Petitioners Brief — Carson v. American Brands, Inc.

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IN THE

Supreue Court of the Mnited

Ocroser TERM, 1980

Frank L. Carson, Lawrence Hatcuek. and Stuart E. MNEs,

Petitioners,

AMEHCAN Branps, Inc. toa Tite Aminican Toracco Company;

Local Js2. Toracco Woirkias INtreRNATIONAL Union,

Respondents.

ON A WRIT OF CERTIONARL To THUR UNITED STATES

COURT OF AIVPEALS FUR THE FOURTH CIRCUIT

BRIEF FOR PETITIONERS

Hexry L. Marsu, III

_Wituiam H. Bass, II]

RanpaLtt G. Jonson

Hit_, TUCKER & MarsH

214 East Clay Street

P. O. Bos 27363

Richmond, Virginia 23261

(804) 645-9073

Joun W. Scott, JR.

615 Caroline Street

Fredericksburg, Virginia 22401

(703) 371-3700

JaCK GREENBERG .”

Counsel of Record

‘James M. Nasrit, III

NaAPoLeon Bb. Wiuuiams. Jr

10 Columbus Circle

Suite 2030

New York, New York 10019

(212) 3586-8397

Barry L. GoLpstTEeIn

806 15th Street, N.W.

Suite 940

Washington, D.C. 20006

(202) 638-3278

Counsel tor Petitioners

Septanber 2, 1980

rae

ee eee een

QUESTIONS PRESENTED

1. Whether the Court of Appeals for the Fourth

Circuit erred in holding that an order of the

district court, which refused to enter a jointly

proposed consent decree on the grounds of its

alleged illegality, was not appealable under 28

U.S.C. §1291 as a collateral order pursuant to

the Court's decision in Cohen v. Beneficial

Industrial Loan Corp., 377 U.S. 541 (1949)?

r Whether there was error in the Fourth

Circuit's holding that the district court's

order, which denied approval to a proposed consent

decree granting a permanent injunction on the

ground of the decree's alleged illegality, was

not appealable under 28 U.S.C. §1292(a)(1) as

an interlocutory order refusing an injunction?

TABLE OF CONTENTS

QUESTIONS PRESENTED... 2. eceecececeecsceees

TABLE OF po eg tee aaa ae er

CITATION TO OPINION BELOW.......eeeeeeeees ;

i ee Or Pn 6 ois kb 6 068 © Oe ee 6 Ow 00008 bbe eee

CONSTITUTIONAL AND STATUTORY

PROVISIONS poo Ks ee eee re ee eee

STATEMENT OF THE ts b 4 6-6 kee 6566604648464"

SUMMARY OF ARGUMENT. eeeee#ee eoeeeoeeese0eeeeetenteeee

A. Appealability Under §1291........,.

B. Appealability Under §1292(a)(1)....

ARGUMENT... cccccccccccecs Cee cccccccccces coe

1. INTRODUCTION....... ce ccccone cecccee

2. THE DISTRICT COURT'S ORDER RE-

FUSING TO APPROVE THE PARTIES'

JOINTLY PRESENTED CONSENT ORDER

WAS A COLLATERAL ORDER WHICH WAS

APPEALABLE AS AN EXCEPTION TO

THE FINAL JUDGMENT REQUIREMENT

OF Se Cibch, TRAP E sc ceservecusesses

A. ee eee ee ee ae ee

B. The Applicable Law.........eee0-

C. Application of the Cohen

9 ROR GREASE ee re eh ang ee aN

3. THE DISTRICT COURT'S ORDER

BELOW IS APPEALABLE UNDER

28 U.S.C. §1292(a)(1) AS AN

INTERLOCUTORY ORDER DENYING

AN INJUNCTION. .....eceeeeeeeeeeees

A. The Applicable Law.............

B. Criteria Governing The

Application of §1292(a)(1).....

GOMOTRLs cccccresesvocescccto~

Interlocutory Order........

Injunctive Relief..........

Characteristics of an

Injunction. ...ceecccecccees

a. More Than a Mere

Pre-trial Order........

b. Determining the

PGP R. Cis tctaeaeeseks

Irreparable Injury.........

C. Application of the Criteria

Under +0. (Pe) ¢ 0 Sr ee

CPR CAs 600 06 6s 0 Oks OR ORS 68 08S ebSeaeS

iii

Page

Table of Authorities

Cases

Alexander v. Gardner-Denver Co.,

415 U.S. 36 (1974)...... Terrrrere rs i

Baltimore Contractors v. Bodinger,

Se...) Ee

Brown v. Chote,

8” eee er

Catlin v. United States,

6) eee

Chappell & Co. v. Frankel,

mer wee BSP C26 Cit. 1966)... .cccree

Cohen v. Beneficial Loan Corp.,

ES ED ee

Cobbledick v. United States,

ee B.B. 32d CIUDAD)... ccccsecs eeccccee

Coopers & Lybrand v. Livesay,

Ss)

Dent v. St. Louis-San Francisco Ry Co.

406 F.2d 399 (5th Cir. 1969)..........

Dickinson v. Petroleum Conversion Corp.

ne wae. SOF C195SE)...... TUeTTTT TET Te

Eisen v. Carlisle & Jacquelin,

EE EP RE MOORS cacccscccccserece

Enelow v. New York Life Ins. Co.,

6 >.) Se

Page

24,26,35,75

46,47,49,55

57,65

20,23, 25,28

30,47

27,28

35,36,71

28, 30,40

30,40,41

Cases Page

Ettelson v. Metropolitan Life Ins. Co.

S17 U.S. 18B (1962). .ccccccscvccceccce 45

Franks v. Bowman Transportation Co.,

REP Biba FOF SESE is tN 6e00'es vee e aes 11

Gardner v. Westinghouse Broad-

casting Co.

437 U.S. 478 (1978). ..cccccccccccveces 35,40,46,48

56,59, 66, 68

General Electric Co. v. Marvel Rare

Metals Co.,

RET BiB. GOD CAST R ccc cencayeveccsss 56,65

George v. Victor Talking Machine Co.,

oo Be ees Peer ye Tre Te ee 50

Gillespie v. U.S. Steel Corp.,

iy 2S | ee eee eee 40

Goldstein v. Cox,

wee OS OTE Chea awckccevedscvecess ee

Liberty Mutual Ins. Co. v. Wetzel,

err 68

Maxwell v. Enterprise Wall Paper Co.,

131. P2d 400 (Sed Cit. 1942)... ccccsecs 46

Mercantile National Bank at Dallas v.

Langdeau,

BPE Cis SID SAGER av cncskcerdsese ves 30

Morgenstern Chemical Co. Inc. v.

Schering Corp.,

181 F.24 160 (3rd Cir. 1950). ..cccces -46,57,65

Cases Page

Morgantown v. Royal Ins. Co.,

BSF UB. SOW: VUNG coo cc che sve vesvases 45,49

Norman v. McKee,

431 F.2d 769 (9th Cir. 1970),

cert. denied, ISI v. Myers,

se eye ek Perera e re 20, 30,39,43

Osborne v. Missouri P.R. Co.,

SOF Wis ee MEF A cede trindea vanes 43

Peter Pan Fabrics, Inc. v. Dixon

Textile Corp.,

Dae Pied Cee tee Ce. LPOG 6 vices ciees 55

Radio Station WOW, Inc. v.Johnson,

ee ee OS ee ee tare 27

Russell v. American Tobacco Company,

528 F.2d 357 (4th Cir. 1975),

cert. denied, 425 U.S. 935 (1976)..... 8,16

Safe Flight Instrument Corp. v.

McDonnel-Douglas Corp.,

482 F.2d 1086 (9th Cir.),

cert. Genied, S14 U.S. LIS. .ccccccecce 59

Sampson v. Murray,

eS OR ee re err ee 61,65

Seigel v. Merrick,

S00 F236 SS G28 Che. LPTB) ic ccccv sve 19,37,38,39

69,70, 73

Shanferoke Coal & Supply Corp. v.

Westchester Service Corp.,

- & Sy Ree Bf re eee ee 49

Cases Page

Smith v. Vulcan Iron Works,

165 U.S. 518 (1897)....... PTT ETT TIT 24,52,53,55

Stewart-Warner Corp. v. Westinghouse

Elec. Corp.,

325 F.2d 822 (2d Cir. 1963),

ones, Gemsee, 370 B.8s Ulscosccccsesse 44,46,60

Switzerland Cheese Association,

Inc. v. E. Horne's Market, Inc.,

7 ee Me ee | errr reer re 24,45,47,48

50,55, 56,59

66, 68

Teamsters v. United States,

431 U.S. 324 (1977)..... beieeee peeesce 31, 66

United States v. Allegheny-Ludlum

Industries, Inc.,

Si? 9.28 Gab (5th Che. 19759). cccccosee 35

United States v. American Friends

Service Committee,

eS ne ee ec kab eee ou 43

U.S. v. City of Alexandria,

_ F.2d (Sth Cir.),

2 EPD 430, 828, April 10, 1980....... 26

United States v. City of Miami,

F.2d (5th Cir.),

ZZ EPD 30,821, April 10, 1980........ 26

United Steelworkers of America,

AFL-CIO-CLC v. Weber,

443 U.S. 193, 61 L.Ed. 2d 480 (1979)..21,22,31,32

34,35,36,41

67,74,75,76

- vii -

Cases

Virginia Petroleum Jobbers Assn. v.

FPC,

259 F.2d 921 (D.C. Cir. 1958)..

Weber v. United Steelworkers of

America, AFL-CIO,

563 F.2d 216 (5th Cir. 1977)...

W.L. Gore & Associates, Inc. v.

Carlisle Corp.,

529 F.2d 614 (3rd Cir. 1976)...

Constitutional Provisions

coccvee 61

eeeevee#es 22

or ccccne 52

Fifth Amendment to the Constitution of -

Ciel STO BONCORs 564 6 64K 40008

Statutes

26 0.8.C. GEISGC1) « « o00

FO Ui8.0. FESOS csicntices

ZO U.8.C. GAPSE 6 vicce css

28 U.S.C. §1292(a)(1)...

42 U.8.C. SIDS]. .ccccone

Evarts Act of 1891,

- ef 2. Sey eee

- viii -

cecccee a7

errr ye 2

errr 50,51,52

cone By h Og bh Sa, 04

25,27, 28,29, 31, 39

cece oo 2,149, 20,21

22,23,24,27,44,45

46,47,49, 50,52, 55

56, 58,61, 63,67, 70

ceecces 6

occccee 44,53,54

Statutes Page

Title VII, Civil Rights Act

of 1964, as amended, 42 U.S.C.

$§2000e et seq.......eeeeeeeee3,6,7,17,25

26, 30,31 ,32,35

39,64, 65, 66,67

Rules :

Rule 23(e), Federal Rules of

COWES PROCITE. 6 kc cass vvcecs. Dgntetosae

30, 36, 38

Rule 41(c), Federal Rules of

CAiVEL Procedure. cccccccics eas 34

Rule 68, Federal Rules of

GCEWEE PROCHGUEOs. 6s bccn cece. 34

Legislative History

Remarks of Senator Hubert

Humphrey, 110 Cong. Rec.,

6548, concerning Title VII

Civil Rights Act of 1964,

as amended, 42 U.S.C.

§§2000e et seq......eeseeeeees 74

Other Authorities

Note, Appealability in the

Federal Courts,

75 Harv. L. Rev. 351 (1952)... 45

Wright & Miller, Federal

Practice ard Procedure........ 45,48,52

Abbreviated Form

References to "Joint Appendix below" are

to the Joint Appendix filed in the Court of

Appeals for the Fourth Circuit.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1980

No. 79-1236

FRANK L. CARSON, LAWRENCE HATCHER,

and STUART E. MINES,

Petitioners,

Vv.

