*1 SIMER, al., et Elsie
Plaintiffs-Appellants, RIOS, Acting Director of
Richard J. Com- Administration;
munity Com- Services Administration,
munity Services Defend-
ants-Appellees.
No. 80-2544. Appeals,
United States Court Circuit.
Seventh
Argued Feb.
Decided Oct. *2 Block, 111., Chicago,
Jack L. plaintiffs- appellants. Wimbush, Washington, D.C.,
Lawrence amicus curiae. Koslowe, Div., Dept, H. Neil Counsel Civ. *3 Justice, D.C., Washington, for defend- ants-appellees. SWYGERT, Judge,
Before Circuit Senior WOOD, Judges. and PELL and Circuit Jr., WOOD, HARLINGTON Circuit Judge. many concerning
This case raises issues legality vacating and eventual of a set- agreement tlement entered into Community Services Ad- (CSA). ministration I. September was initiated on
Suit Gray by eight individuals and Panthers of non-profit Chicago, unincorporated or- ganization, complaint as a class action. against alleged several claims CSA for its of the Intervention administration Crisis Program (CIP). program was a funded under
CIP Emergency Energy Conservation Services 2809(a)(5), (EECSP), Program § U.S.C. designed “to enable low income and was families, including the el individuals and derly participate energy con ... programs designed to lessen servation energy . impact high cost of .. and energy consumption.” . . . Id.1 to reduce program provided cash aspect of this One quali utility fuel bills to assistance for regulations pertinent fied individuals.2 The pro- energy part conservation and education of the 1975 amend- was created as CSA grams; Opportunity substandard winterization of old or Act of ments to the Economic conditioning, dwellings, improved space operate and was to as the successor insulation; loans, emergency grants, Opportunity. and re- Pub.L.No. Office of Economic volving energy 93-644, (codified 9(a), conservation funds to install 88 Stat. 2291 § technologies increased hous- and to deal with U.S.C. § crises; energy ing expenses relating to the special supplies, fuel voucher alternative fuel energy programs assistance funded Other transporta- stamp programs; alternative by EESCP were: grant adopted by hearing conditioned At a CSA held on the motions for payments upon production assistance summary judgment, the district court indi- utility company.3 notice from a shut-off plaintiffs. cated that it would rule for alleged complaint regu Plaintiffs’ this regard to defendant’s contention that provided EECSP which lation violated requirement shut-off notice was consistent any “[eligibility programs autho emphasis “crisis” of the statute the this section shall not rized under be based court stated: solely delinquency payment of fuel I do language not find the about crisis in 2809(a)(5). § bills.” 42 U.S.C. statute. In Section 2809 of Title 42 days filing of the com Within Paragraph it talks the Energy about plaint, plaintiffs moved in the district court Conservation It Service. talks about temporary restraining for a order and a elderly poor. and the near It talks about injunction preliminary enjoin which would *4 lessening impact high cost of ener- returning unspent CSA from funds from gy on such individuals and families. program the 1979 to the United States words, speak other it does not terms of Treasury.4 The district court entered a speaks helping poor crisis. It in terms of restraining temporary order which directed poor people. and near money unspent to return the CSA 4, Hearing 1980, App. of Jan. at 193.6 Treasury until further court order. After the district court indicated that it Thereafter, parties both moved for sum would be inclined to rule on mary plaintiffs contending judgment, validity regulation, issue of the regulation plain violated the letter of counsel for CSA indicated that settlement response, argued the statute. CSA might appropriate. discussions be The dis- only assistance was to offered in cases of agreed trict court and continued to hold the emergency crisis or regulation and that summary judgment motions for reasonable means to ensure that under ad- “crisis” did exist.5 visement. designed porary restraining Septem- tion activities to save fuel and as- order was held education, training, 26, sure Originally, designated continued access ber CSA had employment; appropriate and ef- May outreach 1979 as the termination date of the CIP forts; furnishing personnel to act as coordi- program. This was extended June nators, providing legal or assist- technical litigation against in settlement of other CSA. ance, representing or otherwise the interests 45 C.F.R. 1061.52-4. CSA funds were to be poor relating energy in efforts to the Treasury returned to the United States as of nutrition, crisis; health, supportive and other September 1979—the close the fiscal cases; emergency services and evaluation year. programs para- and activities under this graph. emphasis regula- 5. This on crisis is evident in 2809(a)(5). § 42 U.S.C. promulgated by tions CSA. CSA’s statement originally The EECSP was included policy provides: Opportuni- 1975 amendments to the Economic Program CSA’s FY79 Crisis Intervention ty Act, Opportunity Act. Economic Pub.L.No. pro- not intended to be an income transfer 93-644, 5(d)(1), (then 88 Stat. 2294 § codified gram; any person nor does entitle 2809(a)(12)). U.S.C. § In 1978 EECSP household to a certain amount and/or form presently was amended and codified as it reads. Rather, 95-568, primary (d), 5(a)(2)(E), of assistance. intent § Pub.L.No. 92 Stat. 2426, 2427, 2439, program (codified grantees is to make available to as 42 U.S.C. 2809(a)(5)). respond § funds which will enable them energy endanger winter-related crises which 1061.52-3(c) provided: 3. 