Rehearing and Rehearing In Banc Denied April 28, 1980.
SPRECHER, Circuit Judge.
The issue in this appeal is whether the district court properly approved a settlement agreement terminating the Milwaukee public school desegregation class action
The original complaint in this litigation was filed in 1965, pursuant to 42 U.S.C. § 1983. An amended complaint was filed in 1968 alleging that the Milwaukee public school system was unlawfully segregated on the basis of race in violation of the Equal Protection Clause of the Fourteenth Amendment. The trial began in September 1973, and consumed thirty full days on the district court's calendar until its conclusion in January 1974. The parties produced approximately fifty witnesses and hundreds of exhibits during the trial and submitted proposed findings of fact and post-trial briefs after its conclusion. The district court then took the case under advisement.
In January 1976, the district court issued its decision and order, finding that the defendants had knowingly and intentionally carried out a systematic program of faculty and student segregation and had created and maintained a dual school system. Amos v. Board of School Directors of the City of Milwaukee, 408 F.Supp. 765, 821 (E.D.Wis.1976). In its decision and order, the district court also certified the litigation as a class action pursuant to Fed.R.Civ.P. 23(b)(2),
In addition to finding a violation of the Equal Protection Clause, the district court, in its initial decision, also permanently enjoined the defendants from any future acts of racial discrimination and appointed a special master to assist in the formulation of an appropriate remedy. While defendants' appeal was pending, they petitioned the district court to stay enforcement of the permanent injunction and to revoke the appointment of the special master until final resolution of the appeal by this court. In a decision issued in May 1976, the district court declined to stay the injunction, revoke the appointment of the special master or suspend his activities. Armstrong v. O'Connell, 416 F.Supp. 1325, 1344 (E.D.Wis.1976).
This court issued its decision affirming the district court's initial finding of a constitutional violation in July 1976. Armstrong v. Brennan, 539 F.2d 625, 637 (7th Cir. 1976). Defendants filed a petition for certiorari in the Supreme Court in December 1976, after unsuccessfully petitioning this court for rehearing and rehearing en banc. While the certiorari petition was pending in the Supreme Court, the district court held further hearings with respect to the adoption of a final desegregation plan for the Milwaukee public schools. In March 1977, the district court issued its final desegregation order, which encompassed both faculty and student body desegregation. Armstrong v. O'Connell, 427 F.Supp. 1377 (E.D.Wis.1977). The defendants appealed from this order, but also began to act in compliance with it.
The Supreme Court granted defendants' petition for certiorari in June 1977, and, in a per curiam order, vacated this court's judgment and remanded the case for reconsideration in light of Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 97 S.Ct. 555, 50 L.Ed.2d 450 (1977) and Dayton Board of Education v. Brinkman, 433 U.S. 406 (1977). Brennan v. Armstrong, 433 U.S. 672, 97 S.Ct. 2907, 53 L.Ed.2d 1044 (1977). On remand from the Supreme Court, this court vacated and remanded both the district court's original liability decision and its final desegregation order. 566 F.2d 1175 (7th Cir. 1977).
On remand, the district court allowed the parties to supplement the record with respect to the issue of segregative intent. This supplementation amounted to a hearing consuming twenty-seven days, during which sixty-five witnesses were called and almost 1,000 new exhibits were admitted; the record doubled in size as a result. On the basis of the expanded record, the district court found that the defendants had discriminated against the plaintiffs with segregative intent in violation of the Equal Protection Clause. Armstrong v. O'Connell, 451 F.Supp. 817, 820 (E.D.Wis.1978). Another evidentiary hearing, this one consuming eight days, was then conducted with respect to the present effects of the past segregative acts of the defendants. The district court found that the defendants' violations had had a "pervasive, systemwide impact [requiring] . . . a systemwide remedy encompassing both student population and teacher assignment . . . ." Armstrong v. O'Connell, 463 F.Supp. 1295, 1309 (E.D.Wis.1979). The court did not order any particular remedial action at that time; it instead ordered the parties to submit proposed desegregation plans.
On March 1, 1977, the plaintiffs and defendants submitted for the court's approval a proposed settlement agreement; the agreement was the product of nine months of negotiations between counsel for both sides. This settlement agreement, which is the subject of this appeal,
At the fairness hearing, which was conducted on March 26, 27 and 29, 1979, the district court heard statements from all counsel, received a number of exhibits, and heard testimony from several witnesses and from forty-five class members responding to the notice, most of whom opposed the settlement. On the basis of this information, the district court, after a careful analysis of the factors to be considered in evaluating a class action settlement, entered its order approving the settlement agreement. Armstrong v. Board of School Directors, 471 F.Supp. 800, 813 (E.D.Wis.1979). The intervening class members appeal from this order.
