Petition for Writ of Certiorari — Belcastro-Bowen v. Delta Air Lines, Inc.

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1991

DEBORAH BELCASTRO-BOWEN, et ai.,

Petitioners,

Vv.

DELTA AIR LINES, INC. and

MARILYN WILEY, ez al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RAYMOND C. FAY

Counsel of Record

THOMAS R. GIBBON

BELL, BOYD & LLOYD

1615 L Street, N.W.

Suite 1200

Washington, D.C. 20036

(202) 466-6300

July 1991 Counsel for Petitioners

la.

QUESTION PRESENTED

When an attorney enters into a settlement agreement

without his clients’ knowledge or consent, may a district court

certify a “settlement class" in order to force the clients and

potential class members to abide by the terms of that unethical

and otherwise unenforceable agreement?

LIST OF PARTIES

The petitioners are Deborah Belcastro-Bowen; Marleena

Reiser; Alice Moloney Adams; Pamela R. Bailey; Judith D.

Beal; Carol Bunce; Stephanie Cohen; Deborah L. Connor-Cook;

Barbara J. Daly; Sheila J. Dickerson; Wendy Dillon; Joanne H.

Doram; Debra DuBord; Connie M. Forde; Roberta May

Freeman; Lawrence Hahn; Gail Louise Haller; Emily D. Heath;

Carol A. Hogan; Marcella Hunt-Peterson; Carole Leavelle;

Sharon Lessinger; Chrissie B. Lovold; Susan L. Magliano; Mary

Ann Pearson; Diane Reilly; Toby S. Sadasky; Anabelle

Simmons; Cyndee Rae Sinardi; Patricia L. Smith; Pamela

Stevens; Rhonda J. Svendsen; Jennifer Terrio; Jo Anne Utz;

Laraine Valdespino-Pozzo; Linda Johnson Walden; Janice M.

Waller; Cynthia Weber; Gina Youngren; Sandy Yslas-

Vanderburg; and Kathi Zablocki.

The respondents are Deita Air Lines, Inc.; and Marilyn

Wiley; Lois A. Rees; Angie Nunn; and Michelene Stella-Otery

The parties to the proceedings below are petitioners and

respondents in this Court, except that Craig Andrews; Pamela

Brenot; Constance S. Cramer; Sandra L. Foley; Barbara Jensen-

Amdjadi; Sharon Miller; Colleen Smith; Elise Stevens and

Cheryl Wendell were appellants below, but are not petitioners in

this Court.

TABLE OF CONTENTS

Page

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FEDERAL RULE INVOLVED ........ 22-000. 2

STATEMENT OF THECASE ...........0000. 2

REASON FOR GRANTING THE WRIT .......... 7

THE ISSUE OF WHETHER CLASS ACTION

PROCEDURES MAY BE USED TO EVADE

AN ATTORNEY’S ETHICAL OBLIGATIONS

AND TO SANCTION UNETHICAL

SETTLEMENT AGREEMENTS IS AN

IMPORTANT ISSUE OF FEDERAL LAW.... 7

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TABLE OF AUTHORITIES

Cases

Eaton v. Delta Air Lines, Inc.,

Pe POPUP TEED So ccc esc ecees

Fennell v. TLB Kent Co., 865 F. 2d 498

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Garabedian v. Allstates Engineering Co.,

Gil P.26 G2 Gé Cer. 1967) ............

Harrop v. Western Air Lines, Inc., 550

Eee

Hickman v. Taylor, 329 U.S. 495 (1947) .....

Mars Steel Corp. v. Continental Ill.

Nat. Bank & Trust Co., 834 F.2d 677

ee

Matter of American Reserve Corp., 840

Pa I ED oe re cc ccc scenes

Simer v. Rios, 661 F.2d 655

(7th Cir. 1981), cert. denied,

Co OS Tee

Weinberger v. Kendrick, 698 F.2d

61 (2d Cir. 1982), cert. denied,

oo Te

Wiley v. Delta Air Lines, Inc.,

No. 87-2273 (N.D.Cal.) ...............

Statutes

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= 8,9

Other Authorities

Manual for Complex Litigation, § 30.45

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ABA Code of Professional Responsibility ....... 8

ABA Model Rules of Professional Conduct

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Le,

IN THE

Supreme Court of the United States

OCTOBER TERM, 1991

No.

DEBORAH BELCASTRO-BOWEN, et ai.,

Petitioners,

Vv.

DELTA AIR LINES, INC. and

MARILYN WILEY, et ai.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Petitioners Deborah Belcastro-Bowen, et al., respectfully

pray that a writ of certiorari issue to review the judgment and

opinion of the United States Court of Appeals for the Ninth

Circuit, entered in the above-entitled proceeding on April 15,

1991.

OPINIONS BELOW

The unpublished memorandum of the Court of Appeals

for the Ninth Circuit, entered April 15, 1991, is reprinted in the

Appendix at la.

2

The unreported order granting class certification and

approving the class settlement, entered June 28, 1989, is

reprinted in the Appendix at 12a.

JURISDICTION

The memorandum of the Court of Appeals for the Ninth

Circuit affirming the judgment of the district court was entered

on April 15, 1991. The jurisdiction of this Court to review the

judgment of the Ninth Circuit is invoked under 28 U.S.C.

§ 1254(1).

FEDERAL RULE INVOLVED

Rule 23(c)(1) and (e) of the Federal Rules of Civil

Procedure (Fed. R. Civ. P. 23(c)(1) and (e)) provide:

(c)(1) As soon as practicable after the commencement

of an action brought as a class action, the court shall determine

by order whether it is to be so maintained. An order under this

subdivision may be conditional, and may be altered or amended

before the decision on the merits.

(e) Dismissal or Compromise. A class action shall not

be dismissed or compromised without the approval of the court,

and notice of the proposed dismissal or compromise shall be

given to all members of the class in such manner as the court

directs.

STATEMENT OF THE CASE

Petitioners are former Western Air Lines, Inc. (Western)

flight attendants who seek to enforce their rights under an early

termination agreement. Petitioners include individuals who were

plaintiffs in federal court litigation concerning this agreement and

3

individuals who intended to initiate or join ongoing litigation.

Petitioners are prevented from asserting their contractual rights

in federal ccurt due to a settlement agreement which was entered

into by one of plaintiffs’ attorneys without the plaintiffs’

approval or consent. This unethical and unenforceable settlement

agreement was imposed upon plaintiffs and other potential class

members when the district court used class action procedures to

certify a “settlement class" and approve the settlement.

Between 1984 and 1986 Western sought to downsize its

workforce by offering an "Early Out" program. Petitioners

terminated their careers under this program in exchange for a

promise of monetary ‘compensation and lifetime flight passes for

them and their families. When Delta Air Lines, Inc. (Delta)

acquired Western, Delta refused to abide by the terms of

Western’s Early Out agreement and eliminated or curtailed the

pass privileges.

In 1989, two lawsuits were pending against Delta to

enforce the Early Out Agreement, a 42-plaintiff action entitled

Eaton v. Delta Air Lines, Inc., No. 87-748 (W.D.Wa.), and a 4-

plaintiff action entitled Wiley v. Deita Air Lines, Inc., No. 87-

2273 (N.D.Cal.) Jurisdiction was premised on 28 U.S.C.

