Thomas v. Albright

Citation139 F.3d 227,1998 WL 135494
Decision Date27 March 1998
Docket NumberNos. 97-5004,97-5018,s. 97-5004
Parties77 Fair Empl.Prac.Cas. (BNA) 227, 74 Empl. Prac. Dec. P 45,535, 329 U.S.App.D.C. 190, 40 Fed.R.Serv.3d 558 Walter J. THOMAS, et al., Appellees/Cross-Appellants, v. Madeleine K. ALBRIGHT, Secretary of State, Appellant/Cross-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Appeals from the United States District Court for the District of Columbia (No. 86cv02850).

Cynthia A. Schnedar, Assistant U.S. Attorney, Washington, DC, argued the cause for appellant/cross-appellee, with whom Mary Lou Leary, U.S. Attorney at the time the briefs were filed, John D. Bates, R. Craig Lawrence, and John Oliver Birch, Assistant U.S. Attorneys, were on the briefs.

Barbara B. Hutchinson argued the cause for appellees/cross-appellants Walter J Thomas, et al., with whom Theresa L. Watson, Washington, DC, was on the briefs.

Avis E. Buchanan, Washington, DC, argued the cause for amicus curiae plaintiff class, with whom Warren E. Connelly, Charles L. Warren, Richard P. Schlegel, and Joseph M. Sellers were on the briefs.

Before: EDWARDS, Chief Judge, GINSBURG, Circuit Judge, and BUCKLEY, Senior Circuit Judge.

GINSBURG, Circuit Judge:

This is a Title VII class action in which the plaintiffs allege that the United States Department of State discriminated against African-American Foreign Service Officers. The Department and a group of nine class members separately appeal from the district court's approval of the class settlement. The Department appeals the district court's decision to permit class members to opt out of the class settlement. The nine cross-appellants challenge the district court's approval of the consent decree as fair and reasonable. We affirm the district court's decision that the consent decree is fair and reasonable, but reverse its decision allowing opt-outs.

I. Background

In 1984 Walter J. Thomas, a former Foreign Service Officer, filed an administrative complaint on behalf of himself and other African-American FSOs, alleging racial discrimination in the Department's employment practices. In 1986, after the Department had rejected Thomas' complaint, he and another former FSO filed a class action complaint in district court alleging that the Department engaged in racially discriminatory employment practices and retaliated against those who complained about them. Thomas v. Christopher, 169 F.R.D. 224, 229 (D.D.C.1996).

The plaintiffs moved for class certification under Federal Rule of Civil Procedure 23(b)(2). The court denied their motion but permitted the plaintiffs to file an amended complaint adding several more plaintiffs. The parties conducted discovery for six years and, beginning in 1993, engaged in settlement negotiations, eventually under the supervision of a magistrate judge. In 1994 the plaintiffs filed another motion for class certification, in which they contended that although their class could be certified pursuant to Rule 23(b)(3), "it is more appropriately maintained as a Rule 23(b)(2) class action." The court deferred ruling upon this motion pending the outcome of the settlement negotiations.

In 1995 the parties reached a settlement in principle, and in January 1996 they signed a consent decree. The consent decree "resolves all claims that were or could have been brought" by African-American FSOs between 1984 and 1996 based upon racial discrimination in promotions, awards, tenuring, termination, performance reviews, assignments, and training, or upon retaliation for complaining about such discrimination. The parties agreed that the court would certify the class pursuant to Rule 23(b)(2).

The consent decree provided for the following relief:

(1) Monetary Relief--The Department agreed to pay a total of $3.8 million, to be allocated as follows: (a) $125,000 for the named plaintiffs ($40,000 to Thomas for "his leadership and coordinating role" and $85,000 divided equally among the 29 other named plaintiffs); (b) $2.9 million for those who experienced delays in and denials of promotions, to be allocated upon the basis of a formula specified in the consent decree, but not to class members who would receive a promotion under the consent decree or who had been promoted at the same rate as white employees; and (c) $775,000 for class members who had been terminated, of which at least $200,000 was to be distributed formulaically to those who were either terminated for unsatisfactory performance or constructively discharged, and up to $575,000 of which was reserved for a maximum of four recipients to be chosen upon the basis of, among other things, the severity of the discrimination and the degree of economic hardship they had suffered.