45 C.F.R. the health and survival of low-income house- [P]ayment outstanding regulated bills of holds .... utilities allowable in those areas 45 C.F.R. 1061.52-2. legally prohibited where are shutoffs applicant pro- where the for assistance can transcripts 6. All references to the or documents duce a notice to disconnect. Appendix will of record Plaintiffs-Appellants. to Brief of complaint September 24,
4. The was filed on hearing 1979 and the on the motion for a tem- parties appeared approve next in court on the court agreement. par- April 1980 with a settlement ties informed the district court prior hearing congression- settlement was consistent with to the district court. At the proper al intent and was a the district court accommodation discussed conflicting of the various interests at stake. problem statutory of relief for the vio- agreed The district court with this charac- lation. Several alternatives were discussed signed terization of the settlement and varying opposition to each alternative entered the consent decree. At no time at possibility stated One was that CSA. hearing this was the issue of class certifica- program reopened the 1979 would be tion or notice putative class members remaining that the funds would be adminis- discussed or alluded to. Nor was settle- through program. tered and disbursed upon ment conditioned class certification or objected to this because a new more CSA putative being judg- bound program presently extensive for 1980 was ment. functioning substantially and was different Therefore, August On program. reopen- from the 1979 1980 an article entitled “A appeared Sweetheart a Lawsuit” ing program be, in the the 1979 Wall Street Journal. The high- article was CSA, night- words of an “administrative ly critical of the settlement in this case and Hearing App. mare.” of Jan. indicated that it result of collusion 186-87. between CSA counsel. Ac- A second alternative considered at article, cording to the CSA entered into the hearing reprogram was to the funds from *5 settlement funding many because for CSA program the program. into the 1980 projects probably would be terminated. major proposal, The flaw with this accord- The settlement’s distribution of the funds ing parties, to the was that it would not allowed “pet CSA to continue to fund these provide greatest relief for those who projects.” program. were to benefit from the Approximately pub- one month after the eventually agreed The settlement by to lication of the article in the Wall Street parties presented a third alternative— Journal, Paul Senator Laxalt sent a letter funding programs which would acceler Rios, acting to defendant Richard J. di- long range energy prob ate solutions to the rector of the CSA. Senator Laxalt stated elderly.7 programs lems for the The funded by reports that he was “disturbed that our 1) by the settlement included: a four mil adversary system justice may have been hypothermia program; 2) lion dollar four compromised by the settlement in the case.” emergency energy million dollars for con requested accounting Senator Laxalt kits; 3) servation a two million dollar solar spent unspent pursuant monies program; 4) ization six and one-half million “[ujntil settlement and that such time as groups dollars to local advocacy to fund accounting the . . . has been delivered to programs represent the interests of ener me, it, and I have a chance to review I consumers; gy 5) one million dollars for an request that no additional funds be dis- “Emergency Preparedness/Impact Assess Community bursed Admin- Services 6) $300,000 program; ment” to fund a App. copy istration.” at 278. A Energy Project; 7) $350,000 Small Farm Judge Grady, letter also was sent to personnel hire to administer and monitor all judge signed district court who the settle- programs. of the above In addition to the ment decree. funding programs, of these each of the September On 1980 the district court eight plaintiffs named individual received a order, sponte, calling issued an sua for a payment cash of $250.00. order, status conference in the case. The parties presented apparently settlement referring to contacts Senator media, the district court and recommended that Laxalt and discussions in the stated: exactly why program