Opposition Brief — Dodson v. General Motors Corp.

-

No. 91 313

Iu Che

Supreme Court of the United States

“NY

rctober Cerm, 1991

LARRY DODSON, ET AL,

“VE- Petitioners,

DENNIS HAZEN HUGULEY &T AL,

Respondents

-and- I '

GENERAL MOTORS CORPORATION,

Respondent.

BRIEF IN OPPOSITION

TO PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

LOPATIN, MILLER, FREEDMAN, BLUESTONE,

ERLICH, ROSEN AND BARTNICK

By: DENNIS D. JAMES (P 15247)

Counsel of Record

RICHARD E. SHAW (P 33521)

Attorneys for Respondents

1301 East Jefferson

Detroit, Michigan 48207 ¢ (313) 259-7800

ReEOosT!I & Hayes

By: RONALD J. REOSTI (P 19368)

Co-Counsel for Respondents

925 Ford Building

Detroit, Michigan 48226 ¢ (313) 962-2770

Interstate Brief & Record Company, a division of North American Graphics, Inc.

1629 West Lafavette Boulevard, Detroit, MI 48216 (313) 962-6250

Supreme Court, U.S,

FILED

= SEP 12 1991

|

i

COUNTERSTATEMENT OF THE QUESTIONS PRESENTED

ISSUE |

WHETHER THE COURT OF APPEALS PROPERLY AFFIRMED

THE TRIAL COURT'S ENTRY OF THE PROPOSED SETTLEMENT

DECREE, WHICH PROVIDED FOR RELIEF PROPORTIONATE TO

(1) THE ANTICIPATED RELIEF SHOULD PLAINTIFFS PREVAIL,

AND (2) THE LIKELIHOOD OF SUCCESS?

ISSUE Il

WHETHER THE COURT OF APPEALS ACTED WITHIN ITS DIS-

CRETION WITH REGARD TO ALLOWING ORAL ARGUMENT

AND WITH REGARD TO THE COURT'S CONSIDERATION OF

MATTERS OUTSIDE OF THE TRIAL COURT RECORD?

Counterstatement of the Questions Presented

Index to Cases and Authorities Cited

Counterstatement of Facts

TABLE OF CONTENTS

Reasons for Denying the Petition for Certiorari:

ISSUE I:

ISSUE Ih:

THE UNITED STATES COURT OF APPEALS FOR

THE SIXTH CIRCUIT PROPERLY AFFIRMED

THE TRIAL COURT'S ENTRY OF THE PRO-

POSED SETTLEMENT DECREE, WHICH PRO-

VIDED FOR RELIEF PROPORTIONATE TO

(1) THE ANTICIPATED RELIEF SHOULD PLAIN-

TIFFS PREVAIL. AND (2) THE LIKELIHOOD OF

Ee ice iscdeasensacshensnaseshsvavecceubsexsaccenteces

eo ccsdennee

B. The Trial Court Acted Within Its Dis-

cretion in Denying Respondents’ Re-

quest For An Opt-Out Provision. ...........

C. The Trial Court Properly Exercised

Its Discretion In Approving The Con-

sent Decree, In View Of The Specific

Reliel Provided By The Decree And

The Likelihood Of Respondents Pre-

eee eee eee ee eee ee eee eee)

eee eee ee eee eee eee eee eee ee ee eee ee eee ee ee eee)

vailing If No Settiement Is Reached. ..... 15

THE COURT OF APPEALS ACTED WITHIN ITS

DISCRETION WITH REGARD TO ALLOWING

ORAL ARGUMENT AND WITH REGARD TO

THE COURT'S CONSIDERATION OF MATTERS

OUTSIDE OF THE TRIAL COURT RECORD. ........ 24

Tse ibccinstscsesrexessersncteeveuseceresseesccesvorsnoess 26

iv

INDEX TO CASES AND AUTHORITIES CITED

PAGE

Michigan Case:

Spalding v Spalding, 355 Mich. 382; 94 NW.2d 810

CUE vera sactneesacstavescanimncaantonnerrapesbrrubiialareneivutcte 11-12

Federal Cases:

Alexander v. Aero Lodge No. 735, International

Association of Machinists & Aerospace Workers,

AFL-CIO, 565 F.2d 1364 (6th Cir. 1977), cert. denied

436 U.S. 946, 98 S.Ct. 2849, 56 L.Ed.2d (1978) ......... 8,9

Cox et al. v. American Cast Iron Pipe Co, 784 F.2d

Bn RONCEE is BOD seakkbeicindkds late tudden Seniccnnseens 13

Dosier v. Miami Valley Broadcasting Corp, 656 F.2d

SI CIE Gi SE Gidicelseacvumprcctsctantancvesiccersivodccoriaion 9

Grigsby v. North Mississippi Medical Center, Inc,

ee Te Fee Ce I FD sides henicninecde crekstecnecsnens 10

Holmes v. Continental Can Co, 706 F.2d 1144 (11th

Soe RUMNUEE | acc ivtheeh at atpudesenaessenenvatance-aciins covuunnasumensnaaedcares 13

Huguley v. General Motors Corp, 638 FSupp 1301

Up REIN: ENED cs scescoacereciivacssysworncsnnecesenamnavarccmansccecsis 7

Kincade v. General Tire & Rubber Co, 635 F.2d 501

Cee se I Tass icctuasscpcbenescoseichevceerapiencestentnvacnanactess 10

King v. South Central Bell Telephone & Telegraph,

COE Vee ee Ce Ge EE cesscethinsterrticecrsenivcciaciicions 9

Laskey v. International Union, United Automobile,

Aerospace & Agricultural, Implement Workers of

America (UAW), 638 F.2d 954 (6th Cir. 1981) ........... 9,

Penson v. Terminal Transport Co, Inc, 634 F.2d 989

CN ee OIE acc ccicotseciccivcctcesecseucsnsecereoeninns eaiees 10

PAGE

Plummer v. Chemical Bank, 668 F.2d 654 (2nd Cir.

