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HAMMON v. BARRY

November 6, 1990

MARVIN K. HAMMON, et al., Plaintiffs,
v.
MARION S. BARRY, JR., et al., Defendants. KEVIN MICHAEL BYRNE, et al., Plaintiffs, v. THEODORE R. COLEMAN, et al., Defendants



The opinion of the court was delivered by: RICHEY

 On August 20, 1990 the three parties to the above-captioned class action lawsuit -- the class of black firefighters ("Hammon plaintiffs" or "Hammon class"), the class of white firefighters ("Byrne plaintiffs" or "Byrne class"), and the District of Columbia defendant ("the City") -- executed a Settlement Agreement through duly authorized counsel. See Agreement, Appendix I. The two-part Settlement Agreement clearly states that it is binding on all parties, that it resolves all claims raised in this litigation, and that it sets forth all essential terms of the settlement. Moreover, the Settlement Agreement contemplated that the parties would work with Special Master Stephen Saltzburg to provide the Court with a detailed decree to implement the terms of the Settlement Agreement. Pursuant to Fed. R. Civ. P. 23(e), the Court must now decide whether to approve the Settlement Agreement as a fair, adequate, and reasonable resolution of the parties' claims. Having carefully considered all of the pleadings submitted by the parties, the Special Master's Reports, all of the objections submitted in writing or made orally at the October 23, 1990 Fairness Hearing, the entire record herein, and the underlying law, the Court will approve the parties' August 20, 1990 Settlement Agreement. Furthermore, the Court will conditionally enter its own decree, which adopts -- with some modifications -- the consent decree proposed by the Special Master, the Byrne plaintiffs and the City but which shall only go into effect only after the parties have had one final opportunity to submit a consent decree signed by all three parties to this litigation.

 I. Factual Background

 The parties' acrimonious dispute, involving charges of discrimination and reverse discrimination, has been burning for over six years. The direct result of this dispute is that the District of Columbia Fire Department administered its last promotional examination (usually given every two years) in 1984 and has made no promotions since 1986.

 The Hammon plaintiffs' part of this has been pending before the Court since March 1984, and the Byrne plaintiffs' part of this lawsuit has been pending since March 1985. In ruling on an affirmative action plan that the City had adopted in response to recommendations by a hearing examiner at the administrative level, the Court approved the affirmative action plan in part, holding "that the hiring aspects of the plan satisfy the minimal requirements of Title VII and the Constitution, but that the promotion aspects cannot survive Title VII scrutiny." Hammon v. Barry, 606 F. Supp. 1082, 1084 (D.D.C. 1985). However, addressing only the hiring part of the affirmative action plan on appeal, a panel majority reversed and struck down the plan's hiring aspects. Hammon v. Barry, 259 U.S. App. D.C. 50, 813 F.2d 412 (D.C. Cir.), reh'g denied, 264 U.S. App. D.C. 1, 826 F.2d 73 reh'g granted, 266 U.S. App. D.C. 117, 833 F.2d 367 (D.C. Cir. 1987), order vacated 841 F.2d 426, cert. denied, 486 U.S. 1036, 100 L. Ed. 2d 610, 108 S. Ct. 2023 (1988).

 The Hammon plaintiffs were informed of the proposed Settlement Agreement, and, after considering it for some time, the Hammon plaintiffs, by class counsel Joan Burt, signed the Settlement Agreement. At a subsequent status conference with the Court, Dovey J. Roundtree (who entered her appearance during February 1989 as co-counsel for the Hammon plaintiffs) independently registered her approval of the Settlement Agreement. Having been notified of and having considered the Special Master's proposal, the Byrne plaintiffs, by class counsel George Cohen, also signed the Settlement Agreement, which was subsequently voted upon and ratified by Local 36. Finally, the City took the proposal under advisement, and, by Corporation Counsel Dr. Herbert O. Reid, Sr., the City also signed the Settlement Agreement.

