# Appendix — Evans v. City of Chicago

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1994
- **Citation:** 511 U.S. 1082

## Text

ey

931372 FEB 2 2 199

OFFICE Or }He CLeNK

No.

IN THE ah

Supreme Court of the United States

OCTOBER TERM, 1993

SYLVIA EVANS, et al., Petitioners,

Vv.

CITY OF CHICAGO, Respondent.

BERTHA BALARK, et al., Petitioners,

V.

CITY OF CHICAGO, Respondent.

Petition for Writ of Certiorari to the United
States Court of Appeals for the Seventh Circuit

APPENDIX TO THE
PETITION FOR WRIT OF CERTIORARI

JOHN BERNARD CASHION EDWARD T. STEIN
Counsel of Record Counsel of Record

33 N. LaSalle Street 225 W. Washington Street
Suite 2500 Suite 2350

Chicago, Illinois 60602 Chicago, Illinois 60606
(312) 368-0191 (312) 220-0600

Attorney for Attorney for

EVANS Petitioners BALARK Petitioners

Midwest Law Printing Co., Chicago 60611, (312) 321-0220

TABLE OF CONTENTS

PAGE
En Banc opinion (Evans III) 11/24/93 ......... 1
Evans panel opinion 6/3/93 ...............0005- 24
District Court Order modifying Consent Decree . . 51
Transcript of District Court reinstating Consent
I a che ChE NbhaU odd vbeeeerees Fikies 52
Evans II opinion 4/27/89... 2.2.2.0... eee eee 72
Consent Decree 5/31/84 ............ccccecccces 93
Evans I opinion 9/27/82 ...............0.000e 108
Order on Rehearing En Banc 8/19/93 .......... 133
Judgment En Banc 11/24/93 ................... 135
District Court Order vacating Consent Decree
NE dee das lvacueceses ceed cicudanc weeds 136
Docket entry of District Court Order vacating Con-
ee SN ha ob-cvaeecuweeetdedesetacceus, 139
District Court Order partially reinstating Consent
BE WUE hci seuuedbaddvdsetencanues. 140
District Court Order (docket ertry) denying Defen-
dants’ Motion to Reconsider 9/4/91 ......... 142
Partial Transcript of Judge Grady’s ruling in the
damages portion 10/22/87 .................. 143

IN THE
Supreme Court of the United States

OCTOBER TERM, 1993

SYLVIA EVANS, et al., Petitioners,
v.

CITY OF CHICAGO, Respondent.

BERTHA BALARK, et al., Petitioners,
v.

CITY OF CHICAGO, Respondent.

Petition for Writ of Certiorari to the United
States Court of Appeals for the Seventh Circuit

APPENDIX TO THE
PETITION FOR WRIT OF CERTIORARI

App. 1

IN THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

No. 91-3277

SYLVIA EVANS, Administrator of the Estate
of Andrew Evans, et ad.,

Plaintiffs-Appellees,

Vv.

City or CHICAGO,
Defendant-Appellant.

Appeal from the United States District Court
for the Northern District of [linois, Eastern Division
Nos. 77 © 4119, 79 C 1939, 79 C 2493—John F. Grady, Judge

ARGUED SEPTEMBER 8, 1993—DecipED NovemMBer 24, 1993

Before POSNER, Chief Judge, and CUMMINGS, BAUER,
CUDAHY, CorrEY, FLAUM, EASTERBROOK, RIPPLE, MANION,
KANNE, and RovNerR, Circuit Judges.

EASTERBROOK, Circuit Judge. Now 16 years oid, this
case is making its third appearance in this court—and the
parties’ current dispute arises out of the conflicting deci-
sions of the first two panels. We meet in banc to con-
sider whether a district court should require a unit of
state or local government to abide by a consent decree
that does not serve any federal interest. The answer is
No, and the injunction based on the parties’ agreement
therefore must be vacated.

i a

App. 2

During the late 1970s and early 1980s, the rate of in-
terest Chicago paid on judgments (6% per annum for mu-
nicipal governments, 735 ILCS 5/2-1303) was substantial-
ly less than the market cost of credit. Judgment debtors
had every reason to postpone payment as long as this im-
balance persisted. Instead of borrowing in the market at
15%, or raising taxes, Chicago borrowed from its judg-
ment creditors. It paid tort judgments of $1,000 or less,
and all contract judgments, quickly. The City Council did
not appropriate funds sufficient to pay other judgments
in the year the courts entered them. By 1979 plaintiffs
without the political clout to jump the queue had to wait
on average 47 months for payment. An active secondary
market in judgments against Chicago developed. About
80% of judgment holders sold in this market, accepting
a discount of approximately 25% off the face value of their
awards. Evans v. Chicago, 689 F.2d 1286, 1290 (7th Cir.
1982) (Evans J).

Suits challenging Chicago’s delay in payment were filed,
certified as class actions, and consolidated. By summary
judgment the district court held that Chicago’s practice
of paying small judgments quickly while deferring pay-
ment of larger ones violated the due process and equal
protection clauses of the fourteenth amendment: due proc-
ess because it deprived judgment creditors of a “prop-
erty” interest in immediate payment created by state law,
and equal protection because there was no rational basis
for distinguishing large from small awards. A panel of this
court affirmed the portion of the judgment that rested
on the equal protection clause, id. at 1299-1300, while
vacating the due process aspect as premature. Jd. at 1296-
99. Dicta in the opinion strongly imply that the City de-
prived the plaintiffs of due process of law. Jd. at 1297-98.

On remand the district judge told the parties and their
lawyers that the combination of his opinion and ours con-

demned Chicago’s practices en toto. He directed the par-
ties to negotiate appropriate relief. They complied, and

App. 3

the judge approved a consent decree eliminating the
distinction between large and small judgments, requiring
all judgments to be paid in order of their entry, and pro-
viding that the Mayor n.ust ask the City Council to ap-
propriate enough money to pay all judgments promptly.
The litigants could not agree whether the plaintiffs were
entitled to damages for delay in payment. The district
court concluded that they were, under the equal protec-
tion clause—both the plaintiffs and the district court deem-
ing the due process theory surplusage in light of the equal
protection holding. Another panel of this court reversed,
overruling Evans I. 873 F.2d 1007 (7th Cir. 1989) (Evans
II). The second panel (with the acquiescence of the full
court, see id. at 1008 n.*) concluded that the City had a
rational basis, if only administrative convenience and the
placation of the more numerous holders of small awards,
to pay little judgments before big ones. Jd. at 1015-18.
The second panel wrapped up: “The district judge ad-
vanced some worthy ideas, but they are for the City’s
self-determination, and will not be imposed by this court.
It is regrettable that this matter which has lingered so
long now takes a new and possibly unexpected turn, but
what we now view as error must be arrested even at so
late a date. Improvements in this situation are better left
to the state and municipal governments.” Jd. at 1017-18.

Chicago then asked the district court to vacate the in-
junction and return the subject to “the City’s self-deter-
mination’’. Interest rates have changed; today the legal
rate ——- the market rate, so Chicago would pay
promptly even if the injunction were not in force. Still,
it wants to redeem its governmental powers, now in hock
in a district court. The motion invoked Fed. R. Civ. P.
60(bX5), which permits a court to modify a judgment when
“a prior judgment upon which it is based has been re-
versed or otherwise vacated, or it is no longer equitable
that the judgment should have prospective application’.
Evans I, which led to the settlement, was gone; the City
added that in its view it is also “no longer equitable” that
a judgment affecting its legislative functions remain in

ee

“a

App. 4

force when the judgment does not serve a federal interest.
Rule 60(bX5) applies to consent decrees as well as to other
judgments. Rufo v. Inmates of Suffolk County Jail, 112
S. Ct. 748, 757 (1992). Recognizing that the decree’s foun-
dation had been washed away, the district court set it
aside. Rufo, which holds that consent decrees regulating
the conduct of state or local governments may be modified
more freely than those entered by private litigants, sup-
ports this disposition.

On motion for reconsideration, however, the district
judge reversed course. He observed that Evans II ad-
dressed only the plaintiffs’ equal protection theory—for
the plaintiffs had not urged the panel te affirm the award
of damages on due process grounds. 873 F.2d at 1012 n.11,
1018 n.15. Because Evans I/ did not bear on the due proc-
ess theory, there had not been any change of law affect-
ing this aspect of the plaintiffs’ case. When Chicago
agreed to pay judgments faster, the district court be-
lieved, it was settling the due process claim along with
the equal protection claim. The district judge therefore
revised the injunction to delete only so much of the relief
as Evans II had expressly held inappropriate. The sole
So satisfying that description was the portion for-

idding Chicago to distinguish judgments according to
size. Deleting that element was nugatory because of the
separate provision compelling the City to pay judgments
promptly and strictly in order of their entry. Stuck ex-
actly where it was before Evans II, Chicago asks us to
annul the consent decree and the injunction implementing
it.

II

No one doubts that Rufo and Rule 60(bX5) entitle Chi-
cago to relief to the extent the decree rests on the equal
protection theory. The injunction intrudes on the internal
operations of the City, telling the Mayor what items must
be in the annua! budget. Evans I] rightly said that, al-
though changes may be beneficent, the political rather
than the judicial process is responsible for the subject.

App. 5

Governments may undertake to do more than the Con-
stitution requires. Rufo, 112 S. Ct. at 760-63; see also
Firefighters v. Cleveland, 478 U.S. 501, 525 (1986). If there
were something to the due process theory (a big if, dis-
cussed in Part III below), a decision removing all but this
one theory would leave room for settlement, as the dis-
trict court said. The initial problem with its decision,
however, is that Chicago did not settle any aspect of the
merits. It litigated the merits to the nines and settled
only the details of relief.

Rule 60(bX5) calls on the court to ascertain whether a
judgment is “based”’ on some earlier decision. This con-
sent decree is ‘“‘based’’ on Evans I rather than an inde-
pendent compromise of the due process claim. Plaintiffs
wanted money. The City refused to pay, and after issuing
an injunction the district judge held a trial on damages.
Chicago appealed from an adverse decision, leading to
Evans II. If the consent decree really represented a com-
promise of the merits—even of the due process theory
alone—there could not have been an Evans IJ. Yet on
appeal in Evans II the plaintiffs did not contend that the
merits had been compromised; it was plain to all that the
merits (and damages) were still in dispute. All that had
been compromised was prospective relief. Chicago “agreed”’
to do what Evans I implied that it must do. ‘ ‘Consent’
that is no more than knuckling under to the inevitable
is more like an adjudication than a contract.’’ People Who
Care v. Rockford Board of Education, 961 F.2d 1335, 1338
(7th Cir. 1992), quoted in United States v. Chicago, 978
F.2d 325, 333 (7th Cir. 1992).

Before accepting the parties’ agreement, the district
judge made clear his view that Evans I (and his own prior
decision) resolved the merits, leaving for decision only
issues about relief. If Evans I condemned the City’s ap-
proach to paying judgments, the parties had no need to
settle the due process claim. After a decision on one claim
resolves the case, neither judge nor litigants needs to ad-
dress additional legal theories. The district judge told the
parties in no uncertain terms that Evans I resolved the

App. 6

merits, and that nothing remained but to select the appro-
priate relief. When Chicago bridled, the judge announced
from the bench on October 26, 1983:

Now, I have got to have an order from the City and
the plaintiffs. I have got to have an agreed order that
will bind the City to pass a budget sufficient to pay
tort judgments.

* * *

If by November 25th, approximately a month from
now, I do not have in my hands an agreed order that
calls upon the City and requires the City to budget
ponent an amount sufficient to pay tort judgments
along the lines which we have been discussing in
great detail at our recent and not so recent confer-
ences in chambers, then I am going to go ahead and
enter my own order.

* * *

I see no need for any further conferences with coun-
sel that go to basic philosophy or go to what I have
been saying this afternoon. If there is some mechan-
ical thing you want to talk about that I can help you
with, I will be happy to sit down, but just to rehash
this question about whether we are going to do some-
thing in this case that the Court of Appeals ordered
done a long time ago, the time for discussion has
passed.

The judge believed that Evans I dictated what to do, but
not how. Mechanical details remained for decision. And
the details of prospective relief are all the parties com-
promised. The merits were not settled. They were liti-
gated, twice. The City lost in Evans I and won the re-
match in Evans I].

Let us suppose, however, that this understanding is in-
accurate. The question remains whether in the language
of Rule 60(bX5) “it is no longer equitable that the judg-

a

App. 7

ment should have prospective application”. The district
court treated this case the same way it would if the defen-
dant were a private merchant that had agreed to sell the
plaintiff a ton of steel: a contract’s a contract, and pacta
sunt servanda. Yet this is no ordinary contract. First,
it requires continuing supervision by the district court.
Judges need a good reason, one in addition to the parties’
say so, before diverting attention from other business in
this fashion. System Federation v. Wright, 364 U.S. 642,
651 (1961) (“The parties cannot, by giving each other con-
sideration, purchase from a court of equity a continuing
injunction.”’); Firefighters v. Cleveland, 478 U.S. at 525
(A “federal court is more than ‘a recorder of contracts’
from whom parties can purchase injunctions.”’). Second,
the decree entangles an arm of federal government in the
administration of another sovereign, monitoring the budget-
ary decisions of a Mayor and City Council rather than
enforcing strictly legal rights. Again such a step may be
taken with justification, cf. Missowri v. Jenkins, 495 U.S.
33 (1990), but the parties’ consent is not automatically
sufficient.

