Reply Brief — Devlin v. Scardelletti

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No. 01-417

In the

Supreme Court of the Hrited States

ROBERT J. DEVLIN,

Petitioner,

Vv.

ROBERT A. SCARDELLETTI, Trustee of the Transportation

Communications International Union Staff Retirement Plan, et ai.,

Respondents.

On Writ of Certiorari

to the United States Court of Appeals for the Fourth Circuit

REPLY BRIEF FOR THE PETITIONER

BRIAN WOLFMAN THOMAS C. GOLDSTEIN

PUBLIC CITIZEN LITIGATION (Counsel of Record)

GROUP AMY HOWE

1600 20th St., N.W. GOLDSTEIN & HOWE, P.C.

Washington, DC 20009 4607 Asbury PI., N.W.

Washington, DC 20016

(202) 237-7543

ERIK S. JAFFE

ERIK S. JAFFE, P.C.

5101 34th St., N.W.

Washington, DC 20008

March 19, 2002

| ee eee eee nn en eR te eR, A

WILSON-EPES PRINTING CO., INC. — (202) 789-0096 -— WASHINGTON, D. C. 20001

TABLE OF CONTENTS

Ce Gr CU IN cxcneereszesscsnszscssscnvevsevesnesonensvecsncsesnesseees

TABLE OF AUTHORITIES .......cccccscoccossccsccscccscscesscescccsecsecsees

I. The Fourth Circuit Erred In Holding That Objectors’

Appeals Should Be Forbidden For Reasons Of

SEI censescnsuisssiessessenpesesnvesqensevenesunsenanessspsossensseustscueneceesee

II. Class Action Objectors Are Parties To The Judgment

And Thus Have The Right To Appeal To The Extent

ee CIID: cencsenennnenessesectnnscssrsevesscsscesscnenesereenes

III. Petitioner Prevails Under A “Pro Forma”

Intervention Requirement, Although Such A

Requirement Is Unwarranted..............csssssssssesseesseeenees

CIE ccscccescersanscereveneenymmrvesssmncsenennscsesesoesssssnsenassnenseees

~ i

TABLE OF AUTHORITIES

Other Authorities

Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997).......... l

American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974) ... 16

Bowling v. Pfizer, Inc., 132 F.3d 1147 (CA6 1998) ............0000 17

Cooper v. Federal Reserve Bank of Richmond, 467 U.S.

GSE (Bee ep avscessvssssssnsnsnrsenenaseninninensennibaiaianiananal 6

Duhaime v. John Hancock Mut. Life Ins. Co., 183 F.3d 1

GAD FIRED ccnssrcsennssnienieneinmnitenieiiiaiaieaaaias 19

Felzen v. Andreas, 525 U.S. 315 (1999) (equally divided

GUI ecnserseceremnisceninteniniiiamiatidieeee 1, 15, 16, 19

Franks v. Bowman, 424 U.S. 747 (1976)......cccccccccssssesseseeseceenes 10

Guthrie v. Evans, 815 F.2d 626 (CA11 1987)........cccccccceeeees 3, 20

Hansberry v. Lee, 311 U.S. 32 (1940) ........cccccccscesseeseeees 5, 6, 7,8

In re General Motors Corp. Pick-up Truck Fuel Tank Litig.,

55 F.3d 768 (CA3), cert. denied, 516 U.S. 824 (1995) ........ 17

Kremens v. Bartley, 431 U.S. 119 (1977) .......ccccccccssecsessssseecees 10

Kremer v. Chemical Constr. Corp., 456 U.S. 461 (1982) .......... 7

Marino v. Ortiz, 484 U.S. 301 (1988) (per curiam)..............0++ 7]

Martin v. Wilks, 490 U.S. 755 (1989)........cccscccsesssesseesseeeeseees 5,8

Matsushita Electrical Industries Co. v. Epstein, 516 U.S.

Se (EGO O a rccrcensiveensesemnstpseineniinicnemianitiaiddaaieniamaal, 5

Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) ......csccscecssseeees 5

Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80(1988)............. 14

Sosna V. Lowa, 419 U.S. 393 (1975) ......ccscecssesseessessessereeeeees 9, 10

Tumey v. Ohio, 273 U.S. 510 (1927) .cssccesssesssesssecsuscssecsesssecsnecess 6

United Airlines, Inc. v. McDonald, 432 U.S. 385 (1977)......... 18

United States Parole Comm’ n v. Geraghty, 445 U.S. 388

Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S.

100 (1969)...c.ccccesesossssesssserseeenssssssssensnssssssnsassnsnsnssnsnsasansnsnensens 6

Fed. R. App. P. 42.....sscssssesssssssssssnsnsensensenssnssnsnnsensnsnnsnnsnnsnnsenes 19

Fed. R. Civ. P. 17(a)....c-ccecsscecsssessreesenssssnsnenrsnsnnssennsnennsnsnnsnsnnenenes 4

Fed. R. Civ. P. 23 ..ccecceccsscessssersssensenssssnennserensensnnensnssnnsnsnnsnns 16, 17

Fed. R. Civ. P. 23(a).....csccccsssersersessessserensnnsensnnsnnsnnsnnsnnsnnenssnnenens 4

Fed. R. Civ. P. 23(a)(4)....c-csecesceseresseresssesesensnsensnensnnsnnsnsnnsnsnnenes 17

Fed. R. Civ. P. 23(d)(2)..0-. -escseeresserssessrennnensensnnsnsnesnnsnnenees 16, 17

