Respondents Brief — Devlin v. Scardelletti

0. 01- C) H

No. 01-417 P ae E

FP ¥RLED

IN THE iim

Supreme Court of the Binited Stdtts*? |

ROBERT J. DEVLIN, a 7

Petifioner.

Vv.

ROBERT A. SCARDELLETTI, Trustee of the Transportation

Communications International Union Staff

Retirement Plan, ef a/.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals

for the Fourth Circuit

BRIEF FOR RESPONDENTS

WILLIAM F. HANRAHAN LAURENCE GOLD

1701 Pennsylvania Avenue, N.W. Counsel of Record

Suite 1200 ANDREW D. ROTH

Washington, D.C. 20006 805 Fifteenth Street, N.W.

Counsel for Respondents Suite 1000

Robert A. Scardelletti, Trustee, et al. Washington, D.C. 20005

BARBARA KRAFT (202) 842-2600

1717 Massachusetts Avenue, N.W. Counsel for Respondents

Suite 704

Washington, D.C. 20036

Counsel for Respondent

Anthony P.. Santoro

Of Counsel

DAVID L. SHAPIRO

1575 Massachusetts Avenue

KENNETH M. JOHNSON Cambridge, MA 02138

228 West Market Street

P. O. Box 2888

Greensboro, NC 27402

Counsel for Respondent

George Thomas DeBarr

WiLSON-EPES Pena 00. INC. — (202) 789-0096 — WASHINGTON, D.C. 20001 - a a

‘

5 hed

BEST AVAILABLE COPY

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES .............cccccccsessesesseeeseeeseees il

STATEMENT OF THE CASE............ccccscssssssseesseeeenes l

SUMMARY OF ARGUMENT ............ccccsccsssssesseeeeeseees 6

GIT cnntetenmnniiepinniteycintemimnnsseneminnnnnen 9

I. PETITIONER’S “PARTY WITH A RIGHT

TO APPEAL” ARGUMENTS ..............ccesseeeee 9

es: PD ccttseriteermnemeeenmensmnennenine 10

B. Petitioner’s “Party Directly Bound By The

eT” CG nccnecnnimetinmmnmanpeen 14

C. Petitioner’s “Party To The Case” Theory .... 25

Il. PETITIONER’S POLICY ARGUMENTS ....... 28

Ill. PETITIONER’S INTERVENTION ARGU-

PSEITT ciccareensssscsmnesnemrsesensintrenseennennienemnersesvernesvess 33

SP ercnaninncrereninicevenstenniensvusnnvenqnsessecssepiemeenn 37

\

(i)

TABLE OF AUTHORITIES

CASES Page

Blossom v. Milwaukee Railroad, 68 USS.

CE WER.) GS COGS cncrsesitesnisitonssnncaciieiiiataiiaianiin passim

Crawford v. Equifax Payment Service, Inc., 201

FS S77 (FR Cae, SEED wcesseneisercinitetinianiansiiaenaiae 32

Croyden Associate v. Alleco, Inc., 969 F.2d 675

I Cae, BF Dacercesseyscesssessnensintainainsidionaeaaiads 26

Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1998),

affd by equally divided court sub nom.,

California Pub. Employees Retirement Sys. v.

Felzen, S25 U.S. 315 (1999). ..cccccccccssccccesccssecesee 26

Guthrie v. Evans, 815 F.2d 626 (11th Cir.

ESS 7 ) cacecersesevesssenenennensiinnneaniisaiuaneniniasinaannnnnnnn 23

Hansberry v. Lee, 311 U.S. 32 (1940) .......ccccseeeee passim

Hinckley v. Gilman, Clinton, & Springfield

Railroad Co., 94 U.S. 467 (1876).....c.ccssesseeees 12, 13

Hovey v. McDonald, 109 U.S. 150 (1883)............. 13

Indianapolis Sch. Comm'rs v. Jacobs, 420 U.S.

BAS CED 7S piccecesetersssepsinententninitieenieaaeiaaanan 21

Johnson v. Manhattan Railway Co., 289 U.S. 479

( BSRZS) ..ecessccomsesmenenpenieennbinniininiaiaeiaae 13, 14

Karcher v. May, 484 U.S. 72 (1987).......cscccsssesseees passim

Kremens v. Bartley, 431 U.S. 119 (1977)........cc0000 20, 21

Marino v. Ortiz, 484 U.S. 301 (1988).............0..00. passim

Martin v. Wilks, 490 U.S. 755 (1989) ........:ccceseeeees 17, 19

Matsushita Electric Industrial Co., Ltd. v.

Epstein, 516 U.S. 367 (1996).........cccccsecsesseseeeees 18, 19

Minnesota Co. v. St. Paul Co., 69 U.S. (2 Wall.)

GD (BOGS) .nceresecsenssinneniteinstincsantiiaieiaen 12, 13

In re Navigant Consulting, Inc. Securities

Litigation, 275 F.3d 616 (7th Cir. 2001)............ 29

New York v. Reebok Int'l Ltd., 96 F.3d 44 (2d

Ce. SDTED .ceccccessssosienssnnnnssnnmnteniieiiieiannianna 24

ili

TABLE OF AUTHORITIES—Continued

Page

Office & Prof | Employees Int'l Union, Local 2 v.

FDIC, 962 F.2d 63 (D.C. Cir. 1992)......c0eeeeeee 24

Owasso Independent School District v. Falvo,

534 U.S.__, 122 S. Ct. 934 (2002)..........-00008 35

Pennoyer v. Neff, 95 U.S. 714 (1878) .......cccceeeeeees 19

Phillips Petroleum Co. v. Shutts, 472 U.S. 797

IIT sstcsicanilendetpeepaommgpapnssceanantesmneessesssusessaceeesoors 18, 19

Richards v. Jefferson County, 517 U.S. 793

CF cccncecnsenscssssserscsensessscesscscsscesessssveessscossesoscese passim

Sage v. Railroad, 96 U.S. 712 (1878) ........-0-esss000 13

Shaw v. Toshiba Am. Info. Sys., Inc., 91 F.

Supp.2d 942 (E.D. Tex. 2000) ..........ceeeeeeeereeees 31

Singleton v. Wulff, 428 U.S. 106 (1976) .........000000 25

Smith v. Swormstedt, 57 U.S. (16 How.) 288

a 18, 19

Sosna v. lowa, 419 U.S. 393 (1975) ......cecceeeseereees 20, 21

In re Synthroid Marketing Litigation, 264 F.3d

712 CBs Cas. BID) nccccccccecccecccsscccccccccsccccscccccsesees 32-33

Toyota Motor Manufacturing, Inc. v. Williams,

534 US. , 122 S. Ct. 681 (2002).........c000+ 35

Trustees v. Greenough, 105 U.S. 527 (1882) ........ 13

United Airlines, Inc. v. McDonald, 432 U.S. 385

STII Tt Pccdedectensnttagnecscccsnsessnssscssncovesoessssssesssssosscooese 30

United States Catholic Conference v. Abortion

Rights Mobilization, Inc., 487 US. 72

(a 12

Williams v. Morgan, 111 U.S. 684 (1884)............. 13

Yee v. City of Escondido, 503 U.S. 519 (1992)...... 36

STATUTES AND RULES

Fed, R. Civ. BP. 23 .cccocccccccsccoscscccccsccccssvccccscccssseseseoes passim

Fed. RB. Civ. P. 2368) ..ccccscccscoccscccsscocccccccccecsovesseesees 14

Fed. R. Civ. P. 23(C)(4).....ccccscsssereserseeerseeeseeeneeees 10

iv

TABLE OF AUTHORITIES—Continued

Page

Peal Sats SPUD I Mcsisciahcnerereciicenenasecleetaieetaaniatainaes 27

ee 8, 26, 27, 33

8 SRI ae ny Seen eS passim

ee ee Pe I icrtccretntinicnneinamntentinnieetens 15

EERE AS SP Re ORE 15

8 Kk TERE ee Ne Sone ee 15

ee a es a hicehicaaiekiehi iced a ih catteni 15

I Ak 5 Denses 15

re rn aii ii 15

I ie 15

Pee tin WE GUI cestseiichicnsethiailiiniicinseciipeaitinianianta 15

8 15

Sh Spears ETI Miarccsicctcinsvinsiniinsvsiatitaeibbatietaniiteatlinti 35, 36

MISCELLANEOUS

Advisory Committee Notes on Rule 24................. 30

Restatement (Second) of Judgments § 34(2)

Gear nsccenenssstitinicspimnnteninimitipaiiaiiilibeinpaiitaeamess 16

Restatement (Second) of Judgments § 42

CUE 0 Go centecetnnesitscnntitntentitnemn 16

David L. Shapiro, Class Actions: The Class as

Party and Client, 73 Notre Dame L. Rev. 913

Gee oarcsssensnscatnctnsnnenaguiabnttiinnsatiatiiaiitessciatensiniaeimees 22

ISA Wright, Miller & Cooper, Federal Practice

& Procedure, § 3902.1 (2d ed. 1991)..........c.0000 25

18 Wright, Miller & Cooper, Federal Practice &

Procedure, §§ 4454-60 (2d ed. 1991)... 24

BRIEF FOR RESPONDENTS

The Brief for the Petitioner sets out the opinions below, the

basis for this Court’s jurisdiction, and the statute involved.

