OPINION OF THE COURT
GARTH, Circuit Judge.
Society Hill is a fashionable neighborhood in Philadelphia. The Society Hill Civic Association (the Association) is a group of property owners residing in that neighborhood. The United States Department of Housing and Urban Development (HUD) and the Philadelphia Redevelopment Authority (RDA) are cooperating to build a small number of units of low-income housing in Society Hill. HUD and RDA are bound to fund this housing under the terms of a consent decree entered in an earlier litigation, Dodson v. Salvitti, No. 74-1854 (E.D.Pa.1977), aff'd mem., 571 F.2d 571 (3d Cir.), cert. denied, 439 U.S. 883, 99 S.Ct. 222, 58 L.Ed.2d 195 (1978).
In the instant suit, the Association and several individual homeowners seek to attack the prior consent decree. Judgment on the pleadings was granted by the district court in favor of the defendants, HUD, RDA and various officials of those agencies. The Association and the individual plaintiffs now appeal this determination.
Because we conclude that, on the present record, the Association's action cannot be deemed to be barred by the prior consent decree, and because we find that the Association's complaint sets forth a number of claims inappropriate for disposition by judgment on the pleadings, we reverse the district court's judgment and remand for further proceedings.
This case illustrates the unfortunate hostility and distrust that is often generated
This case is the third in a series of related cases carrying forward the dispute over urban renewal in Society Hill. Initially, the tenants' landlord, a nonprofit housing corporation called the Octavia Hill Association, sought to evict them, the tenants, from their homes to allow rehabilitation of the property. Octavia Hill brought six actions in ejectment in the state courts of Pennsylvania. After removal to federal district court, a consent decree was entered into which provided that the tenants would surrender possession of their tenancies in return for, among other things, temporary housing as well as RDA's promise to attempt to rehabilitate certain property on Pine Street in Society Hill as a permanent relocation resource. Octavia Hill Association, Inc. v. Hayes (Dodson), Nos. 73-1594 to -1599 (E.D.Pa. Oct. 16, 1973). Eventually, a further court order was entered on June 28, 1974 to enforce the Octavia Hill consent decree.
Subsequently the tenants filed a class action
The present action challenges the Salvitti consent decree. The Association brought suit against HUD and several of its officers, and against RDA and its executive director, Augustine Salvitti. Several of the tenants intervened as defendants. The Association claimed, first, that the Dodson consent decree was illegal because it was collaterally barred by the Octavia Hill consent decree, and second, that the Dodson consent decree was independently violative of various federal constitutional provisions and various state and federal statutes and regulations. The district court dismissed the entire action on the pleadings, under Fed.R.Civ.P. 12(c), on two independent grounds. The district court held that the Association's action constituted an impermissible collateral attack on a valid consent decree, since it concluded that the Association should have intervened in Dodson v. Salvitti to protect its interests. Alternatively, the district court held that the Association's complaint failed to state any claims upon which relief could be granted. This appeal followed.
Initially, we must determine as a matter of law whether the Association's action is barred by the collateral estoppel effect of the consent decree entered by the court in
311 U.S. at 40-41, 61 S.Ct. at 117 (citations omitted).
The Association and the individual plaintiffs here claim the benefit of this principle: they were not parties to the Salvitti suit, and they allege that the judgment there entered constitutes an adverse determination of various constitutional, statutory and regulatory rights that they possess. If not allowed to attack the legality of the Salvitti consent decree, they argue, they will have been denied due process of law.
The defendants invoke the strong interest in the finality of judgments to bar the collateral attack. They properly point out that if there were an unqualified right on behalf of persons not parties to a suit to relitigate the merits of the judgment by means of a second suit, the interest in finality would be seriously undermined. Thus, they rely on the district court decision in Oburn v. Shapp, 70 F.R.D. 549 (E.D.Pa.), affirmed without opinion by this court, 546 F.2d 418 (3d Cir.1976), cert. denied, 430 U.S. 968, 97 S.Ct. 1650, 52 L.Ed.2d 359
We agree with the defendants that a concern for the finality of judgments demands some limitations on the availability of collateral attack. We also accept the balance struck in Oburn between the competing interests in finality and an individual's right not to be bound by the judgment in a case to which he was not a party. But, even applying the Oburn approach here, we find that due process demands that the Association be allowed its challenge, and that the district court erred in precluding it.
Oburn presented an attack on a consent decree entered in an earlier litigation in which Pennsylvania agreed to increase minority hiring and promotion in the state police. The plaintiffs in Oburn were unsuccessful white applicants to the state police, who alleged that the earlier consent decree infringed their federal and state constitutional rights. The district court held that the plaintiffs would not be allowed to collaterally attack the earlier decree.
70 F.R.D. at 552 (footnote omitted), aff'd mem., 546 F.2d 418 (3d Cir.1976), cert. denied, 430 U.S. 968, 97 S.Ct. 1650, 52 L.Ed.2d 359 (1977).
