Huguley v. General Motors Corp.

• Decision Date: 10 October 1995
• Docket Number: No. 94-1870,94-1870
• Citation: 67 F.3d 129
• Parties: 66 Empl. Prac. Dec. P 43,736, 64 USLW 2230 Dennis H. HUGULEY, et al., Plaintiffs-Appellees, v. GENERAL MOTORS CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 129

67 F.3d 129

66 Empl. Prac. Dec. P 43,736, 64 USLW 2230

Dennis H. HUGULEY, et al., Plaintiffs-Appellees, v. GENERAL MOTORS CORPORATION, Defendant-Appellant.

No. 94-1870.

United States Court of Appeals Sixth Circuit.

Argued Sept. 11, 1995.

Decided Oct. 10, 1995.

Dennis D. James (argued and briefed), Reosti, James & Sirlin, Detroit, MI, for plaintiffs-appellees.

Daniel G. Galant, General Motors Corp., Office of the Gen. Counsel, Detroit, MI, Barbara B. Brown and Dennis L. Casey (briefed), Paul, Hastings, Janofsky & Walker, Washington, DC, Paul W. Crane, Jr. (argued), Hastings, Janofsky & Walker, Los Angeles, CA, for defendant-appellant.

Before: WELLFORD, MILBURN, and RYAN, Circuit Judges.

WELLFORD, J., delivered the opinion of the court, in which RYAN, J., joined. MILBURN, J. (pp. 136-137), delivered a separate dissenting opinion.

WELLFORD, Circuit Judge.

This is the most recent appeal arising from a consent decree entered in a large class action, employment discrimination case brought by African-American employees of General Motors Corporation ("GM"). ¹ The issue is whether the consent decree remains effective as to class members who work at a facility that GM sold to a third party. Applying the doctrine of successor liability, the district court held that the terms of the decree remained binding on GM and the purchaser of its facility. For the reasons stated herein, we REVERSE.

I.

In July of 1983, plaintiffs, representing other similarly situated GM employees, filed a class action law suit, alleging racial discrimination with respect to promotions, demotions layoffs, recalls, pay, transfers and other subjective personnel decisions in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. Secs. 2000e to 2000e-7. The district court certified the class as including all African-American, salaried GM employees residing in Michigan, Ohio and Indiana who alleged employment discrimination on the basis of race. Huguley v. General Motors Corp., 638 F.Supp. 1301 (E.D.Mich.1986). Prior to trial, the parties settled the dispute and submitted to the district court an elaborate consent decree. Because a substantial portion of the plaintiffs' proof rested on statistical claims of disparate treatment in employment evaluations between black and white employees, the decree provided extensive equitable relief for the incumbent class members, including a computer monitoring system ("Group Monitoring System"). The Group Monitoring System, which was to remain in effect for the five year life of the decree, required GM to record the number of promotions and discretionary salary increases awarded to black salaried employees during a given reporting period. If the number of promotions or salary increases awarded to non-black salaried employees exceeded the number granted to blacks by more than the standard deviation, the decree required GM to make up the difference during the next reporting period. The district court tentatively approved the decree in February of 1989, subject to a notice of the proposed settlement to individual class members. See 128 F.R.D. 81, 83 (E.D.Mich.1989), aff'd, 925 F.2d 1464 (6th Cir.), cert. denied, 502 U.S. 909, 112 S.Ct. 304, 116 L.Ed.2d 247 (1991). In March of 1989, several class members filed objections to the proposed settlement. Id. at 84. After a fairness hearing, the district court overruled the objections and approved the decree; a decision which this court subsequently affirmed. Id. at 88-89.

GM operated two plants in the vicinity of Indianapolis, Indiana, which were subject to the consent decree, the Allison Transmission Division and the Allison Gas Turbine Division. In June of 1993, GM sought a buyer for its Allison Transmission Division and the proposed sale raised concerns among some class members employed at the facility. Several class members sent an anonymous letter to the district court inquiring about the effect of the proposed sale on the decree. The letter raised five questions, two of which are relevant to this appeal:

1. In reference to the Huguley v. GM lawsuit, is Allison Transmission Division currently obligated under law to comply to all provisions mentioned in the Consent Decree?

2. Upon sale of our division from GM, will Allison Transmission Division still be obligated to the Five Year Consent Decree under new ownership?

On June 9, 1993, class counsel responded with respect to these issues:

1. Yes, per Decree Section III, A.

2. No, per Decree Section III, A. ²

Shortly thereafter, counsel for GM wrote the district court and expressed her agreement that the decree would not apply should the sale be consummated. Her letter stated as follows:

1. Allison Transmission Division is currently obligated to comply with the Decree.

2. Under the Decree, a purchaser of a division or facility would not be obligated to comply with the Decree, which is predicated on analysis of the entire three-state salaried workforce.