Especially not when one of “the parties” did not con-
sent. This is the third, and most potent, objection to the
district court’s approach. “Chicago” did not reach a settle-
ment with the plaintiffs. The consent decree was entered
in 1984. Negotiations were conducted on Chicago’s behalf
by its corporation counsel, who we may suppose acted
with the approval of Harold Washington, then Chicago’s
mayor. Although the decree purports to last for all time—
and the district court’s decision refusing to vacate the de-
cree even after Evans II reflects a belief that the commit-
ments ought to run perpetually—democracy does not per-
mit public officials to bind the polity forever. What one
City Council enacts, another may repeal; what one mayor
decrees during his four-year term, another may revoke.
Today’s lawmakers have just as much power to set public
policy as did their predecessors. “Chicago” speaks through
its elected representatives, and the people are free to
upset even the most enlightened policies of earlier times.

App. 8

The current mayor wants to be free of his predecessor’s
commitment, concluding that more flexibility over budgets
will promote the public welfare. People of good will could
be on either side of this disagreement; each mayor may
have correctly perceived the needs of the moment.

Governments are in this respect unlike corporations or
other contracting parties. A corporate board of directors
may enter into commitments that continue after new di-
rectors take office; a legislature may not. True, govern-
ments may form contracts (for example, to build a new
road or repay a loan) and must keep these commitments
by virtue of the contract clause of the Constitution, Art. I,
§10, cl. 1. See United States Trust Co. v. New Jersey,
431 U.S. 1 (1977). But temporary officeholders may not
contract away the basic powers of government to enact
laws—or in this case to adopt budgets—in the same way
natural persons may make enduring promises about their
own future behavior. Wilbur v. United States, 281 U.S.
206, 217 (1930); Stone v. Mississippi, 101 U.S. 814, 817-18
(1879); Charles River Bridge Co. v. Warren Bridge Co.,
36 U.S. 420 (1837). Why then should things differ if the
parties choose not the device of a seal (or even of a stat-
ute) but the imprimatur of a district judge? See Michael
W. McConnell, Why Hold Elections? Using Consent De-
crees to Insulate Policies from Political Change, 1987 U.
Chi. Legal Forum 295; cf. Peter M. Shane, Federal Policy
Making by Consent Decree: An Analysis of Agency and
Judicial Discretion, id. at 241, 269 n.105.

Consent alone is insufficient to support a commitment
by a public official that ties the hands of his successor.
Accord, League of United Latin American Citizens v.
Clements, 999 F.2d 831, 846 (5th Cir. 1993) (in banc)
(“Courts must be especially cautious when parties seek
to achieve by consent decree what they cannot achieve
by their own authority. Consent is not enough when liti-
gants seek to grant themselves powers they do not hold
outside of court.”’); United States v. Miami, 664 F.2d 435,
440 (11th Cir. 1981) (in banc). Thus the answer to the
question “‘why should consent decrees be enforced when

App. 9

contracts out of court are not?” must concentrate on legal
rules that shape the parties’ agreement. A promise by
a public official is of limited utility when only the official’s
word supports the commitment. A consent decree may
be—under System Federation must be—based on more
than consent. It depends on rules of law that govern the
public official’s conduct. “ (TJhe District Court’s author-
ity to adopt a consent decree comes only from the statute
which the decree is intended to enforce,’ not from the par-
ties’ consent to the decree.” Firefighters v. Stotts, 467
U.S. 561, 576 n.9 (1984), quoting from System Federation,
364 U.S. at 651. A state official’s promise to follow a rule
of federal law retains its force because of the continuing
effect of the law, which the state cannot alter. And a set-
tlement of a dispute about the meaning of that law may
be enforced if the agreement compromises genuine uncer-
tainties, for then the public official actually may be en-
hancing or preserving the powers of the democratic branch
(by avoiding a worse outcome after trial) rather than
ceding the powers of the government.

This method of justifying the implementation of consent
decrees implies, however, that the court must ensure that
there is a substantial federal claim, not only when the
decree is entered but also when it is enforced, and that
the obligations imposed by the decree rest on this rule
of federal law rather than the bare consent of the office-
holder. When making these inquiries, courts are bound
by principles of federalism (and by the fundamental differ-
ences between judicial and political branches of govern-
ment) to preserve the maximum leeway for democratic
governance. Over the last decade a series of decisions in
this circuit has emphasized the dist: ict court’s responsibil-
ity to identify the rule of federal 1aw supporting a con-
sent decree binding the political arms of government, and
the corresponding obligation to permit new public officials
to set their own policy within the limits established by
federal law. We mention only a sample of these cases,
beginning with another decision by the full court.

App. 10

As part of a settlement of litigation protesting investiga-
tions calculated to stifle dissident groups, the Department
of Justice promised to continue using a set of investiga-
tory eee specified in guidelines developed by Attor-
ney General Levi in 1976. In 1983 Attorney General Smith
promulgated a new set of guidelines, which like the Levi
guidelines fully complied with all constitutional require-
ments but which differed from the Levi guidelines in re-
spects the plaintiffs deemed material. Relying on the con-
sent decree, the district court forbade implementation of
the Smith guidelines to the extent they differed from the
Levi poses men This court held, however, that despite
one Administration’s promise, Attorneys General are en-
titled to reach, and implement, different conclusions about
appropriate investigative techniques, so long as the new
rules adhere to all legal norms. Alliance to End Repres-
sion v. Chicago, 742 F.2d 1007 (7th Cir. 1984) (in banc).
Although the case involved interpretation rather than
modification of the decree, the court emphasized the im-
portance of allowing the political branches of government
to reach, and update, independent conclusions about law
enforcement techniques. Doubts were to be resolved in
favor of leeway for the political branches: “We doubt that
in agreeing to the consent decree the Justice Department
tied its hands to such an extent; for if it did, it was
trifling with the public safety . . . and maybe even vio-
lating the President’s constitutional obligation to ‘take
Care that the Laws be faithfully executed.’ ” 742 F.2d
at 1014. “And what did [it] get in return for abandoning
that duty, if that is what it did? [The plaintiffs] would
not have gotten a broader injunction if they had pressed
the case to trial and won than they got in the consent
decree. . . . The decree as it stands is a remarkable judi-
cial intervention in vital executive functions; a proper
decree formulated after a trial would not have been more
Draconian.” Jd. at 1015. Such considerations led the court
to infer that the executive branch had not contracted
away its powers after all. See also id. at 1020. Pretty much
the same approach—with the same result of permitting

App. 11

the political branches of government to go on formulating
new policies—was applied in White v. Roughton, 689 F.2d
118 (7th Cir. 1982) (permitting a town to enact new wel-
fare legislation, although an earlier consent decree seemed
to commit it to a different program in perpetuity, when
the due process clause of the Constitution did not lock
the town into the choice expressed in the decree). Cf. Sec-
retary of Labor v. Fitzsimmons, 805 F.2d 682, 695-97 (7th
Cir. 1986) (in banc).

Consider, too, a dispute about using consent decrees to
affect the budget. In order to induce Chicago to agree
to a school desegregation remedy, the federal government
promised financial aid. According to the consent decree,
the United States would give Chicago priority in the allo-
cation of available funds. A new Administration in Wash-
ington allocated Chicago less than it believed the agree-
ment required, and six years of litigation ensued. We final-
ly concluded that the consent decree should not be read
to require automatic funding, or to compel the President
to seek additional appropriations, but only to require the
Secretary of Education to exercise discretion in good faith
within a range preserved by statutes and regulations.
United States v. Board of Education, 799 F.2d 281 (7th
Cir. 1986). We adopted this reading in substantial measure
because of concern that judges should not take control
of the budgetavy process even with the consent of the
parties—and we were reluctant to enforce even such a
limited commitment except for the fact that the federal
government’s promise induced Chicago to undertake a
program otherwise beyond its means, a p that pro-
tected the constitutional rights of children. Take away the
detrimental reliance, and the bona fide constitutional
claim, and there would have been little support for even
the modest control of budgetary priorities reflected in that
decree. See 799 F.2d at 297-98. In today’s case, by con-
trast, the decree governs the size and allocation of the
City’s budget, did not engender reliance, and does not pro-
tect anyone’s constitutional rights.

a

App. 12

Let us turn to a few cases about the entry of consent
decrees. Electoral fraud has been a persistent blemish on
the political system of Chicago. The Board of Election
Commissioners agreed to resolve constitutional litigation
by adopting a new regulatory system, including different
dates for registration and canvasses, that it believed
would reduce the amount of fraud. We held that entry
of such a decree would be improvident, because regula-
tion of election procedures should be left to the political
process unless a particular procedure is essential to cure
an ongoing violation of federal law, and because “{a] fed-
eral court must preserve the appropriate relation between
state and national power.” Kasper v. Board of Election
Commissioners, 814 F.2d 332, 340 (7th Cir. 1987). And
we reminded the public officials of Chicago who tried to
enter into this consent decree: “The Commissioners are
agents, not principals; they need their principals’ approval
to alter the terms of their agency. An alteration of the
[state’s] statutory scheme may not be based on consent
alone; it depends on an exercise of federal power, which
in turn depends on a violation of federal law. The district
court therefore properly insisted on a demonstration of
at least a probable violation of that law as a condition
to the entry of this decree.” Jd. at 342. See also Dunn
v. Carey, 808 F.2d 555, 559-60 (7th Cir. 1986); Duran v.
Elrod, 760 F.2d 756 (7th Cir. 1985). Finding no probable
violation of federal law that would be rectified by the par-
ties’ agreement, this court held that there was no basis
for entering a consent decree. People Who Care v. Rock-
ford Board of Education, 961 F.2d 1335 (7th Cir. 1992),
similarly insists that the litigants establish a probable
violation cf federal law before the court may enter a con-
sent decree that affects the rights of third parties. That
is a fair description of the consent decree in our case, for
a binding promise to pay all tort judgments promptly af-
fects the allocation of the budget. Someone else must wait
for payment; alternatively the City must raise taxes (or
cut back on other things, such as police or education) to
pay all creditors immediately. In any of these cases the

Sn

App. 13

decree affects strangers’ interests. See Larry Kramer,
Consent Decrees and the Rights of Third Parties, 87 Mich.
L. Rev. 321 (1988).

All of these cases illustrate the principle we recognize
today: entry and continued enforcement of a consent de-
cree regulating the operation of a governmental body de-

nd on the existence of a substantial claim under federal
aw. Unless there is such a claim, the consent decree is
no more than a contract, whose enforcement cannot be
supported by the diversity jurisdiction and that has in
court no more force than it would have outside of court.
Accord, League of United Latin American Citizens, 999
F.2d at 847. Cf. Rizzo v. Goode, 423 U.S. 362, 379-80
(1976). Prospective enforcement therefore is “inequitable”
within the meaning of Rule 60(bX5).

Evans I identifies two federal claims: one, under the
equal protection clause, which it adjudicated in plaintiffs’
favor, and another, under the due process clause, on which
it reserved judgment. The decree was properly supported
when the district court entered the injunction in 1984. But
Evans II properly overruled the equal protection holding
of Evans I, and there can be little doubt that Evans [/
would have repulsed a due process argument had the
plaintiffs presented it for decision. The two lines of argu-
ment were conceived as complements, and the conclusion
of Evans II that budgeting to pay tort judgments is a
subject for political rather than judicial decision under-
mines all of plaintiffs’ theories.

At the time of Evans /, plaintiffs’ due process theory
was that tort judgments are “property” and that state
law calls for prompt payment. Failure to follow state law
thus deprived them of the “property” right in prompt

ayment. Deferring payment indeed is problematic under
Hlinois law, which requires partial payment if full pay-
ment is postponed. 745 ILCS 10/9-104. But litigants ag-
grieved by Chicago's failure to adhere to state law must
take their claims to state court. Kasper, 814 F.2d at 340.
The Constitution does not authorize federal judges to super-
intend state and local governments’ compliance with their

App. 14

own laws. Nordlinger v. Hahn, 112 S. Ct. 2326, 2335 n.8
(1992); id. at 2339-41 (Thomas, J., concurring); DeShaney
v. Winnebago County Department of Social Services, 489
U.S. 189, 202 (1989); Snowden v. Hughes, 321 U.S. 1, 11
(1944); Archie v. Racine, 847 F.2d 1211, 1215-18 (7th Cir.
1988) (in banc). Quite the contrary, principles of respect
for a coordinate sovereign (and in some cases the eleventh
amendment) mean that federal courts should refrain from
adjudicating claims under state law, whether raised direct-
ly or whether used as the springboards for other theories.
“{I}t is difficult to think of a greater intrusion on state
sovereignty than when a federal court instructs state offi-
cials on how to conform their conduct to state law.” Penn-
hurst State School & Hospital v. Halderman, 465 U.S.
89, 106 (1984). State law may create property interests
that give rise to federal procedural entitlements, see
Archie, 847 F.2d at 1217, but establishing a budget is a
legislative rather than a person-specific decision. A govern-
ment need not offer individual hearings before adopting
legislation with widespread effects. Atkins v. Parker, 472
U.S. 115, 129-31 (1985).

