Reed v. General Motors Corp., 82-1073

• Decision Date: 18 April 1983
• Docket Number: No. 82-1073,82-1073
• Citation: 703 F.2d 170
• Parties: 32 Fair Empl.Prac.Cas. 531, 31 Empl. Prac. Dec. P 33,538 William REED, Jr., et al., Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION and United Auto Workers, Local Union 276, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 170

703 F.2d 170

32 Fair Empl.Prac.Cas. 531,

31 Empl. Prac. Dec. P 33,538

William REED, Jr., et al., Plaintiffs-Appellants, v. GENERAL MOTORS CORPORATION and United Auto Workers, Local

Union 276, Defendants-Appellees.

No. 82-1073.

United States Court of Appeals, Fifth Circuit.

April 18, 1983.

E. Brice Cunningham, Dallas, Tex., for plaintiffs-appellants.

Cantey, Hanger, Gooch, Cravens & Munn, Ira Butler, Michael A. McConnell, Fort Worth, Tex., Strasburger, Price, Kelton, Martin & Unis, Royal H. Brin, Jr., Dallas, Tex., for General Motors.

James H. Baumgartner, Jr., Dallas, Tex., for the class & certain named plaintiffs.

Appeal from the United States District Court for the Northern District of Texas.

Before RANDALL and HIGGINBOTHAM, Circuit Judges, and McDONALD ^*, District Judge.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Certain class representatives and dissident members of a class certified under Title VII and 42 U.S.C. Sec. 1981 ask that we overturn an approval by the trial court of a class settlement. Finding that the trial court did not abuse its discretion in approving the settlement and articulated its reasons for doing so with clarity and completeness, we affirm.

In March 1976, William Reed and others, on behalf of a class of black workers, filed suit against General Motors asserting claims under Title VII of the Civil Rights Act of 1964 and 42 U.S.C. Sec. 1981. A class certification hearing was finally held in January 1979. Before a ruling the case was transferred to Judge Barefoot Sanders, who after another hearing, certified on April 18, 1980, a class of:

All Negroes who have been employed by Defendant at the General Motors Arlington Assembly Plant on any date since September 17, 1970, who have been discriminated against because of their race by Defendant in any of the following terms and conditions of employment:

(1) Job Placement;

(2) Promotion;

(3) Transfers;

(4) Work Assignments; and

(5) Discipline.

The class shall not include former Negro employees who have not been employed by Defendant on any date since September 17, 1970.

Some fifteen months later and after extensive discovery all counsel requested approval and entry of a proposed consent decree in settlement of the case. The district court tentatively approved the proposed decree, directed notice to the class, and scheduled a class hearing. Notices of hearing and proposed settlement were mailed to all class members. Only 148 class notices of the 1,517 mailed were returned unclaimed. Presumably, 1,469 class members received actual notice. The proposed settlement immediately encountered opposition. By the time of the hearing, over 600 members of the class, and twenty-three of the twenty-seven named plaintiffs, had filed objections. At the hearing the objectors appeared through their own counsel and were given complete opportunity to express their opposition. Approximately three months later, on December 22, 1981, the district court approved the settlement in a written opinion. Reed v. General Motors, 560 F.Supp. 60 (N.D.Tex.1982).

Under the settlement, General Motors agreed to pay $200,000 to the class and promised not to discriminate against blacks. The $200,000 was to be distributed to class members under a point system that measured seniority. No injunctive relief was called for by the settlement. Contending that the relief was inadequate the dissident class members ask us to set aside the district court's approval of the settlement. We turn to the standard of review before returning to the specifics of the settlement.

Over the past twelve years, this court has, on at least five occasions, examined the requirements for approval of class action settlement and the measure to be employed on its appellate review. Parker v. Anderson, 667 F.2d 1204 (5th Cir.1982); In re Corrugated Container Antitrust Litigation, 643 F.2d 195 (5th Cir.1981); Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157 (5th Cir.1978), cert. denied, 439 U.S. 1115, 99 S.Ct. 1020, 59 L.Ed.2d 74 (1979); Cotton v. Hinton, 559 F.2d 1326 (5th Cir.1977); Young v. Katz, 447 F.2d 431 (5th Cir.1971). The teaching of these cases is that the district court's approval of a proposed settlement may not be overturned on appeal absent an abuse of discretion. See Young v. Katz, 447 F.2d at 432. The exercise of discretion is to be tested by inquiries that "ensure that the settlement is in the interest of the class, does not unfairly impinge on the rights and interests of dissenters, and does not merely mantle oppression." Pettway v. American Cast Iron Pipe Co., 576 F.2d at 1214. There are six focal facets: (1) the existence of fraud or collusion behind the settlement; (2) the complexity, expense, and likely duration of the litigation; (3) the stage of the proceedings and the amount of discovery completed; (4) the probability of plaintiffs' success on the merits; (5) the range of possible recovery; and (6) the opinions of the class counsel, class representatives, and absent class members. Parker v. Anderson, 667 F.2d at 1209. See also In re Corrugated Container Antitrust Litigation, 643 F.2d at 217.

