Petitioners Brief — Cooper v. Federal Reserve Bank of Richmond

No. 83-185

ly THE - STEVAS.

Supreme Court uf the Huited-Staes<——

Octoser Term, 1983

Sytv1a Cooper, ef al.,

Petitioners,

v.

FeperaL Reserve Bank or RicHMoND.

Puy.us Baxter, et. al.,

Petitioners,

v.

Feperat Reserve Bank or RicHMonD.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE FOURTH CIRCUIT

ee — —

a -- ——

BRIEF FOR PETITIONERS

—- —

—

J. LeVonne CHAMBERS

Joun T. NockLesy

Chambers, Ferguson, Watt,

Wallas & Adkins, P.A.

951 S. Independence Boulevard

Charlotte, North Carolina 28202 |

Jack GREENBERG

O. Peter SHERWwoopD

CuarLes STEPHEN Rawston

Eric Scunaprer*

16th Floor

99 Hudson Street

New York, New York 10013

(212) 219-1900

Counsel for Petitioners

* Counsel of Record

—— $$$ ———™

_________ —S

QUESTION PRESENTED*

Did the Court of Appeals err in

holding that a prior finding that any

pattern or practice of employment discrim-

ination was not "pervasive" precludes, as a

matter or res judicata, all employees from

litigating any individual claims of dis-

crimination?

'*The parties to this litigation are set out

at p. ii of the Petition.

TABLE OF CONTENTS

Page

Question Presented ..ccccccccccsvceee i

Table of Authorities soenreeeneeeeeneeeee ii

Opinions Below _— wae eo ee ee 62-6 0.8 6.0 © 1

Jurisdiction see eeeeeenerteneeeeeeneeeneeee 2

Rule Involved e*eereeeeeeeneneeeeeneeeeeee 3

Statement of the Case ...csccccccsccce 4

Summary Of ArgquineNnt ..ccccccccssscces 15

ARGUMENT seeeeeeeeeneeeeeeeeeeeeeeeeee 21

I. The Binacing Effect of

Decisions in Class Actions .. 21

II. The Saxter Claims Are Not

Barred by Res Judicata ...... 33

(1) The District Court in

Cooper Dia Not Decide

the Merits of the

Baxter ClaimS ..ccceseee 33

(2) The District Court in

Cooper Expressly Reserved

the Right of the Baxter

Plaintiffs to Bring

This Litigation ........ 56

III. The Application of Collateral

Estoppel To This Case ....... 63

Conclusion wed 67

-ii-

TABLE OF AUTHORITIES

Cases: Page

American Pipe Construction Co. v. Utah,

414 U.S. 538 (1974) seeoeoeveee ee ee 23

Bogard v. Cook, 586 F.2d 399 (5th

Sie. 1978) e*eeeseieeeeeee#eneeneeeeee#ee 30

Branham v. General Electric Co., 63

F.R.D. 667 (M.D. Tenn. 1974) ... 46,48

Brown v. Felsen, 442 U.S. 132

(1979) e*eeeoeeeeneteenseeeeeneeneee#seneee#e 35

Commissioner v. Sunnen, 333 U.S.

591 (1948) e*eeeeeeeneeeeene#ee#eee#ee#e# 64

Connecticut v. Teal, 73 L.Ed2d 130

(1982) eeeeeeenseeneeeeeneeeee#see#eee¢ 44

Costello v. United States, 365 U.S.

265 (1961) eeeeeenseeeeeees8se#ee#eeeeee#es 34,35

Dickerson v. United States Steel

Corporation, 582 F.2d 827

(3d Cir. 1978) eeeeveveveee eee ee eee 45

Federated Department Stores, Inc. v.

Moitie, 452 U.S. 394 (1981) .... 34,49

Franks v. Bowman Transportation Co.,

424 U.S 747 (1976) wecceeseeee 47,48,56

Furnco Construction Corp. v.

Waters, 438 U.S. 567 (1978) .... 44

- iii -

Cases: Page

General Telephone Co. v. Falcon, 457

U.S. 147 (1982) e*eeeoeieeeeeeeeees 27,33,43

Harrison v. Lewis, 559 F. Supp. 943

(D.D.C. 1983) eoeeeeeesteenseeneeeeeeee 46

Hughes v. United States, 71 U.S.

(4 Wall.) 232 (1866) eoeeeveeveve eee 35

International Brotherhood of Team-

sters v. United States, 431 U.S.

360 (1977) cecccceccce 5f16,32,43,47,50

Kremer v. Chemical Construction Corp.,

456 U.S. 461 (1982) .....66.6217,18,38,49

Marshall v. Kirkland, 602 F.2d 1281

(8th Cif. 1979) *eeeseieeeeseeeneeeeeeee? 31

Montana v. United States, 440 U.S.

147 (1979) e*eneeeees8seesteereeneee#see#ee#e#s¢ 63

Muskelly v. Warner & Swassy Co.,

653 F.2d 112 (4th Cir. 1981) ... 46

Russell v. Place, 94 U.S. 606

(1876) eeeoeeeeseeeenteeeeneteeneeneeneeeee 64

Stastny v. Southern Bell Tel. & Tel.

Co., 628 F.2d 267 (4th Cir.

1980) wcccccccccccccccccccccccces 46

Woodson v. Fulton, 614 F.2d 940

(4th Cir. 1980) wccccccccccccces 30

Statutes

28 U.SsCw. § 1254(1) coqgeeeeeecccveess 3

-_ iv -_ ,

Cases: Page

28 U.S.C. § 1292(a) eeeeeeeeeeeeeeeees 13

42 U.8.C. § 1981 eeeeeees eee eeeeeeees 11

42 U.S.C. 5 2000e-5 eeoeeeeeeeeeeeeee es’ 4

Civil Rights Act of 1964, Title

VII eoeeeeseteeneeneeeeeeneensteeeeeeees 5,47,51

Rules

Rule 23, F.R.C.P.e seecccccece 22,24,27,28,47,

Rule 23(a), FeR.CoPse cocccccccccccees 36

Rule 23(b), FeR.C.P. coccccccccvccses 26,32

Rule 23(C), PeR.CoP. ccccccccccccccce 3,23

4

Other Authorities

Frankel, “Some Preliminary Observa-

tions Concerning Civil Rule 23",

43 P.R.D. 39 (1967) eeeeneev eee eer 32

F. James, Jr. & G. Hazard, Civil Pro-

cedure (2d ed. 1977) eeeeeveaeeeee 25

3B Moore's Federal Practice

§ 2360 (2d ed. 1982) eeeeveeeeeee 22

C. Wright & A. Miller, Federal

Practice and Procedure

(1972) eeeeeeeeeee ee eee 22,24,25,29,46

Restatement of Judgments, 2d

(1982) eeeeseenreeseeeneeeeeeeeeeeeee 34,62

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1983

No. 83-185

=e SS SSS SS SSS

SY1.VIA COOPER, et al.,

Petitioners,

Ve

FEDERAL RESERVE BANK OF RICHMOND,

a

PHYLLIS BAXTER, et al.,

Petitioners,

Vv.

FEDERAL RESERVE BANK OF RICHMOND.

On Writ Of Certiorari

To The United States Court of Appeals

For The Fourth Circuit

BRIEF FOR PETITIONERS

OPINIONS BELOW

The decision of the court of appeals

is reported at 698 F.2d 633, and is set out

at pp. ta-185a of the Appendix to the

Petition for Writ of Certiorari (herein-

after cited as "P.A."). The order denying

rehearing, which is not yet reported, is

set out at P.A. 186a. The district court's

Memorandum Decision of October 30, 1980, is

not reported, and is set out at P.A.