Fed. R. Civ. P. 23(€)....c-ccssecsessserseressensesnesssnnensnssnsnennsnennsnnensnsnnes 19

Fed. R. Civ. P. 24 ..ccccceccsssssssssrsssersensssssssnsnssnsensnnensnnsnnsneenenes 16, 17

Fed. R. Civ. P. 24(a)(2)...-ccscccsssssrserersersnennsssnnsnssnsnssnnsnsnnsnnsnennes 17

Fed. R. Civ. P. 24(C)....ccscscccssssssessesessnnsnnsnsensensnennanesnnnnsnnsnssnsnens 17

S. Ct. R. 24.1) ecccececceressercsserseserereerensnssnsnssrsnsensnsensnsnnsnrenensnnenees 13

2 NEWBERG, CLASS ACTIONS § 2755 (1977) ...-s:-s-ssseseererensreenenes 6

Marcel Kahan & Linda Silberman, The Inadequate Search

for ‘Adequacy’ in Class Actions: A Critique of Epstein v.

MCA, Inc., 73 N.Y.U. L. Rev. 765 (1998)....---v-ssseerereerenseees 20

REPLY BRIEF FOR THE PETITIONER

I. The Fourth Circuit Erred In Holding That Objectors’

Appeals Should Be Forbidden For Reasons Of Policy.

Respondents’ contention in this Court (at 28) that petitioner

is relying on policy rationales as a “subtext” for reversal is

wrong. It was the majority below that relied entirely on policy

grounds — in particular, that appeals by objectors would be

destructive of orderly class action litigation — to hold that

objectors may not appeal. See Pet. App. A21-A24. Petitioner’s

opening brief (at 30-36) simply demonstrated that the Fourth

Circuit’s policy rationale is fundamentally flawed, aid

respondents’ failure even to attempt to defend the decision

below on its own terms is a telling admission.

Thus, there is no serious dispute that appeals by objectors

identify important legal errors, as in Amchem Products, Inc. v.

Windsor, 521 U.S. 591 (1997), which respondents studiously

ignore. The potential for appeals also deters collusive class

action settlements and encourages district court judges to

consider objections studiously. The empirical data establishes

that district court fairness hearings regarding »roposed

settlements tend to be perfunctory, and thus do not, standing

alone, provide substantial protection to objectors, whose

interests will be finally decided by the court’s judgment. See

generally Pet. Br. 28-41. And this Court’s decision in American

Pipe & Products, Inc. v. Windsor, 521 U.S. 591 (1974), and its

progeny establish that the Federal Rules should not be construed

to as to invite unnecessary, burdensome, and distracting motions

to intervene. See Pet. Br. 37-38.

The Solicitor General joins in these points here (at 3-9) just

as he did in Felzen v. Andreas, 525 U.S. 315 (1999) (equally

divided court). The government thus explains that class actions

can be abused by class representatives and their lawyers and that

allowing objector appeals provides an important safeguard “by

assuring that judgments approving [class] settlements are

subjected to appellate scrutiny.”

Respondents echo the Fourth Circuit’s reasoning in only one

respect, contending that, if class action objectors may appeal,

they will effectively have the power to take over the case. Resp.

Br. 22-24. But, just as the class representative has no power to

preclude the presentation of objections in the district court under

Rule 23, she has no such power on appeal. And on appeal,

objectors may press only their obiections to the settlement

because (a) the appeal lies from that aspect of the district court’s

decision rejecting his individual objections, and (b) a party may

raise on appeal only the issues that he properly pressed below.

Objectors may not, for example, contest the district court’s

rulings on discovery, or granting summary judgment on certain

claims, on any number of the many issues that arise during the

course of litigation. Objectors thus cannot be said to “usurp”

any prerogative of the class representative. Petitioner’s position

is thus not that a class member “is entitled to assume the role of

the named representative party.” Resp. Br. 21.

_ Similarly, nothing about petitioner’s position implies that

— enaphine Beye representative’s role in the district

prior to or on appeal from a liti judgment.

Objectors have the right to pursue their init chjoatioas in

district court and on appeal only because the representative no

longer acts in the objectors’ interests once a settlement has been

proposed. Respondents themselves press this distinction: “Once

a proposed settlement is reached, it is axiomatic that the named

representative party who has negotiated the settlement does not

Nor is there a realistic prospect, unique to class actions, of strategic

appeals to gain leverage in the litigation. The only example given of

supposedly strategic behavior (Duhaime v. John Hancock Mutual Life Ins.

Co., 183 F.3d 1, 6 (CAl 1999)) merely speculated regarding the

possibility of improper objections and appeals, but found no such

impropriety, and in any event the same prospect arises if objectors instead

intervene before appealing. The proposed revisions to Rule 23

address the Duhaime concern by requiring the court’s permission before

objections may be withdrawn. 201 F.R.D. 560, 617- 631-32 (2001).

adequately represent either the interests or the viewpoint of

those class members opposed to the settlement.” Resp. Br. 30

(emphasis in original).* Absent such a conflict in interests, the

ive is the class member’s champion, both in the

district court and on appeal.”

This case, moreover, presents the strongest possible

circumstance for permitting an objector to appeal. Petitioner not

only properly presented his objections, but the district court

entered an injunction against Petitioner acting in contravention

of its judgment approving the settlement. There cannot be any

serious argument that his interests are not sufficiently affected

by the proceedings in the district court to take an appeal. J.A.

174-77.

Il. Class Action Objectors Are Parties To The Judgment

And Thus Have The Right To Appeal To The Extent Of

Their Objections.

