10 F.3d 474 (7th Cir. 1993), 91-3277, Evans v. City of Chicago

Docket Nº:91-3277.
Citation:10 F.3d 474
Party Name:Sylvia EVANS, Administrator of the Estate of Andrew Evans, et al., Plaintiffs-Appellees, v. CITY OF CHICAGO, Defendant-Appellant.
Case Date:November 24, 1993
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 474

10 F.3d 474 (7th Cir. 1993)

Sylvia EVANS, Administrator of the Estate of Andrew Evans,

et al., Plaintiffs-Appellees,

v.

CITY OF CHICAGO, Defendant-Appellant.

No. 91-3277.

United States Court of Appeals, Seventh Circuit

November 24, 1993

Argued Sept. 8, 1993.

Page 475

John B. Cashion; Edward T. Stein (argued), Clifford Zimmerman; and Cecile Singer, Chicago, IL, for plaintiffs-appellees.

Ruth M. Moscovitch, Asst. Corp. Counsel, Lawrence Rosenthal, Deputy Corp. Counsel (argued), Kelly R. Welsh, Asst. Corp. Counsel, Brian Trubitt and Benna R. Solomon, Office of the Corp. Counsel, Appeals Div., Chicago, IL, for defendant-appellant.

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

EASTERBROOK, Circuit Judge.

Now 16 years old, this case is making its third appearance in this court--and the parties' current dispute arises out of the conflicting decisions of the first two panels. We meet in banc to consider 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

During the late 1970s and early 1980s, the rate of interest Chicago paid on judgments (6% per annum for municipal governments, 735 ILCS 5/2-1303) was substantially less than the market cost of credit. Judgment 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. 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 I ).

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 payment of larger ones violated the due process and equal protection clauses of the fourteenth amendment: due process because it deprived judgment creditors of a "property" 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 deprived the plaintiffs of due process of law. Id. at 1297-98.

On remand the district judge told the parties and their lawyers that the combination of his opinion and ours condemned Chicago's practices en toto. He directed the parties to negotiate appropriate relief. They complied, and 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 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. Evans v. City of Chicago, 873 F.2d 1007 (7th Cir.1989)

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(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. Id. 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. Improvements in this situation are better left to the state and municipal governments." Id. at 1017-18.

Chicago then asked the district court to vacate the injunction and return the subject to "the City's self-determination". Interest rates have changed; today the legal rate approximates 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(b)(5), which permits a court to modify a judgment when "a prior judgment upon which it is based has been reversed 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 force when the judgment does not serve a federal interest. Rule 60(b)(5) applies to consent decrees as well as to other judgments. Rufo v. Inmates of Suffolk County Jail, --- U.S. ----, ----, 112 S.Ct. 748, 757, 116 L.Ed.2d 867 (1992). Recognizing that the decree's foundation 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, supports this disposition.

On motion for reconsideration, however, the district judge reversed course. He observed that Evans II addressed only the plaintiffs' equal protection theory--for the plaintiffs had not urged the panel to affirm the award of damages on due process grounds. 873 F.2d at 1012 n. 11, 1018 n. 15. Because Evans II did not bear on the due process theory, there had not been any change of law affecting this aspect of the plaintiffs' case. When Chicago agreed to pay judgments faster, the district court believed, 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 provision satisfying that description was the portion forbidding 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 exactly 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(b)(5) entitle Chicago 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 annual budget. Evans II rightly said that, although changes may be beneficent, the political rather than the judicial process is responsible for the subject.

Governments may undertake to do more than the Constitution requires. Rufo, --- U.S. at ---- - ----, 112 S.Ct. at 760-63; see also Firefighters v. Cleveland, 478 U.S. 501, 525, 106 S.Ct. 3063, 3076, 92 L.Ed.2d 405 (1986). If there were something to the due process theory (a big if, discussed in Part III below), a decision removing all but this one theory would leave room for settlement, as the district 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(b)(5) calls on the court to ascertain whether a judgment is "based" on some earlier decision. This consent decree is "based"

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on Evans I rather than an independent 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 compromise of the merits--even of the due process theory alone--there could not have been an Evans II. 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 approach 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 address additional legal theories. The district judge told the parties in no uncertain terms that Evans I resolved the merits, and that nothing...

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