Armstrong v. BOARD OF SCH. DIRECTORS, ETC.

• Decision Date: 04 May 1979
• Docket Number: Civ. A. No. 65-C-173.
• Citation: 471 F. Supp. 800
• Court: U.S. District Court — Eastern District of Wisconsin
• Parties: Kevin ARMSTRONG and Kraig Armstrong, minors, by Roosevelt Savage and Rochelle Savage, their parents and next friends, Mary Lou Hicks and Presten Hicks, minors, by Paul L. Hicks and Rose B. Hicks, their parents and next friends, Jean Robinson, by Alonzo Robinson and Theresa Robinson, their parents and next friends, and Andrew Smith, Grantley H. Smith, and Kermit Smith, minors, by Kenneth L. Smith and Phyllis G. Smith, their parents and next friends, Plaintiffs, v. BOARD OF SCHOOL DIRECTORS OF the CITY OF MILWAUKEE, James F. Koneazny, Thomas Brennan, Anthony S. Busalacchi, Margaret Dinges, Gerald P. Farley, Stephen Jesmok, Jr., Marian McEvilly, Maurice J. McSweeney, Edward S. Michalski, Lawrence J. O'Neil, Evelyn T. Pfeiffer, Lorraine M. Radtke, Lois Riley, Doris Stacy, and Leon W. Todd, Jr., Members of the Board of School Directors of the City of Milwaukee, Lee R. McMurrin, Superintendent of Schools of the City of Milwaukee, and Thomas A. Linton, Secretary-Business Manager of the Board of School Directors of the City of Milwaukee, Defendants, Milwaukee Teachers' Education Association, Undesignated Intervenor.

471 F. Supp. 800

Kevin ARMSTRONG and Kraig Armstrong, minors, by Roosevelt Savage and Rochelle Savage, their parents and next friends, Mary Lou Hicks and Presten Hicks, minors, by Paul L. Hicks and Rose B. Hicks, their parents and next friends, Jean Robinson, by Alonzo Robinson and Theresa Robinson, their parents and next friends, and Andrew Smith, Grantley H. Smith, and Kermit Smith, minors, by Kenneth L. Smith and Phyllis G. Smith, their parents and next friends, Plaintiffs, v. BOARD OF SCHOOL DIRECTORS OF the CITY OF MILWAUKEE, James F. Koneazny, Thomas Brennan, Anthony S. Busalacchi, Margaret Dinges, Gerald P. Farley, Stephen Jesmok, Jr., Marian McEvilly, Maurice J. McSweeney, Edward S. Michalski, Lawrence J. O'Neil, Evelyn T. Pfeiffer, Lorraine M. Radtke, Lois Riley, Doris Stacy, and Leon W. Todd, Jr., Members of the Board of School Directors of the City of Milwaukee, Lee R. McMurrin, Superintendent of Schools of the City of Milwaukee, and Thomas A. Linton, Secretary-Business Manager of the Board of School Directors of the City of Milwaukee, Defendants Milwaukee Teachers' Education Association, Undesignated Intervenor.

Civ. A. No. 65-C-173.

United States District Court, E. D. Wisconsin.

May 4, 1979.

COPYRIGHT MATERIAL OMITTED

Lloyd A. Barbee, Milwaukee, Wis., for named plaintiffs.

Irvin B. Charne, Milwaukee, Wis., for absent members of the plaintiff classes.

L. C. Hammond, Jr., Patrick W. Schmidt, and Ronald E. Klipsch, Milwaukee, Wis., for defendants.

Curry First, Milwaukee, Wis., for Milwaukee Teachers' Education Association, undesignated intervenor.

DECISION AND ORDER

REYNOLDS, Chief Judge.

I. Introduction

This is an action brought pursuant to 42 U.S.C. § 1983 challenging the defendants' alleged unconstitutional actions in creating and maintaining unlawful racial segregation in the City of Milwaukee public school system. The court has jurisdiction under 28 U.S.C. § 1343.

On January 19, 1976, the Court issued a decision and order finding the defendants liable for the constitutional violations alleged in the amended complaint. Amos v. Board of School Directors of the City of Milwaukee, 408 F.Supp. 765 (E.D.Wis.1976). Following affirmance of that decision by the Seventh Circuit Court of Appeals, Armstrong v. Brennan, 539 F.2d 625 (7th Cir. 1976), the decision was vacated and remanded by the United States Supreme Court to the court of appeals for reconsideration in light of Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977), and Dayton Board of Education v. Brinkman, 433 U.S. 406, 97 S.Ct. 2766, 53 L.Ed.2d 851 (1977), see Brennan v. Armstrong, 433 U.S. 672, 97 S.Ct. 2907, 53 L.Ed.2d 1044 (1977), and the court of appeals thereafter remanded the case to this court for proceedings consistent with the Supreme Court's mandate. Armstrong v. Brennan, 566 F.2d 1175 (7th Cir. 1977).

The Court has proceeded in three phases with its reconsideration of the case:

First, the Court took additional evidence on the issue of past intentional discrimination. On June 1, 1978, the Court found:

"* * * that the defendants discriminated against the plaintiffs with segregative intent * * * and in so doing violated the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution and the Civil Rights Act of 1871, 42 U.S.C. § 1983." Armstrong v. O'Connell, 451 F.Supp. 817, 820 (E.D.Wis.1978).

The Court also found:

"F-89. * * * Defendants undertook a systematic program designed to prevent whites from being required to attend classes with large numbers of blacks." Armstrong v. O'Connell, supra, at 866.

