Eaton v. Courtaulds of North America, Inc.

• Decision Date: 09 August 1978
• Docket Number: No. 76-2457,76-2457
• Citation: 578 F.2d 87
• Parties: 17 Fair Empl.Prac.Cas. 1767, 17 Empl. Prac. Dec. P 8534 Freddie EATON et al., Plaintiffs-Appellants, v. COURTAULDS OF NORTH AMERICA, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 87

578 F.2d 87

17 Fair Empl.Prac.Cas. 1767, 17 Empl. Prac.

Dec. P 8534

Freddie EATON et al., Plaintiffs-Appellants, v. COURTAULDS OF NORTH AMERICA, INC., et al., Defendants-Appellees.

No. 76-2457.

United States Court of Appeals Fifth Circuit.

Aug. 9, 1978.

J. U. Blacksher, Mobile, Ala., Jack Greenberg, O. Peter Sherwood, New York City, for plaintiffs-appellants.

Paul W. Brock, Benjamin T. Rowe, William C. Tidwell, III, Mobile, Ala., for Courtaulds.

Otto E. Simon, Mobile, Ala., for Local 1465, etc.

John C. Falkenberry, Birmingham, Ala., Arthur Goldberg and Linda M. Nelson, A.C.T.W.U., New York City, for Textile Workers Union of America.

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

Before CLARK and GEE, Circuit Judges, and LYNNE, ^* District Judge.

GEE, Circuit Judge.

This appeal revolves around the interpretation of one section of a consent decree entered into by the parties and accepted by the district court in 1973.

The consent decree in question settled the claims of a group of black employees who had initiated an action under Title VII of the 1964 Civil Rights Act, 42 U.S.C. § 2000e, et seq., against Courtaulds of North America and against the local and national units of the Textile Workers Union of America. Among other things, the black employees had contended that the defendants maintained a discriminatory promotional and seniority system. This, they said, was due in part to the past practice of segregated job classifications under which black employees had been placed in undesirable labor classifications only; although by the time of the lawsuit black employees had gained the right to transfer, they could do so only at the cost of their seniority. This in turn was because under the collective bargaining agreement between the union and Courtaulds, seniority was reckoned by service within particular sections or "lines of progression," rather than by an employee's total length of service with the company. When one departed one "line" to enter another, then he began in the new "line" with no seniority, and that regardless of how long he had been employed at the plant.

Whatever the truth of those allegations, the parties did arrive at the 1973 settlement agreement that purported, among other things, to solve these problems of seniority. For seniority purposes the agreement set out special provisions for an "Affected Class" of 57 named black employees who had been hired in the "labor section" before October 21, 1968, and provided that, subject to certain specific limitations, the "Affected Class" members would be entitled to what was called "Court Seniority" in connection with promotions, demotions and layoffs. This "Court Seniority" was defined by the employee's length of continuous service with Courtaulds.

The present controversy concerns the application of the settlement agreement's "Court Seniority" clauses in the context of a reduction in force. The paragraphs under dispute are the following:

(VII.) D. 1. When members of the Affected Class compete with each other or with employees not of the Affected Class as to layoff, demotion and recall, Court Seniority shall be the applicable seniority for such purposes and may be utilized by Affected Class employees and any other employees so competing. Court Seniority for the purposes of demotion, layoff and recall shall not be lost by failure either to bid or to accept an entry level job as is set forth in preceding Paragraph "C".

2. Subject to the express exception in Paragraph III. (F) above, an Affected Class employee or any other person can only use his Court Seniority in case of demotion, layoff or recall from his position in the line of progression in which he is as of the date of this Settlement Agreement downward to the entry job in that same line of progression. He can at no time use Court Seniority to jump from section to section or from department to department.

(Emphasis added).

The entire case hinges on the referent of the prepositional clause beginning with "in which" in the emphasized portion: if this clause modifies "position," one result emerges; but if it modifies "line of progression," it has quite a different meaning. At the time this controversy arose the company and the union read the "in which" clause to modify "position." On this reading the company could, at the time of a layoff, bump each Affected Class employee back to the position he had occupied at the time of the 1973 agreement, and the employee could only apply his Court Seniority to avoid further drops in position. Each of the appellants had transferred to the Spinning Department prior to the 1973 settlement, and each had used his Court Seniority in that line of progression to advance to a job position higher than that to which he would have advanced under ordinary section seniority. But when a reduction in force occurred in 1974 the company, applying its interpretation of paragraph VII.D.2. of the agreement, bumped each plaintiff back to his pre-settlement position in the Spinning Department.