The distinction between the Oburn proceeding and the instant one is immediately apparent. In Oburn, the district court had retained jurisdiction over the earlier consent decree; thus, the Oburn plaintiffs could have had their day in court by moving to intervene in the very litigation in which the decree had been entered. This retention of jurisdiction is also present in the other decisions that have found collateral attacks impermissible in similar circumstances. See, e. g., Black and White Children of the Pontiac School System v. School District of the City of Pontiac, 464 F.2d 1030-31 (6th Cir.1972); McAleer v. American Telephone & Telegraph Co., 416 F.Supp. 435, 438 (D.D.C. 1976). But here, this route is closed; the Salvitti court did not retain jurisdiction over the decree, and thus direct intervention is no longer available. The Association may only challenge the consent decree by instituting a separate lawsuit. Thus, if it is to receive the day in court that due process demands, its collateral attack must be allowed.
The defendants contend, however, that collateral attack is not the only way the Association can have its challenge entertained. They point out that under the terms of the consent decree, the parties retained their right to return to court to
This argument need not detain us long, for the defendants' suggestion does not guarantee the Association an opportunity to present its claims. If the parties to the Salvitti decree can carry out its terms amicably, they never will return to court for enforcement, and there will be no further litigation in which the Association could intervene. This speculative possibility of an opportunity for the Association to intervene at the enforcement stage falls far short of the opportunity to be heard on the substantive claims and the opportunity to be afforded "that due process which the Fifth and Fourteenth Amendments require." Hansberry v. Lee, 311 U.S. at 41, 61 S.Ct. at 118.
The district court here generally recognized the Association's right to be heard under Hansberry v. Lee. The court concluded, however, that the Association's failure to seek intervention in Dodson v. Salvitti precluded its later collateral attack. We agree with the district court that intervention is a far better course than subsequent collateral attack, if intervention is feasible. We further agree that an unjustified or unreasonable failure to intervene can serve to bar a later collateral attack. Unjustified failure to intervene would, for instance, bar a collateral attack by the group of property owners who had earlier sought to intervene in Salvitti. Those property owners were denied intervention in part on the grounds that they had delayed for two and a half years before bringing their motion to intervene. As the dissent points out, these property owners should not be allowed to escape the consequences of their own tardiness by recasting their motion for intervention as a complaint in a suit collaterally attacking the prior judgment. However, it is not these property owners who are before the court now.
The district court here precluded the Association's collateral attack for the same reason that it denied intervention to the other property owners in Dodson v. Salvitti. The court held that the Association had "been no less dilatory in asserting [its] claims [than] ... the Dodson intervenors, [and] should have acted, if at all, as soon as it became apparent [that its] interests needed representing." But this conclusion was not one that the court could draw at this stage of the litigation. The Association made an allegation in its complaint, which must be accepted as true for purposes of a judgment on the pleadings, that would excuse its failure to file suit until the present time. The Association alleged that, despite its continuing negotiation with the tenants during the course of Dodson v. Salvitti, it did not know of the Dodson action until late 1976, and was never served with process. If this allegation is true, and we must accept it as such at this stage, the Association, on the present record with all inferences given in its favor, cannot be precluded from its present collateral attack on the ground that it unreasonably delayed in protecting its interests.
The Association acted promptly after the final denial of this motion to intervene, filing its own complaint in the instant suit in September, 1977.
Assuming that the district court finds that the Association did not delay unreasonably in acting to protect its interests, and that its challenge must therefore be allowed, it remains to consider the legal sufficiency of the claims that the Association raises. In doing so, we suffer the disadvantage of having little discussion of these issues by the parties or the district court. The parties in their briefs concentrated on the question of the collateral estoppel effect of the Dodson v. Salvitti consent decree. They have provided us with virtually no illumination on subjects we find critical to the resolution of this case—the Association's standing, its entitlement to seek judicial review of HUD's action in committing itself to the consent decree, or the actual substantive merits of its claims. The district court, apparently faced with a similar situation, understandably did not dwell on these aspects of the suit. The district court's primary ruling was that the Association's complaint, since it sought impermissibly to attack a valid judgment, could not be entertained. Thus, on this ground the district court dismissed the suit. It was only after it had done so that the district court alternatively stated that "[i]n view of this ruling, it is unnecessary for me to examine the
Under Rule 12(c), like Rule 12(b)(6) (dismissal for failure to state a claim upon which relief can be granted), judgment will not be granted
5 C. Wright & A. Miller, Federal Practice and Procedure, § 1368, at 690 (1969) (footnotes omitted). Thus, our task is to determine whether any of the allegations made by the Association can survive a Rule 12(c) motion, under the standard set forth above. In discharging this task, we have the benefit of the pleadings alone, with little additional analysis by the parties or the district court. Nevertheless, we believe that at least some of the Association's claims state a cause of action as a matter of law, and thus could not be dismissed in the instant Rule 12(c) proceeding.
The Association claims, for instance, that the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (the Relocation Act), on which the tenants in Dodson v. Salvitti principally based their right to relief, does not permit the construction of new housing for the purpose of relocating displaced persons unless no suitable existing housing is available. Postponing for the moment consideration of the substantive merits of this allegation, we shall address briefly two preliminary matters concerning the Association's right to raise this issue.