Second, on July 10, 1978 through July 14, 1978, and on October 23, 1978 through October 25, 1978, the Court took evidence on the issue of the present effects of defendants' past segregative acts. On February 8, 1979, the Court found:

"L-2. * * * Defendants' constitutional violations had an incremental segregative effect throughout the school system.

"L-3. In order to redress the pervasive, systemwide impact of defendants' constitutional violations, a systemwide remedy encompassing both student population and teacher assignment is required." Armstrong v. O'Connell, 463 F.Supp. 1295, 1309 (E.D.Wis.1979).

Finally, in its February 8, 1979, decision and order, the Court established a schedule for submission by the parties of proposed remedial plans, and it scheduled a hearing to commence March 23, 1979, on the issue of the appropriate remedy to be imposed.

In lieu of proposed remedial plans, on March 1, 1979, the plaintiffs and defendants submitted to the Court a proposed agreement (attached hereto as Appendix A) for settlement of all issues remaining in the case with the exception of the issue of a teacher assignment remedial plan, and a motion for approval of the settlement agreement, which motion is the subject of this decision and order.¹ For the following reasons, the motion is granted and the settlement agreement is approved.

II. Settlement of a Class Action

Rule 23(e) of the Federal Rules of Civil Procedure provides:

"(e) Dismissal or Compromise. A class action shall not be dismissed or compromised without the approval of the court, and notice of the proposed dismissal or compromise shall be given to all members of the class in such manner as the court directs."

The Seventh Circuit has recognized that the essence of a settlement is compromise and that one of the benefits obtained from it is avoidance of the need for court resolution of disputed issues. In Re General Motors Corporation Engine Interchange Litigation, 594 F.2d 1106 at 1132, n. 44 (7th Cir. 1979); Patterson v. Stovall, 528 F.2d 108, 112, 114 (7th Cir. 1976); McDonald v. Chicago Milwaukee Corporation, 565 F.2d 416 (7th Cir. 1977). Nevertheless, before it can approve a settlement proposal, the Court must be satisfied that the settlement is fair, reasonable, and adequate. In Re General Motors, supra, at 1122; In Re Clark Oil & Refining Corporation Antitrust Litigation, 422 F.Supp. 503 (E.D.Wis.1977). The proponents of the settlement bear the burden of persuasion on the issue of fairness. In Re General Motors, at 1126, n. 30; Manual for Complex Litigation § 1.46 at 56 (1977 ed.) (Wright & Miller) (hereafter "Manual").

Among the factors which the Court should consider in judging the fairness of the proposal are the following:

"(1) `* * * the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement';

"(2) `The defendant's ability to pay';

"(3) `The complexity, length and expense of further litigation';

"(4) `The amount of opposition to the settlement';"

Manual, supra, at 56.

Professor Moore notes in addition the factors of:

"(1) * * *

"(2) Presence of collusion in reaching a settlement;

"(3) The reaction of members of the class to the settlement;

"(4) The opinion of competent counsel;

"(5) The stage of the proceedings and the amount of discovery completed."

3B Moore's Federal Practice ¶ 23.804 at 23-521 (2d ed. 1978).

The most important of the factors is number "(1)" from the Manual listed above; that is, the strength of the plaintiff's case on the merits as compared to what is offered in settlement. Manual at 56; 3B Moore's at 23-521; In Re General Motors, at 1132, n. 44.

The decision to accept or reject the settlement proposal is one within the discretion of the district court. In Re Clark Oil, supra, at 507; Manual at 57; Ace Heating & Plumbing Company v. Crane Company, 453 F.2d 30 (3d Cir. 1971). If the Court finds that the settlement is fair, it may accept it over the objection of some class members, In Re General Motors, at 1134, and also, although the issue does not arise in this case, over the objection of named class representatives. In Re General Motors, at 1128, n. 34 and 1134; McDonald, supra, at 426. The Court cannot, however, modify the terms of a settlement proposal; it can only accept or reject the proposal as presented to it. In Re General Motors, at 1125, n. 24.

In the Manual it is recommended that the court follow a two-step procedure, which the Seventh Circuit has endorsed, In Re General Motors, at 1133, in regard to a settlement proposal:

"* * * The first step involves a preliminary determination as to whether notice of the proposed settlement should be given to members of the class and a hearing scheduled at which evidence in support of and in opposition to the proposed settlement will be received. Unless the judge is preliminarily satisfied that the proposed settlement is within the range of possible approval, there is no point in proceeding with notice and a hearing.

* * * * * *

"Such a preliminary hearing is not, of course, a definative sic proceeding on the fairness of the proposed settlement * * *. * * * It is simply a determination that there is, in effect, `probable cause' to submit the proposal to members of the class and to hold a full scale hearing on its fairness at which all interested parties will have an opportunity to be heard after which a formal finding of fairness will be made." Manual at 53-55.

Assuming that a finding of probable cause is made and notice is given to members of the class:

"At the hearing itself, every effort should be made not only to hear all interested parties desiring to be heard, but to adduce all information necessary to enable the judge intelligently to rule on whether the proposed settlement is `fair, reasonable, and adequate.' * * *" Manual at 57.

In this case, the Court on March 5, 1979, held a pre-fairness hearing at which counsel for the parties stated to the Court their reasons for supporting the settlement. After considering those statements and the papers previously submitted, the Court found that the settlement proposal was within the range of possible approval and found probable cause to have notice of the terms of the settlement sent to the class members. (See the order filed March 6, 1979.)

Copies of the notice (attached hereto as...