On June 11, 1979, the intervening plaintiffs filed a motion in the district court for leave to intervene for the purpose of seeking an order vacating the settlement approval or, alternatively, for the purpose of appealing from that approval. The district court, in an order issued June 20, 1979, denied the motion on the ground that the notice of appeal contemporaneously filed by the intervening plaintiffs had transferred all jurisdiction over the case to this court, thus depriving the district court of jurisdiction to grant the motion. The district court indicated, however, that if it had possessed jurisdiction, it would have permitted intervention for purposes of appeal but would not have vacated the settlement. The intervening class members also appeal from the district court's denial of their motions to intervene.
The settlement agreement is published as Appendix A to the district court's decision, 471 F.Supp. 800, 813-20; it is therefore unnecessary to discuss its terms in detail in this opinion. We will, however, briefly describe its most important provisions insofar as they are relevant to our review of the district court's order.
The settlement agreement begins with a recital of the protracted history of the Milwaukee school desegregation litigation and a brief explanation of the reasons underlying plaintiffs' and defendants' decision to terminate the dispute through settlement. The first substantive provision of the agreement permanently enjoins the defendants, their successors, officers and agents from discriminating on the basis of race in the operation of the Milwaukee public schools. 471 F.Supp. at 815. The agreement contains one other injunctive provision, which requires that decisions respecting school openings and closings and the location of specialty programs not be made in a racially discriminatory manner. 471 F.Supp. at 818.
In addition to the injunctive provisions, the agreement places affirmative obligations
The agreement establishes a procedure whereby the defendants' compliance with its provisions shall be monitored by a United States Magistrate and by a five-member monitoring board appointed to assist him. Individual class members may file complaints of noncompliance with the board; the Superintendent of Schools must respond to such complaints and the monitoring board may investigate further if it finds the response insufficient. The board may recommend to the Magistrate that action be taken on particular complaints. The board and plaintiffs' counsel have the right, upon reasonable notice, to visit any school in the system to determine whether it is in compliance with the terms of the agreement. In addition, the defendants are required to submit periodic reports regarding the racial composition of the Milwaukee public schools. Decisions of the board may be reviewed by the Magistrate with a right of appeal to the district court. The monitoring procedure will remain in effect throughout the full five year duration of the settlement agreement.
Finally, the agreement provides for the payment of $550,000.00 in fees and $13,428.11 in expenses to counsel for the named plaintiffs and $300,000.00 in fees and $29,350.00 in expenses to counsel for the absent class members in complete payment for services rendered and expenses incurred in this litigation. 471 F.Supp. at 818-19. The district court readily approved the payments because it was
471 F.Supp. at 811. The court went on to comment that it was
Id. at 811. No party to this appeal raises any specific objections to this aspect of the district court's order.
The district court carefully considered each of the settlement terms outlined above as well as the strength of plaintiffs' case on the merits, the complexity and expense of further litigation, the opinion of counsel for both sides, and all of the other factors which must be weighed when any class action settlement is presented for approval. We do not understand the intervening plaintiffs to argue that the court somehow misapplied the class action standard; rather, they argue that the class action standard should not have been applied at all. It is to this argument which we direct our primary attention.
It is axiomatic that the federal courts look with great favor upon the voluntary resolution of litigation through settlement. U. S. v. McInnes, 556 F.2d 436, 441 (9th Cir. 1977); Du Puy v. Director, Office of Workers' Compensation Programs, 519 F.2d 536, 541 (7th Cir. 1975), cert. denied,
Settlement of a class action is not, however, an unmixed blessing. Balanced against the "overriding public interest in favor of settlement" are strong countervailing public policies which counsel against automatic judicial acceptance of such agreements. First and foremost is the fact that most of those whose rights are affected by a class action settlement—the members of the class—are not involved in its negotiation nor are they present to voice their views in court. The class members must rely upon the representation of the class representatives and class counsel to protect their interests. While this representation is no doubt vigorous in most cases, on occasion the negotiating parties may find that their individual interests can best be served by a settlement which is not in the best interests of the class as a whole. Similarly, class counsel may be persuaded by the prospect of a substantial fee to accept a settlement proposal which leaves the class with less relief than could have been procured through more vigorous negotiation. In such cases, the class members may find that substantial rights have been bargained away in exchange for relief which inures primarily to the benefit of a few class members or class counsel. See In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106, 1120 (7th Cir. 1979), cert. denied, ___ U.S. ___, 100 S.Ct. 146, 62 L.Ed.2d 95 (1979); Moreland v. Rucker Pharmacal Co., 63 F.R.D. 611, 615 (W.D.La.1974).