A. Class Action Objectors Have The Right To Appeal

As “Parties” Because They Are Bound By A Class Action

Judgment.

1. Respondents do not seriously contest the section of

petitioner’s opening brief (at 16-24) demonstrating that, under

this Court’s precedents, the right to appeal extends to all parties

“to the judgment” as opposed to merely “named” parties.

2 Indeed, the class representative’s counsel would be disabled from

acting on the objector’s behalf. See, ¢.g., Model Rule of Prof. Conduct

1.7(b).

problem in Guthrie was one of unfair surprise, and thus is akin to the

ordinary prohibition against raising on appeal issues that have not been

raised in the district court. See supra.

Respondents correctly note (at 14-15) that certain provisions of

the Federal Rules of Civil Procedure (those identifying the

persons who may raise Claims or take discovery) generally refer

to ‘parties” as the named plaintiffs and defendaixts. But the

Civil Rules are not determinative of what persons are “parties”

for purposes of the right to appeal, as respondents essentially

admit by acknowledging (at 22) the many classes of persons

who are not named plaintiffs and defendants (and thus cannot

State claims or take discovery in the district court) but may

nonetheless appeal. See Resp. Br. 22 (discussing, ¢.g., putative

intervenors and sanctioned attorneys).

In any event, the Civil Rules equally assign “party” status to

any person on whose behalf the named plaintiff or defendant

acts. Rule 17(a) thus provides that persons such as an “executor,

administrator, guardian, bailee [or] trustee * * * may sue in that

person's own name without joining the party for whose benefit

the action is brought” (emphasis added). In a class action, the

named representative is (as Rule 23(a) provides) a

representative party” and must exercise her rights under the

Civil Rules not just in her own personal interest, but also in the

en or of all the class members, who are equally “parties” on

at basis.

2. : Respondents therefore principally press the argument that

an objecting class member is not a “party” because he is not

bound directly by a class action judgment. This theory of class

action judgments, even if accepted, would not change the

outcome of this case. However one describes the manner in

which class members are bound, there is no question that they

are in fact bound. As a result, they have an a fortiori right to

appeal under this Court’s long-standing precedents recognizing

the right to appeal of quasi-parties — i.e., persons who have the

right to appear in the case, do appear, and are directly affected

by the judgment. See Pet. Br. 20-22.‘

Respondents assert that, in some of the quasi-party cases, the

“intervened.” But as the Solicitor General explained in his brief in Felzen

(at 8 n.3), at the time the quasi-party cases were decided, the term

“intervention” did not carry with it the same connotation of a formal

But in any event, respondents seriously misunderstand the

effect of a class action judgment on the individual class

members. Respondents emphasize, and this Court reiterated

most recently in Ortiz v. Fibreboard Corp., that there is a “due

process ‘principle of general application in Anglo-American

jurisprudence that one is not bound by a judgment in personam

in a litigation in which he is not designated as a party or to

which he has not been made a party by service of process.’” 527

U.S. 815, 846 (1999) (quoting Hansberry v. Lee, 311 U.S. 32,

40 (1940)). But respondents simply fail to understand the

import of the fact that, as this Court has often repeated, class

actions are “‘an exception to the general rule.” /d. (quoting

Martin v. Wilks, 490 U.S. 755, 762 n.2 (1989) (emphasis

added)).°

As an “exception” to the general rule, class members are

personally bound notwithstanding that they were not named

parties in the district court. As Ortiz explains, in a class action

judgment, “/t)/he legal rights of absent class members * * * are

resolved regardless either of their consent, or, in a class with

objectors, their express wish to the contrary.” 527 U.S. at 846

(emphasis added). The Court made the same point in

Matsushita Electrical Industries Co. v. Epstein: “[{A}\l 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)

action, they make a timely election for exclusion.” 516 U.S.

appearance as a party for all purposes. Ultimately, the significance of the

other quasi-party cases is not the means by which various individuals

gained access to a case, but rather the mere fact that they had gained

access and had a final decision rendered on their arguments so presented.

Here, petitioner had access as a matter of right, not grace, made use of that

access to present his objections, and had a final decision on those

objections rendered by the court. He thus has as much a right to appellate

review of such decision as do any other participants in a case, whether

parties proper or quasi.

5 There is also a bitter irony in respondents’ attempt to invoke the “day in

court ideal” to conclude that a class action objector, unlike any other

person whose interests are adjudicated in a case, may not have a day in an

“appellate court.”

367, 379 (1996) (quoting 2 NEWBERG, CLASS ACTIONS § 2755,

at 1224 (1977), and citing Cooper v. Federal Reserve Bank of

Richmond, 467 U.S. 867, 874 (1984)).

Respondents err in their reliance (at 17-18) on this Court’s

determination in Hansberry v. Lee that a judgment is binding

only to the extent that the class representative adequately

represented the class members’ interests. The relevant point is

Hansberry’s confirmation that, unless and until there is a

successful collateral attack, the class members are “bound by the

judgment.” 311 U.S. at 42. Moreover, Hansberry manifestly

does not turn on any “fundamental distinction in the law of

judgments” (Resp. Br. 19 (emphasis in original)) between class

representatives, who are bound directly by a judgment, and class

members, who (supposedly) are not. There is no such

distinction. Hansberry merely applied the basic principle that

any judgment, including a class action judgment, may not be

enforced to the extent it was entered in violation of due process.

