Kyriazi v. Western Elec. Co.
| Decision Date | 12 May 1981 |
| Docket Number | No. 80-2417,80-2417 |
| Citation | 647 F.2d 388 |
| Parties | 33 Fair Empl.Prac.Cas. 1147, 25 Empl. Prac. Dec. P 31,796 Kyriaki Cleo KYRIAZI, Individually and on behalf of all those similarly situated v. WESTERN ELECTRIC COMPANY; Ralph Boyd, individually and in his capacity as agent for Western Electric and Fred Wilser, individually and in his capacity as agent for Western Electric, James Snyder, Robert Armstrong and S. "Teddy" Liu, first name of last named defendant fictitious, real first name unknown to plaintiff. Appeal of Helen MILLER, Dorothy Goodman, Helen Witz, Jeannette Scott, Clarice Phillips, Sharon Caines, Barbara R. Gaglio, Jeanne DeMasi, Joyce Lynn, Loretta Harris, and Joanne Bonfante, on their own behalfs and on behalf of others similarly situated, petitioners. |
| Court | U.S. Court of Appeals — Third Circuit |
Oliver Lofton (argued), Lofton & Lester, Newark, N. J., for appellants.
S. Joseph Fortunato (argued), Pitney, Hardin & Kipp, Morristown, N. J., for Western Elec. Co., Inc.; George V. Cook, Joe Ramirez, Lawrence M. Joseph, New York City, of counsel.
Judith P. Vladeck (argued), Vladeck, Elias, Vladeck & Engelhard, P. C., New York City, for Kyriaki Cleo Kyriazi.
Before SEITZ, Chief Judge, and GIBBONS and HIGGINBOTHAM, Circuit Judges.
In a class action alleging sex discrimination in violation of Title VII of the Civil Rights Act of 1964, Pub.L. 88-352, 78 Stat. 253 (), eleven class members appeal from two orders overruling their objections to a proposed settlement of the action. 1 Their objection is that under the terms of the settlement they are, by virtue of an earlier order, excluded from obtaining a back pay award out of the settlement fund. The order to which they object was made prior to the settlement, on February 21, 1979, after a trial on liability in which the trial court found that the defendant Western Electric Co., Inc. (Western) had at its Kearny, New Jersey Works engaged in a pattern or practice of sex discrimination. 2 We affirm the district court's order.
Prior to the trial on liability issues, the trial court had certified the action as a Fed.R.Civ.P. 23(b)(2) class action, including in the class:
all females who are now or at any time since June 9, 1971 have been employed by defendant Western Electric Company, or who sought employment with said company during the pendency of this suit, at the Kearny Works organization.
Order of July 16, 1975. No question is raised in this appeal as to the appropriateness of the class determination. After finding liability the trial court fashioned procedures for adjudicating the claims of class members for monetary and other individual relief. 3 In the February 21, 1979 order it fashioned detailed procedures under which special masters would hear and report on claims to hiring, promotion, transfer, training, testing opportunities, retroactive seniority, priority hiring, and back pay. In this appeal no objection is made to those procedures except in two respects.
The February 21, 1979 order provides:
2. This Court has ordered that class members be notified of their eligibility to present claims and participate in hearings before the Special Masters pursuant to this Order of Reference by a "Notice to Class" approved by this Court. The Notice requires all class members who seek to pursue their claims to fill out a "Proof of Claim" form, approved by this Court, certifying in writing that they are members of the class and that they will pursue their claims. It also requires the class members to answer questions concerning each claim. These Proof of Claim forms must be filed with the Clerk of the Court not later than April 9, 1979.
3. The Special Masters are directed to exclude from consideration those females who do not file Proofs of Claim forms within the time provided, unless applicant shows good cause which shall not include neglect.
The Court approved notice to the class members by mail, by newspaper publication, by plant meetings, and by posting on plant bulletin boards. No question is raised in this appeal as to the adequacy of the means chosen to bring the notice to the attention of potential claimants. As to content, the notice advised that a contested class action was pending in which Western had been found to have discriminated against women as a group in hiring, promotion, layoffs, transfer into Kearny, discharge, participation in job training programs and opportunities for testing. The notice continued:
There will be soon a second stage, "Stage II", at which time the Court will determine the damages and other relief which it will award to individual women. If you are or were at any time since June 9, 1971 an employee of Western, or if you ever applied for a position at Western, you may be entitled to certain benefits, including monetary payments. The "Stage II" proceedings will determine this question. At these "Stage II" proceedings, any eligible woman will be presumed to have been discriminated against. It will be Western's duty to show that it did not deny a woman employment opportunities because of her sex. If Western fails to demonstrate this, that woman will be entitled to recovery, which may include back pay and reinstatement.
