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STEWART v. RUBIN

November 21, 1996

LARRY D. STEWART, et al., Plaintiffs,
v.
ROBERT E. RUBIN, Secretary, Department of The Treasury, Defendant.



The opinion of the court was delivered by: LAMBERTH

 I. FINDINGS OF FACT

 A. Findings As to Fairness and Class Certification

 1. This class action lawsuit was brought against the U.S. Department of Treasury's Bureau of Alcohol, Tobacco, and Firearms ("ATF"), under Title VII of the Civil Rights Act of 1964, as amended, and the Civil Rights Act of 1991, 42 U.S.C. §§ 2000e-16 et seq. Plaintiffs, fifteen (15) current and former African-American GS-1811 series Special Agents, *fn1" allege class-wide racial discrimination and retaliation by ATF in a variety of personnel practices. Specifically, Plaintiffs allege that ATF discriminated on the basis of race in promotions, discipline, awards, assignments (including undercover assignments), special teams, Schedule A hiring, *fn2" hostile work environment, terminations, employment performance evaluations, training assignments, and retaliated against them for their equal employment opportunity ("EEO") activities. Plaintiffs allege both a disparate impact and disparate treatment case. As relief, Plaintiffs seek widespread injunctive relief, retroactive promotions and tenure, back pay, compensatory damages and attorneys' fees and costs.

 2. This case was filed in this Court in November of 1990 on behalf of two African-American ATF Special Agents, Larry D. Stewart and Mark Jones. Plaintiffs sought leave to file an Amended Complaint in January 1993, adding thirteen more named Plaintiffs and including additional alleged discriminatory acts and practices. This Court granted Plaintiffs' Motion to Amend. Extensive discovery was undertaken by the parties, including written discovery and the depositions of all fifteen named Plaintiffs, the then-current Director of ATF and the statistical experts. In July 1994, the Plaintiffs filed their Motion for Class Certification, which was supported by statistical analysis, expert reports and the affidavits of about fifty (50) African-American ATF Special Agents. The Defendants also filed a comprehensive opposition to Class Certification that was supported by expert reports and statistical analysis.

 3. In August 1994, the Court referred the case to the District Court's Alternative Dispute Resolution program ("ADR"). Early in the mediation, ATF decided to hire an outside expert to assist the agency to revise ATF's Law Enforcement Career Development Plan. Information concerning the hiring of this expert, its impact on ATF's personnel systems, and the fact of the pendency of the mediation was disseminated by the Director of ATF to all employees throughout the agency by two teletypes.

 4. Intensive settlement negotiations, through the mediation process, followed. The mediation included the participation of then-Undersecretary of the Treasury, Ronald Noble, other senior Treasury officials, the Director of ATF, defense counsel, Plaintiffs' counsel and class representatives. The parties, after numerous face-to-face meetings and teleconferences, substantial drafting, and intense negotiations for over one and one-half years, reached a proposed Settlement Agreement, which was submitted to the Court for preliminary review and approval.

 5. By Order filed July 9, 1996, the Court granted preliminary approval of the parties' Settlement Agreement. Pursuant to that Order, ATF took steps designed to notify all class member and all current ATF Special Agents of the Settlement Agreement, the Court's Fairness Hearing and the deadline for filing objections. See Def. Resp. at Exhibit 1.

 6. The Settlement Agreement resolves all of Plaintiffs' claims, including attorneys' fees and costs. The Settlement Agreement provides individual monetary payments, sets forth a procedure for providing individualized non-monetary equitable relief, provides for the development of a new promotion assessment system, and provides for additional equitable relief in the areas of performance appraisals, training, transfers, awards, bonuses, discipline, and assignments to special teams. The essential features of the agreement as summarized by Defendant are as follows:

 
A. A total of $ 4.7 million will be awarded to the class as a whole, which may be awardable to each individual as determined according to two formulas. One formula is designed to provide the plaintiffs compensation for, among other things, backpay and front pay. Accordingly, $ 675,000 of the $ 4.7 million will be placed by plaintiffs' counsel into a fund ("The Backpay Fund") to satisfy those claims. The second formula is designed to take into account, among other things, claims for compensatory damages based upon emotional distress, mental anguish, and pain and suffering. The remaining $ 4.025 million of the $ 4.7 million accordingly will be placed by plaintiffs' counsel into a "Compensatory Damages Fund." See Settlement Agreement, at 7-9; Appendices B, C, G, H.
 