Instead of contending that the due process clause re-
quires state and local governments to follow their own
law, plaintiffs might contend that the disparity between
the statutory 6% rate of interest and the market rate of
interest means that delay diminishes the value of the
judgments, violating the due process clause or, more ac-
curately, the takings clause applied to the states through
the due process clause. Chicago, Burlington & Quincy
R.R. v. Chicago, 166 U.S. 226 (1897). These arguments,
too, belong in state court, which may compensate litigants
for the erosion in the value of their judgments. William-
son County Regional Planning Commission v. Hamilton
Bank, 473 U.S. 172 (1985); Gamble v. Eau Claire Coun-
ty, No. 91-2499 (7th Cir. Sept. 22, 1993).

Recasting the due process argument as an objection to
erosion of a judgment’s value during delay encounters ad-
ditional obstacles. State and local law determines the dam-
ages awarded in tort litigation under these legal systems.

App. 15

There would be no constitutional obstacle to a rule say-
ing, for example, that the court shall calculate the income
the plaintiff lost because of the defendant’s tort and award
80% of that amount as damages. Workers’ compensation
systems use this principle, and many other rules of law
limit the damages recoverable in tort. Limitations on the
damages recoverable from state and local governments in
tort litigation are common. If a state may reduce the
award directly, it may do so indirectly by computing dam-
ages at 100% of loss and deferring payment while interest
accrues at less than the market rate.

If the statutory interest rate matches the market rate,
judgment holders receive full compensation for delay and
can sell judgments in the secondary market for their face
value, just as people buy and sell 30-year municipal bonds.
A court that would not dream of declaring, on constitu-
tional grounds, that a 6% post-judgment interest rate is
unconstitutionally low or that a cap on awards in tort
cases violates the due process clause has no greater war-
rant for declaring that the judgment debtor is taking too
long to pay; the calculation of the award, the interest rate,
and the delay in payment are three facets of the same
thing. (The post-judgment rate of interest in Illinois is 6%
if the defendant is a unit of local government and 9%
otherwise. 735 ILCS 5/2-1303. This difference does not
pose any problem under the due process clause, and plain-
tiffs do not bother to contest it.)

Federal law excluding municipalities from involuntary
bankruptcy, 11 U.S.C. §904, may make cities more able
(and thus more willing) to defer payment, but a decision
by Congress to limit the scope of federal remedies does
not justify stretching the due process clause. Some other
elements of national law may bear on Chicago’s budgetary
decisions. State and local governments do not determine
the level of damages in cases arising under federal law,
which implies a correspondingly uced entitlement to
diminish the value of these awards by delay. Chicago’s
payment of contract before tort judgments may disfavor

_

App. 16

holders of federal judgments (most federal judgments
against municipalities rest on 42 U.S.C. §1983 and other
civil rights statutes), which might offend the supremacy
clause of the Constitution. And if Chic pays interest
on federal judgments at the local rate rather than the fed-
eral coupon issue yield equivalent rate, see 28 U.S.C.
§1961(a), then Chicago is in hot water under federal stat-
utory law. Cf. Evans 1/1, 873 F.2d at 1011 n.7. Plaintiffs
do not pursue any of these claims based on the difference
between federal and state judgments, however, and the
difference could not support the full scope of the relief
awarded in this case.

To the objection that our approach interferes with the
settlement of litigation, we have two replies. First, settle-
ment is not an end in itself. It is a means of resolving
disputes harmoniously. Many things are more important:
preserving democratic governance, separating the judicial
and political spheres, respecting state autonomy in the
absence of a federal rule. These interests may elude a
hectored district judge, eager to reach the next case in
the queue, but to the political society whose long-term
good the judge serves they are vital. Settlements pur-
chased at the cost of putting the court in control of state
and local budgets come at too high a cost. Second, the
premise is incorrect. Attempts to enforce this consent
decree have not produced the peace that settlement brings.
There have been 16 years of noisome litigation. See also
United States v. Board of Education, 799 F.2d at 288-89,
296-98. Politics is unruly and often unpleasant; judicial
regulation of political affairs does not end the conflict but
only shifts the venue.

Recognizing that a substantial federal claim must under-
gird a consent decree does not make plaintiffs less will-
ing to settle: the decree still provides relief, which may
be tailored more closely to the parties’ circumstances than
a remedy of the judge’s devising could be. Plaintiffs’ alter-
native remains a trial, at which they might lose every-
thing or obtain less suitable relief. From defendants’ per-
spective, the approach we have taken actually may make

—————————

App. 17

settlement more rather than less attractive. Knowledge
that a change in the course of judicial decisions permits
modification or withdrawal of the decree may e a re-
sponsible public official more willing to consent to relief
based on the state of the law at the time. Public office-
holders whose objectives included ensuring that their
policies outlast the terms to which they had been elected
will have less reason to settle, but, as we have explained,
this is not a proper inducement to resolve litigation.

District judges need a substantial measure of discretion
to deal with consent decrees, and with discretion comes
deferential appellate review. Nothing in our discussion is
poe 0 to detract from these principles. What we have
emphasized is a rule of law that the district judges must
take into account when deciding which settlements to ac-
cept, and when to vacate consent decrees. Unless there
is a substantial claim under federal law, the district judge
should not enter or continue to enforce a consent decree
affecting the operation of a governmental body. The dis-
trict court did not find that after Evans II plaintiffs have
a substantial claim under the due process clause, and any
such finding would have been legally erroneous. Thus the
consent decree must be vacated, and the City’s budgetary
decisions restored to the political process.

REVERSED

RipeLe, Circuit Judge, concurring.

I concur in the judgment of the court. The plurality
opinion writes more broadly than is necessary to decide
the case before us, and I believe that it would be pru-
dent for the court to wait until another day when those
issues are presented more starkly and more fully than
they have been in this case. For the present, it is suffi-
cient to conclude that this court’s decision in Evans v.
City of Chicago, 873 F.2d 1007 (7th Cir. 1989) (Evans 11),
changed the prevailing law to such a degree as to make

App. 18

further enforcement of the consent decree by the district
court ——— under the standards set forth by the
Supreme Court in Rufo v. Inmates of the —— Count
Jail, 112 S. Ct. 748, 762-64 (1992). Although Evans II ad-
dressed only the equal protection issue, that was the only
issue tendered to the court on appeal by the plaintiffs.
Certainly, as the plurality opinion points out, the merits
of the due process argument, as presented in earlier
stages of the litigation, could not have survived the
holding of Evans IJ had it been presented for decision
by the plaintiffs. Indeed, given the history of this litiga-
tion, it is fair to say that it did not survive. See Evans
II, 873 F.2d at 1012 n.11. On this basis, I concur in the
judgment of the court.

CuDAHY, Circuit Judge, with whom CumMMINGS and
ROVNER, Circuit Judges, join, dissenting.

The plurality opinion flatly rejects the previously unar-
guable truth that “a deal is a deal’ or, more elegantly,
pacta sunt servanda. The plurality’s assertion that Chi-
cago in 1984 did not settle any aspect of the merits of
this dispute is simply and transparently wrong. Pl. Op.
at 6. Any number of sophistical efforts to distinguish
municipalities from corporations and to invoke the shib-
boleths of democracy and federalism do not change the
basic fact that a contract has been repudiated with the
blessing of this court. The City’s promises in 1984 are
apparently no longer binding in 1994. The City’s promise
in 1984 was merely to pay some of its debts promptly. I
am unable to see this as a significant assault on federalism
or democracy.

The plurality seems to have backwards what was settled
in 1984. It says the merits were not settled—only the re-
lief. But by its plain terms the consent decree purported
to settle the merits both of the equal protection and of
the due process claims. The Consent Decree states unam-

, —

App. 19

biguously that the “parties intend this Consent Decree
to fully and finally resolve the budgetary and equitable
aspect of the Plaintiff's class complaint, reserving only
plaintiff's claim for damages and claims for attorney’s
fees.”” Consent Decree at 8. The Consent Decree later in-
dicates that it is “a final and total settlement of all claims
(that the plaintiffs] now have or may have in the future,
arising either directly or indirectly out of [the Illinois
Code], as well as under the United States and Illinois
Constitutions, except for claims for damages and attorneys
fees.” Id. at 10. The merits were therefore settled, while
the relief was left to further litigation, ultimately resulting
in Evans II. The plurality seems to be saying that the
merits were not settled because Judge Grady pressed the
parties to reach a settlement. Somehow, the one ?;
tion does not follow from the other. In any event, I do
not understand the City to be complaining that its arm
was twisted.

At the time the settlement was reached in 1984, the
City had litigated the equal protection claim and lost. The
due process claim, on the other hand, was set aside by
this court (although our dicta certainly indicated that the
claim was colorable). Hence, if anything was settled under
the 1984 decree, it was certainly the due process claim.

With its explication of the transitory ee of settle-
ments with municipalities (e.g. a Harold Washington deal
certainly could not bind Richard Daley), Pl. Op. at 7-13,
the plurality has put in grave doubt the value of these
devices for dispute resolution. In fact, the plurality opin-
ion effectively deprives state and local governments of the
ability to enter into enforceable consent decrees. If courts
refused to enforce contractual agreements, “people would
be reluctant to enter into contracts and the process of
economic exchange would be retarded.” Anthony T. Kron-
man & Richard A. Posner, The Economics of Contract
Law 4 (1979). Where courts are unavailable to enforce
promises, those who seek to make binding promises are
forced to seek some other, and typically more costly,
means of enforcement. See John Umbeck, A Theory of

App. 20

Contract Choice and the California Gold Rush, 20 J.L.
& Econ. 421 (1978).

Here, there is an obvious candidate to replace a regime
of contract law. A district court, recognizing that consent
decrees are of doubtful and declining enforceability, would
likely issue a permanent injunction, rather than have the
city negotiate a (meaningless) consent decree.

The plurality correctly points out that cities may form
contracts to build a new road or repay a loan, but insists
that governments cannot contract away their power to
enact legislation. Pl. Op. at 8. The Consent Decree falls
into the latter category, the plurality contends, because
it interferes with Chicago’s ability to adopt a budget. This
assertion simply proves too much, for even a city’s agree-
ment to build a road interferes with the city’s budgetary
process, since a subsequent administration is surely re-
quired to honor the bonds that its predecessor sold to
finance the construction. Moreover, the agreement we are
concerned with here involves an application of constitu-
tional law—something we should think not open to tinker-
ing even by a democratic process. If, as the plurality con-
tends, the word of an elected official is less worthy of
trust than almost anyone else’s, governmental bodies will
simply have to be coerced into compliance instead of invited
to make voluntary agreements. It is difficult to understand
how this result furthers the ends of federalism.

The plurality is insistent that there is no federal interest
in maintenance of the consent decree to the extent that
it is based on due process. While the Supreme Court has
yet to vacate a consent decree on the grounds that there
is an insufficient federal interest, it has suggested that
the Constitution implicitly imposes such a limitation on the
equitable powers of the federal courts. See Rizzo v. Goode,
423 U.S. 362 (1976); Allan Effron, Note, Federalism and Fed-
eral Consent Decrees Against State Governmental Entities,
88 Colum. L. Rev. 1796 (1988). See also yy of United
Latin American Citizens v. Clements, 999 F.2d 831, 898,
900 (5th Cir. 1993) (Politz, J. dissenting & King, J. dissent-
ing) (consent decree settling parties’ dispute should be en-
forced).

App. 21

In any event, in the case before us there certainly is
a federal interest of the highest importance. That interest
is, of course, in the enforcement of the Constitution. The
facts here, as recited by the plurality, involve tort judg-
ment creditors who had enough political clout to “jump
the queue” and receive payment first. This practice alone
may violate three or four constitution2! provisions. In ad-
dition, the original due process claim recognized by the
district court in 1981 and affirmed in dicta by this court,
Evans v. City of Chicago, 689 F.2d 1286, 1296-99 (7th Cir.
1982) (‘Evans I’’), is at least colorable. There is thus a
clear federal interest in enforcing the decree. In enforc-
ing the Constitution, federal courts are not meddling in
parochial matters lying outside their sphere of responsibil-
ity. Nor are they encroaching on the prerogatives of the
state. They are instead serving the preeminent function
for which they were established. See generally Marbury
v. Madison, 5 U.S. (1 Cranch) 137, 178 (1803) (ensuring
the supremacy of the Constitution is “of the very essence
of judicial duty’’).

