Devlin v. Scardelletti

• Decision Date: 10 June 2002
• Docket Number: No. 01-417.,01-417.
• Citation: Devlin v. Scardelletti, 536 U.S. 1 (2002)
• Court: U.S. Supreme Court
• Parties: DEVLIN v. SCARDELLETTI et al.

Page 1

536 U.S. 1

DEVLIN

v.SCARDELLETTI et al.

No. 01-417.

Supreme Court of the United States.

Argued March 26, 2002.

Decided June 10, 2002.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Petitioner retiree participates in a defined benefits pension plan (Plan) that was amended in 1991 to add a cost of living increase (COLA).Because the Plan could not support such a large benefits increase, its trustees ultimately eliminated the COLA in 1997 and filed a class action in the Maryland Federal District Court, seeking a declaratory judgment that the 1997amendment was binding on all Plan members or that the 1991 COLA was void.Petitioner's separate challenge to the 1997amendment was dismissed by a New York Federal District Court, which found that the Maryland court should resolve the matter.By this time, the Maryland court had already conditionally certified a class under Federal Rule of Civil Procedure 23(b)(1).After the trustees asked the court to approve their settlement with the class representatives, petitioner moved to intervene.The District Court denied his motion as untimely.It then heard objections to the settlement, including those advanced by petitioner, and approved the settlement.Petitioner appealed.The Fourth Circuit affirmed the District Court's denial of intervention and held that, because petitioner was not a named class representative and because he had been properly denied the right to intervene, he lacked standing to challenge the settlement.

Held: Nonnamed class members like petitioner who have objected in a timely manner to approval of a settlement at a fairness hearing have the power to bring an appeal without first intervening.Pp. 6-14.

(a) This issue, though framed by the Fourth Circuit as one of standing, does not implicate the jurisdiction of the courts, as petitioner satisfies both constitutional and prudential standing requirements.What is at issue is whether petitioner is a "party" for purposes of appealing the settlement approval, for only a lawsuit's parties, or those that properly become parties, may appeal an adverse judgment.This Court has never restricted the right to appeal to named parties.Petitioner's interest in the settlement approval is similar to those of the nonnamed partiesthis Court has allowed to appeal in the past.He objected to the settlement at the fairness hearing, as permitted by the Federal Rules of Civil Procedure.And the settlement's approval notwithstanding his objections amounted to a final decision of his right or claim sufficient to trigger his right to appeal.That right cannot be effectively accomplished through the named class representative — once the named parties reach a settlement that is approved over the petitioner's objections, petitioner's interests diverge from those of the class representative.Marino v. Ortiz,484 U. S. 301, in which white police officers who were not members of the class of minority officers who had brought a racial discrimination suit were not allowed to appeal the settlement, is not to the contrary.Although the settlement affected them, the District Court's decision did not dispose of any right or claim they might have had because they were not class members.Nor does considering nonnamed class members as parties for the purpose of bringing an appeal conflict with any other aspect of class action procedure.Such members may be parties for some purposes and not for others.What is important here is that they are parties in the sense of being bound by the settlement.Allowing them to appeal a settlement approval when they have objected at the fairness hearing preserves their own interests in a settlement that will bind them, despite their expressed objections before the trial court.Allowing such appeals will not undermine the class action goal of preventing multiple suits.Restricting the power to appeal to those members who objected at the fairness hearing limits the class of potential appellants considerably.Pp. 6-11.

(b)This Court rejects the Government's argument that class members should be required to intervene for purposes of appeal.Nor does the Court agree with the Government that the structure of class action procedural rules requires intervention for purposes of appeal.A procedure that allows nonnamed class members to object to a settlement at the fairness hearing without first intervening should similarly allow them to appeal the district court's decision to disregard their objections.Moreover, no statute or procedural rule directly addresses the question of who may appeal from approval of class action settlements, while the right to appeal from an action that finally disposes of one's rights has a statutory basis.28 U. S. C. § 1291. Pp. 11-14.

265 F. 3d 195, reversed and remanded.

O'CONNOR, J., delivered the opinion of the Court, in which REHNQUIST, C. J., and STEVENS, SOUTER, GINSBURG, and BREYER, JJ., joined.SCALIA, J., filed a dissenting opinion, in which KENNEDY and THOMAS, JJ., joined, post, p. 15.