Ty cea gui isiienceinkeonennnes 10

Senter v. General Motors, 532 F.2d 511 (6th Cir.

1976), cert. denied 429 U.S. 870, 97 S.Ct. 182, 50

eT LS See ae ARIE RI SN 8

U.S. v. U.S. Steel Corp, 520 F.2d 1043 (5th Cir.

1978). cert. denied 429 US. 817, 97 S.Ct. 61, 50

RN nL ca lvss cislbnesesttneensvdonsieeveevauvees 10

Wards Cove Packing Co v. Antonio, — U.S. —, 109

DA, Beet Fe EE FSS (TICS) © cocescoreceeses. 17, 18, 24

Watson v. Fort Worth, 487 U.S. 977, 108 S.Ct. 2777,

Pee A ET MIE vs cons stastcveveicawcavcevesseresisrereesesne 17

Wetzel v. Liberty Mutual Ins Co, 508 F.2d 239 (3rd

Cir. 1975), cert. denied 421 U.S. 1011, 95 S.Ct.

Fe NE FE CUE) cncnsnaccescrcevsevevevevecsrevessrvense 10

Other Authorities:

DE I Nivea vans cuivunsesacekcavnatesestonesanees 7, 8, 9, 10, 11

PWNS IED vacncveexeovsiscscsivesvsrscvnniveverses 7, 8, 9, 10, 11

I oe, Sena ts ven sdbenannecadsepenivoerestoens 8

UE ea case Sipe ohh cect ects phay-césadvnvontnansssineevnnabe 10

No. 91 313

In Che

Supreme Court of the United States

—

October Cerm, 1991

i 4

LARRY DODSON, ET AL,

Petitioners,

ts

- of

DENNIS HAZEN HUGULEY, ET AL,

sand. Respondents,

GENERAL MOTORS CORPORATION,

Respondent.

BRIEF IN OPPOSITION

TO PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

COUNTERSTATEMENT OF FACTS

In July, 1983. respondents filed their first complaint

(R.1: Complaint), in this race discrimination class action,

with the United States District Court for the Eastern

District of Michigan; the case was assigned to the Hon-

orable John Feikens. Respondents present counsel,

Lopatin & Miller, P.C., was substituted as counsel for the

putative class in May, 1985 (R.91: Appearance); Reosti &

Hayes, P.C. filed as co-counsel in September, 1985. (R.95:

Appearance as Co-counsel)

The Third Amended Complaint, the operative com-

plaint in this litigation, was filed on February 24, 1986.

At that time, the named plaintiffs were Dennis Huguley,

Larry Kitchen, James Kennedy and Larry Dodson.

2

(R.126: Plaintiffs’ Third Amended Complaint) This com-

plaint charged that defendant-appellee (hereafter, defen-

dant) General Motors discriminated against black

salaried employees in Michigan, Indiana and Ohio,

through the operation of its performance appraisal

system, with regard to salary, promotional and other

employment opportunities. (/d.)

The trial court certified the class through his opinion

and order on July 21, 1986, and October 16, 1986.

respectively. (R.154: Opinion: R.170: Order of Certifica-

tion) The order certified a class of approximately 9800

persons who were: (1) black: (2) classified salary

employees of defendant General Motors; (3) in the

Michigan, Indiana and Ohio area; (4) employed between

October 8, 1982 and September 25, 1986. (/d.)

Thereafter, the parties conducted extensive discovery,

including eighty-seven (87) depositions and voluminous

research and statistical analysis concerning over 100,000

computerized personnel files. (R.513: Response to

Motion to Substitute Attorneys) Respondents’ counsel

has advanced over $200,000 in costs. (/d.) During this

time, with some interruption, the parties conducted

lengthy and complex negotiations. !

On October 21, 1988, three weeks before the sched-

uled trial, the parties reached an agreement in prin-

ciple. (R.515: Memorandum Opinion Approving Consent

Decree) The trial was adjourned to allow the litigants

time to complete the details of the settlement, where-

upon on February 1, 1989, they submitted a proposed

consent decree to the court, with the approval of all

four of the named plaintiffs including Larry Dodson.

(R.374: Consent Decree; Dodson, Tr 6/26/89, 59) On Feb-

' In litigation of this complexity, a litigation team represented

each party; for ease of exposition, respondents refer to counsel or

attorney in the singular.

3

ruary 3, 1989, the court issued its preliminary approval

of the proposed Consent Decree. (R.373: Order of Pre-

liminary Approval)

Thereafter, the class members were informed of the

proposed decree, were granted access to free copies of

the decree, and were invited to pose objections to the

proposal over a sixty-day period, concluding on April

30, 1989. (R463: Order Extending Time) The class mem-

bers were advised of a special telephone number, con-

necting to paralegals and attorneys for the class, who

could answer questions about the proposed decree.

(James, Tr 6/26/89, 66; R.374: Consent Decree) The class’

trial team handled hundreds of such inquiries during

and after the objection period. (James, Tr 8/11/89, 42-43)

The class counsel appeared at numerous mass meet-

ings, called throughout the tri-state area in Detroit,

Flint, Lansing, Indianapolis, and Youngstown, and con-

tinues to be available for class member meetings.

(James, Tr 8/11/89, 42: Tr 5/3/89, 21)

By the end of the appeal period, 1.485 objections

were filed; the vast majority were signatures on peti-

tions. A hearing for objections was scheduled for June

26, 1989 (Status Conference 5/9/89). whereupon, on June

23, 1989, three days before the scheduled hearing,

attorney Godfrey Dillard filed an appearance on behalf

of named-plaintiff Larry Dodson and other objectors.

(R499: Appearance) At the hearing, approximately 200

objectors appeared, some accompanied by counsel.

(Court, Tr 6/26/89, 6) For purposes of the hearing, at his

request, Dillard was allowed by the court to speak for

those objectors present without counsel. The court

took the decree under advisement.

