Cotton v. Hinton

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Citation559 F.2d 1326
Docket NumberBY-PRODUCTS,No. 75-1505,75-1505
Parties15 Fair Empl.Prac.Cas. 1342, 15 Empl. Prac. Dec. P 7864 Hollie COTTON and Young Herrod, Individually and on behalf of all others similarly situated, Plaintiffs-Appellees, v. Ravon HINTON and Chauncey L. Gardner et al., Plaintiffs-Appellants, v. UNITED STATES PIPE & FOUNDRY COMPANY COKEPLANT et al., Defendants-Appellees.
Decision Date30 September 1977

Oscar W. Adams, Jr., Birmingham, Ala., for plaintiffs-appellants.

John J. Coleman, Jr., James P. Alexander, Demetrius C. Newton, Birmingham, Ala., Charles F. Wilson, Tampa, Fla., John C. Falkenberry, Birmingham, Ala., (Rep. United Steelworkers Local 12014), for plaintiffs-appellees.

Appeal from the United States District Court for the Northern District of Alabama.

Before MORGAN and HILL, Circuit Judges, and NOEL, * District Judge.

JAMES C. HILL, Circuit Judge:

The sole issue in this employment discrimination case is whether or not the District Judge clearly abused his discretion in approving a settlement entered into by a plaintiff class of employees. Objectors bring this appeal seeking to overturn the compromise. We affirm.

On December 28, 1971, following submission of their claims to the administrative process of the Equal Employment Opportunity Commission (EEOC), two black employees, Hollie Cotton and Young Herrod, filed suit against their employer, United States Iron Pipe and Foundry Company (U.S. Pipe) and against their union, International Union District 50, Local Union 12014 (Union). Seeking to represent a class consisting of the present and former black employees at U.S. Pipe's North Birmingham Complex, the plaintiffs charged the defendant company with violations of 42 U.S.C. § 1981 and of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., stemming from allegedly racially discriminatory employment practices. The defendant Union was charged with violating 29 U.S.C. § 151 et seq., requiring unions to provide fair representation for all of its members. The complaint sought back pay, declaratory and injunctive relief.

The Union answered on February 18, 1972, and U.S. Pipe answered on March 15, 1972. Both answers generally denied the allegations in the complaint. On July 3, 1972, a pre-trial conference was held where it became evident that discovery would be necessary and that the litigation commitments of counsel would delay trial of the case. On January 29, 1973, a second pre-trial conference was held in which the Court urged the parties to handle discovery on an informal and cooperative basis. On May 6, 1974, a third pre-trial conference was held in which the Court was informed that a settlement was likely. By September 4, 1974, settlement had not been achieved and U.S. Pipe made an offer of judgment. See F.R.Civ.P., Rule 68. Several conferences between the parties and the Court followed with the result that on October 25, 1974, the Court conditionally approved the consent decree and directed that notice of settlement be given to the class.

Thereafter, objections to the settlement were entered by counsel purporting to represent 187 then employed black employees at U.S. Pipe. On December 23 and 27, 1974, hearings were held to consider their objections. Several changes were suggested by the Court. The decree was modified to conform to the Court's suggestions. On January 7, 1975, the objectors filed a motion to be allowed to pursue full discovery and after conference between the parties and objector's counsel, the motion was denied. On January 14, 1975, over six years after the charges of unlawful employment practices were filed with the EEOC, a final judgment was entered from which the objectors appeal.

In this case, as indicated above, the Court is called upon to determine whether or not the District Judge, the Honorable Sam C. Pointer, abused his discretion in approving a settlement resolving this private class action. The conclusion we reach is that the trial judge wisely exercised his discretion rather than abused it and we affirm the District Court.

From the growing body of decisional law, a number of principles have emerged for

the guidance of district judges in making the determination to give or withhold approval of a proposed settlement. We refer to some of them, applicable to this case. Of course, each case must be decided on its own facts. In determining that a compromise is fair, adequate and reasonable and therefore should be approved, the trial judge is essentially called upon to do a balancing task. The application of the principles to which we refer, as well as others, will be dependent upon the facts of each case

In determining whether to approve a proposed settlement, the cardinal rule is that the District Court must find that the settlement is fair, adequate and reasonable and is not the product of collusion between the parties. 1 Young v. Katz, 447 F.2d 431 (5th Cir. 1971).