In addition to this concern with the interests of class members, there is a concern with the interests of the public as a whole. The substantive issues involved in many class actions reflect a broad public interest in the rights to be vindicated or the social or economic policies to be established. In such cases, the ramifications of a settlement can extend far beyond the rights of individual class members. This public interest is present not only in civil rights suits such as the one now before us, but also in such economic litigation as antitrust and consumers' rights actions. Uncritical acceptance of a class action settlement can, therefore, disturb important national policies beyond the immediate impact upon the rights of class members. See Developments in the Law—Class Actions, 89 Harv.L.Rev. 1318, 1536-39 (1976).
To safeguard the rights of class members and allow consideration of the broader implications of a class action settlement, Rule 23(e) of the Federal Rules of Civil Procedure requires that notice of a proposed settlement be sent to all class members and that judicial approval of settlement offers be procured prior to dismissal of a class action.
District court review of a class action settlement proposal is a two-step process. The first step is a preliminary, pre-notification hearing to determine whether the proposed settlement is "within the range of possible approval." This hearing is not a fairness hearing; its purpose, rather, is to ascertain whether there is any reason to notify the class members of the proposed settlement and to proceed with a fairness hearing. Manual for Complex Litigation § 1.46, at 53-55 (West 1977).
Manual for Complex Litigation at 57. On the basis of all information available to him, the trial judge must decide whether or not to approve the proposed settlement.
Although review of class action settlements necessarily proceeds on a case-by-case basis, certain factors have been consistently identified as relevant to the fairness determination. The district court's opinion approving the settlement now before us listed these factors:
471 F.Supp. at 804. As the district court noted, the first factor, the strength of plaintiffs' case on the merits balanced against the settlement offer, is generally regarded as the most important. See Grunin v. International House of Pancakes, 513 F.2d 114, 124 (8th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 124, 46 L.Ed.2d 93 (1975); Detroit v. Grinnell Corp., 495 F.2d 448, 455 (2d Cir. 1974). While consideration of this factor will require some evaluation of the merits of the dispute, the district court must refrain from reaching conclusions upon issues which have not been fully litigated. Detroit v. Grinnell Corp., 495 F.2d at 456; Patterson v. Stovall, 528 F.2d 108, 114 (7th Cir. 1976).
In making its fairness determination, the district court must not forget that it is reviewing a settlement proposal rather
Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2d Cir. 1974). Nonetheless, the district court must clearly set forth in the record its reasons for approving the settlement in order to make meaningful appellate review possible. Dawson v. Pastrick, 600 F.2d 70, 75-76 (7th Cir. 1979). This is particularly important in civil rights class actions. See, e. g., Bryan v. Pittsburgh Plate Glass Co., 494 F.2d 799, 804 (3d Cir.), cert. denied, 419 U.S. 900, 95 S.Ct. 184, 42 L.Ed.2d 146 (1974) (employment discrimination). Even in such cases, however, the court's reasoning need not be so specific as to amount to a judgment on the merits. Id.
Courts of appeals, in reviewing district court approval of class action settlements, engage in an even more limited inquiry than the district court. In determining whether a district court abused its discretion, a court of appeals focuses not on the substantive law governing the claims asserted in the litigation, but on the general principles governing approval of class action settlements. As this court noted in a recent Title VII class action:
Airline Stewards & Stewardesses Ass'n v. American Airlines, Inc., 573 F.2d 960, 963 (7th Cir.), cert. denied, 439 U.S. 876, 99 S.Ct. 214, 58 L.Ed.2d 190 (1978). See also Dawson v. Pastrick, 600 F.2d 70, 75 (7th Cir. 1979). Courts of appeals view the facts in the light most favorable to the settlement. Patterson v. Stovall, 528 F.2d 108, 112 (7th Cir. 1976). In addition, they do not focus on individual components of settlements, but rather view them in their entirety in evaluating their fairness. McDonald v. Chicago Milwaukee Corp., 565 F.2d 416, 425 (7th Cir. 1977); Cotton v. Hinton, 559 F.2d 1326, 1331-32 (5th Cir. 1977). Such deference is due the judgment of the district judge because of his familiarity with the litigants, the history of the litigation and the merits of the substantive claims asserted. Ace Heating & Plumbing Co. v. Crane Co., 453 F.2d 30, 34 (3d Cir. 1971).
