Carson v. American Brands, Inc.

606 F.2d 420, 20 Fair Empl. Prac. Cas. (BNA) 1186, 28 Fed. R. Serv. 2d 7, 1979 U.S. App. LEXIS 11805, 20 Empl. Prac. Dec. (CCH) 30,270

• Court: Court of Appeals for the Fourth Circuit
• Decided: September 14, 1979
• Docket: No. 77-2260
• Status: Published

Opinions

K. K. HALL, Circuit Judge:

Plaintiffs seek an interlocutory appeal under 28 U.S.C. § 1292(a)(1) of the district court’s refusal to enter a consent decree agreed to by the named parties in a Title VII class action.

The suit is based on claims of race discrimination and is brought against employer and union on behalf of black workers and black applicants for employment at an American Tobacco Company plant in Richmond, Virginia. The decree would grant money damages and hiring and seniority preferences to black employees and would set a goal requiring the employer to give' preference to blacks in hiring for supervisory positions until a certain number of qualified blacks were employed. The decree was negotiated by representative plaintiffs, and it provides for notice to all class members.

The named plaintiffs contend that this relief is injunctive in nature, and, because the district court refused to enter the decree, its order is immediately appealable under § 1292(a)(1) as a denial of injunctive relief. We disagree.

The district court’s order refusing entry of the decree does not deny any relief, whatever its nature. It merely requires the parties to either revise the decree or proceed with the case by trial or motions for summary judgment. The immediate consequence of the order is continuation of the litigation and, because the merits of the decree can be reviewed following final judgment, we think it is not an appealable order under § 1292(a)(1). Accordingly, we dismiss the appeal.

I.

In Flinn v. FMC Corporation, 528 F.2d 1169 (4th Cir. 1975), cert. denied, 424 U.S. 967, 96 S.Ct. 1462, 47 L.Ed.2d 734 (1976), we heard the appeal of individual class plaintiffs alleging that the district court abused its discretion by entry of a consent decree in a Title VII sex discrimination class action. There, the overwhelming majority of class members had voted to adopt the decree, and the district court entered it on the “eve of trial.” With scholarly care, Judge Russell surveyed various interests supporting entry of the decree and posited the rule that, when a district court is presented with a consent decree, it should view the merits of the decree in light favorable to its entry. That is, it should, without requiring technical perfection or legal certitude, determine whether the law and the facts of record arguably support its terms. Under this standard, he identified factors which the district court should consider in exercising its discretion. These included “the extent of discovery that has taken place, the stage of the proceedings, the want of collusion in the settlement, and the experience of counsel who may have represented plaintiffs in the negotiation.” Id. at 1173.

Plaintiffs argue that the district court erred in failing to consider the proposed decree under the liberal standards of Flinn¹ and that its refusal to enter the decree is immediately appealable. Although we think the district court should have reviewed the proposed decree under Flinn, we do not think its refusal to approve the decree is a matter properly within our jurisdiction prior to final judgment.

In Flinn, the district court’s entry of the decree terminated the action, whereas here the district court’s order refusing it has no such effect — it continues the proceedings, making our review of it an interlocutory appeal.

II.

As a general rule appeals of right from interlocutory trial court decisions are not favored. 28 U.S.C. § 1291. Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 75 S.Ct. 249, 99 L.Ed. 233 (1955); Coopers & Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 2459, 57 L.Ed.2d 351 (1978); Gardner v. Westinghouse Broadcasting Co., 437 U.S. 478, 98 S.Ct. 2451, 2453, 57 L.Ed.2d 364 (1978). They disrupt the trial process, slow the course of litigation and create unnecessary multiple appeals. A single appeal following final judgment facilitates orderly litigation and comprehensive appellate review of all issues presented, many of which are dependent upon or related to other issues in the suit. After final judgment, the fact issues have been settled in the appropriate forum, and appellate review can be dispositive of all issues in the case. See, Coopers & Lybrand v. Livesay, 98 S.Ct. at 2460-61.

In the interests of justice, appeals of right from interlocutory orders are allowed when the delay in hearing an appeal after final judgment poses some irreparable consequence, Gardner v. Westinghouse Broadcasting Co., 98 S.Ct. at 2453, or when the issue to be determined is sufficiently collateral to the ongoing litigation that no disruption of the trial process will attend early appellate review, see Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546-47, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949); Coopers & Lybrand v. Livesay, 98 S.Ct. at 2459.