Pet. Br. at 1-2.

STATEMENT OF THE CASE

The certiorari petition in this case raises the following

‘Question Presented:

Whether a class member who, upon receiving notice of a

proposed class action settlement, objects and moves to

intervene has standing to appeal the district court’s

approval of the settlement? [Pet. i.]

That “right to appeal” question arises out of a declaratory

judgment class action lawsuit by Robert A. Scardelletti, et al.,

as trustees of the Transportation Communications Inter-

national Union Staff Retirement Plan against George DeBarr

and Anthony Santoro, Sr., individually and as representatives

of two separate subclasses; the class action settlement therein;

and the District Court’s approval of that settlement. The

Court of Appeals succinctly and accurately stated the nature

of the underlying class action case and of the relevant

proceedings in the District Court. In the first regard the Court

of Appeals stated: .

The Transportation Communications International

Union (TCU) is a labor union representing approxi-

mately 85,000 employees, mostly in the railroad and

service industries. The Plan is a defined benefits

pension plan that covers TCU’s officers and employees.

In October 1990, the former trustees recommended that

the Plan be amended to add a COLA adjustment equal to

the increase in the COLA index for every three years

after a participant’s retirement. As a result of the

2

amendment, which became effective on January 1, 1991,

the existing retirees received increases in their pensions

based upon the number of years they had been retired.

In late 1991, TCU elected new officers and selected

the new trustees to replace the former trustees. In 1993,

however, it was revealed that the former trustees had

relied upon an incorrect valuation of the Plan’s liabilities

in deciding to enact the COLA amendment and that

enactment of the COLA amendment had increased the

Plan’s liabilities by approximately $20 million. The new

trustees believed that they could not rescind the COLA

benefits across the board because, under ERISA, they

were prohibited from amending the Plan to reduce

accrued benefits. See 29 U.S.C.A. § 1054(g)(1) (provid-

ing that accrued benefits “may not be decreased by

amendment of the plan”). Accordingly, they amended

the Plan to “freeze the COLA as it pertain[ed] to the

future service accrual for active employees,” . . ., thereby

“eliminating COLA increases based on future service

under the Plan.” ... The amendment did not, however,

eliminate the COLA benefits for participants who were

retired as of January 1, 1991.

In January 1995, the new trustees filed suit against the

former trustees in the United States District Court for the

District of Maryland seeking damages and an equitable

decree declaring the COLA amendment void as a

product of fiduciary breaches. See Scardelletti v. Bobo,

897 F.Supp. 913 (D.Md. 1995); Scardelletti v. Bobo, No.

JFM-95-52 (D.Md. Sept.8, 1997). The district court

found in favor of the new trustees, agreeing that the

former trustees had breached their fiduciary duties. The

district court also concluded that the 1991 COLA benefit

was not an accrued benefit for pre-1991 retirees such as

Devlin because it had not been received prior to their

ee pe

3

retirement.° In accordance with the district court’s

decision, the new trustees amended the Plan and

rescinded the COLA for participants who had retired

prior to January 1, 1991 (the 1997 amendment).

® The district court originally concluded that the COLA

benefit was an accrued benefit for pre 1991 retirees. See Scar-

delletti v. Bobo, 897 F. Supp. 913, 916 (D.Md. 1995). As noted

above, accrued benefits generally cannot be eliminated by

amendments to the plan. See 29 U.S.C.A. § 1054(g)(1). The

district court, with little elaboration and presumably relying upon

§ 1054(g), stated that “[u}nfortunately, the current trustees are

caught between a rock and a hard place to remedy this situation

because ERISA prohibits amendments of the Plan repealing an

automatic COLA.” Bobo, 897 F. Supp. at 916. It later recon-

sidered, however, stating that “if an employee works with the

expectation that she is earning, and will receive, a pension bene-

fit, an employer may not later decide not to give her the benefit

that it has promised and she has earned. In the present case, Plan

participants who retired prior to 1991 did not work with the

expectation that they would receive a COLA. Thus, the COLA

was not an accrued benefit.” See Scardelletti v. Bobo, No. JFM-

95-52, at 18-19 (D.Md. Sept.8, 1997).

[Pet. App. A4-A6 (citations and other footnotes omitted). ]

With regard to the proceedings in the class action case, the

Court of Appeals added:

On October 14, 1997, the new trustees filed the

present action as a class action in anticipation of

challenges to the 1997 amendment, seeking a declaration

that the 1997 amendment was binding on all Plan

participants or, in the alternative, that the 1991 COLA

amendment was void as to all participants. The new

trustees’ original complaint named Devlin as a class

representative for the Retiree Subclass because he

previously had been active in challenging the new

trustees’ efforts to eliminate the COLA benefits. Devlin,

however, refused to accept the position. The new

trustees, therefore, named a new representative for the

Retiree Subclass, Anthony Santoro.

4

On February 9, 1999, the [D]istrict [CJourt for the

District of Maryland conditionally certified the class

pursuant to Federal Rule of Civil Procedure 23(b)(1) and

divided it into two subclasses: those who would benefit

from the removal of COLA (the Active Subclass), and

those who would benefit from the retention of COLA

(the Retiree Subclass). In May 1999, with the assistance

of a magistrate judge, the new trustees and the class

representatives agreed upon a settlement under which

the COLA benefits would be eliminated in exchange for

certain other benefits. Under the proposed settlement, it

was agreed that the [D]istrict [C]ourt would enter a

consent order declaring the 1991 COLA benefit void at

its inception.

In the meantime, Devlin and four other retirees were

pursuing actions in the Southern District of New York

alleging claims under the ADEA and ERISA against

TCU relating to their death benefits and medical

benefits. They also included a claim relating to the 1997

Amendment, arguing that the 1997 Amendment was

motivated by age discrimination. See Devlin v. Trans-

portation Communications Int'l Union, 175 F.3d 121,

126 (2d Cir. 1999). On April 13, 1999, the Second

Circuit affirmed the Southern District of New York’s

dismissal of Devlin’s COLA claim, stating that “[t}he

exact COLA issue that the appellants are pursuing ... is

being addressed by the district court in Maryland.... It

seems eminently sensible that the Maryland district court

should resolve fully the COLA amendment issue .. . .”

Shortly after the Court of Appeals for the Second

Circuit affirmed the dismissal of Devlin’s challenge to

the 1997 Amendment, Devlin became interested in the

class action pending in the [District [CJourt in

Maryland. On April 20, 1999, Devlin’s counsel sent a

letter to the [District [CJourt informally seeking to

intervene in the class action. On May 12, 1999, Devlin

sent another letter through counsel to the [District

[Cjourt repeating his informal request to intervene and

5

informing the [D]istrict [Cjourt that- Devlin was “still

await[ing] a response from Your Honor.” . . . For

whatever reason, Devlin did not formally move to

intervene, nor did he take any further action to follow up

on these letters, until September 1999.

On August 27, 1999, the Trustees filed a motion for

preliminary approval of the settlement in the District of

Maryland. On September 10, 1999, Devlin finally

sought leave to intervene pursuant to Federal Rule of

Civil Procedure 24(a) and (b). At the November 12,

1999 fairness hearing, the [District [C]Jourt denied

Devlin’s motion to intervene as “absolutely untimely.”

. . . It then examined the considerations leading to

the settlement, heard Devlin’s objections, and approved

the settlement. [Pet. App. A7-A9 (citations and

footnotes omitted). ]

On appeal to the Fourth Circuit, Petitioner made two

separate “right to appeal” arguments. Petitioner’s first argu-

ment was “that he was entitled to intervene before the

[D]istrict [C]Jourt under Federal Rule of Civil Procedure 24(a)

and (b) to challenge the settlement,” Pet. App. A4, and “that

the [D]istrict [CJourt erred in denying his motion to inter-

vene,” id. Al0. And, Petitioner’s second argument was “that

even if the [D]istrict [CJourt properly denied his motion to

intervene, he is nevertheless entitled to appeal from the

[D]istrict [C]ourt’s final order approving the settlement,” id.

A4, in that “he has standing to challenge the settlement by

virtue of his objections at the fairness hearing and his

unsuccessful attempt to intervene, id. A1l4.

The Fourth Circuit unanimously rejected Petitioner’s

appeal of the District Court order denying his motion to inter-

vene. See Pet. App. A10-A14 (Part II of Court of Appeals’

opinion), A30 (Michael, J., concurring in that Part II ruling).

The Fourth Circuit then went on, by a 2-1 vote, to reject

Petitioner’s second argument—that his right to appeal could

6

be based solely on his status as an objector to the settlement.

See id. Al4-24 (Part III of Court of Appeals’ opinion),

A30-34 (Michael, J., dissenting from that Part III ruling).

SUMMARY OF ARGUMENT

In Karcher v. May, 484 U.S. 72 (1987), and Marino v.

Ortiz, 484 U.S. 301 (1988), this Court reaffirmed and applied

the well-settled general rule that only parties have a right to

appeal from an adverse final judgment. Infra pp. 9-10.