§§ 1331 and 1337 and 29 U.S.C. § 1132. Six of the Eaton

plaintiffs are petitioners here. The lawsuits had been filed in

1987. A class had not been certified in either case and the Wiley

court had rejected a prior class certification attempt. By 1989,

both courts had denied summary judgment motions by Delta and

held that the Early Out Agreement was subject to ERISA.’

In January, 1989, plaintiffs’ counsel in Eaton and Wiley

entered into a Settlement Agreement with Delta. The Settlement

' The Wiley case had proceeded to trial based largely on

stipulated facts with which the Eaton petitioners here disagree.

4

Agreement was conditioned upon both the Eaton and Wiley

courts’ dismissing plaintiffs’ claims with prejudice and upon the

Wiley court’s certifying a class under Fed. R. Civ. P. 23b(1) and

b(2). (A-6a.) The Settlement Agreement provided for payment

of attorneys’ fees to plaintiffs’ counsel.

Plaintiffs’ attorneys moved the Wiley court for class

certification and approval of a notice to the settlement class. The

motion was supported by the declarations of the three attorneys,

who represented Delta and the Eaton and Wiley plaintiffs, but not

by any of the plaintiffs themselves. The declaration of the

attorney for the Eaton plaintiffs stated, “All 42 plaintiffs whom

I represent endorse the settlement agreement and believe it is a

fair and equitable resolution of their claims." (A-6a)’

This sworn statement by plaintiffs’ attorney was false.

It was subsequently revealed that none of the 42 plaintiffs in the

Eaton had reviewed and approved the final Settlement Agreement

before it was signed by their attorney on their behalf. Four of

the five leaders of the Eaton plaintiffs actually opposed the

Settlement Agreement below.’ The Eaton plaintiffs learned

about the Settlement Agreement after it was signed without their

2 A condition of the Settlement Agreement was that plaintiffs’

counsel certify that all plaintiffs had approved the agreement. As the

Eaton counsel subsequently admitted, “In order for me, as attorney

for all 42 plaintiffs, to execute the agreement, it was necessary for

me to affirmatively represent that I had authority on behalf of all 42

to do so.”

> After the motion to decertify the class was filed, the Eaton

counsel filed another affidavit which claimed that 37 of his clients

provided him after-the-fact approvals. This conflicts with the fact

that seven of his clients opposed the settlement below. The leaders

of the Eaton group testified at the fairness hearing that the Eaton

counsel had provided inadequate and incomplete information to

secure those approvals.

5

approval and gave up issues they had wished to preserve. The

Eaton plaintiffs were provided a copy of the Settlement

Agreement only after they complained. As they subsequently

testified at the fairness hearing, this process permitted plaintiffs’

attorneys to cut their own deal. For example, plaintiffs’ counsel

in Eaton assured his clients in writing that in any settlement he

would not agree to the withdrawal of the district court’s ERISA

ruling, but that is precisely what he agreed to in the Settlement

Agreement without his clients’ approval.

Based in part on the false affidavit from the Eaton

plaintiffs’ counsel, the court tentatively certified a class and

authorized a notice to the class of the Settlement Agreement and

a fairness hearing with respect to the agreement.

A group of objectors, consisting of most of the

petitioners here, filed a motion to suspend the fairness hearings

and decertify the class principally on the ground that the

Settlement Agreement had been entered into without approval or

authority of the Eaton plaintiffs. The court rejected the motion

and stated that the Eaton plaintiffs could express their objections

at the fairness hearing. (A-6a)

Prior to the fairness hearing the court received comments

on the settlement from 94 individuals, 84 of whom opposed it.

At the hearing, two leaders of the Eaton plaintiffs testified

against the Settlement Agreement and informed the court it had

been signed by their attorney without their approval. None of

the 26 individuals who appeared at the hearing favored the

settlement.‘

* — At the hearing, it was also disclosed that counsel for the

Wiley plaintiffs contacted the leader of the objectors in a series of

abusive calls to obstruct opposition to the settlement. He cursed the

leader and accused her of costing him money, stating, “I’m out of

(continued...)

6

On June 25, 1989, the district court issued its order

certifying a class and approving the settlement. The court failed

to acknowledge or discuss the fact that the Settlement Agreement

on which the entire class certification proceeding was based was

signed by the Eaton plaintiffs’ counsel without his clients’

approval. Similarly, the court did not address the

misrepresentation which this same counsel made to the court on

this subject in order to secure class certification.

On appeal to the Ninth Circuit, petitioners argued that

court should not use class action procedures to sanction a

settlement which was entered into unethically and was otherwise

unenforceable. The panel rejected this argument and relied upon

the district court’s preliminary finding that the conduct of the

Eaton plaintiffs’ counsel had not “tainted” the decision by the

court “to tentatively certify the class and to request a fairness

hearing on the proposed settlement." (A-6a)

The district court’s preliminary finding, on which the

appellate panel exclusively relied, was made prior to the

testimony of the Eaton plaintiffs themselves at the fairness

hearing. This preliminary finding was based in part upon the

hearsay concerns and was expressly conditional upon reviewing

further evidence at the fairness hearing. (A-6a) The testimony

at the fairness hearing by the Eaton plaintiffs removed all

hearsay concerns and established beyond cavil that the Settlement

“(...continued)

pocket $4,500 so far; into this for $50,000. If you oppose me, |

won't get paid.” He also said, "It will cost you at least $15,000 if

you oppose the settlement. You won't be able to find an attorney to

take your case. Once they find out that I’m involved no one will

touch it." He concluded by stating that “he would have [presiding

judge] D.L. Jensen’s signature on the certification papers and there

was nothing [she] could do to stop him."

|

7

Agreement was entered into without the Eaton plaintiffs’

approval and that counsel misrepresented this fact to the district

court in an affidavit. Neither the district court not the court of

appeals alluded to this testimony at the fairness hearing nor made

any findings whatsoever concerning this evidence.

REASON FOR GRANTING THE WRIT

THE ISSUE OF WHETHER CLASS ACTION

PROCEDURES MAY BE USED TO EVADE

AN ATTORNEY’S ETHICAL OBLIGATIONS AND

TO SANCTION UNETHICAL SETTLEMENT AGREEMENTS

IS AN IMPORTANT ISSUE OF FEDERAL LAW.

The decisions below have undercut the bedrock ethical

principle that an attorney may not settle an action without the

express permission of the client. The decisions, if unreviewed,

will permit attorneys to impose settlements upon their unwilling

clients by the creation of a “settlement class." The Court should

take review to close down this abuse of the class action

procedures and the flouting of the canons of ethics. See

Hickman v. Taylor, 329 U.S. 495 (1947) (certiorari granted to

resolve important issue under Federal Rules of Civil Procedure).

The dangers of certifying a class solely for settlement

purposes has been widely recognized, and the practice has been

criticized by reviewing courts. Mars Steel Corp. v. Continental

Ill. Nat. Bank & Trust Co., 834 F.2d 677, 680-81 (7th Cir.

1987) (cases collected); Simer v. Rios, 661 F.2d 655, 665 (7th

Cir. 1981), cert. denied, 456 U.S. 917 (1982) (trade-offs at the

expense of the class members may occur); Weinberger v.

Kendrick, 698 F.2d 61, 73 (2d Cir. 1982), cert. denied, 464

U.S. 818 (1983) (possibility of collusion or undue pressure by

the defendants on would-be class representatives); see Matter of

American Reserve Corp., 840 F.2d 487, 490 (7th Cir. 1988)

8

(lawyer may settle too quickly rather than risk all or may accept

a settlement package slanted in favor of the fee component).