The first aspect of the Association's right to challenge the consent decree on this ground is the requirement of standing. In order to have standing to sue, the Association must demonstrate an "injury in fact" to an interest "arguably within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question." Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 152-53, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970); Americans United for Separation of Church and State v. United States Department of Health, Education and Welfare, 619 F.2d 252, at 256 (3d Cir.1980).
The allegation that the construction of the proposed housing will cause a substantial diminution in property values on Society Hill is sufficient to satisfy the injury in fact component of standing. We are also satisfied that the Association's interest is arguably within the zone of those protected by the Relocation Act. While perhaps not its principal focus, the Act may be construed as reflecting an intent that relocation of persons displaced by federal projects shall be carried out in a manner that entails the minimum disruption of neighborhoods. Thus, the Act prescribes that displaced persons shall be relocated in existing housing before the government shall construct new housing for them. We thus find that the Association has standing to raise this claim of a violation of the Relocation Act.
The second aspect of the Association's right to complain of a violation of the Relocation Act is whether there exists a "cause of action" in the Association's behalf, i. e., whether the Association is "a member of the class of litigants that may, as a matter of law, appropriately invoke the power of the court" to enforce the Act's limitations. Davis v. Passman, 442 U.S. 228, 240 n.18, 99 S.Ct. 2264, 2274, 60 L.Ed.2d 846 (1979). Where a party seeks to challenge the legality of the acts of a federal administrative agency, the "cause of action" element is more commonly referred to as a right to seek judicial review of the agency action. This right to judicial review is broadly conferred by the Administrative Procedure Act (APA), which provides in pertinent part that "A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof." 5 U.S.C. § 702 (1976). The limitation that a party be "adversely affected or aggrieved" embodies the requirement of standing to sue, a requirement that, as discussed above, the Association satisfies.
The Administrative Procedure Act contains two significant limitations on the availability of judicial review of agency action that must be considered before concluding that the Association may complain of a violation of the Relocation Act. 5 U.S.C. § 701(a) (1976) states that:
In considering the application of these limitations to the Association's claim, we heed the Supreme Court's oft-repeated directive that the APA's "generous review provisions must be given a hospitable interpretation," and that "only upon a showing of clear and convincing evidence of a contrary legislative intent should the courts restrict access to judicial review." Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967) (internal quotations omitted). See, e. g., Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 820, 28 L.Ed.2d 136 (1971); Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 156-57, 90 S.Ct. 827, 831, 25 L.Ed.2d 184 (1970); Local 2855, American Federation of Government Employees v. United States, 602 F.2d 574, 578 (3d Cir.1979).
It is plain that the first limitation in the APA statutory preclusion of judicial review, is inapplicable here. The Relocation Act contains no such preclusion, and neither does any other statute to which we have been directed, although, as we have pointed out, the parties have not been generous in their assistance in this regard.
It is equally clear that the second limitation, "agency action ... committed to agency discretion," is also inapplicable. The Supreme Court has held that "[t]his is a very narrow exception" that "is applicable in those rare instances where statutes are drawn in such broad terms that in a given case there is no law to apply." Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 820, 28 L.Ed.2d 136 (1971) (quoting legislative history of the APA; internal quotations omitted). This is not such a case. The Relocation Act specifies in unambiguous terms, as is described in more detail below, the circumstances under which new housing may be constructed for persons displaced by federal projects. There is little left to agency discretion in making the choice between relocating displaced persons into existing housing or newly constructed housing. See 42 U.S.C. §§ 4624 & 4626 (1976) discussed and quoted infra.
We thus conclude that neither of the APA's limitations on review are applicable
The APA defines the scope of review of agency action. 5 U.S.C. § 706(2) sets forth six grounds upon which a reviewing court shall "hold unlawful and set aside agency action, findings, and conclusions." Subsection (C) of § 706 is particularly applicable to the claim that HUD could not build replacement housing for the tenants because adequate existing housing is available. This subsection provides that a court shall set aside agency action that is "in excess of statutory ... authority." The Association claims that the Relocation Act and HUD's regulations have been violated. Thus, it contends that HUD's commitment to build replacement housing for the tenants was "in excess of statutory authority."
In support of this claim, the Association relies on 42 U.S.C. §§ 4624 & 4626 (1976), which regulate the construction of new housing for displaced persons, and specify that only as a last resort may such new housing be constructed. Section 4624 provides for payments to displaced tenants for the rental or purchase of existing dwellings comparable to those from which they were displaced.
42 U.S.C. § 4626 (1976).
A HUD regulation likewise specifies that, with certain exceptions, new housing may only be erected as a last resort. This regulation provides:
24 C.F.R. § 880.103(a) (1979) (emphasis added).
The Association alleged in its complaint that there is adequate existing housing in the neighborhood to accommodate the displaced tenants, and in effect claimed that the project had not been specifically approved in accordance with established priorities. It therefore urges that HUD's agreement to provide new housing for the tenants violated the Relocation Act and HUD's own regulations.