Petitioner makes two arguments as to why he is a “party” for

purposes of the Karcher/Marino “right to appeal” rule—both

of which are wrong.

1. (a) At the most basic level, the persons who are the

parties who litigate a federal court case are the named

plaintiff(s), the named defendant(s), and the persons who

become named parties by intervention, substitution, or third-

party practice. Beyond that, federal court cases can generate

ancillary legal disputes/ancillary proceedings in which a third

person is the movant or the respondent and an adverse district

court ruling runs against, and directly binds, that third person

as an individual. In that situation, this Court has recognized

in, e.g., Blossom v. Milwaukee Railroad, 68 U.S. (1 Wall.)

655 (1863), that the third person movant/respondent in the

ancillary proceeding who is subjected to an adverse final

order/judgment in that proceeding is a party with a right to

take an appeal therefrom. /nfra pp. 10-14.

(b) Petitioner’s main “party” theory—which invokes

Blossom v. Milwaukee Railroad, supra, and the thin line of

like cases in this Court—is that every individual member of a

properly-certified class in a Rule 23 class action case is “a

party directly bound by an adverse judgment” in the case with

a right to appeal therefrom. But the Blossom ee and

result are of no aid to Petitioner.

On first principles of the law of judgments, the only

individual members of a certified class who are “parties

oe ae o

7

directly bound by the judgment” in a Rule 23 class action

case are the named representative parties who appear—either

originally or through intervention, substitution or third-party

practice—to litigate the claim(s)/defense(s) set out in their

complaint/answer. In contrast, as the Court most recently

explained in Richards v. Jefferson County, 517 U.S. 793

(1996), there is a “general consensus ‘in Anglo-American

jurisprudence’” that persons—including the numerous

persons who are members of a certified class in a Rule 23

class action—who have not appeared on their own behalf to

litigate their own claim(s)/defense(s) are “‘not bound by a

judgment in personam.’” Id. at 798 (quoting Hansberry v.

Lee, 311 U.S. 32, 40 (1940)) (emphasis added). Such persons

are bound solely because, and to the extent that, they are

members of a class that has been fairly and adequately

represented by the named representative parties to the case.

Infra pp. 14-18.

All of Petitioner’s attempts to show otherwise through

snippets of language drawn from various opinions of this

Court in the class action context do nothing to put those

principles into question. /nfra pp. 18-22.

It is also to the point that Petitioner’s theory—which

transmutes a class action from one commenced and litigated

in the district court by a representative party to one

commenced and litigated in the court of appeals by as many

of the represented class members as -choose to take an

appeal—is entirely inconsistent with, and destructive of, the

very purpose of the Rule 23 process for the fair and effective

litigation of class action cases. Infra pp. 22-24.

2. Petitioner’s secondary “party” theory is that in a

Rule 23 class action case those class members who make a

timely objection to a proposed settlement are, on that basis,

“parties to the case” witha right to appeal the judgment

approving the settlement.

(a) This argument cannot be squared with this Court’s

holding in Marino v. Ortiz, supra, that persons who presentec

their objections to a proposed settlement of a Title VII class

action case but did not intervene in the case “were not parties

to the underlying [class action] lawsuit” with a right to appeal

from the judgment approving the settlement. 484 U.S. at 304

(emphasis added). /nfra pp. 25-26.

Petitioner fails in his attempt to distinguish Marino on the

ground that class members who present objections to a

proposed class action settlement do so “as a matter of right,

pursuant to Rule 23(e),” whereas non-class-members (like the

objectors in Marino) who present objections to such a

settlement do so “as a matter of [judicial] grace.” Pet. Br. at

19 (emphasis in original). There is nothing in Rule 23

(including the cited Rule 23(e)), or in any other Federal Rule,

providing that class members who present objections to a

proposed settlement of a class action case become “parties to

the case,” but that other objectors do not. /nfra pp. 26-27.

(b) Nor is there any substance to the suggestion,

implicit in Petitioner’s Question Presented, that even if a class

member does not become a party to the case by making an

objection to the approval of a class action settlement, a class

member does become a party by making an objection and

moving to intervene. /nfra p. 28.

3. Petitioner’s subtext is that without regard to whether

objecting class members are parties on one or both of his

“party” theories, there are sound policy reasons for allowing

appeals by objecting class members from district court

judgments approving class action settlements. This

suggestion for re-writing the “right to appeal” rule is

fundamentally unsound.

(a) The Karcher/Marino rule—and its corollary here

that only third persons who have become parties to a class

action through Rule 24 intervention have the right to appeal

from a judgment approving a settlement of that action—has

9

the benefits of formal precision and a high degree of certainty

that are particularly desirable in a rule of civil proce-

dure; Petitioner’s suggested policy standard does not. Infra

pp. 28-29.

(b) Petitioner bottoms his policy argument on the

proposition that the procedure for becoming a party to a

class action case afforded those who object to a pro-

posed settlement—a Rule 24 motion to intervene—is

unduly burdensome. But that is not so. A Rule 24 inter-

vention requirement imposes at most a minimal burden on

objecting class members, as against the far greater burden on

an appellant inherent in the taking of and prosecution of an

appeal from the approval of a class action settlement. And,

by any measure, the benefits of an intervention requirement in

this context more than balances that minimal burden. /nfra

pp. 29-33.

4. Petitioner also seeks to raise the question of whether

the District Court’s denial of Petitioner’s motion to intervene

and the Court of Appeals’ unanimous affirmance of that

denial were in error. But that question is not the single

question set out in the certiorari petition nor a question fairly

included therein, and is therefore not a question before this

Court. Infra pp. 33-36.

ARGUMENT

I. PETITIONER’S “PARTY WITH A RIGHT TO

APPEAL” ARGUMENTS

In Karcher v. May, 484 U.S. 72, 77 (1987), the Court

reaffirmed the “consistently applied . . . general rule that one

who is not a party or has not been treated as a party to a

judgment has no right to appeal therefrom.” And, in Marino

v. Ortiz, 484 U.S. 301, 304 (1988), the Court added:

The rule that only parties to a lawsuit, or those that

properly become parties, may appeal an adverse

judgment, is well settled. See, e.g., United States ex rel.

10

Louisiana v. Jack, 244 U.S. 397, 402 (1917); Fed. Rule

App. Proc. 3(c) (“The notice of appeal shall specify the

party or parties taking the appeal”).

Petitioner makes two claims to a party status that supports

a right to appeal the District Court judgment approving the

class action settlement in this case.

First, and foremost, Petitioner argues that as a member of 4

certified class in this Rule 23 Fed. R. Civ. P. class action

case, he is “a party directly bound by the judgment” approv-

ing the settlement with the right to appeal that judgment.

Second, Petitioner argues that as a class member who, on

the publication of notice of the proposed settlement, made a

timely objection to the settlement, he is, on that basis, “a

party to the case” with the right to appeal the judgment

approving the settlement. '

Neither of Petitioner’s “party” theories is sound.

Accordingly, under Karcher and Marino, Petitioner has no

right to appeal from the District Court judgment in this case.

A. Party Status

At the most basic level, the persons who are parties to a

federal court case are:

(i) the named plaintiff(s) who initiate the lawsuit

through a complaint, and who are entitled to pursue

the claim(s) stated therein in the manner provided

in the Federal Rules;

(ii) the named defendant(s) who are properly served

with the complaint, and who are entitled to state and

maintain defense(s) to the plaintiff(s)’ claim(s) in

the manner provided for in the Federal Rules; and

' To simplify the terminology used here, the “subclass” of retirees of

which Petitioner is a member will be referred to (as in Petitioner's brief)

as a “class.” See Fed. R. Civ. P. 23(c)(4).

1]

(iii) “{oJ}ne who is not an original party to [the] lawsuit,

but who, in the manner provided for in the Federal

Rules, “become[s] a party by intervention, substitu-

tion, or third-party practice,” Karcher, 484 U.S. at

77, and who is entitled to pursue her legal position

in the manner provided for in the Federal Rules.

To the foregoing, Petitioner would add:

Under this Court’s settled precedents, “party” status for

purposes of the right to appeal is not limited to

individually identified or “named” parties to a case, as

some courts assume. Instead, appellate “party” status

extends to all persons over whom a district court

exercises jurisdiction, who are directly bound by a final

order or judgment of that court, and hence who are

“parties” to the particular final decision from which

they appeal. ([Pet. Br. at 17 (emphasis in original)

(footnote omitted). ]

It is not intuitively obvious that the term “party” encom-

passes a person who is not a “‘named’ part[y] to a case.” /d.

(emphasis in original). But lawsuits between the named par-

ties to a case can and do generate ancillary legal disputes/

ancillary proceedings in which: (i) a third person is the

movant or the respondent (like a named plaintiff/named

defendant in the underlying lawsuit); and (ii) an adverse

district court ruling runs against, and directly binds, that third

person as an individual (like a dispositive ruling for/against a

named party in the underlying lawsuit). And, in that

situation, this Court has recognized that the third person (like

a named party subject to an adverse final order/judgment) is a

party with a right to take an appeal from the adverse final

order/judgment in the ancillary proceeding that runs against

and directly binds that person as an individual.2 The Court

has done so in the following cases:

”

? While we agree with Petitioner on the basic point of the cited cases,

we disagree that those cases constitute “[t]wo general lines of precedents.”