Thus, “there has been a failure of due process only in those cases

where it cannot be said that the procedure adopted, fairly insures

the protection of the interests of absent partiss who are to be

bound by it.” 311 U.S. at 42 (emphasis added).

The principle announced in Hansberry is not, contrary to

respondents’ argument, peculiar to unnamed class members.

Instead, the Court in Hansberry relied on the holding of Tumey

v. Ohio, 273 U.S. 510 (1927), that a plaintiff or defendant may

not be deemed bound by the result in “a trial by a judicial officer

who is in such situation that he may have an interest in the

outcome of the litigation in conflict with that of the litigants.”

311 U.S. at 45. That basic rule of due process applies to a class

representative as well, such that a judgment entered against a

named representative would be equally void, and equally subject

to collateral attack, if entered without notice and an opportunity

to be heard. See, e.g., Zenith Radio Corp. v. Hazeltine

Research, Inc., 395 U.S. 100, 110 (1969) (“It is elementary that

one is not bound by a judgment in personam resulting from

litigation in which he is not designated as a party or to which he

has not been made a party by service of process.” (citing

Hansberry)); cf. Kremer v. Chemical Constr. Corp., 456 U.S.

461, 482 (1982) (“A State may not grant preclusive effect in its

own courts to a constitutionally infirm judgment, and other state

and federal courts are not required to accord full faith and credit

to such a judgment.”).°

Nor is there merit to respondents’ position (at 16-17) that

class members are not “parties to the judgment” because they

are merely “privies” of the class representatives, or to their

related argument (at 24) that, if class members have the right to

appeal, then so must every other “privy” who will be bound as a

matter of res judicata. Respondents completely misunderstand

the one case they cite, Richards v. Jefferson County, 517 US.

793 (1996). Richards held that a judgment in a prior suit was

not res judicata as to a suit later brought by different persons as

a class action. The question of privity was whether the class was

sufficiently in privity with the parties to the first suit, not

whether the class members were in privity with the class

representative.

Respondents latch on to Richards’ statement that one need

not necessarily have been “a party to a judgment in order to be

bound by it,” including “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.” 517 U.S. at 798. But Richards

does not equate class members with privies. Rather, it discusses

class actions in a separate paragraph, which avowedly sets forth

“addition{al]” examples departing from the general rule, and

which has nothing to do with privity. /d. (discussing not only

’ Respondents’ reliance on Hansberry is particularly surprising

because of the natural parallel between that case — which was a successful

challenge to a class action settlement approving a restrictive racial

covenant — and this one. The Hansberry petitioners were unaware of the

prior class action, and thus did not object or appeal but rather collaterally

attacked the adequacy of the representative party. According to the

ts in this case, however, if the Hansberry petitioners had stated

- objections to the settlement in the prior case, and those objections had

been rejected, they would have been prohibited from appealing. There is

no warrant for immunizing trial court errors from review in that fashion.

class actions but also “special remedial scheme[s] * * *

expressly foreclosing successive litigation by nonlitigants”).

Any ambiguity on this score is resolved by Hansberry itself,

which explained (311 U.S. at 38) that it was uncontested that the

class members in that case were not in “privity” with the named

parties, wholly apart from whether they might be bound by the

Class judgment.

The error in respondents’ position is also evident from their

immediate retreat from it. Thus, respondents themselves seem

to recognize that class members are directly bound by a class

action judgment, but they rely on this Court’s statement in

Martin v. Wilks that the judgment is binding when a class

member, “although not a party, has his interests adequately

represented by someone with the same interests who is a party.”

490 U.S. at 762 n.2 (emphasis in Resp. Br. at 17). They

similarly invoke the statement in Hansberry v. Lee that the

petitioners in that case “were not parties” to the contested state

court judgment. Wilks and Hansberry, however, involved only

the preclusive effect of a judgment on persons who were neither

plaintiffs nor defendants in the prior suit, and the Court was

accordingly not referring to a “party” in the sense of the right to

appeal. The Court just as frequently referred to class members

as “absent parties.” See Hansberry, 311 U.S. at 42, 43, 44, 45;

see also Pet. Br. 25-26 (detailing this Court’s precedents

describing class members as “parties” and “absent parties”).

Finally, that petitioner correctly describes the preclusive

effect of a class action judgment is readily apparent from the

facts of this case, and from respondents’ litigation of the case in

the lower courts. The settlement agreement embodied in the

district court’s judgment fundamentally alters the rights and

obligations of the respondent trustees with respect to each plan

member, including petitioner. The judgment thus leads directly

to a substantial reduction in petitioner’s individual pension,

precluding him from challenging respondents’ modification of

the plan’s terms. On that very basis, respondents successfully

secured an injunction prohibiting petitioner in personam from

acting in contravention of the district court’s judgment by

litigating related issues in any other forum. See J.A. 174-77.

Respondents totally fail to explain how, if they are now correct

that petitioner is not bound by the settlement, the judgment in

this case adjudicates petitioner’s individual rights as the district

court held.

B. Class Members Are “Parties” For Purposes Of The

Right To Appeal At The Point The Class Is Properly Certified.

Petitioner’s opening brief explained that Sosna v. lowa and

its progeny hold that, at the point of certification, “the class of

unnamed persons described in the certification acquire[s] a legal

status separate from the interest asserted by [the class

representative],” because that is the point at which “the decision

will bind” all the class members. 419 U.S. 393, 399 & n9

(1975). Sosna thus held that when the class representative's

claims become on moot on appeal, the appeal need not be

dismissed because a continuing case or controversy exists as to

the individual class members, who are equally bound by the

judgment. See also Pet. Br. 26-27 (discussing Sosna’s progeny).

