U.S. v. City of Chicago
| Citation | 978 F.2d 325 |
| Decision Date | 10 November 1992 |
| Docket Number | No. 91-3486,91-3486 |
| Parties | 60 Fair Empl.Prac.Cas. (BNA) 309, 60 Empl. Prac. Dec. P 41,896 UNITED STATES of America, Plaintiff-Appellee, v. CITY OF CHICAGO, Defendant-Appellee, and Retirement Board of the Policemen's Annuity and Benefit Fund of the City of Chicago, Walter Knorr, Richard J. Jones, et al., Defendants-Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Fred Foreman, U.S. Atty., Office of the U.S. Atty., Criminal Div., Chicago, Ill., John R. Dunne, Asst. Atty. Gen., Mark L. Gross (argued), Department of Justice, Civil Rights Div., Appellate Section, Washington, D.C., for plaintiff-appellee.
Michael G. Cleveland (argued), Vedder, Price, Kaufman & Kammholz, David R. Kugler, Kugler, DeLeo & D'Arco, Chicago, Ill., for defendants-appellants.
Mardell Nereim (argued), Kelly R. Welsh, Asst. Corp. Counsel, Benna R. Solomon, Office of the Corp. Counsel, Appeals Div., Chicago, Ill., for defendant-appellee.
Before CUMMINGS and COFFEY, Circuit Judges, and GIBSON, Senior Circuit Judge. *
Sixteen years after the district court first ruled that the Chicago Police Department had discriminated against women, blacks, and Hispanics in violation of civil rights laws, the City of Chicago ("the City") has yet to make whole the victims of its unlawful discrimination.
In 1976, in a case brought against the City by the United States of America, District Judge Prentice H. Marshall held that the Chicago Police Department had knowingly and systematically discriminated in its employment practices against women, blacks, and Hispanics in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 1981 and 1985, the State and Local Fiscal Assistance Act of 1972, and the Fourteenth Amendment to the United States Constitution. United States v. Chicago, 411 F.Supp. 218 (N.D.Ill.1976).
On the basis of its finding of unlawful discrimination, the district court enjoined the City from committing further acts of discrimination and ordered it to "make whole by an award of back pay * * * all identified victims of the Chicago defendants' unlawful discriminatory practices and, to the extent appropriate, to order retroactive seniority adjustments for all identified victims of the Chicago defendants' unlawful discriminatory promotion practices." Id. at 251. This court affirmed in part (as to sexual and racial discrimination in violation of Title VII and the nondiscrimination provision of the State and Local Fiscal Assistance Act), reversed in part (as to unconstitutional racial discrimination and certain quotas not at issue in this appeal), and remanded for further proceedings as to unconstitutional sexual discrimination. United States v. Chicago, 549 F.2d 415 (7th Cir.1977).
In accordance with the district court's order for remedial back pay and retroactive seniority adjustments for the plaintiffs, 1 the parties submitted a proposed consent decree to the district court on April 4, 1988, following twelve years of protracted litigation, negotiation, and discovery.
The consent decree established that the City would deposit $9,229,212 into a back-pay fund earning a minimum rate of six percent interest. The decree identified each person entitled to back pay and adjusted seniority, and provided the formula for determining the amount of back-pay awards. The formula estimates a plaintiff's lost earnings based upon 1) the person's actual hiring or promotion date and what that date would have been absent unlawful discrimination and 2) the person's estimated job earnings during the period of delayed hiring or promotion. 2
In addition to the back-pay awards, the consent decree also entitled plaintiffs to "adjustments in their seniority dates and all benefits derived therefrom." 3 As payment for the retroactive seniority credit, the decree directed the City to deduct employee contributions from plaintiffs' back-pay awards and to provide employer contributions from a source other than the plaintiffs' back-pay fund. 4
Notice of this proposed consent decree was distributed. All interested parties received the opportunity to respond to the decree in writing and in person at a fairness hearing held on June 5, 1989. Two days after the fairness hearing, the district court approved and entered the consent decree. On October 26, 1990, 752 F.Supp. 252 (N.D.Ill.), the court issued its Final Memorandum Order addressing the objections of 42 individuals to the consent decree and ordering disbursement of funds to the plaintiffs.