19la-96a. The district court's Findings of

Fact and Conclusions of Law, which are not

reported, are set out at P.A. 197a-285a.

The district court orders of May 29, 1981,

and February 26, 1982, which are not

reported, are set forth at P.A. 286a-89a

and P.A. 290a-97a respectively.

JURISDICTION

The judgment of the Court of Appeals

was entered on January 1l, 1983. A timely

Petition for Rehearing was filed, which was

denied on April 6, 1983 by an equally

divided court. (P.A. 186a). This Court

granted an extension of time in which to

file “the Petition for Writ of Certiorari

until August 4, 1983. The Petition for a

Writ of Certiorari was filed on August 4,

1983, and was granted on October 31,

1983. Jurisdiction of this Court is

invoked under 28 U.S.C. § 1254(1).

RULE INVOLVED

Rule 23(c)(3), Federal Rules of

Civil Procedure, provides:

(3) The judgment in an action

maintained as a class action under

subdivision (b)(l1) or (b)(2),

whether or not favorable to the

class, shall include and describe

those whom the court finds to be

members of the class. The judgment

in an action maintained as a class

action under subdivision (b)(3),

whether or not favorable to the

class, shall include and specify or

describe those to whom the notice

provided in subdivision (c)(2) was

directed, and who have not requested

exclusion, and whom the court finds

to be members of the class.

STATEMENT OF THE CASE

On Marcn 22, 19877, the cEUC brought

Suit against the Federal Reserve Bank of

Richmond alleging that the Bank haa

discriminated against black employees in

making promotions at its Charlotte, North

Carolina facilities, and that it had

discriminated in particular against Sylvia

Cooper because of her race, first by

refusing to promote her to a supervisory

position and then by discnarging her.

Jurisdiction was asserted under 4z U.S.C.

§ 2000e-5. (J.A. 6a-11a). On September

21, 1977, Cooper and three other present or

former Bank employees (the “Cooper plain-

tiffs") were permitted to intervene as

plaintiffs. (J.A. 12a-23a). On April 28,

1978, the district court certified a

piaintiff class consisting of blacks who

had been employed at the Bank's Charlotte

branch since January 3, 1974, and had been

discriminated against on the basis of

race. (J.A. 24a-32a).

The case was tried without a jury in

September, 1980. The case was heard under

the bifurcateu procedure common in Title

VII class actions, and expressly sanctioned

by this Court in International Brotherhood

of Teamsters v. United States, 431 U.S. 360

(1977). Under that procedure plaintiffs

were required to establish at the September

1980 hearing that there had been a practice

of classwide discrimination; if that burden

were met, the identities of the particular

class memvers who were the victims of that

practice were to be resolved at a later

hearing.

At the September, 1980, trial Phyllis

1

baxter and four oched” tines Bank employees

1/ Brenda Gilliam, Glenda Knott, Alfred

Harrison and Sherri McCorkle. Emma Ruffin

also sought to testify, but because

she was in grade 4 and thus covered by the

(the “Baxter plaintiffs"), none of whon

were named plaintiffs in the Cooper action,

sought to testify regarding alleged acts of

discrimination against them by the Bank.

The defendant, however, objected to their

testimony, urging the district court to

rule that it woula not resolve the merits

of those "incividgual claims and that this

evidence we hear just goes to their claim

that there is a pattern and practice.” Tne

trial court agreed to so limit considera-

Z/

tiou of that testimony.

On October 30, 1980, the district

court issued a Memorandum of Decision which

/ continued

trial court's finding of a pattern of

discrimination against blacks in grades 4

and 5, she did not join as a plaintiff in

the subsequent Baxter litigation.

2/ Trial Transcript, p. 400 (handwritten

page number 340) (testimony of Sherri

McCor<xle. )

held that the Bank haa engaged in a pattern

ana practice bf éipevidiiecine in denying

promotions to black employees in pay grades

4 and 5. (P.A. 194a). With respect to

promotions of blacks in pay grades 6

and above, however, the court held:

There does not appear to be a pattern

and practice pervasive enough for the

court to order relief. (P.A. 194a).

The district court concludea that two of

the named plaintiffs, Sylvia Cooper and

Constance Russell, both of whom were in

pay grade 6 or above, had been denied

promotions on the basis of race. (P.A.

192a-193a). The court's October, 198U,

opinion contained no reference to the

testimony or discrimination claims of

Baxter or any of the other Baxter plain-

tiffs. The court directed counsel for the

plaintiffs to propose more detailed "find-

ings of fact and conclusions of law con-

sistent with [its] findings." (P.A.

194a).

Undaunted by the failure of their

initial attempt to obtain in the Cooper

litigetion a cecision on the merits of

the claims of the Baxter plaintiffs,

counsel tor plaintifts tried another

approach. The district court's decision

contemplated the appointment of "a special

master for a Stage II proceeding[ ] to ...

identify class members entitled to relief."

(P.A. 195a). But the court had found

Classwide discrimination against only

blacks in pay grades 4 and 5, ana the

Baxter plaintiffs were in grades 3, 6 or 7.

Thus a determination as to which blacks in

grades 4 and 5 were the victims of dis-

crimination would necessarily have left

still unresolved the claims of the Baxter

plaintiffs. Since those Baxter plaintiffs

apparently could not be represented

by Cooper in the private class action,

COOMEEPAS. PLSRe lets deed; in their

Proposea Pind inggipf, Pact Pana Conclusions

of Law, that the EEOC instéad be permitted

to press the claims of those employees at

the stage II sresteling On February

27, 1981, however, the defendant filea a

response strenuously objecting to this

4/

proposal.”

3/ Paragraph 27 of the Proposed Conclu-

Sions of Law read in part:

The Court is of the opinion ... that

~ee the Master should receive evi-

dence and make recommendations with

respect to Phyllis Baxter, Brenda

Gilliam, Glenda Knott, Alfred Harrison

and Sherri McCorkle.... They are

within the scope of [the] individuals

who have claims which may appropri-

ately be pursued by EEOC.

This proposed Conclusion was not adopted by

the trial court. See P.A. 283a.

4/ Defendant's Response to Plaintiffs'

Proposed Findings of Fact and Conclusions

of Law, pp. 8-10, 14, 18.

- 10 =

While this proposal for EEOC represen-

tation was still pending, counsel for

plaintiftts made yet a third attempt to

obtain in the Cooper litigation a resolu-

tion of the merits of the Baxter claims.

On March 24, 1981, the Baxter plaintiffs

moved to intervene as individuals in the

Cooper litigation. (J.A. 39a-51a). The

proposed complaint in intervention asserted

that each of the Baxter plaintiffs had been

denied a promotion “Resa” result of racial

discrimination, but did not aillees that

there was any general practice of discrimi-

nation against blacks in pay grades 6

ana above. The defendant bank opposed

this motion, insisting that if the Baxter

plaintiffs wished to pursue their indi-

vidual claims they could and should file a

5/

separate lawsuit.” The district court

5/ See pp. 57-58, infra.

~ 1 =

agreed, and at a hearing on May 8, 198l,

denied from the bench the motion to inter-

6/

vene; the court also indicated that

it would not permit the EEOC to represent

the Baxter plaintiffs in the Cooper litiga-

tion.