reprogramming It clear this alternative benefit from the than directly program. would more aid those who were to the funds into the 1980 ques- attention It has come our At status conference of October been raised as to whether tions have pursued the district court several lines Agreed “Stipulation Order” regarding inquiry ap the settlement may provide funding . .. for the case proved April 25,1980. First, the district Congress programs which did not intend queried court whether the disbursement of to be funded this manner. pursuant the funds to the settlement order App. at 93. congressional was consistent with intent. Second, set The order the status conference for discussed 1980. On October October previously issue and action intimated that “motion to intervene motion for relief had concluded that class certification was by: from the was filed Fred order” P. properly denied.9 The district court denied putative class, Meagher, a member the motion to requested intervene and Laxalt, Hatch, Senators Paul Orrin and Ed memoranda filed on whether or not the Zorinsky, Capital Legal ward and the Foun settlement order should be vacated. (Capital).8 sought dation The motion On October 1980 the district court approving vacate the order settlement Opinion” issued “Memorandum which va pursu any spending and to restrain further April 25, approving cated order of ant settlement. Furthermore, opin settlement. grounds The above motion stated several ion, the court denied the motion for class vacating intervention and the settle- certification and held the claims or significantly, ment. Most the intervenors ganizational plaintiffs, Panthers, Gray non contended settlement violated justiciable. The court concluded that since proper procedure class action under Rule eight individual had received 23(e) failing give putative class mem- their relief and the class action had been opportunity bers notice and an to be heard. denied, controversy no argued there was case or intervenors also the settle- ment was best before the court and interests ordered the case dis prejudice.10 members or CSA. missed with *6 Capital 8. The motion characterized as “tax- 9. The issue class certification had been dis- exempt, non-profit public interest law in cussed the context of the various alternative ” App. grounds . . . firm. at 269. As for inter- settlement structures. Capital alleged vention that the settlement dis- legal organizations tributed funds to assistance appears ambiguity 10. There be some as to Capital and was excluded the considera- whether this order dismissed the claims of all alleged tion this distribution. The Senators plaintiffs Gray individuals as well as Pan- —the they seeing had an in interest that funds merely thers —or dismissed the individual congressional were distributed consistent with claims. The order states that “This cause is protecting intent and an interest their votes plaintiffs, dismissed as to the individual with congressmen. prejudice, subject inasmuch as the matter be- plain- Laxalt, tween the September 16, defendants the individual Senator in his letter However, App. Rios, tiffs has at been settled.” 149. 1980 to Administrator directed Rios to part in another of the order the district ap- disburse no more CSA funds. The order proving stated: April the settlement was entered on Thus, ordering 1980. Senator Laxalt’s letter organizational plaintiff, Gray Pan- apparently Rios not to disburse funds is Chicago position thers stood in no better obligation conflict with Rios’ under court order. purportedly repre- than the class members it We cannot conceive that Senator Laxalt was sented. Had those members been identified ordering disobey they named; Rios to a valid order entered should have been there was no by a United States District Court and have they Rios indication that were too numerous to be contempt. risk a joined Or, alternative, citation of We can as- as individuals. in they sume that join, Senator Laxalt either was unaware if were too numerous then the practical of the court order or believed it not to be in same applied obstacles to class certification appears reading any possible effect. This a fair to them as to other events since Senator Laxalt filed a motion to members. Thus, proper App. appears intervene legal procedure and motion to vacate —the it that the district challenging Gray for an order of a court also dismissed claim of standing. United States District Court. Panthers lack of This conclusion Opinion” prised the The “Memorandum offered sev- district court of both the facts the law vacating and therefore there was rationale for the order of no eral misrepresentation or fraud on the Primarily, the court rea- court. April agrees The Government po misrepresented parties had soned that misrepresentation sition on the issues of prior hearings the facts and the law in However, and fraud on the court. alleged misrepresenta- the settlement. The argues judgment Government