A threshold requirement is that the trial judge undertake an analysis of the facts and the law relevant to the proposed compromise. A "mere boiler-plate approval phrased in appropriate language but unsupported by evaluation of the facts or analysis of the law" will not suffice. Protective Committee v. Anderson, 390 U.S. 414, 434, 88 S.Ct. 1157, 1168, 20 L.Ed.2d 1 (1968).

In addition to undertaking such an analysis, it is essential that the trial judge support his conclusions by memorandum opinion or otherwise in the record. An appellate court, in the event of an appeal, must have a basis for judging the exercise of the trial judge's discretion. Protective Committee v. Anderson, supra.

In determining the fairness, adequacy and reasonableness of the proposed compromise, the inquiry should focus upon the terms of the settlement. The settlement terms should be compared with the likely rewards the class would have received following a successful trial of the case. Protective Committee v. Anderson, supra. The relief sought in the complaint may be helpful to establish a benchmark by which to compare the settlement terms. See Norman v. McKee, 431 F.2d 769 (9th Cir. 1970).

In Title VII class actions, the District Court is particularly suited to perform this task since the trial judge is given broad discretion in the fashioning of the proper remedial relief to eliminate employment discrimination. See Ablemarle Paper Co. v. Moody, 422 U.S. 405, 95 S.Ct. 2362, 45 L.Ed.2d 280 (1975).

Yet, in evaluating the terms of the compromise in relation to the likely benefits of a successful trial, the trial judge ought not try the case in the settlement hearings. Young v. Katz, supra.

It cannot be overemphasized that neither the trial court in approving the settlement nor this Court in reviewing that approval have the right or the duty to reach any ultimate conclusions on the issues of fact and law which underlie the merits of the dispute.

City of Detroit v. Grinnell Corporation, 495 F.2d 448, 456 (2d Cir. 1974), Grunin v. International House of Pancakes, 513 F.2d 114, 123 (8th Cir. 1975).

Neither should it be forgotten that compromise is the essence of a settlement. The trial court should not make a proponent of a proposed settlement "justify each term of settlement against a hypothetical or speculative measure of what concessions might have been gained; inherent in compromise is a yielding of absolutes and an abandoning of highest hopes." Milstein v. Werner, 57 F.R.D. 515, 524-25 (S.D.N.Y.1972).

In performing this balancing task, the trial court is entitled to rely upon the judgment of experienced counsel for the parties. Flinn v. FMC Corporation, 528 F.2d 1169 (4th Cir. 1975). Indeed, the trial judge, absent fraud, collusion, or the like, should be hesitant to substitute its own judgment for that of counsel. Id. at 1173.

In addition to examining the merits of a proposed settlement and ascertaining the views of counsel, the Court should consider other factors.

Practical considerations may be taken into account. It is often said that

litigants should be encouraged to determine their respective rights between themselves. United States v. Allegheny-Ludlum Industries, Inc., 517 F.2d 826 (5th Cir. 1975) (and cases cited therein). Particularly in class action suits, there is an overriding public interest in favor of settlement. Id.; Van Bronkhorst v. Safeco Corp., 529 F.2d 943, 950 (9th Cir. 1976). It is common knowledge that class action suits have a well deserved reputation as being most complex. The requirement that counsel for the class be experienced attests to the complexity of the class action. Eisen v. Carlisle and Jacquelin, 391 F.2d 555 (2d Cir. 1968)

A review of the leading cases from this Circuit involving litigation of employment discrimination in class actions profitably shows the length of time and expense which must be incurred before the dust of combat has finally settled. See, e. g., United States v. United States Steel Corporation, 520 F.2d 1043 (5th Cir. 1975); Pettway v. American Cast Iron Pipe Company, 494 F.2d 211 (5th Cir. 1974). In these days of increasing congestion within the federal court system, settlements contribute greatly to the efficient utilization of our scarce judicial resources.

In a Title VII case, as here, the policy favoring settlement is even stronger in view of the emphasis placed upon voluntary conciliation by the Act itself. United States v. Allegheny-Ludlum Industries, Inc., supra; Patterson v. Newspaper & Mail Del. U. of N. Y. & Vic., 514 F.2d 767 (2d Cir. 1975).

"While the public objectives embodied in Title VII warrant a careful review of the provisions of the settlement in light of these policies, . . ., the clear policy in favor of encouraging settlements must also be taken into account, . . ., particularly in an area where voluntary compliance by the parties over an extended period will contribute significantly toward ultimate achievement of statutory goals." Patterson, supra at 771 (citations omitted).

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