AMERICAN BRANDS, INC., T/A THE

AMERICAN TOBACCO COMPANY; LOCAL 182,

TOBACCO WORKERS INTERNATIONAL,

TOBACCO WORKERS INTERNATIONAL UNION,

Respondents.

ON A WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE FOURTH CIRCUIT

CITATION TO OPINION BELOW

The opinion of the Court of Appeals for the

Fourth Circuit is reported at 606 F.2d 420. The

opinion and judgment of the Court of Appeals are

set forth in the Appendix to the Petition for a

Writ of Certiorari, pp. la, 52a. The opinion of

the District Court for the Eastern District of

Virginia is reported at 446 F.Supp. 790. The

opinion and judgment of the District Court are

also set forth in the Appendix to the Petition for

a Writ of Certiorari, pp. 28a, 5la..

-2-

JURISDICTION

Jurisdiction of this Court is invoked pur-

suant to 28 U.S.C. §1254(1). The judgment of the

Court of Appeals dismissing the appeal was entered

on September 14, 1979. On June 16, 1980, this

Court granted the petition for a writ of cer-

tiorari limited to Question 1 presented by the

petition. On July 24, 1980, the Clerk of the

Supreme Court granted petitioners, pursuant to

request, until September 2, 1980 in which to file

a brief.

CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED

This case involves the Fifth Amendment to the

Constitution of the United States.

This case also involves the following federal

statutes:

a. 28 U.S.C. §1291

The court of appeals shall have

jurisdiction of appeals from all final

decisions of the district courts of the

United States, the United States Dis-

trict Court for the District of the

Canal Zone, the District Court of Guam,

and the District Court of the Virgin

Islands, except where a direct review

may be had in the Supreme Court.

b. 28 U.S.C. §1292(a)

The court of appeals shall have

jurisdiction of appeals from:

(1) Interlocutory orders of the

district courts of the United States,

a. te

the United States District Court for the

District of the Canal Zone, the District

Court of Guam, and the District Court of

the Virgin Islands, or of the judges

thereof, granting, continuing, modify-

ing, refusing or dissolving injunctions,

or refusing to dissolve or modify

injunctions, except where a direct

review may be had in the Supreme Court.

42 U.S.C. §2000e-2

(a) It shall be an unlawful employment

practice for an employer--

(1) to fail or refuse to hire or

to discharge any individual, or other-

wise to discriminate against any indivi-

dual with respect to his compensation,

terms, conditions, or privileges of

employment, because of such individual's

race, color, religion, sex, or national

origin; or

(2) to limit, segregate, or

classify his employees or applicants for

employment in any way which would

deprive or tend to deprive any indivi-

dual of employment opportunities or

otherwise adversely affect his status as

an employee, because of such indivi-

dual's race, color, religion, sex, or

national origin.

“a

practice for a labor organization--

(1) to exclude or to expel

from its membership, or otherwise

to discriminate against, any

individual because of his race,

color, religion, sex, or national

origin;

(2) to limit, segregate, or

classify its membership or appli-

cants for membership, or to clas-

sify or fail or refuse td refer for

employment any individual, in any

way which would deprive or tend to

deprive any individual of employ-

ment opportunities, or would Limit

such employment opportunities

or otherwise adversely affect his

status as an employee or as an

applicant for employment, because

of such individual's race, color,

religion, sex, or national origin;

(3) to cause or attempt to

cause an employer to discriminate

against an individual in violation

of this section.

(j) Nothing contained in this sub-

chapter shall be interpreted to require

any employer, employment agency, labor

organization, or joint labor-management

committee subject to this subchapter io

grant preferential treatment to any

individual or to any group because of

= § «

the race, color, religion, sex, or

national origin of such individual or

group on account of an imbalance which

may exist with respect to the total

number or percentage of persons of any

race, color, religion, sex, or national

Origin employed by any employer,

referred or classified for employment by

any employment agency or labor organiza-

tion, admitted to membership or clas-

sified by any labor organization,

or admitted to, or employed in, any

apprenticeship or other training pro-

gram, in comparison with the total

number or percentage of persons of such

race, color, religion, sex, or national

origin in any community, State, section,

or other area, or in the available work

force in any community, State, section,

or other area.

d. Rule 23(e), Federal Rules of Civil Pro-

cedure

A class action shall not be dis-

missed or compromised without the

approval of the court, and notice of the

proposed dismissal shall be given to

all members of the class in such manner

as the court directs.

STATEMENT OF THE CASE

General. On October 24, 1975, petitioners,

present and former seasonal employees at the

Richmond Leaf Department of the American Tobacco

—

Company, a subsidiary of American Brands, Inc.,

which is located in Richmond, Virginia, filed a

complaint on behalf of themselves and other black

employees at the Richmond Leaf Department.

The complaint charged that defendant Ameri-

can Brands, Inc., defendant Tobacco Workers'

International Union, and defendant Local 182 of

the Tobacco Workers' International Union, in

violation of the Civil Rights Act of 1964, 42

U.S.C. §§2000e, et seq., and 42 U.S.C §1981,

discriminatorily denied black workers hiring,

promotion, and transfer opportunities and dis-

criminatorily restricted black workers to low

paying and otherwise undesirable jobs.

After the conduct of extensive discovery, the

district court, on March l, 1977, certified a

class consisting of (1) black persons, currently

and formerly employed who were seasonal employees

of the American Tobacco Company's Richmond Leaf

Department on or after September 9, 1972, and (2)

black persons who applied for seasonal employment

at the American Tobacco Company's Richmond Leaf

Plant on or after September 9, 1972.

The parties reached a settlement of plain-

tiffs' claims, entered into a proposed consent

decree, Joint Appendix 24, and jointly moved for

-7-

approval and entry of the proposed decree. The

district court denied the motion on the ground

that the proposed decree violated the provisions

of Title VII of the Civil Rights Act of 1964, as

amended, 42 U.S.C. §§2000e et seq. in that it

provided, in the absence of proof that defendants

had engaged in racially discriminatory actions or

that plaintiffs and class members were victims of

racial discrimination by defendants, for preferen-

tial treatment of black employees on the basis of

race and color. 446 F.Supp. at 788-791.

Additionally, it held that both Title VII

and the Fifth Amendment to the Constitution of the

United States precluded a district court from

placing what it termed a "federal stamp of appro-

val" upon an agreement which provided preferential

treatment on the bais of race or color in the

absence of proof of discrimination by defendant

and in the absence of proof that plaintiff and

class members were victims of discrimination.

446 F.Supp. at 784

On May 14, 1979, the United States Court of

Appeals for the Fourth Circuit ordered the merits

of the appeal to be determined en banc. On

September 14, 1979, however, the Court of Appeals

ordered the appeal dismissed on the ground that

«= §-=

the order appealed from below was not appealable

within the intendment of 28 U.S.C. §§1291 and

1292. Chief Judge Haynsworth and Circuit Judges

Winter and Butzner dissented in an opinion holding

that the order was appealable and that the consent

decree should have been approved.

History of Racial Discrimination. American

Brands, Inc., employs 150 seasonal employees and

100 regular, or full-time, employees to process

and store leaf tobacco at the Richmond Leaf

Department of the American Tobacco Company in

Richmond, Virstale<¢ Tie seasonal employees, all

of whom are black, work between six and nine

months during the year. By contrast, regular

employees, of whom 34% are white, work throughout

the veae Both the seasonal and regular

1/ The facts concerning employment statistics of

defendant American Brands, Inc. are contained in

that defendant's answer to plaintiffs’ interro-

gatories, relevant portions of which are included

in the Record below as the parties' Joint Appendix,

and are also contained in the opinions below.

Moreover, the operation of the American Tobacco

Co. is described in Russell v. American Tobacco

Co., 528 F.2d 357 (4th Cir. 1975), cert. denied,

425 U.S. 935 (1976).

2/ The following table represents the racial

composition of the employees at the Richmond

Leaf Department from 1968-1976:

-9 -

employees are represented by defendant Local 182,

Tobacco Workers’ International Union (herinafter

a i Mig B

Prior to September 16, 1963, union jurisdic-

tion over job positions at the Richmond Leaf

Department was divided betweeen Local 182 of the

T.W.I.U. and Local 214 of the T.W.I.U. The

former, whose membership was then all white, had

exclusive jurisdiction over regular job class-

ifications. Local 214's membership was limited

to black employees who were seasonal workers at

the Richmond Leaf Siercenat

While the existence of two separate unions at

the Department was officially terminated on

September 16, 1963, the pre-existing patterns of

2/ (con'd)

Year Regular Employees Seasonal Employees

Whites Blacks Whites Blacks

FS ae Sees ? ial

1968

1970 40 59 0 175

1973 40 56 0 176

1976 37 57 0 135

3/ See defendant American Brand's answer to

TInterrogatory #14 in Joint Appendix below.

- 10 -

racial discrimination, however, continued in

effect at the Richmond Leaf Department as a

consequence of regulations and procedures estab-

lishing the system of seniority and transfer

rights of employees.

ret , 4 ;

Seniority and Transfer Bistien = Prior to

September 16, 1963, permanent job vacancies were

filled by canvassing the employees within the

bargaining unit of the union having jurisdiction

of the jobs in which the vacancies existed.

This procedure benefitted the white members of

Local 182 in the competition for permanent job

positions.

Following the 1963 merger of the locals,

the rules governing the filling of vacancies in

the full-time positions continued to exclude or

disadvantage the black workers who had been

discriminatorily assigned to seasonal positions.

When management requests a job transfer of a

regular employee that employee does not lose

seniority rights, but when management requests a

= =

4/ See defendant American Brand's answers to

[Interrogatories #20-56 in Joint Appendix below.

- }]] -

seasonal employee to transfer to full-time work

that employee loses his seniority rights.

Moreover, when a regular worker transfers

from one full-time job to another one the employee

retains all of his seniority rights, but when a

seasonal worker transfers to a full-time job he

loses all of his seniority cbavee Further-

more, a seasonal worker who transfers to a full-

time position aimost always must enter at a

bottom-level position because the regular workers

have the first opportunity to move to the vacan-

cies in full-time positions.

Accordingly, if a seasonal worker is employed

in a seasonal position above the entry-level, he

frequently will be required to suffer a short-term

pay cut in order to move into a full-time position.

The imposition of these penalties, the loss of

seniority and the possible reduction in short-term

pay, serve to lock in the effects of the historical

5/ The transferring seasonal worker loses not

only his "competitive" seniority rights, e.g.,

rights for job security and promotion, but also

his “benefit" seniority rights, e.g., right for

sick leave and vacation, except for retirement

benefits. Cf. Franks v. Bowman Transportation

Co., 424 U.S. 747, 765 (1976).

-12<-

discriminatory practices which existed at the

Richmond Leaf Division. These practices were

responsible, as of February 13, 1976 for creation

of a situation in which only one of the 16 posi-

tions of watchman was held by a black amtien

The historical practices of discrimination

have continued to limit the employment opportuni-

ties of black workers for supervisory as well

as hourly jobs. Almost invarably the Company

selects its supervisory employees from its full-

time staff. The Company has never promoted a

seasonal worker directly to a supervisory posi-

tion. The continuation of the effects of the past

segregative practices has resulted in the selec-

tion of a disproportionately small group of the

Company's black employees as supervisors. As

of April, 1976, only 20% of these positions were

filled by blacks!

