Requirements for Rule 22

Requirements for Rule 22

Rule 22(a)(1) lets a plaintiff join as defendants “persons with claims that may expose a plaintiff to double or multiple liability” and require them to interplead.¹ Courts read that language as setting two broad requirements. The stakeholder must have a bona fide concern about multiple claims against a fund or piece of property, and at least two adverse claimants must stand behind those claims.²

The two requirements test opposite sides of the stakeholder’s dilemma. The first looks at the stakeholder and asks whether its fear of paying twice is genuine and reasonable. The second looks at the claimants and asks whether their claims truly compete, so that the fund or property cannot be awarded to several of them at once.³ A stakeholder facing a single demand has no rival to join, and a stakeholder whose claimants could all be satisfied from the fund has no dilemma for one proceeding to resolve.

Neither requirement asks the court to decide who is entitled to the fund. The stakeholder need not demonstrate the relative merits of the competing claims or show that any individual’s claim is meritorious, and the contest over entitlement belongs to the claimants at a later stage.⁴

Genuine Exposure to Multiple Liability

The first requirement asks whether the stakeholder has a good-faith concern about duplicative liability and multiple court proceedings. The fear must be genuine and reasonable, but the risk of multiple liability need not be imminent or certain, and a threat that several claims will be asserted suffices.⁵ That standard fits the Rule’s text, which asks only whether claims “may” expose the plaintiff to multiple liability.⁶ It also means the stakeholder need not wait for claims to be filed, because it may invoke the Rule on the possibility of future claims against the property.⁷

State Farm Fire and Casualty Co. v. Tashire shows how little the threat must have matured. State Farm insured the driver of a truck involved in a collision in Shasta County, California, under a policy limited to $20,000 per occurrence. The suits already filed, and those State Farm anticipated, sought far more than that in total, so State Farm paid $20,000 into court. It asked the court to require all claimants to establish their claims in that single proceeding and to discharge State Farm from its remaining obligations under the policy, including its duty to defend the driver.⁸ The Ninth Circuit held that interpleader was unavailable. In states like Oregon, which do not permit direct-action suits against insurers until judgments are obtained against the insured, it reasoned, an insurer could not invoke federal interpleader until the claims against the insured were reduced to judgment. Until then, holders of unliquidated tort claims were not “claimants” under § 1335 or “persons having claims against the plaintiff” under Rule 22.⁹

The Supreme Court rejected that waiting requirement. An insurer made to await judgments would let the first claimant to win a judgment or negotiate a settlement take all or a disproportionate slice of the fund before the others could establish their claims. That race to judgment, and the unfairness it works on some claimants, were among the principal evils interpleader was meant to remedy.¹⁰ A stakeholder facing many claims on a limited fund therefore needs no judgment in hand before it interpleads.

Tashire is not itself a Rule 22 holding. The Court resolved the case under the interpleader statute, 28 U.S.C. § 1335, and found the action properly brought under it. A footnote declined to pass on the Ninth Circuit’s conclusions about Rule 22 because State Farm had not invoked the Rule and could not have done so given its venue and service limits. The footnote quoted the Rule as reaching a plaintiff who “is or may be exposed” to multiple liability.¹¹ Authorities on rule interpleader nonetheless carry the reasoning across. Courts read the statute’s “two or more adverse claimants” and the Rule’s “multiple liability” the same way, so that a showing of the threat of multiple suits suffices under either.¹²

The stakeholder also need not prove that any claim is valid, and it may even contend that no claim against the fund is warranted, so long as it has a good-faith concern about duplicative liability and multiple proceedings.¹³ A contrary rule would force the stakeholder to pick the winner before interpleading, the very judgment it cannot safely make, because a wrong guess could mean paying twice. The protection runs against double vexation in respect to a single liability. Interpleader is allowed even though one claim lacks merit, so long as that claim is not so utterly baseless that the possibility of conflicting claims falls below a minimal threshold level of substantiality.¹⁴

Metropolitan Life Insurance Co. v. Bigelow illustrates the point. Two days after the decedent’s death, the decedent’s daughters submitted a claim to GE for life insurance, pension, and savings benefits, and a week after the death the father claimed the life insurance and pension benefits.¹⁵ MetLife and GE told the claimants they could not decide, fearing exposure to double liability if they reached a conclusion that proved incorrect. They then brought an interpleader action naming the daughters and the father as defendants, alleging that they could not determine to whom the benefits should be paid and were “ready, willing and able” to pay whichever party the court determined to be the appropriate beneficiary.¹⁶