(2) Promotions--The Department agreed to give retroactive promotions to the 16 mid-level class members and to the one senior-level class member who had been at their current grade-levels for the longest time and had been recommended previously for promotion.

(3) Reinstatement--The Department agreed to offer a new five-year appointment to each of four class members who had been fired when they failed to get tenure within the required time.

(4) Injunctive and Prospective Relief--The Department agreed to: (a) submit to an injunction against its discriminating on the basis of race or retaliating for equal employment opportunity activities; (b) create a Council for Equality in the Workplace to monitor the EEO activities of the Department; (c) modify its employee evaluation reports and engage a consultant to help determine whether further revisions are necessary; (d) revise and expand its diversity and EEO training; (e) establish a working group to monitor the grant of awards to employees; (f) use its best efforts to include an African-American on any board considering an African-American for termination; (g) continue development of an electronic personnel database to monitor employment actions; (h) report employment and EEO information to class counsel for four years; and (i) adopt an affirmative action plan approved by the Equal Employment Opportunity Commission.

(5) Attorneys' Fees--The Department agreed to pay $2.1 million in attorneys' fees, plus an additional amount for any services rendered after the district court's preliminary approval of the consent decree.

Class counsel and the Department also entered into a letter agreement providing that (1) the consent decree would not address the issue of opt-outs; and (2) class counsel would (a) support the settlement in court as "fair and reasonable to the class as a whole"; (b) not take a legal position regarding optouts other than to advise the court that it "may have the discretion to allow opt outs"; and (c) not advocate that class members opt out.

In March the district court held a two-day hearing and preliminarily approved the consent decree. The court then ordered that the consent decree and notice of the fairness hearing be sent to all known class members. 169 F.R.D. at 231. The notice advised class members that the court might grant them the right to opt out. Of 359 class members, 34 wrote the court in support of the consent decree and 55 wrote in opposition. Id. at 235.

In June class members were informed of their individual awards under the consent decree. The Department, as agreed, retroactively promoted 17 class members and reinstated four. It awarded an average of $10,900 in promotion damages to 265 class members. Twenty-nine class members received an average termination award of $16,400, and the four class members who had incurred the greatest injuries received an average termination award of $75,000. Id. at 234-35.

At the fairness hearing later that month 14 class members testified; three supported the consent decree, eight opposed it, and three were "ambivalent or neutral." Id. at 235. The court required the Department to send notices to opponents of the agreement informing them that if they wished to opt out then they had to file a motion stating "the reasons for this request, and any law" supporting it. Of the nineteen class members who filed motions to opt out all but nine chose ultimately to remain in the class.

The court certified the class under Rule 23(b)(2) and approved the consent decree pursuant to Rule 23(e). The court found that the settlement was "negotiated at arm's length and presents no danger of collusion"; it then held that the consent decree was fair and reasonable in light of the disputed evidence and the risks of litigation. Nonetheless, the court allowed those class members so desiring to opt out of the consent decree. Id. at 239-44.

II. Analysis

The Department of State appeals the district court's decision permitting opt-outs, while the cross-appellants, nine members of the plaintiff class, object to the court's approval of the consent decree. Class counsel submitted a brief in support of the consent decree but did not take a position concerning the dissidents' right to opt out.

A. Fairness of the Consent Decree

Rule 23(e) states that "[a] class action shall not be dismissed or compromised without the approval of the court." Before it can approve a settlement a district court "must find that the settlement is fair, adequate and reasonable and is not the product of collusion between the parties." Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir.1977); see Isby v. Bayh, 75 F.3d 1191, 1196 (7th Cir.1996); Van Horn v. Trickey, 840 F.2d 604, 606 (8th Cir.1988); Grant v. Bethlehem Steel Corp., 823 F.2d 20, 22 (2d Cir.1987). The court's primary task is to evaluate the terms of the settlement in relation to the strength of the plaintiffs' case. See, e.g., Isby, 75 F.3d at 1199. The court should not reject a settlement merely because individual class members complain that they would have received more had they prevailed after a trial. See EEOC v. Hiram Walker & Sons, Inc., 768 F.2d 884, 889 (7th Cir.1985); see also United States v. Trucking Employers, Inc., 561...

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