United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Virginia M. Kendall United States District Court Judge.
28, 2016, the Commodity Futures Trading Commission
(“CFTC”) filed a complaint seeking injunctive
relief, disgorgement, restitution, and civil penalties from
Defendant Alvin Guy Wilkinson and two commodity pools that he
controlled, which the CFTC alleged defrauded at least 30
individuals out of $6.9 million. (Dkt. 1.) On July 21, 2016,
this Court entered a preliminary injunction, which among
other things, imposed an asset freeze, prohibiting any person
that received actual notice of the Order to “Permit
Defendants and or other persons to withdraw, remove, assign,
transfer, pledge, encumber, disburse, dissipate, convert,
sell or otherwise dispose of Defendant(s)' assets, except
as directed by further order of the Court.” (Dkt. 17 at
7.) The preliminary injunction noted that there was
“good cause to believe immediate and irreparable harm
to the Court's ability to grant effective final relief to
the” Defendants' victims because Wilkinson's
recent conduct, which included transferring his interest in
his home (the “Sharon Property”) to his wife in
October 2015 without consideration, indicated that there was
a risk that he would dissipate assets. (Dkt. 17 at 5.) Since
that time, the Court defaulted Wilkinson and the related
commodity pools and a motion for default judgment as to all
defendants is currently pending before the Court.
(See Dkt. Nos. 24, 29.)
consideration are two motions filed by Alexandra Wilkinson,
the Defendant's wife. Mrs. Wilkinson, who is in the midst
of divorce proceedings with the Defendant, wishes to
intervene in the instant suit pursuant to Federal Rule of
Civil Procedure 24 for the purpose of seeking relief from the
preliminary injunction in order to finalize her divorce.
(Dkt. 26.) In her motion, Mrs. Wilkinson asserts that the
asset freeze entered by this Court as part of the preliminary
injunction “arguably precludes entry of the . . .
divorce decree” because it prevents the withdrawal,
removal, assignment, or transfer of the Defendant's
assets, some of which are apparently marital assets.
(Id. ¶ 24.) Mrs. Wilkinson apparently seeks
modification of the preliminary injunction to, inter
alia, declare that she is the sole owner of: (1) the
Sharon Property; (2) two vehicles jointly owned by Mrs.
Wilkinson and Mr. Wilkinson; and (3) all tangible personal
property located at the Sharon Property. (Id.
¶¶ 22-23.) The CFTC opposes Mrs. Wilkinson's
motion, arguing that intervention is unnecessary and
unwarranted. (Dkt. 30.) For the reasons set forth below, Mrs.
Wilkinson's motion to intervene is denied, as is her
request to modify the preliminary injunction.
Intervention as of Right under Rule 24(a)
seeking to intervene as of right must satisfy four
requirements: (1) the motion to intervene must be timely; (2)
the party seeking to intervene must claim an interest related
to the subject matter of the action; (3) the party seeking to
intervene must be so situated that the disposition of this
action threatens to impair or impede the party's ability
to protect that interest; and (4) the existing parties must
not be adequate representatives of the movant's interest.
Fed.R.Civ.P. 24(a)(2); see also Ligas ex rel. Foster v.
Maram, 478 F.3d 771, 773 (7th Cir. 2007). The party
seeking intervention bears the burden of establishing each of
these elements. United States v. BDO Seidman, 337
F.3d 802, 808 (7th Cir. 2003).
timeliness requirement is a flexible one and is determined by
considering the totality of the circumstances, leaving much
to the sound discretion of the Court. See Shea v.
Angulo, 19 F.3d 343, 348-49 (7th Cir. 1994). A
prospective intervenor should file “as soon as ... [it]
knows or has reason to know that [its] interests might be
adversely affected by the outcome of the litigation he must
move promptly to intervene.” Sokaogon Chippewa
Community v. Babbitt, 214 F.3d 941, 949 (7th Cir. 2000)
(quotation omitted). Although the parties have failed to
address this element in detail, Mrs. Wilkinson filed her
divorce action on June 17, 2016, before the CFTC instituted
the instant suit against Mr. Wilkinson. (Dkt. 26 ¶ 3.)
There is no doubt that Mrs. Wilkinson knew about the
CFTC's suit: she has been deposed by a CFTC attorney and
according to the briefing, had other contacts with CFTC
counsel. (See, e.g., id. ¶ 12.) Yet despite
this knowledge of the pending suit, Mrs. Wilkinson failed to
file her motion to intervene until the day before the Court
entered an order of default against Mr. Wilkinson and she did
nothing while the Court originally considered the CFTC's
motion for a preliminary injunction. While the Court will not
find that her motion was untimely, her motion to intervene
could have and should have been filed much sooner.
evaluating whether the party seeking to intervene has an
interest related to the subject matter of the action, the
Seventh Circuit has held that the moving party must have a
“direct, significant and legally protectable”
interest. Reich v. ABC/York-Estes Corp., 64 F.3d
316, 323 (7th Cir.1995). Although Rule 24 does not define
“interest, ” a mere “economic
interest” (i.e. being a creditor of one of the parties)
is insufficient. Flying J, Inc. v. Van Hollen, 578
F.3d 569, 571 (7th Cir. 2009). Additionally, in order to have
an interest related to the subject matter of the action, the
movant must “be someone whom the law on which his claim
is founded was intended to protect.” Id. at
572. Here, although Mrs. Wilkinson's property interests
are potentially affected by the asset freeze, her claims are
unrelated to the commodities fraud allegations that comprise
the CFTC's complaint. See Thompson v. United
States, 268 F.R.D. 319, 322 (N.D. Ill. 2010) (finding
that party seeking intervention did not have sufficient
interest in the suit to merit intervention because it had
“no stake in the underlying legal issues or the subject
matter of the dispute between [the Defendant] and the
government. On the contrary, its interest is a purely
practical, economic one-namely, to protect its ability to
collect its debt. Simply put, an interest of this kind does
not satisfy Rule 24(a).”); SEC v. Benger, No.