6/ See defendant American Brand's answer to

Interrogatory #15(c) continued in Joint Appendix

be low.

7/ Id. Interrogatory #65.

-13-

Proposed Consent Decree. Discovery con-

ducted by the parties following the commencement

of this lawsuit showed dramatically the degree to

which particular job classifications could be

identified by race. It also showed the extent

to which seniority rules and transfer rules

impinged on the capacity of defendants to eradi-

cate the vestiges of past racial discrimination.

The parties, of course, had differing views on the

extent to which such lingering effects exist. To

resolve their disagreement and to settle the

controversy, the parties negotiated a proposed

consent decree settling all claims outstanding

between them and presented it to the district

court, in accordance with Rule 23(e) of the

Federal Rules of Civil Procedure.

One of the principal features of the proposed

7/ . * 7 *

consent decree=was a seniority clause requiring

7/ Part III of the proposed consent decree

stated the following:

‘a III. INJUNCTIVE RELIEF FOR THE CLASS

In full and final settlement of any and

all claims for injunctive relief alleged in the

Complaint, the parties agree to the following:

Ae For the purposes of determining eligib-

ility for vacations and for promotions,

= 14 =

current and future employees to be credited

with actual time worked at the plant as seasonal

employees. Another feature of the proposed

7/ = (contd. )

lay-offs and recalls, every current

and future regular hourly paid produc-

tion employee of the Richmond Leaf

Department will be credited with actual

time worked as a seasonal employee

commencing with the date of hire of the

last period of continuing employment as

a seasonal employee in accordance with

Section 1 of Article 7 of the current

collective bargaining agreement govern-

ing seasonal employees. The combined

total of such seasonal and regular

employment will apply toward service

requirements for vacations, and for

promotions, demotions, lay-offs and

recalls.

Regular employees who have served the

probationary period as a seasonal

employee during the last period of his

or her continuous seasonal employment

at Leaf prior to being transferred to

regular Lear employment will become

eligible for medical benefits and

sick benefits immediately upon such

transfer to regular employment.

- 15 «

consent decree allowed seasonal employees to

transfer to permanent job positions as vacancies

occurred provided, of course, no regular employees

7/ = (contd. )

In the event that vacancies in hourly

paid permanent production job classifi-

cations at the Richmond Leaf Department

are not filled by regular production

employees, then all qualified hourly

paid seasonal production employees

will be given the opportunity to fill

such vacancies prior to hiring from the

outside.

In the event that vacancies in the

job classification, Watchman, at the

Richmond Leaf Department are not filled

by regular production employees, then

all qualified hourly paid seasonal

production will be given the opportunity

to fill such vacancies prior to hiring

from the outside.

The Richmond Leaf Department adopts a

goal of filling the production super-

visory positions of Foreman and Assis-

tant Foreman with qualified blacks

until the percentage of blacks in such

positions equals 1/3 of the total of

such positions. The date of December

31, 1980 is hereby established for the

accomplishment of this goal.

See Joint Appendix at 27a-28a.

- 16 =

desired the positions.

These provisions were patterned after the

relief fashioned for seasonal workers in Russell

v. American Tobacco Company, supra, 528 F.2d 357,

362-64 (4th Cir. 1975), cert. denied, 425 U.S. 935

(1976). Under the first above-mentioned feature

of the proposed consent decree, seasonal workers

are allowed to maintain their seniority upon

transfer to regular positions. Under the second

feature, seasonal employees are permitted to bid

on vacancies in classifications, such as watch-

men, which were once reserved for whites.

In addition, the proposed consent decree

contained, in Part III, section 5, an affirmative

action provision to reduce a historical underrep-

resentation of blacks which had existed in the

supervisory positions. This provision provided

that:

The Richmond Leaf Department adopts a

goal of filling the production super-

visory positions of Foreman and Assis-

tant Foreman with qualified blacks until

the percentage of blacks in such posi-

tions equals 1/3 of the total of such

positions. The date of December 31,

1980 is hereby established for the

accomplishment of this goal.

Joint Appendix at 3la.

Furthermore, the consent decree eliminated

the requirement that seasonal workers must serve a

-l7 -

probationary period when they transfer to a

full-time position. Finally, the decree contained

a general injunction prohibiting the defendants

from discriminating against black workers and

a reporting provision requiring the Company to

submit for a three-year period specific reports

detailing compliance with the Decree. Joint

Appendix at 3la.

All of the parties found that these provi-

sions represented, in light of the history of the

Richmond Leaf Department, a settlement that was

reasonable, just, and fair to all conseuied

Despite their agreement, the district court, by

order filed June 2, 1977, denied the joint motion

of the parties to approve and enter the proposed

consent decree.

Several reasons were offered by the district

court in support of its refusal to grant the

motion. First, the district court judge stated

that Title VII of the Civil Rights Act and the

due process clause of the Fifth Amendment to the

8/ See the Memorandum in Support of Entry of

Proposed Consent Decree filed by defendant Ameri-

can Brands, Inc. in the district court. Also, see

Memorandum in Support of Entry of Proposed Consent

Decree filed in the district court by the two

union defendants on April 15, 1977.

- 18 -

Constitution prohibited the defendant employer,

defendant, unions, and the district court from

granting preferential treatment to employees based

upon race except upon a showing of past or present

discrimination committed by the defendants.

Second, the district court said that the

proposed consent decree was fatally flawed in

seeking to provide for preferential treatment for

black employees who were not shown to be victims

of discrimination. Moreover, because the intro-

ductory section of the proposed consent decree

contained a provision in which defendants denied

that their actions had been discriminatory or un-

lawful, and contained another provision in which

plaintiffs stated that they did not admit that

defendants' actions were lawful, the district

court concluded that there was not "create(d) any

factual basis upon which relief may be granted."

446 F.Supp. at 788-789.

The district court conceded, however, that

prior to September 1963, the "regular job classi-

fications of truck driver, watchman, maintenance,

storage, and boiler operator ... were reserved

for whites only", 446 F.Supp. at 782, and that, as

of April 5, 1976, only 20% of the 35 supervisory

positions were filled with black employees. Id.

at 783.

- 19 -

Petitioners appealed the district court's

order to the Fourth Circuit. That court dismissed

the appeal on the ground that the order was non-

appealable under 28 U.S.C. §§1291 and 1292 (a)(1).

In holding that the district court's judgment

was not appealable as an interlocutory decree

denying an injunction, the Court of Appeals said,

"Here, injunctive relief was not finally denied;

it was merely not granted at this stage of the

proceedings." 600 F.2d at 423. It regarded the

order as deciding only that the case should go to

trial. Id. at 423.

Following the rationale of the Second Circuit

in Seigal v. Merrick, 590 F.2d 35 (2d Cir. 1978),

it held that disallowance of the interlocutory

appeal would strengthen the power of the district

courts to draw parties into presenting more favor-

able settlement proposals. The denial of one

agreement, it said, did not necessarily prevent a

more "sweetened" agreement from being approved.

606 F.2d at 423-24. The court was oblivious to

whether the order decided the merits of the

action. It stated that "whatever the district

court's reasons for refusing a decree, appeals of

rights from those refusals would encourage an

endless string of appeals and destroy the district

court's supervision of the action as contemplated

by Fed.R.Civ.Proc. 23(e)". Id. at 424.

= 20 -

The Fourth Circuit recognized that its deci-

sion was contrary to the decision in Norman v.

McKee, 431 F.2d 769 (9th Cir. 1970), cert. denied,

ISI v. Meyers, 401 U.S. 912 (1971), where the Ninth

Circuit had held that orders disapproving proposed

settlements of stockholder's derivative suits are

appealable as collateral peteve et However, it

merely noted the existence of the case and did

9/ Although the opinion in the Fourth Circuit

below implied that petitioners only sought an

interlocutory appeal under 28 U.S.C. §1292(a)(1),

606 F.2d at 421, petitioners, in fact, appealed

the decision under both §1291 an §1292(a)(1). To

help clarify the matter, the facts concerning the

appeal are stated herein.

By letter to the Clerk of the Fourth Circuit

Court of Appeals dated January 13, 1978, peti-

tioners stated that the district court's order

below was appealable under 28 U.S.C. §1291. Sub-

sequently, however, petitioners filed, on February

9, 1979 a supplemental memorandum in which they

stated, on page 2, that the case did not involve

the collateral order doctrine of Cohen v. Benefi-

cial Industrial Corp., 377 U.S. 541 (1949).

On February 20, 1979, petitioners filed a

Supplemental Reply Memorandum in which they noted

the existence of a conflict between the circuits

on the issue of appealability under §1291 of a

district court's order disapproving a proposed

settlement of a derivative action. Because the

proposed decree contained a request for an in-

junction, petitioners stated that jurisdiction

could be upheld under §1292(a)(1) without reaching

o 9)-

not state why the court's analysis there was not

persuasive.

SUMMARY OF ARGUMENT

A. Appealability Under §1291

Petitioners contend that the order of the

district court denying approval to the parties'

jointly proposed consent decree was appealable as

a collateral order. Separate and apart from the

issue of whether defendants have practiced racial

discrimination against plaintiffs, this Court has

established that a private employer and union can

voluntarily establish an affirmative action plan

on behalf of black employees in an industry in

which there is an imbalance of black employees

with respect to white employees arising out of a

9/ (contd. )

the issue under §1291. They cautioned, however,

that the court would be confronted with deciding

the appealability of the order as a collateral

order under §1291 if the court could not sustain

jurisdiction under §1292(a)(1). See petitioners'

Reply to Brief in Opposition to Certiorari, n.4.

Although petitioners subsequently emphasized

the appealability of the district court's order

under §1292(a)(1) in their Supplemental Brief for

the Appellants On Consideration En Banc, they did

not, at any time, waive or drop their insistence

that the order was appealable as a collateral

order under §1291.

"fe *

historical exclusion of blacks. See United Steel-

workers of America, AFL-CIO-CLC v. Weber, 443 U.S.

193 (1979). The denial of the right to settle

voluntarily the instant action in accordance with

principles set forth in Weber, supra, is therefore

a collateral order affecting rights collateral to

the merits of the action and thus was appealable

under §1291.

B Appealability Under §1292(a)(1)

Petitioners contend that an examination of

the grounds stated by the district court in sup-

port of its order denying approval to entry of a

consent decree granting a permanent injunction,

discloses that the order resolved the merits of

the injunctive claims and of the Title VII claims.

Since these grounds precluded the filing of a

subsequent motion by petitioners for a preliminary

injunction, the district court's order was appeal-

able under §1292(a)(1) as an interlocutory order

refusing an injunction.

ARGUMENT

INTRODUCTION

This case concerns the appealability of a

district court's order which, on the basis of the

= 93 «

Fifth Circuit's opinion in Weber v. United Steel-

workers of America, AFL-CIO, 563 F.2d 216 (5th

Cir. 1977), subsequently reversed by this Court in

United Steelworkers of America, AFL-CIO-CLC v.

Weber, 443 U.S. 193 (1979), refused to approve,

pursuant to Rule 23 of the Fed. R. Civ. P., a

joint motion by the parties to enter a proposed

consent decree granting permanent injunction

Petitioners contend that the order of the

district court is appealable, pursuant to the

collateral order doctrine, see Cohen v. Beneficial

Industrial Loan Corp., 377 U.S. 541 (1949), as an

exception to the finality requirement of 28 U.S.C.

§1291. Petitioners also submit that the order is

appealable under 28 U.S.C. §1292(a)(1) as an

interlocutory order denying injunctive relief.