 Thus, on August 20, 1990, the parties all executed a Settlement Agreement that is final and binding on all the parties and that resolves any and all claims of discrimination -- whether based upon the Constitution or federal or local statutes -- raised by the classes and the individual members at any point during this lawsuit. Although the Settlement Agreement is one integrated document, it contains two parts to reflect the different claims of the Hammon and Byrne plaintiffs: Part A (signed by the Hammon plaintiffs and the City) addresses all of the lawsuit's claims involving hiring and vestiges of discrimination but not the dispute over future promotions and Part B (signed by the Hammon plaintiffs, the Byrne plaintiffs, and the City) addresses the future promotions issue. The Settlement Agreement explicitly states that it "sets forth all essential terms of the settlement;" Agreement, Appendix I, Part A para. 1, Part B para. 1 (emphasis added), and that "Parts A and B together resolve all claims and bind all class members with respect to all claims of discrimination as of the date of this agreement," id. Part A P 21 (emphasis added); see id. Part B P 2.

 Without going into an overly detailed description of the Settlement Agreement, which speaks for itself, the Court notes that it provides for various forms of relief. The Hammon plaintiffs will receive a $ 3.5 million lump-sum payment from the City, which does not include attorneys fees and which will be divided among the class members based upon how many years each firefighter worked as well as other criteria. See id. Part A PP 4, 8-17. Moreover, the Settlement Agreement provides for: about 180 immediate promotions (based upon an attached schedule) to fill most outstanding vacancies; the creation of a new (fourth) platoon of firefighters with many new Sergeant, Lieutenant, and Captain positions; the development and administration of fair promotional examinations to fill some outstanding and all future vacancies. See id. Part B PP 5-13. In return for the foregoing, the City avoids any finding of liability and enhances the public safety by improving Fire Department working conditions and morale and making long overdue promotions. Finally, all parties avoid the risks and costs of proceeding to trial.

 In short, while each of the parties benefits from the Settlement Agreement, none of the parties has obtained a perfect result for itself. As is common when a case settles rather than proceeding to trial, the Settlement Agreement contains various trade-offs and concessions that the parties agreed to when faced with the prospects of litigating and perhaps losing some or all aspects of this case.

 The Settlement Agreement envisioned that the parties would work with the Special Master to develop a decree for the Court's approval, see Agreement, Appendix I, Part A para. 1, but the Settlement Agreement nowhere indicates that it could be implemented only by a consent decree signed by all the parties. In fact, the Special Master has stated to the Court that he purposely did not use the term "consent decree" when drafting the Settlement Agreement, in light of the many previous instances throughout this litigation in which the parties were unable to cooperate. Thus, the record is clear that the parties originally agreed that the Court could enter its own decree in accordance with the essential terms contained in the Settlement Agreement in the event that the parties failed to agree upon one consent decree.

 Since the date the Settlement Agreement was signed by all of the parties, the parties have worked with the Special Master and the Test Development Committee ("TDC") to develop promotional examinations as required by the Settlement Agreement. *fn1" The first promotional test is scheduled for December 1990, and it will provide hundreds of firefighters, who have been studying for weeks, with their first opportunity for a promotion.

 The parties and the Special Master notified the class members of the October 23, 1990 Fairness Hearing in various ways. All current Fire Department members received personal notice, and retired firefighters and others who requested notice received personal notice. In addition, class members received publication notice in five different publications. See Notices, Appendix III. Judging by the written objections the Court received pursuant to this notice procedure and the responses at the Fairness Hearing, the Court is satisfied that the various notices succeeded in alerting the class members to the proceedings.

 In anticipation of the Fairness Hearing, the Special Master met with counsel for all the parties on October 16 and 17, 1990 to discuss the class members' written objections and formulate responses. The record is clear that all counsel present agreed with and supported the Special Masters' proposed responses to the class members' objections, see October 17, 1990 Meeting with Special Master Tr. at 21-55. Before the Fairness Hearing, no counsel for any of the parties requested the Special Master to suggest to the Court that any of the class members' objections had any merit, except for one minor modification (agreed to by all the parties) enabling the heirs or estates of deceased firefighters, who otherwise would have been eligible to share in the settlement fund to submit claims. Nor did counsel for any of the parties argue at the Fairness Hearing that any of the class members' objections should prevent Court approval of the Settlement Agreement.

