costco motion to intervene in contact lens lawsuit

MARK M. BETTILYON (Utah Bar No. 4798) [email protected] BRETT L. TOLMAN (Utah Bar No. 8821) [email protected] RAY QUINNEY & NEBEKER P.C. 36 South State Street, Suite 1400 Salt Lake City, Utah 84111 Telephone: 801-532-1500 Facsimile: 801-532-7543 DAVID J. BURMAN, Pro Hac Vice pending [email protected] SHYLAH R. ALFONSO, Pro Hac Vice pending [email protected] DAVID S. STEELE, Pro Hac Vice pending [email protected] PERKINS COIE LLP 1201 Third Avenue, Suite 4900 Seattle, Washington 98101-3099 Telephone: 206.359.8000 Facsimile: 206.359.9000

Attorneys for Intervenor Costco Wholesale Corporation

IN THE UNITED STATES DISTRICT COURT DISTRICT OF UTAH, CENTRAL DIVISION

ALCON LABORATORIES, INC.,

Plaintiff,

v.

SEAN D. REYES, in his Official Capacity as Attorney General of Utah,

Defendant.

CASE NO. 2:15-cv-00252-CW

COSTCO WHOLESALE CORPORATION’S MOTION TO INTERVENE Magistrate Judge Brook C. Wells

Case 2:15-cv-00252-DB Document 21 Filed 04/20/15 of 22

TABLE OF CONTENTS

Page

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I. INTRODUCTION ........................................................................................................ v

II. FACTUAL BACKGROUND ..................................................................................... vi

A. The Utah Contact Lens Act ............................................................................. vi

B. Costco Wholesale’s Interest In The Alcon Action ......................................... vii

III. ARGUMENT ............................................................................................................... 1

A. Standards For Intervention Under Fed. R. Civ. P. 24 ...................................... 1

B. Costco Wholesale Is Entitled To Intervene ...................................................... 1

1. Costco Wholesale’s Motion to Intervene is Timely ............................. 2

2. Costco Wholesale Is Entitled to Intervene As a Matter of Right Under Rule 24(a)(2) ............................................................................. 3

a. Costco Wholesale has an interest relating to the property or transaction at issue ................................................. 3

b. Costco Wholesale’s interest would be impaired and impeded without intervention ................................................... 5

c. Costco Wholesale’s interest is not adequately represented by the existing parties ........................................... 6

3. Costco Wholesale Is Entitled To Intervene Under Rule 24(b)(1)(B) ........................................................................................... 9

IV. CONCLUSION .......................................................................................................... 10


TABLE OF AUTHORITIES

Page

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CASES

Bass v. Richardson, 338 F. Supp. 478 (S.D.N.Y. 1971) ...................................................................................... 8

Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129 (1967) ............................................................................................................ 3

City of Herriman v. Bell, 590 F.3d 1176 (10th Cir. 2010) ........................................................................................... 9

Coalition of Arizona/New Mexico Counties for Stable Econ. Growth v. Dept. of Interior, 100 ........................................................................................... 1, 3, 6, 7

Costco Wholesale Corporation v. Johnson & Johnson Vision Care, Inc., Case No. 3:15-cv-00941 (N.D. Cal.) ............................................................................ viii, 9

Flying J, Inc. v. Van Hollen, 578 F.3d 569 (7th Cir. 2009) ............................................................................................... 4

General Motors Corp. v. Burns, 50 F.R.D. 401 (D. Haw. 1970) ............................................................................................ 6

Great Atlantic & Pacific Tea Co. v. Town of East Hampton, 178 F.R.D. 39 (E.D.N.Y. 1998) .......................................................................................... 5

Herriman City v. Swensen, No. 2:07-CV-711 TS, 2007 WL 4270590 (D. Utah Nov. 30, 2007) (unpublished) ....................................................................................................................... 6

In re: Disposable Contact Lens Antitrust Litigation, Case No. MDL No. 2626 (2015) ...................................................................................... viii

Nat’l Farm Lines v. Interstate Commerce Comm’n, 564 F.2d 381 (10th Cir. 1977) ..................................................................................... 1, 7, 8

Nat. Res. Def. Council, Inc. v. U.S. Nuclear Regulatory Comm’n, 578 F.2d 1341 (10th Cir. 1978) ....................................................................................... 3, 5

Oklahoma ex rel. Edmondson v. Tyson Foods, Inc., 619 F.3d 1223 (10th Cir. 2010) ........................................................................................... 2

San Juan County v. United States, 503 F.3d 1163 (10th Cir. 2007) ................................................................................... 1, 6, 9


TABLE OF AUTHORITIES (continued)

Page

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Sanguine, Ltd. v. Dep’t of Interior, 736 F.2d 1416 (10th Cir. 1984) ....................................................................................... 2, 3