The appealability of a district court's order

which refuses to enter a jointly proposed consent

decree settling the action and granting a perma-

nent injunction, is a case of first impression

in this Court.

The interlocutory order of the district court

denied approval, under Rule 23(e), of the parties’

jointly proposed consent decree and thereby

denied their joint request for a permanent injunc-

tion. The appealability of orders of the district

= 94. -

courts refusing to approve proposed consent

decrees has not been previously determined by the

Court. Furthermore, the Court has not, in general,

determined when interlocutory orders denying

permanent injunctions are appealable under §1292

(a)(1). Compare, e.g., Smith v. Vulcan Iron Works,

165 U.S. 518 (1897) with Switzerland Cheese Asso-

tion, Inc. v. E. Horne's Market, Inc., 385 U.S.

23, 23-25 (1966).

This case seemingly presents an opportunity

for the Court to resolve both issues. Petitioners

submit, however, that there are special factors

operative here, such as the Congressional prefer-

ence for voluntary settlement of Title VII actions,

see Alexander v. Gardner-Denver Co., 415 U.S. 36,

44 (1974), and the peculiar nature of the grounds

assigned by the district court in support of its

order, which will permit the Court to decide this

case without determining, in general, the appeal-

ability of orders denying proposed settlement

decrees or the appealability of orders denying

permanent injunctive relief. However, these

special circumstances do warrant allowance of an

appeal from the order below under both §1291 and

§1292(a)(1).

- 25 «

THE DISTRICT COURT ORDER REFUSING TO

APPROVE THE’ PARTIES’ JOINTLY PRESENTED

CONSENT ORDER WAS A COLLATERAL ORDER

WHICH WAS APPEALABLE AS AN EXCEPTION

TO THE FINAL JUDGMENT REQUIREMENT OF

28 U.S.C. §1291.

A. General

Section 1291 of Title 28 of the United States

Code authorizes an appeal to a federal court of

appeals of a final "decision" or judgment, of a

federal district court. This Court, however, has,

in interpreting the statute to effectuate its pur-

poses, made exceptions to the "final judgment"

rule. One such exception is the collateral order

doctrine under which the Court has allowed the

appeal of an interlocutory orders which is collat-

eral to the merits of the underlying action.

See Cohen v. Beneficial Industrial Loan Corp., 337

U.S. 541 (1949).

This doctrine, petitioners contend, is appli-

cable to an order of the district court which, in

a Title VII action, denied, under Rule 23 of the

Fed. R. Civ. P., approval of a proposed consent

decree, on the ground that the decree provided

preferential treatment on the basis of race to

black employees who were not victims of racially

discriminatory actions by defendants.

- 26 -

At the outset, petitioners stress the impor-

tance of the issue involved. Voluntary settlement

of employment discrimination suits lies at the

heart of the effort to enforce Title VII. This

Court has emphasized that "(c)ooperation and

voluntary compliance were selected as the prefer-

red means for achieving" the goal of equal oppor-

tunity in employment. Alexander v. Gardner-Denver

Co., 415 U.S. 36, 44 (1974). Judicial review in

the courts of appeals of settlement decrees has

been extremely instrumental in carrying out this

purpose of the statute. See, e.g.,.United States

v. City of Miami, F.2d (5th Cir.), 22 EPD

430,821, April 10, 1980; United States v. City of

Alexandria, F.2d (Sth Cir.), 22 EPD

430,828, April 10, 1980.

Conversely, disaliowance of interlocutory

review of orders disapproving proposed settlement

decrees is likely to frustrate the achievement of

the purposes of Title VII. Not only would it put

all voluntary settlements of Title VII actions at

the mercy of district judges but it would also

force the parties needlessly to undergo expensive,

time-consuming trials.

- 27 -

B. The Applicable Law

With the exception of 28 U.S.C. §1292, and

certain judicially created exceptions, the appeal-

ability of orders of the district court to the

federal courts of appeals is limited by 28 U.S.C.

$1291 to "final decisions." See Cobbledick v.

United States, 309 U.S. 323 (1940); Catlin v.

United States, 370 U.S. 294 (1962). In its deci-

sion in Cobbledick v. United States, supra, the

Court found that Congress, with the enactment of

§1291, prohibited "piecemeal disposition on appeal

of what for practical purposes is a single con-

troversy ... (and) set itself against enfeebling

judicial administration." Id. 309 U.S. at 324.

Moreover, the Court has noted that the pur-

pose of the final judgment rule is to avoid "the

obstruction to just claims that would come from

permitting the harassment and cost of a succes-

sion of separate appeals from the various rulings

to which a litigation may give rise, from its

initiation to entry of judgment." Cobbledick v.

United States, supra, 309 U.S. at 324. Thus, the

final judgment rule, which “has the support of

considerations generally applicable to good

judicial administration", Radio Station WOW, Inc.

v. Johnson, 326 U.S. 120 (1945), is, in the final

analysis, designed to enable courts and litigants

«= 96 «

to avoid “the mischief of economic waste and of

delayed justice." Id. 326 U.S. at 123. Also see

Dickinson v. Petroleum Conversion Corp., 338 U.S.

307, 388.

Despite the laudable goals of §1291, the

courts have discovered that there are occasions

where a strict application of the final judgment

rule will not effectuate the purposes of the

statute and instead "would practically defeat the

right of any review at all." Cobbledick v. United

States, 309 U.S. at 324. In these cases, denial

of the right to an immediate appellate review

would cause irreparable injury to the party seek-

ing review. This is the basic justification for

the Court's adoption of the collateral order

doctrine under which certain interlocutory orders

can be immediately- appealed despite the absence of

a final judgment terminating the action.

The collateral order doctrine was articulated

and applied in Cohen v. Beneficial Industrial Loan

Corp., 337 U.S. 541 (1949). There, the Court, in

upholding an interlocutory appeal of an order

denying a request by defendant for the posting of

a bond by plaintiff, observed that the

order of the District Court did not make

any step toward final disposition of the

merits of the case and will not be mer-

ged in final judgment. When that time

comes, it will be too late effectively

= 29 -

to review the present order, and the

rights conferred by the statute if it

is applicable, will have been lost,

probably irreperably We conclude that

the matters embraced in the decision

appealed from are not of such an inter-

locutory nature as to affect, or to be

affected by, decision of the merits of

this case.

Id. at 546. Accordingly, it held the order

appealable on the grounds that it:

appears to fall in that small class

which finally determine claims of

right separable from, and collateral to,

rights asserted in the action, too

important to be denied review and tov

independent of the cause itself to

require that appellate consideration

be deferred until the whole case is

adjudicated.

Id. at 546.

The Cohen rule requires that an order must

have three basic characteristics before it can

qualify as a collateral order. First, the order

must adversely affect a right that is separate

and independent from whatever rights are asserted

in the action. Second, the order must constitute

a final determination of those rights. Third, the

order must be one whose review cannot be postponed

until final judgment because delayed review will

cause irreparable harm by causing the rights

conferred to be irretrievably lost.

In. applying these criteria to determine

appealability, a court must adopt a "practical

rather than a technical construction" of §1291.

- 30 -

Cohen v. Beneficial Industrial Loan Corp., supra,

337 U.S. at 546. Such an approach will neces-

sitate an evaluation of the competing considera-

tions of "the inconvenience and costs of piecemeal

review on the one hand and the danger of denying

justice by delay on the other, "A2 Eisen v.

Carlisle & Jacquelin, 417 U.S. 156, 171 (1974),

citing Dickinson v. Petroleum Conversion Corp.,

338 U.S. 507, 511 (1950).

C. Application of the Cohen Criteria

This Court has defined a collateral issue as

an issue which is "a separate and independent

matter, anterior to the merits and not enmeshed in

the factual and legal issues comprising plain-

tiff's cause of action." Mercantile National Bank

at Dallas v. Langdeau, 371 U.S. 555, 558 (1963).

The right to reach a lawful settlement of a

Title VII employment discrimination case pursuant

to the guidelines set forth by this Court in

Weber, supra, is separate and anterior to the

merits of the claims in the Title VII action.

10/ In Norman v. McKee, 431 F.2d 769 (9th Cir.

1970) cert. denied, 401 U.S. 912, the Ninth

Circuit allowed an appeal from a district court's

rejection of a settlement agreement. The court

said that the settlement of a class action under

Fed.R.Civ. P. 23 is appealable as a final decision

« $2 -=

The issues in a Title VII action concern

issues such as the following: (1) the existence

of discriminatory employment practices by defen-

dant; (2) victimization of plaintiff by defen-

dant's discriminatory practices; and (3) the

fashioning of remedies that are commensurate

in scope with the defendant's violation of law.

See, e.g., Teamsters v. United States, 431 U.S.

324 (1977).

By contrast, as this Court indicated in

United Steelworkers of America, AFL-CIO-CLC

v. Weber, supra, where it upheld the lawfulness

of a race-conscious affirmative action plan

reserving 50% of the openings in an in-plant

craft training program for black employees, the

relevant issues in determining the lawfulness of a

private, voluntarily negotiated affirmative action

plan are (1) the extent to which the plan operates

to reduce or lessen, pre-existing patterns of

racial segregation and hierarchy by opening em-

ployment opportunities to blacks in occupational

areas which have been traditionally closed to

10/ (contd. )

under 28 U.S.C. §1291, because the "inconvenience

of piecemeal review of an order disapproving a

settlement is outweighed by the danger of denying

justice by delay." 431 F.2d at 774.

o $8 «

areas which have been traditionally closed to

them; (2) the degree to which the plan unneces-

sarily trammels the interests of white and other

workers or creates a bar to the advancement of

their legitimate interests; (3) the temporary

nature of the plan; (4) the extent to which the

plan is intended to eliminate a manifest racial

imbalance and not to maintain racial balance; and

(5) the extent to which the signatories to the

affirmative action agreement adopted the plan

voluntarily. See United Steelworkers of America,

AFL-CIO-CLC v. Weber, supra, 443 U.S. at 208.

Moreover, the Court in Weber, supra, ex-

plicitly noted that the lawfulness of a private,

voluntary affirmative action plan is separate and

apart from the issue of a violation of Title VII.

It said

"(S)ince the Kaiser-USWA plan was

adopted voluntarily, we are not con-

cerned with what Title VII requires or

with what a court might order to remedy

a past proved violation of the Act."

Id. 443 U.S. at 200. Thus, the issue of whether

plaintiffs and defendants can voluntarily agree

upon a bona fide affirmative action plan that

grants racial preferences is anterior to and

not enmeshed in the issues of a Title VII suit.

Weber, supra, 443 U.S. at 200.

= 33 -

The Court's decision in Weber, supra, not

only established that the issue of the validity

of private affirmative action plans for blacks is

separate and independent of legal issues arising

in a Title VII action, but also affirmed that

private employers. and unions have a right under

Title VII to enter voluntarily into such plans.

Moreover, the Court, in Weber, supra, protected

the exercise of this right against opposing claims

of third parties, such as employees who prefer to

see the plans abandoned. 443 U.S. at 200-209.

Of course, the right to institute an affirma-

tive action plan, such as the one in Weber, only

exists when the plan complies with the criteria

set forth in Weber, supra, 443 U.S. at 208. As

the Court noted in Weber, the adoption of race-

conscious, affirmative action plans

falls within the area of discretion

left by Title VII to the private sector

voluntarily to adopt affirmative action

plans designed to eliminate conspicuous

racial imbalance in traditionally se-

gregated job categories.