The due process claim here as analyzed in our 1982 deci-
sion Evans I, 689 F.2d at 1296-98, rested in part on a
purported property interest in unpaid tort judgments
created by an Illinois statute. Apparently the financial
practices of the City violated state law as well as, argu-
ably, the Constitution. It is therefore difficult for me to
see how the consent decree has offended federalism and
democracy. So far as I am aware, no effort has been made
to amend the state statutes which, we are told, intruded
so onerously on the City’s independeice.

Finally, I am astonished by the plurality’s suggestion
that we have announced a “rule of law” for the future
guidance of district courts. Pl. Op. at 17. Here, of course,
we are violating the basic principle of strong deference
to the district court in its construction of its own consent
decrees. It does not seem to me that we are announcing
a rule of law. It is more like a rule of anarchy. The
solemn promises of governments bind only for the day.

App. 22

They are not to be taken seriously with the turnover of
city fathers (not to mention the advent of new faces on
the federal courts).

I therefore respectfully dissent.

FLAUM, Circuit Judge, with whom KANNE, Circuit Judge,
joins, dissenting.

I dissent. Although I share the majority’s wariness of
federal involvement in matters of local governance, I can-
not discern any change in legal or factual circumstance
since the entry of the consent decree in this case that
justifies setting it aside in toto.

The original litigation and subsequent decree were bot-
tomed on separate legal theories, equal protection and due
process. This Court repudiated the et protection theory
in Evans II, but the due process theory was left intact.
Perhaps the majority is correct in speculating that the
Evans II court was in no mood to sustain the due proc-
ess claim had it the opportunity to pass on it. However,
I think it is a wiser practice to limit what we take from
a case to what it in fact says, and not to attribute to cases
enumbral holdings about wholly distinct and undecided
egal theories.

In my opinion a colorable due process theory supported
at least part of this decree when it was entered in 1984,
and nothing in Evans II or any other case since alters
that conclusion. The district court, intimately familiar with
the decree and its foundations, understood the precise im-
port of Evans II and acted well within its discretion in
modifying the decree accordingly. I also see no inequity
at this time in continued enforcement of the decree. Chi-
cago does not complain that compliance has now become
onerous and, indeed, even indicates its intention, with or
without the decree, to continue to pay tort judgments
promptly.

For these reasons, I respectfully dissent.

ce

App. 23

A true Copy:
Teste:

Clerk of the United States Court of
Appeals for the Seventh Circuit

App. 24

IN THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

No. 91-3277

SYLVIA Evans, Administrator
of the Estate of ANDREW EVANS,
Deceased,

and

BERTHA BALARK, DANA BALARK,
ANNE BALARK, and DANE BALARK,
by themselves and for all

others similarly situated,

Plaintiffs-Appellees,
v.

City or CHIcaco, a municipal
corporation,

Defendant-Appellant.

Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
Nos. 77 C 4119, 79 C 1939, 79 C 2493—John F. Grady, Judge.

ARGUED SEPTEMBER 30, 1992—DecipEp JUNE 3, 1993

Before CuDAHY and EASTERBROOK, Circuit Judges, and
LEE, District Judge.

1 The Honorable William C. Lee, United States District Judge
for the Northern District of Indiana, is sitting by designation.

App. 25

LEE, District Judge. This is an appeal from a district
court order reinstating and modifying a consent decree.

Procedural Background

This case began on November 4, 1977, when plaintiff
Sylvia Evans filed suit under 42 U.S.C. $1983 against of-
ficers of the City of Chicago. In this suit, Evans claimed
that the City’s practice of paying small tort judgments
before large ones regardless of the dates on which the
judgments were entered, and the City’s practice of delay-
ing payment of large tort judgments, violated the Equal
Protection and Due Process clauses of the United States
Constitution. The City of Chicago was later added as a
defendant, and the case was certified as a class action on
January 2, 1980. On May 14, 1979, plaintiffs Bertha Balark,
Dana Balark, Anne Balark, and Dane Balark filed suit un-
der 42 U.S.C. §1983 against the City of Chicago and cer-
tain of its officers asserting similar violations. The Balark
case was certified as a class action on August 15, 1980.
On June 18, 1979, plaintiff Curtis Collum also filed suit
under 42 U.S.C. §1983 against the City of Chicago and
certain of its officers, asserting similar violations of the
United States Constitution. The Collwm case was also cer-
tified as a class action on August 15, 1980. On January
28, 1981, the district court consolidated these cases. How-
ever, the Collum class is not a party to this appeal.

The class certified in Evans consisted of persons holding
large judgments against the City who not been paid
within the first two fiscal years after the entry of their
judgments. Evans v. City of Chicago, 689 F.2d 1286, 1290
n. 6 (7th Cir. 1982; (“Evans I’). The class certified in
Balark consisted of persons holding large unpaid judg-
ments against the City, which judgments were less than
two years old. Jd. at 1291 n. 7.

On January 28, 1981, the district court entered partial
summary judgment in favor of the Evans and Balark
plaintiff classes and against the defendant City of Chicago,
and certified its order for immediate appeal under Rule

App. 26

5A(b) of the Federal Rules of Civil Procedure. The district
court’s order (1) directed the City to pay all members of
the Evans class immediately; (2) declared that Ill. Rev.
Stat. ch. 85 para. 9-104(b) (1981), violated the Due Pro-
cess clause of the United States Constitution;? (3) specified
procedural safeguards to be followed before the City could
properly pay judgments in installments; (4) ordered small
judgments along with judgments over $1000 to be paid in
the order in which they were entered; (5) declared that Ill.
Rev. Stat. ch. 24, para. 8-1-16 (1981), violated the Equal
Protection clause of the United States Constitution; (6)
reserved the question of attorney’s fees; and (7) certified
the order for immediate appeal under Rule 54(b). The City
of Chicago filed a timely notice of appeal from the district
court’s judgment.

This Court affirmed the district court’s judgment on
September 27, 1982, stating as follows:

The defendants contend that the City’s practice of
paying tort judgments of $1,000 or less before tort

2 The 1981 statute provided:

(a) If a local public entity does not pay a tort judgment or
settlement during the fiscal year in which it becomes final and
if, in the opinion of its governing body, the unpaid amount
of the tort judgment is not too great to be paid out of reve-
nues for the ensuing fiscal year, the governing body shall pay
the balance of the judgment during the ensuing year.

(b) If the local public entity does not pay the tort judgment
or settlement during the fiscal year when it becomes final and
its governing body is of the opinion that the unpaid amount
of the judgment or settlement is so great that undue hard-
ship will arise if the entire amount is paid out of the revenues
for the ensuing fiscal year, the governing body shall pay the
judgment or settlement, with interest thereon, in not more
than 10 annual installments. Each payment shall be of an equal
rtion of the principal of the tort judgment or settlement.
e governing body, in its discretion, may prepay any one or
more installments or any part of an installment.
Ill. Rev. Stat. ch. 85, para. 9-104 (1981). Effective November 25,
1986, paragraph 9-104 was amended by P.A. 84-1431.

Pi diticce

App. 27

judgments in excess of $1,000 related rationally to
the City’s attempt to reduce litigation and interest
costs by encouraging quick settlements for $1,000 or
less without interest in a large amount of nuisance
litigation. The explanation does not survive exami-
nation for two reasons. First, the City’s practice in-
cluded immediate payment of fully litigated claims
which resulted in judgments of $1,000 or less. Second,
the practice did not reduce interest costs since inter-
est accumulated on the sum of the unpaid judgments.
The priority given smaller judgments did not reduce
that total. Nor does the payment of many small judg-
ments before an equal amount due on large judgments
allow the City more effectively to manage its yearly
appropriations and limit the City’s debt. We discern
no rational basis for the City’s challenged classifica-
tion. See Zobel v. Williams, ___. U.S. , 102
S.Ct. 2309, 2311, 72 L. Ed.2d 672 (1982). The district
court correctly held the practice and IIl.Rev.Stat., ch.
24, § 8-1-16, Boss as the statute incorporates. the
practice, unconstitutional. (Footnote omitted.)

Evans I, 689 F.2d at 1299-1300.

With respect to the due process challenge to paragraph
9-104(b), this Court ruled that:

Upon review of the relevant statutes and decisions,
we agree with the district court that under Illinois
law, if the City has not invoked § 9-104(b) before the
end of the fiscal year following the year in which the
tort judgment became final, the tort judgment holder
may legitimately claim entitlement to immediate pay-
ment. Thus, at least in that situation, the right to
immediate payment of a tort judgment against a mu-
nicipal corporation becomes a property right under
Illinois law.

* * *

The record discloses that the governing body of the
City never determined that undue hardship would arise
if the entire amount of unpaid judgments were paid

App. 28

out of revenues for the fiscal year following the fiscal
year in which the judgments became final. Further-
more, the City never subjected the named plaintiffs
or any class member to the installment plan method
of payment permitted by IIl.Rev.Stat., ch. 85, § 9-104(b).
Nor did the City ever tell the named plaintiffs or any
class member that it would implement such a plan.
Thus cond wager 9 had no standing to attack the con-
stitutionality of that provision. Blum v. Yaretsky,
ine ; , 102 S.Ct. 2777, 2783, 73 L.Ed.
2d 534 (1982); Alabama State Federation of Labor v.
McAdory, 325 U.S. 450, 65 S.Ct. 1384, 89 L.Ed. 1725
(1945). Because the district court improperly reached
this issue, we vacate paragraph four of the district
court’s January 28, 1981 order, which declared III.
Rev.Stat., ch. 85, § 9-104(b) unconstitutional and set
forth the minimum procedural safeguards that due
process requires before the City may decide to pay
a judgment in installments over ten years. In vacat-
ing this portion of the court’s order, we, of course,
express no opinion about the constitutionality of the
statute or the appropriateness of the order’s proce-
dural safeguards.

Id. at 1297, 1299.

The case returned to the district court for further pro-
ceedings. Subsequently, the parties entered into negotia-
tions and on May 30, 1984, Judge Grady approved a con-
sent decree. This decree stated in part:

III.
PURPOSES OF CONSENT DECREE

1. The parties state that they are entering into
this Consent Decree for the purpose of avoiding the
further expense of protracted litigation over the mat-
ters resolved and decided by this Consent Decree.
The parties intend this Consent Decree to fully and
finally resolve the budgetary and equitable aspects
of Plaintiffs’ class complaint, reserving only plaintiffs’

App. 29

claims for damages and claims for attorneys’ fees. All
equitable and legal rights of the plaintiffs are merged
into this Consent Decree uiiless otherwise specified.

5. In consideration of the execution of this Consent
Decree, the Defendants, CITY OF CHICAGO, et al.,
and the Plaintiffs as class representatives, hereby
covenant and agree to abide by the Terms of Settle-
ment described in this Consent Decree, thereby fully
settling all matters decided therein. The parties, as
indicated by the signatures of their counsel below, who
are acting with express authority from their respec-
tive clients, have determined to finally settle Plain-
tiffs’ claims as described herein by entry of this con-
sent decree subject only to notice to the class and
hearing on January 9, 1983 to determine whether the
proposed settlement as provided by this Consent De-
cree should be approved by the court under Rule
23(e) of the Federal Rules of Civil Procedure.

IV.
TERMS OF SETTLEMENT

1. In consideration of the execution of this Con-
sent Decree and the Release herein contained, and
in consideration of the dismissal of this lawsuit in all
respects, with prejudice and without costs and/or at-
torneys’ fees, against Defendants CLARK BURRUS,
Defendant DANIEL GRIM and Defendant WILLIAM
QUINLAN, individually and as past Comptrollers and
Corporation Counsel, ively, of the City of Chi-
cago, Defendant CITY OF CHICAGO hereby cove-
nants and agrees to do the things and perform the
acts described herein, at the time and in the man-
ner set forth in this Decree, all of which shall be sub-
ject to the conditions set forth herein.

*x* * *
3. Plaintiffs understand, upon advice of counsel,

and agree that except as otherwise provided herein,
this Decree is a final and total settlement of all claims

App. 30

they now have or may have in the future, arising
either directly or indirectly out of or related to III.
Rev. Stat. 1981, ch. 85 §9-104 and Ill. Rev. Stat. 1981,
ch. 24 §8-1-16, as well as under the United States
and Illinois Constitutions, except for claims for dam-
ages and attorneys fees, as hereinafter specified; and
that such finality is applicable to the defendants, the
City of Chicago, and its officers, agents and employees.

* * *

5. The Defendant CITY OF CHICAGO, its agents,
servants and employees are permanently enjoined
from paying final judgments other than by the date
of their entry by a court of competent jurisdiction.

* * *

7. For fiscal 1984, the Defendant CITY OF CHI-
CAGO shall appropriate an amount which is expected
to be sufficient to satisfy payment of all final judg-
ments which remain unpaid as of December 31, 1983,
plus payment of one-half of the estimated liability of
the CITY OF CHICAGO for payment of judgments
to become final in 1984. In no event shall Defendant
CITY OF CHICAGO appropriate less than Thirteen
Million Five Hundred usand ($13,500,000) Dollars
for the payment of judgments in 1984.