State of Utah By & Through Utah State Dep't of Health v. Kennecott Corp., 801 F. Supp. 553 (D. Utah 1992) .................................................................................. 9, 10

SWEPI, LP v. Mora Cnty., N.M., No. CIV 14-0035 JB/SCY, 2014 WL 6983288 (D.N.M. Dec. 5, 2014) ............................. 7

Trbovich v. United Mine Workers, 404 U.S. 528 (1972) ........................................................................................................ 6, 7

Tudor Ins. Co. v. 1st Nat. Title Ins. Agency, LLC, 281 F.R.D. 513 (D. Utah 2012) ........................................................................................... 2

United Nuclear Corp. v. Cranford Ins. Co., 905 F.2d 1424 (10th Cir. 1990) ........................................................................................... 9

United States v. Albert Inv. Co., 585 F.3d 1386 (10th Cir. 2009) ........................................................................................... 3

Utah Ass’n of Counties v. Clinton, 255 F.3d 1246 (10th Cir. 2001) .................................................................................. passim

Utahns for Better Transp. v. U.S. Dept. of Transp., 295 F.3d 1111 (10th Cir. 2002) ............................................................................... 3, 4, 5, 7

Vetter v. Keate, No. 2:09-CV-137-DB-PMW, 2009 WL 3226395 (D. Utah Oct. 2, 2009) (unpublished) ..................................................................................................................... 10

WildEarth Guardians v. U.S. Forest Serv., 573 F.3d 992 (10th Cir. 2009) ......................................................................................... 7, 8

STATUTES

Contact Lens Act .............................................................................................................. passim

Utah Code Ann. § 58-16a-905.1(1) (2015) .............................................................................. vi

Utah Code § 58-16a-905.1 ....................................................................................................... vi

Utah Code § 58-16a-906 .......................................................................................................... vi

Utah Contact Lens Act ............................................................................................................. vi


TABLE OF AUTHORITIES (continued)

Page

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RULES & REGULATIONS

Fed. R. Civ. P. 24 .................................................................................................................. 1, 2

Fed. R. Civ. P. 24(a)(2) .................................................................................................... passim

Fed. R. Civ. P. 24(b)(1)(B) ................................................................................................ 1, 2, 9

Fed. R. Civ. P. 24(b)(3) ............................................................................................................. 9


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Pursuant to Federal Rules of Civil Procedure 24(a)(2) and 24(b)(1)(B), Costco

Wholesale Corporation (“Costco Wholesale”) respectfully moves to intervene in the above-

referenced action.

I. INTRODUCTION

In June 2013, Alcon Laboratories, Inc. (“Alcon”) was the first contact lens

manufacturer to implement a minimum resale price maintenance (“RPM”) policy restricting

the prices by which retailers of contact lenses can sell their contact lenses for. Following

Alcon’s lead, the other major manufacturers of contact lenses—Johnson & Johnson Vision

Care, Inc. (“JJVC”), Bausch + Lomb, Inc. (“B+L”), and CooperVision, Inc.

(“CooperVision”) (collectively the “Contact Lens Manufacturers”)—adopted similar

policies. These policies are the result of collusion between the Contact Lens Manufacturers,

contact lens distributors, contact lens eye care professionals (“ECPs”), and others aimed at,

among other benefits to the Contact Lens Manufacturers, diverting contact lens sales away

from discount retailers and directing them to ECPs. The State of Utah passed the Contact

Lens Consumer Protection Act Amendments (the “Contact Lens Act”), which goes into

effect on May 12, 2015, and prohibits a contact lens manufacturer from controlling the prices

by which retailers sell contact lenses or discriminating against retailers based on the prices

they choose to sell contact lenses. Alcon asks this Court to invalidate the Contact Lens Act

as facially unconstitutional. Costco Wholesale seeks to intervene in this litigation because as

a retailer of contact lenses in Utah, Costco Wholesale and its customers are direct

beneficiaries of the Contact Lens Act and therefore have significant interests in the litigation.

To defend these interests, Costco Wholesale should be entitled to intervene under Federal

Rules of Civil Procedure 24(a)(2) and 24(b)(1)(B).


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II. FACTUAL BACKGROUND

A. The Utah Contact Lens Act

In June 2013, Alcon was the first contact lens manufacturer to implement a minimum

RPM policy for its contact lenses. Declaration of Shylah R. Alfonso, Ex. A (Costco

Wholesale Complaint (“Costco Compl.”)), ¶ 46.1 The policy mandated the minimum price

by which retailers of contact lenses could not sell contact lenses below. Id. In May 2014,

B+L implemented its own contact lens RPM policy, followed by JJVC and CooperVision.