12

(i) Blossom v. Milwaukee Railroad, 68 U.S. (1 Wall.)

655 (1863), recognizing the right of a bidder on

foreclosed-upon property—not a named party to the

original foreclosure action—to appeal from the

district court’s order denying the bidder’s petition

claiming a legal entitlement to the property, see Pet.

Br. at 20-21;

(ii) Hinckley v. -Gilman, Clinton, & Springfield

Railroad Co., 94 U.S. 467 (1876), recognizing the

right of a court-appointed receiver—not a named

party to the original foreclosure action—to appeal

from the district court’s order requiring the receiver

to pay money into the court registry, see Pet. Br.

at 18; and

(iii) United States Catholic Conference v. Abortion

Rights Mobilization, Inc., 487 U.S. 72, 76 (1988),

recognizing the right of third person witnesses, not

named parties to the case, to appeal from a

contempt citation entered by the district court

against the witnesses for noncompliance with

subpoenas served upon them by a named party to

the case, see Pet. Br. at 22.”

Pet. Br. at 20. Insofar as we can discern, there is a single line of

cases stemming from Blossom v. Milwaukee Railroad, 68 U.S. (1 Wall.)

655 (1863).

> Beyond the three cases noted in text, two of the cases Petitioner cites

as Blossom “progeny,” see Pet. Br. at 21 n.7, do rely on Blossom’s

reasoning, albeit in treating not with an appellant’s right to appeal but in

rejecting an appellee’s claim that because the appellee was not a named

party to the underlying lawsuit no appeal will lie. See Minnesota Co. v.

St. Paul Co., 69 U.S. (2 Wall.) 609, 633-34 (1865) (Rejecting the

argument of an appellee bidder on foreclosed-upon property that an appeal

from a district court judgment in the bidder’s favor in an cillary

proceeding precipitated by the bidder arising out of an original foreclosure

action did not lie because the bidder was not a named party to the original

action. The bidder in St. Paul was a party to the ancillary proceeding

resulting in a judgment in that bidder’s favor just as the bidder in Blossom

13

was a party to the ancillary proceeding resulting in a judgment against the

bidder there); Hovey v. McDonald, 109 U.S. 150, 155-56 (1883)

(Rejecting the argument of an appellee receiver that an appeal from a

district court judgment in the receiver’s favor in an ancillary proceeding

arising out of an original foreclosure action did not lie because the

receiver was not a named party to the original action. The receiver was a

party to the ancillary proceeding resulting in a judgment in the receiver's

favor just as the receiver in Hinckley was a party to the ancillary

proceeding resulting in a judgment against the receiver there).

In our view, none of Petitioner's other cases is a Blossom “progeny.”

While Petitioner cites Trustees v. Greenough, 105 U.S. 527 (1882), and

Sage v. Railroad, 96 U.S. 712 (1878), see Pet. Br. at 21 n.7, neither is in

point. Trustees v. Greenough does not even cite Blossom, and is part of

“Blossom’s progeny,” if at all, only to the extent that it follows sub

silentio the Court's ruling on the altogether separate “finality” issue

presented in Blossom (and not presented here). Sage does cite Blossom,

but only on the “finality” issue, see 96 U.S. at 714, it being undisputed

that the appellants before the Court “had been admitted as defendants

in the suit” and as named parties were parties for purposes of the appeal,

id. at 713.

Petitioner also cites Williams v. Morgan, 111 U.S. 684 (1884), which

he describes as a case in which “this Court held that a district court order

approving fees for a trustee could be appealed by objectors who had

appeared in the trial court but had not formally intervened.” Pet. Br. at 21

(emphasis added). But that misdescribes Williams, which involved an

appeal by two individuals who had formally intervened and were thus

parties. See 111 U.S. at 696 (“As to the right of Williams and Thomason

to appeal, this depends on their right to intervene . . . or rather on the

power of the court to allow them to do so... . Williams and Thomas

jointly, presented, as we have seen, formal applications to be heard before

the master and the court. ... The court very properly, as it seems to us,

granted their application.” (emphasis added).

Johnson v. Manhattan Railway Co., 289 U.S. 479 (1933)—cited not by

Petitioner but by one of his supporting amici, see Brief of Amicus Curiae

Council of Institutional Investors at 25— is most fairly read as a decision

noting a highly unusual variation on the Williams intervention theme. In a

decision antedating the Federal Rules of Civil Procedure, the Johnson

Court approved the dismissal of a second suit on preclusion grounds. In

dictum, the Court opined that the shareholders who brought and/or

intervened in the second suit in order to object to the conditions of a

14

Neither the holdings nor the reasoning of the decisions

in this thin Blossom line of authority provides support for

Petitioner’s claim that he is a party with a right to appeal from

the judgment here—as we now show.

B. Petitioner’s “Party Directly Bound By The

Judgment” Theory

Petitioner’s main “party” theory—that in a Rule 23 class

action case “members of a properly certified class . . . are

‘parties’ directly bound by the judgment” in the case, Pet. Br.

at 2—is plainly and simply wrong.

The only class members who are parties to a Rule 23 class

action case are those members of the class who “sue or [are]

sued as representative parties,” Fed. R. Civ. P. 23(a)

(emphasis added), and those named representative parties are

the only class members who are “parties directly bound by

the judgment” in the case.* The additional numerous persons

who are members of the class are not parties to the case and

are not “parties directly bound by the judgment” in the

case. This conclusion is buttressed by the Federal Rules, the

theory of representative actions and the principles of in

personam judgments.

1. The Federal Rules set the same basic teims for the

conduct of Rule 23 class action cases as for other civil actions

litigated in federal court. And, under the Federal Rules—as

the Rules have long stood and currently stand—only those

receivership imposed on their company in the first suit would have been

entitled “to intervene as parties in the [first] suit” under former Equity

Rule 37, and could have appealed in that suit if their objections had been

denied. See 289 U.S. at 495-96. In the course of this brief discussion, the

Court did not elaborate on the required intervention procedure.

* In addition, as we have indicated, a person is a party if that person has

in the manner provided for in the Federal Rules been duly permitted to

intervene or substitute as a named representative party, either for general

purposes or for purposes of taking an appeal. See also infra pp. 29-33.

15

class members who “sue or [are] sued as representative

parties” have the rights, spelled out in the Rules, to personally

appear to litigate the claim(s)/defense(s) set out in their

complaint/answer. For example, only the named repre-

sentative parties, and not any of the other class members,

have the right to take or obtain discovery in support of their

asserted claim(s)/defense(s).° Likewise, only the named

representative parties, and not any of the other class

members, have the right to move for summary judgment

in the case or to defend against a motion for summary

judgment.°

Given that the named representative parties to a Rule 23

class action case are the only class members who appear to

litigate the claim(s)/defense(s) set out in their complaint/

answer, it necessarily follows that only those named

* See, e.g., Fed. R. Civ. P. 30(a)(1) (“A party may take the testimony of

any person, including a party, by deposition.”); Fed. R. Civ. P. 31(a)(1)

(“A party may take the testimony of any person, including a party, by

deposition upon written questions.”); Fed. R. Civ. P. 33(a) (“[A}ny party

may serve upon any other party written interrogatories”); Fed. R. Civ.

P. 34(a) (“Any party may serve on any other party a request . . . [for]

designated documents.”); Fed. R. Civ. P. 36(a) (“A party may serve upon

any other party a written request for . . . admission(s].”); Fed. R. Civ. P.

45(a)(3) (“The clerk shall issue a subpoena, signed but otherwise in blank,

to a party requesting it, who shall complete it before service.”). With

respect to the discretionary decisions of some district courts to allow

limited discovery by objectors to a proposed class action settlement who

have not been accorded party status, see p. 27 n.14 infra.

® See, e.g., Fed. R. Civ. P. 56(a) (“A party seeking to recover upon a

claim, counterclaim, or cross-claim or to obtain a declaratory judgment

may ... move .. . for a summary judgment in the party’s favor upon all or

any part thereof.”); Fed. R. Civ. P. 56(b) (“A party against whom a claim,

counterclaim, or cross-claim is asserted or a declaratory judgment is

sought may .. . move . . . for a summary judgment in the party's favor as

to all or any part thereof.”); Fed. R. Civ. P. 56(e) (“When a motion for

summary judgment is made and supported as provided in this rule, an

adverse party may . . . respon[d].”).

16

representatives are “parties directly bound by the judgment”

in the case disposing of those claims/defenses. The named

representatives are the parties asserting or defending against a

claim and it is the named representatives as parties who are

bound by the judgment. See Restatement (Second) of

Judgments § 34(2), at 345 (1982) (“A party is bound by and

entitled to the benefits of the rules of res judicata with respect

to determinations made while he was a party.”). See also id.

§ 42 comment g, at 412 (“A person who appears in his own

behalf in litigation has had his day in court and is bound by

the judgment.”).