A second claim of the Association that we believe survives a motion for judgment on the pleadings is its contention that the new housing currently contemplated will not be in compliance with applicable zoning regulations. HUD regulations provide that preliminary proposals for new construction must include
24 C.F.R. § 880.205(h) (1979). A similar provision is included in the requirements for final proposals. See 24 C.F.R. § 880.209(a)(13) (1979).
The consent decree itself could not, and does not, specifically authorize HUD to fund housing that does not comply with the local zoning ordinances. Nor does the decree describe in any detail the housing to be constructed. Had the above regulation never been promulgated, then, we might well be inclined to conclude that the Association's complaint as to this issue was not ripe for adjudication at this time. Such an issue could more properly be determined only after the plans for the housing were finally approved, so that any inconsistency between the plans and the zoning code could be demonstrated. However, the regulation set forth in text above imposes on HUD an obligation to demand proof of conformity with the zoning code even in preliminary proposals. Thus, the regulation
The Association, having alleged that the consent decree contemplates placing multifamily housing on property currently zoned for single family residences, and that the proposed housing violates the zoning ordinances in other respects, has thus made allegations sufficient to survive a motion for judgment on the pleadings. For the reasons which we have discussed heretofore with respect to the claim that the consent decree violated the Relocation Act by authorizing new construction when there was adequate existing housing, we believe that the Association also has standing to raise this zoning claim and is entitled to seek judicial review of HUD's action in committing itself to this housing project. Thus, on a motion under Rule 12(c), it was error to dismiss the Association's claim that HUD had failed to comply with its regulations requiring proof of compliance with zoning ordinances.
In addition to the two claims discussed above, which we have concluded survive a Rule 12(c) motion, the Association has raised a great variety of other legal challenges to the consent decree.
In holding that the four claims
As to the remainder of the claims made by the Association, we hold that the district court did not err in entering judgment for the defendants on the pleadings. Four claims were properly dismissed on the ground that they do not state claims on which relief can be granted.
First, the Association claims that construction of the new housing will depress property values on Society Hill and thereby deprive homeowners of property without due process of law. We agree, however, with the Court of Appeals for the Sixth Circuit that a decline in property value flowing solely from a governmental program of urban renewal to improve the living conditions for the disadvantaged cannot constitute a due process taking. See Sayre v. City of Cleveland, 493 F.2d 64, 69(6th Cir.), cert. denied, 419 U.S. 837, 95 S.Ct. 65, 42 L.Ed.2d 64 (1974).
Two other contentions that likewise fail to state claims upon which relief can be granted are that the Dodson v. Salvitti court was without subject matter jurisdiction to enter the consent decree because the parties to that suit were not truly adverse and, as a result, the constitutionally required case or controversy was absent; and, that the decree unlawfully extends relief to parties not before the district court. These claims fail because a consent decree can only be attacked on the ground that its substantive provisions unlawfully infringe the rights of the complainant. If HUD and RDA could lawfully take the actions that they bound themselves to take, without infringing the rights of the present plaintiffs, it is an insufficient response that the court that entered the decree lacked subject matter jurisdiction, or that the decree benefits parties not present in the litigation underlying the decree. Those contentions, by themselves and without charges of substantive illegality, do not constitute allegations of violations of the rights of the Association. Thus, they provide no basis for affording the Association any relief. See United States v. City of Miami, 614 F.2d 1322 at 1329 (5th Cir.1980) (consent decree cannot be challenged by a party whose rights are not affected by it).
A fourth claim fails as a result of a subsequent change in the law. The Association claims that the consent decree's twenty year limitation on the new housing for use by tenants of low and moderate income is in violation of 24 C.F.R. § 880.109(a) (1979), which limits federal housing assistance payments contracts to initial terms of no more than five years, renewable at the sole option of the owner of the housing. In the Housing and Community Development Amendments of 1979, however, Congress raised the minimum permissible length of a housing assistance payments contract from one month to twenty years. 42 U.S.C.A. § 1437f(e)(1) (Supp.1980). Thus, the regulation that limits initial contract terms to five years has effectively been modified by Congress. Initial contract terms of twenty years are not only permissible, but mandatory. The Association, then, has no basis for challenging the twenty year covenant in the consent decree.
Two other claims were properly dismissed on the ground that they are premature for adjudication at this time.
First, the Association claims that the consent decree is unlawful because it fails to require the preparation of an environmental impact statement, thereby violating the National Environmental Policy Act of 1969, 42 U.S.C. § 4321 et seq. (1976). The consent decree itself, however, cannot be challenged on these grounds. The decree does not, of course, authorize
A second claim premature for adjudication at this time is the Association's contention that the decree fails to ensure that the project's developer has the ability successfully to complete and manage the project, as required by 24 C.F.R. § 880.208(a)(5) (1979). This claim fails for the same reason set forth above. The decree does not authorize selection of a developer who does not satisfy the requirements of this regulation; it merely makes no mention of these requirements. If a developer is selected who is unsatisfactory under the regulation, that selection may be challenged at that time. But the consent decree's silence on this point is no basis for challenging the decree itself.