GM never completed the sale of the Allison Transmission Division and the district judge made no finding regarding the questions raised in the anonymous letter. ³

On December 1, 1993, however, GM did sell the Allison Gas Turbine Division ("Allison") to AEC Acquisition Company ("AEC"). ⁴ Prior to the sale, GM employed approximately 1,950 salaried employees at Allison but only 186 of those employees were African-Americans. GM retained no ownership interest in, or control over, the Allison facility. AEC continued to employ virtually all of the salaried workers at Allison but retention of the employees was not a sale condition, nor did the agreement obligate AEC to continue any of GM's employment practices.

After the sale, GM's counsel contacted class counsel and sought an agreement that the Allison facility would no longer be subject to the terms of the decree. On this occasion, however, class counsel disagreed with GM's interpretation. Consequently, GM moved to clarify the meaning of the decree and asked the district court to confirm its interpretation. The district court granted the parties ⁵ an abbreviated discovery period and the opportunity to submit memoranda on the issue of successor liability. On June 27, 1994, the district court held that the decree remained effective as to the employees working at the Allison facility. In so holding, the district judge stated that the decree bound both GM and Allison and that GM was liable if Allison failed to comply with the decree. He noted that a mini-monitoring system, or something equivalent to it, could be established at Allison for the purpose of measuring Allison's compliance with the decree. This appeal ensued.

II.

In Huguley v. General Motors Corp. (Perry I), 999 F.2d 142, 146 (6th Cir.1993) (citation omitted), we stated that "a district court's interpretation of its consent decrees is entitled to substantial deference on appeal. Such deference is required because '[f]ew persons are in a better position to understand the meaning of a consent decree than the district judge who oversaw and approved it.' " Plaintiffs cite Perry I for the proposition that this court reviews the district court's interpretation of the decree for clear error. GM also cites Perry I for the proposition that the district court's decision is reviewed de novo. And, indeed, Perry I stated that "we review de novo the district judge's legal determination" about the scope of the decree. Id. at 145.

The basic issue in this appeal is whether the parties intended--as evidenced by the consent decree--that GM and any third party who purchased a GM facility would remain obligated after the sale to provide the affirmative relief guaranteed by the settlement. This is a question of contract interpretation. See United States v. ITT Continental Baking Co., 420 U.S. 223, 238, 95 S.Ct. 926, 935, 43 L.Ed.2d 148 (1975). This court has repeatedly held that "[t]he interpretation of a consent decree is a matter of law reviewed de novo." ⁶ Stotts v. Memphis Fire Dep't, 858 F.2d 289, 299 (6th Cir.1988). The other circuits also review consent decrees under the de novo standard. E.g., Sinclair Oil Corp. v. Scherer, 7 F.3d 191, 193 (10th Cir.1993); United States v. Western Elec. Co., 900 F.2d 283, 293 (D.C.Cir.), cert. denied, 498 U.S. 911, 111 S.Ct. 283, 112 L.Ed.2d 238 (1990); Kern Oil & Refining Co. v. Tenneco Oil Co., 840 F.2d 730, 736 (9th Cir.), cert. denied, 488 U.S. 948, 109 S.Ct. 378, 102 L.Ed.2d 367 (1988). Therefore, we review the district court's findings of fact for clear error, but the legal import of those findings must be assessed in light of the parties' contractual agreement, a matter which is entitled to plenary review. Cf. NLRB v. Aquabrom, Div. of Great Lakes Chem. Corp., 855 F.2d 1174, 1180 (6th Cir.), modified on other grounds, 862 F.2d 100 (6th Cir.1988).

III.

The Supreme Court first applied the doctrine of successor liability in John Wiley &amp Sons, Inc. v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964), a National Labor Relations Act case. In order to effectuate the goals of federal labor policy, the Court held that a successor employer could be obligated to arbitrate under a collective bargaining agreement with the union of the predecessor employer even though the successor was not a party to the agreement. Id. at 549, 84 S.Ct. at 914. The Court explained that "[t]he objectives of national labor policy, reflected in established principles of federal law, require that the rightful prerogative of owners independently to rearrange their businesses and even eliminate themselves as employers be balanced by some protection to the employees from a sudden change in the employment relationship." Id. In EEOC v. MacMillan Bloedel Containers, Inc., 503 F.2d 1086, 1090-91 (6th Cir.1974), we extended the rule of successor liability to remedies under Title VII. We concluded "that the considerations set forth by the Supreme Court ... as justifying a successor doctrine to remedy unfair labor practices are...