 II. Analysis

 A. Jurisdiction Despite Notice of Appeal

 In any event, the Notice of Appeal does not divest this Court of jurisdiction because the order from which the Hammon plaintiffs seek to appeal is an interlocutory, non-appealable order. See 9 Wright & Miller, Federal Practice and Procedure § 2615, at 813 ("An order of reference to a master is interlocutory and not appealable."). Instead of allowing the Hammon plaintiffs to willy-nilly deprive this Court of jurisdiction, "thus bringing [these] proceedings to a standstill while a non-appealable ruling wends its way through the appellate process," Venen v. Sweet, 758 F.2d 117, 121 (3d Cir. 1985), the Court will "disregard the notice of appeal [from a non-appealable order] and proceed with the case," Hammerman v. Peacock, 623 F. Supp. 719, 721 (D.D.C. 1985) (citing 9 Moore's Federal Practice P 203.11, at 3-52 (citing cases)); see also SEC v. American Bd. of Trade, Inc., 829 F.2d 341, 344 (2d Cir. 1987), cert. denied, 486 U.S. 1034, 100 L. Ed. 2d 605, 108 S. Ct. 2018 (1988); United States v. Bastanipour, 697 F.2d 170, 173 (7th Cir. 1982), cert. denied, 460 U.S. 1091, 76 L. Ed. 2d 358, 103 S. Ct. 1790 (1983).

 B. Number of Objecting Class Members

 Turning to the merits of whether the Court should approve the Settlement Agreement as a fair resolution of this case, the Court first examines the number of the objections received. Although approximately 85 individuals objected to some aspect of the Settlement Agreement, *fn2" that is a relatively low level of dissatisfaction considering that the Hammon and Byrne classes comprise at least 2,000 individuals. *fn3" Moreover, the number of objectors is somewhat misleading because that figure includes about 33 members of the Fire Prevention unit who made essentially the same objection based on the absence of a separate test and insufficient pay and whose concerns are discussed in more detail below. See infra Section G. Thus, as best as the Court can determine, it appears that less than five percent (85 out of 2,000) of the class members objected, and that figure drops to less than three percent (52 out of 2,000) if the Fire Prevention common objection is put to one side. Compare Cotton v. Hinton, 559 F.2d 1326, 1333 (5th Cir. 1977) (affirming district court's approval of class action settlement over objection of counsel purporting to represent almost half of the class); Bryan v. Pittsburgh Plate Glass Co., 494 F.2d 799, 803 (3d Cir.) (affirming district court's approval of class action settlement over objections by over twenty percent of class), cert. denied, 419 U.S. 900, 42 L. Ed. 2d 146, 95 S. Ct. 184 (1974).

 While the fact that a relatively small percentage of the class members objects to a proposed settlement is not dispositive, "courts have taken the position that one indication of the fairness of a settlement is the lack of or small number of objections." 2 H. Newberg, Newberg on Class Actions § 11.47, at 463 (2d ed. 1985) (citing Laskey v. International Union (UAW), 638 F.2d 954 (6th Cir. 1981)). The low percentage of objectors in this case is one factor in the Court's conclusion that the Settlement Agreement is fair and that almost all of the class members are looking forward to its approval so that the promotions can be made, the promotional tests given, and the settlement fund disbursed.

 C. Adequacy of Monetary Aspect of Settlement

 Next, the Court considers the adequacy of the $ 3.5 million lump-sum payment that the City would make to the Hammon plaintiffs under the Settlement Agreement. As far as the Court can tell there has been only one objection -- a general objection at that -- to the amount of the monetary relief. In view of the factual and legal uncertainties that the Hammon plaintiffs face if they were to proceed to trial, *fn4" as well as the substantial harm they would continue to suffer by being precluded from receiving immediate promotions and taking promotional exams, the Court holds that the $ 3.5 million settlement amount is well within the range of a reasonable and adequate settlement. Id. § 11.44, at 457 (citing Newman v. Stein, 464 F.2d 689 (2d Cir.), cert. denied, 409 U.S. 1039, 34 L. Ed. 2d 488, 93 S. Ct. 521 (1972)). Another factor in the Court's analysis is that the Special Master argues in support of the reasonableness of the $ 3.5 million figure. Most important, however, is that counsel -- who represent three very different parties, who have been deeply involved in this case from the beginning and can evaluate their cases better than anyone else, and who have failed to agree for so long -- all agreed after extensive arms-length negotiations that $ 3.5 million was a fair settlement. See id. § 11.46, at 462 ("'The court should give great weight to the fact that the lawyers for substantially all of the plaintiffs and defendant who have been engaged in this arduous litigation for seven years unanimously support the settlement.'" (quoting Cannon v. Texas Gulf Sulphur Co., 55 F.R.D. 308, 316 (S.D.N.Y. 1972))).