At the time of the hearing, over objections, the par-

ties also submitted to the court the question of

whether the decree, if approved, should have an opt-out

4

provision. The court decided that the decree, if

approved, should not have an opt-out provision pur-

suant to the class's certification under F.R.Civ.P. 23(b)(2)

and relevant case law. (Court, Tr 6/26/89, 86)

On August 3, 1989, Dillard filed a Motion for Substitu-

tion of Attorney moving to substitute himself as counsel

for the class, which was heard August 11, 1989. (R.512:

Motion to Substitute) On September 1, 1989, Judge John

Feikens issued an Opinion Approving the Consent

Decree and an Opinion and Order Denying Attorney

Dillard’s Motion for Substitution of Attorney. (R.515:

Memorandum Opinion and Order; R.519: Order Denying

Motion to Substitute) On September 14, 1989, the court

signed an Order Approving Consent Decree, as well as

Order Adding as Named Plaintiffs Robert Raglin of

Columbus, Ohio and Darnita Stein of Flint, Michigan.

(R.520: Order Adding Plaintiffs’ R.21: Order Approving

Consent Decree)

The consent decree is a sixty-two page (62) document

(exclusive of exhibits) providing relief to the class in

the following categories:

1. A backpay distribution of up to4.6 million dollars

to approximately 2800 ex-employee class members.

i

A first year distribution of approximately one mil-

lion dollars in pay raises to those approximately

1,000 present class member employees whose pay

is furthest out of line with their statistical white

counter-parts.

3. A group monitoring system for promotions and

pay which is to be in place for five (5) consecu-

tive years. This computerized group monitoring

system will benefit not only class members, but

black salaried employees that plaintiff hired since

the close of the class identification period on

October 8, 1986.

5

4. The institution of an individual monitoring

system which will allow employees to appeal

their performance appraisals (now called relative

contribution assessment) to a separate panel par-

tially nominated by the employees.

5. Awards to named plaintiffs, anecdotal witnesses,

and potential witnesses, totaling $325,000.

6. Payment by defendant of plaintiffs’ fees of approxi-

mately $457,000 and costs in excess of $200,000.

On October 12, 1989, Dillard filed the Joint Notice of

Appeal of the Order Approving Consent Decree of

September 14, 1989. (R.522: Appeal Notice) No Notice of

Appeal has been filed regarding the Order Denying

Motion for Substitution of Counsel. To date, there has

been no motion to intervene filed on behalf of any

unnamed plaintiff. On November 20, 1989, attorney

William Hawkins of Indianapolis, Indiana also filed an

appearance on behalf of named plaintiff Dodson.

On November 2, 1989, respondents filed, inter alia, a

Motion to Strike All or Part of Joint Notice of Appeal.

This motion challenged: (1) the standing of any class

member except Larry Dodson to prosecute an appeal in

this case: (2) Dillard's authorization to prosecute an

appeal on behalf of any objector other than Dodson;

and (3) the standing of persons named in Dillard's

appeal who had not filed objections, were not class

members, or were duplicates. On January 22, 1990, the

court granted respondents’ motion in part, striking all

nonobjectors, nonclass members and duplicate names,

and directing Dillard to set forth in his opening brief,

the authority by which he claims to represent plaintiffs-

objectors on appeal.

On April 26, 1990, attorney William Hawkins and

named plaintiff Larry Dodson filed documents dis-

6

missing Dillard and substituting William Hawkins as

counsel for Dodson. To date, Dillard nas produced no

written statements of objectors authorizing him to rep-

resent them on appeal. Attorney Hawkins has produced

thirty (30) such statements, including that of Mr.

Dodson; of these, four (4) are unsigned and five (5) are

those of persons who have no filed objections.

On February 22, 1991, the United States Court of

Appeals for the Sixth Circuit issued a per curiam

opinion, affirming the trial court. The court below

acknowledged that respondents had challenged the

objectors standing to challenge the consent decree.

Nevertheless, the court declined to address the

standing issue, because it found that the merits of the

issues raised were wholly without merit. (Opinion, 3)

The court cautioned that its assumption of standing “is

without consequence and should not be construed as a

decision on the merits of the standing issue.” (Opinicn, 4)

3 8 8

-

REASONS FOR DENYING

THE PETITION FOR CERTIORARI

ISSUE I

THE UNITED STATES COURT OF APPEALS FOR THE SIXTH

CIRCUIT PROPERLY AFFIRMED THE TRIAL COURT’S ENTRY

OF THE PROPOSED SETTLEMENT DECREE, WHICH PRO-

VIDED FOR RELIEF PROPORTIONATE TO (1) THE ANTICI-

PATED RELIEF SHOULL PLAINTIFFS PREVAIL, AND (2) THE

LIKELIHOOD OF SUCCESS.

A. Introduction

Respondents perceive appellants as raising two objec-

tions, each of which is addressed. First, the trial court

properly found that it was empowered to exercise its

discretion not to insert am opt-out provision. Second, in

view of the relief accorded by the consent decree, the

potential award at trial, and the likelihood of success

if this action were to proceed to trial, the trial court

acted within its discretion in approving the consent

settlement.

B. The Trial Court Acted Within Its Discretion In

Denying Respondents’ Request For An Opt-Out

Provision.

Respondents sought certification under F.R.Civ.P.