In contrast, as the Court most recently explained in

Richards v. Jefferson County, 517 U.S. 793 (1996), there is a

“general consensus ‘in Anglo-American jurisprudence’” that

persons—including the numerous persons who are members

of a certified class in a Rule 23 class action—who have

not appeared on their own behalf to litigate their own

claim(s)/defense(s) are “‘not bound by a-—judgment in

personam.”” Id. at 798 (quoting. Hansberry v. Lee, 311 U.S.

32, 40 (1940)) (emphasis added).’

We hasten to add that the foregoing proposition—that only

the named representative parties in a Rule 23 class action case

are “parties directly bound by the judgment” in the case and

that the many other individual class members are not so

bound—most emphatically does not mean that the judgment

does not extend to the certified class as a class entity or that the

judgment has no preclusive effect on those other individual

class members. But the preclusive effect on the individual

class members derives from the status of those members as

part of the class that is bound as the result of a judgment

obtained by or against the named representative parties.

’ Richards did not itself involve the binding effect of a judgment in a

class action case, but in discussing the constitutional limits of preclusion,

the Court discussed the nature of class actions at some length.

17

As Richards makes clear, the law of judgments “do[es] not

always require one to have been a party to the judgment in

order to be bound by it.” 517 U.S. at 798. To the contrary,

and “[mJost notably, there is an exception when it can be said

that there is ‘privity’ between a party to the second case and a

party who is bound by an earlier judgment.” /d. To take the

example pertinent here,

as [the Court] explained in [Martin v.] Wilks[, 490 U.S.

755, 762 n.2 (1989)}: “We have recognized an

exception to the general rule when, in certain limited

circumstances, a person, although not a party, has his

interests adequately represented by someone with the

same interests who is a party. See Hansberry v. Lee,

311 U.S. 32, 41-42 (1940) (‘class’ or ‘representative’

suits); Fed. Rule Civ. Proc. 23 (same)... .” [517 U.S. at

798-99 (emphasis added).]

It bears emphasis that the preclusive effect of an adverse

judgment on persons who are parties thereto is not the same

as its effect on persons who are in privity with the parties to

the judgment. As we have shown, an adverse judgment in a

Rule 23 class action case operates directly and automatically

to extinguish the claim(s)/defense(s) of the named

representative parties as “part[ies} to [the] judgment.”

Richards, 517 U.S. at 798. On the other hand, under the

“privity” rule, the judgment extinguishes the claim(s)/

defense(s) of the represented class members if, but only if, the

class member, “‘although not a party, has [had] his interests

adequately represented by someone with the same interests

who [was] a party.”” /d. (quoting Wilks, 490 U.S. at 762 n.2).

Indeed, as Hansberry v. Lee holds, where the named

representative parties in a class action case do not adequately

represent the interests of the other class members, it violates

due process to accord an adverse judgment in that case res

judicata effect against those other class members. See 311

U.S. at 42-43 (“[T]h{e] members of a class not present as

parties to the litigation may be bound by the judgment,”

- 18

consistent with due process of law, only “where they are

in fact adequately represented by parties who are present.”’).

In that situation, then, the class action judgment does

extinguish the named representative parties’ claim(s)/

defense(s), but does not extinguish the other class members’

claim(s)/defense(s).

2. (a) In arguing that represented class members are

“parties directly bound by the judgment” in the class action

case, Petitioner places great albeit misplaced reliance on

statements regarding the preclusive effect of class action

judgments in Smith v. Swormstedt, 57 U.S. (16 How.) 288

(1853); Matsushita Elec. Indus. Co., Ltd. v. Epstein, 516 U.S.

367 (1996); and Phillips Petroleum Co. v. Shutts, 472 U.S.

797 (1985). Pet. Br. at 24-26. Petitioner sums up its case

discussion by quoting Shutts for the proposition that “‘[t}he

absent parties would be bound by the decree so long as the

named parties adequately represented the absent class and the

prosecution of the litigation was within the common

interest.’” Pet. Br. at 25 (quoting 472 U.S. at 808) (emphasis

by Petitioner)."

Petitioner’s main “party” theory, however, does not rest on

the proposition stated in Hansberry v. Lee and summarized in

Shutts that the “privity” rule extends a judgment’s preclusive

effect to properly represented third persons who are not

“parties directly bound by the judgment.” Rather, the theory

rests on the quite different proposition that all represented

® See also Pet. Br. at 24-25 (quoting Smith v. Swormstedt, 57 U.S. at

303, for the proposition that under “the English rule . . . a court of equity

could permit ‘a portion of the parties in interest to represent the entire

body, and the decree binds all of them the same as if all were before the

Court.’”); Pet. Br. at 25 (quoting Matsushita, 516 U.S. at 379, for the

proposition that “[ujnder current practice, ‘all members of the class,

whether of a plaintiff or defendant-class, are bound by the judgment

entered in the action unless, in a Rule 23(b)(3) action, they make a timely

election for exclusion.””).

19

class members are “parties directly bound by the judgment”

in a class action case. Richards, Wilks and Hansberry v. Lee

reject that quite different proposition in the clearest possible

terms. And, nothing in Smith v. Swormstedt, Matsushita,

Shutts or, so far as we are aware, any other decision of this

Court, embraces it.

(b) Petitioner likewise fails in his effort to make

something of the Court’s references in Shutts, Hansberry v.

Lee, and other decisions to represented class members in a

class action case as “absent parties” or “parties in interest.”

See Pet. Br. at 25-26.

None of the cited decisions (nor any other decision of the

Court that we have been able to find) refers to represented

class members as “parties directly bound by the judgment” in

a class action case, or suggests that an “absent party” to a

class action case or a “party in interest” thereto is a “party

directly bound by the judgment” in the case.

The Hansberry v. Lee opinion cuts squarely against any

such equation. The opinion begins by denoting the peti-

tioners as persons that the court below had held “bound by a

judgment rendered in an earlier litigation to which they were

not parties.” 311 U.S. at 37 (emphasis added). And, the

opinion goes on to state the “‘class’ or ‘representative’ suit”

exception to the principle of Pennoyer v. Neff, 95 U.S. 714

(1878), to be that “the judgment in [the suit], to which some

members of the class are parties, may bind members of the

class or those represented who were not made parties to it.”

Id. at 40-41 (emphasis added).

Indeed, Hansberry v. Lee’s due process holding rests on

the fundamental distinction in the law of judgments between:

(i) named representative parties in a class action case who

appear to litigate their claim(s)/defense(s) and who are

“parties directly bound by the judgment,” and (ii) represented

class members who do not appear to litigate their own

20

claim(s)/defense(s) and who are bound by the judgment only

as members of a class and only if their interests have been

adequately represented by the named representative parties.

Against that background, the Court’s references to “absent

parties” or “parties in interest” are most fairly read as

shorthand for “persons whose legal situation is such as to put

them in privity with the named representative parties in a

class action case so long as those named representative

parties have adequately represented the absent class

members’ interests”—not as shorthand for “persons who are

parties directly bound by the judgment in a class action case.”

(c) Petitioner goes on to argue that “[t)his Court's

precedents addressing mootness issues in the context of class

actions similarly support the conclusion that every class

member is a ‘party’ in a properly certified class action.” Pet.

Br. at 26. Petitioner cites in particular Sosna v. lowa, 419

U.S. 393 (1975), and this Court’s statement therein that

“(when the District Court certified the propriety of the class

action, the class of unnamed persons described in the

certification acquired a legal status separate from the interest

asserted by [the] appellant [class representative].” Pet. Br. at

26 (quoting 419 U.S. at 399) (brackets by Petitioner). Again,

Petitioner’s argument is without merit. The Sosna line of

decisions lends added support to our position.

The Sosna Court did not state, or even imply, that each

individual person who is a member of a certified class

acquires a separate “legal status” upon class certification—

much less a “party” status. To the contrary, what the Sosna

- Court said is that upon class certification “the class of

unnamed persons” as a class entity acquires a separate “legal

status.” 419 U.S. at 399 (emphasis added). As the Court

added in Kremens v. Bartley, 431 U.S. 119 (1977), under

Sosna and its progeny “it is only a ‘properly certified’ class

that may succeed to the adversary position of a named

21

representative whose claim becomes moot.” /d. at 132-33

(emphasis added) (citing Indianapolis Sch. Comm'rs vy.

Jacobs, 420 U.S. 128 (1975)).

Indeed, Petitioner’s reading of Sosna would lead to absurd

results that Kremens v. Bartley makes clear were not intended

by the Sosna Court. Under Petitioner’s reading, when the

named representative party’s individual claim in a certified

class action case becomes moot, any one of the “unnamed

persons” who is a member of the certified class with a live

claim (or any number of those persons) is entitled to assume

the role of the named representative party who litigates the

claims therein, without any regard to whether that person

is a proper named representative party who “will fairly

and adequately protect the interests of the class.” Fed. R.

Civ. P. 23(a)(4).

Under Kremens v. Bartley, however, what is required in

these circumstances in order to avoid a declaration of

mootness of the class action case is the proper “substitution of

class representatives with live claims.” 431 U.S. at 135.

Substitution of new class representative parties would be

entirely unnecessary in this context, of course, if all

“unnamed persons” who are members of the certified class

were already “parties” with the litigation rights attendant to

party status.