Id. ¶¶ 47-48. The Contact Lens Manufacturers control 98.5% of the contact lens market and

RPM policies governing the sale of contact lenses are now pervasive. Id. ¶ 23.

On March 27, 2015, the Utah Legislature enacted Utah Code § 58-16a-905.1 which

prohibits contact lens manufacturers or distributors from taking any actions “by agreement,

unilaterally, or otherwise, that has the effect of fixing or controlling the price that a contact

lens retailer charges or otherwise advertises for contact lenses.” Utah Code Ann. § 58-16a-

905.1(1) (2015). It also prohibits a contact lens manufacturer or distributor from

discriminating against a contact lens retailer based on the price a retailer sells or advertises

contact lenses for. Id. § 58-16a-905.1(2). In addition, Utah amended Utah Code § 58-16a-

906, to provide that the attorney general may bring a civil action or seek an injunction against

any person who violates § 58-16a-905.1. Costco Wholesale supported this legislation.

Declaration of Shylah R. Alfonso, Ex. B (Letter from Richard Chavez to the Honorable

Deidre M. Henderson, Feb. 16, 2015 (“Chavez Letter”)). Similar legislation prohibiting

RPM policies for contact lenses has been introduced in numerous other states.2

Alcon is a contact lens manufacturer subject to the Contact Lens Act. On April 13,

2015, Alcon filed a complaint alleging that the Contact Lens Act is unconstitutional and

should be invalidated. Dkt. 2. That same day, Alcon filed a motion for preliminary 1 On March 2, 2015, Costco Wholesale filed an action against JJVC in the Northern District of California, Costco Wholesale Corporation v. Johnson & Johnson Vision Care, Inc., Case No. 3:15-cv-00941 (N.D. Cal.). 2 In addition to Utah, to date, legislation banning minimum resale price policies for contact lenses has been proposed in at least Mississippi, Washington, Arizona, Florida, New York, Idaho, Oregon, Illinois, and California.


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injunction seeking to enjoin the Contact Lens Act. Dkt. 3. The Alcon action challenges the

validity of the Contact Lens Act as a violation of the Commerce Clause of the United States

Constitution. Dkt. 2 at ¶¶ 45-54. In its complaint, Alcon alleges that the Contact Lens Act

violates the Commerce Clause by “subjecting Alcon to extraterritorial regulation . . .

discriminating between in-state and out-of-state actors, and burdening interstate commerce.”

Id. ¶ 47. Alcon alleges further that the Contact Lens Act will “(i) control conduct taking

place wholly outside of Utah; (ii) it will interference with the sale of UPP Products and other

products outside of Utah, and otherwise disrupt the benefits of the UPP; and (iii) it will

interfere with programs that benefit consumers, ECPs, and the marketplace for vision care

products.” Id. ¶ 52. Alcon believes that the Contact Lens Act will cause irreparable harm to

Alcon and asks this Court for declaratory and injunctive relief. Id. ¶¶ 45-48, 53-54.

B. Costco Wholesale’s Interest In The Alcon Action

Costco Wholesale has membership warehouse locations in Utah. Declaration of

Richard Chavez (“Chavez Decl.”), ¶ 2. Costco Wholesale sells contact lenses at its Utah

stores, competing with other retailers of contact lenses, including ECPs and other in-store

and online retailers. Id. ¶ 4. As such, Costco Wholesale is a “contact lens retailer” under the

Contact Lens Act. Costco Wholesale’s business model is founded on providing value to its

members by offering low prices. Id. ¶¶ 3-4. The Contact Lens Manufacturers’ RPM policies

prohibit Costco Wholesale from selling contact lenses at prices it chooses. Id. ¶ 8. These

policies are damaging to Costco Wholesale’s business model because Costco Wholesale can

no longer provide value to its members through lower prices or compete with other contact

lens retailers on price to the extent it would in the absence of the RPM policy. Id. ¶¶ 9-11.

Should a retailer price contact lenses below a Contact Lens Manufacturer’s RPM policies, the

manufacturer punishes the retailer by terminating supply of contact lenses until the retailer

complies with the RPM policy. Id. ¶ 8.


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Costco chose not to purchase and sell Alcon’s contact lenses that are subject to its

RPM policy because it precluded Costco from providing value to its members. Id. ¶ 9.

Alcon’s RPM policy, along with the other manufacturers’ RPM policies, have thus reduced

the number of non-RPM contact lenses Costco can purchase. Id. ¶¶ 9-11.