Four days later, on May 12, 1981, the

Baxter plaintiffs, following the suggestion

of the district court and the defendant,

filed a civil action alleging racial

discrimination in employment in violation

of 42 U.S.C. § 1981. On May 29, 1981, the

district judge entered a written order

formally denying the motion to intervene in

Cooper, emphasizing, "I see no reason

why, if any of the would be intervenors are

6/ Transcript of Hearing of May 8, 1981,

pp. 17-18. That decision was memorialized

in an order of May 29, 1981. (P.A.

286a-289a).

7/ Transcript of Hearing of May 8, 1981,

p. 19.

# 12

actively interested in pursuing their

claims, they cannot file a Section 1981

Suit next week...." (P.A. 291a). On the

same day the judge issued his Findings of

Fact and Conclusions of Law, which formally

rejected the proposal to permit the EEOC to

pursue in the Cooper litigation the claims

of the Baxter plaintiffs.

Having thus succeeded in thwarting

three different attempts to obtain in the

Cooper litigation a resolution of the

claims of the Baxter plaintiffs, the

defendant Bank moved on July 2, 1981, to

dismiss the Baxter claims, asserting

that they were “barred by res judicata"

because of the decision in Cooper, (J.A.

7la et seq.). On February 26, 1982, the

district court denied the motion to dis-

miss. (P.A. 290a). The district judge,

however, entered the findings necessary

to permit the defendant to appeal from its

o 93 «

decision pursuant to 28 U.S.C. § 1292(a).

The court of appeals grantea the defendant

leave to take such an appeal.

On January ll, 1983, the court of

appeals reversed the district court's

decision in Baxter. The Fourth Circuit

did not suggest that the triai court had

implicitly considered and resolved the

conflicting contentions regarding the

specific claims of the Baxter plaintiffs;

it reasoned, rather, that the lack of a

finding of classwide discrimination involv-

ing grades 6 and above barred as a matter

of res judicata any consideration of the

particular claims of blacks in those

grades:

They ... are ... precluded by the

determination of the District Court

that there was no discrimination in

promotion out of pay grades above pay

grade 5.... (P.A. 179a).

One of the Baxter plaintiffs, Alfred

Harrison, was in pay grade 3. Neither the

- 14<

district court's Memorandum of Decision

nor its Findings of Fact and Conclusions of

Law even considered whether there was class

wide discrimination regarding promotions

Out of grade 3. The court of appeals

nonetheless held that Harrison's claim too

was barred by res judicata. MThe district

court had found a practice of discrimina-

tion in promotions from grades 4 and 5, and

the court of appeals overturned that

determination:

We ... reverse the District Court's

Findings and Conclusions of class

discrimination in promotions out of

grades 4 and 5.... (P.A. 129a).

The court of appeals, nominally relying on

this conclusion, held that Harrison's

claim was

precluded by our determination on this

appeal that there was no practice of

discrimination in pay grade 5 and

below. (P.A. 179a) (Emphasis added).

In fact the decision of the court of

appeals on the class claims, like that of

a

¢

- 1§ «

the district court, referred only to grades

4 and 5, and was devoid of any discussion

of whether there was classwide discrimina-

tion against blacks in pay grade 3. Upon

consideration of the Baxter plaintiffs'

Petition for Rehearing and Suggestion for

Rehearing En Banc, the panel's decision was

upheld by an equally divided (4-4) court.

(P.A. 188a).

SUMMARY OF ARGUMENT

I. The question presented by this

case is not whether a judgment on the

merits of a particular issue in a class

action ordinarily precludes members of the

class from relitigating that specific

issue. Petitioners acknowledge the cor-

rectness of that principle. The problem

here is to ascertain what the district

court in fact decided.

- 16 -

II.(1) The district court in the

Cooper litigation neither considered nor

resolved the merits of the individual

claims of the Baxter plaintiffs.

The trial in Cooper was a limited

Stage I proceeding whose purpose was to

determine whether there was a practice of

classwide discrimination. The district

court concluded regarding discrimination in

pay grades 6 and above that "there does not

appear to be a pattern and practice of

discrimination pervasive enough for the

court to order relief." (P.A. 194a). That

finding does not preclude the possibility

that there were particular acts of dis-

crimination against the Baxter plaintiffs

in grades 6 and above. This Court has

repeatedly recognized that even in the

absence of classwide discrimination there

may be “isolated or ‘accidental’ or spo-

radic discriminatory acts.'" Teamsters v.

o (47 «

United States, 431 U.S. 324, 336 (1977).

The trial judge in Cooper repeatedly

refused to consider and resolve the claims

of the Baxter plaintiffs. When the Baxter

Plaintiffs sought to testify at the

Cooper trials, the judge accepted a defense

proposal that the court not "rule on

individual claims." The district court

refused to permit the EEOC to present the

claims of the Baxter plaintiffs in the

Cooper litigation, and rejected an attempt

by the Baxter plaintiffs to actually

intervene in Cooper. Thus the Baxter

plaintiffs never had in Cooper "a ‘full

and fair opportunity’ to litigate [their]

claims.'" Kremer v. Chemical Construction

Corp., 456 U.S. 461, 480 (1982).

The decision of the court of appeals

appears to hold that the failure of the

district court to decide the merits of the

individual Baxter plaintiffs in the Cooper

- 18 «-

class action somehow precludes the Baxter

plaintiffs from bringing a second action.

Such a rule would be inconsistent with the

established principle that res judicata

only bars claims previously resolved "on

the merits.” Kremer v. Chemical Construc-

tion Corp., 456 U.S. 461, 466 n.6 (1982).

(2) Res judicata does not apply where

the judge who issued the first decision

expressly reserved the rigtit of the plain-

tiffs to bring a second action. At the

hearing on the Baxter plaintiffs’ motion to

intervene in Cooper, the district judge

announced:

I'm going to deny the motion without

prejudice to the individual rights

of the four would be intervenors to

maintain a separate action. 8/

The court's written order denying that

motion reiterated:

8/ See p. 60, infra.

« 49 «

I see no reason why, if any of the

would be intervenors are actively

interested in pursuing their claims,

they cannot file a Section 1981 suit

next week, nor why they could not file

a claim with EEOC next week. (P.A.

288a).

Thus it was the clear intent of the dis-

trict court in Cooper to permit the instant

litigation.

The application of res judicata is

particularly inappropriate since the

defendant in Cooper expressly argued that

Baxter could and should file her own

lawsuit. In successfully opposing Baxter's

motion to intervene in Cooper the Bank

asserted:

Applicants ... can still go to the

EEOC office and file all the charges

they desire ... therefore, there is no

way there will be any prejudice to the

applicants in denying their motion,

since they can pursue any individual

claims they have in separate proceed-

ings. 9/

9/ See p. 61, infra.

- 20 -

Less than two months after insisting in

Cooper that the Baxter plaintiffs could and

should file their own suit, the Bank moved

to dismiss that suit, arguing that it was

barred by res judicata.

III. The Baxter plaintiffs are barred

by collateral estoppel from litigating only

those issues which were actually decided in

Cooper.

The Baxter plaintiffs in pay grades

6 and above are bound by the Cooper deci-

sion that any classwide discrimination in

those grades was not sufficient to warrant

a classwide remedy.

One of the Baxter plaintiffs, Alfred

Harrison, is in pay grade 3. Since neither

court below ever considered or decided

whether there was classwide discrimination

in pay grade 3, Harrison should be per-

mitted to offer proof on remand of the

a 24 =

existence of such a pattern and practice of

discrimination.