B. Plaintiffs will receive reimbursement of $ 1.2 million in documented attorneys' fees and expenses. In addition, plaintiffs will receive up to a maximum total of $ 150,000 for reasonable attorneys' fees plus expenses and costs incurred after Entry of Judgment in the District Court until the expiration of the Settlement Agreement. See Settlement Agreement, at 37-38, Appendix D.
 
C. The Settlement Agreement also provides a mechanism for granting individualized, non-monetary relief to plaintiffs. Any member of the plaintiff class who has a claim not yet resolved or dismissed between December 25, 1981 and the Entry of Judgment in the District Court on grounds of discrimination on the basis of race in promotions, discipline, awards, assignments (including undercover assignments), details, terminations, performance evaluations, or training may submit a claim under the procedures set forth in the Settlement Agreement. No monetary relief may be granted under this procedure, which has elaborate safeguards, including the participation of a Recommending Official that is selected by mutual agreement of the parties. The Director of ATF is the final decision-maker on these claims, which are not further reviewable by any court or any other quasi-judicial or administrative body. See Settlement Agreement, at 9-14, Appendix G.
 
D. ATF will retain a qualified individual approved by the plaintiffs (currently, Dr. Irwin Goldstein) to assist the agency in writing a work statement to be used in connection with the procurement of a new promotion assessment system. That system will be developed in accordance with the Uniform Guidelines issued by the U.S. Equal Employment Opportunity Commission, codified at 29 C.F.R. Part 1607, or other professional standards, and any applicable federal laws and regulations and shall, inter alia, minimize adverse impact on African-Americans who are GS-1811 series Special Agents employed by ATF. See Settlement Agreement, at 20-25.
 
The Request For Proposals ("RFP")/solicitation will be designed to select a contractor to develop a promotion assessment system to replace the existing Career Development Plan for the Office of Criminal Enforcement. The contract would also provide for a job analysis that would not only provide the basis for developing the new promotion assessment center, but it would provide the basis for developing other equitable relief in the areas of performance appraisals, training, transfers, awards and bonuses, and assignment to special teams. See Settlement Agreement, at 20-25, 27-33.
 
E. ATF would convert to career conditional status all Special Agents who, on the Effective Date of this Settlement Agreement, are qualified for such conversion and are still in Schedule A status. See Settlement Agreement, at 18-19. Currently, there are three Special Agents remaining in Schedule A status.
 
F. Plaintiffs' counsel will be provided with information sufficient to monitor whether ATF is complying with the terms of the Settlement Agreement. To assist the parties in monitoring compliance, ATF will establish and maintain a computerized database containing relevant statistical data. An expert mutually acceptable to the parties will produce a report that analyzes the employment data to determine whether the employment practices or personnel systems at issue have had an adverse impact upon African-American Special Agents in the GS-1811 series during the previous data gathering period as well as cumulatively from the Entry of Judgment in the District Court. See Settlement Agreement, at 14-18.

 Def. Resp. at 3-6.

 7. There has been overwhelming class support for the proposed settlement. There are approximately 245 members of the class. Yet, only one class member, Special Agent Davenport, has objected to the Settlement Agreement. Special Agent Davenport seeks to "opt out" of the Settlement Agreement and argues that class certification is inappropriate. The Settlement Agreement, however, states:

 
No class member may opt-out of this Settlement Agreement, but any class members may elect not to accept the relief or any portion of the relief, provided under this Settlement Agreement. So doing, will not, however, revive or preserve any individual rights on the part of that class member.

