. 411 at 6. They add that
even if the Court finds all Rule 24(b) requirements
satisfied, the Court should exercise its discretion to refuse
intervention because granting the motion would contravene the
important policy against derivative plaintiff access to
discovery before satisfaction of Rule 23.1. Id. at
conditions must exist to satisfy Rule 24(b): (1) an
independent ground for jurisdiction, (2) a timely motion, and
(3) a common question of law and fact between the
movant's claim or defense and the main action.
Beckman Indus., Inc. v. Int'l Ins. Co., 966 F.2d
470, 473 (9th Cir. 1992). Requirements one and two are not in
dispute here.The parties instead focus on whether there
is a common question of law or fact between Derivative
Plaintiffs' claim and the Securities Class Action. A
district court may deny a motion for permissive intervention
on discretionary grounds even if all three Rule 24(b)
requirements are met. San Jose Mercury News, Inc. v. U.S.
Dist. Court, 187 F.3d 1096, 1100 (9th Cir. 1999)
(“motion for permissive intervention pursuant to Rule
24(b) is directed to the sound discretion of the district
Derivative Plaintiffs correctly note, the commonality
requirement is construed liberally when a party's sole
purpose for seeking intervention is to modify a protective
order. Beckman, 966 F.2d at 474 (“There is no
reason to require such a strong nexus of fact or law when a
party seeks to intervene only for the purpose of modifying a
protective order”). Although the commonality
requirement is relaxed in such cases, it is not eliminated.
This Court has previously found that the commonality
requirement survives Beckman and later cases.
Bobolas v. Does, No. CV-10-2056-PHX-DGC, 2011 WL
304874, at *2 (D. Ariz. Jan. 28, 2011).
Beckman, the court found the commonality requirement
satisfied when the intervenors, who were litigating claims in
state court concerning the scope of an insurance policy,
sought to intervene for the purpose of modifying a protective
order in a federal case concerning the same policy. 966 ...