By parity of logic, a member of a certified class is a “party” who

can appeal in his own right.

Respondents’ answer (at 20-21) is to contend that Sosna

actually held that, upon certification, the “class” as an entity —

as opposed to its individual constituent members — has an

interest in the judgment. But respondents simply confuse the

question whether all the members of the class are bound with the

separate question, at issue in Sosna, whether the individual class

members are bound by the judgment and thus raise a sufficient

case or controversy to present the case from becoming moot.

Thus, in a class action, only the individual class members (as

7 In Part I-C of their brief, respondents attack a straw-man, contending

that it is not sufficient for a person merely to “object” to a settlement to

have the right to appeal. Petitioner’s position is not that an objection is a

sufficient condition to “party” status, but that it is a necessary condition.

The objection must be stated by a class member who is, as just explained,

bound by the judgment. Respondents’ reliance on Marino v. Ortiz, 484

U.S. 301 (1988) (per curiam), is thus misplaced because, as even the

majority below acknowledged, the putative appellants in that case were

not members of the class. See Pet. Br. 19-20; Pet. App. A15 n.12.

opposed to the aggregated entity) can have an Article III case or

controversy. In turn, “classes” don’t appeal; individuals do.

Respondents’ argument is just an attempt to undo this Court’s

repeated holding (see supra) that a class action judgment binds

each class member individually.

Respondents’ description of Sosna is thus wrong. Sosna

explained that the significance of certification was that “all

persons” in the class would be bound (419 U.S. at 399 n.9

(emphasis added)), and the Court held there was an ongoing

controversy because “it is clear that [the appellees] will enforce

[the challenged statute] against those persons in the class that

appellant sought to represent and that the District Court

certified” (id. at 400 (emphasis added)). The Court then

articulated its rule as follows: “The controversy may exist * * *

between a named defendant and a member of the class

represented by the named plaintiff, even though the claim of the

named plaintiff has become moot.” /d. at 402 (emphasis added).

See also United States Parole Comm'n v. Geraghty, 445 U.S.

388, 397-98 (1980) (specifically relying on this statement of

Sosna’s holding). Subsequently, in Franks v. Bowman, 424 U.S.

747, 756 (1976), this Court applied Sosna to hold that an appeal

in a Title VII class action was not moot because the appellant

class representative could pursue the interests of “[t]he unnamed

members of the class involved [who] are identifiable individuals,

individually named in the record” (emphasis added).®

* Respondents’ further reliance on Kremens v. Bartley, 431 U.S. 119

(1977), is similarly mistaken. Respondents quote Kremens for the

proposition that, to avoid mootness, there must be a “proper ‘substitution

of class representatives with live claims” (Resp. Br. at 21 (quoting 431

U.S. at 135)), but they omit any mention of the context of that decision.

Kremens did not overrule Sosna and Franks, supra. Rather, intervening

developments in Kremens had squarely called the class certification into

question, such that it was unclear which individuals actually remained

bound by the judgment. In that circumstance, the Court required not

merely “substitution” but also “reconsideration of the class definition.”

431 U.S. at 134. As the Court explained, but respondents ignore, “The

factors which we have just described make the class aspect of this

litigation a far cry inleed from that aspect of the litigation in Sosna and in

——— ee eee ee —

*k#*e *

Because class action objectors are “parties” to the judgment,

they have the right to appeal without intervening in the case.

For the reasons described infra, a more formal intervention

requirement is unwarranted.

Ill. Petitioner Prevails Under A “Pro Forma” Intervention

Requirement, Although Such A _ Requirement Is

Unwarranted.

The government argues (at 18-21), anc respondents basically

acknowledge (at 30), that this Court should adopt the Seventh

Circuit’s rule that an objector’s right to appeal should be

contingent on the objector filing a motion to intervene, which

the district judge should grant essentially as a matter of course.

The government thus asserts (at 21) that a class member who

seeks to intervene generally “will satisfy Rule 24(a)’s interest,

timeliness, and inadequate representation requirements, and,

thus, be entitled to intervene for that limited purpose.”

According to the government (at 24), the objector need not show

that he is an adequate representative for any other member of the

class but only “that his own interests will not be fairly

represented on appeal, a showing that in most cases may be

made simply by pointing to the class representative’s interest in

foregoing an appeal” (emphasis in original). Intervention should

be allowed in those circumstances, ,it maintains, because

objectors “belong to the settlement class and will be bound by

the judgment” (id. at 21), and because “inadequate

representation will invariably be present when a class member

seeks to appeal approval of a class action settlement over his

objection” (id. at 23).

Although petitioner would be entitled to appeal on the

government’s approach, this Court should reject this invitation

to create what amounts to no more than a procedural hurdle to

Franks, where we adjudicated the merits of the class claims

notwithstanding the mootness of the claims of the named parties.” /d. at

131.

appeals by objectors. Furthermore, to the extent this argument

contemplates that district courts would screen objectors’

appeals, it lacks any foundation in the Rules of Civil Procedure

or the experience of the federal courts.

A. Petitioner Has Properly Presented And Preserved

The Argument That He Would Prevail Under A Pro Forma

Intervention Rule.

It is undisputed that petitioner moved to intervene in this

case pursuant to Rule 24 as soon as respondents proposed their

settlement. The government and respondents nonetheless argue

that, if this Court were to adopt a pro forma intervention

requirement, the judgment in this case should be affirmed. The

Solicitor General presses two arguments (only one of which is

joined by respondents), both of which are meritless.

