Flinn v. FMC Corp.

• Decision Date: 22 March 1976
• Docket Number: No. 74--2198,AFL-CI,A,74--2198
• Citation: 528 F.2d 1169
• Parties: 12 Fair Empl.Prac.Cas. 1069, 10 Empl. Prac. Dec. P 10,408 Mabel FLINN, et al., Appellants, v. FMC CORPORATION and Local 9 Textile Workers Union of America,ppellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1169

528 F.2d 1169

12 Fair Empl.Prac.Cas. 1069,

10 Empl. Prac. Dec. P 10,408

Mabel FLINN, et al., Appellants, v. FMC CORPORATION and Local 9 Textile Workers Union of

America, AFL-CIO, Appellees.

No. 74--2198.

United States Court of Appeals, Fourth Circuit.

Argued May 7, 1975.

Decided Oct. 6, 1975.

Certiorari Denied March 22, 1976.

See 96 S.Ct. 1462.

M. E. Mowery, Jr., Parkersburg, W. Va., for appellants.

Fred L. Davis, James R. Renfroe, Chicago, Ill. (Robert F. St. Aubin, Asst. Counsel, Philadelphia, Pa., McDougle, Davis, Handlan & Davis, Parkersburg, W. Va., on brief), for appellee FMC Corp.

Gregory Abbey, New York City, for appellee Local 9, Textile Workers Union of America, AFL-CIO

Before BOREMAN, Senior Circuit Judge, and RUSSELL and FIELD, Circuit Judges.

DONALD RUSSELL, Circuit Judge:

This is an appeal from an order of the District Court approving the settlement of a class action asserting a claim of sex discrimination under the provisions of Title VII. The scope of our review on such an appeal is narrow. ¹ We are not, in reviewing the settlement, to 'substitute our ideas of fairness for those of the district judge * * *.' ² Our power, as the appellants concede and the authorities abundantly affirm, is only to be exercised 'upon a clear showing that the district court abused its discretion' in approving the settlement. ³ The most important factor to be considered in determining whether there has been such a clear abuse of discretion is whether the trial court gave proper consideration to the strength of the plaintiffs' claims on the merits, for, as the Court said in City of Detroit v. Grinnell Corporation (2d Cir. 1974) 495 F.2d 448, 455, '(I)f the settlement offer was grossly inadequate, * * * it can be inadequate only in light of the strength of the case presented by the plaintiffs.' The trial court should not, however, turn the settlement hearing 'into a trial or a rehearsal of the trial' ⁴ nor need it 'reach any dispositive conclusions on the admittedly unsettled legal issues' in the case. ⁵ It is not part of its duty in approving a settlement to establish that 'as a matter of legal certainty * * * the subject claim or counterclaim is or is not worthless or valuable.' ⁶ It is not, though, to give to the settlement 'mere boilerplate approval phrased in appropriate language but unsupported by evaluation of the facts or analysis of the law.' ⁷ While it should extend to any objector to the settlement 'leave to be heard, to examine witnesses and to submit evidence' on the fairness of the settlement, it is entirely in order for the trial court to limit its proceedings to whatever is necessary to aid it in reaching an informed, just and reasoned decision. ⁸ So long as the record before it is adequate to reach 'an intelligent and objective opinion of the probabilities of ultimate success should the claim be litigated' and 'form an educated estimate of the complexity, expense and likely duration of such litigation, * * * and all other factors relevant to a full and fair assessment of the wisdom of the proposed compromise,' it is sufficient. ⁹

In reviewing the record and evaluating the strength of the case, the trial court should consider the extent of discovery that has taken place, the stage of the proceedings, the want of collusion in the settlement, and the experience of counsel who may have represented the plaintiffs in the negotiation. ¹⁰ The fact that all discovery has been completed and the cause is ready for trial is important, since it ordinarily assures sufficient development of the facts to permit a reasonable judgment on the possible merits of the case. ¹¹ Collusion and bad faith on the part of those purporting to represent the class in the negotiations will, of course, impugn the settlement. ¹² While the opinion and recommendation of experienced counsel is not to be blindly followed by the trial court, ¹³ such opinion should be given weight in evaluating the proposed settlement. ¹⁴ The attitude of the members of the class, as expressed directly or by failure to object, after notice, to the settlement, is a proper consideration for the trial court, ¹⁵ though 'a settlement is not unfair or unreasonable simply because a large number of class members oppose it.' ¹⁶ And because the cash settlement 'may only amount to a fraction of the potential recovery' will not per se render the settlement inadequate or unfair. ¹⁷ With particular reference to class actions under Title VII, any settlement should receive careful review because of the public policy embodied in such legislation, but the clearly expressed intent of that Act to encourage settlements must be borne in mind. ¹⁸