On March 2, 2015, Costco Wholesale, filed the action Costco Wholesale Corporation

v. Johnson & Johnson Vision Care, Inc., Case No. 3:15-cv-00941 (N.D. Cal.), against JJVC,

seeking a declaratory judgment under the parties’ contract and alleging that JJVC has

violated federal and state antitrust laws by engaging in an unlawful conspiracy to fix prices

of contact lenses. Specifically, the Costco action alleges that JJVC’s pricing policy is an

illegal minimum RPM policy that is the product of a coordinated conspiracy and agreement

between contact lens ECPs, contact lens distributors, JJVC, and others to fix and control

contact lens prices. Costco Compl. ¶¶ 6, 8, 10, 26-32, 49-52, 69-72, 77-92. The Costco

action maintains that JJVC’s RPM policy is designed to eliminate competition between

retailers and ECPs. Id. ¶¶ 6, 11, 29-32, 42-43, 63-68. The Costco action alleges that JJVC’s

RPM is unreasonably anticompetitive in violation of federal and state antitrust laws resulting

in numerous anticompetitive harms including, but not limited to, increased prices for contact

lenses; increased incentives for ECPs to be improperly influenced by profit considerations

when prescribing and selling contact lenses; increased barriers to market entry at the

manufacturing and wholesale levels; increased market power for manufacturers and less

efficient groups of retailers; restraints on intrabrand competition by retailers; and the

elimination of effective interbrand price competition. Id. ¶¶ 11, 63-72, 77-92.

Since the Costco action was filed, approximately forty-five class action lawsuits have

been filed against JJVC, Alcon, B+L, and CooperVision. Collectively, these actions allege

that the Contact Lens Manufacturers have violated state and federal antitrust laws by

engaging in an unlawful conspiracy to fix contact lens prices. These actions are currently

pending in various jurisdictions across the United States and there are motions pending to


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coordinate or consolidate the actions to a multidistrict litigation forum. In re: Disposable

Contact Lens Antitrust Litigation, Case No. MDL No. 2626 (2015).


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III. ARGUMENT

A. Standards For Intervention Under Fed. R. Civ. P. 24

Federal Rule of Civil Procedure 24(a)(2) provides that intervention is appropriate as a

matter of right where:

On timely motion, the court must permit anyone to intervene who . . . claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant’s ability to protect its interest, unless existing parties adequately represent that interest.

Thus, intervention as of right is appropriate where (1) the application is timely; (2) the

applicant claims an interest relating to the property or transaction which is the subject of the

action; (3) the applicant’s interest may as a practical matter may be impaired or impeded; and

(4) the applicant’s interest is not adequately represented by existing parties. Coalition of

Arizona/New Mexico Counties for Stable Econ. Growth v. Dept. of Interior, 100

F.3d 837, 840 (10th Cir. 1996). Rule 24(b)(1)(B) provides that, upon timely motion,

intervention is permissible where a party “has a claim or defense that shares with the main

action a common question of law or fact.”

The Tenth Circuit follows a “somewhat liberal line in allowing intervention.” Utah

Ass’n of Counties v. Clinton, 255 F.3d 1246, 1249 (10th Cir. 2001); Coalition of

Arizona/New Mexico Counties, 100 F.3d at 841; Nat’l Farm Lines v. Interstate Commerce

Comm’n, 564 F.2d 381, 384 (10th Cir. 1977). “The central concern in deciding whether

intervention is proper is the practical effect of the litigation on the applicant for intervention.”

San Juan County v. United States, 503 F.3d 1163, 1193 (10th Cir. 2007).

B. Costco Wholesale Is Entitled To Intervene

Costco Wholesale meets the requirements of Rule 24(a)(2). Costco Wholesale filed

its motion to intervene only days after Alcon’s complaint and motion for preliminary

injunction were filed and is therefore timely. Costco Wholesale has a significant interest in

the legislation at issue because Costco Wholesale has been damaged by the Contact Lens


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Manufacturers’ RPM policies and the Contact Lens Act directly protects Costco Wholesale’s

right to sell contact lenses at prices it chooses and the interests of its customers in lower

prices and greater selection. Without intervention, Costco Wholesale interest will be

impaired and impeded because it will be unable to represent the significant harm caused by

the Contact Lens Manufacturers’ RPM policies and defend the critical need for the Contact

Lens Act. Finally, neither of the parties in the action will adequately protect Costco

Wholesale’s rights since Costco Wholesale would be opposing Alcon, and the Utah Attorney

General is a governmental entity with interests that vary from those of Costco Wholesale.

In the alternative, Costco Wholesale should be allowed to intervene under Rule

24(b)(1)(B) because Costco Wholesale has defenses that share common questions of law and

fact, including significant factual defenses that refute Alcon’s factual allegations.