* Petitioner also relies, to no avail, upon the Sosna Court’s statement

that class certification has “important consequences” because “[i]f the suit

proceeds to judgment on the merits, it is contemplated that the decision

will bind all persons who have been found at the time of the certification

to be members of the class.” Pet. Br. at 26 (quoting 419 U.S. at 399 n.8).

This Court’s precedents undoubtedly do “contemplate” that where the

named representative party provides fair and adequate representation to

the class the judgment in a class action case will be binding on all

members of the certified class. But as we have shown, that is because of

the rule making judgments in representative actions—including class

22

(d) Petitioner fares no better in his argument that

“{t]he same logic” under which the Court of Appeals (without

discussion or analysis) recognized Petitioner’s right to appeal

both “the [Dlistrict [C]Jourt’s denial of his motion to

intervene” and “the [D]istrict [CJourt’s entry of an injunction

against him,” supports Petitioner’s right to appeal the District

Court judgment approving the class action settlement. Pet.

Br. at 27. In both the instances Petitioner cites, his appeal

arose out of an ancillary proceeding in this Rule 23 class

action case initiated by Petitioner as an individual, or brought

against Petitioner as an individual, that generated a District

Court ruling and final order that ran directly against, and

directly bound, Petitioner as an individual.

In both instances, then, under Blossom v. Milwaukee

Railroad, supra, Petitioner was “a party directly bound by the

[final orders]” running against him, with a right to appeal

therefrom. In contrast, as we have shown, neither Petitioner

nor any of the other represented individual class members in

this case is “a party directly bound by the judgment”

approving the class action settlement here.'°

3. The short of the matter is that Petitioner’s “party

directly bound by the judgment” theory has no basis in the

law. And, while that is dispositive, it is worthy of note that

Petitioner’s theory—which transmutes a class action from

one commenced and litigated in the district court by a

representative party to one commenced and litigated in the

actions—binding on properly represented third persons, and not because

every member of a certified class is “a party directly bound by the

judgment” in the class action case.

'° As indicated above, represented class members are bound by a class

action judgment only because, and to the extent that, they are members of

a class that has been adequately represented by the named representative

parties. See David L. Shapiro, Class Actions: The Class as Party and

Client, 73 Notre Dame L. Rev. 913 (1998) (developing this aspect of the

nature of class actions).

23

court of appeals by as many of the represented class members

as choose to take an appeal—is entirely inconsistent with, and

destructive of, the very purpose of the Rule 23 process for the

fair and effective litigation of class action cases. As the

Eleventh Circuit aptly put it in Guthrie v. Evans, 815 F.2d

626, 629 (11th Cir. 1987):

A fundamental purpose of the class action is to render

manageable litigation that involves numerous members

of a homogeneous class, who would all otherwise have

access to the court through individual lawsuits.... A

class cannot even be certified unless its members are so

numerous that joinder is impracticable. Fed.R.Civ.P.

23(a)(1). If each class member could appeal indivi-

dually, the litigation could become unwieldy. Thus,

allowing direct appeals by individual class members

who have not intervened in the~district court would

defeat the very purpose of class action lawsuits. '!

'' Citing empirical data purporting to show a relative paucity of

“objector appeals” from the approval of class action settlements during the

1971-2000 period, Amicus Curiae Council for Institutional Investors

argues that the concerns stated by the Guthrie court are misplaced, and

that “[ijn fact, mandating intervention would impose more work on the

federal courts, not less.” Brief of Amicus Curiae Council of Institu-

tional Investors at 21 (emphasis in original). This argument suffers from

several flaws.

First, Petitioner’s “party directly bound by the judgment” theory would

allow not only “objector appeals” from the approval of class action

settlements, but also non-party-class-member appeals from adverse final

judgments in fully-adjudicated class action cases (of which Guthrie itself

was one). Thus, in offering empirical data on “objector appeals” from the

approval of class action settlements, the Council of Institutional Investors

has not even begun to come to grips with the manageability problems that

likely would be created by acceptance of Petitioner’s theory.

Second, whatever this empirical data may indicate on its own narrow

terms with respect to the past (and we do not even know whether the data

treats comprehensively with the whole range of reported and unreported

judicial action in the settlement context), that data is an ineffective

24

Indeed, Petitioner’s theory extends by necessary impli-

cation to various other forms of representative litigation that

are as well-recognized and accepted in the law as is class

action litigation, and that generate judgments that generally-

have the same preclusive effect on absent represented persons

in privity with the named representative party as do judg-

ments rendered in class action litigation: e.g., litigation by a

trustee on behalf of the beneficiaries of a trust, see, e.g.,

Richards, supra, 517 U.S. at 798; litigation by a labor union

or other unincorporated association on behalf of its members,

see, e.g., Office & Prof l Employees Int'l Union, Local 2 v.

FDIC, 962 F.2d 63 (D.C. Cir. 1992); and parens patriae

litigation by the government on behalf of its citizens, see,

e.g., New York v. Reebok Int'l Ltd., 96 F.3d 44 (2d Cir. 1996).

See also generally 18 Wright, Miller & Cooper, Federal

Practice & Procedure, §§ 4454-60 (2d ed. 1991).

Petitioner’s theory, then, is equally inconsistent with, and

equally destructive of, the very purpose of these various other

well-recognized forms of representative litigation. '”

harbinger of the future, as the class action is still in its formative stages

with respect to a wide range of potential litigation. Indeed, the result

in the case at bar may serve as a focal point in determining the future

of the class action as an effective technique for the resolution of large-

scale disputes.

Third, whatever burden is placed on the federal courts (and would-be

intervenors) by a mandatory intervention requirement is more than offset

by the benefits of that requirement, both in the settlement context, see

infra pp. 29-33, and in the non-settlement context, see Guthrie.

'2 Showing obvious discomfort with the necessary implications of his

theory, Petitioner suggests that—at least in the specific context of a class

action case that is resolved by a district-court-approved settlement—

“party” status for purposes of an appeal can and should be limited to those

represented persons who themselves have taken some action in the district

court to “preserve[ ] the arguments they seek to raise” on appeal. Pet. Br.

at 13. That suggestion makes no analytical sense.

25

C. Petitioner’s “Party To The Case” Theory

Petitioner’s secondary argument is that in a Rule 23 class

action case those individual class members who, on the

publication of notice of a proposed settlement of the case,

make a timely objection to that settlement, are, on that basis,

“parties to the case” with aright to appeal the judgment

approving the settlement. This “right to appeal” theory, while

considerably narrower than Petitioner’s main theory, is just as

clearly wrong.

1. Petitioner’s second theory cannot be squared with this

Court’s holding in Marino v. Ortiz, supra. In that Title VII

class action lawsuit brought by minority police officers

against the City of New York, white police officers—who

were not members of the class and who had not intervened,

but whose interests were affected by a proposed settlement

of the class action case—first “presented their objections

to the District Court at the hearing” on the proposed

The general rule barring appellate consideration of arguments not

“preserved” in the court below might properly be invoked to limit the

scope of the arguments that would be open on an otherwise proper appeal

from a final judgment in representative litigation—where, for example,

arguments sought to be raised on appeal have not been made in the court

below by any representative party or member of the represented group,

thus denying the opposing party a fair opportunity to be heard on the

point. See generally Singleton v. Wulff, 428 U.S. 106, 120-21 (1976).

But we do not see how that general rule could properly be invoked to

deny an appeal outright if in fact the represented person taking the appeal

is “a party directly bound by the judgment” in the case. The threshold

issue of the right to appeal is quite distinct from the issue of the proper

scope of any appeal that is permitted, and that threshold issue must be

disposed of on its own terms before the latter issue even comes into play.

See generally 15SA Wright, Miller & Cooper, Federal Practice &

Procedure, § 3902.1, at 123-24 (2d ed. 1991) (“The conclusion that

[certain] non[-named]-parties should be able to appeal does not of itself

determine the scope of the arguments that should be open on appeal.”’).

26

settlement, and then sought to appeal from the judgment

approving the settlement. 484 U.S. at 303 (emphasis added).

The Marino Court held that the objecting white police

officers “were not parties to the underlying lawsuit” with a

right to appeal from the judgment approving the settlement.

Id. at 304 (emphasis added). Under Marino, then, a person

not otherwise a party to a class action case does not become a

party to the case by making and pursuing an objection to the

approval of a proposed settlement of the case.

What the Eighth Circuit said of Marino in Croyden Assoc.

v. Alleco, Inc., 969 F.2d 675, 679 (8th Cir. 1992), is

eminently correct:

The Supreme Court [in Marino] was referring to officers

who had filed objections to the settlement [there], and

whose counsel was allowed to speak at the hearing and

argue against the proposed settlement. ... While they

were not unnamed class members, they were in a

position similar to the [unnamed class member appellant

in the case before this Circuit] in that they were

objecting to the approval of a settlement of the class

action. ... Marino [thus] provides substantial support

for holding that unnamed class members who object to a

settlement must move to intervene, and they will be

denied standing to appeal when they have not done so.'?