First, the government (at 29) and respondents (at 34)

contend that the Question Presented does not encompass the

Seventh Circuit’s standard. But the pro forma intervention rule

is not only “fairly encompassed” by the Question Presented in

the Petition for Certiorari, it is explicitly encompassed by it. The

question asks: “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” (emphasis added).

Respondent could not be more wrong in stating (at 35) that

“the certiorari petition contained no argument, or so much as an

intimation, that adequate grounds existed for a grant of

certiorari” on this issue (emphasis in original). The Petition

specifically argues that certiorari should be granted because the

Fourti = scuit’s decision conflicts with the Seventh Circuit’s

rule. Tue Petition states in the introduction (at 2): “petitioner

would have been allowed to appeal in the Seventh Circuit.” The

Reasons for Granting the Writ section then devotes an entire

page to the issue, explaining, for example: “The Seventh Circuit

would permit petitioner to appeal as well, although on a different

basis. That court would hold that, although petitioner does not

have standing to appeal as an objector, he does have standing to

appeal as an intervenor” (emphasis in original). The certiorari

Reply Brief (at 8) returned to this precise issue, explaining that

petitioner would prevail under the Seventh Circuit's standard

and that “the relevant point here is that the Fourth Circuit

rejected the Seventh Circuit's approach — it held that petitioner

could not appeal notwithstanding that he had sought to intervene

well before the district court approved the settlement” (emphasis

in original).

The Solicitor General’s contrary position that the Question

Presented does not encompass this issue is impossibly

confusing, for he repeatedly demonstrates that he does not

believe his own argument. The government's brief (at i) restates

the Question Presented as “[wJhether, or in what circumstances,

a non-named class member who objects to a class action

settlement may appeal-a district court judgment approving the

settlement.” See also id. at 9 (same); S. Ct. R. 24.1(a) (“The

phrasing of the questions presented need not be identical with

that in the petition for a writ of certiorari or the jurisdictional

statement, but the brief may not raise additional questions or

change the substance of the questions already presented in those

documents.”’).

Second, the government contends (at 28) that petitioner did

not specifically invoke, and the Fourth Circuit did not

specifically reject, the Seventh Circuit's rule in those terms in

the proceedings below. To put it charitably, this is nitpicking.

Petitioner argued in the Fourth Circuit that he was entitled to

appeal either as an intervenor or as an objector, and the court of

appeals’ entire opinion is devoted to rejecting those arguments.

If nothing else, the Fourth Circuit “passed upon” this issue when

it held (Pet. App. Al2-A13, A21-A24) that class members

generally may not intervene once the settlement is proposed

because they will interfere with the class representative's

administration of the case. Even respondents admit (at 34) that

the issue was sufficiently resolved below. And, once again, the

Solicitor General contradicts himself: if the government really

believed that the pro forma intervention rule was not passed

upon below, it could not ask this Court to adopt it. “This

Court’s practice is to ‘deal with the case as it came here and

affirm or reverse based on the ground relied on below.’” S.G.

Br. 28 (quoting Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80,

86 (1988)).’

Finally, it bears emphasizing both that the district court did

believe that petitioner had satisfied any “screening” criteria that

might constrain an objector’s right to appeal, and furthermore

that respondents consciously led the district court to conclude

that petitioner could appeal without intervening. As petitioner’s

opening brief detailed and respondents notably do not contest,

respondents not only categorically took the position that it was

unnecessary for petitioner to formally intervene to protect his

interests, but furthermore secured approval from the district

court of a class notice that explicitly contemplated objector

appeals. Pet. Br. 6-7. The district court, in turn, rejected

petitioner’s objections, but stated on the record that, “if I’m

wrong, you got an appeal.” J.4. 154. Later, the district court

eiterated: “I am perfectly clear that my order approving the

class settlement should be appealed, should be reviewed by the

Fourth Circuit in due course.” C.A. Supp. App. 1240.

Respondents are judicially estopped from taking the contrary

position in this Court. See New Hampshire v. Maine, 532 U.S.

742 (2001); Pegram v. Herdich, 530 U.S. 211, 228 n.8 (2000)."°

* The government's passing suggestion (at 27, 29) that petitioner’s merits

brief does not sufficiently present this issue is inexplicable. As even

respondents acknowledge (at 33), an entire section of petitioner’s merits

brief (Part IV, at 41-43) is devoted to it. The government's further

suggestion (at 28) that petitioner did not properly raise this issue in the

district court because “he sought to intervene not only to move to oppose

the preliminary approval of the settlement, but also to take discovery,

secure an injunction, and disqualify class counsel” (emphasis added)

contradicts its own proposal (at 14) that objectors should move to

intervene and the district court should enter an order under Fed. R. Civ. P.

23(d(3 that permits them to intervene but then “condition{}"their

participation to appealing.

position (at 30) that the class representatives did not provide adequate

representation once the settlement was proposed. They strenuously, and

successfully, pressed the opposite position below. See J.A. 84-86; Resp.

C.A. Br. 41-42.

B. A Pro Forma Intervention Requirement Is

Unwarranted.