 It is well established that a court deciding whether to approve a class action settlement should not substitute its judgment for that of the proponents of the settlement, id. § 11.44, at 457 (citing Steinberg v. Carey, 470 F. Supp. 471 (S.D.N.Y. 1979)), and that "unless the settlement is clearly inadequate, its acceptance and approval are preferable to lengthy and expensive litigation with uncertain results," id. § 11.49, at 466. Consequently, the Court sees no reason on this record to reject or modify the $ 3.5 million figure negotiated by the parties. *fn5" Any argument that the Hammon plaintiffs would recover much more than $ 3.5 million if they proceeded to trial not only is pure speculation, *fn6" but also fails to take into account that this $ 3.5 million would go immediately and directly to the class (without attorneys' fees or any further costs being subtracted) whereas another amount disbursed pursuant to a judgment, if any, after trial would probably reach the class members only after several years of trial and appellate litigation.

 D. Apportionment of Settlement Fund

 A large percentage of the objections represent challenges to the way in which the $ 3.5 million settlement fund would be apportioned among Hammon class members. Under the Settlement Agreement and Proposed Consent Decree, that $ 3.5 million would be apportioned as follows: (1) at least $ 2.4 million as compensation for pre-1980 discrimination claims to be divided among all members of the Hammon class who were members of the Fire Department on January 1, 1980, Agreement, Appendix I, Part A paras. 8-10; (2) no more than $ 1 million as compensation for post-1980 discrimination in hiring claims to be divided among all members of the Hammon class who completed the 1980 hiring test and either were never hired or were hired after the average date on which white test-takers were hired (July 1, 1982), id. Part A PP 12-14; and (3) $ 100,000 as compensation for individual class members who contributed to the litigation by rendering services on their own time or who bore "special burdens . . . during this litigation," Proposed Consent Decree, Appendix II, Part I para. 25.

 About forty retired firefighters (most of whom were represented at the Fairness Hearing by Joel P. Bennett) object to the cut-off date of January 1, 1980 because it would preclude them from sharing in the settlement fund. The Special Master and counsel for all the parties chose this cut-off date only after extensive discussions and careful consideration of the relative weakness of these retirees' claims due to the City's potentially devastating statute-of-limitations defense. *fn7" The City made it very clear to everyone involved in this lawsuit that, if settlement talks were to break down, the City would assert and vigorously litigate a statute-of-limitations defense since the discrimination giving rise to the pre-1980 claims occurred, if at all, over four years before the filing of this lawsuit. However, to avoid litigating this issue and having to determine precisely when acts occurred on a case-by-case basis for the numerous members of the Hammon class, the City agreed to waive its statute-of-limitations defense, and counsel for all the parties (including the Hammon plaintiffs' attorney) as well as Special Master agreed that it was highly likely that claims by any firefighter who retired before January 1, 1980 would be time-barred. *fn8"

  Although the Court feels great sympathy and admiration for the older retired firefighters who probably suffered the most (enduring that period when discrimination in the Fire Department was institutionalized and its most extreme), the Court must evaluate the strengths and weaknesses of the class members' claims within the framework of their likelihood of establishing liability and damages at trial. See In Re "Agent Orange" Prod. Liability Litig., 818 F.2d 145, 171 (2d. Cir. 1987) (evaluating district court's approval of settlement by examining strength of claims, which were allegedly "serious" judging by amount of damage class members suffered, in terms of the likelihood of prevailing on liability), cert. denied, 484 U.S. 1004, 98 L. Ed. 2d 647, 108 S. Ct. 695 (1988). Moreover, in evaluating the formula for apportioning the settlement fund, the Court keeps in mind that "district courts enjoy 'broad supervisory powers over the administration of class-action settlements to allocate the proceeds among the claiming class members equitably.'" In Re "Agent Orange" Prod. Liability Litig., 818 F.2d 179, 181 (2d. Cir 1987) (quoting Beecher v. Able, 575 F.2d 1010, 1016 (2d Cir. 1978)), cert. denied, 487 U.S. 1234, 101 L. Ed. 2d 932, 108 S. Ct. 2898 (1988). In view of the likelihood that the retirees' claims would be time-barred and the fact that counsel for all the parties (including the Hammon plaintiffs' counsel when signing the Settlement Agreement) and the Special Master all agreed that the January 1, 1980 cut-off date was proper, the Court holds that the Settlement Agreement is fair, adequate, and reasonable and must be approved over the retirees' objections. *fn9" See id. at 182 (district court has "discretion to adopt whatever distribution plan [it] determine[s] to be in the best interests of the class as a whole notwithstanding the objections of class counsel or of a large number of class members " (emphasis added; citations omitted)).