Manual for Complex Litigation, § 30.45 (2d ed. 1986)

("Ordinarily, a class action determination should be made not

only before a settlement is reached, but indeed before settlement

discussions are commenced.").

As detailed by Judge Posner in Mars Steel, the

certification of a settlement class, typically occurring years after

the case was filed and solely to implement a settlement, jostles

uneasily with Fed. R. Civ. P. 23(c)(1) which requires class

certification to occur as soon as practicable. In addition, when

the status of a class action is not determined until after a

settlement is negotiated, "the danger of a premature, even a

collusive settlement is increased." 834 F.2d at 680. As the

court further noted, “Class actions differ from ordinary lawsuits

in that the lawyers for the class, rather than the clients, have all

the initiative and are close to being the real parties in interest."

834 F.2d at 677. Where a settlement class is certified when

there is no genuine underlying settlement, the attorneys have

completed the transformation envisioned by the Mars Steel court

and become the real parties in interest.

An attorney has an absolute ethical duty to secure a

client’s approval before entering into a settlement agreement.

Harrop v. Western Air Lines, Inc., 550 F.2d 1143, 1145 (9th

Cir. 1977) (citing ABA Code of Professional Responsibility,

Canon 7, Ethical Consideration 7-7)°; Fennell v. TLB Kent Co.,

865 F.2d 498, 501 (2d Cir. 1989); ABA Model Rules of

’ Ethical consideration 7-7 states: "[T]he authority to make

decisions is exclusively that of the client and, if made within the

framework of the law, such decisions are binding on his lawyer. As

typical examples in civil cases, it is for the client to decide whether

he will accept a settlement offer...."

9

Professional Conduct, Model Rule 1.2(a) (1989) ("A lawyer shall

abide by a client’s decision whether to accept an offer of

settlement of a matter."). If an attorney is permitted sign a

settlement agreement in violation of that duty and then impose

that unethical settlement upon his dissenting clients through the

use of a settlement class, the unethical conduct is sanctioned. It

is even rewarded if attorneys’ fees are part of the settlement.

Attorneys have no actual or implied authority to settle an

action without their clients’ approval. Harrop; Fennell;

Garabedian v. Allstates Engineering Co., 811 F.2d 802 (3d Cir.

1987) Settlement agreements are invalid and unenforceable

where the clients did not approve them. Jd. The rights of

clients should not be diminished simply because the attorney

exceeds his authority even further and secures cerification of a

settlement class.

The decisions below, if permitted to stand, would permit

an attorney to cut a deal without his clients’ approval, and then

impose that settlement upon them and the entire class. For

example, the Eaton plaintiffs below refused to give up their

rights under ERISA. Their attorney ignored this instruction and

settled without preserving his clients’ ERISA rights. The

attorney then bootstrapped this unauthorized settlement to secure

a certification of a settlement class. As a result of the attorneys’

unethical conduct, the clients lost their ERISA rights and the

attorney secured his fees.

Without a valid settlement between the parties, the

rationale for a settlement class collapses. The premise of a

settlement class is that the parties voluntarily entered into a

settlement, based upon their own goals and assessment of the

case. Without a genuine settlement between the parties or

without a prior certification of the class and the imposition of

10

class responsibilities on counsel, the danger of collusion is too

great for a settlement class to be certified.

If the procedures below are permitted to stand, attorneys

will be free to negotiate settlements without a duty to their

clients or the class. The duty to the clients has been eliminated

since the settlement need not meet their approval. The duty to

the class never existed during the settlement negotiations because

the class had not yet been certified.° In short, the procedures

sanctioned by the courts below give attorneys unbridled

discretion to enter into collusive settlements.

CONCLUSION

The Court should grant the writ of certiorari to prevent

the use of settlement classes under Fed. R. Civ. P. 23 to impose

unethical and otherwise unenforceable settlement agreements

upon an attorney’s own clients.

Respectfully submitted,

RAYMOND C. FAY

Counsel of Record

THOMAS R. GIBBON

BELL, BOYD & LLOYD

1615 L Street, N.W.

Suite 1200

Washington, D.C. 20036

(202) 466-6300

¢ — Thus, the district court found that the plaintiffs’ attorneys

did not have a duty to the class until the court certified the class.

(A-20a-2 1a)

APPENDIX

APPENDIX TABLE OF CONTENTS

Memorandum, U.S. Court of Appeals,

Ninth Circuit (April 15, 1991) ............... la

Order Granting Class Certification

and Approving the Class Settlement............ 12a

(June 28, 1989)

la

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MARILYN WILEY; LOIS A. REES;

ANGIE NUNN; MICHELENE

STELLA-OTERY,

Plaintiffs-Appellees,

v.

DELTA AIR LINES, INC.;

WESTERN LINES, INC.,

Defendants-Appellees,

Vv.

DEBORAH

BELCASTRO-BOWEN,

et al.,

Objectors-Appellants.

)

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No. 89-16141

DC# C-87-2273-DLJ

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2a

MARILYN WILEY; LOIS A. )

REES; ANGIE NUNN; )

MICHELENE )

STELLA-OTERY, )

Plaintiffs-Appellees, ) No. 89-16142

)

) DC# CV-87-2273-DLJ

DEBORAH )

BELCASTRO-BOWEN, )

Appellant, ) MEMORANDUM’

Vv. )

)

WESTERN AIRLINES, INC.; )

DELTA AIR LINES, INC., )

Defendants-Appellees. )

)

Appeal from the United States District Court

for the Northern District of California

D. Lowell Jensen, District Judge, Presiding

Argued and Submitted March 13, 1991

San Francisco, California

Before: BREEZER and NOONAN, Circuit Judges, and

JONES”, District Judge

This disposition is not appropriate for publication and may not be

cited to or by the courts of this circuit except as provided by Ninth Cir. R.

36-3.

“ Honorable Robert E. Jones, United States District Judge for the

District of Oregon, sitting by designation.

esriabiceen

3a

FACTUAL BACKGROUND

On October 1, 1984 Western Airlines, Incorporated

(Western) and the Association of Flight Attendants (AFA) entered

into an “early-out" agreement which gave permanent flight passes

to flight attendants who voluntarily left Western’s employme t

between September 1, 1984 and December 31, 1986 for reaso1s

other than cause. A successor clause in the early-out agreement

stated in pertinent part as follows: “Pass and reduced-rate

transportation . . . shall mean pass and reduced rate transportation

on Western Airlines, Inc. [or] any . . . merged company or

companies... .”

The agreement split the early-out participants into two

groups. Attendants with more than fifteen years of service and their

spouses were assigned an F-1 pass -- the same pass which Western

issued to its active employees with more than five years service and

to its retirees with more than fifteen years of service. The F-1 pass

entitled eligible children and parents of the attendants up to eight

passes per year, depending on the attendant’s length of

employment. Attendants with ten to fifteen years of experience and

their spouses were given an H-1 pass -- the same pass which

Western issued to its active employees with less than five years of

service and to its retirees with less than fifteen years of service.

The F-1 and H-1 cards entitled qualifying flight attendants

and their spouses to an unlimited number of passes on Western’s

system. F-1 cardholders had boarding priority behind paying

passengers and company officials; boarding among the F-1

cardholders depended upon arrival time at the gate. H-1

cardholders boarded behind all F-1 cardholders; boarding priority

among H-1 cardholders also depended upon arrival time at the gate.