Special statutory exceptions to the final judgment rule are set forth in 28 U.S.C. § 1292(a). Plaintiffs argue that characterization of the refused relief as “injunctive” is sufficient to meet the plain terms of § 1292(aXl), which reads in pertinent part,

The courts of appeals shall have jurisdiction of appeals from: (1) Interlocutory orders of the [district courts] granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions

But a mere labeling of relief is not sufficient. See City of Morgantown, W. Va. v. Royal Ins. Co., 337 U.S. 254, 258, 69 S.Ct. 1067, 93 L.Ed. 1347 (1949). Courts look to the consequence of postponing appellate review following final judgment and weigh the need for immediate appeal against the important judicial interests militating against piecemeal review. See Gardner v. Westinghouse Broadcasting Co., 98 S.Ct. at 2454; Coopers & Lybrand v. Livesay, 98 S.Ct. at 2460. This test is applied to appeals in class actions as well as to those in ordinary litigation.² Under this test, we find no appeal of right from orders refusing consent decrees at any time before final judgment.

III.

The consequence of the district court’s order is not irreparable. No right is forfeited as a result of delayed review. Here, injunctive relief was not finally denied; it was merely not granted at this stage in the proceedings. See Liberty Mutual Insurance Company v. Wetzel, 424 U.S. 737, 744-45, 96 S.Ct. 1202, 47 L.Ed.2d 435 (1976). Like the denial of a motion for summary judgment which, if granted, would include injunctive relief, the denial of this consent decree decided “only one thing — that the case should go to trial.” Switzerland Cheese Association, Inc. v. E. Horne’s Market, Inc., 385 U.S. 23, 25, 87 S.Ct. 193, 195, 17 L.Ed.2d 23 (1966).

In Gardner v. Westinghouse Broadcasting Co., 437 U.S. 478, 98 S.Ct. 2451, 57 L.Ed.2d 364 (1978), the Supreme Court held that the pretrial denial of class certification in a Title VII case was not appealable under § 1292(a)(l) as a denial of injunctive relief. In that case, which involved allegations of sex-based discrimination, the complainant sought broad injunctive relief for the class similar to the relief proposed in the decree before us. The Court reasoned that the pretrial order denying class certification was not one of irreparable consequence since it could be reviewed at any stage of the proceedings either before or after final judgment, did not affect the complainant’s personal claim for injunctive relief, and did not pass on the legal sufficiency of any claim for injunctive relief. Id. 98 S.Ct. at 2453-54 and notes 7, 8 and 9 (citing Switzerland Cheese).

IV.

The analogous consequences of a district court’s disapproval of a settlement in a class action and its refusal to grant summary judgment were considered by the Second Circuit in Seigal v. Merrick, 590 F.2d 35 (2nd Cir. 1978). The issue there was whether, in a stockholder derivative action, the court’s order refusing settlement was appealable before final judgment.

Relying upon the analysis in Coopers & Lybrand v. Livesay, 437 U.S. 463, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978), a case decided the same day as Gardner, the Seigal court discussed the judicial and private interests always present where the rights of represented and unrepresented individuals may be compromised by the court’s approval of a settlement. The court explained the purpose of requiring class action settlements to be presented to district courts under Fed.R. Civ.Proc. 23.1.

[A]n order disapproving a settlement . is based, in part, upon an assessment of the merit of the positions of the respective parties, and permits the parties to proceed with the litigation or to propose a different settlement.

A settlement in an ordinary civil litigation is normally the sole concern of the parties. In stockholder derivative actions, on the other hand, because of the vicarious representation involved, the court has a duty to perform before an action can be “settled.” . . . This approval cannot be a rubber stamp adoption of what the parties alone agree is fair and equitable.

Seigal v. Merrick, 590 F.2d at 37-38. The court pointed out that disallowing appeals of right from each refusal to enter a settlement had the practical effect of enhancing the district court’s control over the litigation.

[T]he denial of one compromise does not necessarily mean that a “sweetened” compromise may not be approved. The management of a derivative suit gives the trial judge a chance not only to disapprove a compromise but to edge the parties toward more equitable terms.

Id. at 39.

The Seigal court reasoned that a rule allowing appeals of right from orders refusing entry of settlements was unjustified. It would interrupt the litigation and thrust appellate courts indiscriminately into the trial process without appreciable benefit to class members whose interests were to be protected.

Therefore, the court concluded that such an order was not appealable before final judgment. See, Note, “Recent Developments: Appealability of District Court Orders Disapproving Proposed Settlements in Shareholder Deprivative Suits,” 32 Vand. L.R. 985, 998-1001 (1979). Contra, Norman v. McKee, 431 F.2d 769, 772-74 (9th Cir. 1970) cert. denied, ISI v. Meyers, 401 U.S. 912, 91 S.Ct. 879, 27 L.Ed.2d 811 (1971).