443 U.S. 209.

It is undisputed, in the present action, that

“regular job classifications of truck driver,

watchman, maintenance, storage, and boiler oper-

ator ... were reserved for whites only" prior to

s th’

September 1963. 446 F.Supp. at 782. Similarly, it

is undisputed that, prior to September 1963,

there existed separate unions for black and white

workers. Finally, it is undisputed that the

jurisdiction of the union representing black

employees was, prior to September 1963, restricted

to seasonal employees and that the jurisdiction

of the union representing white employees was, at

that time, restricted to nonseasonal, regular job

classifications.

Since the terms of the proposed consent

decree were in all other respects in compliance

with the criteria set forth in Weber, supra, peti-

tioners had a right to settle the action as pro-

vided by the decision in Weber, supra. Either

Rule 41(c) or Rule 68 of Fed.R.Civ.P, could have

been utilized by the parties to facilitate sett-

ling their grievances without intervention of the

11/

courts. =

11/ Fed. R. Civ. P., 41(a) provides that an

action may be voluntarily dismissed by the plain-

tiff with the consent of all parties. Similarly,

Rule 68 provides that

"At any time more than 10 days before the

trial begins, a party defending against a

claim may serve upon the adverse party an

offer to allow judgment to be taken against

him... to the effect specified in his offer.

If within 10 days after the service of the

» 35 =

This Court has stated that courts should

accord deference to the processes of voluntary

conciliation and settlement. See, e.g., Alexander

v. Gardner-Denver Co., 415 U.S. 36, 44 (1974).

Similarly, the lower courts have sanctioned

settlement efforts in civil rights actions. As

the Fifth Circuit said in United States v. Alleg-

heny~Ludlum Industries, Inc., 517 F.2d 826, 846

(5th Cir. 1975), citing Dent v. St. Louis-San

Francisco Ry. Co., 406 F.2d 399, 402 (5th Cir.

1969),

It is quite apparent that the basic

philosopy of these statutory provisions

is that voluntary compliance is prefer-

able to court action and that efforts

should be made to resolve these employ-

ment rights by concilation both before

and after court action.

The existence of a right to settle a Title

VII action in accordance with the standards set

forth in Weber, supra, distinguishes this case from

Coopers & Lybrand v. Livesay, 437 U.S. 463, 467

(1978) and Gardner v. Westinghouse Broadcasting

1l/ (contd. )

offer the adverse party serves written notice

that the offer is accepted, either party may

then file the offer and notice of acceptance

together with proof of service thereof and

thereupon the clerk shall enter judgment.”

- 36 =

Co., 437 U.S. 478 (1978). In Coopers & Lybrand

and Gardner, this Court held that an order refus-

ing certification of a class was not appealable as

a collateral order or as an interlocutory order

denying an injunction.

The plaintiffs there had no substantive right

to have the action certified as a class action

under Rule 23. Nor did denial of their claim for

class certification affect any substantive rights

of theirs. By contrast, petitioners here have a

substantive right which is based upon the Court's

decision in Weber, supra, and which is supported

by Congressional policy promoting settlements of

Title VII actions.

Although Federal Rule of Civil Procedure

23(e), to be sure, prevents parties from having an

unencumbered right to settle class actions, Rule

23(e) does not negate the parties' legal right to

settle the case in accordance with standards set

forth in Weber, supra.

The policy behind Rule 23(e) stems from a

need to protect the interests of those class

members who are absent during settlement negotia-

tions. The need to protect the absent class

members, however is minimal in a case, such as

here, where the only right of protection advanced

in their behalf is one which this court rejected

«» 37 «

in United Steelworkers v. Weber, supra. A dis-

trict court cannot, under the guise of effectuat-

ing Rule 23(e), collaterally attack the holding

and rationale of the Court's decision in Weber.

Insofar as the rights of third parties seek-

ing protection under Rule 23(a) do not differ from

those asserted by plaintiff Weber in United Steel-

workers of America v. Weber, supra, Rule 23(a), as

a matter of law, cannot be used to defeat the

rights of private parties to institute an affirma-

tive action plan which conforms to the require-

ments of the Court set forth in United Steel-

workers of America v. Weber, supra. Such a rule

of law is a necessary requirement if the proposed

consent order is one which, like here, does not re-

quire the discharge of white workers, does not

unnecessarily trammel upon the interest of white

employees, is voluntarily adopted, is designed to

eliminate traditional patterns of racial segrega-

tion and hierarchy, is temporary, is created to

eliminate a manifest racial balance and not to

maintain a racial balance, and does not require a

percentage of black employees greater than that of

blacks in the relevant labor force.

Petitioners’ rights under Weber, supra, were

thus denied as a result of the district court's

rejection of the proposed decree on the basis of

« 30 w

the inclusion of an affirmative action plan within

the decree. By rejecting the decree, the district

Court therefore made a final determination of the

parties’ collateral right to settle the action in

accordance with the decision in Weber.

This aspect of the case distinguishes it

from Seigal v. Merrick, 590 F.2d 35 (2d Cir. 1978),

which was relied upon by the Court of Appeals

below. In Seigal, the Second Circuit held that

a district court's disapproval of a settlement

agreement in a stockholder's derivative action

was not appealable as a collateral order.

Objections were raised in Siegal v. Merrick,

supra, to the proposed settlement because of

disagreements concerning the date on which the

value of an option was measured and concerning the

criteria by which the value of the option should

be measured. These objections, however, were not,

as here, contrary to legal principles enunciated

by this Court. Rather, they were based upon

concepts of fairness and equity which had not

previously been definitively resolved by this

Court. To this extent, therefore, the facts of

Siegal v. Merrick, supra, are distinguishable from

the facts of the present case.

The duty of the district court in Siegal v.

Merrick, supra, was to determine, pursuant to Rule

- 39 -

23 whether the proposed settlement of the stock-

holder's derivative action was, in light of the

objections made to it, fair and equitable. Al-

though the district court below also had a duty

to determine if the terms of the proposed consent

decree were fair and equitable, it also had

imposed upon it a duty to insure that its deter-

mination of what is fair and equitable was in

accordance with the purposes of Title VII and with

applicable legal principles determined by this

Court. This Court's decision in Weber, supra,

demonstrates that the district court below failed

to satisfy this obligation.

These considerations show that the Second

Circuit's decision in Siegal v. Merrick, supra, is

inapplicable to the facts of this case. The op-

posing decision of the Ninth Circuit in Norman v.

McKee, supra, in which the court held that orders

refusing proposed settlements are appealable as

collateral orders, states the better rule, espe-

cially in cases such as here where the basis for

the order refusing the consent decree is based

upon a violation of important, substantive in-

terests which the Congress has sought to protect

and maintain.

The second prong of the Cohen test requires

that an order constitutes a final determination of

- 40

the collateral rights involved before an appeal

under §1291 is allowed. The Court, however, has

recognized that the determination of when a right

has been finally decided and is thereby ripe for

appeal under the collateral order doctrine, is not

an exact science: In Dickinson v. Petroleum Con-

version Corp., supra, 338 U.S. at 51l, Mr. Justice

Jackson emphasized that there was no set formula

for ditemnining tien finality of a decree. The only

reliable guide which the Court has found is the

avoidance of any rigid insistence on technicality

which conflicts with the purposes of §1291 and the

collateral order doctrine. This approach requires

a "practical" inquiry to determine if the nature

and the effect of the district court's denial of

the the settlement decree is such that review of

the order cannot be postponed until the rendition

of a final judgment in the action See Eisen v.

Carlisle & Jacquelin, 417 U.S. 156, 170 (1974);

Gillespie v. U.S. Steel Corp., 379 U.S. 148, 152

(1964).

One factor which bears on the finality of a

collateral order is whether the issue requiring

review will become moot if the review is delayed.

Thus, for instance, the district court's order in

Gardner v. Westinghouse Co., 437 U.S. 478, (1978)

- 4]

denying class certification, was held not appeal-

able ‘precisely because effective relief could be

provided even after final judgment on the merits

of the action, if the prior denial of relief was

shown to be in error. Id. 437 U.S. at 480. On

the other hand, in Eisen v. Carlisle & Jacquelin,

supra, the Court permitted an appeal of a district

court's order which imposed 90% of the cost of

giving notice to class members in a securities

fraud case upon the defendant. Disallowance of

the appeal would have made moot the collateral

claim since it was the order which permitted the

plaintiffs' suit to proceed as a class action.

Id. 417 U.S. at 172.

In the present case, the district court's

order deprived the parties of their right to

remedy the effects of prior segregated job prac-

tices by invoking their rights under Weber, supra,

and Title VII to settle the action voluntarily.

The tenor of the district court's opinion

below tended to indicate that a final determina-

tion had been made. The opinion stated that the

Court would enter a consent decree only when "the

parties have settled their differences without a

violation of the law and without violating the

- 42

right of any class member. 446 FP. Supp. at 791.

At another portion of the opinion, the district

court claimed that "Preferential treatment on the

basis of race - any race - violates the Constitu-

tion." 446 F. Supp. at 788. It also said that

"the Court perceives no such vestiges" of dis-

crimination." 446 F. Supp. at 790.

These findings and conclusions would, if left

standing, utterly doom any possibility of a

settlement. The parties' willingness to settle

their differences is dependent, at any time, upon

the prospects for ultimate victory then as well as

the probable costs in money, resources, and time,

of seeking such a victory.

The district judge, by stating that he

perceived no evidence of discrimination by the

defendants, created an incentive for defendants to

go to trial to win the case. Once trial, however,

had begun, there would be no way in which the

parties, despite whatever might be done upon

review of a final judgment, could retrieve the

advantages which a settlement would have brought.

- 43

Moreover, the advantages of a particular settle-

ment which was probable at one time would be

forever lost. See Norman v. McKee, supra. Thus,

the district court's order finally determined

petitioners’ collateral rights.

The third prong of the Cohen test requires

"ir-

that the interlocutory order must have an

reparable" effect. This refers to the nature and

the extent of the injury, such as whether it is

destructive, substantial, continuing or irremedi-

al. See, e.g., Osborne v. Missouri P.R. Co., 147

U.S. 248, 258 (1893); Brown v. Chote, 411 U.S.

452, 456 (1973). Also, however, as the Court has

noted, “inadequacy of available remedies goes . .

. to the existence of irreparable injury." United

States v. American Friends Service Committee, 419

U.S. 7, 11 (1974). For the reasons previously

mentioned, however, with respect to why the

district court's order in this case was a final

determination of petitioners’ collateral rights,

the order caused petitioners' irreparable injury.

It was therefore appealable, pursuant to §1291, as

a collateral order.

- bh «

II!

THE DISTRICT COURT'S ORDER BELOW IS

APPEALABLE UNDER 28 U.S.C. §1292(a)(1)

AS AN INTERLOCUTORY ORDER DENYING AN

INJUNCTION

The second issue raised in this case concerns

the appealability, under 28 U.S.C. §1292(a)(1), of

a district court's order which denied, as a matter

of law, a joint motion by the parties to settle

the action in accordance with the terms of a

proposed consent decree which granted a permanent

injunction.