Thomas C. Goldstein argued the cause for petitioner.With him on the briefs were Erik S. Jaffe and Brian Wolfman.

Laurence Gold argued the cause for respondents.With him on the brief were Andrew D. Roth, David L. Shapiro, William F. Hanrahan, and Kenneth M. Johnson.

Patricia A. Millett argued the cause for the United States et al. as amici curiae urging affirmance.On the brief were Solicitor General Olson, Assistant Attorney General McCallum, Deputy Solicitor General Kneedler, Gregory G. Garre, Marleigh D. Dover, Irene M. Solet, David M. Becker, Jacob H. Stillman, and Eric Summergrad.^*

JUSTICE O'CONNORdelivered the opinion of the Court.

Petitioner, a nonnamed member of a class certified under Federal Rule of Civil Procedure 23(b)(1), sought to appeal the approval of a settlement over objections he stated at the fairness hearing.The Court of Appeals for the Fourth Circuit held that he lacked the power to bring such an appeal because he was not a named class representative and because he had not successfully moved to intervene in the litigation.We now reverse.

I

PetitionerRobert Devlin, a retired worker represented by the Transportation Communications International Union (Union), participates in a defined benefits pension plan (Plan) administered by the Union.In 1991, on the recommendation of the Plan's trustees, the Plan was amended to add a cost of living adjustment (COLA) for retired and active employees.As it turned out, however, the Plan was not able to support such a large benefits increase.To address this problem, the Plan's new trustees sought to freeze the COLA.Because they were concerned about incurring Employee Retirement Income Security Act of 1974 (ERISA) liability by eliminating the COLA for retired workers, see29 U. S. C. § 1054(g)(1)(1994 ed.)(providing that accrued benefits "may not be decreased by an amendment of the plan"), the trustees froze the COLA only as to active employees.Because the Plan still lacked sufficient funds, the new trustees obtained an equitable decree from the United States District Court for the District of Maryland in 1995 declaring that the former trustees had breached their fiduciary duties and that ending the COLA for retired workers would not violate ERISA.Scardelletti v. Bobo,897 F. Supp. 913(Md.1995);Scardelletti v. Bobo,No. JFM-95-52(D. Md., Sept. 8, 1997).Accordingly, in a 1997amendment, the new trustees eliminated the COLA for all Plan members.

In October 1997, those trustees filed the present class action in the United States District Court for the District of Maryland, seeking a declaratory judgment that the 1997amendment was binding on all Plan members or, alternatively, that the 1991 COLA amendment was void.Originally, petitioner was proposed as a class representative for a subclass of retired workers because of his previous involvement in the issue.He refused to become a named representative, however, preferring to bring a separate action in the United States District Court for the Southern District of New York, arguing, among other things, that the 1997 Plan amendment violated the Age Discrimination in Employment Act of 1967,81 Stat. 602, as amended, 29 U. S. C. § 621 et seq.(1994 ed. and Supp. V).The New York District Court dismissed petitioner's claim involving the 1997amendment, which was later affirmed by the Second Circuit because:

"The exact COLA issue that the appellants are pursuing... is being addressed by the district court in Maryland....It seems eminently sensible that the Maryland district court should resolve fully the COLA amendment issue."Devlin v. Transportation Communications Int'l Union,175 F. 3d 121, 132(CA21999).

At the time petitioner's claim was dismissed, the District Court in Maryland had already conditionally certified a class under Federal Rule of Civil Procedure 23(b)(1), dividing it into two subclasses: a subclass of active employees and a subclass of retirees.On April 20, 1999, petitioner's attorney sent a letter to the District Court informally seeking to intervene in the class action.On May 12, 1999, petitioner sent another letter repeating this request.He did not, however, formally move to intervene at that time.

Also in May, the Plan's trustees and the class representatives agreed on a settlement whereby the COLA benefits would be eliminated in exchange for the addition of other benefits.On August 27, 1999, the trustees filed a motion for preliminary approval of the settlement.On September 10, 1999, petitioner formally moved to intervene pursuant to Federal Rule of Civil Procedure 24.On November 12, 1999, the District Court denied petitioner's intervention motion as "absolutely untimely."Scardelletti v. Debarr,265 F. 3d 195, 201(CA42001).It then heard objections to the settlement, including those advanced by petitioner, and, concluding that the settlement was fair, approved it.App. C to Pet. for Cert. 1-3.

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