Several other claims were properly dismissed on the ground that the Association, for various reasons, has no standing to bring them. First, the Association claims that the Dodson v. Salvitti court was without jurisdiction because the issues involved had already been determined in the earlier Octavia Hill litigation, and that the Salvitti suit was thus barred by the doctrine of res judicata. It is true, as the Association argues, that both of those actions concerned the tenants' relocation rights under federal law, and that the predicate for a claim of res judicata is there. But the protection of the res judicata defense runs only to the defendants in the Salvitti suit. Those defendants may well have been able to avoid the suit by claiming that the relocation rights granted in Octavia Hill exhausted the tenants' ability to sue for such rights. The Salvitti defendants, however, chose not to raise this defense. The Association cannot now complain of this waiver by the Salvitti defendants; it was the defendants' choice to make, not the Association's. Nor is this result altered by the Supreme Court's relaxation of the requirement of mutuality of estoppel. See Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971). The relaxation of the mutuality requirement allows a defendant against whom substantive liabilities are asserted to avail himself of a judgment against the plaintiff when the plaintiff asserted the same liabilities against a different defendant.
A second claim that the Association has no standing to raise is that the consent decree contravenes the equal protection clause by providing relief to certain parties without providing the same relief to other persons in similar circumstances. The Association does not claim that its members are entitled to the relief granted. Thus, it seeks here to assert rights possessed only by other individuals. It has no standing to do so.
The Association next complains that the National Housing Act of 1949,
Three remaining claims also fail because the Association can only assert the taxpayer interest of its members as a basis of standing. The Association claims that the consent decree contemplates housing more luxurious than is permissible under 24 C.F.R. § 880.102 (1979); that the cost of the contemplated housing contravenes the congressional intent in the National Housing Act of 1949, 42 U.S.C. § 1441 et seq. (1976), not to exhaust federal housing funds on unreasonably expensive projects; and that the price that will be paid for the property by the developer is not "reasonable," as required by 24 C.F.R. § 880.203(e)(1)(ii) (1979). The essence of these claims is simply that the government is spending money unlawfully, or selling property at an unlawfully low price, thereby improperly impairing the national fisc. The Association's members' interest as taxpayers does not confer standing to sue. See Flast v. Cohen, 392 U.S. 83, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968); Frothingham v. Mellon, 262 U.S. 447, 43 S.Ct. 597, 67 L.Ed. 1078 (1923).
We hold that the district court, on the present record, erred in concluding that the Association could not challenge the Dodson v. Salvitti consent decree under the circumstances presented here. We also hold that, on this record, it was inappropriate to dispose of several of the Association's claims by judgment on the pleadings, inasmuch as they state claims upon which relief may be granted. As to the Association's right to maintain this action, and as to the claims that we hold to be inappropriate for judgment on the pleadings, we will reverse and remand for further proceedings before the district court. Costs will be taxed against the appellees.
SLOVITER, Circuit Judge, dissenting.
In its decision holding that a neighborhood civic association and some of its members may be able to challenge a consent decree after other neighborhood residents failed in their attempt to make essentially the same challenges in prior litigation, the majority has undermined the fundamental principle of finality of judgments. Therefore I dissent.
Dodson v. Salvitti was an action filed on July 26, 1974 against the Redevelopment Authority of the City of Philadelphia and the United States Department of Housing and Urban Development and some of their officers. The plaintiffs, tenants of property which was being redeveloped, claimed that defendants failed to perform their statutory and constitutional duty to provide permanent replacement housing for them in a manner which would affirmatively promote racial integration. On January 13, 1977, two and one-half years after the inception of the action, 20 residents of the neighborhood
On March 4, 1977 the same 20 residents again moved to intervene in order that their response to the opposition could be considered by the court. Their second motion to intervene alleged that they sought to "protect an economic interest in the value of their homes" which would be injured by building government subsidized homes near their property. Intervention was again opposed not only by the plaintiffs but this time also by the federal defendants, all of whom again asserted the proposed intervenors did not satisfy the requirements of Rule 24(a)(2) because they did not have a legally protectible interest. They also alleged that the intervention request was untimely because "it was unreasonable to believe that proposed intervenors were unaware of [the case] until recently, particularly in light of the media coverage received by this case and its predecessors." Memorandum of Federal Defendants in Opposition to (Renewed) Motion to Intervene as Defendants at 3. This second motion to intervene was denied by the district court who held that intervention by the proposed intervenors was not warranted both because they "failed to assert an interest in the lawsuit sufficient to warrant intervention as of right" and because their motion was untimely. In connection with the latter holding the court ruled:
Dodson v. Salvitti, 77 F.R.D. 674, 677 (E.D.Pa.1977).
On appeal by the proposed intervenors, this court affirmed the action of the district court, and the Supreme Court of the United States denied their application for a writ of certiorari, and their subsequent request for rehearing. 571 F.2d 571 (3d Cir.) (memorandum decision), cert. denied, 439 U.S. 883, 99 S.Ct. 222, 58 L.Ed.2d 195, reh. denied, 439 U.S. 998, 99 S.Ct. 604, 58 L.Ed.2d 673 (1978). On September 16, 1977, the district court approved a consent decree entered into between the parties to the litigation which required the construction of 14 to 18 low-income housing units in or near the center of the Society Hill area to house the displaced tenants.