 Settlement Agreement, at 6-7.

 8. The remaining objections to the Settlement Agreement were filed by non-class members. There are 386 total objections from non-class members. All but 20 of these objections are made through a form ("form objections") with no material distinction among them. *fn3"

 9. The Court conducted its Fairness Hearing on September 12, 1996. The ATF Hispanic Association (the "Association") has objected to the Settlement Agreement and appeared, through counsel, at the Fairness Hearing. The Association's main concern as articulated in oral argument is that the Settlement Agreement does not address alleged discrimination against its members.

 B. Findings As To Intervention

 11. The Putative Intervenors knew of the existence of this lawsuit for "some time." Putative Intervenors' Proposed Complaint P 6. The fact of the filing of Plaintiffs' Complaint in November 1990 and the details of the Complaint were reported widely in the press. See Exhibit A to Plaintiffs' Opposition to the Motion to Intervene.

 12. Intervenor NATA, from at least 1990 through 1995, regularly published and disseminated throughout its membership a newsletter known as " The Agent." The Agent was routinely circulated to ATF Special Agents, including the Putative Intervenors. The fact that this lawsuit has been filed was reported in The Agent, was thereafter periodically updated in following issues of The Agent, and was the subject of editorials and letters from unnamed ATF Special Agents. See Exhibit B to Plaintiffs' Opposition to the Motion to Intervene.

 13. As with the initial Complaint, the fact of the filing of the Amended Complaint was widely reported in the media, and particularly in a front-page article in The Washington Post. See Exhibit C to Plaintiffs' Opposition to the Motion to Intervene. Copies of the Amended Complaint were circulated extensively throughout ATF. The Putative Intervenors, however, did not seek to intervene in this lawsuit until now, even in the face of the broad relief sought in the Amended Complaint.

 14. Following the parties' extensive discovery and Plaintiffs' filing of the class certification motion, the issues concerning this lawsuit were again widely publicized in the press. See Exhibit D to Plaintiffs' Opposition to the Motion to Intervene. Defendant opposed the class certification motion with extensive briefing and expert statistical reports. The Putative Intervenors, however, still did nothing with respect to this lawsuit.

 15. Although, as is the practice in this Court's ADR Program, the content of the mediation was confidential, the Putative Intervenors were aware of the fact of the mediation and were aware that it was being conducted in confidence. Nevertheless, the Putative Intervenors did not seek to become a party and gain access to the mediation.

 16. Early in the mediation, ATF decided to hire a mutually-acceptable outside expert to assist the Agency to revise ATF's Law Enforcement Career Development Plan. Information regarding the hiring of this expert, and its impact on the class settlement, was sent, on October 11, 1994, by the Director of ATF over a teletype to the entire agency. The teletype specifically referencing the settlement negotiations in the African American Special Agents' class action. The teletype advised ATF employees as follows:

 
AS A RESULT OF THE MEDIATION CURRENTLY TAKING PLACE BETWEEN THE BUREAU OF ALCOHOL, TOBACCO AND FIREARMS AND THE AFRICAN-AMERICAN SPECIAL AGENTS, ATF HAS AGREED TO RETAIN AN OUTSIDE EXPERT TO ASSIST THE AGENCY IN DESIGNING A NEW CAREER DEVELOPMENT PLAN AND PERFORMANCE APPRAISAL SYSTEM THAT HAS THE LEAST POSSIBLE ADVERSE IMPACT ON ANY GROUP OF EMPLOYEES.

 Exhibit C to Plaintiffs' Opposition to the Motion to Intervene.

 17. To ensure that all ATF employees received his first teletype, several weeks later the Director of the ATF distributed yet a second copy:

 
THE ATTACHED TELECOMMUNICATIONS MESSAGE (ORIGINALLY TRANSMITTED ON 10/11/94) IS BEING RETRANSMITTED TO ENSURE THAT EVERY EMPLOYEE RECEIVES A COPY OF THIS MESSAGE.