The district court found that there

had been intentional discrimination against

two named plaintiffs in Cooper, Sylvia

Cooper and Constance Russell, both of whom

were in pay grade 6 or above. The court of

appeals reversed these findings of dis-

crimination; the court of appeals, however,

apparently misunderstood the district court

to have held that there was no discrimina-

tion in grades 6 and above. Accordingly,

the court of appeals' decision regarding

the individual claims of Cooper and Russell

should be vacated and remanded.

ARGUMENT

I. THE BINDING EFFECT OF DECISIONS

IN CLASS ACTIONS

The question presented by this case is

not whether a judgment determining on the

merits a particular issue in a class action

=» 22 «=

a ae

ordinarily precludes members of the

class from relitigating that specific

issue. Petitioners did not question that

principle below end do not seek to ao so

here. The court of appeals, however, ap-

plied a far more sweeping rule, apparently

assuming that an adverse determination on

the merits of any single class issue

precludes class members from litigating all

otner issues involving the same subdject

inatter.

Prior to the 1966 amenaments to Rule

23, there was in the case of a so-called

"spurious" class action no procedure

10/ The application of this principle

presupposes, inter alia, that the class was

in fact certified, that class members

received any required notice, that the

named plaintiff adequately represented the

interests of the class, and that the court

rendering the decision had jurisdiction to

do so. See 18 C. Wright and A. willer,

Federal Practice and Procedure, § 4455

(1972); 3B Moore's Federal Practice 4 2360

(2d ed. 1982).

e 33 «

for determining prior to judgment which of

the potential members of the class claimed

in the complaint were actual members and

would thus be bound by the judgment. A

number of courts held or intimated that

Class members might be permitted to inter-

vene after a decision on the merits favor-

able to their interests, in order to secure

the benefit of the decision for themselves,

although they would presumably be unaf-

fected by an unfavorable decision. In

order to prevent such "one-way interven-

tion,” sections (c)(l) and (c)(2) were

added to Rule 23, directing that the

propriety of class certification be re-

solved "as soon as practicable," and

requiring class mempers in a Rule 23(b)(3)

action to decide prior to any resolution on

the merits whether to remain in the class.

American Pipe Construction Co. v. Utah, 414

- 24 -

directs the court adjudicating a class

action to include in its judgment a desig-

nation of the individuals who are mempers

of the affected class.

Rule 23 does not, however, purport to

"determ.ne the binding effect of a judgment

-»» [or] prescrib[e] any particular adjudi-

catory effect to itee et Rather, Rule

23 directs the attention of the court

deciding a class action, and of any court

subsequently called upon to ascertain the

adjudicatory effect of that decision, to

the actual language of the judgment. It is

in the particular terms of the judgment

that the first court is called upon to

spell out what it has decided and wno were

the parties to that litigation, and it

1l/ 7A C. Wright and aA. Miller, Federal

Practice and Procedure, § 1789, p. 1

(1972).

= 2§ «-

is by those terms that the res judicata

effect of the judgment must be determined.

In ascertaining what issues or clains

cannot ve litigated because of the decision

in an earlier class action, "Special cere

may be required in identifying the issues

or claims presented anc in relating them to

the scope of the class action." 18 Cc.

wright & A. Miller, Federal Practice and

12/

Procedure, § 4455, p. 473 (1972)

In a@ civil action on behalf of a

Single individual, one would ordinarily

expect the plaintiff to present, and

the court to resolve, all of his or her

claims and contentions with regard to a

12/ See also F. James, Jr. & G. Hazard,

Jr., Civil Procedure, § 11.28, p. 587 (24

ed. 1577) ("(T)he very nature of a class

Suit requires that the rules of res

judicata be applied to it with special

caution.")

o 26 \«

particular subject matter or transaction.

In certain instances an individual plain-

tiff may be required to do so. But in

determining the scope of the decision

in a class action the courts cannot indulge

in any assumption that every possible claim

against the defendant of each and every

class member was in fact litigated and

aecided. A clain of a particular class

member, Or an issue or fact relevant to

that claim, is not ordinarily adjudicated

in a class action unless the claim or

question is common to both the class and

the named plaintiff, and unless that named

plaintiff is in a position to “fairly and

adequately protect the interests of the

class." Rule 23(a). Rule 23(b) poses

yet additional limitations regarding what

claims and issues may in fact be litigated

in a class action. "The mere fact that an

aggrieved private plaintiff is a member of

o 37 «

an identifiable class of persons of the

Same race or national origtn is insuffi-

cient to establish his standing to litigate

on their behalf all possible claims of

discrimination against a common employer."

General Telephone Co. v. Falcon, 457 U.S.

147, 159 n. 15. (1982) (emphasis added) In

sum, while an individual plaintiff ordinar-

lly would not, and under some circumstances

could not, pick and choose among the

related claims anda issues to present in a

Single lawsuit, "careful attention to the

requirements of ... Rule ... 23" requires

just such selectivity in the choice of

questions to be resolved in a class action.

East Texas Motor Freight v. Rodriguez, 431

U.S. 395, 405 (1977).

Those matters which a court declines

to actually resolve in a class action of

course remain open for litigation in some

future action. The same is true of issues

- 28 -

which counsel for the representative party,

mindful of the requiremencs of Rule 23 and

of the problems of manageability associated

with any class action, declines to present

Or press for resolution. Falcon neither

encourages nor requires the class represen-

tative to plead the broadest conceivable

class claim and force the court to reduce

it to a more manageable suit consonant with

Rule 23. If the defendant in a class

action believes that the membership of the

proposed class or the scope of the proposed

class claims are too narrowly defined,

it is free to urge the trial court to

expand or alter either. But a defendant

dissatisfied with the class definition or

the claims offered by a plaintiff cannot

withhold its objection and later complain

that other issues should have been liti-

gated or that other individuals should have

- 29 -

13/

peen members of the class.

Ascertaining precisely what issues

were in fact litigated and resolved in a

class action will not always be a simple

task. The mere fact that a complaint

alleges a wide variety of claims does not

itself ensure that the representative party

coula or aid in fact litigate all or most

of them at trial. Ci. East texas motor

13/ "Tne basic effort to limit class

adjudication as close ag possible to

matters common to members of the class

frequently requires that nonparticipating

members of tne class remain free to pursue

individual actions that would be merged or

barred by claim preclusion had a prior

individual action been brought for the

relief demanded in the class action. An

individual who has suffered particular

injury as a result of practices enjoined in

a class action, for instance, should remain

free to seek a damages remedy even though

Claim preclusion would defeat a second

action had the first action been an indi-

vidual suit for the same injunctive

relief." 18 C. Wright & A. Miller, Federal

Practice and Procedure, §4455, p. 474

(1972).

= 30 -

Freight v. Rodriguez, 431 U.S. 395, 405-06

(1977). In some instances limitations on

the claims or issues actually presented

and resolved in aclass action may be

apparent on the face of the complaint

itself. See, e.g., Bogard v. Cook, 586

F.2d 399 (Sth Cir. 1978) (individual action

for damages not barred by earlier class

action seeking only injunctive relief).

The terms of the trial court's decision or

order regarding certification may define

the class issues more narrowly than the

complaint itself. See e.g., woodson v.

Fulton, 614 F.2d 940, 942 (4th Cir. 1980)

(certification decision excluded claims

regarding discriminatory discharge). In

14/ In sustaining that individual action,

the Fifth Circuit noted that it had-"no way

of knowing that [the earlier suit] would

have been manageable as a class action if

individual damage relief had been re-

quested.” 586 F.2d at 408.

=

Ls

»

» 31 =

the instant case, for example, the Cooper

complaint alleged a general practice of

discrimination on the basis of both

race and sex (J.A. 15a), but the certifica-

tion order limited the class claim to

discrimination on the basis of race. (J.A.