23(b)(2) — not F.R.Civ.P. 23(b)(3). (R.144: Plaintiffs’ Cor-

rected Reply to Defendant's Supplemental Memorandum

in Opposition to Class Certification; R.126: Third

Amended Complaint, 4 33) Therefore, the trial court rec-

ognized, in certifying this case as a 23(b)(2) class,

“Plaintiffs seek certification pursuant to Rule 23(b)(2)

.... Accordingly | need not address the requirements of

Rule 23(b)(3), (c)(2).” Huguley v. General Motors Corp,

638 FSupp. 1301, n.1 at 1302 (E.D.Mich. 1986).

8

Undoubtedly, the trial court properly certified this

class action pursuant to F.R.Civ.P. 23(b)(2). Indeed, the

petitioners conceded this (Petition for a Writ of Certio-

rari to the United States Court of the [sic] Appeals for

the Sixth Circuit, 25):

“The Appellants [petitioners] acknowledge that

this case was properly certified as a (b)(2) class

action. Subsection (b)(2) contemplates class»

cases seeking equitable injunctive or declaratory

relief, and back pay comes within the ambit of

(b)(2) because the ‘demand for back pay is not

in the nature of a claim for damages, but rather

is an integral part of the statutory equitable

remedy, to be determined through the exercise

of the court’s discretion.’ Johnson -v- Georgia

Highway Express, 417 F.2d 1122, 1125 (5th Cir.

1969). See also Pettway -v- American Cast lron

Pipe Co., 494 F.2d 211, 256-257 (Sth Cir. 1974)

(Pettway Ill), cert. denied, 439 U.S. 1115, 99 S.Ct.

1020, 59 L.Ed.2d 74 (1979).”

Petitioners correctly state the law in this regard. It is

well established that a Title VII class action seeking

back pay is properly certified under Rule 23(b)(2). F.g.,

Alexander v. Aero Lodge No. 7.35, International Associa-

tion of Machinists & Aerospace Workers, AFL-CIO, 565 F.2d

1364, 1372 (6th Cir. 1977), cert. denied 436 U.S. 946, 98

S.Ct. 2849, 56 L.Ed.2d (1978): Senter v. General Motors,

932 F.2d 511, 525 (6th Cir. 1976), cert. denied 429 US. 870,

97 S.Ct. 182, 50 L.Ed.2d 150 (1976).

Accordingly, the trial court's decision not to grant an

opt-out provision must be reviewed in the context of a

class action certified under F.R.Civ.P. 23(b)(2). ER.Civ.P.

23(b)(3) is simply irrelevant to this issue.

In express terms, F.R.Civ.P. 23(c)(2) requires an opt-

out provision, only in a suit certified as a (b)(3) action,

g

not in a suit-certified under Rule 23(b)(2). Alexander v.

Aero Lodge, 565 F.2d at 1373 (“The mandatory notice

provision of Rule 23[c]{2] [containing notice of the right

to opt out] is expressly confined by its terms to actions

under [b][3], and a number of courts have indicated

that actual prejudgment notice is not required by Rule

23 in actions certified under sections other than

(b]{3].°) Similarly, no decision holds that an opt-out

mechanism is essential in a rule (b)(2) case. Laskey v.

International Union, United Automobile, Aerospace & Agrt-

cultural Implement Workers of America (UAW), 638 F.2d

954, 956-957 (6th Cir. 1981); King v. South Central Bell

Telephone & Telegraph, 790 F.2d 524, 530 (6th Cir. 1986);

Doster v. Miamt Valley Broadcasting Corp, 656 F.2d 1295,

1299 (9th Cir. 1981). Indeed, in Laskey, the Court

squarely held that opt-out is not required, even in a

case combining aspects of a Rule 23 (b)(2) class action

and a Rule 23(b)(3) action. /d., 956-957.

“The notice of the pendency of the class

action stated that all members would be bound

and that each had the right to retain indepen-

dent counsel and intervene as a plaintiff. This

class action could be either brought under Rule

23(b)(2), Fed. R.Civ. Pro., which does not have the

right to opt out, or under Rule 23(b)(3). In the

interests of judicial economy and efficiency, the

courts should treat the class as a Rule 23(b)(2)

class. Thus, the failure to notify the class mem-

bers of the right to opt out of the class is not a

violation of due process.” (Citations omitted)

Not only is there no requirement that an opt-out

mechanism be provided in a (b)(2) action, there is dis-

pute regarding whether the opt-out mechanism is per-

missible, with the circuit courts of appeal split on this

issue. Plummer v. Chemical Bank, 668 F.2d 654, n.2 at

10

657 (2nd Cir. 1982). On one point, however, there is no

dispute: in a (b)(2) action, there is certainly no auto-

matic right to an opt-out provision. Laskey, 638 F.2d at

956: Penson v. Terminal Transport Co, Inc, 634 F.2d 989,

993-994 (5th Cir. 1981); Grigsby v. North Mississippi Medi-

cal Center, Inc, 586 F.2d 457, 461 (5th Cir. 1975): U.S. v.

U.S. Steel Corp, 520 F.2d 1043, 1057 (Sth Cir. 1978), cert.

denied 429 US. 817, 97 S.Ct. 61, 50 L.Ed.2d 77 (1977).

The remaining question, then, is whether the trial

court, assuming that it is empowered to provide an opt-

out mechanism in a (b)(2) action, abused its discretion

in denying respondents’ request for opt-out. Respon- -

dents did request an opt-out provision from the trial

court, however they recognize that the trial court acted

within its discretion in denying the request.

In Kincade v. General Tire & Rubber Co, 635 F.2d 501,

507 (5th Cir. 1981), the court gave three reasons for

holding that “the right to opt-out, which is denied when

a Rule 23(b)(2) class is tried, also need not be provided

when such a case is settled.” First, Rule 23 certification

procedure ensures that the named parties will ade-

quately represent the class. Second, F.R.Civ.P. 23(e).

requiring court approva! of a!l dismissals or compro-

mises, gives additional judicial protection to the class

members. Third, the public policy in favor of settlement

is served by barring objectors from opting out. Here.

where the trial court exercised its discretion in denying

an opt-out provision, the Kincade reasoning serves to

illuminate the basis for the trial court's decision.