 Id.

 18. During this time, and after the circulation of the teletypes referred to above, The Agent, the newsletter of NATA, published a report concerning the status of the African-American Class Action mediation and stated that it was monitoring the situation "very carefully":

 
Black Class Action
 
Scores Victory for All?
 
Washington - The Bureau of Alcohol, Tobacco, and Firearms announced this week that pursuant to negotiations with representatives of the agents who filed a Black Class Action complaint, ATF has agreed to hire an outside consultant. This consultant will assist ATF officials in the development of a career plan and performance appraisal system which would have no disparate impact on any group of employees.
 
NATA Notes . . . NATA will be monitoring this situation very carefully. While we are extremely wary of plans which propose to ensure "group" rights, it is possible that if properly written and evenly administered, the proposed plans may ensure fairness and equity for ALL ATF agents rather than just a vocal minority.

 The Agent, December 1994. See Exhibit B to Plaintiffs' Opposition to Motion to Intervene (emphasis in original). As of late 1994, however, the Putative Intervenors did not move to intervene.

 19. In August of 1995, mediation intensified with participation of then-Undersecretary of Treasury Ronald Noble, along with other ATF and Treasury officials. Also in the summer of 1995, news broke of the "good old boys roundup" that had been conducted on an annual basis since approximately 1980. This "roundup" was widely-reported in the press. See Exhibit F to Plaintiffs' Opposition to the Motion to Intervene. Many of these news articles discussed the pending African-American class action.

 20. During this time period, The Agent also discussed the progress of the African-American Class Action and called for members to support litigation on behalf of NATA itself. See Exhibit B to Plaintiffs' Opposition to the Motion to Intervene. Moreover, in October of 1995, Intervenor Jorgenson wrote a letter to NATA's members on behalf of Intervenor NATA stating:

 
Within the past few weeks, the National Association of Treasury Agents (NATA) has received numerous inquiries from concerned ATF special agents. The focus of these inquiries has been two-fold. First, many agents have heard rumors of an agreement to settle the lawsuit pending between ATF and Afro-American ATF agents. While no official settlement terms have been announced, those contacting NATA have been very upset with what they've heard thus far. The second area of inquiry to NATA pertains, once again, to the rumored massive transfers of senior ATF agents. While no official announcements have been made from ATF, it doesn't take a brain surgeon to realize that, if true, such transfers would impact disparately on white male agents and supervisors over the age of 40.
 
In response to these inquiries, NATA has agreed to serve as an initial administrator for a class action lawsuit for ATF agents concerned about the black agents settlement as well as for ATF agents worried about future transfers. These are two separate actions. They are open ONLY to active duty ATF agents.
 
Enclosed are two flyers. One pertains to the black agents' settlement while the other concerns that transfer of ATF agents. Please duplicate these flyers as needed and distribute in a variety of ways to active duty ATF agents in your area. If you are aware of ATF agents outside of your area, please ensure that they too, receive a copy.
 
If sufficient response is not received from active duty ATF agents, no future action will be taken. Frankly, we can't afford it! If there are any questions, call NATA at (202) 828-1960. Your assistance is appreciated.

 Exhibit C to Plaintiffs' Opposition to the Motion to Intervene.

 21. Despite Intervenor NATA's solicitations, in 1995, to finance a lawsuit to challenge the perceived settlement, the Putative Intervenors did not file any such lawsuit and did not move to intervene in this lawsuit.

 22. The parties continued to mediate and, eventually, exchanged draft settlement agreements. The Settlement Agreement went through over 15 iterations, involving intensive negotiations on a face-to-face basis, sometimes on a daily basis, over a myriad of details. Negotiations on the text of the Settlement Agreement lasted from August 1995 through April 1996.

 23. The final proposed Settlement Agreement, reached in April 1996, was reviewed and approved by senior DOJ, ATF, and Department of the Treasury officials.