On April 1, 1987 Western merged with Delta Airlines,

Incorporated (Delta). The pass systems of the two airlines differed

4a

significantly so perfect integration was impossible. Delta issued to

its active employees an SA-3 pass which gave them boarding

priority behind corporate officials. Delta issued to its retirees an

SA-3B pass which gave them boarding priority behind active

employees. Unlike Western’s system, boarding within each Delta

class was determined by seniority.

Delta gave all Western employees who became active Delta

employees SA-3 passes; Western retirees were given SA-3B passes.

Delta did not have any type of early-out arrangement with its

employees so Delta created a new pass, the SA-4B pass, for the

participants of Western’s early-out program. The SA-4B pass

entitled the early-outs and their spouses to an unlimited number of

passes; parents and children of the early-outs were given up to

eight passes a year. However, four distinct characteristics of the

SA-4B class gave rise to dispute: (1) early-outs boarded behind all

active Delta employees and retirees; (2) tickets could not be

obtained at the gate; (3) a service charge was enacted; and (4)

travel was restricted to Western’s previous route structure.

PROCEDURAL BACKGROUND

On May 6, 1987, Marilyn Wiley and three other former

Western flight attendants sued Delta in Federal Court in San

Francisco, alleging that Delta’s modifications to Western’s

early-out program violated the Employee Retirement Income

Security Act (ERISA) and the terms of the early-out agreement.

Specifically, the Wiley plaintiffs challenged the four provisions

mentioned above. They sought injunctive relief restoring their

alleged contractual rights and monetary damages for any travel

expenses caused by the modifications. Forty-two former Western

attendants filed a similar action, the Eaton action, in Seattle on

May 28, 1987.

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5a

Both courts summarily determined that the early-out

agreement constituted a welfare benefit plan subject to ERISA, 29

U.S.C. § 1002(1). The Wiley court reserved for trial the questions

whether Delta’s modifications to the early-out program were

permissible under ERISA or the early-out agreement, and whether

Delta could alter the agreement pursuant to the Railway Labor

Act’s merger rules. The Wiley court also denied class certification,

subject to reconsideration.

On November 21 and 22, 1988, District Judge Lowell

Jensen heard the Wiley case. The case was tried pursuant to a

forty-six page stipulation of facts which Delta and Wiley’s counsel

had agreed to on November 8, 1988. Under the stipulation the

plaintiffs agreed inter alia that the maximum relief they sought was

the boarding priority of Delta’s retirees; they further agreed that

the merger clause did not require “an acquiring carrier to expand

the early-out travel privileges to the carrier’s entire route... . “

Meanwhile, in Seattle, District Judge William L. Dwyer

ordered mediation in the Eaton case. On December 15, 1988, an

experienced Seattle labor attorney, H. Clemens Barnes, conducted

the mediation which was attended by Delta’s attorneys, the Eaton

plaintiffs’ attorney and five of the Eaton plaintiffs.

On January 31, 1989, while the Wiley court’s ruling was

still pending, counsel for Delta and counsel for the Eaton and Wiley

plaintiffs entered into a tentative settlement agreement. The

agreement gave the early-outs and their spouses an unlimited

number of passes to travel on Delta’s domestic system, which

included the continental United States, Alaska, Hawaii, Mexico,

Puerto Rico, the Bahamas, and Bermuda, but it denied them access

to Delta’s trans-Atlantic and trans-Pacific routes; it placed the

early-outs in Delta’s retiree class; it promised them the same pass

privileges as retirees; it dismissed all claims for damages; and it

denied any protection under ERISA. The agreement also

6a

eliminated the service charge and allowed the early-outs to obtain

passes without going through Delta’s pass bureau. Finally, the

agreement gave plaintiffs’ counsel $85,000 in attorneys’ fees.

The agreement was subject to both courts dismissing the

actions with prejudice and to a class being certified by the Wiley

court under Federal Rules of Civil Procedure 23(b){1) and 23(b)(2).

On February 15, 1989 the Wiley court tentatively certified the class

and ordered the parties to send notice of the tentative agreement

and class settlement to the 612 potential class members. The court

set a Rule 23(e) fairness hearing date for May 19, 1989.

Seventy-eight potential class members filed objections with

the court prior to the fairness hearing; ten potential class members

filed favorable comments. Sixty-four flight attendants organized

themselves into a group, the Bowen/Reiser group, to oppose the

settlement; the Bowen/Reiser group comprises the objectors who

have appealed.

On March 28, 1989 the Bowen/Reiser group filed a motion

to suspend the fairness hearing and decertify the class. In

particular the motion attacked Frederic Reed’s declaration which

stated: “All 42 plaintiffs whom I represent endorse the settlement

agreement and believe it is a fair and equitable resolution of their

claims." The Bowen/Reiser group allegedly learned through

conversations with several Eaton plaintiffs that this statement was

not true and that the agreement had been entered into without the

plaintiffs’ approval. On April 26, 1989, the district court held a

hearing and denied the motion; the court expressed concern over

the hearsay nature of the evidence and stated the Eaton plaintiffs

could raise their concerns at the fairness hearing.

At the fairness hearing on May 19, 1989, the court heard

oral testimony from twenty-six persons, all opposing the settlement.

The court also heard argument from the objectors’ attorneys and

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from the attorneys for the plaintiffs and Delta. On June 28, 1989

the district court entered an order approving of the settlement and

certifying the class under Rules 23(a), 23(b)(1) & 23(b)(2).

In the order the court first discussed the requirements of

Rule 23(a) and found that they had been satisfied. The court paid

particular attention to the adequacy of representation by class

counsel. The court also discussed the requirements of Rules

23(o)(1) & 23(b)(2) and determined that they too had been met.

The court then discussed whether the settlement was

“fundamentally fair, adequate, and reasonable." The court looked

at each part of the agreement and described that which the plaintiffs

had gained and that which they had lost. The court found that the

compromises which each side had made were reasonable and

concluded that the agreement was adequate and fair. Judge Jensen

explained that he was in a unique position to make this

determination because he had “heard the merits of the case fully

litigated at trial prior to evaluating the settlement," and was in fact

“prepared to issue a ruling on the merits of the action at the time

the parties presented the proposed settlement agreement." In the

end, Judge Jensen was “doubtful the plaintiffs could have achieved

such an outcome” from the court.

On July 5, 1989 the district court entered an order vacating

its prior summary adjudication and dismissed the action with

prejudice. We affirm.

DISCUSSION

Appellants contend that the district court abused its

discretion in accepting the settlement agreement and in certifying

the class. They argue that the district court was required to, but

did not, make a specific finding that the settlement was not the

product of collusion, fraud or overreaching. They also argue that

the district court abused its discretion because it approved of an

8a

agreement which had "stripped" appellants of their seniority status

and which did not provide for damages, Trans-Atlantic and Pacific

travel, or reduced-rate passes for parents. We are not persuaded

by these arguments.

A. Standard of Review

"Class certification is a matter within the district court’s

discretion, and is reviewed to determine whether there has been an

abuse of discretion and application of impermissible legal

standards.” Probe v. state Teachers’ Retirement System, 780 F.2d

776, 779 (9th Cir.), cert. denied, 476 U.S. 1170 (1986) (citation

omitted). However, because this class was certified after a

tentative settlement agreement had been reached, we will examine

the fairness of the agreement closely in making our determination

whether the district court abused its discretion. Mars Steel Corp.

v. Continental Ill. Nat. Bank & Trust Co. of Chicago, 834 F.2d

677, 680-81 (7th Cir. 1987); Weinberger v. Kendrick, 698 F.2d 61,

72-73 (2d Cir. 1982), cert. denied, 464 U.S. 818 (1983).