A. The Applicable Law

Section 1292(a)(1) of Title 28 of the United

States Code provides for the appeal of certain

, , , 12

interlocutory orders of the district courts.—

12/ The appeal of interlocutory orders of federal

district courts to the courts of appeals was first

provided as a result of the enactment of the

Evarts Act of 1891, 26 Stat. 826. As originally

enacted, the Evarts Act authorized an interlocu-

tory appeal only "where . . . an injunction shall

be granted or continued." In a subsequent amend-

ment to the Act in 1895, the jurisdiction of the

court of appeals was extended to encompass appeals

from orders of district courts refusing requests

for injunctions. 28 Stat. 666. For a review of the

history of interlocutory appeals in the federal

curts, see Stewart-Warner Corp. v. Westinghouse

Elec. Corp., 325 F.2d 822, 829-230 (2d Cir. 1963)

(Friendly, J., dissenting), certiorari denied,

376 U.S. ll.

- 45

The statute grants jurisdiction to the United States

Courts of Appeals over appeals from:

(i)nterlocutory orders of the dis-

trict courts of the United States, or of

the judges thereof, granting continuing,

modifying, refusing or dissolving ina-

junctions, or refusing to dissolve or

modify injunctions except where a direct

review may be had in the Supreme Court.

Since the enactment of 1292(a)(1), the courts

have been plagued with problems concerning the

statute's proper interpretation and wepiication.22

The difficulties in interpreting and applying the

statute have been compounded because of the fact

that "(n)o discussion of the underlying reasons for

13/ See, e.g., Enelow v. New York Life Ins.

Co., 293 U.S. 379 (1935); Ettelson v. Metropolitan

Life Ins. Co., 317 U.S. 188 (1942); Morgantown v.

Royal Ins. Co., 337 U.S. 254 (1949); Switzerland

Cheese Association, Inc. v. Horne's Market Inc.,

385 U.S. 23 (1966). Generally, see Note, Appeal-

ability in the Federal Courts, 75 Harv. L. Rev.

351 (1952); Wright & Miller, Federal Practice

and Procedure, §§3920, 3921-3924.

- 46

modifying the rule of finality appears in the

legislative history" of §1292(a) (1) .1*/ Baltimore

Contractors v. Bodinger, 348 U.S. 176, 181 (1955).

This Court has found that the purposes of

§1292(a)(1) can best be achieved if the appeal-

ability of an order is determined in accordance

15/

with the nature and the effect of the order,—

see Gardner

14/ Despite the lack of clear legislative history,

it has been possible to conclude that the reasons

for amending the statute spring from a developing

need to permit litigants to effectually challenge

interlocutory orders of serious, perhaps irrepar-

able consequence. Baltimore Contractors v.

Bodinger, supra, 348 U.S. at 181.

In Maxwell v. Enterprise Wall Paper Co., 131

F.2d 400, 402 (3rd Cir. 1942), the Third Circuit

found, with respect to §1292(a)(1) that:

The manifest purpose of the statute is

to enable a litigant to seek prompt

review in an appellate court from an

order or decree which in most instances

is effective upon its rendition and is

drastic and far reaching in effect.

See also Morgenstern Chemical Co. v. Schering

Corp., 181 F.2d 160 (3rd Cir. 1950).

15/ In Stewart-Warner Corp. v. Westinghouse

Electric Corp., supra, the majority of the Court

held that a dismissal of an intervenor's claims

for injunctive relief alleged in a counterclaim

= 4&7 =

v. Westinghouse Broadcasting Co., supra, 437 U.S.

at 480-481; Cohen v. Beneficial Industrial Loan

Corp., supra, as measured by the impact it has

upon the rights of the parties.

B. Criteria Governing The Application of

$1292(a) (1)

is General

In a series of decisions, the Court has

narrowed the class of orders which are appealable

under §1292(a)(1). The Court's decisions have

allowed the appeal of an order pursuant to §1292

(a)(1) only when the order satisfied five basic

criteria. First, the order must be interlocutory.

See, Baltimore Contractors v. Bodinger, supra,

348 U.S. at 181; Switzerland Cheese Association v.

E. Horne's Market, Inc., 385 U.S. 23 (1966).

Second, the order must grant, deny, continue,

modify or refuse to dissolve or modify, an injunc-

tion. See, 28 U.S.C. §1292(a)(1).

15/ (contd)

for patent infringement and unfair competition was

appealable under 28 U.S.C. §1292(a)(1) even if the

basis for dismissal rested upon a conclusion that

the counterclaim improperly enlarged the action.

Judge Friendly, dissenting, charged that the order

was not appealable. As he saw it "(a)ppeal-

ability must turn on the nature of the order." 325

F.2d at 829.

» 68 «

Third, it must determine more than that the

case should proceed to trial; see, Switzerland

Cheese Association v. E. Horne's Market, Inc.,

supra, 385 U.S. at 25. Fourth, it mst settle, or

tentatively decide, an aspect of the merits of a

party's claim for injunctive relief. See, Gardner

v. Westinghouse Broadcasting Co., supra; 437 U.S.

at 480-482. Fifth, it must cause a threat of

serious, irreparable injury which can be alleviat-

ed only through allowance of an interlocutory

appeal. Gardner v. Westinghouse Broadcasting Co.,

supra, 348 U.S. at 181.

2. Interlocutory Order

Interlocutory orders of a district court are

orders rendered before final judgment which

advance a case towards final judgment.— See,

16/ Although this Court implied in its decision in

Switzerland Cheese Association, Inc. v. E. Horne's

Market, Inc, supra, that interlocutory orders are

orders which "touch on the merits of the claim," 385

U.S. at 25, subsequent decisions of the Court as well

as general principles, seem to indicate that the

interlocutory nature of an order is separate from

the issue of whether the order touches on the merits

of the claim. See, e.g., Gardner v. Westinghouse

Broadcasting Co. Also see Wright & Miller, Federal

Practice and Procedure, §3924, pp. 72-73 (1977).

=» 49 «

e.g., Baltimore v. Bodinger, supra, 348 U.S. at

183-184. Such interlocutory orders however, do

not become appealable under the statute merely

because they are “important, and may determine the

outcome of the litigation."Morgantown v. Royal

Ins. Corp.,. 337 U.S. 254, 258 (1949).

. Injunctive Relief

Although §1292(a)(1) is applicable only to

orders involving injunctive relief, see Wright &

Miller, Federal Practice and Procedure, §3922

(1977), this Court has not determined what consti-

tutes an injunction for the purposes of §1292

(a) (1). See, e.g., Baltimore Contractors v.

Bodinger, supra, where the issue was "(w)hether in

an action for accounting an interlocutory order

denying a stay under Section 3 of the United

States Arbitration Act should be regarded as a

denial of an injunction from which an appeal

lies." 348 U.S. at 177. See also, Shanferoke Coal

& Supply Corp. v. Westchester Service Corp., 293

U.S. 449 (1935).

The Court has held, to be sure, that denials

of requests for preliminary injunctions are

covered by the statute. Baltimore Contractors v.

Bodinger, supra, 348 U.S. at 182. See also,

= §9 «-

George v. Victor Talking Machine Co., 293 U.S,

377 (1934). Uncertainty, however, exists over the

extent to which §1292(a)(1) is applicable to re-

quests for a permanent injunction.

For example, in Switzerland Cheese Associa-

tion, Inc. v. E. Horne's Market, Inc., supra,

where it was held that the denial of plaintiffs'

motion for summary judgment granting a permanent

injunction was not an appealable order under §1292

(apap. the Court said:

It is earnestly argued, however, that

although this order denied a permanent

injunction, it was nonetheless "“inter-

locutory" within the meaning of §1292

(a)(1) because the motion for summary

judgment did service for a motion for

a preliminary injunction ... and that

therefore "“interlocutory"™ must also

include a denial of a permanent

injunction.

We take the other view not because

"interlocutory" or preliminary may not

at times embrace denials of permanent

injunctions, but for the reason that the

denial of a motion for summary judgment

because of unresolved issues of fact

17/_ In dealing with the somewhat analogous pro-

visions of 28 U.S.C. §1253, providing that:

Except as otherwise provided by law,

any party may appeal to the Supreme Court

= §] -

does not settle or even tentatively

decide anything about the merits of the

claim.

385 U.S. at 24-25. Thus, requests for permanent

injunctions are not per se beyond the scope of

application of §1292(a)(1).

Indeed, no such per se exclusion could be

justified under the statute for the simple reason

that an "(a)ppeal under §1292(a)(1) depends on the

17/ (contd)

from an order granting or denying, after

notice and hearing, an interlocutory or

permanent injunction in any civil action,

suit or proceeding required by any Act of

Congress to be heard and determined by a

district court of three judges,

this Court concluded that "the only interlocutory

orders that we have power to review under that

provision are orders granting or denying prelimi-

nary injunctions". Goldstein v. Cox, 396 U.S. 471

1970).

: The Court acknowledged, in Goldstein v. Cox,

supra, that "(o)n its face, this language is

subject to the construction that interlocutory

orders denying permanent as well as preliminary

injunctions can be appealed to this Court." 396

U.S. at 477. However, it nonetheless "conc lude(d)

that our jurisdiction over interlocutory orders

under §1253 is confined to orders granting or

denying a preliminary injunction." Id. at 478.

- 52 -

interlocutory nature of the order involved, rather

than the interlocutory nature of the injunctive

relief requested." Wright & Miller, Federal Prac-

tice and Pr. cedures, supra, §§3924, p. 67.

Thus appeals under §1292(a)(1) can be made

from interlocutory orders granting a permanent in-

junction. See W.L. Gore & Associates, Inc. v.

Carlisle Corp., 529 F.2d 614 (3rd Cir. 1976).

Indeed, this Court, in Smith v. Vulcan Iron Works,

165 U.S. 518 (1897), permitted an appeal from an

——

17/. — (contd)

~ Despite the facile similarity between §1253

and §1292(a)(1) there are important Wifferences

between them. First, §1253 explicitly refers to

permanent injunctions. Moreover, it explicitly

mentions both permanent injunctions and interlocu-

tory injunctions, thereby drawing a distinction

between them. Second, §1253 expressly refers to

interlocutory injunctions whereas §1292(a)(1)

refers to interlocutory orders granting, con-

tinuing, modifying, refusing, or dissolving in-

junctions. Thus §1292(a)(1) is broader with

respect to interlocutory orders. Moreover,it does

not exclude interlocutory orders refusing perma-

nent injunctions whereas §1253 does not include

interlocutory orders refusing permanent injunc-

tions. Thus, the decision in Goldstein v. Cox

is inapplicable to the instant case.

» $3 =

interlocutory order granting a permanent injunc-

tion against patent infringement.

The issue in Smith v. Vulcan Iron Works,

supra, one of the early cases construing and

applying the Evarts Act, arose as follows: The

district court rendered an order which permanently

enjoined defendant from infringing the plaintiff's

patent. Final judgment, however, was reserved

pending the outcome of the district court's refer-

ence of the case to a master for an accounting.

Defendant filed an appeal from the order granting

the permanent injunction. This Court allowed the

appeal.

The opinion of the Court reviewed the history

of appeals of interlocutory orders granting in-

junctions in the English Court of Chancery, the

House of Lords, and in the United States. It

stated:

But under the judicial system of the

United States, from the beginning until

the passage of the Act of 1891, estab-

lishing circuit courts of appeals,

appeals from the circuit courts of the

United States in equity or in admiralty,

like writs of errors at common law,

would lie only after final judgment or

decree; and an order or decree in a

patent cause, whether upon preliminary

= $4 <

application or upon final hearing,

granting an injunction and referring the

cause to a master for an account of

profits and damages, was interlocutory

only, and not final, and therefore not

reviewable on appeal before the final

decree in the cause.

165 U.S. at 524. It concluded, however, that the

American policy with respect to finality had been

altered by the passage of the Evarts Act of 1891.