The objectors here do not contend that the settlement was motivated by fraud or collision. Similarly, they do not dispute either the district court's finding that the settlement occurred after completion of discovery or the class counsel's testimony that the trial would be long and complex. Instead, the objectors argue that the product of the last three inquiries demonstrates that the trial court abused its discretion in approving the proposed settlement. We agree that these are the relevant inquiries but in making them conclude there was no abuse of discretion.

Likelihood of Success

This inquiry contains an internal tension. A district court faced with a proposed settlement must compare its terms with the likely rewards the class would have received following a successful trial of the case. See Cotton v. Hinton, 559 F.2d at 1330. The court, however, must not try the case in the settlement hearings because "[t]he very purpose of the compromise is to avoid the delay and expense of such a trial." Young v. Katz, 447 F.2d at 433. Following this command, the district court here examined the pretrial record, conducted full hearings, and concluded that "if the case went to trial the class would have a good chance of proving its claim of discrimination in the areas of job placement and promotion." It also noted that the class would have little chance of showing discrimination in the areas of work assignment and discipline.

At the class certification hearing, plaintiffs supported the claim of discrimination in job placement, transfer, and promotion by showing an underrepresentation of blacks in salaried, supervisory positions. Specifically, plaintiffs showed that in 1970, blacks were 13.42% of the work-force but only .59% of the sixth level supervisors and that in 1976 they were 15.45% of the work-force but only 4.2% of the sixth level supervisors. These uncontroverted statistics are evidence that General Motors' placement, transfer, and promotion policies had a disproportionate adverse impact on blacks. See Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). If not explained they may have supported a finding of liability. We do not pause, however, to explore that possibility. We observe only that a finding of liability was by no means preordained, even if the figures were themselves unchallenged. In Pouncy v. Prudential Insurance Company of America, 668 F.2d 795 (5th Cir.1982), we suggested that a plaintiff must, as a part of his prima facie case, relate disparate impact to an employment practice. The fit of this decision in the jurisprudence of this circuit is less than obvious. Defining that fit is not our task here. Our reference to Pouncy is to illustrate only that this area of law is uncertain, continues to develop, and that its uncertainty was relevant to the settlement. For example, we are yet to absorb the technique of Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981) and General Telephone Company of the Southwest v. Falcon, --- U.S. ----, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982). Specifically, their impact upon disparate impact cases is yet to be developed.

Finally, we note that plaintiffs provided little evidence of illegality in the areas of work assignment and discipline. In fact, the class counsel testified at the settlement hearing that he could find little support for these claims and the objectors have identified none, below or here. The district court thus did not abuse its discretion in its focus upon the areas of placement, transfer, and promotion.

Range of Possible Recovery

In analyzing the fairness and adequacy of the $200,000 settlement figure, the district court multiplied the salary differential between a sixth level supervisor and an hourly worker by the deficiency in black supervisors for each year. After adding the yearly totals and making some minor adjustments, the district court concluded that the potential back pay recovery for discrimination in the areas of job placement, promotion, and transfer was in the $140,000 range. Its conclusion that "the settlement substantially remedies any class injury" is then unassailable when one adds the fact that there was no proof of pay differences attributable to job placement and transfer.

The objectors argue, however, that the $140,000 figure is too low because it does not reflect salary differentials between hourly workers and salaried, non-supervisory personnel. This argument is without factual support. Assuming that blacks were denied promotions to salaried, non-supervisory positions, the objectors failed to show any difference between the salary of non-supervisory personnel and the hourly wages to other employees under the collective bargaining agreement. In fact, the class counsel suggested that there is no difference. The...