09 C 0676, 2010 WL 724416, at *2 (N.D. Ill. Feb. 23, 2010)
(finding that wife seeking divorce had insufficient interest
in frozen assets to intervene in SEC fraud action against her
husband because she did not make showing that the frozen
assets were lawfully derived or even demonstrate conclusively
that the frozen assets were marital assets); SEC v. Univ.
Lab Techs., Inc., No. 07-80838-CIV, 2009 WL 723243, at
*3 (S.D. Fla. Mar. 18, 2009) (denying soon-to-be
ex-wife's motion to intervene because “she is an
individual completely outside the realm of this securities
fraud action who is attempting to inject a personal claim
totally unrelated to the SEC's enforcement proceedings at
intervenor must also show that disposition of the underlying
action may impair the intervenor's ability to protect its
interest in the litigation. Reich, 64 F.3d at 321.
“Impairment exists when the decision of a legal
question . . . would, as a practical matter, foreclose the
rights of the proposed intervenor in a subsequent
proceeding.” Shea, 19 F.3d at 347 (citation
omitted). Here, Mrs. Wilkinson has not made such a showing.
In fact, she admits that even if her motion to intervene is
denied, if the district court considers her plea for relief,
that consideration would be a sufficient alternative remedy
to protect her interests. (See Dkt. 31 at 5)
(indicating that she has no objection to denial of her motion
to intervene if the “Court is prepared to consider the
relief requested in the Motion regarding the Preliminary
Injunction without granting formal intervention”).
with her position and as detailed below, the Court will
consider her motion for relief from the preliminary
injunction without her status as an intervening party, as she
has failed to satisfy the second and third prongs of the Rule
24(a)(2) test. To the extent there is an additional
proceeding, such as an enforcement proceeding brought by the
CFTC to satisfy a judgment against the Defendants, that
proceeding would be a more appropriate venue for Mrs.
Wilkinson's intervention. See CFTC v. Heritage
Capital Advisory Servs., Ltd., 736 F.2d 384, 387 (7th
Cir. 1984) (affirming denial of motion to intervene because
alternative forums, which included claims submitted to the
receiver and the district court's review of any denials
thereof would not impair rights of party seeking to
intervene); CFTC v. Chilcott Portfolio Mgmt., Inc.,
725 F.2d 584, 587 (10th Cir. 1984) (same); SEC v.
Marshall, No. 1:13-CV-3032-TCB, 2013 WL 12067459, at *2
(N.D.Ga. Nov. 15, 2013) (denying ex-wife's motion to
intervene in SEC action because her ability to protect her
interest was not impaired by the asset freeze).
parties seeking to intervene must show that the existing
parties to the action do not adequately represent their
interests. See Fed. R. Civ. P. 24(a)(2). Because
Mrs. Wilkinson has not satisfied her burden regarding the
second and third prongs of Rule 24(a)(2), the Court need not
address the fourth prong in depth. That being said, while the
CFTC may adequately represent Mrs. Wilkinson in her capacity
as a defrauded investor, that is not the basis upon which she
filed her motion to intervene.
Permissive Intervention under Rule 24(b)
Wilkinson alternatively seeks permissive intervention
pursuant to Fed.R.Civ.P. 24(b). Even when intervention as of
right is not available, courts have the ability to exercise
their considerable discretion to allow permissive
intervention under Rule 24(b). See Sokaogon Chippewa
Cmty., 214 F.3d at 949. Permissive intervention is
allowed only when the movant “has 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). The Court declines to
invoke its considerable discretion to permit Mrs. Wilkinson
to intervene pursuant to Fed.R.Civ.P. 24(b). As discussed
above, Mrs. Wilkinson's claims relate to certain property
at issue in her divorce action and are too distinct from the
CFTC's allegations of fraud to conclude that they share
common questions of law or fact with the underlying
commodities fraud suit. Even if the Court found that they
shared a common question of fact, Mrs. Wilkinson's
request is still deficient as the issues she raised are
collateral or extrinsic to the CFTC's fraud suit.
See, e.g., City of Rockford v. Sec'y of
Hous. & Urban Dev., 69 F.R.D. 363, 366 (N.D. Ill.
1975) (“A request for permissive intervention . . . .
may be denied if the intervenor raises collateral or
extrinsic issues, even though the petition presents a common
question of law or fact.”).
also consider whether permissive intervention would
“unduly delay or prejudice the adjudication of the
original parties' rights.” Fed.R.Civ.P. 24(b)(3);
see also Vollmer v. Publishers Clearing House, 248
F.3d 698, 707 (7th Cir. 2001). Mrs. Wilkinson's
intervention in the instant matter would necessarily unduly
delay and prejudice the adjudication of the CFTC's suit,
as liability has already been determined, an unopposed motion
for default judgment is pending, and Mrs. Wilkinson does not
challenge any of the CFTC's substantive allegations.
See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 332
n.17 (1979) (observing that “additional issues”
and “additional parties” would complicate
prosecution of SEC enforcement actions). Furthermore,
intervention is unnecessary and does not serve the interests
of judicial economy, as the “fairest and most efficient
method of handling the matter” is to address Mrs.
Wilkinson's substantive claims for relief without
granting her motion to intervene. See SEC v. ...