The principles governing district court and court of appeals review of settlement proposals seek to take account of the special concerns implicit in class action settlements while still preserving the essential character of settlement of a lawsuit. Whether the lawsuit being settled is a civil rights class action or a simple two-party contract suit, the essence of a settlement is compromise— an abandonment of the usual total-win versus total-loss philosophy of litigation in favor of a solution somewhere between the two extremes. This court has, on more than one occasion, taken note of this essential character, stating that "the essence of a settlement is a bilateral exchange. `The inherent nature of a compromise is to give up certain rights or benefits in return for others.'" In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106, 1135 (7th Cir. 1979) [citation omitted], cert. denied, ___ U.S. ___, 100 S.Ct. 146, 62 L.Ed.2d 95 (1979). See also Patterson v. Stovall, 528 F.2d 108, 115 (7th Cir. 1976); McDonald v. Chicago Milwaukee Corp., 565 F.2d 416, 425, 429 (7th Cir. 1977). Because settlement of a class action, like settlement of any litigation, is basically a bargained exchange between the litigants, the judiciary's role is properly limited to the minimum necessary to protect the interests of the class and the public. Judges should not substitute their own judgment as to optimal settlement terms for the judgment of the litigants and their counsel.
The initial issue with which we are faced on this appeal is whether the principles
The underlying question implicit in the intervenors' argument is whether it is possible to "settle" the remedial portion of a school desegregation class action at all. As we noted in Part III, supra, the essence of settlement is a compromise in which both parties relinquish some rights in order to gain benefits which would not otherwise be available or would be available only at the expense of further litigation. The intervenors appear to argue that once liability is established in a school desegregation suit, the plaintiffs may not agree to any compromise as to the remedial portion of the suit; the plaintiffs may not exchange their potential right to a particular remedial plan for other remedies or programs or for a speedy final resolution of the litigation. Such a rule would effectively preclude settlement because, by prohibiting any meaningful compromise as to remedy, it would eliminate the element of exchange which is at the heart of settlement of any litigation. The essence of the intervenors' position seems to be that this element of exchange, while most desirable in purely economic litigation, is inappropriate when rights of constitutional stature are involved.
The issue raised by the intervenors appears to be one of first impression in the federal courts. Although resolution of school desegregation controversies by way of settlement or consent decree is not uncommon,
The employment discrimination cases cited above persuade us that, despite the importance of the substantive rights of the class members, settlement is an appropriate method of arriving at a school desegregation remedy. While courts should be extremely sensitive to the possibilities for abuse where a compromise of the civil
Id. at 521. We are unwilling to forego the potential benefits of settlement of school desegregation cases.
As a corollary to the argument that the district court's application of the class action standard was inappropriate in this case, it is urged that this court employ a standard of review more stringent than the usual abuse of discretion standard. The basis for this suggestion is explained by amici as follows:
Brief of Amici Curiae at 5. This argument misconceives the reasoning which underlies court of appeals deference to district court approval of class action settlements. The abuse of discretion standard is employed not because the courts of appeals consider the economic claims involved in most class actions too insignificant to deserve closer scrutiny, but rather
Ace Heating & Plumbing Co. v. Crane Co., 453 F.2d 30, 34 (3d Cir. 1971). The consistent application of the abuse of discretion standard in employment discrimination cases reveals that it is not reserved only for purely economic litigation. See, e. g., E. E. O. C. v. American Telephone & Telegraph, 556 F.2d 167, 174 (3d Cir. 1977), cert. denied, 438 U.S. 915, 98 S.Ct. 3145, 57 L.Ed.2d 1161 (1978); Pettway v. American Cast Iron Pipe
We can imagine no case in which deference to the judgment of the district court is more appropriate than the present one. This litigation has been before the same district judge for its entire fifteen year history. He has issued hundreds of pages of published opinions, has heard voluminous testimony and reviewed countless documents, and has ruled on a variety of issues ranging from preliminary procedural matters to the substantive merits of the plaintiffs' constitutional claims. His familiarity with the litigants and the litigation is a valuable asset which should not lightly be discarded. In the absence of a showing of exceptional circumstances, we decline to do so. The abuse of discretion standard will govern our review of the district court's approval of the settlement proposal.
Despite our resolution of the issues discussed above, we believe that the intervenors' position is not wholly without merit. Their concern that constitutional requirements might be frustrated through the use of settlement agreements in school desegregation class actions is a valid one deserving serious attention. The Eighth Circuit expressed a similar concern in Liddell v. Caldwell, 546 F.2d 768 (8th Cir. 1976), cert. denied, 433 U.S. 914, 97 S.Ct. 2987, 53 L.Ed.2d 1100 (1977), and clearly indicated that a school desegregation plan devised through voluntary means, in that case a consent decree, must attain a certain minimum level of constitutional compliance. Id. at 773-74.