Similarly, Laskey, 638 F.2d at 956, held that the proce-

dures associated with a (b)(2) class action, with no opt-

out mechanism, are preferred, stating, “In the interests

of judicial economy and efficiency, the court should

treat the class as a Rule 23(b)(2) class.” Accord: Wetzel

v. Liberty Mutual Ins Co, 508 F.2d 239, 253 (3rd Cir. 1975),

11

cert. denied 421 US. 1011, 95 S.Ct. 721, 54 L.Ed.2d 753

(1975) (holding that a Title VIF action seeking injunctive,

declaratory, and monetary relief which could be main-

tained “under both (b)(2) and (b)(3) should be treated

under (b)(2) to enjoy its superior res judicata effect and

to eliminate the procedural complications of (b)(3)

which serve no useful purpose under (b)(2).”)

In Laskey, 638 F.2d at 957, the court noted that a trial

court's acceptance of a settlement is discretionary, sub-

ject to reversal only if there is an abuse of discretion.

“The acceptance of a settlement in a class

action suit is discretionary with the court and

will be overturned only by a showing of abuse of

discretion. See Grunin v. International House of

Pancakes, 513 F.2d 114, 123 (8th Cir.), cert. denied,

423 US. 864, 96 S.Ct. 124, 46 L.Ed.2d 93 (1975):

Cohen v. Young, 127 F.2d 721, 724-25 (6th Cir.

1942).”

Indeed, even where the named representatives of the

class object, the reviewing court will affirm if no abuse

of discretion is demonstrated. /d.

“Accepting a settlemeni over the objections of

the named representatives is not necessarily an

abuse of discretion. See Bryan v. Pittsburgh Plate

Glass Co., 494 F2d 799, 803 (3d Cir.), cert. denied,

419 US. 900, 95 S.Ct. 184, 42 L.Ed.2d 146 (1974);

Mungin, supra, 318 F.Supp. at 731.”

In Spalding v. Spalding, 355 Mich. 382, 384-385; 94

N.W.2d 810 (1959), the Michigan Supreme Court ex-

plained the “abuse of discretion” standard:

“Where, as here, the exercise of discretion turns

upon a factual determination made by the trier

of facts, an abuse of discretion involves far more

than a difference in judicial opinion between the

12

trial and appellate courts. The term discretion

itself involves the idea of choice, of an exercise

of the will, of a determination made between

competing considerations. In order to have an

‘abuse’ in reaching such determination, the

result must be so palpably and grossly violative

of fact and logic that it evidences not the exer-

cise of will but perversity of will, not the exer-

cise of judgment but defiance thereof, not the

exercise of reason but rather of passion or bias.”

Aithough respondents urged the trial court to man-

date an opt-out provision in the decree, respondents

cannot reasonably contend that the trial court’s exer-

cise of discretion was so unreasonable as to constitute

an abuse. There are almost 10,000 individuals in this

class. If an opt-out mechanism is established, with even

one percent of the class opting out, the trial court

would be burdened with 100 additional cases. Thus, the

trial court could reasonably conclude that the concerns

for judicial economy and efficiency which originally lay

behind its certification order would be largely des-

troyed by an opt-out clause.

Moreover, the complexity of the proposed consent

decree arguably makes an opt-out procedure less war-

ranted. The decree provides class-wide relief, that

cannot be partitioned between the opt-ins and the opt-

outs. (Court, Tr 6/26/89, 82) Individuals who choose to

opt out would receive a free ride, gaining the benefit of

the class-wide relief, such as group monitoring, without

giving up their own claims for back pay, unlike their

fellow class members who would give up these claims.

Indeed, the trial court may have anticipated that the

benefit of opting out — to have your cake and eat it too

— could prove too attractive. Possibly, so many individ-

uals would opt out as to undermine the entire settle-

13

ment process, even though the settlement is intrinsi-

cally fair and equitable. Accordingly, respondents

respectfully submit that the trial court acted within its

discretion in approving the settlement and must be

affirmed.

It remains only to explicitly address and repudiate

petitioners’ contention that “the Sixth Circuit’s decision

in this case is in conflict with the Eleventh Circuit's,”

citing Cox et al. v. American Cast Iron Pipe Co, 784 F.2d

1546 (11th Cir. 1986). In Cox, two weeks after the class

was certified, the judge resigned from the bench. There-

after, the second judge authorized the defendants to

notify the class members of a right to opt out. A third

judge then assumed responsibility for the case and

approved the opt-out procedure. The appellate court

reversed, finding that the trial court had abused its dis-

cretion in approving the opt-out notice. Although some

language within Cox serves petitioners, the language is,

at most, dicta. The Cox court reversed the trial court,

which had approved an opt-out procedure.

Petitioners also rely on Holmes v. Continental Can Co,

706 F.2d 1144 (11th Cir. 1983). There is no fundamental

dispute between Holmes and the opinion below. The

trial court below recognized its discretion to allow opt-

out; however, upon an examination of the specific facts

and circumstances of this action, the trial court

declined to permit opt-out. The appellate court below

affirmed this exercise of discretion. Holmes demands

that the trial court exercise its discretion; it does not

mandate an opt-out procedure.* The Holmes court

noted, 706 F.2d at 1155:

> |

- The Holmes facts are radically different from those of this

action. First, dissenters challenged the disproportionate payments

to the named plaintiffs. contrary to the facts in this action. More

(concluded on page 14)

14

“This court in Penson held that a district court

‘acting under its Rule 23(d)(2) discretionary

power, may require that an opt-out right and

notice thereof be given should it believe that

such a right is desirable to protect the interests

of the absent class members.’ 634 F.2d at 994. A

district court’s decision would only be reversed

for abuse of discretion.”

Petitioners announce a conflict between the Sixth Cir-

cuit’s affirmance of the trial court and the Eleventh Cir-

cuit, although there is no such conflict. The trial court

assumed that it had the discretion to include an opt-out

provision, exercised its discretion, and declined to

include the provision. The appellate court below

affirmed, finding no abuse of discretion. At bottom, peti-

tioners advocate a rule that mandates an opt-out provi-

sion whenever the case involves any monetary relief,

regardless of the significance of the monetary relief.