V.

We think this Title VII interlocutory appeal should be dismissed. Our review of this pretrial order has halted the litigation for over two years pending review of the district court’s exercise of discretion. Given this disruption and the difficult burden on appeal of demonstrating an abuse of discretion, plaintiffs have identified no consequence requiring appellate review before final judgment. We perceive none. Instead, we think our review is best left to follow final judgment.

Under the Flinn analysis, the named parties may present a proposed decree to the district court in any form and at any stage in the proceedings. If one decree is refused another may be proposed. At any time the district court can reconsider its refusal to enter a decree. See Cohen v. Beneficial Industrial Loan Corporation, 337 U.S. at 547, 69 S.Ct. 1221.

When a district court objects to the terms of a decree, alternative provisions can be presented, and perhaps a disapproved decree may be entered with further development of the record. If the district court refuses a decree because it is presented too early in the litigation, it may be later approved, perhaps following a decisive vote by class members. Whatever the district court’s reasons for refusing a decree, appeals of right from those refusals would encourage an endless string of appeals and destroy the district court’s supervision of the action as contemplated by Fed.R.Civ. Proc. 23(e).

A rule allowing review after final judgment, on the other hand, facilitates the district court’s supervision of the litigation and enhances appellate review. The district court’s consideration and reconsideration of various proposed decrees — in whatever form and whenever presented during the litigation — can be reviewed effectively after final judgment. A single appellate review of all alternative proposals would be dispositive of the Flinn issue.³ Also, after final judgment, important legal questions would rest on a firm factual setting with the parties arguing the importance of the law and facts as they appeared when the decree was proposed. Where alternative or revised decrees have been presented, the parties could advocate on appeal the alternative most favorable to their positions in light of the law and facts appearing when it was presented. Such argument is vital when appellate courts must authoritatively opine about important unsettled legal issues of the highest social concern in the amorphous context of reviewing a trial court's exercise of discretion.⁴ In all, we think the admonition of Judge Clark is apt,

A district judge’s orders advancing a ease to trial ought not to be critically examined and re-examined by the cumbersome method of appeal before he has approached the stage of adjudication. * * * I believe this an intolerable burden for us, an improper and uncertain interference with trial court discretion, and a confusing invitation to indiscriminate appeals in the future — all contrary to settled federal law against piecemeal appeals.

Peter Pan Fabrics, Inc. v. Dixon Textile Gorp., 280 F.2d 800, 805-06 (2nd Cir. 1960). (Judge Clark dissenting).

VI.

In conclusion, the district court’s discretionary decision to send the parties to trial, in lieu of granting immediate injunctive relief before the facts are settled, is not a ruling of irreparable consequence. Plaintiffs may proceed to trial with no loss of either their claims for final injunctive relief or their right of appellate review of the Flinn issue. Short of going to trial, the parties may propose alternative decrees to the district court, one of which may be entered. Appellate review of the order is best effected following final judgment. Such review preserves the trial court’s exclusive control over the progress of the litigation and facilitates its supervision of the class action.

Therefore, we hold that the district court’s order refusing entry of the proposed consent decree is not appealable, and, accordingly, the appeal is dismissed.

APPEAL DISMISSED.

1 . Counsel in this case failed to cite Flinn to the district court in their three separate memoranda of law filed in support of the proposed decree and failed to move the court following its order to reconsider in light of that case. Instead, they immediately brought this appeal.

2 . As the Court noted in Coopers & Lybrand v. Livesay, 98 S.Ct. at 2459:

There are special rules relating to class actions and, to that extent, they are a special kind of litigation. Those rules do not, however, contain any unique provisions governing appeals. The appealability of any order entered in a class action is determined by the same standards that govern appealability in other types of litigation.

3 . For all our consideration of the merits of this decree, if we allowed the appeal our decision would not be dispositive. See Coopers & Lybrand v. Livesay, 98 S.Ct. at 2460-61; Seigal v. Merrick, 590 F.2d at 39. The ultimate composition of the decree would remain an open matter pending response by individual class members to the class notice. Although the named parties are bound to the terms of the decree as proposed, in fairness to class members, we think our approval of it would have to be conditioned upon acceptance of its terms by at least a majority of the members.

4 . As noted by the Supreme Court in Coopers & Lybrand v. Livesay, 98 S.Ct. at 2461, Congress wisely provided in § 1292(b) for appellate review of important legal issues before final judgment only as a matter of discretion by the courts involved. Such review is allowed with approval of both the district court and the court of appeals.