The accommodation of these potentially competing interests can be achieved within the framework of the class action settlement standard. Inherent in this standard are two characteristics which ensure that federal courts reviewing class action settlements will give due consideration to the public interests implicated in the suits before them. First, as has been recognized in employment discrimination cases, while the relative importance of the substantive claims asserted in civil rights class actions does not require abandonment of ordinary settlement principles, it does require that both district courts and courts of appeals apply these principles with particular care and state their reasoning with particular clarity. See, e. g., Bryan v. Pittsburgh Plate Glass Co., 494 F.2d 799, 804 (3d Cir. 1974); Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977). The strength of the class action settlement standard lies in this flexibility; in applying it a district judge may adjust his inquiry to give constitutional claims the close scrutiny they deserve while still allowing ample room for settlement and compromise. Second, implicit in the class action settlement standard is a requirement that no settlement be approved which either initiates or authorizes the continuation of clearly illegal conduct. Robertson v. National Basketball Ass'n, 556 F.2d 682, 686 (2d Cir. 1977); Grunin v. International House of Pancakes, 513 F.2d 114, 123-24 (8th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 124, 46 L.Ed.2d 93 (1975).
Application of the class action settlement standard within these guidelines guarantees that civil rights, and other class action, litigants have reasonable latitude in negotiating a settlement without undercutting important national policies on their way to reaching agreement. Having articulated the relevant principles, we turn now to their application to the case before us.
In reviewing for an abuse of discretion the district court's approval of the settlement, the first step is to determine whether the settlement initiates or authorizes any clearly illegal or unconstitutional conduct. The intervenors' brief is sprinkled with references to the constitutional inadequacy of the desegregation plan contained in the settlement agreement. Their objections appear to fall into three specific categories. First, they claim that the settlement plan "did not even purport" to effect the systemwide desegregation required by the finding of a constitutional violation with a systemwide impact. Brief of the Appellants at 14. Second, the settlement plan is said to place impermissible reliance upon voluntary techniques and private choices as the primary means to achieve desegregation. Finally, the fact that the settlement plan would permit the existence of some all-black schools
The intervenors' first objection need not detain us long. While it is clear that a finding of a systemwide impact requires a systemwide remedy in a fully litigated school desegregation suit, Dayton Board of Education v. Brinkman, 433 U.S. 406, 420, 97 S.Ct. 2766, 2775, 53 L.Ed.2d 581 (1977), it is not clear that this requirement applies where the remedial portion of a suit is resolved by settlement. We need not address this issue in this case, however, because the settlement plan before us clearly attempts to effect systemwide desegregation. As we read the provisions of the settlement plan, we are hard-pressed to understand the basis for the intervenors' objection. All elementary, junior and senior high schools in the system, with minor exception, are required to achieve certain minimum levels of black enrollment; all students in the system have the right to attend a desegregated school upon request; the racial balance transfer program applies throughout the entire system as does the human relations program; and the agreement's two injunctive provisions are clearly systemwide in operation. The intervenors apparently feel that these measures do not go far enough; however, the probable effectiveness of the measures proposed is an issue completely separate from whether these measures operate on a systemwide level. The plan before us clearly is an effort to effect systemwide desegregation.
The district court believed that the settlement would be effective in achieving substantial systemwide desegregation in
The second objection raised by the intervenors appears plausible on its face. A desegregation plan which relied wholly or primarily upon voluntary techniques to achieve desegregation would be constitutionally inadequate in a fully litigated case in which constitutional violations had been found. However, such is not the plan before us. As we noted earlier in this opinion, while the settlement agreement uses language which suggests that it relies primarily upon voluntary efforts to achieve desegregation, all of the parties to this litigation, other than the intervenors, have understood the agreement to impose an affirmative obligation to desegregate upon the defendants. The district court shared this understanding of the agreement and approved it in light of that understanding. In view of the almost universal acknowledgment of the mandatory effect of the agreement, its slightly ambiguous language does not render it constitutionally infirm.
Finally, the intervenors raise the possible continued existence of some one-race schools in the Milwaukee public school system as a constitutional defect requiring reversal of the district court. The intervenors apparently would have us follow Tasby v. Estes, 572 F.2d 1010 (5th Cir. 1978), cert. granted sub nom., Estes v. Metropolitan Branches of Dallas NAACP, 440 U.S. 906, 99 S.Ct. 1212, 59 L.Ed.2d 454 (1979), cert. dismissed, ___ U.S. ___, 100 S.Ct. 716, 62 L.Ed.2d 626 (1980).