B. — Collusion, Fraud and Overreaching

Relying primarily on Ficalora v. Lockheed California Co.,

751 F.2d 995 (9th Cir. 1985), and Officers For Justice v. Civil

Service Comm'n of the City and County of San Francisco, 688 F.2d

615 (9th Cir. 1982), cert. denied, 459 U.S. 1217 (1983), appellants

contend the district court abused its discretion because it failed to

make a specific finding that the agreement was not "the product of

fraud or overreaching by, or collusion among the negotiating

parties.” Appellants misread Officers For Justice and Ficalora.

Officers For Justice explained that a district court should

evaluate a proposed class action settlement using the universal

standard by which all settlements are judged -- whether the

settlement is "fundamentally fair, adequate, and reasonable.”

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9a

Officers For Justice, 688 P.2d at 625 (citation omitted). The court

explained that this determination necessarily will involve,

depending upon the unique facts of a particular case, “a balancing

of several facvors which may include, among others, some or all of

the following: the strength of plaintiffs’ case; the risk, expense,

complexity, and likely duration of further litigation; . . . the

amount offered in settlement; the extent of discovery completed;

and the stage of the proceedings; .. . ." Jd (citations omitted).

The court then stated:

The district court’s role in evaluating a proposed settlement

must be tailored to fulfill the objectives outlined above. In

other words, the court’s intrusion upon what is otherwise

a private consensual agreement negotiated between the

parties to a lawsuit must be limited to the extent necessary

to reach a reasoned judgment that the agreement is not the

product of fraud or overreaching by, or collusion between,

the negotiating parties, and that the settlement, taken as a

whole, is fair, reasonable and adequate to all concerned.

Id.

Ficalora expounded on the standard articulated by Officers

For Justice. Ficalora stated: “the district court must reach a

reasoned judgment that the proposed agreement is not the product

of fraud or overreaching by, or collusion among, the negotiating

parties and that the settlement, taken as a whole, is fair, reasonable

and adequate to all concerned parties." Ficalora, 751 F.2d at 997

(citing Officers For Justice, 688 F.2d at 625). In Ficalora there

were allegations of overreaching and potential conflicts of interest

by the negotiating parties, and “the district court record reveal[ed]

no inquiry by the court into the questioned activities of plaintiff

class counsel with respect to the named plaintiff, Ficalora." /d

(emphasis added). Because the record in Ficalora was totally void

10a

of any inquiry by the court into the questioned activities by class

counsel, this court remanded the case and instructed the district

court to determine “the amount of attorney’s fees received by

plaintiff-class counsel and whether the early closing of the case by

settlement sacrificed any interest of the named plaintiff." Jd. The

district court was instructed to examine the objections in detail and

“examine the settlement for possible conflicts of interest... ." Id.

Hence, the standard which the district court in the case at

bar was required to use in determining whether to accept the

proposed class settlement was whether the settlement was “fair,

adequate, and reasonable." It must also be clear from the record

that the district court “reach({ed] a reasoned judgment that the

proposed agreement [was] not the product of fraud or overreaching

by, or collusion among, the negotiating parties." Jd.

The district court’s order satisfies the letter and spirit of

Ficalora and Officers For Justice. The court set forth the relevant

factors to be considered, examined the agreement in detail, and

then explicitly determined that the agreement was fair, reasonable

and adequate. The court’s order and the record as whole also make

clear that the court came to a reasoned judgment that the agreement

was not the product of fraud, collusion or overreaching. Not only

did the court find the agreement to be fair, reasonable, and

adequate, the court also concluded that anything the plaintiffs

conceded was done in the spirit of compromise that is necessary to

achieve any settlement." Implicit in these conclusions is that there

was no wrongdoing on the part of the negotiators.

Moreover, unlike the record before the Ficalora court, the

record before us reveals that the district court did iz.quire into the

questioned activities of class counsel. The court’s order responded

to the specific allegations of impropriety against David Rosenfeld

in its discussion of the adequacy of representation. The court noted

that Rosenfeld was “not always gracious and patient when dealing

lla

with class members" and did not “respond to all requests for legal

advice,” but the court concluded that these actions “did not

prejudice the case he competently and vigorously presented” to the

court. The court made that statement after having observed

Rosenfeld at numerous hearings and a two-day trial.

As to the questioned activities of Frederic Reed, the district

court reviewed the written allegations, received supplemental

declarations from Reed explaining his declaration, held a hearing,

and then concluded that his conduct had not "tainted" the decision

by the court “to tentatively certify the class and to request a

fairness hearing on the proposed settlement.” Finally, contrary to

appellants’ allegations, the court did respond specifically to the

objectors’ concerns about the attorneys’ fees. The district court

found the fees to be “reasonable,” and noted: “it is sometimes a

distasteful reality that the practice of law is a business and that

lawyers are entitled to fees for their service."

In sum, the district court did exactly what this court has

asked district courts to do when deciding whether to accept a

proposed class settlement agreement. The record makes clear that

district court came to a reasoned judgment that the agreement was

not the product of fraud, collusion, or overreaching, and the

district court expressly determined that it was fair, reasonable and

adequate to all concerned parties.

D. Aopeliants’ Remaining “Al f Discretion” / )

Appellants also argue that the district court abused its

discretion by approving of a settlement which did not provide for

damages, traded away the early-outs’ right to early-outs

international travel, stripped away the seniority status of the early

outs, and eliminated reduced-rate passes for parents. These

arguments amount to nothing more than a request that this court

review the details of the agreement to determine whether it is fair.

12a

The district court was in a unique position to determine the

fairness of this particular settlement agreement. The court had

conducted a two-day trial and was prepared to issue a ruling on the

merits when the parties presented the court with the agreement.

The court issued a twenty page order explaining why it found the

agreement to be reasonable, adequate, and fair; indeed, the court

was “doubtful the plaintiffs could have achieved such an outcome."

This court’s independent review of the record supports the district

court’s conclusion. Accordingly, we hold that the district court did

not abuse its discretion.

AFFIRMED.

13a

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

MARILYN WILEY, et al.,

)

)

Plaintiffs, )

) C87-2273-DLJ

Vv. ) ORDER GRANTING CLASS

DELTA AIR LINES, INC. ) CERTIFICATION AND

and WESTERN AIR LINES, ) APPROVING THE CLASS

INC., ) SETTLEMENT

)

)

)

)

Defendants.

The Court held a fairness hearing regarding class

certification and class settlement in this action on May 19, 1989.

Appearing for plaintiffs Marilyn Wiley, at al., was David A.

Rosenfeld of Van Bourg, Weinberg, Roger & Rosenfeld.

Appearing for plaintiffs in a related lawsuit, Eaton v. Delta Air

Lines; C87-0748 (E.D.Wash), who are proposed class members,

was Fredric D. Reed of Maltman, Weber, Reed, North & Ahrons.

Appearing for defendants Delta and Western Air Lines were

Gilmore F. Diekmann, Jr. of Bronson, Bronson & McKinnon and

Walter A. Brill of Delta Air Lines. James C. Sturdevant of

Sturdevant & Sturdevant and Thomas R. Gibbon of Bell, Boyd &

Lloyd appeared for objectors to the proposed settlement and class

certification Deborah Belcastro-Bowen and Marleena Reiser, et al.,

("the Bowen Group”).