1. Costco Wholesale’s Motion to Intervene is Timely

Under Rule 24, Costco Wholesale’s motion to intervene is “timely.” The primary

factors courts consider when evaluating whether a motion to intervene is timely include the

length of time since the intervenor knew of its interests in the case; prejudice to the existing

parties; and prejudice to the intervenor. Oklahoma ex rel. Edmondson v. Tyson Foods, Inc.,

619 F.3d 1223, 1232 (10th Cir. 2010); Sanguine, Ltd. v. Dep’t of Interior, 736 F.2d 1416,

1418 (10th Cir. 1984). “The prejudice prong of the timeliness inquiry ‘measures prejudice

caused by the intervenors’ delay—not by the intervention itself.’” Utah Ass’n of Counties,

255 F.3d at 1251 (citations omitted). Costco Wholesale’s motion to intervene, filed in the

early stages of litigation just days after the complaint was filed, is well within the timeliness

requirements and does not prejudice the parties. See Tudor Ins. Co. v. 1st Nat. Title Ins.

Agency, LLC, 281 F.R.D. 513, 515 (D. Utah 2012).


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2. Costco Wholesale Is Entitled to Intervene As a Matter of Right Under Rule 24(a)(2)

Costco Wholesale is entitled to intervene as a matter of right under Rule 24(a)(2)

because it has a substantial and direct interest in the constitutionality of the Contact Lens Act

and Alcon’s ability to enforce RPM policies against it in Utah, and these interests would be

impaired and impeded without intervention and are not adequately represented by Alcon or

the Utah Attorney General.

a. Costco Wholesale has an interest relating to the property or transaction at issue

Costco Wholesale, a direct beneficiary of and an advocate for the Contact Lens Act,

without which Costco Wholesale is subject to significant injury under Alcon’s RPM policy in

Utah, has substantial interest in the transaction at issue. The “interest” requirement is

satisfied when a party’s interest is “direct, substantial, and legally protectable.” Coalition of

Arizona/New Mexico Counties, 100 F.3d at 840. An interest need not “be a direct interest in

the property or transaction at issue provided that it [i]s an interest that would be impaired by

the outcome.” Nat. Res. Def. Council, Inc. v. U.S. Nuclear Regulatory Comm’n, 578 F.2d

1341, 1344-45 (10th Cir. 1978) (citing Cascade Natural Gas Corp. v. El Paso Natural Gas

Co., 386 U.S. 129, 135-36 (1967)). In determining whether an applicant’s interest is

sufficient, courts “apply[] the policies underlying the ‘interest’ requirement to the particular

facts of the case.” Sanguine, Ltd., 736 F.2d at 1420 (reversing district court’s ruling denying

motion to intervene filed by tribal lessors of land in suit between lessee and regulatory

agency overseeing lessee’s oil and gas operations). The threat of economic injury from the

outcome of litigation alone can satisfy the interest requirement. United States v. Albert Inv.

Co., 585 F.3d 1386, 1393 (10th Cir. 2009); Utahns for Better Transp. v. U.S. Dept. of

Transp., 295 F.3d 1111, 1115-16 (10th Cir. 2002).

Costco Wholesale has a “direct, substantial, and legally” protected interest in the

Alcon action. Costco Wholesale’s business model is centered on its ability to return value to


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its members. Chavez Decl. ¶¶ 3-4. One way it does this is through offering its members low

prices, discounts, and rebates on contact lenses. Id. As more contact lens manufacturers

impose RPM policies on retailers that apply to a greater number of contact lenses, Costco has

fewer and fewer non-RPM lens options it can purchase and sell. Id. ¶¶ 10-11.

By fixing the minimum prices at which retailers may sell contact lenses, the Contact

Lens Manufacturers’ RPM policies damage Costco Wholesale’s business model because they

have substantially impaired Costco Wholesale’s ability to return value to its contact lens

customers through low prices and limited its ability to compete with other retailers on price,

which further harms goodwill with its members. Id. ¶¶ 9-11. When Costco Wholesale has

attempted to sell contact lenses for lower than RPM policy prices, it has been punished by the

Contact Lens Manufacturers through withholding inventory from Costco Wholesale. Id. ¶ 8;

Costco Compl. ¶¶ 51, 60. Should Alcon prevail in invalidating the Contact Lens Act, Alcon

would continue to impose its RPM policy on Costco Wholesale in Utah resulting in Costco

Wholesale’s economic injury and loss. See Utahns for Better Transp., 295 F.3d at 1115

(“The threat of economic injury from the outcome of litigation undoubtedly gives a petitioner

the requisite interest.”). Thus, Costco Wholesale’s interests are directly at issue in the Alcon

action.

In Flying J, Inc. v. Van Hollen, 578 F.3d 569 (7th Cir. 2009), the court reversed a

district court’s denial of a motion to intervene brought by gasoline dealers in an action

involving a Wisconsin gasoline sales law. Id. at 570-72. The court found the dealers had an

interest in the action and granted the dealers’ motion to intervene since they were the

statute’s “direct beneficiaries.” Id. at 572. Likewise, as a contact lens retailer in Utah,

Costco Wholesale is a direct beneficiary of the Contact Lens Act because it prohibits Contact

Lens Manufacturers from imposing pricing restrictions on Costco Wholesale and other

retailers in Utah. Therefore, Costco Wholesale has a direct and substantial interest in

litigation challenging its constitutionality.