27a). The scope of the issues or claims

actually litigated at trial may be narrower

still. See, e.g., Marshall v. Kirkland,

602 F.2d 1262, 1298 (8th Cir. 1979) (deci-

sion on class claim not res judicata

as to class members whose claims were not

in fact presented to the triai court). The

opinion and judgment of the district court

must be carefully scrutinized to ascertain

whether each of the class clains or issues

presented at trial was in fact resolved by

the court on the merits.

The possibility that a trial court

will not in fact resolve all the issues a

plaintiff seeks to litigate is particularly

- 32 -

real when, as is often the case in kKule

23(D)(3) class actions, the court uses the

@

familiar device of a split trial. Se

Prankel, "Some Preliminary Observations

Concerning Civil Rule 23," 43 F.R.D. 39, 47

(1967). Such bifurcated proceedings are

particularly common in the trial court of

complex Title VII class actions. In

such cases

{aJ]t the initial, “liability” stage

-»- [the plaintiff] is not required to

offer evidence that each person for

whom it will ultimately seek relief

was a victim of the employer's dis-

Criminatory policy. Its burden is to

establish a prima facie case that such

@ policy existed.... [A] district

court must usually conduct additional

proceedings after the liability phase

of the trial to determine the scope of

the individual relief.... (T]he

question of individual relief does not

arise until it has been proved that

the employer has followed an employ-

ment policy of unlawful discrimination.

International Brotherhood of Teamsters v.

United States, 431 U.S. 324, 360-62 (1977).

Should a trial court conclude in such a

- 33 -

case tnat there was no classwide discrimi-

nation, it would ordinarily have no occa-

sion to consider at any later proceeding

whether particular individuals might

nonetheless have been the victims of

isolated acts of discrimination. Just as

the courts cannot assume that, if a class

is certified, "all will be well for surely

the plaintiff will win and manna will fall

on all members of the class,” General

Telephone v. Falcon, 457 U.S. at 161,

so too they cannot assume that every claim

somehow relevant to the plaintiffs' com-

plaint will in fact be litigated and

resolved on the merits.

II. THE BAXTER CLAIMS ARE NOT BARRED

BY RES JUDICATA

(1) The District Court in Cooper Did

Not Decide The Merits of the

Baxter Claims

A final judgment on the merits of a

Claim precludes the parties, including

- 34 -

class members, from relitigating that

Claim. Federated Department Stores, Inc. v.

Moitie, 452 U.S. 394, 398 (1981). But this

principle of res judicata does not apply to

all cases in which a party fails to obtain

the relief it sought in the initial litiga-

tion; only if that denial of relief was

based on a decision on the merits of the

Claim is the unsuccessful party thereafter

precluded from litigating the same claim.

"If the first suit was disposed of on any

ground which did not go to the merits of

the action, the judgment rendered will

prove no bar to another suit.” Costello v.

United States, 365 U.S. 265, 286 (1961);

see Restatement of Judgments 2d, § 20

(1982). This Court has repeatedly declined

to give such preclusive effect to decisions

which failed to resolve the merits of a

= 35 -

, a

disputed claim. A finding that some

earlier action did resolve the merits of a

Claim, like any application of res judi-

cata, must be made “only after careful

scrutiny." Brown v. Felsen, 442 U.S. 127,

132 (1979).

There is no question that the Baxter

plaintiffs wanted and repeatedly attempted

to litigate their individual claims in the

Cooper action. It is equally clear,

however, that the defendants successfully

prevented them from doing so. Although the

Baxter plaintiffs were permitted to testify

at the Cooper trial, the defendant insisted

that the district court not resolve their

individual claims, but consider their

testimony only insofar as it tended to

15/ Costello v. United States, 365 U.S.

765 (1961); Hughes v. United States, 71

U.S. (4 Wall.) (1866); Gilman v. Rives,

35 U.S. (10 Pet.) 298 (1836).

- 36 -

establish the existence of classwide

discrimination. This distinction was made

when the first Baxter plaintiff was

called to the stand:

[DEFENSE COUNSEL]: ... My understand-

ing now is that, except for [Cooper

and the three other named plaintiffs],

you won't rule on individual claims

and that this evidence we hear just

goes to their claim that there is a

pattern and practice.

x *&

THE COURT: -»- I think the answer to

your question is that is correct. The

only people as to whose rights the

Court has a duty to make a present

decision are the four persons named

who have themselves asserted in this

case a personal right to recovery. 16/

Following the district court's initial

Memorandum of Decision, which apparently

precluded Cooper from representing the

interests of the Baxter plaintiffs at the

Stage II proceedings, counsel for plain-

16/ See n.2, Supra.

- 37 -

tiffs suggested that the EEOC be permitted

to present in those prs=ceedings the indi-

vidual claims of the Baxter plaintiffs.

(See p. 9, Supra). The defendant again

objected:

The defendant submits that those

witnesses are not entitied to parti-

cipate in Stage II proceedings. The

people in question testified at trial,

but had not participated in the action

other than as passive class members.

Their testimony was on the issue of

class liability, although their

testimony focused on personal griev-

ances. These people are not parties

[and] they are not intervenors.... 17/

The trial court upheid the defendant's

argument that the EEOC should not be

permitted to pursue the Baxter wae”

Finally, the Baxter plaintiffs attempted to

intervene in the Cooper litigation in order

17/ Defendant's Response to Plaintiffs’

Proposed Findings of Fact and Conclusions

of Law, p. 8. (Emphasis in original).

18/ See p. 11, Supra.

if

= 38 -

to present their individual claims for

adjudication at the Stage II proceedings.

The defendant successfully opposed this

attempt as well. (P.A. 286a-289a). Far

from having in Cooper "a ‘full and fair

Opportunity’ to litigate [their] claim,"

Kremer v. Chemical Construction Corp., 456

U.S. 461, 480 (1982), the Baxter plaintiffs

in fact had no opportunity whatever to do

so in that case.

It is also clear that the trial court

did not in fact decide the individual

Claims of the Baxter plaintiffs. Phyllis

Baxter, for example, alleged that on

several occasions between 1975 and 1978 she

applied for certain vacancies, “but was

denied the positions beause of her race and

color". (P.A. 66a). Plaintiff Gilliam

contended that she was denied promotion to

a junior Computer Console position in

November of 1976 because of racial dis-

= 39 -

crimination. Plaintiffs Knott, Harrison

and McCorkle made equally specific claims

about denials of promotions to particular

vacancies. (Id.) Neither the district

“court's Memorandum of Decision (P.A. 191a)

nor the Judgment (P.A. 52a-62a) contain any

reference whatever to Baxter, Gilliam,

Knott, Harrison, or McCorkle. The lower

court's Findings of Fact and Conclusions of

Law describe the claims of the Baxter

plaintiffs, noting that in general they

were fully qualified for the promotions

they sought and often more experienced than

the whites who were actually appointed to

the positions involved. (P.A. 247a-254a).

But nowhere in the Findings is there the

Sligntest suggestion that the trial judge

had in fact reached any conclusion as to

why the Baxter plaintiffs had been denied

those particular promotions.

= 40 -

Tne Court of Appeals, however, be-

lieved that the claims of four of the five

Baxter plaintiffs’ were precluded by

res judicata because of the district

court's decision regarding classwide

discrimination. At the time of trial these

four plaintiff were in pay grades 6 or

above, and both Cooper and the EEOC claimed

and sought to prove that there was a

general practice of promotional discrimina-

tion against blacks in those pay grades.