Plaintiffs Marilyn Wiley and three other former Western

Air Lines flight attendants brought this action under ERISA, 29

U.S.C. § 1002, et seq., and the provisions of a letter of agreement

14a

issued to Western flight attendants who took an "early-out" option

and prematurely terminated their employment at Western. The suit

seeks a permanent injunction preventing defendants from

terminating or modifying the reduced rate travel provisions of the

letter of agreement entered into between Western and the

Association of Flight Attendants ("AFA") in conjunction with a

collective bargaining agreement on October 1, 1984.

The letter of agreement provides benefits to all flight

attendants who chose a voluntary "early-out" termination plan

between the date of the agreement and December 30, 1986. The

benefits of the agreement included: (1) termination pay for 24

months; (2) medical insurance for up to 12 months; and (3)

reduced rate travel passes. The agreement states that the travel

passes “may not be used . . . in violation of the then effective pass

policies,” and also contains a successor clause which provides that:

Pass and reduced rate transportation referred to in

this Letter of Agreement shall mean pass and

reduced rate transportation on Western Air Lines,

Inc., amy successor or merged company or

companies, any successor in control of the

company, any parent or holding company in

control of the company, any reorganized company

or companies, its parent(s) or subsidiary(ies).

On April 1, 1987, Western merged with Delta Air Lines

and ceased to exist. Delta thereafter modified certain aspects of the

reduced rate travel program to fit within its existing travel pass

structure. Plaintiffs allege that these modifications had the

following effects on "early-out" Pass holders: (1) substantially

increased the cost of pass travel; (2) reduced boarding priority; and

(3) required that tickets be obtained several weeks in advance rather

than on the date of travel. In addition, Delta announced that it

would honor the passes only on routes previously flown by

15a

Western, and would not expand the program to include all Delta

routes. Delta contends that the modifications did not have the

effects alleged by the plaintiffs, were reasonable in light of the

necessity of fitting the Western pass structure within Delta’s

system, and were necessary to comply with federal tax regulations.

Cross-motions for summary judgment were heard by the

Court on January 6, 1988. In these motions, plaintiffs sought a

ruling that the “early-out" program constituted an ERISA plan

while conceding that genuine issues of material fact existed

concerning whether or not Delta could alter the travel pass plan

within the “early-out" agreement without breachirg the terms of the

agreement and their fiduciary duty under ERISA. Plaintiffs also

sought to have a Federal Rule of Civil Procedure 23(b)(2) class

certified of all former Western employees covered by the collective

bargaining agreement who took the “early-out" agreement.

Defendants requested the Court to rule that the travel benefits do

not fall within the scope of ERISA, the modifications were within

defendants’ rights under the terms of the agreement and that the

agreement was nullified by the merger of Western and Delta.

On June 13, 1988, the Court issued an order finding that:

(1) the travel pass program provision of the early-out

program constitutes an “employee welfare benefit plan" within the

meaning of ERISA, 29 U.S.C. § 1002(1);

(2) that genuine issues of material fact exist regarding

whether the defendants violated their contractual obligations and

fiduciary duty by modifying the travel pass provisions, thereby

making summary Judgment on these issues inappropriate;

(3) that genuine issues of material fact exist regarding

whether or not the letter of agreement is binding on Delta

laa aia

16a

following the merger of Delta and Western, thereby making

summary judgment on this issue inappropriate; and

(4) that class certification is denied as plaintiffs have not

met the requirements of Rule 23(a) & (b)(2).

Therefore, there were two critical issues left for the court

to determine at trial. First, the Court had to decide whether Delta

was bound by the terms of the letter of agreement following the

merger of Delta and Western. Second, the Court had to rule on

the issue of whether Delta breached its fiduciary duty under ERISA

or the terms of the letter of agreement by altering the travel pass

benefits provided to the early out flight attendants.

To resolve the latter issue, the Court would have to

evaluate the alterations made by Delta in the “early-out’s” travel

pass benefits. Specifically, the following changes were made by

Delta: (1) Western “early-out" attendants’ pass cards which enabled

the "early-outs" to utilize available space on Delta flights by simply

showing up at the airport without obtaining a travel pass from the

Delta pass bureau ahead of time were revoked; (2) a service charge

for use of the travel benefits was enacted; (3) the boarding priority

of the “early-outs" was reduced, placing them behind Delta active

employees and retirees in boarding priority; and (4) Delta only

honored the travel benefits on Western’s existing route structure at

the time of the merger.

The original parties in this action, Marilyn Wiley, et al.,

Western and Delta, litigated these issues during a trial before this

Court in November, 1988. The Court took the matter under

submission following trial. Before the Court issued a ruling, the

original parties entered into a proposed settlement agreement which

was presented to the Court in February, 1989. A condition of the

settlement was that a Rule 23(b)(1) and 23(b)(2) class be certified

of all former Western employees who were entitled to travel

17a

benefits under the “early-out" program. The Court issued an

Order, dated February 15, 1989, tentatively approving the

settlement agreement and certifying a class of all former Western

employees who participated in, qualified for and received travel

benefits under the “early-out" agreement. This ruling was tentative

and subject to modification or recession following a full hearing at

a fairness hearing held pursuant to Federal Rule of Civil Procedure

23(e).

The February 15 Order required the parties to provide

notice of the proposed settlement and class certification to all class

members. This notice included the terms of the proposed

settlement and class certification and informed all class members of

their right to object to the settlement by written notice to the Court

and by appearing in person or through an attorney at the fairness

hearing. This notice was dispersed to the proposed class members

through the United States mail.

The Court received a large number of responses to the

settlement notice prior to the fairness hearing. The responses both

supported and opposed the settlement agreement and class

certification although the majority of the class members who filed

comments oppose the proposed settlement. A group of

approximately sixty “early-out" attendants opposing the settlement

and class certification, the Bowen Group, retained the law firm of

Bell, Boyd & Lloyd to represent them at the fairness hearing.

At the May 19 hearing, the Court heard the oral arguments

of counsel for plaintiffs in the Wiley action and counsel for Delta

in support of class certification and approval of the settlement

agreement, the oral argument of counsel for the Bowen Group

against class certification and approval of the settlement and the

testimony of twenty-six members of the proposed class in

opposition to settlement approval and class certification. All

proposed class members who attended the fairness hearing were

eee

18a

given the opportunity to address the Court regarding the settlement

agreement and class certification.

After considering the briefs submitted by the parties, the

record in this action, the proposed settlement agreement and the

testimony and comments of proposed class members, the Court

hereby finds that (1) certification of a Rule 23(b)(1) and 23(b)(2)

class consisting of all former Western employees who receive travel

benefits under the “early-out" agreement is appropriate, and (2) the

proposed settlement agreement is approved.

I.

In order to have a Rule 23(b)(1) or 23(b)(2) class certified,

plaintiffs must meet both the requirements of Rule 23(a) and Rule

23(b)(1) or 23(b)(2). Fed. R. Civ. P. 23. Rule 23(a) requires that

a proposed class satisfy four requirements: (1) numerosity; (2)

commonality; (3) typicality; and (4) adequacy of representation.

The party moving for class certification has the burden of

demonstrating that a proposed class contains each of these

elements. Doninger v. Pacific Northwest Bell, Inc., 564 F.2d

1304, 1308 (9th Cir. 1977).