8. For fiscal 1985, the CITY OF CHICAGO shall
appropriate an amount which is e to be suf-
ficient to — yment of the “anticipated lia-
bility” of the CITY OF CHICAGO for fiscal 1985.
In no event shall defendant CITY OF CHICAGO ap-
gy: less than Twelve Million ($12,000,000) Dol-
ars for the payment of judgments in 1985.

9. For all subsequent fiscal years, the Defendant
CITY OF CHICAGO shall submit to the City Coun-
cil a request for an appropriation of monies sufficient
to a ent of the full “anticipated liability”
of the CI OF CHICAGO for payment of fede
ments for the ensuing fiscal year.

App. 31

10. Process of tort judgments entered against the
CITY OF CHICAGO, its agents, servants and em-
es thereafter, shall be administered in the
ollowing manner:

*_ * *

(f) Payment of j nt creditors from the date
of entry of this r until May 31, 1985 shall be
made when funds become available for payment.
Sums budgeted for 1984 and 1985 shall be made
available for disbursement in ten (10) monthl
installments for each month from March t
December of that year.

11. ee of tort judgments entered against the
CITY OF CHICAGO, its agents, servants and em-
ployees beginning June 1, 1985 and for subsequent
years thereafter shall be processed in the following
manner:

(d) ... Effective June 1, 1985, the Office of -he
Comptroller shall issue a check in payment of
judgments within forty-five (45) days of receipt
of all executed documents.

12. In the event that all funds allocated for the
payment of tort judgments have been exhausted, the
time restrictions of 10 with respect to pay-
ment of tort judgments shall be suspended until such
funds become available. All other provisions in Yd
graph 10 shall remain in full force and effect. n
additional allocated funds become available for pay-
ment of tort judgments, all judgments due to be paid
during the suspension period for which the proper
documentation has been provided shall be paid im-
mediately.

After the entry of the Consent Decree, trial commenced
in the district court on the damages issue. At trial, the
oe introduced a new theory of equal protection lia-

ility, arguing that the City irrationally chose to delay

payment of tort judgments while paying other types of
judgments (such as contract claims) immediately. Plaintiffs

App. 32

also reasserted their due process argument. The district
court found in favor of the plaintiffs on their new equal

rotection claim, but did not address the due process claim.

inal judgment was entered against the City of Chicago
on November 23, 1987. Again, the City of Chicago ap-
pealed to this Court, and on April 27, 1989, we reversed
the district court and also reversed our ruling in Evans
I. Evans v. City of Chicago, 873 F.2d 1007, 1012-13 (7th
Cir. 1989) (“Evans II”). We explained our reversal of
Evans I as follows:

[I}t is clear that the classification system set up by
the City [for paying judgments] should not be struck
down by this court. The City offered a number of
reasons for its classification system. Most importantly,
at the second trial the City ed that paying off
smaller judgments early satisfied more claimants;
without such a bifurcation of payments, all tort judg-
ment creditors would have experienced lengthy de-
lays. The district court found that the purpose of
satisfying more claimants was invalid. However, we
find nothing to indicate that such a goal is imper-
missible. The purpose behind a government enact-
ment need not be laudatory—to pass constitutional
muster, the purpose must simply be legitimate. If the
court can hypothesize plausible reasons for legislation
that are within the legitimate of a government,
nothing else is required to validate the governmen-
tal classification and it does not matter whether the
reasons advanced actually motivated the legislative
action. United States R.R. Retirement Bd. v. Fritz,
449 U.S. 166, 179, 101 S.Ct. 453, 461, 66 L.Ed.2d 368
(1980). Vicious or irrational discrimination violates the
equal protection clause. Jackson v. City of Joliet, 715
F.24 1200, 1203 (7th Cir. 1983), cert. denied, 465 U.S.
1049, 104 S.Ct. 1325, 79 L.Ed.2d 720 (1984). No such
discrimination is evident in this case. At worst, the
City is merely attempting to satisfy as many individ-
ual claimants as possible with the limited revenues
available. The City’s practice of paying small tort

—_——

App. 33

judgments in advance of larger ones does not violate
the equal protection rights of the holders of large tort
judgments. This court’s finding in Evans / that the
City’s practice violated equal protection was clearly
erroneous and must be reversed. '

Evans II, 873 F.2d at 1016.

With respect to the plaintiffs’ new equal protection the-
ory, we held that:

In reviewing this holding by the district court [that
the City’s differentiation between tort and nontort
judgments was irrational], we must again apply the
rational basis test of equal protection to the City’s
practice. Under this standard, the City’s budgetary
scheme does bear some rational relationship to legiti-
mate state ends. The City’s practice of charging judg.
ments incurred by enterprise funds to those funds
seems rationally related to the concept of such a fund—
a self-sustaining or breakeven operation supported by
its users. Charging departmental budgets for contract
damages conforms to the normal accounting practice
of matching expenditures to the appropriate entity
that incurred the liability. Similar rational reasons ex-
ist for charging personnel damages to the involved
department. The 395 Fund is by law a special reve-
nue fund and can only be used for its defined pur-
pose.

The district court found fault with this system and

while it may not be perfect, we do not believe that
it sinks to the level of being irrational.

Id. at 1017. 3

Once again the case returned to the district court, where
the plaintiffs’ motions for attorney’s fees were,wending.
The plaintiffs argued to the district court that, despite
their defeat in Evans II, they were still the “prevailing
parties” for purposes of the attorney fee provision of 42
U.S.C. §1988, as they had prevailed in negotiating a con-
sent decree which remained in effect. Plaintiffs’ argument
prompted the City to move to vacate the consent decree

App. 34

under Rule 60(bX5) of the Federal Rules of Civil Proce-
dure. The district court granted the City’s motion to va-
cate the consent decree on October 31, 1990 and also de-
nied plaintiffs’ petition for attorney’s fees.

On November 28, 1990, the plaintiffs moved for recon-
sideration and on July 25, 1991, the district court, in a>
bench ruling, reversed its earlier ruling vacating the con-
sent decree and granted in part the motion for reconsid-
eration. Judge Grady explained the basis for his reversal
as follows:

These statements which I have just quoted from
my order vacating the consent decree were based
upon a misinterpretation of the facts of this case and
a misapprehension as to the timing of certain critical
events. I emphasized in my order vacating the con-
sent decree that the Court of Appeals in Evans II
had said that the due process issue had not survived
in the case to the point of the decision in Evans II;
namely, 1989. Evans II said nothing whatever about
what the status of the due process claim was back
in 1984 at the time the consent decree was negotiated
and agreed to by the parties except to say in several
places that the due process questions considered in
Evans I were not before the Court in Evans II.
Evans I had not decided the question of whether the
City’s customary delay in the payment of judgments
was a violation of due process. That question was ex-
plicitly left open by Evans I. It was not decided by
Evans II as is made abundantly clear by Footnotes
8, 11, and 15 of Evans II.

In saying, as I unfortunately did in my order va-
cating the consent decree, that all legal underpinning
for the consent decree had been eliminated by Evans
II, I was overlooking the fact that the language in
Evans II about the elimination of the due process
issue from the case was not addressed to the situa-
tion that existed at the time of the entry of the con-
sent decree.

Transcript of July 25, 1991 hearing at 9-10.

App. 35

On August 2, 1992, Judge Grady entered an “Order
Modifying Consent Decree’”’ which stated:

The court having granted in part and denied in part
the motion of the defendant City of Chicago to mod-
ify the Consent Decree of May 31, 1984, the said de-
cree is hereby modified as follows: Nothing in the
Consent Decree shall require the defendant City of
Chicago to pay a final tort judgment under $1,000.00
in any particular order.

On August 8, 1991 the City moved the district court to
reconsider its order. On September 9, 1991, the district
court denied the City’s motion for reconsideration, and
on September 30, 1991, the City of Chicago filed its notice
of appeal.

Standard of Review

In a case involving a Rule 60(bX5) request to modify
or vacate a consent decree, the standard of judicial re-
view is deferential. Duran v. Elrod, 760 F.2d 756, 761
(7th Cir. 1985). Thus, the district court’s determination
may be reversed only upon an abuse of discretion and
appellate review is limited. Reinsurance Co. v. Adminis-
tratia Asigorarilor, 902 F.2d 1275, 1277 (7th Cir. 1990);
Tolliver v. Northrop Corp., 786 F.2d 316, 318 (7th Cir.
1986).

Discussion

Appellant City of Chicago contends that, pursuant to
Rule 60(bX5), the consent decree should be modified to
respond fully to changes in legal and factual circumstances.
The City argues that it changed its practices, as memo-
rialized in the consent decree, to conform with the law
as announced in Evans I, and now that this Court has
repudiated Evans I the consent decree should be vacated
as it is clear that no part of the City’s former practices
violates the equal protection clause.

App. 36

Rule 60(bX5) of the Federal Rules of Civil Procedure
provides in relevant part:

On motion and upon such terms as are just, the court
may relieve a party or a party’s legal representative
from a final judgment, order, or proceeding for the
following reasons: . . . (5) the judgment has been
satisfied, released, or discharged, or a prior judgment
upon which it is based has been reversed or other-
wise vacated, or it is no longer equitable that the
judgment should have prospective application ... .

The Supreme Court, in Rufo v. Inmates of Suffolk County
Jail, 112 S.Ct. 748, 758 (1992), recently reinforced its hold-
ing in Railway Employes v. Wright, 364 U.S. 642, 647-48
(1961), that: “There is . . . no dispute but that a sound
judicial discretion may call for the modification of the
terms of an injunctive decree if the circumstances, whether
of law or fact, obtaining at the time of its issuance have
changed, or new ones have since arisen.”

The City contends that the legal circumstances in this
case have changed. Specifically, the City asserts that the
judgment upon which the consent decree was based,
Evans I, has been overruled by this Court in Evans II.
Plaintiffs, however, claim that Evans II only reversed the
equal protection holding of Evans I, and the consent
decree was based on the alleged due process violations
as well as the equal protection violations. The record is
clear that the due process issues were not before this
Court in Evans IJ, but were completely settled by the
parties after Evans I was decided and prior to the City’s
appeal of the district court’s ruling in favor of plaintiffs
on their new equal protection claim. Although the due pro-
cess issues were before this Court in Evans I, we declined
to address the issues due to the plaintiffs’ lack of stand-
ing to raise the issues. It is clear that we did not rule
on the due process issues, and thus had no ruling to re-
verse on this point in Evans II. Likewise, it is clear that
both parties agreed to settle the due process issues, as

ainda

App. 37

set forth in detail in the consent decree.* Therefore, the
City’s assertion that the judgment upon which the con-
sent decree was based has been reversed is not complete-
ly correct as there was no judgment on the due process
issues. The Court understands the City’s point that since
it lost on the equal protection claim, it feit it had no choice
but to settle the case. Nevertheless, the City did have
a choice in how it structured the settlement and it could
have reserved some or all of the due process issues for
further litigation. The City lost on the equal protection
claim, predicted it would lose on the due process claims
if it pursued the matter, and decided the wisest course
was to enter into the consent decree. At the time the con-
sent decree was entered into no one could have very well
predicted that, as a result of additional evidence before
the district court during the trial on damages, the equal
protection holding would be appealed and reversed. As a
result, although the City is bound by the decree, it is no
longer obligated to pay damages to several large classes
of plaintiffs since the damages award, based on the equal
protection holdings, was reversed in Evans I1.*

This Court can find no competent basis for vacating the
decree in its entirety and finds that Judge Grady’s modifi-
cation of the decree is a proper resolution of the conflict
arising out of this Court’s reversal of the equal protec-
tion holdings. Although the City argues that Ill. Rev. Stat.
ch. 85, para. 9-104(a) can withstand both substantive and

3 At oral argument, the Court queried whether the agreement
the parties entered into was a consent decree or, rather, simply
an agreement on relief after a judgment on the merits. Counsel
for both parties assured the Court that the agreement was indeed
a consent decree. After further considering the issue, the court
agrees that the document is a consent decree since there was not
a judgment on the merits on the due process claims. The due pro-
cess claims were settled in the consent decree.

4 Neither party appealed the district court’s finding that it need
not reach the question of whether plaintiffs were entitled to dam-
ages based upon a due process violation.

App. 38

procedural due process challenges, the constitutionality of
§9-104(a) is not properly before this Court. Furthermore,
the City cannot now litigate an issue that was subsumed
in the consent decree, which the City agreed was final
and applicable to it. Money Store, Inc. v. Harriscorp Fi-
nance, Inc., 885 F.2d 369 (7th Cir. 1989).

The City argues that the district court erred in modi-
fying the consent decree to reflect the narrowest possi-
ble reading of this Court’s prior decisions. However, as
discussed above, in the absence of a judgment on the due
process issues, the district court had no other choice. The
district court correctly granted relief from the consent de-
cree to the extent that Evans II overruled Evans I on
the equal protection holding.