This is not the rule promulgated in Holmes, Cox, or any

other decision of the Eleventh Circuit. Predicated upon

its extensive review of the facts before it, the trial court

declined to grant an opt-out option; there was no abuse

of discretion; the issue raised by petitioners is not

worthy of this Court’s review.

(continued from page 13)

importantly, this action seeks and achieves (if the settlement decree

stands) prospective relief with regard to promotion and merit pay.

which far outweighs the monetary award for historical disparities. In

Holmes, the action de facto involved only monetary relief, “{b'ecause

the plants at which the bulk of the class and all of the named plain-

tiffs and objecting class members worked [had] been permanently

closed.” Hoimes, 706 F.2d at 1146, n.1.

15

C. The Trial Court Properly Exercised Its Discre-

tion In Approving The Consent Decree, In View

Of The Specific Relief Provided By The Decree

And The Likelihood Of Respondents Prevailing

If No Settlement Is Reached.

The trial court found that the primary objection to

the substantive provisions of the consent decree was

that the monetary relief was inadequate. (R.515:

Opinion, 9) Otherwise, the objections to the monitoring

or affirmative relief were “largely conclusionary,” and

on the whole, “were stated in broad form and not pre-

cisely defined.” (/d., 14) A review of appellants’ argu-

ments to the court below, as to why the monetary and

affirmative relief provided by the consent judgment is

inadequate (Brief on Appeal [to the United States Court

of Appeals for the Sixth Circuit], 39-45), confirms the

trial court’s opinion. Although petitioners appear to

have abandoned some of their arguments, the Consent

Decree can be evaluated only by consideration of all of

its parts. Moreover, petitioners’ argument for opt-out

necessarily relies on the monetary relief aspect of this

action, making this discussion pertinent to the discus-

sion, supra, on the trial court’s decision not to include

an opt-out provision. es

Adequacy of Monetary Relief

Petitioners complained to the appellate court below

that the monetary relief is inadequate. (Brief on Appeal

[to the United States Court of Appeals for the Sixth Cir-

cuit], 39) They did not, however, raise any specific

objection to the distribution formulas used for allo-

cating either the ex-employee fund or the incumbent

employee awards. (Tr 6/27/89, 27) The adequacy of the

monetary relief must be judged by examining the likeli-

hood of success and the potential recovery if respon-

dents should prevail.

16

Probability of Success

Petitioners argued below, based on the preliminary

report of plaintiff's expert, Dr. Michael Thomson, that

respondents would have prevailed. Such certainty is the

province of armchair quarterbacks. Defendant's memo-

randum in support of approval of the consent decree

(R.503) fully explained the uncertainty regarding the

ultimate result, in the absence of a settlement.

Dr. Thomson's preliminary report was exactly that,

preliminary. Although it described differences in the

performance evaluations of black and white employees,

it did not analyze the effect of performance levels on

merit increases or promotions. It is precisely these

effects which are the central focus of this case. Fol-

lowing the preliminary analysis, Dr. Thomson con-

ducted additional statistical analysis. These studies

were multiple regression analyses which used educa-

tion, age, and tenure as the principal predictors (fac-

tors) for determining salary levels. Dr. Thomson

performed several multiple regressions to test the dif-

ference between black and nonblack employees in dis-

cretionary salary increases and promotion rates. These

results indicated the strengths and weaknesses of

respondents statistical evidence of discrimination.

Respondents did not argue to the trial court, and do

not argue here, that these statistical results were so

weak that respondents settled this case for fear of

losing the liability issue. In fact, respondents settled

this case, because the settlement benefits to the class

were substantial and were a very high proportion of the

potential recovery (as explained below). Nevertheless,

respondents necessarily considered the possibility that

additional data regarding pre-employment work experi-

ence, starting salary, starting job category, and career

path, might narrow the statistical differences found by

Dr. Thomson.

17

More disturbing, however, were the studies performed

by Dr. Thomson to test the connection between perfor-

mance evaluation and merit pay and promotion. To

some extent, these results were consistent with defen-

dant’s claim that there is no direct correlation between

performance evaluations and promotions. Although

respondents were certainly unwilling to concede defeat

(nor was defendant prepared to proclaim victory), the

results did present problems, especially in light of this

Court's opinion in Watson v. Fort Worth, 487 U.S. 977, 108

S.Ct. 2777, 101 L.Ed.2d 827 (1988).

These initial concerns have been, of course, magni-

fied by this Court’s subsequent decision in Wards Cove

Packing Co v. Antonio, —— U.S. —_, 109 S.Ct. 2115, 104

L.Ed.2d 733 (1989). In a disparate impact case, these

decisions require proof of a nexus between the dis-

parate statistical results and an identifiable employment

practice.

Defendant. in its memorandum to the trial court,

included a long list of reasons why respondents’ case

might fail, in the absence of settlement. Although

respondents did not, and do not agree with defendant's

analysis, respondents must accept the possibility that

defendant might prevail on one or more of its defenses,

~~ ‘if this action were tried.

Respondents would have, for instance, as defendant

observed, been required to concede that performance

evaluations systems are a useful business tool in

making personnel decisions. Respondents would also

have to concede that defendant's performance evaliua-

tion system was sophisticated, representing the “state

of the art.” While not agreeing that such admissions

would necessarily have led to defeat, in light of the

Supreme Court's decision in Wards Cove, it is inescap-

18

able that respondents would face significant uncertainty

with regard to the ultimate result.®

Potential Recovery

The relief negotiated for the class represents a sub-

stantial percentage of the possible recovery if respon-

dents had prevailed. Because the actual total recovery

would depend on the outcome of thousands of indi-

vidual claims hearings,’ it is impossible to estimate the

actual total recovery to class members. However, it is

possible to statistically estimate the total amount of the

difference in salary growth for black and white em-

ployee which could be attributed to race, as opposed to

education, age, tenure, etc. This would arguably equal

the total amount of money lost by the class during the

years in question, as a result of discrimination in merit

pay and promotions.