The group of neighborhood residents who opposed the subsidized low income housing which allegedly would contribute to racial integration in the neighborhood persisted in their efforts to halt construction of those units. Using the same counsel and alleging essentially the same claims which the proposed intervenors sought to assert in the Dodson suit, they filed the suit sub judice, this time denominating as plaintiffs the Society Hill Civic Association and 13 residents of the neighborhood, none of whom had previously joined the motions to intervene in Dodson. The same government agencies are named as defendants along with their current officers. Four of the original Dodson plaintiffs moved for and were granted leave to intervene as defendants.
Initially, I note that even under the majority's view that the dismissal should be overturned and the case remanded, I see no justification for the majority's treatment of the merits of plaintiffs' claims, which the majority admits the parties have not illuminated in their briefs. Typescript Op. at 14. In reading the record of the judge's ruling on the motion to dismiss which was delivered orally, it is apparent that the judge dealt with the legal sufficiency of the claims as a subsidiary matter. After devoting more than 17 of the 21 pages of transcript to the collateral attack issue, the judge stated, "In view of this ruling, it is unnecessary for me to examine the sufficiency of each and every averment in the complaint." The judge then briefly commented on his views of the merits of some of the claims which were asserted in the complaint. In spite of the fact, as the majority admits, that it has "virtually no additional analysis by the parties" beyond the pleadings, it nonetheless embarks on a determination of complex statutory issues. I believe this is inappropriate, particularly in light of the fact that the district court may determine on remand that the plaintiffs did in fact delay unreasonably in failing to file a timely motion to intervene. Since the district court may never reach the merits, I see no reason for the majority to have done so.
In holding that plaintiffs may be able to collaterally attack a final judgment, the majority appears to have accepted appellants' claim that they are not bound by the Dodson consent decree because they were not parties to that suit. Appellants relied on the language of the decision in Hansberry v. Lee, 311 U.S. 32, 40, 61 S.Ct. 115, 117, 85 L.Ed. 22 (1940), "that one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process." If that were in fact the black letter law which it appears to be, then, of course, the trial court would have been in error in holding that appellants were not free to reassert claims resolved by the consent decree in the prior litigation.
There are several well-established exceptions to the general principle that nonparties are not precluded by prior litigation. The most well-recognized exception is that which has traditionally been referred to as affecting persons who are in "privity" with the parties to the prior litigation, leading to the formulation of the res judicata rule: "A person who is not a party but who is in privity with the parties in an action terminating in a valid judgment is ... bound by and entitled to the benefit of the rules of res judicata." Restatement of Judgments § 83 (1942). See United States v. Moser, 266 U.S. 236, 241, 45 S.Ct. 66, 67, 69 L.Ed. 262 (1924); Southern Pacific R.R. v. United States, 168 U.S. 1, 48-49, 18 S.Ct. 18, 27, 42 L.Ed. 355 (1897); Mid-Continent Casualty Co. v. Everett, 340 F.2d 65, 69 (10th Cir.1965). The traditional definition of a "privy" was one who claimed an interest in the subject-matter affected by the judgment through or under one of the parties, i. e. either by inheritance, succession or purchase, and was restricted to situations involving transfer of property. See M. Rosenberg, J. Weinstein, H. Smit, H. Korn, Elements of Civil Procedure 1129 (3d ed. 1976). This technical view of privity has given way to a more pragmatic approach, one looking to the relationship between the nonparty and the party to determine whether the judgment involving the party may justly be conclusive upon the one who is not a party. See F. James & G. Hazard,
Plaintiffs in this litigation have never asserted that they were not in privity with the proposed Dodson intervenors. On the contrary, they admit that they were in "privity." As previously noted, counsel for plaintiffs-appellants in this case represented the proposed intervenors in the Dodson case. In the brief of plaintiffs-appellants filed in this court in this case, they make the candid admission as follows: "Appellants are in privity of interest only with those who have previously sought to participate in the litigation. That includes their neighbors and members of the Society Hill Civic Association." Brief for Appellants at 12 (emphasis added). At the oral argument before this court, the following colloquy took place:
Later in the argument, counsel admitted that the substantive claims he raised in the Dodson case were essentially the same raised in this suit.
It follows from this admitted privity relationship that if the proposed intervenors in Dodson would have been precluded by virtue of the Dodson judgment from bringing this lawsuit, then plaintiffs also must be precluded from bringing this lawsuit. Inexplicably, the majority never deals with the admission of privity, nor does it ever suggest that the Dodson plaintiffs could have renewed their challenge to the government subsidized housing by filing a new suit following our rejection of their claim that they had a right to intervene in the prior suit. Even the majority concedes that judgments must have some finality, at least as to the proposed albeit unsuccessful intervenors.