The City also condemns the district court’s decision by
stating that a federal judgment still has effect even though
it has not been shown that any law has ever been vio-
lated. The Court observes that this is true in most cases
that settle. Most judgments arising from settlements are
based on the agreement of the parties and not on a show-
ing that a law has been violated. The purpose of a set-
tlement agreement, or a consent decree, is to end a case
without having to go through the trouble and expense of
deciding whether a law has been violated. If the City had
entered a consent decree prior to any litigation, thereby
aborting the birth of Evans I and its siblings, the City
would remain bound by the decree, absent a substantial
change in legal or factual circumstances, even though it
may later have believed that it unwisely entered into the
decree. The City further complains that, by refusing to
vacate the consent decree, the district court penalized it
for having agreed to the entry of the decree rather than
proceeding with litigation. Yet this is true in every case
that settles—one party is being penalized in the sense that
there is always the chance that one side can completely
win their case if litigation continues.

Although we agree that consent decrees should be modi-
fied or vacated when the circumstances so warrant, we

App. 39

are mindful of the teaching of our Supreme Court in Rufo,
112 S.Ct. at 760, that “Rule 60(bX5) provides that a par-
ty may obtain relief from a court order when ‘it is no
longer equitable that the judgment should have prospec-
tive application,’ not when it is no longer convenient to
live with the terms of a consent decree.” Further, “‘a
party seeking modification of a consent decree bears the
burden of establishing that a significant change in circum-
stances warrants revision of the decree” and then “the
court should consider whether the proposed modification
is suitably tailored to the changed circumstance.” Id. In
the present case, the significant change in circumstances
was a legal change rather than a factual change. The legal
change was the ruling that the City’s practice of paying
tort judgments less than $1000 prior to judgments over
$1000 did not violate the equal protection clause. The dis-
trict court modified the decree to provide that the City
could pay a tort judgment under $1000 in any order it
wished. This modification is clearly suitably tailored to the
changed circumstance. It is worth noting that Judge Grady
gave the parties ample opportunity to submit an agreed
upon proposed order modifying the decree. The City was
apparently unable to reach an agreement and should not
now complain so loudly that Judge Grady’s modification
is too narrow. Further, although the City is bound to the
due process aspects of the consent decree, the procedures
the City must follow in paying judgments have not been
adjudged to be illegal. This is in keeping with the Supreme
Court’s ruling that a decree modification must not “create
or perpetuate a constitutional violation.” Rufo, 112 S.Ct.
at 763. Rufo further held that:

A proposed modification should not strive to re-
write a consent decree so that it conforms to the con-
stitutional floor. Once a court has determined that
changed circumstances warrant a modification in a
consent decree, the focus should be on whether the
proposed modification is tailored to resolve the prob-
lems created by the change in circumstances. A court
should do no more, for a consent decree is a final

App. 40

judgment that may be reopened only to the extent
that equity requires. The court should not “turn aside
to inquire whether some of [the provisions of the de-
cree] upon separate as distinguished from joint action
could have been opposed with success if the defen-
dants had offered opposition.” Swift, 286 U.S., at 116-
117, 52 S.Ct., at 463.

Id. at 764.

The City suggests to the Court that “to encourage set-
tlements, a court considering changes in legal circumstances
should construe them to be far-reaching changes, and thus
grant relief from consent decrees freely,” and that “‘to
allocate the risk of future changes in the law to the ob-
ligor under a consent decree, without realistic hope of
relief, is to discourage potential obligors from entering into
settlements in the first instance.” The City is grossly
overstating the case. First of all, it would be an extremely
poor judicial policy to freely grant relief from consent de-
crees and certainly would not encourage settlements. Sec-
ondly, there has been no change in the law to which the
City has not been granted relief. The decree has already
been modified to account for the change in the law and
the City has been relieved from paying damages.

The City relies on the following passage from Rufo in
support of its argument that the federal courts should re-
linquish control over the management of the City’s fisc:

Within these constraints, the public interest and “{cJon-
siderations based on the allocation of powers within
our federal system,” Dowell, 498 U.S., at ___, 111
S.Ct., at 632, require that the district court defer to
local government administrators, who have the “pri-
mary responsibility for elucidating, assessing, and
solving” the problems of institutional reform, to re-
solve the intricacies of implementing a decree modifi-
cation. Brown v. Board of Education, 349 U.S. 294,
at 299, 75 S.Ct. 753 at 755-756, 99 L.Ed. 1083 (1955).
See also Missouri v. Jenkins, 495 U.S. 33, __., 110
S. Ct. 1651, , 109 L.Ed.2d 31 (1990); Milliken II,

App. 41

433 U.S., at 281, 97 S.Ct., at 2757. (Footnote omitted.)
Although state and local officers in charge of insti-
tutional litigation may agree to do more than that
which is minimally required by the Constitution to
settle a case and avoid further litigation, a court
should surely keep the public interest in mind in rul-
ing on a request to modify based on a change in con-
ditions making it substantially more onerous to abide
by the decree. To refuse modification of a decree is
to bind all future officers of the state, regardless of
their view of the necessity of relief from one or more
provisions of a decree that might not have been en-
tered had the matter been litigated to its conclusion.

Id.

It is clear to this Court that to continue to require the
City to abide by the terms of the consent decree will not
work a hardship on the City. The City admits that it has
fully complied with the consent decree for eight years and
has no intention of reverting to its prior practices, as it
does not wish to ever again pay more post-judgment in-
terest on its tort judgments than is absolutely necessary.
The City argues that the interests of the taxpayers of
the City of Chicago should also be considered in deter-
mining where the public interest lies, and their interests
may not always dictate immediate payment. The City seems
to have forgotten that the consent decree is very flexi-
ble and provides that:

6. Nothing in this decree is intended to prevent
the parties to a suit from entering into a structured
settlement, or a final settlement which assumes peri-
odic payment of sums of money over a period of time
established by the settlement, provided that such set-
tlement is in good faith compliance with the terms
of this Consent Decree and subject to the approval
of the court before whom the case is pending.

*x* * *

12. In the event that all funds allocated for the
payment of tort judgments have been exhausted, the

App. 42

time restrictions of paragraph 10 with respect to pay-
ment of tort judgments shall be suspended until such
funds become available. All other provisions in para-
graph 10 shall remain in full force and effect. When
additional allocated funds become available for pay-
ment of tort judgments, all judgments due to be paid
during the suspension period for which the proper
documentation has been provided shall be paid imme-
diately.

This flexibility fatally undermines the City’s argument
that the decree should be vacated because it robs the local
government of necessary flexibility. For example, pursuant
to Paragraph 6 above, if the City cannot afford to imme-
diately pay a judgment in full, it may settle for whatever
the judgment holder is willing to accept, such as higher
interest. This alternative is certainly more justifiable than
expecting the judgment holder to settle for less than he
is entitled to (Gif he sells his judgment at a discount) or
forego payment for years.

The City has suggested that if the Court finds vacatur
of the decree unwarranted, the Court should remand the
case back to the district court for a decision on the merits
of the due process claims. The Court rejects this sugges-
tion for two reasons. First, this case has been in Judge
Grady’s court since November of 1977 and Judge Grady
has conscientiously managed the case since that time. A
review of the record in this case proves without a doubt
that Judge Grady understands the case better than any-
one else. His order modifying the decree conforms with
the law, and while it may be argued until the end of time
that Evans II could be read more broadly than Judge
Grady chose to read it, by no stretch of the imagination
can his decision be held to be an abuse of discretion. Sec-
ond, a remand is likely to give rise to Evans IV, and pos-
sibly to Evans V, if plaintiffs continue to pursue their
claim for attorney fees. Simply stated, this case should
come to an end as soon as possible.

Accordingly, for all the foregoing reasons, the District
Court’s opinion is hereby AFFIRMED.

App. 43

EASTERBROOK, Circuit Judge, dissenting. In 1982 we
held that the sequence in which Chicago paid tort judg-
ments against it violated the equal protection clause of
the fourteenth amendment. On remand in 1983 the par-
ties agreed on the prospective relief required by that deci-
sion but not on damages. On appeal from the damages
judgment in 1989, we overruled our 1982 opinion. Chicago
asked to be relieved of the prospective relief as well, now
that its foundation is gone. A majority of this third panel
holds that Chicago is forever bound to carry out relief
designed to implement our overruled decision. This car-
ries respect for the dead hand of the past altogether too
far. Having admitted in 1989 our mistake of 1982, we
should relieve the parties of the consequences.

I

During the late 1970s and early 1980s, the rate of in-
terest Chicago paid on judgments (6% per annum for mu-
nicipal governments, Ill. Rev. Stat. ch. 110 42-1303) was
substantially less than the cost of voluntary credit. Judg-
ment debtors had every reason to postpone payment as
long as this imbalance persisted. Instead of borrowing in
the market at 15%, or raising taxes, Chicago borrowed
from its judgment creditors. It paid tort judgments of
$1,000 or less, and all contract judgments, quickly. Any
plaintiff “lucky” enough to recover more in tort litiga-
tion could whistle for his money. By 1979 plaintiffs with-
out the political clout to jump the queue had to wait on
average 47 months for payment. An active secondary mar-
ket in judgments against Chicago developed. About 80%
of judgment holders sold in this market, accepting a dis-
count of approximately 25% off the face value of their
awards. Evans v. Chicago, 689 F.2d 1286, 1290 (7th Cir.
1982) (Evans I).

The district court held that Chicago’s practice of pay-
ing small judgments quickly while deferring payment of
larger tort judgments violated the due process and equal
protection clauses of the fourteenth amendment: due pro-

App. 44

cess because it deprived judgment holders of a “proper-
ty” interest in immediate payment created by state law,
and equal protection because there was no rational basis
for distinguishing large from small awards. A panel of this
court affirmed the portion of the judgment that rested
on the equal protection clause, id. at 1299-1300, while
vacating the due process aspect as premature, id. at 1296-
99. Dicta in the opinion strongly imply that the City de-
prived the plaintiffs of due process of law, id. at 1297-98.

On remand the parties proposed, and the district court
approved, a consent decree eliminating the distinction be-
tween large and small judgments, requiring all judgments
to be paid in order of their entry, and providing that the
Mayor must ask the City Council to appropriate enough
money to pay all judgments promptly. The litigants could
not agree whether the plaintiffs were entitled to damages
for delay in payment. The district court concluded that
they were, under the equal protection clause—both the
plaintiffs and the district court deeming the due process
theory surplusage in light of the equal protection holding.
Another panel of this court reversed, overruling Evans I.
873 F.2d 1007 (7th Cir. 1989) (Evans ID). The second
panel (with the acquiescence of the full court, see id. at
1008 n. *) concluded that the City had a rational basis,
if only administrative convenience and the placation of the
more numerous holders of small awards, to pay little judg-
ments before big ones. Jd. at 1015-18. The second panel
wrapped up: “The district judge advanced some worthy
ideas, but they are for the City’s self-determination, and
will not be imposed by this court. It is regrettable that
this matter which has lingered so long now takes a new
and possibly unexpected turn, but what we now view as
error must be arrested even at so late a date. Improve-
ments in this situation are better left to the state and
municipal governments.” Jd. at 1017-18.

Delay in paying judgments is no different in principle
and in consequence from a low interest rate on judgments.
If the statutory interest rate matches the market rate,
judgment holders receive full compensation for delay and

App. 45

can sell judgments in the secondary market for their face
value, just as people buy and sell 30-year municipal bonds.
A court that would not dream of declaring, on constitu-
tional grounds, that a 6% post-judgment interest rate is
“too low” has no greater business declaring that the judg-
ment debtor is taking “‘tco long” to pay; the interest rate
and the delay in payment are two facets of the same thing.

Chicago’s practice has its legal problems, to be sure.
Illinois law appears to forbid a city to put off its creditors
as Chicago did. Ill. Rev. Stat. ch. 85 49-104. Chicago’s pay-
ment of contract before tort judgments may disfavor holders
of federal judgments (most federal judgments against mu-
nicipalities rest on 42 U.S.C. §1983 and other civil rights
statutes), which may offend the supremacy clause of the
Constitution. And if Chicago pays interest on federal judg-
ments at the local rate rather than the federal coupon
issue yield equivalent rate, see 28 U.S.C. §1961(a), then
Chicago is in hot water under federal statutory law. Cf.
Evans II, 873 F.2d at 1011 n.7. But none of this has any-
thing to do with the due process and equal protection
clauses, notwithstanding the intimations in Evans I that
by violating state law Chicago violated the due process
clause. See Snowden v. Hughes, 321 U.S. 1, 11 (1944);
Archie v. Racine, 847 F.2d 1211, 1215-18 (7th Cir. 1988)
(in banc).