The district court concluded that, other

than regarding blacks in ad grades 4

and 5, “there does not appear to be a

pattern and practice of discrimination

pervasive enough for the court to order

relief." (P.A. 194a). This holding cannot

plausibly be read as a decision that there

had never been any discrimination against

19/ Baxter, Knott, Gilliam and McCorkle.

« 61 =

blacks above grade 5, or even that such

discrimination had been particularly

rare or unique. Since tne district court

in the same opinion also hela that plain-

tifts Cooper and Russell, both of whom were

in grades 6 or above, "were discriiminated

against on account of their race" (P.A.

192a), its holding on the class claim

cannot mean that there was no such dis-

crimination in those grades. The only

plausible construction of the court's

decision is that acts of discrimination

against employees in grades 6 and above

were not sufficiently widespread to warrant

a classwide remedy.

That the district judge's decision on

Cclasswide discrimination in grades 6 and

above was not intended to resolve the

particular individual claims of the Baxter

Plaintiffs, or of any other employees,

was confirmed by the judge's subsequent

- 42 -

statements and orders. At the hearing on

the application of the Baxter plaintiffs to

intervene in Cooper, a question arose

regarding whether the judge's prior deci-

sion on the class claim might somehow limit

subsequent consideration of the individual

Claims. The trial court expressly rejected

any such construction of its earlier

decision:

I'm not ruling that their rights are

barred -- their individual rights to

make individual claims are barred

by res judicata. You can have several

people who may be entitled to recovery

without tiat evidence proving that

there nad been a classwide discrimina-

tion. 20/

In its order denying intervention, the

district court explained that its earlier

opinion had merely “found no proof of any

Classwide discrimination above grade

Deswen (P.A. 287a).

2U/ Transcript of Hearing of May 8, 1981,

p. 20.

- 43 -

The distinction drawn by the district

court between proof of classwide discrimi-

nation and proof of individual acts of

discrimination is fully supported by the

Gecisions of this Court. In Teamsters

v. United States, 431 U.S. 324 (1977), the

Court held that proof of a pattern or

practice of discrimination requires more

than proof of “the mere occurrence of

isolated or ‘accidental' or sporadic

Giscriminatory acts.” 431 U.S. at 336.

General Telephone v. Falcon noted that

there is a “wide gap" between the occur-

rence of an individual act of discrimina-

tion and existence of a classwide discrimi-

natory practice:

Even though evidence that [a minority

employee] was passed over for promo-

tion when several less deserving

whites were advanced may support the

conclusion that [the employee] was

denied the promotion because of his

national origin, such evidence would

not necessarily justify the additional

- 44 <-

inference ... that this discriminatory

treatment is typical of [the en-

ployer's}] promotional practices....

457 U.S. at 157-58. This Court nas consis-

tently rejected efforts to treat the

absence of classwide discrimination as if

it were an affirmative defense to a claim

Of particular acts of discrimination.

In Connecticut v. Teai, 73 L.Ed.2d 130

(1962), the Court explained:

{[p]etitioners seek simpiy to justify

Giscrimination against respondent on

tne basis of tneir favorable treatment

of ctnher mempers ot respondent's

racial group.... It is clear that

Congress never intended to give an

empioyer a license to discriminate

against some employees on the pasis of

race or sex merely because he tavor-

ably treats other members of tne

employees group.

73 Le~Ed.2d at 141-42. Furnco Construction

Corp. v. Waters, 438 U.S. 567 (1978),

emphasized that "[a] racially balanced work

force cannot immunize an employer from

liability for specific acts of discriimina-

tion." 4368 U.S. at 579.

~ - 45 -

The lower courts have repeatedly

recognized that proof that there is no

classwide discrimination does not preclude

the possibility that there may have been

individual instances of discrimination. In

Dickerson v. United States Steel Corpora-

tion, 582 F.2a 827 (3rd Cir. 1978), the

employer advanced the same aryument offered

by respondent hnere, insisting that the

dismissal of a classwide claim barred

subsequent individual lawsuits by class

members. The court of appeals rejected

that contention:

7

The class claims were not examined as

a mere aggregation of individual

claims. --- Rather, the district

court looked to statistical evidence

offered to support the existence of

a practice or pattern of discrimina-

tion.... The district court's finding

of an absence of class-wide discrimi-

nation is not necessarily inconsistent

with a claim that discrete, isolated

instances of discrimination occur-

CEG.weee Therefore, the court's

decision as to the class-wide claims

of discrimination does not, as a

- 46%

matter of res judicata, bar class

members from asserting individual

Claims of personal discrimination.

582 F.2d at 830-31.

See also Harrison v. Lewis, 559 F. Supp.

943, 947 (D.D.C. 1983); Branham v. General

electric Co., 63 F.R.D. 667 671-71 (M.D.

Tenn. 1974); 18 C. Wright & A. Miller,

Federal Practice and Procedure, § 4455, pp.

473-74/(1982). Several circuits have

eunstadees or upheld claims of Andividual

class members or representatives despite

holding that the evidence did not support a

finding of classwide weUtrisinavion.<”

The distinction repeatedly recognized

by this Court, and correctly applied by the

district court in this case, does not

recreate a situation similiar to the

z/ Ss See, a muskes li v. eae & Swasey

CO., P r. eastny

Vv. Ba Aes Bell Tel. & Tel. Co., 's

(4th Cir. 1980).

= 47 «-

"one-way" intervention which existed prior

to the 1966 amendments to Rule 23. ‘The

actuai aecision at a stage I proceeding

binds the plaintiff class as well as the

aefendant, and that decision has a similar

impact on both parties. If the plaintifts

prevail at stage I of a bifurcated Title

VII hearing, the finding of a classwide

discrimination does not result automatic-

ally in the entry of judgment for eacn

Class member. Rather, that decision merely

creates 4g rebuttable presumption, applied

at the stage II reinedy hearing, that each

class member was the victim of discrimina-

tion. International Brotherhood of Team-

sters v. Uniteda States, 431 0.8. 324,

357-62 and nn. 45-46 (1977). The employer

remains free to attempt to overcome that

presumption and to prove that any particu-

lar class member was not such a victim.

Franks v. Bowman Transportation Co, 424

o 68 «

U.S. 747, 773 ana n. 32 (1976). Con-

versely, a stage I finding of no classwide

discrimination has an unquestionable anda

comparable adverse effect on any class

member thereafter seeking to litigate an

ingivicual claim of discrimination. Such a

class member would ordinarily be barred py

collateral estoppel from seeking to Support

his or her individuai claim by offering

proof of a general pattern or practice of

discrimination. Branhain v. General Elec-

tric Co., 63 P.R.D. 667, 671-72 (M.D. Tenn.

1974); see pp. 63-67, infra.

The opinion of the court of appeals

suggests an alternative basis for its

decision -- that tne Baxter plaintiffs,

having unsuccessfully sought to have their

Claims adjudicatea in the Cooper litiga-

tion, are not entitled to renew that effort

in another lawsuit. Such a rule is implied

vy the following passage:

- 49 -

The plaintiffs seek to escape the bar

createc by the determination in the

Class action suit by arguing that they

were prevented by the District Court

in proving their individual claims in

the class action trial. This argument

would disregard the fact that the

trial was bifurcated by agreement of

the parties. (P.A. 179a-18Uay.

This argument seems to assent, and the bank

appears to argue, that if the Baxter

plaintiffs "lost" in Cooper “in the sense

that they merely failed to obtain a deci-

sion on the merits of their claims,

such a "loss" precludes any further attempt

to obtain a judicial determination of tnose

claims.