As explained in Plaintiff's Answer to Common Objec-

tions to the Proposed Consent Decree (R.501), this esti-

mate was based “on multiple regression analysis of the

difference in the growth in salaries for black employees

compared to the growth in salaries of comparable white

employees, during the period covered by this case.

Comparability was defined in terms of age, education,

company seniority, and to a limited extent company

experience.” (/d., 2) Petitioners do not complain that

this method underestimates the potential recovery.

Petitioners simply reject respondents conciusion that

the amounts provided in the consent judgment are a

3 The decision in Wards Cove Packing Co v. Antonio, —— US. _.

109 S.Ct. 2115, 104 L.Ed.2d 733 (1989), appears to allow the defendant

to defeat a prima facie case of disparate impact by a lesser showing

of business necessity.

4 The numer of individual claims hearings that would be neces-

sary if plaintiffs prevailed is an additional factor which supports the

decision to settle the case.

19

“substantial percentage of Defendant's total expo-

sure. ..." (/d., 3) In other words, the objectors believe

that the potential recovery is many times the amount

negotiated by the class representatives.

Petitioners fail to understand that the difference in

merit pay, while statistically significant, involves a frac-

tion of a percentage point. Further, while promotions

are individually worth much more than merit pay

increases, they are, relatively speaking, rare events. Peti-

tioners have not contested these assertions. However.

althougi: they apparently accept the analysis as reason-

able, they continue to assert that trial would neces-

sarily result in a recovery to the class, which make the

amounts obtained through the consent judgment inade-

quate. This is unexplainable.

Dr. Michael Thomson's estimates of the potential

recovery to the class, should respondents prevail on lia-

bility, indicated that the amounts negotiated for the

_class was a substantial percentage of the estimated

potential recovery as described above.

Merit increases are generally in the range of four to

six percent for all employees. A difference of .002 or two

tenths of one percent in the merit increases of black

and white employees would be highly significant. How-

ever, this difference would amount to a difference of

only $70.00 in anual salary, based on an annual salary

of $35,000.00.

The impact of being passed over for promotions is

obviously much greater. Respondents’ studies showed

that promotions would, on average, increase an em-

ployee’s salary between $2,000 and $3,000 (depending

on the year in which the promotion occurred). However,

promotions were rare events. In any year, excluding

automatic, nondiscretionary promotions, less than ten

percent of the employees would be promoted. A differ-

20

ence of two percent in promotion rates would be highly

significant. However this »vould result in a shortfall of

only approximately. 150: promotions which should go to

black employees.

In additiom to overestimating the potential recovery

at trial, appellants have also understated the actual

recovery in the consent decree, by ignoring or mis-

stating two other important facis.

First, with regard to the ex-employees, although there

are approximately 2,800 former employees, only a small

minority were present for the entire period covered by

the lawsuit. In fact, there were less than 5,000 years of

service for this subgroup, an average of less than 1.8

years. Thus, although the average recovery is $571.00

(see, Appellant's Brief on Appeal [to the United States

Court of Appeals for the Sixth Circuit, by Godfrey J.

Dillard], 3), this equals an average loss of $317.00 per

year.

This represents a difference in the rate of salary

growth, on average, of approximately .0075 percent

(*%4 of one percent) per year. In other words, if white

salaries increased an average of six percent per year

during this period and black salaries increased at a rate

of 5.25% per year, then 2,800 employees with an average

tenure of 1.8 years would lose approximately $1.6 mil-

lion. (This amount is an overall increase, which includes

both promotion and merit increases.) In only one year

did the difference in rate of growth, when controlled for

differences in education, age, and tenure, exceed one

percent and in that year the figure was 1.16%.

The second fact that petitioners overlooked is the

cumulative effect of the amount negotiated for the

incumbent class. The average incumbent award is

$1,000, a total of $1,000,000 for this subclass. However

21

this amount is added to their base salaries. A conserva-

tive estimate of the value of this fund is $10,000,000.

(This excludes the effect on future percentage increases

and on pensions.) As a result, the total monetary

recovery is more than fifty percent of the total expo-

sure estimated as explained above.

This award will be distributed to the fourteen percent

of the class whose salaries are furthest from what

would be predicted, based on the employees’ education,

age, tenure and company experience. The decision to

distribute this fund in this manner was based on the

Statistical analysis which indicated that the discrimina-

tion uncovered did not affect all black employees and

was primarily due to the nonpromotion of blacks at cer-

tain pay levels. Petitioners have not challenged either

the concept that the consent judgment should attempt

to identify the most probable victims of discrimination,

nor the method chosen to accomplish this goal.

In short, the total amount negotiated on behalf of the

class is a substantial percentage of the total estimated

recovery. The method of distributing these amounts has

not been challenged by petitioners and is eminently fair

and reasonable.

Monitering

Petitioners’ other argument is that the affirmative

relief is also inadequate. This argument appears to be

made, because the trial court pointed to the monitoring

or affirmative relief as the central justification for his

approval of the consent decree. In the appellate court

below, the two group of appellants (one of whom is now

“petitioners”) did not agree on the purported inade-

quacy of the affirmative relief. One group of appellants

below (not petitioners) argued that it is inadequate,

because it doesn't contain a specific performance evalu-

ation scheme to replace the objectionable procedure.

22

This group did not contest the effectiveness of the

group monitoring plan in terms of the “bottom line.”

Petitioners apparently complain that the group moni-

toring is per se inadequate, because it is allegedly sim-

ilar to the plan agreed to by the defendant and the

Office of Federal Contract Compliance (OFCC). They

argue that since the OFCC plan did not prevent discrim-

ination, the group monitoring scheme cannot be ex-

pected to do so. (Hawkins Brief on Appeal [to the

United States Court of Appeals for the Sixth Circuit], 45;

Petition for a Writ, 29) Petitioners also complain that

the consent decree is inadequate, because it does not

guarantee that defendant's “utilization” of minorities will

“approximate minorities in the community.” (Hawkins

Brief on Appeal [to the United States Court of Appeals

for the Sixth Circuit], 46; Petition for a Writ, 29-30)

Those appellants below (not petitioners herein) were

correct that the group monitoring plan cannot identify

individual cases of disparate treatment, and that a bal-

anced “bottom line” could easily include several cases

of individual discrimination. However, the individual

monitoring provision, ignored by appellants, addresses

this problem in a realistic and forceful manner. Further,

class members retain their right to sue for future indi-

vidual acts of discrimination.