Taking us up on the proposition in Evans I] that “{ijm-
provements in this situation are better left to the state
and municipal governments’, Chicago asked the district
judge to vacate the injunction requiring sequential pay-
ment of judgments and compelling the Mayor’s budget to
include the funds for their prompt satisfaction. Rule 60(bX5)
of the Rules of Civil Procedure speaks directly to the situ-
ation, permitting relief from judgment when “a prior judg-
ment upon which it is based has been reversed or other-
wise vacated”. The injunction was based on Evans I,
which has been overruled. Interest rates too have changed;
today the legal rate approximates the market rate, so Chi-
cago pays promptly. Still, it wants to redeem its govern-
mental powers, now in hock in a district court.

App. 46

Judge Grady, who has presided over this case since its
inception, refused to vacate the decree. He conceded that
Evans II pulled the rug out from under the equal pro-
tection theory. But, the judge observed, Evans II did not
address the due process theory, deeming it abandoned,
873 F.2d at 1012 n.11, 1018 n.15. The consent decree did
not specify a legal foundation and therefore did not rule
out the possibility that Chicago was compromising the due
process claim rather than yielding to the equal protection
holding of Evans I. So after making a trivial change in
the decree the judge reiterated that the City remains
obliged to pay all judgments in order, and quickly. (The
change the judge made, knocking out the portion of the
decree forbidding Chicago to distinguish judgments accord-
ing to size, is nugatory because of the separate provision
in the injunction compelling the City to pay judgments
strictly in order of their entry.)

II

Chicago has prevailed on the merits of this case, and
still it loses. An injunction intrudes into the internal opera-
tions of the City, telling the Mayor what items must be
in the annual budget. Evans II said bluntly that, although
changes may be beneficent, the political rather vnan the
judicial process is responsible for the subject. The district
court nonetheless held, and a majority of this third panel
agrees, that the judicial compulsion may continue. How can
this be? Recently the Supreme Court told district judges
that they must reexamine consent decrees when changes
in the legal landscape erode their footings. Rufo v. In-
mates of Suffolk County Jail, 112 S. Ct. 748 (1992). Here
we have not a change in legal doctrine with uncertain ef-
fects on the case at hand, but the overruling of the decision
in this very case. The decree was founded on a blunder
committed by this court. Evans I has been overruled, yet
through the injunction Evans I lives on.

If the plaintiffs’ due process claim really were indepen-
dent of their equal protection claim, and if the parties

App. 47

really settled the case rather than settling their disagree-
ment about the injunctive relief to which Evans I entitled
the plaintiffs, then there would be reason to think the
consent decree Rufo-proof. The majority never discusses
the first of these conditions, and it addresses the second
only in a footnote. Footnote 3 asks whether the injunction
was based on a consent decree; answering “yes,” my col-
leagues think the inquiry over. Yet the question is not
whether there was a “consent decree.” Surely there was.
The question is what aspects of the decree rest on the
parties’ consent rather than Evans I. No one believes that
the decree settled “the case.” Plaintiffs wanted damages.
The City refused to pay, and after issuing an injunction
the district judge held a trial on damages. Chicago ap-
pealed from an adverse decision, leading to Evans II. No,
there was no global settlement. What issues, then, did
the parties compromise? All the decree addresses is pro-
spective relief. And this is all the parties settled—the re-
lief, not the merits. Chicago “agreed” to do what Evans I
implied that it must do. “ ‘Consent’ that is no more than
knuckling under to the inevitable is more like an adjudica-
tion than a contract.” People Who Care v. Rockford Board
of Education, 961 F.2d 1335, 1338 (7th Cir. 1992), quoted
in United States v. Chicago, 978 F.2d 325, 333 (7th Cir.
1992). Once again consider the significance of Evans II.
If the parties indeed compromised the merits, what was
the City doing asking us to overrule Evans I? Plaintiffs
did not contend that through the consent decree Chicago
bargained away its right to challenge the legal foundations
of their position. If, as Evans II demonstrates, there has
been no settlement of the merits, then nothing inhibits
the court from erasing all vestiges of Evans I.

All that remains is the possibility that the due process
theory is independent of the equal protection theory, so
that Evans II does not undermine one sufficient theory
for relief—a theory on which the parties may have reached
a compromise. It makes sense to understand the decree
as a settlement of a due process claim only if that claim
supported additional relief, for otherwise it was super-

App. 48

fluous. If Evans I sufficed to condemn the City’s approach
to paying judgments, the parties had no need to settle
the due process claim. They could ignore it—because the
judge was legally bound to ignore it! Once a decision on
one claim resolves the case, a judge has no business under
Article III of the Constitution issuing advisory opinions
about additional legal theories. If the judge would not,
could not, adjudicate a claim, and would award identical
relief with or without that claim, it is foolish to treat a
consent decree as resolving or resting on, let alone set-
tling, that claim.

Judge Grady told the parties in no uncertain terms that
Evans I resolved the merits, and that nothing remained
but to select the appropriate relief. When Chicago bridled,
the judge announced from the bench on October 26, 1983:

Now, I have got to have an order from the City and
the plaintiffs. I have got to have an agreed order that
will bind the City to pass a budget sufficient to pay
tort judgments.

* * *

If by November 25th, approximately a month from
now, I do not have in my hands an agreed order that
calls upon the City and requires the City to budget
annually an amount sufficient to pay tort judgments
along the lines which we have been discussing in great
detail at our recent and not so recent conferences in
chambers, then I am going to go ahead and enter
my own order.

* * *

I see no need for any further conferences with coun-
sel that go to basic philosophy or go to what I have
been saying this afternoon. If there is some mechani-
cal thing you want to talk about that I can help you
with, I will be happy to sit down, but just to rehash
this question about whether we are going to do some-
thing in this case that the Court of Appeals ordered
done a long time ago, the time for discussion has
passed.

App. 49

Judge Grady unequivocally told the parties that Evans I
compelled Chicago to appropriate the money to pay all
judgments promptly—that Evans I dictated what to do,
but not how. Only mechanical details remained for deci-
sion. And the details of prospective relief are all the par-
ties compromised. The merits were not settled. Thev were
litigated, twice. The City lost in Evans I and wun the
rematch in Evans I].

Plaintiffs themselves saw things that way until recent-
ly. During the trial on damages, plaintiffs jettisoned their
due process theory. When Chicago appealed from the award
of damages, plaintiffs did not urge the due process theory
in defense of their judgment. That is why we remarked
in Evans I] that the “due process claim has not survived
to this stage of the litigation.” 873 F.2d at 1018 n.15. At
oral argument before this third panel, counsel for the
plaintiffs said that he let the due process theory drop
because it was redundant.

If neither plaintiffs nor the district court attached any
independent significance to the due process theory, if both
believed that Evans I compelled Chicago to pay all tort
judgments promptly, then it is unwarranted for us to pro-
claim that Chicago, unbeknownst to its own officials, “set-
tled” this fugitive claim in 1983, putting the injunction
beyond recall.

Lightning bolts of this kind disserve principles of fed-
eralism and in the long run work against the interests
of the judicial system itself. In the future, prudent counsel
will insist on litigating stray issues, lest an appellate court
a decade later declare that in recognizing that a claim no
longer mattered counsel sabotaged his client’s rights. Or
perhaps counsel will lard consent decrees with reserva-
tions and provisos, “clarifying”? what is being settled and
what is not, even though nothing then is in need of clari-
fication. Worst of all, we might induce counsel to refuse
to compromise on relief, lest such compromises be deemed
to include the merits. Can you imagine Judge Grady’s re-
action if on November 25, 1983, Chicago’s lawyers had

App. 50

told him that the City was refusing to accept relief of
any kind, because it feared that this step would keep the
Mayor and City Council in shackles if the law should change
in the future?

Counsel seeking to maximize the City’s ability to capi-
talize on legal developments might have done one of these
things. Whatever the penalty for counsel’s drafting choices
should be, it is not a perpetual transfer of budgetary powers
from state and local government to federal court. In treat-
ing this consent decree the same way they would treat
the compromise of 2 private dispute over a contract to
deliver two tons of rhubarb, the majority not only per-
petuates the error of Evans I but also offends principles
separating political from judicial roles in government.

A true Copy:
Teste:

Clerk of the United States Court of
Appeals for the Seventh Circuit

App. 51

[Dated August 2, 1991]

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

SYLVIA EVANS, et al.,

‘ Plaintiffs, No. 77 C 4119
CITY OF CHICAGO, et al.,
Defendants.

BERTHA BALARK, et al.,

Diaz a "
:. Plaintiffs, No. 79 C 1939
CITY OF CHICAGO, et al.,
Defendants.

CURTIS CULLUM, et al.,

:. Plaintiffs, No. 79 C 2493
CITY OF CHICAGO, et al.,

Defendants. Consolidated Cases

ORDER MODIFYING CONSENT DECREE

The court having granted in part and denied in part
the motion of the defendant City of Chicago to modify
the Consent Decree of May 31, 1984, the said decree is
hereby modified as follows: Nothing in the Consent Decree
shall require the defendant City of Chicago to pay a final
tort judgment under $1,000.00 in any particular order.

DATED: August 2, 1991

ENTER: /s/ JOHN F. GRADY
United States District Judge

App. 52

(1) IN THE
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

Chicago, Illinois — July 25, 1991 — 2:40 p.m.

SYLVIA EVANS, et al.,

er
Me t S, T ar ‘
. Plaintiffs No. 77 C 4119
CITY OF CHICAGO, et al.,
Defendants.

BERTHA BALARK, et al.,

laintiffs, — a
v. Plaintiff No. 79 C 1939
CITY OF CHICAGO, et al.,

Defendants.

CURTIS COLLUM, et al..
nd
v. Plaintiffs, No. 79 C 2493
CiTy OF CHICAGO, et al.,
Defendants.

TRANSCRIPT OF PROCEEDINGS
BEFORE THE HONORABLE JOHN F. GRADY

* Numbers in brackets refer to the Court Reporter’s original
pagination of the Transcript of Proceedings.

APPEARANCES:

For the Plaintiffs:
MR. EDWARD T. STEIN
201 North Wells Street
Suite 1900
Chicago, Illinois 60606

MR. JOHN CASHION
33 North LaSalle Street
Suite 2500
Chicago, Illinois 60602

[2] For the Defendants:
CITY OF CHICAGO
180 North LaSalle Street
Room 704
Chicago, Illinois 60601, by
MR. BENNETT W. LASKO,

MS. RUTH MOSCOVITCH
Assistant Corporation Counsel

[3] (The following proceedings were had in open court:)

THE CLERK: 77C 4119 and related cases, Evans v.
Bilandic, for ruling.

THE COURT: Good afternoon, counsel.

MR. CASHION: Good afternoon.

MR. STEIN: Good afternoon, your Honor; Edward Stein
for the Balark and Collum plaintiffs.

MR. CASHION: John Cashion for the Evans class plain-
tiffs.

MS. MOSCOVITCH: Ruth Moscovitch and Bennett Lasko
on behalf of the City of Chicago.

THE COURT: Good afternoon.

If you will be seated, I will give you my ruling.

The motion currently before the Court is plaintiffs’ mo-
tion to reconsider various orders I entered on October
31, 1990, which were docketed on November 2, 1990. The

App. 54

plaintiffs’ motion will be granted in part and denied in
part.

I will begin my remarks by discussing the holding of
the Court of Appeals in what we have come to call Evans
I, 689 F.2d 1286 (1982). That decision of the Court of Ap-
peals affirmed my holding that the practice of the City
of Chicago of paying judgments less than $1,000 ahead
of those that were in excess of $1,000 was a denial of
equal protection of the law to those judgment creditors
whose judgments exceeded $1,000.

I have reached certain other matters in my ruling prior
[4] to the first appeal, but the Court of Appeals reversed
those rulings and held that it had been premature for me
to address the constitutionality of a certain statue the
State of Illinois upon which the City had not isiwe to
justify its practices. More precisely, the Court of Ap>eals
held that the plaintiffs lacked standing to challenge that
statute on due process grounds.

The important thing for today’s purposes is that the hold-
ing of Evans I was that it was a denial of equal protec-
tion for the City to pay judgments of less than $1,000
ahead of those which were in excess of that amount. Some
seven years later in Evans II, 873 F.2d 1007 (1989), the
Court of Appeals overruled this holding of Evans I.

Quoting from 1018 of Evans II, the Court concluded:

“Our decision in Evans I was clearly erroneous in
its conclusion that the City’s practice of prioritizing
tort judgments under $1,000 denied the plaintiffs the
equal protection of the laws. To that extent, we over-
rule Evans I.”

Now, between Evans I and Evans II, certain proceed-
ings took place in this Court after the remand in Evans I.
The case had been remanded for further proceedings, and
we had a trial on damages. At the damages trial, the
plaintiffs argued that not only the City’s practice of prior-

App. 55

itizing judgments less than [5] $1,000 was a violation of
equal protection but that certain other practices of the
City were also a violation of equal protection. Specifical-
ly, the plaintiffs argued, and I agreed with the plaintiffs,
that the practice of paying non-tort judgments in a man-
ner that was preferential, at least as far as time was con-
cerned, to, the payment of tort judgments was a viola-
tion of equal protection.