We decline to upset the plan before us on the authority of Tasby for a number of reasons. First Tasby deals with a remedial plan ordered by a district court after full litigation, while the plan before us is the result of a settlement. The Fifth Circuit in Tasby instructed the district court as to the proper scope of its inquiry during the remedial portion of school desegregation litigation; it is precisely this portion of the litigation which the parties in the present suit have attempted to avoid through settlement. Tasby thus appears inapplicable to the present case.
Second, before a settlement may be rejected because it initiates or authorizes a clearly illegal or unconstitutional practice, prior judicial decisions must have found that practice to be illegal or unconstitutional as a general rule. Robertson v. National Basketball Ass'n, 556 F.2d 682, 686 (2d Cir. 1977); Grunin v. International House of Pancakes, 513 F.2d 114, 123-24 (8th Cir.), cert. denied, 423 U.S. 864, 96 S.Ct. 124, 46 L.Ed.2d 93 (1975). In Tasby, the Fifth Circuit did not hold that a court ordered desegregation plan which permits some one-race schools must always be rejected; rather, the court held that, on the facts of that case, there was not sufficient justification in the record for the substantial number of one-race schools permitted under the lower court's order. 572 F.2d at 1014-15. Under Tasby, a district court must engage in a careful examination of the particular facts of the case and the feasibility of other desegregation techniques to determine whether there is any justification for the
Finally, a class action settlement is to be evaluated according to the state of the law as of the time it was presented to the district court for approval. Dawson v. Pastrick, 600 F.2d 70, 76 (7th Cir. 1979). At the time this settlement was presented to the court below, Tasby had been decided by the Fifth Circuit and certiorari had been granted. The state of the law as to one-race schools at that time, as at this, was far from clear, and is unlikely to become clear until the Supreme Court addresses the issue. This settlement should not be evaluated on the basis of unsettled legal principles which will only be clarified at some time in the future.
We conclude that, at the time of the district court's approval of the settlement agreement, the desegregation plan contained in it did not initiate or authorize any clearly unconstitutional activities. The settlement agreement is thus not per se inappropriate. We turn, therefore, to a review of the district court's application of the class action settlement standard to determine whether the court abused its discretion in finding the settlement fair, reasonable and adequate.
In reaching its decision to approve the settlement agreement, the district court considered each of the factors identified as relevant in Part III, B, supra, and carefully evaluated the probable effectiveness of the settlement agreement in eliminating the effects of defendants' unconstitutional conduct. 471 F.Supp. at 803-13. The court found that each of the relevant factors supported approval and that the settlement addressed itself to the defendants' constitutional violations and provided the plaintiffs with a fair, reasonable and adequate remedy for them. Id. at 809. As discussed in detail below, our review of the district court's action reveals no abuse of discretion.
As the district court noted, the most important factor to be considered in reviewing a class action settlement is the strength of plaintiffs' case on the merits balanced against the relief offered in the settlement. 471 F.Supp. at 804. Closely related to this factor is the complexity, length and expense of further litigation. The district court observed that the granting of certiorari in three school desegregation cases
The correctness of the conclusion reached by the district court as to the strength of plaintiffs' case on the merits is further supported by the fact that, under the law as it stood at that time, it was not clear that the plaintiffs, in the event of full litigation, would have been entitled to significantly more relief than the settlement provided. The district court observed that the plaintiffs could claim no right to a particular degree of racial balance, 471 F.Supp. at 806, and that to achieve "the most effective remedy for members of the plaintiff class" the court would be required to include school districts outside the Milwaukee system in the operation of the plan, a step the court did not have the power to order. Id. at 808 n. 2. The court expressed its agreement with the opinion of counsel as to the limitations upon its power to order a remedy:
471 F.Supp. at 812. Thus, it is not at all clear that class counsel sacrificed any established remedial rights of the class in exchange for the benefits conferred by the settlement. At most, counsel negotiated as to whatever rights might be established or clarified by the Supreme Court in the pending school desegregation cases. This conclusion finds support in the brief of the intervening class members filed in this court. While they cite several Supreme Court school desegregation opinions in their attack upon the constitutional adequacy of the settlement, they seem to place special emphasis on Columbus Board of Education v. Penick, 443 U.S. 449, 99 S.Ct. 2941, 61 L.Ed.2d 666 (1979) and Dayton Board of Education v. Brinkman, 443 U.S. 526, 99 S.Ct. 2971,