The plaintiffs contested this procedure, arguing that it was based on a misreading of paragraph D.2. They contend that the "in which" clause modifies "line of progression" rather than "position." On this reading the Affected Class members, in case of a reduction in force, should be able to apply Court Seniority to protect themselves in the new positions they have attained as a result of the settlement, without first being bumped back by section seniority to their pre-settlement positions. The company's interpretation, they argue, turns paragraph D.2. into an exception that virtually swallows the rule of Court Seniority as applied to layoffs by paragraph D.1. Upon their demotions the plaintiffs filed grievances. These were denied, and an arbitrator decided in favor of the company, unaccountably finding no ambiguity in the disputed clause. ¹ Meanwhile, appellants applied to the district court for a declaration of their rights and enforcement of the settlement agreement. The district court, like the arbitrator, determined that the phrase in question was not ambiguous and that the defendants' interpretation was correct.

We reverse. We note preliminarily that we are not bound by the clearly erroneous standard of review of Federal Rule of Civil Procedure 52(a). ² The Supreme Court has said that "since consent decrees and orders have many of the attributes of ordinary contracts, they should be construed basically as contracts," United States v. ITT Continental Baking Co., 420 U.S. 223, 236, 95 S.Ct. 926, 934, 43 L.Ed.2d 148 (1975), and this court has observed that the contractual aspects of a consent decree exist "chiefly . . . in regard to disputes concerning what the parties actually consented to as reflected by the judgment in question." United States v. Kellum, 523 F.2d 1284, 1287 (5th Cir. 1975). The present issue thus should clearly be treated as a matter of contractual interpretation. It has been frequently stated, however, that the interpretation of the written language of a contract is a matter of law and is reviewable as such. See, e. g., First National Bank of Miami v. Insurance Co. of North America, 495 F.2d 519 (5th Cir. 1974); C. Wright & A. Miller, Federal Practice & Procedure: Civil, § 2588. The reason was stated in our opinion in Illinois Central Railroad Co. v. Gulf, Mobile & Ohio Railroad Co., 308 F.2d 374, 375 (5th Cir. 1962):

Since this Court is in as good position to interpret the . . . written contract as was the district court, we cannot rely upon the clearly erroneous rule, but must ourselves construe the contract without any presumption in favor of the judgment of the district court.

Thus, our review of the district court's interpretation of the consent decree's language is comparable to review of a district court's contract interpretation and is not restricted by the clearly erroneous rule of F.R.Civ.P. 52(a); the matter may rather be considered afresh by this court as a matter of law. See Kimbell Foods, Inc. v. Republic National Bank, 557 F.2d 491 (5th Cir. 1977).

If possible, we are required to analyze a contract's meaning by its language without resort to extrinsic considerations. This is because the language of an agreement, unless ambiguous, represents the parties' intention. Kimbell, supra at 496. Of settlement agreements in particular, the Supreme Court has said that:

(T)he agreement reached normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with the litigation. Thus the decree itself cannot be said to have a purpose; rather the parties have purposes, generally opposed to each other, and the resultant decree embodies as much of those opposing purposes as the respective parties have the bargaining power and skill to achieve.

For these reasons, the scope of a consent decree must be discerned within its four corners, and not by reference to what might satisfy the purposes of one of the parties to it.

United States v. Armour & Co., 402 U.S. 673, 681-82, 91 S.Ct. 1752, 1757, 29 L.Ed.2d 256 (1971). Where ambiguities exist in the language of a consent decree, the court may turn to other "aids to construction," such as other documents to which the consent decree refers, as well as legal materials setting the context for the use of particular terms. ITT Continental Baking, supra, 420 U.S. at 238-43, 95 S.Ct. 926.

We are puzzled by the district court's stated view that the syntactically opaque language of clause VII.D.2 is "not ambiguous," but we think that the district court was correct in attempting to construe this clause in the light of other portions of the agreement. We disagree, however, with the district court's ultimate construction of the phrase. That interpretation focused on the opening clause of paragraph VII.D.2, "Subject to the express exception in Paragraph III. (F) . . . ."...