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Costco Wholesale’s interest in the Contact Lens Act is further demonstrated by its

efforts to obtain passage of the Contact Lens Act. Chavez Letter; see Great Atlantic &

Pacific Tea Co. v. Town of East Hampton, 178 F.R.D. 39, 42 (E.D.N.Y. 1998) (holding an

intervenor had an interest “where the underlying action concerns legislation previously

supported by the organization”). Because Costco Wholesale is directly impacted by whether

the Contact Lens Act is constitutional and the Contact Lens Manufacturers’ RPM policies

can be maintained in Utah, Costco Wholesale has a significant interest in the Alcon action

under the requirements of Rule 24(a)(2).

b. Costco Wholesale’s interest would be impaired and impeded without intervention

Without intervention, Costco Wholesale’s interest could be severely impaired. “To

satisfy [the impairment] element of the intervention test, a would-be intervenor must show

only that impairment of its substantial legal interest is possible if intervention is denied.”

Utah Ass’n of Counties, 255 F.3d at 1253 (citations omitted) (emphasis added). “This burden

is minimal.” Id. “Any significant legal effect in the applicant’s interest” satisfies the

requirement. Nat. Res. Def. Council, Inc., 578 F.2d at 1345. However, the “impairment”

requirement refers to impairment “as a practical matter,” and “the court is not limited to

consequences of a strictly legal matter.” Utah Ass’n of Counties, 255 F.3d at 1253 (citations

omitted). The question of impairment “is not separate from the question of existence of an

interest.” Id. Whether or not a proposed intervenor’s interests may be impaired can be

determined by looking to the relief sought by plaintiffs in their complaint. See Utahns for

Better Transp., 295 F.3d at 1116.

As described above, the Alcon complaint seeks to invalidate a law that directly

protects Costco Wholesale’s business model, ability to compete with other contact lens

retailers on price, and contact lens sales. Should invalidation occur, the Contact Lens

Manufacturers would continue to impose their RPM policies resulting in economic injury and

loss to Costco Wholesale. Chavez Decl. ¶¶ 9-11. Without being able to intervene, Costco


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Wholesale will be unable to defend its significant interests in the litigation and attest to the

harm caused by the Contact Lens Manufacturers’ RPM policies.

In General Motors Corp. v. Burns, 50 F.R.D. 401 (D. Haw. 1970), the court granted a

state association of automobile dealers the right intervene in a lawsuit brought by automobile

manufacturers against the State of Hawaii alleging that a state motor licensing act was

unconstitutional. Id. at 403-06. The court held that the dealers had a “direct economic

interest in preserving the protection that the Act gives” and that they would be “substantially

affected” if not allowed to intervene. Id.; see also San Juan County, 503 F.3d at 1195 (“If an

absentee would be substantially affected in a practical sense by the determination made in an

action, he should, as a general rule, be entitled to intervene.”) (internal quotation marks

omitted); Utah Ass’n of Counties, 255 F.3d at 1253 (finding intervenors met impairment test

when plaintiff sought to invalidate management plan protecting intervenors’ interests);

Herriman City v. Swensen, No. 2:07-CV-711 TS, 2007 WL 4270590, at *1 (D. Utah Nov. 30,

2007) (unpublished) (granting intervention where “[i]t is undisputed that the Proposed

Intervenors have an interest that may be impaired if the statutory scheme at issue is held to be

unconstitutional”). There is no question Costco Wholesale would be substantially affected

and impaired by an adverse determination in the Alcon action. Therefore, Costco Wholesale

meets the “impairment” requirement of Rule 24(a)(2) and should be allowed to defend its

interests by intervening.

c. Costco Wholesale’s interest is not adequately represented by the existing parties

Finally, Costco Wholesale’s interests will not be adequately represented by the

existing parties in the action. The burden to satisfy this condition is “minimal.” Trbovich v.

United Mine Workers, 404 U.S. 528, 538 n.10 (1972); San Juan County, 420 F.3d at 1203-

04. “The possibility of divergence of interest need not be great in order to satisfy the burden

of the applicants.” Coalition of Arizona/New Mexico Counties, 100 F.3d at 844-45

(alterations and internal quotation marks omitted). An intervenor need only show the


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possibility of inadequate representation. Utah Ass’n of Counties, 255 F.3d at 1254; see also

Trbovich, 404 U.S. at 538 n.10 (holding an applicant need only show that his interest “may

be” inadequately protected by existing parties).