One additional fact is relevant to the strength of plaintiffs' case on the merits and the complexity and expense of further litigation. This litigation was settled at a relatively late stage, after a finding of liability and systemwide impact but before imposition of a remedy. The lateness of the settlement might suggest that there was little doubt as to the strength of plaintiffs' case and little reason to fear further complex litigation. While this may be a rational inference in the usual case, it is not so in a school desegregation class action. The remedial portion of a school desegregation case is unlike that of any other variety of litigation and conceivably can surpass the liability portion in terms of complexity and duration. As the Second Circuit noted in a recent school desegregation case:
U. S. & South End Education Committee v. Board of Education of Waterbury, 605 F.2d 573 at 576-77 (2d Cir. 1979). Thus, when a school desegregation suit is settled prior to
In addition to evaluating the merits of plaintiffs' case and the probable course of any further litigation, the district court placed great weight on the opinion of counsel for the plaintiffs and defendants. 471 F.Supp. at 811-12. While the court, of course, should not abdicate its responsibility to review a class action settlement merely because counsel support it, the court is entitled to rely heavily on the opinion of competent counsel support it, the court is entitled to rely heavily on the opinion of competent counsel. Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157, 1215 (5th Cir. 1978), cert. denied, 439 U.S. 115, 99 S.Ct. 1020, 59 L.Ed.2d 74 (1979); Patterson v. Stovall, 528 F.2d 108, 114 (7th Cir. 1976). The district court expressly noted that it had a high opinion of all counsel involved in the litigation, that they favored the settlement, and that their assessment of the strength of plaintiffs' case and the benefits offered by the settlement was in accord with the court's own views. 471 F.Supp. at 811-12. Counsel for the plaintiff class and counsel for the defendants had been extensively involved in the litigation through virtually all of its history, giving the court ample time to evaluate their competence and the weight to be accorded their opinions. There is no basis for disturbing the district court's finding that this factor favored approval of the settlement.
Related to the opinion of counsel are two other factors: (1) the stage of the proceedings and amount of discovery completed and (2) the presence of collusion in reaching the settlement. The stage of the proceedings at which settlement is reached is important because it indicates how fully the district court and counsel are able to evaluate the merits of plaintiffs' claims. As discussed above, settlement of this litigation was reached at a very late stage, after the issues had been clearly identified, liability and impact had been decided, and a massive record had been compiled. The district court found, and we agree, that the litigation had progressed to a point at which counsel and the court were fully capable of evaluating the merits of plaintiffs' case and the probable course of future litigation. 471 F.Supp. at 805 & 806. The district court also recognized the possibility of collusion among counsel in reaching a class action settlement. The court considered the history of this hotly contested litigation and affidavits of counsel describing the negotiating process sufficient proof of the absence of collusion. We note that there is nothing in the record to suggest any other conclusion and that the fees paid to class counsel,
The final factors considered by the district court were the reaction of the class to the settlement and the amount of opposition to the settlement.
471 F.Supp. at 812. The presence of objecting class members is a relevant factor, although not dispositive even when many class members object. Bryan v. Pittsburgh Plate Glass Co., 494 F.2d 799, 803 (3d Cir. 1974); Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977). Similarly, while a district court should be hesitant to infer that the class supports a settlement merely because its members are silent, In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106, 1137 (7th Cir. 1979), cert. denied, ___ U.S. ___, 100 S.Ct. 146, 62 L.Ed.2d 95 (1979), where this silence is coupled with other indicia of fairness, it provides further support for approval. City of Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2d Cir. 1974).
Having reviewed the district court's consideration of the factors discussed above, we are convinced that, far from abusing its discretion, the court proceeded with commendable care and fairness in approving a reasonable and equitable settlement of this hotly contested, complex lawsuit. The settlement provides for a desegregation plan
Amici admonish this court to follow the lead of the Fifth Circuit and resist the temptation to approve a possibly inadequate settlement merely to conclude a lengthy lawsuit. We share the concern expressed by the Fifth Circuit and acknowledge the wisdom of its statement:
Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157, 1223 (5th Cir. 1978), cert. denied, 439 U.S. 1115, 99 S.Ct. 1020, 59 L.Ed.2d 74 (1979) [footnote omitted]. In this case, however, we are not presented with a choice between an hour of efficiency and a moment of justice. Rather, our inquiry convinces us that we are presented with a resolution which secures both efficiency and justice. In the face of such a resolution, to "contribut[e] further to the seemingly Methuselean duration of this case," would be to sacrifice justice and efficiency without any rational basis. This we decline to do.