Respondents’ experts, the statistical analysis, and the

anecdotal testimony all support the conclusion that the

main problem with defendant's evaluation system was

not its design, but the ability of supervisors to exercise

conscious and unconscious bias. The affirmative relief

addresses this problem in three ways: first, the indi-

vidual monitoring system will provide a means to iden-

tify individual examples of bias; second, the group

monitoring sanctions provide powerful incentives to

defendant to identify and correct recurring problems

23

stemming from supervisory bias; and, third, the class

members retain their right to bring individual suits for

discrimination in pay or promotion.

In fact, the individual monitoring section is a substan-

tial change in the performance evaluation system. More

importantly however, the group monitoring proposal is

not only innovative but is a real breakthrough in the

area of affirmative action. The system, by using com-

puters and multiple regression analysis, allows the par-

ties to agree on the commonly accepted “predictors” of

success for large groups. Almost all experts, whether

testifying for employees or employers or writing aca-

demic articles, agree that in large groups of employees,

education, company experience, and prior work experi-

ence, are legitimate indicators of success within the

company. The consent decree recognizes that the

rewards for black and white employees should relate to

these factors. And, in the event the performance evalua-

tion system and the subsequent decisions regarding pay

and promotion do not bear a statistically predictable

correlation to those factors, the decisions are suspect

and should be adjusted to correct the statistical imbal-

ance. One cannot perceive of a more forceful induce-

ment for defendant to increase its training and its own

monitoring of the performance evaluation system, to

insure that minorities are treated fairly.

Petitioners’ complaint that the OFCC plan is substan-

tially similar to the affirmative relief in the instant case

is simply not true. The OFCC plan is based on multi-

level job groups. In other words it evaluates the rate at

which black and white employees are promoted to and

from certain job groups. It does not address the proba-

bility that black or white employees will be in such job

groups to begin with. Nor does it identify the problem

of blacks being concentrated at the bottom levels of

24

each group. Further, to assume that this settlement will

fail in achieving its objectives, because the OFCC may

have failed in achieving similar objectives is not sup-

ported by evidence or logic.

Petitioners’ argument that the consent judgment is

inadequate because it doesn't guarantee that defen-

dant’s utilization of minorities will not approximate

minorities in the community simply reflects an igno-

rance of the legal standards applicable to this case. See

Wards Cove.

ISSUE Il

THE COURT OF APPEALS ACTED WITHIN ITS DISCRETION

WITH REGARD TO ALLOWING ORAL ARGUMENT AND

WITH REGARD TO THE COURT'S CONSIDERATION OF MAT-

TERS OUTSIDE OF THE TRIAL COURT RECORD.

In view of petitioners’ cursory treatment of this issue,

respondents will be brief.

Petitioners baldly assert that they were denied due

process of law, because the United States Court of

Appeals for the Sixth Circuit denied oral argument.

Respondents are perplexed by this assertion, inasmuch

as there was oral argument on January 22, 1991. More-

over, petitioners cite no authority for the proposition

that there is a constitutional right to oral argument;

respondents know of no such authority.

Petitioners also baldly assert that they were denied

due process of law before the United States Court of

Appeals for the Sixth Circuit due to the “denial of ...

documentation (National Reporting System-—NRS) which

would support Petitioner's and Objectors position.” It

appears that petitioners are contending that the court

below failed to permit them to enlarge the record.

Again, petitioners cite no authority for the proposition

25

that there is a constitutional right to enlarge the record

upon appeal and require the appellate court to consider

matters not raised in the trial court; respondents know

of no such authority.

Moreover, petitioners uid present argument to the

court below with regard to the agreement between Gen-

era! Motors Corporation and the Office of Federal Con-

tracts Compliance Programs. (Plaintiffs/Appellants’ Brief

(to the United States Court of Appeals for the Sixth Cir-

cuit, 45) Further, respondents answered petitioners

argument on this subject. (Plaintiffs-Appellees’ Brief on

Appeal! [to the United States Court of Appeals for the

Sixth Circuit], 41-43) Thus, the Court of Appeals below

was presented with substantial information regarding

the OFCC plan, notwithstanding that petitioners injected

this information into this case for the first time at the

appellate level.

Accordingly, respondents respectfully submit that

petitioners have failed to demionstrate that the United

States Court of Appeals for the Sixth Circuit acted so as

to deny petitioners of due process of law; the petition

for certiorari should be denied.

ce 2 fe

26

RELIEF

WHEREFORE, respondents herein, DENNIS HAZEN

HUGULEY et al., by and through their attorneys LOPATIN,

MILLER, FREEDMAN, BLUESTONE, ERLICH, ROSEN &

BARTNICK, and their attorneys REOSTI & HAYES, respect-

fully pray that this Honorable Court deny petitioners

Petition for Writ of Certiorari to the United States Court

of Appeals for the Sixth Circuit, together with costs and

attorneys fees.

- Respectfully submitted,

LOPATIN, MILLER, FREEDMAN, BLUESTONE,

ERLICH, ROSEN AND BARTNICK

By: /s/ DENNIS D. JAMES (P 15247)

Counsel of Record

/s/ RICHARD E. SHAW (P33521)

Attorneys for Respondents

1301 East Jefferson

Detroit, Michigan 48207

(313) 259-7800

REOSTI & HAYES

By: /s/ RONALD J. REOSTI (P 19368)

Co-Counsel for Respondents

925 Ford Building

Detroit, Michigan 48226

(313) 962-2770

DATE: September 10, 1991