 Another objection to the allocation of the settlement fund envisioned by the Settlement Agreement and the Proposed Consent Decree -- not raised until the Hammon Plaintiffs' Post-Fairness Hearing Report to the Court -- is that certain named plaintiffs and individual class members claiming under them should receive additional money for suffering more serious discrimination than the other class members. See supra note 6. Under the Settlement Agreement, the named plaintiffs -- who are properly members of the Hammon class *fn10" -- would receive: (1) a share of the $ 2.4 million (if working for the Fire Department on January 1, 1980) allocated to pre-1980 discrimination claims in direct proportion to how many years that plaintiff worked for the Fire Department or (2) a share of the $ 1 million allocated to claims arising out of the administration of the 1980 hiring test. In addition to the foregoing, the Proposed Consent Decree addresses the possibility that certain class members experienced more serious discrimination by allowing them to submit claims for shares of the $ 100,000 amount set aside for those members who made litigation contributions or bore "special burdens" as identified by the Hammon plaintiffs.

 Thus, although nothing is definite yet since claims forms have not been submitted and precise calculations have not been made, it appears to the Court on this record that, as a result of these three sub-divisions of the settlement fund, each of the named plaintiffs would receive some amount of monetary relief (as well as promotions or the opportunity to take promotional tests). *fn11" Therefore, the Court is not persuaded that the Settlement Agreement should be rejected because certain plaintiffs do not receive more money.

 Finally, about two objectors argued that the heirs or estates of those deceased firefighters who otherwise would have shared in the settlement fund should be entitled to recover monetary relief on behalf of the decedent. All the parties and the Special Master have agreed to modify the proposed Claims Form to accommodate the heirs or estates of deceased firefighters in accordance with these few objections, see October 16 Meeting with Special Master Tr. at 19-20, and the Court also approves of this slight modification to the Claims Form, especially since the Settlement Agreement did not address this issue one way or the other.

 E. Union Voting Procedures

 The Court received about six objections based on the voting procedure utilized to determine whether Local 36 would ratify the Settlement Agreement signed, subject to Local 36 ratification, by the counsel for the Byrne plaintiffs and Local 36. Instead of resorting to mail notice of the proposed settlement -- which would have consumed four or five weeks that could not be spared in view of the rapidly approaching December test date -- the Special Master directed that voting occur within one week of the Settlement Agreement's being signed, and the Union President and counsel agreed that this procedure was feasible. Consequently, the Settlement Agreement was widely circulated among union members and was even posted in the varfirehouses. In light of the great attention this litigation has received among union members, the ensuing vigorous debate, and the representations of the Union President, counsel for the Byrne plaintiffs, and the Special Master, the Court is fully satisfied that the notice and voting procedures were perfectly proper and that all interested union members had a fair opportunity to be heard. Indeed, the packed Courtroom, with standing room only, at the October 23, 1990 Fairness Hearing demonstrates that all interested parties are aware of what has taken, and is taking, place in this case and that the various notices were effective. See Notices, Appendix III.

 F. Use of Lists For Immediate Promotions

 Of the total number of objections registered against the Settlement Agreement orally or in writing, a relatively large number challenge some aspect of the procedure for making about 180 immediate promotions (for vacancies existing as of March 1, 1989) from lists based upon the last promotional exam administered in 1984. Some class members want more immediate promotions while others argue that those who served in an acting capacity should have preference for promotions, and still others contend that these lists should not be relied upon to fill all of the vacancies because they usually would be valid for only two years.

