finding little benefit to class members from settlement agreement provisions that obligated defendant “to do what the law generally requires”
How later courts described this case
- finding little benefit to class members from settlement agreement provisions that obligated defendant “to do what the law generally requires”
- reversing district court’s approval of settlement when “the ‘preferred position’ of the named plaintiffs should have signaled the district court of potential inequities in this proposed settlement”
- allowing publication notice in Federal Rule of Civil Procedure rule 23(b)(2) discrimination class actions
- "The Mullane decision established a constitutional standard of 'reasonable notice, but this constitutional standard should not be confused with the more rigorous rule of individual notice which the Supreme Court found required by Rule 28 in Eisen v. Carlisle & Jacqueline." (internal quotation marks omitted)
Written by the judges who cited it.
The opinion
MERRITT, Circuit Judge,
concurring.
I agree with the conclusion reached in Judge Keith’s opinion that the case must be reversed because the settlement agreement is not in the best interest of the members of the class. Class members do not appear to receive significant benefits from the settlement agreement between the defendant and the named plaintiffs. The settlement agreement, though somewhat vague, appears to conclude that no element of discrimination has been established for the benefit of class members, although at the same time one of the named plaintiffs is scheduled to receive $10,000 in damages. The briefs for both sides agree that the settlement agreement does not establish a prima facie case of discrimination or any other element of the cause of action stated in the complaint. For example, appellee states at page 23 of its brief that class members can recover in separate proceedings only “if discrimination in their individual cases is established.”
My concern here is the same as that expressed in Judge Keith’s opinion. The named plaintiffs and the defendant have simply settled the case by making individual incentive payments to the named plaintiffs and the class lawyers without any substantial benefits to the class. The relief provided by the settlement agreement does not treat the named plaintiffs and the class members equally. We should not allow a class action device to be used as a hammer at the head of the defendant for the purpose of extracting benefits for named plaintiffs at the expense of members of the class. That appears to be what has occurred here.
The portion of the Court’s opinion with which I disagree is Section II concerning notice. This is a class action asking for an award of damages. The settlement agreement purports to cut off any further individual causes of action that members of the class may have arising out of the same subject matter, other than the remedy proposed in the settlement. Failure to follow the complex procedure outlined in the settlement terminates all other claims in any other forum. Before the rights of class members are so terminated, a careful effort should be made to identify potential class members, and they should receive personal notice by mail. If it is impossible to so identify such potential class members, the personal notice by mail should be given to all female employees of the defendant in the designated marketing area, and former employees, who could have requested a promotion during the requisite time. If for some reason it is impossible to provide a notice of this kind to the relevant class of employees of only one employer in a relatively small region of the nation, then I do not believe the case is appropriate for class action treatment.
GUY, District Judge, concurring in part and dissenting in part.
I concur in Sections I and III of Judge Keith’s opinion but, for the reasons hereinafter set forth, I am unable to concur with Sections IV and V.
If the court’s construction of the settlement agreement entered in this case is correct, I then find the opinion to be well reasoned. However, I am unable to accept the court’s construction of the settlement agreement. The majority opinion states:
It is clear to us that under the individual claims procedure provided for in the agreement the members of the class are no better off than if they had brought their actions individually. In fact, appellants’ contention that they are actually in a worse position under the settlement *1228 than they would have been if they had brought individual Title VII eases has merit.
The above conclusion is predicated upon the fact that the majority concludes that class members are still left with the burden of proving that they have been specifically discriminated against by the company. In my opinion neither the record in this case nor the settlement agreement itself dictates this conclusion.
The record discloses that this settlement agreement ultimately entered was not the first or only settlement agreement presented to the court for consideration. An earlier settlement agreement was proposed, notices were sent out, and a hearing was held to consider objections. As a result of objections at that hearing, the district court declined to approve the proposed settlement agreement. The court noted that “the joint proposal is not a settlement but a mere postponement of disputed issues in this case and that the rights of the claimants which are postponed will be subjected to more stringent requirements if the settlement is approved.” Based upon this finding, the court rescinded a previous order which had granted a joint motion for class redefinition and then proceeded to once again redefine the class. The district court also authorized additional discovery and, upon completion of such discovery, again considered a joint motion seeking approval of a settlement agreement.
The settlement agreement which the court rejected suffered from the exact deficiency which this court now finds in the settlement agreement that was entered. Given the fact that the record reflects that the district judge was clearly aware of the problem of placing a greater burden on the class than required by law, I am simply unable to interpret the settlement agreement ultimately approved by the court in a manner which would assess to it this same deficiency. Since I interpret the settlement agreement to have defined the class that was the victim of the discriminatory treatment, I do not find it an impermissible burden to require individual claimants to specify (1) the particular training or promotion to which the class member claimed to have been wrongfully denied; (2) the approximate date of the request for the training or promotion and the name of the persons to whom the request was made; (3) the approximate date of denial, the name of the person who denied the request, and any reasons given for the denial; (4) the name of the employee awarded the training or promotion in question and the approximate date of the award; (5) the class member’s basis for claiming that she was qualified for the training or promotion in question; and (6) the approximate amount of back pay or other relief sought. These requirements are consistent with the holdings of Teamsters v. United States, 431 U.S. 324 , 97 S.Ct. 1843 , 52 L.Ed.2d 396 (1977), which teaches that individual relief may be granted only on the basis of individual findings of discrimination. The settlement agreement entered establishes the presumptive entitlement to relief for the individual class members and this does not offend the decision in McDonnell-Douglas v. Green, 411 U.S. 792 , 93 S.Ct. 1817 , 36 L.Ed.2d 668 (1973). Since I would interpret the settlement agreement entered by the court to have defined a class that was discriminated against, I find that it is unnecessary to even consider the prima facie case standards set forth in McDonnell-Douglas since the settlement agreement entered takes the class defined beyond the prima facie case point. The procedures set forth in the settlement agreement for the resolution of individual claims are consistent with the bifurcated adjudication process approved by the Fifth Circuit in United States v. U. S. Steel Corp., 520 F.2d 1043 (5th Cir. 1976). The conclusion that an individual is a member of a class that has been discriminated against does not carry with it automatic entitlement to relief. The procedures set forth for proof of individual entitlement in this settlement agreement are extremely detailed and set forth an easy to follow blueprint for a claimant. It is ironic that the effort to spell out in detail the procedures for individual claimants now becomes the impediment upon which this settlement agreement founders.
I also feel the majority is being unduly influenced by the “upfront” relief and attorney fees awarded to the named plaintiffs *1229 and their counsel. It is a fact of life in any class action that is settled that the named plaintiffs and the attorneys will generally receive benefits prior to the rest of the class as part of the settlement agreement. Rather than viewing this as some type of a “sweetheart deal,” however, I think it can equally well be viewed as setting the pattern for the type of relief that is now available to the other members of the class. If, in fact, the named plaintiffs and their attorneys have been amply compensated, then this serves as a guide to the Kroger Company, the magistrate, and ultimately the district judge as to what treatment should ultimately be accorded the individual class members who establish their entitlement to relief.
Accordingly, I also find that the class was adequately represented by the named plaintiffs and would sustain the district court in its decision to deny the appellants’ motion to intervene.