Inadequate representation is particularly apparent where the party that would be relied

on to protect an intervenor’s interest is the government. WildEarth Guardians v. U.S. Forest

Serv., 573 F.3d 992, 996-97 (10th Cir. 2009). “[An intervenor’s] showing is easily made

when the party upon which the intervenor must rely is the government, whose obligation is to

represent not only the interest of the intervenor but the public interest generally, and who

may not view that interest as coextensive with the intervenor’s particular interest.” Utah

Ass’n of Counties, 255 F.3d at 1254 (emphasis added). “[T]he government’s representation

of the public interest generally cannot be assumed to be identical to the individual parochial

interest of a particular member of the public merely because both entities occupy the same

posture in the litigation. In litigating on behalf of the general public, the government is

obligated to consider a broad spectrum of views, many of which may conflict with the

particular interest of the would-be intervenor.” Id. at 1255-56; see also Utahns for Better

Transp., 295 F.3d at 1117; Coalition of Arizona/New Mexico Counties, 100 F.3d at 845;

Nat’l Farm Lines, 564 F.2d at 384 (holding it “impossible” for a government agency to

adequately protect both the interest of the public and the private parties seeking intervention).

This has “created what essentially amounts to a per se rule that, when a government entity is

a party in a case, it is unable to represent a potential intervenor’s private interests, despite the

government and the intervenor’s common objectives.” SWEPI, LP v. Mora Cnty., N.M., No.

CIV 14-0035 JB/SCY, 2014 WL 6983288, at *43 (D.N.M. Dec. 5, 2014) (unpublished); see

also Nat’l Farm Lines, 564 F.2d at 384 (“[T]his kind of conflict satisfies the minimal burden

of showing inadequacy of representation”.).

While both Costco Wholesale and the State of Utah oppose actions taken by contact

lens manufacturers to control and fix the prices of contact lenses, their reasons for doing so


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are not necessarily and completely the same. In enacting the Contact Lens Act, the State of

Utah was required to represent the collective interest of all Utah citizens. Some of these

interests could run counter to those of Costco Wholesale’s. See WildEarth Guardians, 573

F.3d at 997 (“Government entities have a “public mission and necessary public neutrality”

that “inherently conflict[s] with the interests of intervening private parties.”); see also Utah

Ass’n of Counties, 255 F.3d at 1256 (allowing intervention of environmental organizations in

suit involving national monument in southern Utah and noting the “potential conflict” that

arises when a private party and the “government is called upon to defend against a claim

which the would-be intervenor also wishes to contest”).

In addition, as a retailer directly affected by both the Contact Lens Manufacturers’

RPM policies, Costco Wholesale provides a unique perspective on the effects of contact lens

RPM policies generally and JJVC’s RPM policy specifically. See Nat’l Farm Lines, 564

F.2d at 383 (granting intervention and noting that private party petitioners “in intervention

possess experience and knowledge in a complex area of business which the government . . .

does not have”). Indeed, Costco Wholesale has challenged JJVC’s RPM policy and been in

discussions with JJVC about its legality, scope, enforcement and exceptions for months.

Costco Compl. ¶¶ 53-60; Chavez Decl. ¶ 12. As a result, Costco Wholesale has significant

and unique information and expertise regarding the RPM policies, their harmful effects, and

their relationship to the Contact Lens Act. See Bass v. Richardson, 338 F. Supp. 478, 492

(S.D.N.Y. 1971) (allowing intervention where putative intervenor was in “a unique position

to inform the Court as to the factual matters with which it must deal in deciding th[e] case”).

Therefore, Costco Wholesale’s knowledge and perspective of the Contact Lens

Manufacturers’ RPM policies is not the same as the Utah Attorney General and would be

invaluable to the factual issues relating to the litigation.

Because of the Utah Attorney General’s unique interest in representing the State of

Utah, and Costco Wholesale’s unique perspective and expertise of the Contact Lens


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Manufacturers’ RPM policies, it cannot be said that Costco Wholesale’s interest will be fully

protected by the Utah Attorney General. There is no question that, at minimum, a mere

“possibility of inadequate representation” is apparent.

3. Costco Wholesale Is Entitled To Intervene Under Rule 24(b)(1)(B)

Alternatively, Costco Wholesale should be permitted to intervene under Rule

24(b)(1)(B). Rule 24(b)(1)(B) provides that intervention is permissible where a party “has a

claim or defense that shares with the main action a common question of law or fact.”

“[P]ermissive intervention is a matter within the sound discretion of the district court.”

United Nuclear Corp. v. Cranford Ins. Co., 905 F.2d 1424, 1427 (10th Cir. 1990). In

exercising its discretion, a court must also consider the possibility of undue delay or

prejudice in the “the adjudication of the original parties’ rights.” Fed. R. Civ. P. 24(b)(3).

