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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1991
- **Citation:** 502 U.S. 860

## Text

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FILED
No. JUL 7

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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

QUES TUN PRRESENNIED 2. cc ccc cee cece i
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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
eas 6 bu bo ao O88 Oe ne ew wos 10

aos oa ey 6 6 9 5 oe aS Oe 6 we 1]

see

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

I 7
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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to) Ota gai

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1 Ans Bl: Pe

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.

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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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385009_2374%3A1. Public record. Not legal advice.