In particular, the court observed that §7 of the

Evarts Act had, at that time, explicity provided

that “where upon a hearing in equity ... an in-

junction shall be granted or continued by an in-

terlocutory order or decree ... an appeal may be

taken from such interlocutory order or decree

granting or continuing such injunction." Id. at

524. Thus, th Court concluded that the Evarts

Act contemplated the use of interlocutory orders

to grant permanent injunctive relief. Accordingly,

it allowed the appeal of an interlocutory order

granting a permanent injunction.

The 1895 amendment to the Evarts Act provided

for an appeal of a denial of an injunction in all

cases in which an appeai would be permitted for

the granting of an injunction. Thus, in some

instances, it is possible, under the holding in

= $§ -

Smith v. Vulcan Iron Works, supra, to appeal an

interlocutory order granting a permanent injunc-

tion. Whether the appeal will be allowed depends,

of course, upon the extent to which the order is

interlocutory and operates, in practice, to

preclude the granting of injunctive relief.

4. Characteristics of An Injunction

a. More Than a Mere Pre-trial Order

In order to constitute an order granting or

denying injunctive relief, an interlocutory order

must, under §1292(a)(1), be more than a “pretrial

order that decides only one thing -- that the case

should go to trial", Switzerland Cheese Associa-

tion v. E. Horne's Market, supra, 385 U.S. at 25,

or an order which is only "a step in controlling

the litigation before the trial court." Baltimore

Contractors v. Bodinger, supra, 348 U.S. at 185.

If these conditions, are not met, then it is un-

likely that there will be a need for critical

examination and re-examination of the issue by the

cumbersome method of appeal prior to final adjudi-

cation of the action. See, Peter Pan Fabrics,

Inc. v. Dixon Textile Corp., 280 F.2d 805 (2d Cir.

1960) (Judge Clark, dissenting).

= 56 <-

b. Determining the merits

Orders addressed to a party which "touch on

the merits of the claim" of the party, are less

likely, under §1292(a)(1), to be deemed mere pre-

trial orders. Switzerland Cheese Association v.

E. Horne's Market, supra, 385 U.S. at 25. [In

general, it can be presumed that interlocutory

orders which "affect the merits of petitioner's

own claim," Gardner v. Westinghouse Broadcasting

Co., supra, 437 U.S. at 480-481 or which have a

"direct or irreparable impact on the merits of

the controversy", Id. at 482, will fall under

§1292(a)(1), especially if they also "pass on the

legal sufficiency of any claims for injunctive

relief." Id. at 481.

Thus, a major factor effecting appealability

under §1292(a)(1) is the extent to which the order

being appealed has the effect of determining the

legal sufficiency of a claim for injunctive

relief. Put another way, the critical issue

becomes whether the order denies appellant "the

protection of the injunction prayed." General

Electric Co. v. Marvel Rare Metals Co., 287 U.S.

430, 433 (1932).

- §7 -

Many interlocutory orders involving a per-

manent injunction will not meet this criteria.

For example, an order denying a motion for summary

judgment to grant a permanent injunction will

not generally satisfy the criteria, see, e.g.,

Switzerland Cheese Association v. E. Horne's

Market, Inc., supra, since it will not in general,

preclude the filing of a subsequent motion for a

preliminary injunction.” See, Chappell & Co. v.

18/ The earliest rationale for disallowing an

appeal of an order. denying a motion for summary

judgment granting an injunction was set forth by

Judge Hastie in Morgenstern Chemical Co. Inc. v.

Schering Corp., 181 F.2d 160 (3rd Cir. 1950).

The action there was brought by plaintiff to

enjoin defendant's continued use of a trade-mark.

The district court denied plaintiff's motion for a

summary judgment granting a permanent injunction.

Plaintiff appealed from the interlocutory order.

In rejecting the appeal, Judge Hastie stated

that

--.- so far as we have been able to

determine, appeals from refusals of

injunctions have been in cases where the

merits of the applications for injunc-

tive relief had been passed upon in the

trial courts ....

- 58 -

Frankel, supra, 367 F.2d 197, 203 (2d. Cir. 1966).

To the extent that an order denying a motion

for summary judgment is only a denial of a request

for acceleration of the trial process and is not a

rejection of the legal sufficiency of the injunc-

tive claim, then the order is not a refusal of an

injunction and it is consequently not appealable under

§1292 (a)(1).

18/ (contd. )

The denial of summary judgment in the

court below has no comparable signifi-

cance. The court has not reached, much

less decided, the merits of plaintiff's

claim for injunction .... Nothing has

occurred in or as a result of the denial

of the motion which precludes plaintiff

from seeking a temporary injunction in

accordance with established procedure if

he believes immediate injunctive relief

is necessary and proper. Plaintiff is

merely relegated to the normal procedure

of trial which would have been the only

procedure before the adoption of Rule 56

-++- In character and impact the

court's action was not greatly different

from an order continuing a cause already

calendered for trial until some future

date in order that additional witnesses

may be called.

181 F.2d at 162.

= §9 -

This analysis is consistent with the decision

of the Court in Switzerland Cheese Association,

Inc. v. E. Horne's Market, Inc., supra, since the

denial there of the motion for summary judgment

granting a permanent injunction was based upon the

ground that there existed genuine issues of facts

which were in dispute. Thus, the denial of the

motion was a rejection of a request for acceler-

ation of the adjudicatory process. It did not

decide anything about the merits of the claim for

injunctive relief. The question in every case, it

seems, is the effect of the denial and the

grounds for it. See, e.g., Safe Flight Instrument

Corp.- v. McDonnel~Douglas Corp., 482 F.2d 1086,

1093 (9th Cir. 1973), certiorari denied 414 U.S.

1113.

More specifically, the relevant distinction

appears to be between an order whose purpose, or

effect, is to deny injunctive relief and an order

whose purpose, or effect, will not preclude a

19/

subsequent grant of similar injunctive relief

19/ This is perhaps the distinction which this

Court sought to invoke in Gardner v. Westinghouse

Broadcasting Co., supra, 437 U.S. at 481, n.7,

when it quoted from Judge Friendly's dissenting

= 60 -

The grounds given in support of the order can, in

part, thus be used to determine if the order

effectively bars, as a practical matter, a subse-

quent claim on the merits for similar injunctive

19/ (contd. ) |

opinion in Stewart-Warner Corp. v. Westinghouse

Electric Corp., 325 F.2d 822, 829 (2d Cir. 1963).

Judge Friendly, in opposing the court's allowance

of an appeal from an order which had dismissed

intervenor's counterclaims for injunctive relief

on the ground that they would unduly enlarge the

scope of the action, stated that

"Appealability must turn on the

nature of the order ... The distinction

.». was between a ‘refusal’ based on an

allegedly erroneous conclusion that the

law does not permit the claim for an

injunction to be heard in the action...

and one based on alleged abuse of a dis-

cretionary power over the scope of the

action. Where the order is of the

former type, the danger of serious harm

from the court's erroneous belief in the

existence of a legal barrier to its

entertaining a claim for an injunction

has been thought to outweigh the general

undesirability of interlocutory appeals.

The very fact that the second type of

order hinges on the trial court's dis-

cretion is itself an indication that

such orders, relating primarily to con-

venience in litigation, carry a lesser

threat of harm.

= 61 «

relief. If such relief is barred and the order

also causes irreparable injury, then it is appeal-

able under §1292(a)(1).

» Irreparable Injury

In Sampson v. Murray, 416 U.S. 61 (1974) the

Court recognized that "the possibility that

adequate compensatory or other corrective relief

will be available at a later date, ... weighs

heavily against a claim of irreparable harm."

416 U.S. at 90, quoting Virginia Petroleum Jobbers

Assn. v. FPC, 259 F.2d 921, 925 (D.C.Cir. 1958).

The existence of irreparable injury under

§1292(a)(1) may therefore be shown by demon-

strating that there is no adequate remedy for the

appellant's substantial injury other than by

allowing an interlocutory appeal.

C. Application of the Criteria

Under §1292(a)(1)

Unquestionably, the order of the district

court below denying approval of the proposed con-

sent decree granting a permanent injunction was an

interlocutory order denying an injunction within

the meaning of §1292(a)(1). The proposed decree

= 62 -

included an express request for a permanent

injunction enjoining defendants from discriminat-

ing against petitioners and class members, and

enjoining them to take certain affirmative steps

20/

to correct the effects of the discrimination.—

20/ These steps included the following:

(1) instituting new rules and proce-

dures, as set forth in the proposed

decree, for determining seniority, or

eligibility, for vacations, promotions,

demotions, lay-offs, and recalls;

(2) providing medical and sick benefits,

upon transfer to regular employment, to

certain employees who served their pro-

bationary period as a seasonal employee;

(3) providing, under certain circum-

stances, a preference for hourly paid

seasonal production employees to fill

vacancies arising in the hourly paid

permanent production job classification;

(4) granting hourly paid seasonal pro-

duction employees a preference for fill-

ing vacancies in the job classification

of Watchman; and

. (5) filling by December 31, 1980, the

production supervisory positions of foreman

and assistant foreman with qualified blacks

until the percentage of blacks in the

position equals one-third of the total.

Joint Appendix at 27a-28a.

= 63 -

The order of the district court satisfies the

specific requirement under §1292(a)(1) that the

order must touch on the merits of petitioners'

claim. In fact, the grounds assigned by the

district court in support of its order clearly

indicate that it. determined simultaneously the

sufficiency of the injunctive claim and the merits

of the action.

For example, the district court, in its

opinion, specifically held that "racial prefer-

ences are forbidden in this nation." 446 F.Supp.

at 770. This holding undermined the claim for

injunctive relief. In another portion of the

opinion, the district court concluded that the

"proposed consent decree herein, rather than

aiding victims of violations of the law, would

itself violate the law and victimize innocent

people both black and white." Id. This conclu-

sion also undermined the injunctive claim.

The district court also critized the proposed

consent decree on the ground that "there was no

apparent consideration given to whether or not the

preferred employees have been, are, or would be

subject to racial discrimination. 446 F.Supp. at

789. This assessment undermined both the claim

= 64 -

under Title VII and the claim for injunctive

relief. Similarly, the court's finding that the

beneficial aspects of the decree were not limited

to "victims of racial discrimination", Id. at 789,

and the finding that there were no vestiges of

discrimination upon which the proposed decree

could be supported as a measure to overcome the

effects of discrimination, Id. at 790, tended to

erode the basis for any recovery by petitioners on

their Title VII claims.

The grounds assigned by the district court in

rejection of the proposed settlement decree thus

determined the merits of the injunctive claims

and the merits of the action. As a matter of law,

these claims were found to be legally insufficient.

Moreover, the alleged legal insufficiency. of the

claims was the sole basis for rejection of: the

proposed settlement decree.

Necessarily, the the grounds specified by the

district court for rejection of the decree pre-

cluded a subsequent motion by petitioners for a

preliminary injunction granting all, or part, of

the relief specified in the proposed consent

decree. To obtain a preliminary injunction, the

petitioners are required to demonstrate the

existence of a substantial likelihood that they

= 65 =

will ultimately prevail on the merits. See

Sampson v. Murray, 416 U.S. 61 (1974).

Given the findings and conclusions of the

district court, however, it is clear that peti-

tioners could not have made such a showing, with

respect to any of the relief specified in the pro-

posed decree, to the satisfaction of the district

court, and therefore could not have obtained a

preliminary injunction. See Chappel & Co. v.

Frankel, supra, 367 F.2d at 203. Also see

Morgenstern Chemical Co. v. Schering Corp.,

supra, 181 F.2d at 162. Thus, the nature and the

effect of the district court's interlocutory

decree was to deny petitioners "the protection of

the injunction prayed". General Electric Co. v.

