Valley Forge Insurance Compan v. King Supply Company, LLC, 791 F.3d 722

CE Design filed a TCPA class action (2009) against King Supply; district court certified the class; judgment settled for $20 million (2011 agreement, approved 2012) with only $200,000 collectible from King Supply and remainder to be paid from insurers' policies.
King Supply’s three liability insurers had disclaimed any duty to defend or indemnify based on policy exclusions for TCPA liability and later filed separate declaratory-judgment suits contesting coverage.
Insurers moved to intervene in the federal class-action (Jan. 2012) seeking to challenge the proposed settlement as collusive and excessive; the district court denied intervention as untimely.
Insurers argued they only learned settlement terms later and sought to block approval to avoid being bound to an unreasonable, insurer-funded settlement; plaintiffs and class counsel defended the settlement's reasonableness.
The Seventh Circuit affirmed denial of intervention as untimely, emphasizing that insurers knew or should have known of the risk to their interests early in the litigation and therefore should have sought timely intervention or defended under the policies.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Timeliness of intervention under Fed. R. Civ. P. 24	CE Design: insurers waited too long; should have acted earlier when they disclaimed coverage	Insurers: couldn’t know they were at risk until settlement terms emerged; delay excused	Intervention denied as untimely — insurers should have moved when they knew coverage was disputed
Insurer’s interest to intervene as of right (Rule 24(a))	CE Design: insurers lacked a concrete interest because coverage was disputed	Insurers: potential indemnity exposure gives sufficient interest to intervene	Seventh Circuit agreed with district court that intervention was untimely; concurrence also noted insurers’ interest was contingent and likely insufficient
Permissive intervention (Rule 24(b))	CE Design: permitting intervention would prolong litigation and upset class settlement process	Insurers: should be allowed to challenge potentially collusive settlement harmful to their interests	Court refused permissive intervention because motion was untimely and would gratuitously extend litigation
Adequacy/collusion in settlement between insured and plaintiff	CE Design: settlement was subject to court approval and not collusive on its face	Insurers: deal was a ‘‘sweetheart’’ that shifts insurer’s risks to insurer without true adversarial checks	Court recognized collusion risk but held insurers’ delay precluded intervention; insurers should have sought to control defense earlier

CE Design Ltd. v. King Architectural Metals, Inc., 637 F.3d 721 (7th Cir. 2011) (prior appellate decision in the same litigation)
Larson v. JPMorgan Chase & Co., 530 F.3d 578 (7th Cir. 2008) (timeliness standard for intervention)
Sokaogon Chippewa Community v. Babbitt, 214 F.3d 941 (7th Cir. 2000) (intervenor must move when it knows its interests may be affected)
Travelers Indem. Co. v. Dingwell, 884 F.2d 629 (1st Cir. 1989) (insurer denying coverage lacks sufficient interest to intervene in tort suit)
Restor‑A‑Dent Dental Labs., Inc. v. Certified Alloy Prods., Inc., 725 F.2d 871 (2d Cir. 1984) (denial of insurer intervention where coverage was contested)
Guillen ex rel. Guillen v. Potomac Ins. Co. of Illinois, 785 N.E.2d 1 (Ill. 2003) (insured’s settlement must conform to a prudent uninsured standard to avoid collusion)
Pearson v. NBTY, Inc., 772 F.3d 778 (7th Cir. 2014) (discussing risks of tacit collusion in class settlements)
Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014) (same)
Eubank v. Pella Corp., 753 F.3d 718 (7th Cir. 2014) (same)