Such a rule would be completely at

odds with the long established principles

of res judicata, which preclude litigation

of only those claims previously resolved

"on the merits". Kremer v. Chemicai

Construction Corp., 456 U.S. 461, 466 n. 6

(1982); Federated Department Stores, Inc.

- 50 -

v. Moitie, 452 U.S. 394, 398 (1981). In

addition, such a rule would wreak havoc

with the administration of Rule 23. Every

class member would be forced to intervene

to assure that his or her claim was not

forfeited merely because a court failed to

decide it. No competent plaintiff's

counsel could ever again agree to the

bifurcation of the trial of a class action,

Since bifurcation would carry with it an

intolerable risk that the claims of class

members would be lost merely because they

were not resolved. In light of that

danger, no conscientious district court,

even at the urging of defense counsel,

could ever order bifurcation.

The de facto abolition of bifurcation

would impose an enormous administrative

burden on the federal courts. The proce-

dure expressly approved by this Court in

Franks and Teamsters evolved, and has

@ §1 -

gained widespread acceptance in Title VII

class actions, because it greatly reduces

the time needed to try such cases. As the

lower courts are well aware, the trial of

even a handful of individual claims of

employment discrimination can be as time

consuming as a trial to determine whether

there is a classwide practice of discrimi-

nation affecting an entire plant. In

the instant case, for example, the trial

consumed a total of six days; of this

perfod less than two days of testimony

dealt with the class claim, and over four

Gays of hearings concerned the individual

claims of the named plaintiffs and several

class members. Had each individual claim

of every class member been presented, the

trial would doubtless have lasted several

months rather than a few days. A similar

exponential growth in the length of all

Title VII trials would be precipitated by

«= 69 «

a rule that the failure of a court to find

classwide discrimination at a stage I

hearing automatically precludes iitigation

of all individual claims.

If such a rule was in fact applied by

the court of appeals in this case, the

notice actually sent to class members was

fatally deficient. Tne notice advised

class seubers

[T]ne judgment in this case, whether

favorable or unfavorable... will

include all class members; all class

members will be bound by the judgment

or other determination of this action.

(P.A. 36a)

The unambiguous meaning of this notice was

that the claim of a class member would be

lost only if there were in fact a "determi-

nation" of that claim, and if that determi-

nation were “unfavorable.” Nothing

in the notice in any way suggested that a

class member would somehow be "“"bouna"

because the court did not issue any "judg-

- 53 -

ment or other determination” regarding his

or her claim. .

Tne decision of the court of appeals

to dismiss the claims of petitioner Harri-

son did not rest on the district court's

disposition of the claim of classwide

discrimination in grades 6 and above.

Since Harrison held only a grade 3 posi-

tion, the district court's decision regard-

ing pceente tons out of the higher grades was

not controlling. Neither the district

court's Memorandum of Decision, Findings of

Fact and Conclusions of Law, or Judgment

contain any reference whatever to whether

Or not there was a pattern of discrimina-

tion in promotions out of grade 3 In

nolding that Harrison's claim was barred by

res judicata, the court of appeals asserted

tnat tnat claim "is precluded by our

Getermination on this appeal that there was

no practice of discrimination in pay grade

- 54 -

5 ana below." (P.A. 179a).

But the phrase "in pay grade 5 and

below" masks. a critical distinction

between the actual decision of the Fourth

Circuit and the nature of Harrison's claim.

The issue in fact considered and resolved

by the court of appeals was only whether

the district court erred in finding dis-

crimination in promotions from grades 4

and 5; the district court mace no finding

about, and the court of appeals had no

occasion even to consider, promotion

practices affecting black employees in

grade 3. It is clear that the court of

appeals well understood that the only issue

of classwide discrimination before it

involved grades 4 and 5. In twelve

gdifferent passages the court of appeals

described the district court's finding of

classwide discrimination, in every case

noting that that finding concerned grades 4

- §§ -

22/

and 5. In the course of analyzing

the evidence bearing on whether there was

classwide discrimination, the court of

appeals repeated on more than thirty

occasions that the issue before it was the

sufficiency of $b evidence regarding

e

grades 4 and 5, acd emphasizing at one

point, "[wje are concerned solely with

alleged discrimination in pay grades 4 and

5." (P.A. 99a). The appellate court's

actual conclusion regarding classwide

discrimination is equally unambiguous:

[A] finding of either a prima facie

case or of a pattern of class dis-

22/ P.A. 7a, 15a, 25a, 26a, 27a, 28a,

34a, 55a, 104a, 123a, 124a n.40, 129a.

23/ P.A. 29a, 30a, 35a, 36a, 37a, 38a,

55a, 57a, 58a, 59a, 61a, 62a, 64a, 65a

n.24, 70a, 7la, 72a, 77a, 78a, 79a, n.26,

80a, 82a, 93a, 99a, 103a, 104a, 105a,

108a, 110a, 111a, 113a, 114a, 116a, 117a,

122a, 124a, 126a, 127a, 128a.

= 86 <

crimination in promotions out of pay

grades 4 and 5 or a Finding of Fact of

such a pattern is not supported by

any substantial evidence..... We

accordingly reverse the District

Court's Findings and Conclusions of

Class aiscrimination in promotions out

of pay grades 4 and 5.... (PsA.

128a-129a).

Now!.ere in the appellate opinion is there

the slightest suggestion that the panel was

considering, Or even aware of, any allega-

tion in Cooper of classwide discrimination

in promotions out of pay graue 3,2 Accorc-

ingly, nothing in that record can in

any way foreclose cgnsideration of Harri-

son's claim in the Baxter litigation.

(2) The District Court in Cooper

Expressly Reserved the Right of

the baxter Plaintiffs to Bring

This Litigation

24/ The few references in tne court's

Opinion to pay grade 3 contain no sugges-

tion that the court believed there was any

such allegation. (P.A. 3a, 30a, 37a, 98a,

118a, 153a).

«a §7 =

The procedural history of this case

presents an additional basis for rejecting

the defendant's contention that the deci-

sion in Cooper requires 2 tac of the

complaint in Baxter. In opposing the

attempt of the Baxter plaintitfs to inter-

vene in Cooper, the defendant insisted that

intervention was simply unnecessary since

the Baxter plaintiffs were free to File

their own lawsuit. In the Defendant's

Response to Motion to Intervene, the bank

argued:

[A]pplicants ... can still go to the

EEOC office and file all the charges

they desire.... Therefore, there is

no way there will be any prejudice to

the applicants in denying their

motion, since they can pursue any

individual claims they have in separ-

ate proceedings. (P.4)

At the oral argument on that motion in the

district court, the defendant reiterated

this contention:

COURT:

4k.

MR.

HODGES:

HODGES:

= §8 -

Mr. Hodges [counsel for

defendant], are you

saying that they could

bring a separate

suit within whatever

the time would be

following the dismissal

of this case?

I pelieve they could if

they wanted to pursue

their individual claims

and if the statute was

tolled and whatever was

not barred by the

Statute of limitations,

then they could pursue

separately....

xen t

--- [T)hey could go

file charges with

the EEOC, file a case.

under 1981, put they

could not participate

any lonyer in this

case. They are not

entitled simply to go

into Stage 2 to pursue

their claims. They've

got to do what any

other Plaintiff with a

complaint has got to do

and that is go through

the proper procedure.

x aenerk

- §9 -

MR. HODGES: If they've got indi-

vidual claims, let

tnem file it. Let then

go through the proper

procedures.25/

A mere 55 Gays after thus insisting that

the Baxter plaintiffs could and should file

their own suit, the defendant moved to

dismiss that lawsuit as barred by res

PA 26/ Z

jugicata. In the court of appeals

the detendant expressly disavoWed the

position it had taken in Cooper, explaining

"The Bank did at the time erroneously

assert that individual claims could be

27

pursued.” But having thus prevented

the Baxter plaintiffs from litigating tneir

claims in Cooper, the bank was necessarily

25/ Transcript of Hearing of May 8, 1981,

pp. 7, 6, 16. z

26/ J.A 71a. The defendant's Motion to

Dismiss was filed in Baxter on July 2,

1981.