2. Petitioner would distinguish Marino on the ground

that class members who present objections to a proposed

class action settlement do so “as a matter of right, pursuant to

Rule 23(e),” whereas non-class-members who present

'3 See also Felzen v. Andreas, 134 F.3d 873, 874 (7th Cir. 1998), aff d

by equally divided court sub nom., California Pub. Employees’

Retirement Sys. v. Felzen, 525 U.S. 315 (1999) (“{T]he Supreme Court

held [in Marino] that a person adversely affected by the settlement of a

class action may appeal from the consent decree based on that settlement

only if he has intervened as a party.”).

27

objections to such a settlement do so “as a matter of [judicial]

grace.” Pet. Br. at 19 (emphasis in original). But that

distinction has no bearing on the question of “party” status.

There is nothing in Rule 23 (including the cited Rule

23(e)), or in any other Federal Rule, providing that class

members who present objections to a proposed settlement of

a class action case are “parties to the case”—just as there is

nothing in Rule 23, or in any other Federal Rule, providing

that non-class-member objectors are parties. To the contrary,

the Federal Rules point both class member objectors and non-

class-member objectors to a specific procedure by which they

can become “parties to the case,” and that specific procedure

is Rule 24 intervention.

To be sure, the distinction between class mem ers who

have the right to object to a proposed class action settlement

and non-class-members who do not have such a right may

well be relevant to the issue of intervention, inasmuch as Rule

24 on its face distinguishes between intervention “of [rJight”

and “[pjermissive” intervention. But nothing in the Federal

Rules renders such a distinction relevant to the altogether

different issue of whether non-intervenor objectors to a

proposed class action settlement are “parties to the case” by

reason of having made an objection.“

' Aside from his “objection as of right” theory, Petitioner argues that it

is “implicit in the fact that absent class members are often allowed

discovery into the justification for a class settlement” that class members

are parties to a class action case. Pet. Br. at 28 n.14. But of course, if

objecting class members were parties to a class action case, the class

members would have a right to take discovery. Thus, district court

actions, in the exercise of their sound discretion, to “allow discovery into

the justification for a class settlement,” id—given Rule 23(d)’s grant of

authority to such courts to “make appropriate orders . . . determining the

course of [the class action’s) proceedings . . . [and] dealing with similar

procedural matters”"—do not remotely imply that class members are

parties to a class action case.

28

3. Petitioner’s phrasing of his Question Presented—

which speaks of the right to appeal of a “class member who

. . . Objects and moves to intervene . . .”—suggests that

it is Petitioner’s position that even if a class member does

not become a party to the case by making an objection to

the approval of a class action settlement, a class member

does become a party by making an objection and moving

to intervene.

In his brief, however, Petitioner presents no argument for

the proposition that a class member’s filing of a Rule 24

motion to intervene—in conjunction with the filing u an

objection to a proposed class action or in itself—is a legal act

that makes the class member a party to the case.

It therefore suffices, we believe, to point out that the filing

of a Rule 24 motion to intervene, like the filing of any

motion, is an act whose legal significance is determined by a

judicial order disposing of the motion. If that motion is

denied, the movant remains a person who is not a party to the

case. There is thus no substance to the implied suggestion

that the mere filing of a motion to intervene can in any

circumstance make a class member a party to a class

action case.

Il. PETITIONER’S POLICY ARGUMENTS

Petitioner’s legal text is that all class members in a Rule 23

class action case are “parties directly bound by a judgment”

approving a settlement with a right to appeal therefrom, or,

alternatively, that those class members who object to a

proposed settlement are “parties to the case” with the right to

appeal from a judgme.i approving the settlement. That text,

as we have shown, is an incorrect statement of the law.

Petitioner's subtext is that without regard to whether they

are parties, class members who object to a proposed

settlement of a Rule 23 class action case should be deemed to

have a right to appeal from a district court approval of the

29

settlement. The theme of this subtext is that because

appellate review of district court approval of class action

settlements is desirable, and because objecting class members

are persons interested in and affected by the case, it is

undesirable to limit the right of appeal to those who have

become parties to the class action case through the Rule 24

intervention process.

This suggestion for re-writing the “right to appeal” rule is

fundamentally unsound.

(A) The Karcher/Marino rule—and its corollary here that

only third persons who have become parties to a class action

through Rule 24 intervention have the right to appeal from a

judgment approving a settlement of that action—has the

benefits of formal precision and a high degree of certainty

that are particularly desirable in a rule of civil procedure. As

Judge Easterbrook has noted:

Observance of form has benefits, such as a reduction in

uncertainty and the costs that unceriainty breeds. [In the

present context,] [i)ntervention identifies with precision

who is entitled to take what procedura: steps, and when.

[In re Navigant Consulting, Inc. Securities Litigation,

275 F.3d 616, 620 (7th Cir. 2001).]

Conversely, a standard that bases a non-party’s right to appeal

on such vague notions as an assessment of the non-party’s

interests and/or on the costs and benefits of allowing an

appeal by the non-party is one that calls for the kind of

inherently complex and inherently imprecise calculus of

imponderables that breeds uncertainty.

(B) In the final analysis, Petitioner's claim that the

Karcher/Marino rule is too narrow rests on the assertion that

the Rule 24 intervention process places too great a burden on

class members who wish to appeal a district court judgment

approving a class action settlement. This undue burden

argument is a hollow one. Since taking and pursuing an

30

appeal requires infinitely more time, effort and resources than

does submission of a Rule 24 intervention motion, the claim

that the intervention process is an obstacle that would

preclude, or even give serious pause to, a person who would

otherwise pursue an appeal does not ring true.

Indeed, Petitioner’s undue burden argument rests in large

part on exaggeration of what the Rule 24 intervention process

requires of an objecting class member in the context of a

proposed settlement of a Rule 23 class action case. In this

regard, Petitioner and his amici curiae emphasize the

supposed difficulties of intervention before a proposed settle-

ment of a class action case is reached. See Pet. Br. at 36-37;

Brief of Amicus Curiae Council of Institutional Investors at

11-12. But see 1966 Advisory Committee Notes on Rule 24.

However, in the normal course, after a proposed settlement

has been reached, the intervention process is straightforward

and in no way taxing.

Once a proposed settlement is reached, it is axiomatic that

the named representative party who has negotiated the

settlement does not adequately represent either the interests or

the viewpoint of those class members opposed to the

settlement. Thus, it should in the normal course be a

relatively simple matter for an objecting class member (or,

perhaps more likely, a group of objecting class members who

have pooled their resources) to make the showing that she (or

they) should be permitted to intervene in the case for the

limited purpose of making and pursuing her (or their)

objections to the proposed settlement.'* Limited purpose

intervention of this sort was approved by this Court in United

Airlines, Inc. v. McDonald, 432 U.S. 385 (1977).

This is not to say that the Rule 24 intervention process is a

“pro forma” one in the context of a proposed settlement of a

'S As discussed infra at p. 36 n.18, Petitioner’s motion to intervene in

this case was not one made in the normal course.

31

Rule 23 class action case, Pet. Br. at 38, or one that

“produce[s] no benefit to class action litigation” in that

context, id. at 40.

The reality of the matter is that objectors to class action

settlements come in all different shapes and sizes: some

retain legal counsel and make a substantial commitment of

time, energy and resources to the process, whereas others do

not retain legal counsel and are content to file a piece of paper

containing some variant of “I object” or “This is a terrible

deal.” See, e.g., JA 103, 117-26. Moreover, there is evidence

of a practice in which “obviously ‘canned’ objections [are]

filed by professional objectors who seek out class actions to

simply extract a fee by lodging generic, unhelpful protests [on

behalf of class members].” Shaw v. Toshiba Am. Info. Sys.,

Inc., 91 F. Supp.2d 942, 973 (E.D. Tex. 2000).

Given that reality, it is evident that the Rule 24 intervention

process is not a “pro forma” one in the context of a proposed

settlement of a Rule 23 class action case, but rather one that

allows the district court presiding over the case in passing on

a motion to intervene to distinguish between: (i) objecting

class members who make a credible showing that in pursuing

their objections they intend to act and are capable of acting on

behalf of and in the interest of all class members who oppose

the settlement; and (ii) objecting class members who do not

make such a showing (or, worse yet, show that they are

proceeding in an effort to extract a fee by lodging generic,

unhelpful protests).

A requirement of intervention as a prerequisite to an appeal

~of a class action judgment thus serves the vital purpose of

assuring that the appellant is a person who is proceeding in

the interest of the class in initiating a proceeding in a higher

court. In this regard, Petitioner could not be more wrong in

asserting that “[i]n the court of appeals, the objector proceeds

in his individual capacity rather than as a representative of the

class as a whole and he has no obligation to pursue any

32

interest other than his own.” Pet. Br. at 31. To be sure, some

appeals in class action cases involve (in Petitioner’s words,

Pet. Br. at 31) “unique circumstances” with respect to the

individual appellant, such as a claim of improper inclusion or

exclusion from the class. But an appeal of a judgment

approving a class action settlement on grounds of claimed

unfairness to the class of which the appellant is a member—

the situation presented here—will necessarily have a broader,

class-wide impact: affirmance or reversal of the district

court's approval of the settlement will by its very nature affect

the class as a whole."®

In this way, the Rule 24 intervention process can provide a

benefit that more than balances the minimal burden on the

movants by furthering the very purpose of the Rule 23 class

action process—viz., to provide for the fair, efficient and

manageable litigation of a civil case affecting numerous

persons through pari‘es who have the willingness and the

capacity to proceed in a manner that takes proper account of

the interests of those affected persons.