Applying these principles to the settlement approved in this case, we find no abuse of discretion on the part of the trial court. The settlement as approved was not hastily arrived at. It followed protracted discussions and was reached on the eve of trial after prior negotiations had failed. The plaintiffs were represented in the negotiation by their retained counsel, who had had extensive experience in handling sex and racial discrimination cases. His good faith and competency are not challenged. A representative of the Equal Employment Opportunity Commission was present during the hearings on the settlement and presumably fully informed herself of the terms of the settlement and its fairness. In the class involved in the suit were 253 female employees of the defendant. All these employees were given a carefully drafted statement of the settlement, as well as provided adequate notice of the hearing thereon, and of their right to object thereto. Only five members of the class filed any dissent from the settlement. Three of these were the original plaintiffs in the class suit. ¹⁹ They appeared with new counsel, who had been retained to represent them in objecting to the settlement. They were given ample opportunity to present testimony and to be heard on the settlement. They alone appeal from the approval of the settlement.

The first objection of the appellants to the settlement was that the trial court, in approving the settlement, did so 'simply because it was agreed upon by counsel for the respective parties.' The record disproves any such contention. The trial court recognized and stated positively in the record that the mere fact that counsel 'believe it is an honorable settlement' and one which 'is in their considered judgment, the appropriate way to terminate the litigation,' did not relieve the Court of its responsibility to 'oversee, overview and to ultimately pass upon the question of whether the proposed settlement agreement meets the test, the criteria, the standards that are impressed upon the Court by Act of Congress.' It later in its oral opinion approving the settlement emphasized anew the Court's responsibility in approving a settlement of a class action. It stated that 'it is the sole responsibility of the Court * * * in approving or disapproving a settlement such as presented here.'

The appellants go on to assert that, even if the trial court had recognized its responsibility in connection with the proposed settlement, it failed to have 'a trial or hearing on the merits of the allegations raised in the employee's complaint.' There is, as we have seen, no requirement for a trial on the merits as a prerequisite to approval of a settlement. All discovery had been completed in the case, which had been pending for several years in the court. Various motions had been heard, including one for summary judgment and another involving the designation of the suit as a class action. The trial court had considerable familiarity with the case and the respective positions of the parties. Further, it had extended to the appellants the right to present fully on the record their objections to the settlement. In their testimony, they gave the case the appearance more of a complaint about seniority and transfer rights under their collective bargaining agreement than about sex discrimination. Their real complaint related to the effect of such transfers, the propriety of which on technological grounds they did not dispute, on their seniority. The appellant Loiseau, for instance, stated her complaint arose out of a transfer made in 1958 from an incentive pay department to a straight hourly pay department and to the granting of priority in available incentive pay jobs to employees brought over from the discontinued plant of the appellee at Roanoke. However, the employees brought from Roanoke, who secured the job she wanted, were, she admitted, female, too. The appellant Flinn testified that her complaint arose out of a departmental transfer that took place in 1963. She claimed that an employee when transferred to another department was not allowed to carry her seniority with her, though she asserted this was contrary to the collective bargaining agreement. ²⁰ It was conceded, however, that the seniority rules were negotiated between the employer and the Union and were 'applicable to males and females alike.' The appellant Lynn, according to her testimony, 'had to transfer due to customer requirements and I had to transfer and lost half of my seniority.' Her loss of seniority placed her behind other female employees in the department to which she transferred. In their complaint, the appellants seemed to base their claim of sex discrimination on the assertion that female employees were employed on an incentive pay basis, whereas male employees were on a straight hourly pay basis. As we have seen, however, the appellants, in their own statements of their complaint, objected to be transferred from an incentive pay basis to a straight hourly pay basis, and the reason expressed for their discontent was that an employee earned more on an incentive pay basis than on a straight hourly pay basis. Moreover, no one of the appellants, though conceding that the settlement of transfer rights gave them the privilege of transferring...