Marvel Rare Metals Co., supra, 287 U.S. at 433.

The district court's findings and conclusions

on the merits of the request for a final injunc-

tion also necessarily determined the merits of

petitioners’ Title VII action. For petitioners to

prevail on their Title VII claims, they were

required to show that defendants had committed

discriminatory actions in violation of Title VII,

that petitioners were victims of the discrimina-

tion, and that the scope of the relief requested

« 66 «

was commensurate with the scope of the injury

which defendants had caused through their dis-

criminatory practices. See Teamsters v. United

States, 431 U.S. 324 (1977). The district court,

however, decided against petitioners on each of

these three issues, 446 F. Supp. at 788-791,

thereby foreshadowing ultimate defeat, on the

merits, of petitioners’ Title VII claims.

In short, the effect of the interlocutory

order below was to "pass on the legal sufficiency

of . . . (the) claims for injunctive relief",

Gardner v. Westinghouse Broadcasting Co., supra,

437 U.S. at 481, and thereby to settle, or tenta-

tively decide, the petitioners' claims on the

merits. See Switzerland Cheese Association v.

E. Horne's Market, supra, 385 U.S. at 24. It

therefore satisfied the essential prerequisite for

appealability under §1292(a)(1).2L/

21/ It should, perhaps, be noted that petition-

ers' argument that the district court's order

below is simultaneously appealable as a collateral

order and as an order refusing an injunction does

not involve an inconsistency. Although the

appealability of a collateral order is premised

= 67 «

This analysis shows that the court of appeals

below had no basis, in fact or law, for holding

that "(h)ere, injunctive relief was not finally

denied; it was merely not granted at this stage in

the proceedings". 606 F.2d at 423.

PPL GT eS lly

21/ Cont.

upon a showing that the order finally determines

rights which are separate and independent of the

merits, and the appealablity of an order refusing

an injunction is based upon a demonstration that

the order touches on or resolves the merits, the

two apparently inconsistent positions are easily

reconcilable.

With respect to the appealability of the

order below as a collateral order, the right

affected is the parties' right to settle the case,

prior to trial, in accordance with standards set

forth in Weber, supra. This right is, of course,

separate and independent of the right sued upon

pursuant to Title VII.

On the other hand, the right affected with

respect to the refusal of an injunction concerns

petitioners’ right under Title VII as well as the

parties' right to institute an affimative action

plan. The former, of course, is exactly the right

sued upon and therefore an order adversely affect-

ing it touches on the merits of the action.

Thus, the two positions are consistent with

one another since they involve different rights.

@ 68 «

In making this holding, the Fourth Circuit

assumed that the facts here were analogous to

those in Liberty Mutual Imsurance Co. V. Wetzel,

424 U.S. 737 (1976); Switzerland Cheese Associa-

tion, Inc. v. E. Horne's Market, Inc., supra; and

Gardner v. Westinghouse Broadcasting Co., supra.

These cases, however, are inapposite.

In Liberty Mutual Insurance Co. v.Wetzel,

supra, where the issue was the appealability

of an interlocutory order determining liability

but reserving decision on the nature and extent of

the relief to be granted, this Court held §1292

(a)(1) inapplicable because "there was no denial

of any injunction sought by petitioner". 424 U.S.

at 745. By contrast, the petitioners in this

action sought an injunction wnich was denied on

the merits.

The decision in Switzerland Cheese Associa-

tion, Inc. v. E. Hor: 2's Market, Inc., supra,

is clearly distingui-hable from the present

case since the existence there of facts in dispute

rendered premature any determination on the

merits of the injunctive claim. Moreover, the

decision there, unlike the one here, did not

preclude the filing of a subsequent motion for a

preliminary injunction.

= 69 «

In Gardner v. Westinghouse Broadcasting

Co., supra, the issue was the appealability of a

denial of class certification. As the court

pointed out there, the order neither denied

injunctive relief nor determined the merits of

actions. It simply determined the range of

persons who could benefit from the judgment or who

would be bound by it. Also, it did not preclude

an attempt by any party to file a request for a

preliminary injunction. Here, however, an injunc-

tion was denied on the grounds of its legal

sufficiency. Those grounds were sufficient to

bar, on the merits, any later effort to request a

preliminary injunction. None of these cases

therefore supported the holding below of the court

of appeals.

In addition to its purported reliance upon

the decisions of this Court, the court of appeals

found the facts of the present case to be ana-

logous to the facts in Seigal v. Merrick, 590 F.2d

35 (2nd Cir. 1978), in which the Second Circuit

held that a district court's disapproval of a

settlement in a stockbroker's derivative action

was not appealable. Adopting the rationale of the

court in Seigal v. Merrick, supra, the Fourth

- 70 <

Circuit held that the disallowance of appeals from

a refusal to enter a settlement had the "practical

effect of enhancing the district court's control

over the litigation." 606 F.2d at 423. It then

quoted from Seigal the statement that

(T)he denial of one compromise does

not necessarily mean that a "sweetened"

compromise may not be approved. The

management of a derivative suit gives

the trial judge a chance not only to

disapprove a compromise but to edge the

parties toward more equitable terms.

Id. at 423-424, quoting Seigal v. Merrick,

supra, 590 F.2d at 39. On this basis it concluded

that "(w)hatever the district court's reasons for

refusing a decree, appeals of right .. . would

encourage an endless string of appeals and destroy

the district court's supervision of the action".

606 F.2d at 424,

For several reasons, the decision in Seigal v.

Merrick, cannot be deemed dispositive of the issue

presented here. First, the decision in Seigal was

based upon §1291, not §1292(a)(1). Second, the

appellant in Seigal had not been denied a request

= 7] «=

for injunctive relief. Third, the district

court's denial there of the proposed settlement

had been based upon its assessment of the fairness

of the settlement as determined by the date on

which the value of an option was to be measured

and by whether the value of the option was to be

measured entirely by market considerations.

As a result of this posture of the case, the

Second Circuit, as evidenced from its quotation of

the admonition in Cooper & Lybrand v. Livesay,

supra, 437 U.S. at 477, that “allowing appeals of

rights from nonfinal orders that turn on the facts

of a particular case thrusts appellate courts in-

discriminately into the trial process", seemed

to have regarded the district court's order as

turning esssentially upon a factual assessment

rather than a legal assessment.

In the instant action, however, the order of

the district court was based entirely upon its

misapprehension of applicable legal principles.

The order thus fell in the category of cases in

which the district court has an "erroneous belief

in the existence of a legal barrier to its enter-

taining a claim for an injunction". Gardner v.

Westinghouse Broadcasting Co., supra, 437 U.S. at

- 72 -

481, n.7. In such a case, the danger of serious

harm resulting from a disallowance of an appeal

"outweigh(s) the general undesirability of inter-

locutory appeals". Id.

As mentioned previously, the Fourth Circuit

assumed that the decision of the district court

would not prevent the emergence of a more "sweet-

ened" compromise. This assumption, however,

was directly contrary to the explicit statement of

the district court that

"When the parties have settled

their differences without a violation of

the law and without violating the right

of any class members, the Court will

enter an appropriate order... . But

this Court will not, by entering the

proposed Consent Decree provide the

parties with a judicial licence to

practice racial discrimination."

446 F.Supp. at 791.

In view of this conclusion of the district

court, it was plain error for the Fourth Circuit

to assume that the parties would be able to come

up with a more sweetened compromise that would be

satisfactory to the district court while siml-

taneously protective of petitioners’

- 73-

-interest in eradicating the adverse effects of

segregated job classifications. For these reasons,

the decision in Seigal v. Merrick is irrelevant

to the present cone

In short, the decision below, whatever may be

the general status of the appealability of orders

refusing to approve proposed consent decrees or

refusing to grant a permanent injunction, is an

order which, as a practical matter, denied injunc-

tive relief to petitioners on the ground that

their claim was legally insufficient.

The Fourth Circuit also held that the conse-

quence of the order did not produce any irrepar-

able harm and that delayed review would not for-

feit any of petitioners’ rights. 606 F.2d at 423.

This erroneous holding was based on a total mis-

conception of the nature and effect of the dis-

trict court's order. It ignores the parties'

22/ The rationale and the holding in Seigal are

directly contrary to the rationale and hotding of

the Ninth Circuit in Norman v. Mckee, 431 F.2d 769

(9th Cir. 1970) cert. denied, 401 U.S. 912 (1971)

= 74 =

loss of the opportunity to settle the case on the

same basis which this Court permitted the union

and the employer to settle claims of discrimina-

tion against them in United Steelworkers of

America, AFL-CIO-CLC v. Weber, supra.

The race-conscious affirmative action plan

which this Court approved in Weber, supra, was the

result of voluntary action taken by Kaiser Aluminum

& Chemical Corp., and the United Steelworkers of

America, AFL-CIO-CLC. It was, as is true here,

designed to "break down old patterns of racial

Segregation and hierarchy", 443 U.S. at 208, and

to “open employment opportunities for Negroes in

occupations which have been traditionally closed

to them. "22/ ra.

That affirmative action program, like the one

here, did not "unnecessarily trammel the interests

of white employees". Id. Like the present plan,

it was a temporary effort intended to eliminate

racial imbalance, and not to maintain racial bal-

ance. Private affirmative action plan satisfying

23/ These comments were taken from the remarks of

Senator Hubert Humphrey, 110 Cong. Rec. 6548.

= 9§ =

balance. Private affirmative action plan satisfy-

ing these criteria can, under Weber, supra, be put

into place without fear of unncessary judicial

intervention on behalf of third parties who claim

rights denied by the Court in Weber, supra.

Judicial action resulting in the deprivation of

this right constitutes irreparable injury for

which petitioners have no other means of obtaining

redress other than by taking an interlocutory

appeal.

Moreover, it is evident that, if petitioners

are forced to go to trial, the right to settle the

case before trial will be irretrievably lost. As

a consequence, petitioners will be compelled to

undergo the burdens of an unnecessary, expensive,

and time-consuming trial. Furthermore, such a

trial is likely to be disruptive to the preserva-

tion of industrial peace and tranquility in the

workplace. This is an interest which the Congress,

by expressing a preference for voluntary settle-

ments, see Alexander v. Gardner-Denver Co., supra,

415 U.S. at 44, was obviously seeking to foster.

The order of the district court threatens

these vital interests. Its direct effect is to

force petitioners to yield rights granted under

a 6 =

this Court's decision in Weber, supra. It thus

causes irreparable injury to petitioners and class

members. The allowance of an appeal from the

district court's order is the only means available

for ameliorating the damage caused by the order.

Petitioners’ appeal therefore should not be

dismissed.

CONCLUSION

For the reasons indicated herein the decision

below should be vacated with instructions to allow

the appeal.

Respectfully submitted,

HENRY L. MARSH, III

WILLIAM H. BASS, III

RANDALL G. JOHNSON

Hall, Tucker & Marsh

214 East Clay Street

P.O. Box 27363

Richmond, Virginia 23261

Tel: (804) 648-9073

- 77 -

JOHN W. SCOTT, JR.

615 Caroline Street

Fredericksburg, Virginia 22401

Tel: (703) 371-3700

JACK GREENBERG

Counsel of Record

JAMES M. NABRIT, III

NAPOLEON B. WILLIAMS, JR.

10 Columbus Circle

Suite 2030

New York, New York 10019

Tel: (212) 586-8397

BARRY L. GOLDSTEIN

806 15th Street, N.W.

Suite 940

Washington, D.C. 20006

Tel: (202) 638-3278

Counsel for Petitioners

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