The second category of established exceptions to the rule that only parties will be bound by a judgment arises when the nonparty's interest has been represented by another who is authorized to act as a party on his or her behalf. This is closely related to the contemporary view of privity. Representation, for this purpose, is not limited to instances where there has been an express authorization to act on behalf of the nonparty. The appropriate question to be posed is whether the relationship between the person who was a party and the person whom s/he is treated as representing is such that the absentee's interests can be regarded as having been fairly represented by the party. James & Hazard, at 575. In this case, the reply is evident. Counsel for the two groups of litigants is the same; the interest they assert is the same; the claims they assert are identical. Thus, there is no reason why the same claim preclusion applicable to the Dodson proposed intervenors should not be applied to plaintiffs.
This reasoning has been used to preclude members of a trade association from asserting the invalidity of an Interstate Commerce Commission refund order that had previously been challenged unsuccessfully by other members of the same trade association. In rejecting the attempt of the carriers in the second litigation to claim that the Commission's refund order was entered in excess of its jurisdiction, the Seventh Circuit commented:
Aluminum Co. of America v. Admiral Merchants Motor Freight, Inc., 486 F.2d 717, 720-21 (7th Cir.), cert. denied, 414 U.S. 1113, 94 S.Ct. 843, 38 L.Ed.2d 739 (1973) (footnotes omitted).
Thus even a challenge that went to the jurisdictional authority of the order being enforced against a nonparty was held to be precluded. Although the Seventh Circuit termed the relationship between the first and second group of carriers to have been one of "privity", this was not privity in the narrow sense but instead appears to have been a description of a relationship between party and nonparty based on representation of the nonparty's interests.
Under either of these two categories of exceptions to the nonpreclusion of nonparty rule, these plaintiffs would be precluded from attacking the prior judgment. Even in the absence of either "privity" or representation by a party, nonparties may be precluded by a prior judgment if it is equitable to do so. The grounds for equitable preclusion have been described by Professors James and Hazard as follows:
James & Hazard, at 598. Each of the circumstances is present in this case, since the prior action affected the same claim as plaintiffs sought to assert here; plaintiffs could have asserted their claim by a timely motion to intervene; plaintiffs concededly knew of the action before its final termination; the parties settled the Dodson action in the justifiable belief that no further litigation was contemplated by silent bystanders following the Supreme Court's denial of certiorari from our order affirming the denial of intervention, and plaintiffs should have been aware of that reliance.
Equitable preclusion is a concept particularly appropriate for use in cases involving social policy issues or statutes. The older and traditional concept of res judicata evolved in a society where most litigation occurred in the context of a single claim and single parties. As social welfare programs have expanded and statutes have been enacted giving rights to broad groups of persons, the judicial process has accommodated that change by expanding the concept of claim preclusion. One of the most widely used mechanisms shaped for that purpose is, of course, the class action. In this case, however, the proposed intervenors in Dodson carefully sidestepped that procedure by moving to intervene only on their own behalf. In that manner, they may have hoped to avoid the preclusive effect of any adverse judgment, whether on their intervention motion or on the merits, leaving it to another group of neighbors to be free to assert the same claims another time.
It should be emphasized that there is nothing in the decision of Hansberry v. Lee which would prevent the preclusive effect of the Dodson consent decree on plaintiffs in the circumstances present here. In that case, the Court held that it would violate due process to have bound the nonparties to a prior decree because of the "potentially conflicting interests" among the representatives and those they sought to bind. Here, of course, there is no actual or potential conflict of interest between the Dodson potential intervenors and these plaintiffs. In fact, the Court in Hansberry recognized that nonparties may be bound:
311 U.S. at 42-43, 61 S.Ct. at 118 (citations omitted) (emphasis added).
The majority, in its recognition that an "unjustified failure to intervene can serve to bar a later collateral attack," at 1052, apparently concedes the principle enunciated by the district court in Oburn, a decision which we affirmed, that a party who has had the opportunity to timely contest the validity of the final judgment rendered in the prior suit will be bound by the prior judgment. Oburn v. Shapp, 70 F.R.D. at 549, 552, aff'd mem., 546 F.2d 418 (3d Cir.1976), cert. denied, 430 U.S. 968, 97 S.Ct. 1650, 52 L.Ed.2d 359 (1977).
The proposed Dodson intervenors also had sought to justify their tardiness in failing to file an earlier motion to intervene because they allegedly did not know of the Dodson lawsuit earlier. The district court in Dodson found the proposed intervenors "knew or should have known" of that litigation and therefore their motion, when filed, was untimely. Either these plaintiffs are in the same position as the proposed intervenors, in which case the dismissal of their collateral attack in this suit was justified, or they were not in the same position, in which case they could not have relied on representation by the Dodson intervenors and should have filed their own motion to intervene in the Dodson litigation, setting forth reasons applicable to them to excuse their late motion. The majority gives no reason for excusing plaintiffs from having failed to seek intervention in Dodson, which it agrees is the better course. It merely states that once the other Society Hill residents moved to intervene, "the Association's failure to act may conceivably be excused on the ground that these other residents would adequately protect the Association's interests in the litigation." At 1053, n.6. Even if we agree that the Association was not required to file a contemporaneous motion to intervene in Dodson, once the motion of the proposed intervenors was rejected as untimely, these plaintiffs knew that the intervenors no longer could "adequately protect" their interests. They have offered absolutely on reason in this suit, either before the district court or before us, to excuse their failure to attempt to intervene in the Dodson suit at that time. Their complaint allegation, on which the majority relies, simply does not go to this issue.