  However, most, if not all, of these objections are motivated by the self-interest of the individual objector, and none of them indicate that the Settlement Agreement's procedure for making immediate promotions unfairly benefits any one group of firefighters at the expense of any other group. *fn12" Moreover, the objections that rely upon the usual two-year life-span of promotional lists overlook the unfortunate but undeniable reality that nobody -- not the parties, not the Special Master, and not this Court -- can turn back the clock and duplicate exactly what would have occurred if promotional tests had been given in 1986 and 1988. In short, because this is no longer a "usual" situation, the "usual" rules and procedures utilized to make promotions in the past should not be blindly applied. All of the parties recognized that immediate promotions are absolutely essential for the public safety, not to mention improving Fire Department morale for both the Hammon and the Byrne classes. *fn13" The Court is satisfied that using the 1984 promotional lists to make immediate promotions while also creating a new (fourth) platoon is a fair, reasonable, and non-race-based procedure relying upon seniority and past test results, which comes as close as possible to remedying the lengthy delay in promotions in the Fire Department. *fn14"

 G. Administration of New Promotional Tests

 Under the Settlement Agreement and Proposed Consent Decree, fair, non-discriminatory, job-related promotional tests would be administered: (1) in December 1990 to fill vacancies arising after March 1, 1989 and before June 1, 1991 (including the 89 new Sergeant, Lieutenant, and Captain vacancies arising from the creation of a fourth platoon by June 1, 1991) and (2) sometime in 1991 so as to permit announcement of the promotional registry by August 1, 1991 to fill vacancies arising after June 1, 1991. Some class members object that it is unfair to permit their colleagues who benefit from the immediate promotions discussed above to also take these two soon-to-be-administered promotional tests. However, these objections in effect argue for applying rules and procedures developed for usual situations to this highly unusual situation, displaying the same fallacious reasoning rejected above. See supra Section F. The City needs immediate promotions based upon fair promotional tests; the TDC has been working diligently, with the Special Master's assistance, to complete the December 1990 promotional test; and class members on both sides of this lawsuit have already waited much too long for the "privilege" of taking a promotional test. In fact, for many class members the December 1990 promotional test will be their first opportunity for a promotion. Under these unique and unfortunate circumstances, the Court sees nothing wrong with a Settlement Agreement that increases the opportunities for all long-suffering firefighters to take promotional tests quickly to make up for the absence of promotional tests during the last six years.

 One common objection to the Settlement Agreement's procedures for administering promotional tests has been raised by some, if not all, of the members of the "Fire Prevention" unit of the Fire Department (as opposed to the much more larger "Fire Suppression" unit), who contend that the Settlement Agreement should be modified to require a promotional test for Fire Suppression separate from the Fire Prevention test. However, the Special Master, the Byrne plaintiffs, and the City have presented several persuasive reasons why this objection is insufficient to require rejection of the Settlement Agreement: (1) the number of vacancies in the Fire Suppression unit is so low (perhaps only one) that administering entirely different Sergeant, Lieutenant, and Captain promotional tests for the Fire Suppression unit is not economically sound; (2) in the short time remaining, the TDC cannot complete the December 1990 promotional test and also develop separate Fire Prevention tests; (3) Fire Prevention personnel would be eligible to take the unitary promotional tests and compete with Fire Suppression personnel for vacancies throughout the Fire Department; and (4) fully cognizant of the City's historic practice of administering one unitary promotional test, Fire Prevention personnel nevertheless voluntarily elected to serve in that unit instead of Fire Suppression.

 However, despite the foregoing convincing reasons that militate against the objections by Fire Prevention personnel, all of the parties and the Special Master have pledged that they would continue to give serious consideration to these objections, and the City has agreed to reserve any vacancy or vacancies in the Fire Prevention unit until the parties, working with the Special Master, have arrived at a fair promotional system for the Fire Prevention personnel. In light of the factors supporting the administration of a unitary promotional test at this time and the assurances by all the parties and the Special Master that they are receptive to the Fire Prevention objectors' concerns and are working diligently to consider alternatives to accommodate the Fire Prevention unit, *fn15" ...


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