I also agreed with the plaintiffs that the chronic failure
of the City to budget sufficient money for the payment
of tort judgments within a reasonable period of time con-
stituted a denial of equal protection since that failure
resulted in tort judgments being treated differently than
similarly situated judgments that were not based on torts
or at least were not payable out of the tort judgment
fund.

I then awarded damages to the plaintiffs based upon
what I regarded as the law of the case concerning the
prioritization of the $1,000-and-under judgments and these
two additional theories concerning the denial of equal pro-
tection. All of my rulings were based on equal protection
grounds. I discussed due process considerations at length
but specifically refrained from basing my decision on due
process grounds.

An appeal was taken from the damages judgment, and
this resulted in Evans II. As I have indicated, Evans II
overruled Evans I to the extent that Evans I had held
that the prioritization of under-$1,000 judgments was a
violation of [6] equal protection.

The Evans II Court went further, however, and also
reversed my decision in the damages trial that failure to
pay all judgment creditors, tort or not tort, in a single
order violated equal protection. The Court at page 1018
stated in its conclusion:

App. 56

‘We find that the City’s failure to establish a single
order of payment of all judgment creditors did not
violate equal protection. Therefore, the decision of the
District Court is reversed.”

So there were two parts to the Evans II holding. First
was an overruling of the equal protection holding of Evans
I, and the second part of Evans II was a reversal of the
new equal protection holdings I had made at the damages
trial. The net result of Evans II was to eliminate any
equal protection argument that the plaintiffs had in regard
to the City’s practices concerning the payment of judg-
ments.

The conclusion that I have quoted at page 1018 of Evans
I] does not specifically reverse my finding that the chronic
underbudgeting was a violation of equal protection. How-
ever, it seems to me that Evans II must be read as re-
versing that holding.

At page 1617 the Court stated:

“Likewise, the District Court’s holding that the equal
protection clause demands that the City raise more
tax [7] revenue to meet all obligations promptly is
not warranted under the rational basis test.”

And then further down on the page:

“The City’s alleged failure to raise adequate revenue
to quickly meet all its tort judgment obligations does
not violate equal protection.”

So I read Evans II as holding that there is no equal
protection ground upon which the City can be compelled
to budget adequate amounts of money to pay tort judg-
ments within any period of time the Court might hold
is required.

The reason we are here this afternoon and have been
wrestling with the continuing problems of this case for
the last two years is that between Evans I and Evans II,

App. 57

the parties negotiated a consent decree. The Court en-

tered that consent decree on May 31, 1984, some two

years prior to Evans II. After Evans II, the City filed

a motion to vacate the consent decree. That motion was

filed on November 28, 1989.

The motion at page 3 recites the grounds:

“This request is based on two grounds under Rule
60(bX5):

a. The decree was based on a Court of Appeals deci-
sion which has since been reversed;

b. It is no longer equitable that the judgment have
prospective application.”’

At page 4 of the motion, the City stated:

[8] “At the time this Court entered the consent decree,
the parties and the Court were under the belief that
the duties created by the consent decree were consti-
tutionally mandated as decided by the Court of Ap-
peals in Evans I, which at that time was the law of
this case.”

The parties briefed the motion to vacate, and after con-
sidering the respective arguments, I entered one of the
orders the plaintiffs have moved to reconsider; namely,
the order of October 31, 1990, vacating the consent decree.

In opposing the motion to vacate, the plaintiffs had ar-
gued that Evans II had done nothing to affect their due
process argument and that the consent decree should be
regarded as based upon the due process arguments which
had not been affected by Evans II.

At page 3 of my order granting the motion to vacate,
I stated as follows:

“While this may be true, it appears that the due

process holding of Evans I has not survived Evans

II. See Evans II at 1018, note 15, stating that be-

cause this Court did not base its decision in the dam-

age trial on due process grounds and neither party

App. 58

raised the question of due process in the Evans II
appeal, ‘the due process claim has not survived to
this stage of the litigation.’ ”

[9] “Thus,” I continue, “it appears that all legal under-
pinning for the consent decree has been eliminated
by Evans II. We agree with defendant that this case
falls squarely within the language of Rule 60(bX5) in
that the consent decree was based on a judgment,
Evans I, that has now been overruled.”

Further down on page 3, I concluded:

‘There is no doubt in the Court’s mind that the City
would never have consented to the decree had it not
felt constrained to do so by the decision of the Court
of Appeals in Evans I.”

These statements that I have just quoted from my or-
der vacating the consent decree were based upon a mis-
interpretation of the facts of this case and a misapprehen-
sion as to the timing of certain critical events. I empha-
sized in my order vacating the consent decree that the
Court of Appeals in Evans II had said that the due proc-
ess issue had not survived in the case to the point of the
decision in Evans IJ; namely, 1989. Evans II said nothing
whatever about what the status of the due process claim
was back in 1984 at the time the consent decree was
negotiated and agreed to by the parties except to say in
several places that the due process questions considered
in Evans I were not before the Court in Evans II. Evans
I had not decided the question of whether the City’s cus-
tomary delay in the payment of judgments was a viola-
tion of due process. That question was [10] explicitly left
open by Evans I. It was not decided by Evans II as is
made abundantly clear by Footnotes 8, ll, and 15 of
Evans II.

In saying, as I unfortunately did in my order vacating
the consent decree, that all legal underpinning for the con-

App. 59

sent decree had been eliminated by Evans II, I was over-
looking the fact that the language in Evans II about the
elimination of the due process issue from the case was
not addressed to the situation that existed at the time
of the entry of the consent decree.

Looking at the consent decree itself, paragraph nine on
page 7 reads as follows:

“On January 28, 1981, the District Court entered par-
tial summary judgment in favor of the plaintiffs, rul-
ing that the alleged policies and practices of the
defendants, as herein described, deprived plaintiffs
of due process and equal protection of the law. Evans
v. City of Chicago, supra.

That order was affirmed on appeal! as to the equal
protection claim, Evans v. City of Chicago, 689 F.2d
1286 (7th Circuit 1982). The claim regarding the depri-
vation of due process of law was remanded to the
District Court for further proceedings.”’

So here we have the parties themselves describing the
situation that existed at the time of the consent decree:
[11] “The claim regarding the deprivation of due process

of law was remanded to the District Court for fur-
ther proceedings.”

I turn now to the specific language of Rule 60 upon
which the City relies. Rule 60(b) states that, “‘on motion
and upon such terms as are just, the court may relieve
a party or a party’s legal representative from a final judg-
ment, order, or proceeding for the following reasons.’’ And
reason number five, as applies to this case, or at least
is involved in the arguments of the parties in this case,
is “a prior judgment upon which it;” namely, the judg-
ment, “is based has been reversed or otherwise vacated,
or it is no longer equitable that the judgment should have
prospective application.”’

App. 60

There are two parts to 60(bX5), one, the vacation of the
prior judgment and, two, the existence of circumstances
under which it is no longer equitable that the judgment
have prospective application. I will deal with each of those
in turn.

Is the consent decree based on a judgment which has
been reversed or otherwise vacated? The answer is yes,
in part. The equal protection holding of Evans I was the
law of the case as of the entry of the consent decree and,
I think, clearly entered into those considerations which
resulted in the consent decree. The consent decree itself
refers to Evans I and refers to the specific holding of
Evans I; namely, that the [12] preferential payment of
judgments under $1,000 was a denial of equal protection.
Nothing else in the consent decree is based upon a judg-
ment that has been reversed or otherwise vacated or
overruled.

Evans II did reverse my findings that paying different
kinds of judgments out of chronological order and chronic
failure to budget sufficient money constituted denials of
equal protection. However, those equal protection holdings
did not occur until long after the entry of the consent
decree and, as far as I can recall, had never been argued
to the Court or considered by the Court up to the time
of the entry of the consent decree. There is nothing in
the consent decree that reaches out for support to my
later holdings that these additional practices of the City
constituted denials of equal protection.

Evans II does not hold that those practices; namely, of
not paying judgments in chronological order and failing
to budget adequately, do not constitute denials of due
process. Not a word in Evans II so holds. That is a ques-
tion that was settled by the parties in the consent de-
cree. The due process questions left open by Evans I and
remanded by Evans I for consideration by this Court

App. 61

were resolved by the parties in the consent decree, and
the consent decree so states.

Paragraph nine says that issue was remanded for fur-
ther proceedings, and paragraph one of part three of the
[13] consent decree at page 8 says that the parties are
settling all matters left open with the exception of the
claims for damages and attorney’s fees.

The City argues that Evans II can be read as reject-
ing the rational basis test that would be the underpin-
ning of a due process claim just as much as it rejected
that same test or, rather, found that the City’s practices
did not violate that test under the equal protection claim.
It is true that in my decision in the damages trial, I ob-
served that the rational basis test appeared to be rele-
vant to both an equal protection and a due process analy-
sis. And it may be that in light of Evans II the Seventh
Circuit, if confronted with the due process questions to-
day, would say that no violation of due process is involved
because there is a rational basis for the City’s practices
of paying, for instance, contract judgments ahead of tort
judgments, or personnel judgments ahead of judgments
payable out of the tort judgment fund, and a rational basis
for the failure to budget enough money to pay tort judg-
ments within a reasonable time.

The point is, I believe, that that holding has nov yet
been made. Rule 60(b) talks about a judgment that has
been reversed or otherwise vacated. There is nothing in
Evans II that reverses, vacates, or overrules any due
process holding of any kind. So it seems to me clear that
the City does not qualify for relief under the first por-
tion of the Rule 60(bX5). [14] Nothing upon which the con-
sent decree is based has been overruled with the excep-
tion of the equal protection holding of Evans I.

During the time that the Court has had the plaintiffs’
motion for reconsideration under advisement, we have con-

App. 62

ducted hearings on the question of what motivated the
City to enter into the consent decree. The Court has
heard testimony of present and former City employees
and testimony about what was in the minds of the Mayor
and his aide, who are now deceased. At the most recent
argument on the motion to reconsider, counsel for the
City asserted that all of this evidence is irrelevant and
that the Court should be guided exclusively by the deci-
sions in Evans I, Evans II, and the language of the con-
sent decree itself.

After considerable reflection, I have come to agree with
that point of view. The effort to reconstruct what was
in the minds of people back in 1984, seven years ago,
some of whom are now deceased, is a difficult project at
best. I think the Court can find its most reliable guide-
posts in this case by looking at the documents the City
urges me to consider exclusively. There is a decision of
the United States Supreme Court which, I think, contains
some wisdom which is helpful to us in the present circum-
stances. The case is United States v. Armour & Company,
402 US 673, decided in 1971. The case involved the inter-
pretation of a consent decree that had been [15] entered
in 1920 in which Armour & Company had bound itself
to refrain from various practices which the government
had alleged would constitute violations of the antitrust
laws.

The issue before the Court in 1971, 51 years later, was
whether a certain relationship that Armour had entered
into with Greyhound Corporation constituted a violation
of that consent decree. The government contended that
the Armour/Greyhound relationship did violate the con-
sent decree, and Armour contended that it did not.

The Supreme Court concluded that while it is understand-
able that the government would want the language of the
consent decree to apply to the practice under scrutiny,

App. 63

or the relationship under scrutiny, and, had it thought of
the particular circumstance, may well have insisted that
the consent decree cover such a relationship, the fact was
that the language of the consent decree simply did not
fit the relationship that Armour had with Greyhound, and,
therefore, the Court held that there was no violation of
the consent decree. That is by way of general background.
The language of the Court that I find helpful is the fol-
lowing at pages 681 to 682. The government was argu-
ing that what Armour was doing with Greyhound was
frustrating the purpose of the consent decree, and the
Court said the following:
“This argument would have great force if addressed
to a Court that had the responsibility for formulating
[16] original relief in this case, after the factual and legal
issues raised by the pleadings had been litigated. It
might be a persuasive argument for modifying the
original decree, after full litigation, on a claim that
unforeseen circumstances now made additional relief
desirable to prevent the evils aimed at by the original
complaint. Here, however, where we deal with the
construction of an existing consent decree, such an
argument is out of place. Consent decrees are entered
into by parties to a case after careful negotiation has
produced agreement on their precise terms. The par-
ties waive their right to litigate the issues involved
in the case and thus save themselves the time, ex-
pense, and inevitable risk of litigation. Naturally, the
agreement reached normally embodies a compromise;
in exchange for the saving of cost and elimination of
risk, the parties each give up something they might
have won had they proceeded with the litigation.
Thus the decree itself cannot be said to have a pur-
pose; rather the parties have purposes, generally op-
posed to each other, and the resultant decree em-

App. 64

bodies as much of those opposing purposes as the
respective parties have the bargaining power and skill
to achieve.

For these reasons, the stepe—of—a—consent decree
must [17] be discerned within its four corners and
not by reference to what might satisfy the purposes
of one of the parties to it. Because the def

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386005_1168%3A2. Public record. Not legal advice.