that the was funding pro- whether the tions concerned properly grant vacated as “it void because grams provided for in the settlement was giving putative ed class-wide relief without congressional intent consistent with opportunity class members notice and an parties informed the district whether be heard.”12 money prior court that absent its order the Treasury. would revert to the United States agree judgment We that the cannot misrepre be vacated reason of fraud or filed a On October sentation. An examination of the record expedited appeal requested notice of parties leads us to the conclusion that the briefing hearing on the case. lat sufficiently forthright with the dis granted. appeal many ter motions were On legal trict court on both the factual and presented for review issues are point issues the case. The district court parties as well as those filed briefs separate ed to two matters on which it was However, primary amicus curiae.11 is misled—whether it was informed that with proper appeal procedure sues on are the September out its order of 1979 the settling utilized for class actions which money would have reverted to the United have not been certified and whether this Treasury States and whether the case should have been certified as a class congressional misled on the issue of in action. proceed tent. We allega to discuss these misrepresentation tions of and fraud. II. court, The district in its October A. order, concluded that: that, No one informed me without the The initial issue which must be decided is April order million $18 properly [of 1979] whether the district court acted go would have to back to the United 60(b) scope vacating within the of Rule Treasury. States No one alerted me to judgment approving the settlement de- possibility projects various cree. The district court held that there might described in the order not have separate grounds vacating were two contemplation been within the of Con- void, judgment judgment was Fed.R. —the gress money appro- at the time the 60(b)(4), judgment Civ.P. and the *7 priated. by misrepresentation obtained or fraud on court, 60(b)(3). appeal, App. the Fed.R.Civ.P. On contrary at 145. This statement is plaintiffs parties fully ap- by contend the that statements made to the district court Community Program, is further buttressed the fact that counsel Action Milwaukee Com- Gray plaintiffs munity Development for Panthers and the individual Relations/Social Commis- Gray sion, Community have the Panthers’ briefed issue Rural Alaska Action Pro- standing. Plaintiffs-Appellants gram, Employment, See Brief of at Training Committee on 56-57; Reply Plaintiffs-Appellants Inc., Brief of at Development Corp. Human of Metro St. Gray Louis, 26-28. Nor have counsel for Panthers Community County Franklin Action informed the court that the October Corp., Saratoga County Community Action Gray order did not dismiss the Panthers’ claim. Agency, Appropriate and National Center for Technology. supporting plain- 11. Briefs of the amicus curiae supporting Briefs amicus curiae defendants’ position by: tiffs’ have been filed The National position Legal were filed Mid-America Foun- Citizens, Inc., of Senior The Illinois Council Capital Legal Foundation. dation and Organizations, State of Senior Council Citizens Senate, Chicago Metropolitan The Senior Defendants-Appellees at 12. Brief for the 30. Action; Schenectady Metro Seniors in papers presented plaintiffs parties for in counsel misled the district court on the issue temporary restraining their motion for of authority whether its the order was sole support order and thereo memorandum money preventing for reverting the f.13 Plaintiffs’ “Notice of Motion” states Treasury.15 the that: The district court also concluded plaintiffs] appear shall be- for [Counsel parties that the misled it on the issue of Judge Grady fore the . . . and Honorable expenditures whether the in the settlement plaintiffs . . shall . file the motion of agreement were congres consistent with returning restrain the defendants from Specifically, sional intent. the district any unobligated funds the 1979 Crisis parties court believed failed Program to Intervention the U.S. Trea- expenditure inform it that the funds pending sury . . further Court order. . App. for to be crisis situations. at 149. (emphasis added).14 App. at Again, not conclusion fraud is support Plaintiffs’ memorandum in supported by the record. The issue con- motion states that “This motion seeks a gressional funding only intent and whether preventing any court order return was to be for crisis situations was suffi- Treasury currently of the funds ciently explored by the dis- pending dispute App. court order.” at 51. prior trict court to settlement. At exigency situation is made even 4, 1980, hearing January held on when the explicit more in the text of their memoran- summary judgment motions for on va- arguing temporary dum. that a re- lidity regulation being