 24. The fifteen named plaintiffs unanimously approved the Settlement Agreement, as well.

 25. After all these reviews were completed, the Settlement Agreement was submitted to the Court for preliminary review and approval. On July 9, 1996, the Court preliminarily approved the Settlement Agreement, ordered any objections from any interested party filed by August 28, 1996, and set a Fairness Hearing for September 12, 1996.

 26. Shortly thereafter, ATF took steps designed to notify every Special Agent in the Bureau of the terms and conditions of the settlement, and provide a copy of the Settlement Agreement to each ATF Special Agent. See Def's. Resp. at Exhibit 1.

 27. On the last day for filing objections to the Settlement Agreement -- August 28, 1996 -- the Putative Intervenors filed their Motion to Intervene. The Motion, as filed, lacked any pleading as required by Fed. R. Civ. P. 24. The defect was cured on September 6, 1996, six days before the Fairness Hearing when the Putative Intervenors submitted a proposed Complaint in Intervention. On that same day, September 6, Plaintiffs filed their Opposition to the Motion to Intervene, which was joined by Defendant on September 9, 1996. On September 11, 1996, the day before the Fairness Hearing, Putative Intervenors filed a Reply which contained, for the first time, factual assertions in support of intervention. These "factual assertions," however, were in the form of unsigned Declarations of some of the Putative Intervenors, with conclusory allegations concerning the Putative Intervenors' interests. The purported declarants did not seek to speak at the Fairness Hearing or submit any testimony, written or otherwise, under oath.

 II. CONCLUSIONS OF LAW

 A. Class Certification

 1. Standard of Review Under Rule 23

 28. Fed. R. Civ. P. 23(e) imposes a duty on the district courts to review and approve all class action settlements. It is well established that in executing this fiduciary obligation to the class, the Court must decide at the conclusion of the Fairness Hearing whether the settlement is fair, reasonable, and adequate. See Luevano v. Campbell, 93 F.R.D. 68, 85 (D.D.C. 1981); Williams v. Vukovich, 720 F.2d 909, 921 (6th Cir. 1983). The factors a court should consider before approving a settlement agreement include "the fairness of the decree to those affected, the adequacy of the settlement to the class, and the public interest." Williams, 720 F.2d at 921.

 29. There is a strong public policy in favor of the settlement of litigation, and "decisions emphasizing the preferred role of settlements under Title VII are legion." Luevano, 93 F.R.D. at 85 (citing cases). As the Supreme Court has recognized, this policy is particularly important in the resolution of cases brought under Title VII of the Civil Rights Act of 1964 because of the "strong preference" of Congress for "encouraging voluntary settlement of employment discrimination claims." Carson v. American Brands, 450 U.S. 79, 88 n.14, 67 L. Ed. 2d 59, 101 S. Ct. 993 (1981). In Alexander v. Gardner-Denver Co., 415 U.S. 36, 44, 39 L. Ed. 2d 147, 94 S. Ct. 1011 (1974), the Supreme Court explained that "Congress enacted Title VII . . . to assure equality of employment opportunities by eliminating those practices and devices that discriminate on the basis of race, color, religion, sex, or national origin . . . . Cooperation and voluntary compliance were selected as the preferred means for achieving this goal." 415 U.S. at 44, (quoted in Carson v. American Brands, Inc., 450 U.S. at 88 n.14.)

 30. Accordingly, "voluntary compromises of Title VII actions enjoy a presumption of validity, and should therefore be approved 'unless . . . [they] contain provisions that are unreasonable, unlawful, or against public policy.'" Kirkland v. New York State Dep't of Correctional Services, 711 F.2d 1117, 1128-29 (2d Cir. 1983), cert. denied, 465 U.S. 1005, 79 L. Ed. 2d 230, 104 S. Ct. 997 (1984) (citations omitted).

