In re Accellion, Inc. Data Breach Litigation

Background

Accellion provided secure file-transfer software. In December 2020, threat actors exploited vulnerabilities in its File Transfer Appliance product and stole sensitive information from clients. The Washington State Auditor’s Office had used that product to transfer files related to an audit of the state’s unemployment-benefits program. The breach affected the personal identifying information of 1.6 million Washington unemployment claimants.

Counsel for a class of Washington plaintiffs who were injured in that breach sought to intervene in this consolidated federal action. The proposed intervenors wanted to oppose preliminary approval of a proposed class settlement with Accellion and to protect claims involving the Washington State Auditor’s Office. They argued that preliminary approval could impair their ability to litigate those claims in a Washington state-court proceeding.

Before the federal court heard the intervention motion, it terminated all pending motions for preliminary approval of class settlements in the consolidated matter, including the settlement involving Accellion. The court later appointed interim co-lead counsel who had not participated in the earlier settlement negotiations.

Legal standard

Under Federal Rule of Civil Procedure 24(a)(2), a nonparty may intervene as of right if it has a significant protectable interest related to the case, the case’s disposition may impair its ability to protect that interest, the motion is timely, and the existing parties may not adequately represent the interest. Failure to satisfy any one of these requirements defeats intervention as of right.

Under Rule 24(b)(1)(B), the court may allow permissive intervention when the applicant has a claim or defense sharing a common question of law or fact with the main action. The applicant must also satisfy requirements concerning jurisdiction and timeliness. Even when those requirements are met, permissive intervention remains within the court’s discretion.

Court’s analysis

The court denied intervention as of right because the proposed intervenors did not show that their interests might be impaired or impeded. The court relied on Ninth Circuit authority holding that class members generally have other means to protect their interests. In a typical damages class action, the ability to object to a settlement or opt out under Rule 23 ordinarily provides adequate protection.

The proposed intervenors argued that those options were insufficient and relied primarily on an Eighth Circuit decision. The court noted that the Eighth Circuit decision acknowledged contrary decisions from several district courts and that the court was aware of no analogous Ninth Circuit authority supporting the proposed intervenors’ position. The court concluded that the proposed intervenors could protect their interests through the settlement objection and opt-out procedures and therefore were not entitled to intervene as of right.

The court separately considered permissive intervention. Although impairment of an interest is not required for permissive intervention, the court noted that protecting against possible prejudice from preliminary approval of the Accellion settlement was the proposed intervenors’ sole stated reason for intervening. Because the settlement-approval motions had been terminated and interim co-lead counsel had been appointed to review the proposed settlements, the court found that the circumstances underlying the motion had been mitigated. It therefore declined to exercise its discretion to allow permissive intervention.

Disposition

The court denied the proposed intervenors’ motion to intervene. The order did not decide the merits of the data-breach claims, the claims involving the Washington State Auditor’s Office, or the proposed settlement.