The Court finds that the class outlined in the proposed

settlement agreement consisting of all former Western employees

who participated in, qualified for and received travel benefits under

the “early-out" program on or after September 1, 1984, satisfies

the requirements of Rule 23(a), 23(b)(1) and 23(b)(2).

A. Numerosity

To satisfy this requirement, the party seeking certification

must establish that the class is so large that joinder of all parties

would be impracticable. The proposed class consists of 612 former

Western employees. The Court finds that the size of the class

19a

makes joinder of all the class members in a single action

impracticable.

B. Commonality

The rights of all of the “early-out” participants to travel

benefits are governed by letters of agreement which are similar as

to timing and terms to the flights attendants’ agreement.

Therefore; common questions of law including (1) whether the

merger released Delta from any obligations under the letter of

agreement, and (2) whether Delta breached its duty under ERISA

or the terms of the agreement by modifying the travel benefits

program, exist among all class members.

3.[sic] Typicality

The named plaintiffs in the present action are seeking

remedies, improved travel benefits and monetary damages identical

to the remedies sought by the other members of the proposed class.

Accordingly, the Court finds that typicality requirement of Rule

23(a) is satisfied.

4.[sic] Adequacy of Representation

This issue concerns whether plaintiffs are represented by

competent counsel and whether plaintiffs’ counsel has any interests

that are antagonistic to those of the class members. See, e.g., In

Re Activision Securities Litigation, 621 F.Supp. 415, 429

(N.D.Cal. 1985). |

The Bowen group contends that plaintiffs’ counsel, David

A. Rosenfeld, failed to adequately represent the class for the

following reasons: (1) plaintiffs’ counsel entered into allegedly

prejudicial pretrial stipulations; (2) Rosenfeld did not seek job

reinstatement for plaintiffs; (3) there was not an adequate

20a

investigation made into the issue of monetary damages; (4)

Rosenfeld was abusive to class members and failed to respond to

legal inquiries; and (5) a conflict of interest exists between the class

and plaintiffs’ because of the attorneys’ fee award in the settlement

agreement. The Bowen Group’s arguments are not persuasive.

The pretrial stipulations which the Bowen Group contends

are evidence of Rosenfeld’s inadequate representation concern

boarding priority and the route structure available to “early-outs."

Stipulation number 127 states that “[iJn adopting the travel

privilege letter of agreement, Western and its unions intended to

give the early-out participants the same pass priority as retirees."

The Bowen Group contends that this stipulation prejudiced

plaintiffs’ position at trial because prior to the merger, plaintiffs

were entitled under the letter of agreement to a boarding priority

equal to active, not retired, Western employees. This position is

without merit. The record in this action and the language of the

letter of agreement support plaintiffs’ counsel’s conclusion that the

intention of the parties who entered into the letter of agreement was

that “early-out" employees were entitled to a boarding priority

equivalent to that of Western retirees, not active employees. There

is no language in the letter of agreement or other evidence

sufficient to support a contrary conclusion. Accordingly, plaintiffs’

counsel’s decision to enter into stipulation number 127 was

reasonable and sound.

Stipulations 134-136 state that the successor clause in the

“early-out"” agreement did not require a successor air line to

provide travel benefits on routes outside western’s route structure.

The Bowen Group argues that Rosenfeld stipulated away rights of

the plaintiff class by conceding that plaintiffs were not entitled to

travel benefits on all of Delta’s route structure. This argument is

also without merit. The evidence at trial and the language of the

agreement clearly indicate that Delta was free to limit the

“early-outs" to travel only on Western’s flight structure.

2la

Accordingly, plaintiffs’ counsel’s decision to stipulate on this issue

does not indicate that plaintiffs were not adequately represented in

this action.

Rosenfeld’s decision not to seek job reinstatement was also

a reasonable decision by plaintiffs’ counsel. It is unreasonable to

assume, even if it were possible as a matter of law, that the “early-

outs" employees would return all of the benefits they received

under the “early-out"” agreement in order to return to work at

Western. The vast majority of the class members are solely

interested in improving their travel benefits, not in returning to jobs

they left years ago. Plaintiffs’ counsel’s decision not to seek

reinstatement was a sound tactical choice.

The Bowen Group argues that plaintiffs’ counsel failed to

conduct an adequate investigation to determine whether damages

should be sought in this case. The evidence before this Court does

not support a conclusion that plaintiffs’ counsel failed to carry out

an adequate investigation in this regard. Moreover, it does not

appear that the members of the class have suffered substantial,

measurable damages as a result of Delta’s modifications of their

travel benefits. Although there is evidence of “early-outs" being

unable to secure seats on certain flights under the Delta system and

thereby being inconvenienced, significant issues remain as to the

cause and substantiality of any damages associated with these

incidents.

The Bowen Group also contends that plaintiffs, counsel was

abusive to class members and failed to respond to their legal

inquiries. There has been a showing made that Rosenfeld was not

always gracious and patient when dealing with class members and

that he did not respond to all requests for legal advice. However,

these actions did not prejudice the case he competently and

vigorously presented to this Court. In addition, Rosenfeld was

technically not representing the class members, other then the

224

named plaintiffs, before this Court tentatively certified the class

following trial. Thus, any refusal on his part to respond to legal

inquiries beyond the direct issues related to class certification was

not inappropriate until after the class was in fact certified.

Finally, the Bowen Group alleges that the attorneys’ fee

award in the settlement creates a conflict of interest between

plaintiffs’ counsel and the class. This argument also is

unpersuasive. It is a sometimes distasteful reality that the practice

of law is a business and that lawyers are entitled to fees for their

services. Moreover, the Supreme Court has stated that it is not

improper for a fee award to be included in a class action

settlement. Evans v. Jeff D., 475 U.S. 717 (1986). Accordingly

as the fee award of $85,000.00, approximately $46,000 of which

plaintiffs’ counsel will receive, is reasonable, there is no conflict

of interest created by its inclusion in the settlement.

Therefore, the Court finds that the class members received

adequate representation from plaintiffs’ counsel during the course

of this litigation.

In addition to satisfying the four requirements of Rule

23(a), a class must also meet the requirements of Rule 23(b)(1) or

23(b)(2) to be certified as a mandatory class. Members of a class

certified under either of these rules may not opt-out of the class and

pursue individual actions. Certification of a 23(b)(1) class is

appropriate when “the prosecution of separate actions by individual

members of the class would create a risk of (A) inconsistent or

varying adjudications . . ., or (B) adjudications with respect to

individual members of the class would . . . be dispositive of the

interest of other members not parties to the adjudications.” Fed.

R. Civ. P. 23(6)(1). Certification of a 23(b)(2) class is appropriate

when “the opposing party has acted or refused to act on grounds

generally applicable to the class" and the class is seeking “final

injunctive” or “declaratory relief." Fed, R. Civ. P. 23()(2).

—

23a

Generally, actions seeking predominantly monetary damages should

not be maintained under Rules 23(b)(1) or (2). Doninger v. Pacific

Northwest Bell, Inc., 564 F.2d 1304 (9th Cir. 1977).

The present case is an appropriate case for class

certification under Rule 23(b)(1) and 23(b)(2) If class members are

allowed to opt-out of the class and bring individual actions, Delta

could be faced with incompatible judgments forcing the air line to

establish separate travel benefit programs to comply with each

judgment. From a practical standpoint, it is necessary that Delta

be allowed to treat all class members in the same manner with

regards to travel benefits. This can be accomplished by certifying

the class under Rule 23(b)(1) or 23(B)(2), thereby preventing the

possibility of conflicting judgments or settlements. Moreover,

Delta has acted on grounds generally applicable to the entire class

by imposing the same travel restrictions within the benefit program

on all Western “early-outs.” Injunctive relief in the form of a

single restructured travel benefits program is therefore appropriate

for the class as a whole.