dis- straining necessary order was because of cussed, congressional the issue of intent irreparable harm would be suf- explored. relief, absent fered such stated: MR. DOCKTERMAN for [counsel CSA]: If CSA is not restrained from re- your If bill is not due until next month turning funds, unobligated portion you then have no immediate crisis. $200,000,000 appropriation CIP COURT: The statute THE does obligated by that date will be returned to say crisis, anything about an immediate Treasury. the United States Should the you talking does it? In the sense that are subsequently determine that about, it people talks about who are hav- administered, has unlawfully CIP been ing difficulty providing themselves with the balance of the CIP funds will no things these various that are longer be covered obligation available for be- program. eligible applicants. half of App. App. light at 52-53. 186. reply these statements Defendants’ memoran- we record do not believe dum on the motion summary judgment App. at 50-51. In its order of October question separa- court stated “a serious Technically, the motion does not powers state that appears tion of App. to me to be involved.” the district court order would sole au- thought at 148. The court that its order thority preventing money from revert- April through 25 and eventual distribution ing Treasury. However, isit fair to infer prevented the settlement which the reversion danger had there been no of the reversion judicial legisla- was a “substitution of fiat for way prevent it, plaintiffs or another App. tive action.” at 148. This statement applying temporary not have been for a re- Congress already ap- not correct because had *8 straining order in the district court. propriated money by spent The CSA. preventing order of the district court reversion prior 15. One final factor should be noted. In a light potential recovery litigation in CSA, brought against Grieg Olivarez, action v. fully authority. was within the 31 court’s See (N.D.Ill.1978), Judge pre Grady No. 78-C-1646 665(b); Regional § U.S.C. Ass’n of National by entering a vented similar reversion a re Costle, 583, (D.C. Councils v. 564 F.2d 588 Cir. straining Judge order. This indicates that Gra 1977). dy, through prior experience, was somewhat problem reverting familiar with the of funds Treasury.
663 presses the “crisis” contention and also B. range pro- of CSA-funded
notes the broad reject While we the district court’s con- grams. misrepresentation clusion that fraud or addressing energy pro- all Congress was proper vacating a basis for the settlement segment grams, just particu- of a one order, conclude, grounds, we do on other program lar .... Since CIP was not that the settlement decree should have been designed fuel solely pay utility vacated as void. bills, range a wide provide but to of ener- assistance, gy applicants without fuel entry Mere error in judg a eligible. Any bills could nevertheless judgment ment does not render a void for applicant payment in crisis because purposes 60(b)(4).17 of Rule County Chicot eligible such bills was for assistance. Drainage Bank, District v. Baxter State 308 371, 374-78, 317, 318-20,
U.S.
60
84
S.Ct.
(1940).
L.Ed. 329
where an
But
error of
Congress had directed CSA to limit its
occurs,
constitutional
judgment
dimension
programs
only in a
for use
“clear and
may be vacated as
One such
void.
constitu
emergency.”
energy
demonstrated
concluding
tional error for
that a judgment
App. at 265.16
purposes
60(b)(4)
void for
Rule
is if the
Therefore,
stages
pro-
at several
in the
judgment was
entered
violation of due
ceedings
informed
process.18
congressional
court on the issue
intent
below,
greater detail,
As is discussed
and whether disbursements
CSA could
entry of the settlement decree without no-
only
be made
for crisis situations. Al-
putative
tice to
though
members violated the
appear
it does
that there
have
process rights
due
misunderstanding
been
some
members.
between
Entry
decree,
Judge Grady
about the
settlement
while not
and counsel
settle-
individuals,
binding
implication,
ment
we
on absent
and its
conclude that
nonetheless
prejudice
rights
there was an
basis to
did
of these
insufficient
vacate the
individuals.
Therefore,
judgment
misrepresentation
process,
as a
of due
fraud on
matter
no-
required
the court.
tice was
protect
rights.
their
16. CSA’s
that assistance
be available
position,
that
Specifically,
contended
the district
situations,
in “crisis”
judgment
only
on a
predicated
court could not vacate
sua
sponte
Senate Committee
on Appropriations
report
nor
intervenors,
could the
in
non-parties,
funding
recommended
the 1978 CIP
60(b).
voke Rule
We see no reason to decide
program.
stated
report
Committee
whether
could
intervenors
invoke Rule
contingen-
million “be used
$200
60(b). Rather, we
conclude
the district
basis when
a clear and
cy
there is
demonstrat-
vacating
court acted
its
within
fully
power
energy emergency.”
ed
95th
S.Rep.No.95-564,
judgment.