If you wish to be considered, you must fill out the enclosed form. Your claim will not be considered if you do not do so and return the form by April 2nd, 1979. If you do fill out the form, you may be required, with no cost to yourself, to participate in court proceedings. You will be furnished an attorney without cost to you. That attorney will be Judith Vladeck, Attorney for plaintiff Kyriazi. If you prefer, you may retain an attorney of your own choosing. If you wish further information, you may contact the attorney for the plaintiff, Judith Vladeck, at (212) 354-8330.
The eleven appellants, and many other class members, failed to file a claim by April 2nd, 1979. The trial court rejected contentions that in each instance their failure to do so was justified by good cause within the meaning of paragraph 3 of the February 21, 1979 order. 4 On appeal, however, their principal contentions are (1) that the "opting in" procedure of the February 21, 1979 order, requiring absent class members to submit timely proofs of claim, unduly limited Western's liability to the class in violation of Fed.R.Civ.P. 23, and (2) that, in any event, the notice they were given was constitutionally deficient.
These contentions are addressed to an order entered during the contested stage of a Rule 23(b)(2) class action. They bear upon the subsequent settlement of that action, because under the terms of that settlement no individual relief, monetary or otherwise, will be available to class members who failed to file a claim in compliance with the February 21, 1979 order. The validity of that order, and the adequacy of the notice which was given under it, are not, however, affected by the fact of settlement, for had the case proceeded to a litigated final judgment, the failure to file a claim would by its terms likewise have barred individual relief.
One other aspect of the settlement bears mentioning. Notice of a proposed settlement was given pursuant to Rule 23(e) to all class members, including those who had failed to file claims for individual relief. The settlement provides for a special affirmative action program of potential benefit to all class members, including the eleven appellants. No question is raised in their appeal either about the adequacy of the Rule 23(e) notice of proposed settlement or about the prospective injunctive relief provided for the class.
We are left, therefore, with two narrow questions. The first is whether in a contested Rule 23(b)(2) class action the court may bar claims for individual injunctive or monetary relief on behalf of class members who failed to file timely proofs of claim. The second is whether, assuming such an "opting in" requirement is authorized, the content and clarity of the notice given here was sufficient to satisfy due process.
The proof of claim procedure employed by the district court was not novel. The consensus among courts and commentators is that such an inquiry after a judgment establishing liability is not prejudicial and can serve as an essential aid in the efficient control of a complex class action suit. By providing the judge with a realistic estimate of potential claims and their amount, such submissions facilitate trial scheduling and settlement negotiations. See Wright & Miller, 7A Federal Practice & Procedure P 1787 (1972); B & B Investment Club v. Kleinert's Inc., 62 F.R.D. 140, 148-49, 150-51 (E.D.Pa.1974); Philadelphia Electric Co. v. Anaconda American Brass Co., 43 F.R.D. 452 (E.D.Pa.1968). Utilization of the procedure has been approved expressly by courts of appeals as a valid exercise of the trial court's discretion under Rule 23(d)(2), 5 both in (b)(3)-type class actions, see, e. g., Robinson v. Union Carbide Corp., 544 F.2d 1258 (5th Cir.), cert. denied, 434 U.S. 822, 98 S.Ct. 65, 54 L.Ed.2d 78 (1977), and, more pertinently, in (b) (2)-type class actions similar to the instant one. See, e. g., Sledge v. J. P. Stevens & Co., Inc., 585 F.2d 625, 652-53 (4th Cir. 1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1789, 60 L.Ed.2d 241 (1979); Bing v. Roadway Express, Inc., 485 F.2d 441, 448-49 (5th Cir. 1973).
Notwithstanding such precedents, appellants attack the proof of claim procedure as an impermissible burden in this case. Relying on Rule 23(c)(2) which requires use of an opting out procedure in (b)(3) class actions, they argue that where individualized relief is made available, the initial notice to absent members of a class may not operate to exclude individual small claims based on a claimant's failure to come forward. Only individuals who affirmatively opt out may be...
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