Accordingly, the Court hereby *certifies, under Rule

23(b)(1) and 23(b)(2), the proposed class of all former Western

employees who participated in, qualified for and received travel

benefits under Western’s “early-out" program.

In evaluating the proposed settlement agreement, “the court

must determine whether the settlement is “fundamentally fair,

adequate, and reasonable." San Francisco NAACP v. San

Francisco United School District, 576 F. Supp. 34, 43 (N.D.Cal.

1983) (quoting Officers for Justice v. Civil Service Comm'n, 688

F.2d 615, 624 (9th Cir. 1982)). In doing so, the court must

consider the following factors: “the strength of the case; the

reasonableness of the settlement in light of the attendant risks of

litigation; and in light of the best possible recovery; the experience

and views of plaintiffs’ counsel; whether there is any evidence of

24a

collusion; the extent of discovery and the stage of the proceedings;

the expected length, complexity and expense of further litigation;

and objections to the settlement. Boyd v. Bechtel Corp., 485

F.Supp. 610, 617 (N.D.Cal.1978). The court should not simply

place a "mere ‘rubber stamp,’" Boyd, 485 F.Supp. at 617 (quoting

Detroit v. Grinnel Corp., 495 F.2d 448, 463 (2d Cir. 1974)), on

the settlement or "determine whether a better settlement might have

been negotiated." Boyd, 485 F. Supp. at 617. In addition, the

court must bear in mind the “overriding public interest in settling

large class actions." Boyd, 485 F.Supp. at 617.

The present case is unusual in the sense that the Court has

the benefit of having heard the merits of the case fully litigated at

trial prior to evaluating the settlement. In fact, the Court was

prepared to issue a ruling on the merits of the action at the time the

parties presented the proposed settlement <«.greement. Having seen

the relevant evidence, the court is especially cognizant of the

relative strengths and weaknesses of each party’s case. After

evaluating the settlement agreement in lights of the factors listed

above, the Court finds that the settlement is fair, adequate and

reasonable. Although not providing the class with all of the

remedies sought, the settlement provides substantial relief to the

class while also conceding some issues to defendants in the spirit

of compromise that is necessary to achieve any settlement.

A. Route System

The settlement provides “early-outs” with travel benefits on

the entire domestic route system which includes the continental

United States, Alaska, Hawaii, Canada, Mexico, Puerto Rico, the

Bahamas and Bermuda. This is a major gain for the class over the

old Delta benefit program. It is surely as much if not substantially

more than the plaintiff class could have expected to achieve by

allowing this Court to resolve the action.

25a

B. Boarding Priori

Under the settlement, class members are assigned the same

boarding priority as retirees. Persons who held H-1 term cards at

Western will be assigned an April 1, 1987 fictional hire date.

Persons who held F-1 term cards will be assigned a fictional hire

date 15 years later than their Western hire date. Delta may adjust

these boarding priorities in the future, but any such adjustment will

not cause “early-outs" to lose their boarding priority relative to

actual retirees.

This is a significant concession by the class in making the

settlement agreement. However, it is not a result that is completely

inconsistent with the merits of the plaintiffs’ case. The evidence

presented to the Court was not sufficient to support a finding that

plaintiffs are entitled to be given a boarding priority equal to that

of active Delta employees. The “early-outs” are not active Delta

employees. Accordingly, they are not entitled to a boarding

priority as if they were. The letter of agreement does not grant

such status to the “early-outs." While this provision of the

settlement also affects the relative priority of Western and Delta

retirees and is short of what plaintiffs hoped to achieve at trial, it

is reasonable in light of the strength of plaintiffs’ case and the trial

risk on this issue.

C. Pass Insurance Procedures

Within six months of this Court approving the settlement,

Delta will issue pass cards to each class member which will allow

then to prepare their travel passes without having to request passes

from Delta’s pass bureau. This is another large gain for plaintiffs.

Plaintiffs will no longer have to apply for travel passes weeks in

advance of their travel date. This allows for the potential use of

travel benefits in emergency situations and for spontaneous trips.

26a

D. Service Charges

Service charges for use of travel benefits by members of

the class have been eliminated. Eligible dependent children and

parents of class members will be charged a nominal service charge

when they fly more than three times a year. This is another

improvement over the prior system.

E. Dismissal of M Clai

The agreement contemplates that class members will waive

any claims they have for monetary damages arising out of Delta’s

administration of the old travel benefits program. This concession

is not substantial in light of the manifest problem of marshalling

supporting evidence for such claims. The evidence presented to the

Court at trial and during the fairness hearing in this regard

described asserted claims that were largely unsubstantiated as to

actual damages and causation. Those claims described that

appeared to contain potential merit were actions that would be

difficult to prove at trial and therefore contained a high risk of

failure.

F. Inapplicability of ERISA

The settlement agreement states that the travel benefits

provided to the class members are not subject to the provisions of

ERISA. This clause effectively vacates the Court’s earlier ruling

on this issue.

This concession by the plaintiffs must be considered in light

of the litigation context as the legal basin for the Court’s earlier

ruling on the ERISA issue was not overwhelmingly supported by

legal precedent and was subject to being reconsidered by this Court

if it was required to rule on the merits of the action.

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G. Attorneys’ Fees and Costs

As discussed above, these fees are reasonable and

completely appropriate in a class action settlement.

The Bowen group contends that the settlement is unfair

because it precludes the possibility of reinstatement. As mentioned

above, the evidence before the Court shows that the vast majority

of the class members are not interested in reinstatement. The class

members have relocated, acquired new jobs and restructured their

lives since leaving western. Many of the “early-outs" left Western

so they could devote more time to their families. These former

Western employees did not leave their jobs simply for the travel

benefits, there were other considerations that caused them to take

the “early-out" option. The majority of the class members are

essentially concerned with improving their travel benefits, not with

returning to the jobs they left years ago. Therefore, the lack of

any reinstatement remedy within the settlement does not greatly

prejudice the class.

Evaluating the settlement agreement in the aggregate,

against the background of the relative merits of each party’s case

and the litigation risk the plaintiff class takes in submitting the case

to the Court for ruling on the merits of the case presented at trial,

the Court finds the settlement to be very fair, adequate and

reasonable. Although it is has been made clear by the testimony

presented at the fairness hearing that not all class members approve

of the settlement, this is only one factor that this Court is required

to consider when deciding if the settlement should be approved.

The Court also notes in this regard that it received written

responses from class members in favor of settlement who did not

appear at the May 19 hearing.

In evaluating this settlement it is not the Court’s duty to

decide whether a better settlement for either party could have been

28a

reached, although the Court is doubtful that plaintiffs could have

achieved such an outcome. The Court’s duty is to evaluate the

settlement by considering the factors outlined above. After doing

so, the Court is convinced that this settlement agreement should be

approved. Therefore, under Rule 23(e) the Court hereby approves

the tentative settlement agreement between the parties in this action.

Accordingly, the proposed plaintiff class is hereby certified

as a Rule 23(b)(1) and 23(b)(2) class, and the settlement agreement

between the parties is hereby approved.

IT IS SO ORDERED.

DATED: June 28, 1989.

D. Lowell Jensen

United States District Judge