International Controls
v.
Corp.
Cong.,
(1977).
1st Sess. 40
(2d
1977),
Vesco, 556 F.2d
n.2
665, 668
Cir.
judgment
Because we determine
denied,
1014,
cert.
98
S.Ct.
should have
for a
been vacated
different
rea-
(1978);
L.Ed.2d 758
United States v. Jacobs,
give
son —that
is, failure to
notice—
adequate
(4th
1961) (court
298 F.2d
Cir.
has
funding
we need not
decide whether
judgment
sponte).
to vacate
sua
power
congressional
settlement was consistent
distinguishable
cases cited to us
amicus are
intent nor
an error
whether
such
would require
(10th
Baird,
Dow v.
884-85
F.2d
Cir.
judgment
60(b).
under
be vacated
Rule
1968);
Virgin
Government
Islands
v. Mas
60(b)(4).
(3d
17. Fed.R.Civ.P.
sac, 277
F.2d
663-64
Cir.
Dow and
court
Massac the district
offered no
18. V.T.A.,
Airco, Inc.,
Inc. v.
utilizing
reason for
its
un
adequate
power
1979);
Hoagland,
Bass
F.2d
59(d). Also,
der
in Dow the
Fed.R.Civ.P.
(5th Cir.),
denied,
Because this A. judgment be vacated as void. must Sertic Plaintiffs first contend that notice was Lake, etc., Carpenters Cuyahoga v. District required 23(e) not under Rule because the Council, 1972); applies only rule of a settlement certified Inc., Freight Sagers Systems, v. Yellow plaintiff class action. the alternative (N.D.Ga.1975). F.R.D. although may contends that notice re- be
quired in some instances in a class action
III.
certified,
which has not been
this is not such
a case.
complaint
September
their
filed on
plaintiffs requested
the
be
case
23(e) provides:
Fed.R.Civ.P.
certified as
class action. The class was
or Compromise.
Dismissal
A class action
described as:
compromised
shall
be
dismissed or
persons
eligible
all low income
otherwise
approval
court,
without
the
participation
CIP who
in
proposed
notice of
dismissal or com-
CIP
were denied 1979
assistance
promise
given
shall be
all
members of
discouraged
federal defendants or
from
in
such manner as the court
applying
they
for assistance because
were
directs.
delinquent
payment
in
of their
purposes
23(e)
served
Rule
fuel bills for 1979.
are most evident
case where a class
App. at 2.
has been certified
case is settled or
The case never was certified as a class
Most importantly,
dismissed.
the settle
hearing
action. At
initial
on the mo-
ment or dismissal
case will
res
be
summary judgment
tions
the district
judicata
as
claims
the individual class
court indicated that the
en-
Hansberry
Lee,
members.
v.
311 U.S.
judgment
step
titled to
and that the “next
42-43,
115, 118,
(1940)
61 S.Ct.
665
tlement
can be
that the absolute notice
of the class action could affect
made
ment
23(e)
apply.
ways
Rule
should not
requirement
putative
class in several
settle-
—the
However,
early
reject
most
decisions
may
ment
seek to achieve structural
relief
putative
that a
putative
contention and held
may
ed this
agree
class members
with;
action must be assumed to be a class
class
if the relief
in the form
of both
23(e)
therefore notice
under Rule
relief,
action
compensatory
structural and
trade-
required.
v. Waterloo Com
Wallican
expense
putative
offs at
class
munity
District,
(N.D.