Had plaintiffs followed the appropriate course and moved to intervene in Dodson, there are a number of different results which might have ensued. If plaintiffs had moved to intervene in Dodson no earlier than did the proposed intervenors and offered no additional explanation for their dilatoriness, their motion to intervene may have been also rejected because it was filed untimely. Then plaintiffs would also be barred from bringing this action, as I assume the majority concedes the Dodson proposed intervenors would be. Apparently the majority does not accept the extreme position espoused by plaintiffs' counsel that even the Dodson proposed intervenors would not be barred from maintaining this suit because the merits of their claim were never reached.
Had these plaintiffs moved to intervene in Dodson and their motion to intervene had been rejected because they lacked sufficient legal interest, since they were in the identical position as the proposed Dodson intervenors, then plaintiffs would be barred from bringing this suit because the issue of their right to maintain the action would have been determined adversely against
The one possibility ignored by the majority is that these plaintiffs might have filed a timely motion to intervene in Dodson. Had they chosen that procedure, we simply do not know nor can we predict how the district court would have disposed of that timely motion. It is possible their motion would have been granted. Had the district court denied that motion for any erroneous reason, recourse to correct that judgment was available in this court. Therefore, under these circumstances, there is no basis to permit plaintiffs to maintain this action as a reward for their failure to file a timely motion in the Dodson case.
Although the holding of the majority may be highly detrimental to the cause of the low cost integrated housing sought to be achieved by the Dodson plaintiffs and ultimately accepted by HUD and RDA, I am concerned that its effect may be more widespread. It undermines the principle of finality of judgments;
The dissent contends that the issue of the Association's privity with the Dodson intervenors is a foregone conclusion, and refers to a segment of the oral argument as support for that view. See dissenting op., at 1064. The use of the term privity in that context was of course not an admission by the plaintiffs that they were bound by the denial of the motion for intervention brought in Dodson. "Privity" in that interchange was used merely as a shorthand for the possible similarity of position of the former proposed intervenors and the present plaintiffs. No greater meaning can be ascribed.
In addition, the attorney for the Association took a position in that interchange closely in accord with the view of res judicata we take here. He conceded that if the first group of residents had been allowed to intervene, and had had the same claims adjudicated on the merits, he "would have regarded that as a preclusion of any further litigation of the matter." See dissenting op., at 1064. We have ourselves indicated that such preclusion might well follow as a matter of res judicata from a full litigation of the merits of the Association's claims.
Moreover, the Association's assertion of lack of knowledge would operate to defeat any "equitable preclusion" claim, as "knowledge of the first action" is a key factor in the "equitable preclusion" doctrine cited and relied upon by the dissent. Dissenting op., at 1065.
As noted earlier, certain residents of Society Hill, not parties to the Association's suit, moved to intervene in Dodson v. Salvitti on January 13, 1977. Once this motion to intervene was filed, the Association's failure to act may conceivably be excused on the ground that these other residents would adequately protect the Association's interests in the litigation. See United Airlines, Inc. v. McDonald, 432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed.2d 423 (1977).
Even more so, however, we cannot attach the same relevance as the dissent to the Dodson intervenors' failure to attempt class certification. We have already noted that if these intervenors had been permitted to participate in Dodson and had received a full adjudication of the merits of their claims, the result reached there might well bind the Association and preclude the present suit. See note 4 supra. The matter of class certification thus has little bearing on the ability of the Association to bring the present challenge. We have only held that the Association, and other residents similarly situated, are entitled to at least one adjudication on the merits of their challenge to the consent decree.
Replacement housing for tenants and certain others
In addition to amounts otherwise authorized by this subchapter, the head of the Federal agency shall make a payment to or for any displaced person displaced from any dwelling not eligible to receive a payment under section 4623 . . . . Such payment shall be either—
Relocation payments to persons who owned the homes from which they were displaced, as opposed to those who merely rented their dwellings, are covered in 42 U.S.C. § 4623 (1976).
42 U.S.C. § 4601(6) (1976).
The Association claims that the tenants are not covered because the property from which they were evicted was not acquired by any agency, and because no federal funds were involved. See e. g., Alexander v. HUD, 441 U.S. 39, 99 S.Ct. 1572, 60 L.Ed.2d 28 (1979); Messer v. Virgin Islands Urban Renewal Board, 623 F.2d 303 (3d Cir.1980) (per curiam). Rather, the Association alleges that the tenants were simply evicted by a private landlord from apartments that the landlord sought to renovate. On this appeal, we will not consider this claim of error, however, because it was not asserted in the district court below. Rather, we leave it for consideration by the district court in the first instance if, on remand, this claim is reasserted.