27/ Reply Brief of Appellant, No. 82-1259

(4th Cir.), pe. 2. :

- 60 -

estopped from opposing the filing of the

Separate lawsuit wnich the bank itself naa

advocated.

The argument advanced poy the bank in

Opposing the motion to intervene was

expressly adopted by the dis*rict court in

Genying intervention. During the argument

on that motion the district judge made

Clear that his decision in Cooper left the

Baxter plaintiffs free to file a new

action:

COURT: Mr. Hodges is agreeing

with [the plaintiffs]

tnat ultimately they can

éll come in here. He

Says they are entitled

to have the EEOC function

in their cases before

they have a standing to

be in this case, and I

think he's right.

zs ne 2

COURT: I'm going to deny the

motion without prejudice

to the individual rights

ot the four would be

intervenors to maintain

a separate action or to

file a separate claim....

MR. CHAMBERS [counsel for plain-

tiffs): Your Honor,

would that without

prejudice be also with

respect to their rights

under 1981, because we

will move tomorrow

morning for a sepérate

lawsuit.

COURT: Sure, without prejudice

to any rignts they have

under 1981 or under the

Equal Employment Act.238/

The district court's order denying inter-

vention emphasized:

I see no reason why, if any of the

would be intervenors are actively

interested in pursuing their claims,

they cannot file a Section 1981

Suit next week, nor why they could not

file a claim with EEOC next week.

(P.A. 288a).

28/ Transcript of Hearing of May 8, 1981,

pp. 12, 17-18. (&mphasis added).

- 62 -

The district judge's decision is by itself

dispositive of the res judicata defense.

Res judicata is never applicable if a

plaintiff's claim in an earlier action was

rejected “without swasudénse™ ee if the

court in the first action expressly re-

served the plaintiffs right to maintain a

__ 30/

second action.

29/ Restatement of Judgments, Second,

§20(1)(b): "A personal judgment for the

defendant, although valid and final, does

not bar another action by the plaintiff on

the same claim ... (b) when ... the court

directs that the plaintiff be nonsuited (or

that the action be otherwise dismissed)

without prejudice...." (1982).

30/ Restatement of Judgments, Second,

§26(1)(b): "(1) When any of the following

circumstances exists, the general rule ..

does not apply to extinguish the claim and

++. the claim subsists as a possible basis

for a second action by the plaintiff

against the defendant: ... (b) The court

in the first action has expressly reserved

the plaintiff's right to maintain the

second action....” (1982).

= 63 -

III THE APPLICATION OF COLLATERAL

ESTOPPEL TO THIS CASE

—_———— =

Although the rejection of a claim of

classwide discrimination does not preclude

the subsequent litigation of claims of

individual class members, it will ordinar-

ily restrict the evidence and issues on

which such subsequent litigation may be

based. "Under collateral estoppel, once an

issue is actually and necessarily de-

termined by a court of competent jurisdic-

tion, that determination is conclusive in

subsequent suits based on a different cause

of action involving a party to the prior

litigation." Montana v. United States, 440

U.S. 147, 153 (1979). As with res judi-

cata, of course, the bar of collateral

estoppel must be applied with care. "se

must be confined to situations where the

matter raised in the second suit is iden-

tical in all respects with that decided

= 64 ~

in the first proceeding and where the

controlling facts ang applicable legal

principles remain unchangea." Commissioner

v. Sunnen, « 333: a. 599-600 (1948).

"Te there be any uncertainty on this head

in the record -- as, for example: if it

appear that several distinct matters may

nave been litigated ... without indicating

«++ upon which the judgment was rendered --

the whole subject matter of the action will

oe at large....” Russell v. Place, 94

U.S. 606, 608 (1876).

with regard to petitioner Harrison, it

is clear that nothing was litigated or

Gecided in the Cooper litigation regarding

whether or not the bank engaged in a

pattern and practice of discriminating

against blacks in promotions out of pay

grade 3. Harrison should thus be free on

remand to seek to prove, in support of nis

Ay

- 65 -

individual claim, that such a pattern and

practice existed.

The other Baxter plaintiffs, who are

in pay grades 6 and above, are bound by the

trial court's decision in Cooper that any

pattern or practice of discrimination in

those grades was not "pervasive enough for

tne court to order relief." But while

it is apparent that this passage did not

adjudicate the individual claims of any of

the Baxter plaintiffs, it is unclear how

widespread or uncommon the strict court

actually concluded discrimination was in

those pay grades. A frequency of discrimi-

nation insufficient to justify classwide

relief might still pe adequate to provide

Significant evidentiary support for indi-

vidual discrimination claims. Since

the Baxter claims are to be tried by the

same judge who decided Cooper, the district

court will be in a4 position on remand to

- 66 -

resolve, based on the intended meaning of

the original Cooper decision, the extent to

which the Baxter plaintiffs may introduce,

in support of their individual discrimina-

tion claims, evidence of alleged acts of

discrimination involving other black

employees in pay grades 6 and above.

The district court in this case found

that the bank had engaged in intentional

racial discrimination in denying promotions

to two of the named plaintiffs, Sylvia

Cooper and Constance Russell. (P.A.

192a-193a). It concluded in particular

that Cooper, who was in pay grade 7, had

been unlawfully denied a promotion to grade

8, while Russell, a grade 6 employee, had

been illegally rejected for a promotion to

grade 7. The court of appeals reversed

both of these findings of discrimination.

(P.A. 129a-171a). But the opinion and

panel which overturned those findings also

» 67 -

erroneously assumed, as is apparent from

the discussion of the Baxter plaintiffs,

that the trial court had found there was no

discrimination at all at the bank in grades

6 and above. The court of appeals' mis-

reading of the district court's holding on

the question of classwide discrimination in

grades 6 and above necessarily tainted its

rejection of the claims of Russell and

Cooper that they were discriminatorily

denied promotions out of grades 6 and 7

respectively. Accordingly, the Fourth

Circuit's decision dismissing the claims of

Cooper and Russell should be vacated and

remanded for reconsideration in light of

the correct construction of the trial

court's decision on the classwide claims.

CONCLUSION

The judgment and opinion of the Fourth

Circuit, insofar as they hold that the

Claims of the Baxter plaintiffs are barred

=- 68 -

~~

by res judicata, should be reversed. The

judgment and opinion regarding plaintiffs

Cooper and Russell should be vacated and

remanded for further consideration in light

of this Court's opinion.

Respectfully submitted,

J. LeVONNE CHAMBERS

JOHN T. NOCKLEBY

Chambers, Ferguson, Watt,

Wallas & Adkins, P.A.

951 S. Independence

Boulevard

Charlotte, North Carolina

28202

JACK GREENBERG

O. PETER SHERWOOD

CHARLES STEPHEN RALSTON

ERIC SCHNAPPER*

16th Floor

99 Hudson Street

New York, New York 10013

(212) 219-1900

Counsel for Petitioners

*Counsel of Record

Ps