Plainly, Rule 24 intervention motions by objecting class

members who make this showing should readily be granted

by the district court. And, “denials of such motions are, of

course, appealable. See United Airlines, Inc., supra[, 432

U.S. 385].” Marino, 484 U.S. at 304. Moreover, the Seventh

Circuit undoubtedly is correct that when an appellate court

upholds an objecting class member’s appeal from the denial

of intervention, it can and should go forward with a

dispositive ruling on that class member’s objections to the

settlement itself. See Crawford v. Equifax Payment Serv.,

Inc., 201 F.3d 877, 879-81 (7th Cir. 2000); In re Synthroid

'© For this reason, the cases relied on by Petitioner involving the

“wholly individual interests” of persons claiming to have been improperly

included in or excluded from a certified class, see Pet. Br. at 31, are

33

Marketing Litigation, 264 F.3d 712, 715-16 (7th Cir. 2001).

Thus, an intervention requirement does not raise any pros-

pect of multiple successive appeals, with its attendant costs

and delay.'’

Ill. PETITIONER’S INTERVENTION ARGUMENT

In the final section of his brief, Petitioner first seeks to

raise the question of whether the District Court’s denial of

Petitioner’s motion to intervene and the Court of Appeals’

affirmance of that denial were in error, and then argues that

these rulings were in error and should be reversed by this

Court. In Petitioner’s words, “[i]f this Court does hold that a

class member must intervene in order to appeal, the [Fourth

Circuit] judgment [affirming the District Court’s approval of

the settlement] nonetheless must be reversed.” Pet. Br. at 41

(emphasis in original). And Petitioner’s most succinct

statement of his asserted ground for reversing the judgment

below is that “if intervention is required, the [D]istrict [CJourt

erred in refusing to permit [P]etitioner to intervene limited to

the right to contest and subsequently appeal the settlement.”

Id. at 13 (emphasis in original). See id. at 41-42 (developing

this asserted ground for reversal).

But the question Petitioner would now raise is not the

single question set out in the certiorari petition nor a question

fairly included therein, and is therefore not a question before

this Court.

'? Given the availability of Rule 24 intervention upon a proper showing

(and the availability of appellate review if a Rule 24 intervention motion

is improperly denied), there is no reality to Petitioner’s suggestion that

application of the Karcher/Marino rule in the present context will “limit

an_objector’s recourse to a likely futile objection at the fairness hearing

required by Rule 23(e).” Pet. Br. at 35 (internal quotations omitted).

Thus, the “due process” concerns raised by Petitioner on the basis of that

suggestion are wholly illusory.

34

The Fourth Circuit judgment affirming the District Court’s

approval of the settlement rests on two entirely separate

holdings disposing of two entirely separate “right to appeal”

claims raised by Petitioner in that court.

First, the Fourth Circuit unanimously rejected Petitioner’s

claim that the District Court erred in denying his motion to

intervene in the case, that the denial of his motion should be

reversed and that he should be treated as an intervening party

with the right to appeal from the judgment approving the

settlement here. See Pet. App. A10-A14 (Part II of Court

of Appeals’ opinion), A30 (Michael, J., concurring in that

Part II ruling).

Second, the Fourth Circuit held, by a divided 2-1 vote, that

as a class member who presented objections to the proposed

class action settlement after his motion to intervene had been

denied, Petitioner lacked standing to appeal the District

Court’s approval of the settlement. See Pet. App. Al4-24

(Part III of Court of Appeals’ opinion), A30-34 (Michael, J.,

dissenting from that Part III ruling).

The Court granted certiorari in this case to consider the

following single Question Presented:

Whether a class member who, upon receiving notice of a

proposed class action settlement, objects and moves to

intervene has standing to appeal the district court’s

approval of the settlement? [Pet. i.]

On its face, this Question Presented is not addressed at all

to the Fourth Circuit’s first holding—viz., that Petitioner was

properly denied intervention and was not entitled to be treated

as an intervening party with the right to appeal the District

Court’s approval of the settlement. Rather, the Question

Presented is addressed solely to the issue that was the subject

of the Fourth Circuit’s second holding—viz., that as a class

member who objected to a settlement after his motion to

intervene had been denied, Petitioner lacked standing to

appeal the District Court’s approval of the settlement.

- — tay

35

Indeed, if there were any room for doubt, that doubt is

eliminated by the sole grounds stated by Petitioner for

granting his petition: (1) The Fourth Circuit had, by its

decision, added its voice to a substantial, pre-existing “circuit

conflict over whether an objecting class member has standing

to appeal a district court’s approval of a settlement,” Pet. at

11 (emphasis added); and (2) The Fourth Circuit’s disposition

of that issue was (i) in conflict with this Court’s precedents

recognizing the right of certain persons interested in and

affected by a district court judgment to appeal therefrom

without intervening in the case, see id. at 16-19, (ii) in tension

with the due process rights of objectors qua objectors, id. at

19-22, and (iii) unsound from a policy standpoint owing to

the useful role that objectors gua objectors could play in

policing district court approvals of class action settlements,

and the unnecessary burdens of an intervention requirement,

id. at 22-25.

Equally to the point, the certiorari petition contained no

argument, or so much as an intimation, that adequate grounds

existed for a grant of certiorari on the separate question of

whether Petitioner had improperly been denied intervention

in the first instance and had a right to appeal the approval of

the class action settlement as a person determined by an

appellate court to be an intervening party.

Rule 14(1)(a) of this Court’s Rules provides that “[oJnly

the questions set out in the petition, or fairly included therein,

will be considered by the Court.” And, this Court has

repeatedly and consistently enforced that Rule, including

most recently in Owasso Independent School District v.

Falvo, 534 U.S. __, 122 S. Ct. 934, 938 (2002), and Toyota

Motor Manufacturing, Inc. v. Williams, 534 U.S. ___, 122 S.

Ct. 681, 694 (2002). Petitioner does not cite any ground for a

36

departure from that Rule here—indeed, he fails even to

acknowledge the Rule’s application to the matter at hand—

and there is none.'*

'S In his brief, Petitioner does attempt to work around Rule 14(1)(a) by

suggesting that the Fourth Circuit’s unanimous decision upholding the

District Court’s denial of intervention is predicated on a far-reaching,

general statement of the law of intervention in the class action settlement

context that “makes no sense” and “invites a deluge of protective

intervention motions.” See Pet. Br. at 42.

But the reality of the matter is that the denial of intervention here was

firmly and soundly based on a confluence of highly unusual facts and

circumstances unique to this case. Among other things: (i) Petitioner

originally had been designated by the plaintiff trustees as the named class

representative for the defendant retiree class, but had declined to serve in

that capacity; (ii) Against the background provided by his subsequent

litigation actions, Petitioner’s stated reasons for declining to be the named

representative party were not credible and cast reasonable doubt on

Petitioner’s capacity as an intervening party to proceed in a manner that

furthered the interests of the class; and (iii) Instead of moving promptly

for intervention upon the dismissal of his parallel Second Circuit action

against the trustees, Petitioner wrote not one but two letters to the District

Court asking the Court to make him a party, and then five months after his

Second CirCuit case’s dismissal sought to intervene not only, or even

primarily, to make objections to the class action settlement, but rather to

litigate the case by, inter alia, filing motions for a preliminary injunction

against the trustees, to strike evidence, and to disqualify class counsel.

See JA 151-54 (District Court decision denying intervention); Pet. App.

A10-A14 (Court of Appeals decision upholding that denial).

Quite aside from the fact that the ruling on Petitioner’s motion to

intervene was entirely case-specific, recognition of such an after-the-fact

suggestion of certworthiness as a way around Rule 14(1)(a) could only

serve to undermine that Rule’s purpose and utility. See, e.g., Yee v. City

of Escondido, 503 U.S. 519, 535-38 (1992).

tt

37

CONCLUSION

For the furegoing reasons, the judgment below should

be affirmed.

Respectfully submitted,

WILLIAM F. HANRAHAN LAURENCE GOLD

1701 Pennsylvania Avenue, N.W. Counsel of Record

Suite 1200 ANDREW D. ROTH

Washington, D.C. 20006 805 Fifteenth Street, N.W.

Counsel for Respondents __ Suite 1000

Robert A. Scardelletti, Trustee, et al. Washington, D.C. 20005

BARBARA KRAFT (202) 842-2600

1717 Massachusetts Avenue, N.W. Counsel for Respondents

Suite 704

Washington, D.C. 20036

Counsel for Respondent Of Counsel

Anthony P. Santoro DAVID L. SHAPIRO

1575 Massachusetts Avenue

KENNETH M. JOHNSON

228 West Market Street

P. O. Box 2888

Greensboro, NC 27402

Counsel for Respondent

George Thomas DeBarr

Cambridge, MA 02138