 31. A court should not withhold approval simply because the benefits accrued from a settlement agreement are not what a successful plaintiff might receive in a fully-litigated case. See United States v. Trucking Employers, Inc., 182 U.S. App. D.C. 315, 561 F.2d 313, 317 (D.C. Cir. 1977). A settlement is a compromise which has been reached after the risks, expense, and delay of further litigation have been assessed. *fn4" Moore v. City of San Jose, 615 F.2d 1265, 1271 (9th Cir. 1980); Luevano, 93 F.R.D. at 86. Class counsel and the class representatives may compromise their demand for relief in order to obtain substantial and assured relief for the class. A court should defer to the judgment of experienced counsel who have competently evaluated the strength of the proof. See Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir. 1977); Flinn v. FMC Corp., 528 F.2d 1169, 1173 (4th Cir. 1975); cert. denied, 424 U.S. 967, 47 L. Ed. 2d 734, 96 S. Ct. 1462 (1976). Moreover, it must be emphasized that although a settlement agreement does not provide complete satisfaction to all those it affects, this, in and of itself, is not enough to render it "unreasonable". EEOC v. New York Times, 1995 WL 135577 at *4 (S.D.N.Y. 1995). "Unless this were the case, only in the most rare instances would a Title VII case be settled by proposed compromises which in turn would frustrate Congress's expressed preference for achieving Title VII compliance by voluntary means." Id.

 32. Courts have approved settlements to which a significantly greater percentage of the class objected than is the case here. See, e.g., Reed v. General Motors Corp., 703 F.2d 170, 174 (5th Cir. 1983) (forty percent); Cotton v. Hinton, 559 F.2d at 1333 (fifty percent); Bryan v. Pittsburgh Plate Glass Co., 494 F.2d 799, 803 (3rd Cir. 1974) (twenty percent), cert. denied, 419 U.S. 900, 42 L. Ed. 2d 146, 95 S. Ct. 184 (1974); Boyd v. Bechtel Corp., 485 F. Supp. 610, 624 (N.D. Cal. 1979) (sixteen percent); Grant v. Bethlehem Steel Corp., 823 F.2d 20 (2d Cir. 1987) (thirty six percent); see also Van Horn v. Trickey, 840 F.2d 604, 606 (8th Cir. 1988) ("a settlement may be approved over a significant percentage of objections from class members" (citation omitted)). Although the Court should not ignore the existence of objections in assessing the fairness, adequacy, and reasonableness of the Settlement Agreement, the existence or absence of objections is not per se controlling. Indeed, it has long been recognized that "'the Court [should not] make the proponents of the agreement justify each term of settlement against a hypothetical or speculative measure of what concessions might have been gained; inherent in compromise is a yielding of absolutes and an abandoning of highest hopes.'" EEOC v. New York Times, 1995 WL at *4 (quoting Milstein v. Werner, 57 F.R.D. 515, 524-25 (S.D.N.Y. 1972)).

 33. A court reviewing a class settlement should also consider whether the proposed agreement is consistent with the public interest. See United States v. City of Miami, 664 F.2d 435, 441 (5th Cir. 1981); Metropolitan Housing Dev. Corp. v. Village of Arlington Heights, 616 F.2d 1006, 1014 (7th Cir. 1980). A settlement agreement which seeks to enforce a statute must be consistent with the public objectives sought to be attained by Congress. See Patterson v. Newspaper & Mail Deliver's Union, 514 F.2d 767, 771 (2d Cir. 1975), cert. denied, 427 U.S. 911, 49 L. Ed. 2d 1203, 96 S. Ct. 3198 (1976). Such voluntary compliance through settlement will frequently contribute to the ultimate achievement of the public objectives. Settlement agreements minimize the delay, expense, psychological bitterness, and adverse publicity which frequently accompanies adjudication of both liability and remedies. See Village of Arlington Heights, 616 F.2d at 1014. Moreover, there is a strong public interest in settling this dispute so that this important agency is not required to direct resources to litigation as opposed to its law enforcement mission.

 2. Class Certification Is Proper Under ...


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