One final issue requires our attention. The intervening class members argue that the district court erred in denying their motion to intervene in the proceedings below. The district court based its denial on the fact that a notice of appeal had simultaneously been filed in this court, thus depriving the district court of jurisdiction to grant the motion. It is settled in this circuit that the filing of a notice of appeal terminates the jurisdiction of the district court. Elgin Manufacturing Corp. v. Ventfabrics, Inc., 314 F.2d 440, 444 (7th Cir. 1963). A district court has no power to vacate a judgment once a notice of appeal has been filed. Miller v. U. S., 114 F.2d 267, 269 (7th Cir. 1940), cert. denied, 313 U.S. 591, 61 S.Ct. 1114, 85 L.Ed. 1545 (1941). Thus, the district court clearly did not err in denying intervening class members' motion to intervene for the purpose of seeking an order vacating the settlement since the court was without power to enter such an order.
The intervening class members moved, in the alternative, for leave to intervene for the purpose of appealing from the district court's approval of the settlement. We need not decide whether the denial of this motion was proper, in view of the fact that the intervenors have been allowed to appeal and no one has contested their right to do so. See Joint Brief for Plaintiffs-Appellees and Defendants-Appellees at 26. Furthermore, their right to appeal exists independent of any motion made in the district court. In Research Corp. v. Asgrow Seed Co., 425 F.2d 1059, 1060 (7th Cir. 1970), this court held that an unnamed class member who appears in response to a Rule 23(e) notice and objects to a settlement has a right to appeal from an adverse judgment. Accord, Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157, 1180 (5th Cir. 1978), cert. denied, 439 U.S. 1115, 99 S.Ct. 1020, 59 L.Ed.2d 74 (1979). The disposition of their motion by the district court is therefore
We have considered the arguments raised by the intervening class members on this appeal and find them without merit. Accordingly, the order appealed from is affirmed in all respects.
Fed.R.Civ.P. 23(a), (b)(2).
471 F.Supp. at 815.
The table presents projections of the minimum, most probable, and maximum percentages of students enrolled in desegregated schools for each year. In each case the maximum desegregation attainable under the agreement is 100%, the most probable exceeds 75%, and the minimum varies from 75% in the first year to approximately 60% in the final year.
Expert testimony below indicated that the minimum levels are "a realistic impossibility" because the Milwaukee public schools have already exceeded these requirements. To achieve the minimum levels, the defendants would have to reassign "massive numbers" of black students out of schools which are presently desegregated. 471 F.Supp. at 808. Attainment of the maximum levels is similarly unlikely because it would require "a perfect distribution of students within the Milwaukee public school system joined with the assignment of some black students to suburban public school systems." Id. As the district court noted, such a metropolitan area remedy would make good sense and could be voluntarily implemented, but could not be required on the facts in this case. 471 F.Supp. at 808 n.2.
The court was also concerned with amici curiae's prediction that a substantial percentage of the system's black students could be attending non-desegregated schools by the time of the plan's expiration. The court took note of the possibility that as many as 35% of the system's black students might not be enrolled in desegregated schools in the final year of the agreement. On the basis of expert testimony and other provisions of the agreement, however, the court concluded:
471 F.Supp. at 809. See also 471 F.Supp. at 809 n.3.
Fed.R.Civ.P. 23(e). An identical provision is contained in Rule 23.1, governing shareholders' derivative suits. Fed.R.Civ.P. 23.1.
594 F.2d at 1133. We continue to adhere to this view.
Brief of the Appellants at 12. See also id. at 14, 18, 21.
573 F.2d at 964-65 n.9.
Brief of the Appellants at 21-22.
We note initially that the Supreme Court in Milliken was addressing itself to a fully litigated school desegregation suit, not one resolved by settlement. Beyond this, however, it appears that the district court found, in effect, that the remedy proposed in the settlement agreement did, as nearly as possible, provide full relief to the plaintiffs. The court expressly observed that further litigation could achieve little more relief for the plaintiffs and that, to achieve maximum desegregation, the court would be required to order a remedy which it did not, in the present posture of the litigation, have the power to order. Keeping in mind that in considering a settlement proposal the district court is to evaluate the parties' claims but not to decide them, Patterson v. Stovall, 528 F.2d 108, 114 (7th Cir. 1976), we cannot say that the lower court abused its discretion in reaching this conclusion as to the degree of relief to which plaintiffs would have been entitled in the event of full litigation, or in concluding that the settlement may have provided virtually the full extent of such relief. Therefore, even if the Milliken standard were applicable to a remedy reached through settlement rather than litigation, we believe that the district court made the required findings and that its findings, while not free from doubt, do not constitute a clear abuse of discretion.
495 F.2d at 462. While this apparent approval on the part of class members perhaps should not be given as much weight in this, a civil rights action, as in Grinnell Corp., an antitrust action, it nonetheless weighs, however slightly, in favor of approval.