Ten days after the district court's final order mandating the disbursement of funds, the court was informed of a dispute between the parties to the consent decree and the Retirement Board of the Policemen's Annuity and Benefit Fund of the City of Chicago ("the Board") as to the amount of contributions due to the pension fund.
The City and the United States entered into the consent decree with the understanding that the plaintiffs' pension contributions would equal approximately 9% of the plaintiffs' back-pay awards. Under the consent decree, the City reimburses plaintiffs only for estimated lost earnings, which take into account estimated earnings at other jobs during the period of delayed hiring or promotion. Thus the City and the United States both believed that the plaintiffs' required contributions would not be based upon the full salaries that the plaintiffs would have earned absent discrimination. Instead the parties to the consent decree believed that the plaintiffs' pension contributions would be based on only that portion of the salaries remedied by the back-pay award--namely, the estimated amount of wages the plaintiffs lost due to discrimination.
The Board, however, would not agree to afford full retroactive seniority credit unless contributions were made for the full salaries that the plaintiffs would have received absent discrimination. The Board rejected the parties' proposition that employee contributions be assessed only on the back-pay awards--the Board argued that this amount would not fully fund the pension plan for the level of retroactive benefits sought. According to the Board, it may only grant full seniority credit after receiving full employee contributions based on full annual salary. The Board therefore demanded that it receive the same amount of contribution that each plaintiff would have been required to make had that person been employed without discrimination during the period for which retroactive seniority was sought, and interest thereon.
The parties agree that if plaintiffs must contribute the same amount that they would have been required to contribute absent discrimination, they will be required to make a contribution from the back-pay fund of $1.5 million more than that required under the United States' and the City's calculation. Pursuant to the Board's demand, many plaintiffs would be required to pay 20% of their back-pay awards to assure full retroactive pension benefits and some would be required to pay between 50% and 100%, or even in excess of 100%, compared to 9% under the United States' and the City's formula. The district court later wrote that the consequences of the Board's position would have been "catastrophic" to the back-pay settlement between the City and the United States. The court wrote:
It was clear to the court that had the demands of the Board been known at the time the consent decree was proposed, notice and hearings held thereon, there would have been an outpouring of objections and the likelihood was that the Decree would not have been approved. Thus, the Board's demand went to the very heart of the consent decree.
Opinion and Order at 5, 1991 WL 192213 (Sept. 25, 1991) (footnote omitted).
Because of the drastic and unforeseen consequences of the Board's demand, the City filed a Motion To Alter or Amend Judgment or For Modification of the consent decree, with which the United States concurred. That motion sought leave from the court for the City not to deduct pension contributions from the back-pay awards of those victims of discrimination whose awards would be exhausted by the contributions demanded by the Board. The City suggested that those plaintiffs be given the option of whether or not to make the required contributions and receive retroactive seniority. The United States filed an additional motion to vacate the consent decree and to vacate those portions of the final memorandum order relating to back pay and seniority since it contended that the decree would no longer satisfy its remedial objectives because of the Board's demands. The City strongly opposed this motion.
The district court suggested that the parties pursue another option. At the time the dispute between the parties and the Board arose, the Board was not a party to this action. The district court therefore suggested that the Board be joined as a party so that its demands could be adjudicated. Consequently, on May 15, 1991, the district court granted the United States' motion, filed March 4, 1991, to join the Retirement Board as a defendant pursuant to Fed.R.Civ.P. 19(a). Judge Marshall found that
in the Board's absence complete relief cannot be accorded among those already parties and those in whose behalf this action was brought by the United States. The Court further finds that the Board claims an interest relating to the subject matter of the action and is so situated that the disposition of the action in the Board's absence may impede the Board's ability to protect its interest and may leave the persons in whose behalf this action was brought subject to a substantial risk of incurring inconsistent obligations by reason of the Board's claimed interest.
The United States then filed a supplemental complaint naming the Retirement Board and...
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