In the Felzen case, the Solicitor General, on behalf of the

S.E.C., argued that this Court’s quasi-party precedents firmly

established the right of objectors to appeal without intervention,

and advised this Court:

[T]he standards for objecting under Rule 23.1 are

different from intervention under Rule 24, and it was

precisely that point that the [court in the leading case of

Cohen v. Young, 127 F.2d 721 (CA6 1942)} recognized

in ruling that an objecting shareholder had a limited right

to appeal without demonstrating that the standards for

****

The court of appeals [in Fe/zen] concluded that if the

objecting shareholders wished to appeal, they must first

intervene as parties. As a practical matter, that

conclusion imposes an unnecessary requirement. By

appealing the district court’s approval of the settlement,

the objecting shareholders are merely seeking to

persuade the court of appeals that the district court erred

in rejecting the arguments they were required to make if

they hoped to avert the imposition of a binding judgment

adverse to their interests. Requiring intervention as a

party for the purpose of making an appearance in the

court of appeals threatens to interpose an unwarranted

obstacle to what historically has been an essentially

automatic right that comparably situated quasi parties

have had to pursue their appeals.

Gov’t Br. at 24.

With barely a side-long glance at those unambiguous

arguments (Br. at 27 n.27), the Solicitor General now takes the

opposite view.'' The government says its new position is the

"The government notes (at 27 n.13) that, in a footnote in its Felzen

brief, it referred to “a settlement that has yet to be proposed or accepted.

result of “further consideration” (id.) but the real reason is

transparent. In Felzen, the Solicitor General spoke on behalf of

the S.E.C. as a regulating entity. Because the decision in this

case will apply to all civil litigation, the Solicitor General now

advances the government’s interest as a class action defendant

as “a named party in numerous class actions brought under

Federal Rule of Civil Procedure 23” (Br. 1) because the decision

in this case will apply to all civil litigation. With respect,

petitioner submits that the views expressed by the government’s

F elzen brief, which were unadorned with its own litigating self-

interest, are more well founded.

The government, unable to find any statutory basis for

arguing that class members who are already “parties to the suit”

(American Pipe & Constr. Co. v. Utah, 414 U.S. 538, 550

(1974)) must nevertheless intervene, latches on to the 1966

amendments to Rules 23 and 24, which it claims (at 14)

“establish intervention as the mechanism by which non-named

ata ae eh biceiee eee iee

their interests * * *, including with respect to appeals.” Not so.

Rule 24 does not mention Rule 23 class actions, let alone

suggest that class action settlements may be appealed only by a

Rule 24 intervenor. For its part, Rule 23 mentions intervention

only with respect to class members who may wish “to intervene

and present claims and defenses.” Fed. R. Civ. P. 23(d)(2)

(emphasis added). As explained in petitioner’s opening brief,

that is the principal purpose of Rule 24 intervention: to allow

interested persons to litigate claims and defenses that they

believe are not being adequately advanced by the named

litigants. Objectors such as petitioner seek no such right.'?

But its position in Felzen was not limited to intervention prior to the

submission of a settlement. Indeed, the case cited by the government in

that footnote — American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974)

— Stands squarely for the proposition that unwarranted intervention

requirements should not be imposed because they simply result in

unnecessary collateral litigation.

? Seeking to fit within the scheme of Rule 24, the Solicitor General

States that the objector’s motion to intervene should include “notice

After claiming (at 12) that the “Federal Rules” “[s)pecify”

intervention as the avenue for appeal, the government relies not

on the text of the Rule itself, but rather on two snippets from the

1966 Advisory Committee Notes, neither of which have

anything to do with the question presented here. The Note to

Rule 23(d)(2) — a Rule which concerns supplemental forms of

court-ordered notice to the class — states that a class action

notice may “encoviage interventions to improve the

representation of the class” (emphasis added). Like the Rule

itself, that statement in the Note plainly pertains to intervenors

who (unlike objectors such as petitioner) wish to litigate the

underlying action as representative parties, and thus the purpose

of intervention is to allow a class member to take over the

litigation. The same is true of the Note to Rule 24(a)(2), which

provides that intervention is appropriate when a trust beneficiary

can show that the current trustee is an inadequate representative,

and that “similarly a member of a class should have the right to

intervene in a class action if he can show the inadequacy of

representation of his interest by the representative parties before

the court.”"*

Without any support in (or even citation to) the text of Rules

23 or 24, the government turns to case law, which it claims

pleading stating his claims or defenses” as required by Rule 24(c).

However, an objector is not pursuing “claims or defenses” different from

the other class members, but instead seeks only to defeat the class

settlement, which simply underscores that the Rule’s drafters did not

contemplate Rule 24 intervention as procedural prerequisite for objector

appeals.

‘3 Moreover, if intervention were the method contemplated by the

drafters for class members to challenge a class settlement on appeal, that

would effectively reduce the merits of the class settlement to one issue —

adequacy of representation. See Fed. R. Civ. P. 23(aX4), 24(a)(2).