The agent may. Each letter threatens a claim to the same deposit, so the agent’s fear of paying the wrong party and being sued by the other is genuine and reasonable. A threat of claims suffices, the agent need not wait for a suit, and it need not show that either claim is meritorious.¹⁷

Newkirk Construction Corp. v. Gulf County marks the outer limit of the threshold. Gulf County owed a contractor progress payments for work the contractor had already performed, and the county invoked interpleader against the contractor and its surety. The court began from the standard that “While the stakeholder is not obliged at his peril to determine which claimant has the better claim, he must have some real and reasonable fear of exposure to double liability or the vexation of conflicting claims.” It found no valid fear of conflicting claims to payments owed for work already done and concluded that, absent a default by the contractor, the county faced no bona fide threat of suit by the surety. The interpleader action should therefore not have proceeded.¹⁸

Tashire and Newkirk differ in what stood behind the demands. In Tashire, the claimants held real, if unliquidated, claims against one limited fund, so the stakeholder’s fear rested on substance even though no judgment existed. In Newkirk, the surety could assert a claim only if the contractor defaulted, so the county’s fear had nothing under it. The difference lies in whether anyone has a plausible claim when interpleader is sought, and not in how far the claims have progressed. An exam fact pattern that stresses that no claimant has yet sued is pointing to a fact that does not defeat exposure. One showing that the only demand rests on a right that has not arisen signals that the fear is not bona fide.

Adverse Claimants

The second requirement asks whether at least two claimants compete for the same limited fund or piece of property, so that it cannot be awarded to several of them at once.²⁰ Put another way, the stakeholder must owe a single obligation to rival payees, because interpleader protects against double vexation in respect to a single liability.²¹ The first requirement tests the stakeholder’s fear, and this one tests the structure of what the stakeholder owes.

Consider an insurer holding life insurance proceeds that both Belle and Marina demand. If the insurer pays Belle, it will likely face a suit from Marina demanding payment to her, and after litigation it might end up paying twice. Interpleader lets the insurer tender the proceeds to the court and leave the claimants to litigate ownership before a court that can bind all the parties by its judgment.²²

Competing claims need not rest on the same legal theory. In Hapag-Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, the Second Circuit quoted Judge Friendly for the point that nothing could be more palpably unjust than to permit two recoveries against the interpleader plaintiff for the same enrichment. The claims all concerned the same enrichment to Hapag-Lloyd, the value of the bunkers (the fuel for its ship), payment for which every party claimed as its entitlement. They were therefore “inextricably interrelated.” The claims might have different legal origins, the court added, but interpleader claims need not arise “out of a common source of right or entitlement.”²³ What matters here is that the claims compete for one payment. Whether they must share an origin is a separate question, taken up below under the relaxed equitable restrictions.

The claimants need not be hostile to each other, and they need not even know of each other’s existence.²⁴ The stakeholder is the one who faces the double vexation, whatever the claimants think of one another, and each claimant can sue the stakeholder on its own, as Marina could after a payment to Belle.

Only persons who actually hold claims against the stakeholder count as adverse claimants. The Rule reaches “persons with claims,”²⁵ and Newkirk shows what happens when a defendant has none. The county owed the contractor for work already performed, the contractor was not in default, and so the surety could not expose the county to suit. The interpleader was improper.²⁶ A weak claim is still a claim, because interpleader is allowed even when one claim lacks merit, so long as it is not so utterly baseless that conflicting claims fall below a minimal threshold level of substantiality.²⁷ A claim with no substance at all creates no adversity. If naming a defendant were enough, any stakeholder could force unrelated parties into the case by calling them rivals.

Interpleader also fails where the stakeholder owes a separate, full obligation to each person, because the device protects against double vexation in respect to a single liability and not against double liability as such.²⁸ Suppose a store’s promotion promises $50 to every customer whose receipt carries the winning code, and two customers present winning receipts. Paying the first customer does not discharge the store’s promise to the second. The store faces two liabilities and no rival claims to a single sum, so interpleading the customers would protect it from nothing. Compare a storage company holding one fur coat that two people claim as owner. Delivering the coat to one means it cannot go to the other, so the claims compete.²⁹ The sorting question is how many obligations the stakeholder owes. If paying one person in full satisfies its duty to the others, the claims are adverse, and if it owes each person in full, they are not.

How far a court may restrain the claimants from pursuing the stakeholder elsewhere is a question for the later discussion of injunctions. As a general matter, courts usually refuse to enjoin criminal prosecutions once they have been instituted.³⁰