To permissively intervene, however, “a party need not have a direct personal or pecuniary

interest in the subject of the litigation.” San Juan County, 503 F.3d at 1207. And, the words

“claim or defense” “should not be strictly interpreted so as to preclude permissive

intervention.” City of Herriman v. Bell, 590 F.3d 1176, 1184 (10th Cir. 2010).

Here, the Alcon action shares numerous common questions of fact and law with the

Costco action and the related class action lawsuits. Alcon makes several factual assertions in

its complaint and preliminary injunction motion that are also at issue in the Costco action,

such as the nature of the contact lens industry (Dkt. 2 ¶¶ 13-17), and the origin, justifications,

purposes, and purported effects of the Contact Lens Manufacturers’ RPM policies (id. ¶¶ 18-

32). Because of Costco Wholesale’s factual understanding of the origin, purposes, and

effects of the RPM policies, it would “significantly contribute to the full development of the

underlying factual issues in the suit and to the just and equitable adjudication of the legal

questions presented.” State of Utah By & Through Utah State Dep't of Health v. Kennecott

Corp., 801 F. Supp. 553, 572 (D. Utah 1992) (granting permissive intervention because the

intervenor would contribute to the legal and factual issues in case). Moreover, the existence


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and outcome of this litigation has the potential to influence legislative activity in other

jurisdictions that could benefit Costco Wholesale and its customers.

Given the closely related legal and factual issues between the cases, and because the

Alcon action is still in its very early stages, adding Costco Wholesale will not prejudice or

harm the parties. See id. (finding no undue delay or prejudice where intervenor had related

action with similar factual and legal issues and intervention was sought before trial date was

set); Vetter v. Keate, No. 2:09-CV-137-DB-PMW, 2009 WL 3226395, at *3 (D. Utah Oct. 2,

2009) (unpublished) (granting permissive intervention because although allowing

intervention “will add some additional questions of law and fact to this case, there are a far

greater number of issues of law and fact that are shared”). Thus, at minimum, Costco

Wholesale should be permitted to intervene under Rule 24(b)(1)(B).

IV. CONCLUSION

Based on the foregoing, Costco Wholesale respectfully requests this Court grant its

motion to intervene under Rule 24(a)(2) or alternatively, Rule 24 (b)(1)(B).


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Respectfully submitted,

DATED: April 20, 2015

By: /s/ Mark M. Bettilyon MARK M. BETTILYON (Utah Bar No. 4798) [email protected] BRETT L. TOLMAN (Utah Bar No. 8821) [email protected] RAY QUINNEY & NEBEKER P.C. 36 South State Street, Suite 1400 Salt Lake City, Utah 84111 Telephone: 801-532-1500 Facsimile: 801-532-7543 DAVID J. BURMAN, Pro Hac Vice pending [email protected] SHYLAH R. ALFONSO, Pro Hac Vice pending [email protected] DAVID S. STEELE, Pro Hac Vice pending [email protected] PERKINS COIE LLP 1201 Third Avenue, Suite 4900 Seattle, Washington 98101-3099 Telephone: 206.359.8000 Facsimile: 206.359.9000

Attorneys for COSTCO WHOLESALE CORPORATION


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CERTIFICATE OF SERVICE

I hereby certify that on the 20th day of April, 2015, I electronically filed the foregoing

COSTCO WHOLESALE CORPORATION’S MOTION TO INTERVENE with the

Clerk of the Court using the CM/ECF system, which sent notification of such filing to the

following:

Amber M. Mettler Amy F. Sorenson SNELL & WILMER 15 W. South Temple, Suite 1200 Salt Lake City, Utah 84101 [email protected] [email protected] Attorneys for Plaintiff Alcon Laboratories, Inc.

David R. Marriott CRAVATH, SWAINE & MOORE 825 Eighth Avenue New York, NY 10019 [email protected] Attorneys for Plaintiff Alcon Laboratories,

Inc.

Parker Douglas UTAH ATTORNEY GENERAL’S OFFICE LITIGATION UNIT 160 E. 300 S., 6th Floor P.O. Box 140856 Salt Lake City, Utah 84114-0856 [email protected] Attorney for Defendant Sean D. Reyes

Brent O. Hatch Paul G. Cassel Phillip J. Russell HATCH JAMES & DODGE, P.C. 10 W. Broadway, Suite 400 Salt Lake City, Utah 84101 [email protected] [email protected] [email protected] Attorneys for Movant 1-800 Contacts

Garth T. Vincent MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue Los Angeles, CA 90071 [email protected] Attorneys for Movant 1-800 Contacts

/s/ Lori M. McGee 1325838


mailto:[email protected]








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