However, there are many other legitimate bases for overturning a class

settlement or its fees component on appeal. See, ¢.g., In re General

Motors Corp. Pick-up Truck Fuel Tank Litig., 5S F.3d 768 (CA3), cert.

denied, 516 U.S. 824 (1995) (settlement’s benefits not fair exchange for

release of class members’ claims); Bowling v. Pfizer, Inc., 132 F.3d 1147

(CA6 1998) (excessive attorney's fees).

supports the proposition that class members who object to an

settlement must intervene to continue their objections in the

court of appeals, relying chiefly (at 17) on United Airlines, Inc.

v. McDonald, 432 U.S. 385 (1977). In that case, the district

court had denied class certification in a Title VII gender

discrimination action. As a result of that ruling, the non-named

plaintiffs were not parties to the action and would not be bound

by any subsequent judgment of the court. See supra. Thus, at

that juncture, intervention was the only means for the unnamed

class members to participate further in the litigation (if the class

representatives did not take further action), because their legal

interests had been formally excluded from the litigation. The

sole question before this Court was whether a member of the

uncertified class, who sought to intervene after judgment to

appeal the district court’s denial of certification, was a timely

intervenor, and the Court held that she was. Petitioner’s

situation is exactly opposite to that of the putative appellant in

United Airlines: Rather than being ousted from the litigation,

the district court’s decisions in this case certifying the class and

approving the class settlement confirmed petitioner’s party

status and that he would be bound by the judgment just as

assuredly as would the named plaintiffs. Thus, intervention

would be redundant; it would merely corroborate a status that

petitioner had already attained.

Just as important, no provision of the Rules permits a district

court to undertake, as the government proposes (at 28), to

choose between potential objector appellants or otherwise screen

out objectors. Rule 24 permits intervention; once -anted, the

intervenor has a categorical right to appeal. Rule 23(d), on

which the Solicitor General relies, lists a number of devices the

district judge may do to manage class actions, but all of them

relate to the district court proceedings, and none of them

approach forbidding a class member from appealing. And the

government’s proposed approach to intervention invites the

pernicious possibility that the objector “chosen” by the district

court will not advance certain arguments favored by those

objectors who were “rejected” by the district court, or worse

still, will settle or voluntarily dismiss the appeal (see Fed. R.

App. P. 42; Duhaime v. John Hancock Mut. Life Ins. Co., 183

F.3d 1 (CAI 1999), cited in U.S. Br. 28 n.12), leaving the non-

appealing objectors subject to a settlement that they regard as

unfair or unlawful, and which they were denied the opportunity

to appeal.

Moreover, the examples given by the government as a basis

for interposing the district court as appellate gatekeeper make no

sense. Each posits a situation in which the objector does not

have standing to challenge the settlement even in the district

court, such as when the objector is not, in fact, a class member

or is not entitled to settlement relief. If the defect in the

objector’s standing can be discerned at all, it will have already

become apparent during the course of the Rule 23(e) fairness

hearing process. Any dispute over the objector’s status will be

resolved at that earlier stage, not in the context of a motion to

intervene for the purpose of appeal. The government’s supposed

concerns rest on a view of class action litigation that is totally

imagined. Thus, the Solicitor General does not (because he

cannot) cite a single case suggesting either that any of his

concerns ever arise in practice, or that intervention for the

purpose of appeal is an appropriate procedure for addressing

those concerns. Nor does he cite a single court that has ever, in

the history of the Federal Rules, adopted his proposal; petitioner

is aware of none.'*

The government claims that its intervention requirement

would not pose a burden on objectors because the motion would

be a formulaic request based on the objector’s obvious interest

in taking an appeal from a settlement that the named plaintiffs

favor. But, as the Solicitor General pointedly argued in Felzen

(at 24), intervention is nothing more than an “unnecessary

requirement.” The government (now in its role as a litigating

defendant) ignores the burdens imposed by the intervention

‘4 As noted supra, the Seventh Circuit deems the intervention

requirement entirely pro forma; the district court has no role in screening

objectors’ motions to intervene, and certainly does not pick which

objectors have a right to appeal or use intervention as a tool to determine

class membership and the like, as the government now suggests.

requirement on objectors, on the istrict court (which must

adjudicate the motions), and on the courts of appeals (because

objectors will likely challenge a denial of intervention on

appeal). The government’s position, like the respondents’, also

ignores the fact that objectors are often pro se and will have no

idea that they are expected to seek intervention to preserve their

appellate rights.'°

CONCLUSION

For the foregoing reasons, the decision of the Fourth Circuit

should be reversed.

'S The Eleventh Circuit in Guthrie v. Evans, upon which both

respondents and the government rely, also supported its intervention

requirement by stating that collateral attack — the filing of a separate, post-

judgment lawsuit attacking the validity of the settlement — is a better

alternative to appeal. 815 F.2d 626, 628 (1987). But that approach is

unfair to class members and undermines the interests of the litigants and

the courts in finality. As explained supra, an absent class member would

be entitled to collaterally attack a judgment approving a class action

settlement when due process was the basis for the attack, but would not be

able to challenge the fairness of the settlement or other legal impediments

that generally can be contested on direct review. That being the case, a

collateral attack is a poor substitute for a direct appeal that can protect all

of the absentees’ legal interests. See generally Marcel Kahan & Linda

Silberman, The Inadequate Search for ‘Adequacy’ in Class Actions: A

Critique of Epstein v. MCA, Inc., 73 N.Y.U. L. Rev. 765, 780 & n.69

(1998) (hailing superiority of comprehensive direct review over collateral

attack and criticizing intervention requirement as potential impediment to

appellate review). Moreover, regardless of the scope of collateral attack,

it is generally preferable to have challenges to a class action settlement

heard in the original forum, with direct appellate review, rather than to

encourage each class member to file a separate suit, in a distant forum,

challenging the res judicata effect of a previously entered class action

judgment.

BRIAN WOLFMAN

PUBLIC CITIZEN LITIGATION

GROUP

1600 20th St., N.W.

Washington, DC 20009

March 19, 2002

Respectfully submitted,

THOMAS C. GOLDSTEIN

(Counsel of Record)

AMY HOWE

GOLDSTEIN & HOwgE, P.C.

4607 Asbury PI., N.W.