occur;
ment was to distribute Having concluded that notice to absent lar fund of CIP funds in manner putative required class members was contrary puta been to the interests have properly therefore that the settlement was prejudice tive class members. vacated, plaintiffs urge us to remand several lev absent individuals evident at case for a determination of class certifi- Assuming that els. the absent individuals court, its cation. The district order of *12 spent that be would have chosen the funds 30, 1980, October concluded that the case providing programs rather than individu properly could not as a maintained class damage guar is payments, alized there no action. Plaintiffs contend the district they to seek antee that would decide the substantively court’s conclusion erroneous eventually agreed relief procedure mix structural by and furthermore the used upon. importantly, repre dispose class to More the the district court of the issue was (and counsel) discussing their to erroneous. Before these sentatives had decide conten- procedural tions we set forth the spend They history funds. how the decided that class action issue. money the having programs the fund rather attempting long than the and laborious task A class claim was included in identifying class members and determin original 18, complaint. On October 1979 ing the form relief was a alterna better plaintiffs filed a motion for class certifica- tive. But it cannot be that some doubted tion which taken under advisement. might preferred have individuals receive 4, January the hearing At 1980 the district monetary payment pro the the rather than plain- that it court indicated would rule for By gram funding.21 identifying notify validity on tiffs the issue of the of the individuals, ing given they the this regulation step and that the next was to choice; unfairly preju and failure do so However, certify a nego- class. settlement rights diced their in the matter. tiations followed and the issue did class again arise until the district court sua opportunity Notice to be sponte called for status conference on procedural heard are the touchstones of due whether to vacate the settlement decree. process. entry We conclude that of the expressed At this time the court concerns settlement without notice the violated due manageability the about of a class action in process rights putative Finally, absent class vacating case. its order members.22 settlement decree the court denied class legal 21. See Motion to Intervene filed distributed to all services in the putative attorneys Meagher. class member Fred United States. Plaintiffs contend the individual absent We are not convinced notice this prejudiced class members were putative the best practicable notice under circum- the settlement because under remedy stances. Eisen v. Carlisle & 417 U.S. Jacquelin, 1346(a)(2). Tucker Act remained. 28 § U.S.C. 2140, 94 40 732 S.Ct. L.Ed.2d disagree. relegate We To to an un- plaintiffs None of the were sent publications directly certain under the Act remedy Tucker overlooks objecting class members but rath- potential judgment effect of the on practical plain- organizations er aided elderly. rights. tiffs’ While this indirect have process informed individuals, some an effort to select publication argue 22. Plaintiffs if notice was necessary, in more read would have widely periodicals there was sufficient notice publication been a better at notice. attempt mandate Due comply Process the notice sent out notified in- Finally, only Clause of the Fifth Amendment. Specifically, terested of the of the settle- individuals terms plaintiffs publication settlement point individuals ment and in no informed way Legal terms May-June issue of Services right right their or the to intervene action News; 1980 issue of Corporation May damages sue for an individual basis. Washington NSCLC dis- Weekly, publication Therefore, the notice was in notify- inadequate organizations tributed to senior citizens’ ing absent class members of possible putative legal August projects; services and the 1980 prejudice to their individual claims. Clearinghouse Review, issue of publication
certification, (1981) (citing again emphasizing Susman man- L.Ed.2d ageability problems. v. Corp., Lincoln American (7th Negley, Adashunas v. 1977)); Cir. Initially note we that our re (7th 1980).23 F.2d Cir. of the court’s denial of view district class is limited. We can reverse certification parties, as did the district if determination court’s court, concept “manageabili focus on the denying certification was an decision abuse ty” of a class action and issue whether Patterson General Motors discretion. Corporation, plaintiff’s of each individual state of mind F.2d Cir. denied, cert. 1980), 451 U.S. makes action unmanageable.24 S.Ct. (3d 1979); An aff’d, initial matter for consideration wheth- F.2d 32 3B Moore’s er the dismissal claims j| of the individual Federal Practice at 23-322. Further- 23.45[1] the case although renders moot. Recent- more, did plaintiffs’ complaint request held that injunctive ly, Court “an action Supreme note declaratory relief, as we brought on behalf class does of a not become below, the declaration as to the invalidity *13 moot of the named upon expiration plaintiff’s regulation judgment awarding and a relief though substantive claim, even class certifica- members of class are two completely sepa- tion has been denied.” United States Parole legal rate issues. The latter on depends proof Geraghty, Comm’n v. 445 388, 404, 100 regula- of whether the existence of the invalid S.Ct. 479 1202, 1212, Thus, 63 L.Ed.2d discouraged applying tion class members from jurisdiction we have to review the district for the assistance. Plaintiffs requested actually court’s denial of class certification. that the class members be in compensated some form for these lost specifically, benefits — Although the district court did not attempt through funding decree or of consent pro- categorize category 23(b) of Rule this grams. class action fell its reference under, to the con- argument (b)(1)(A) We do note an for certifi- manageability cept a implies determination cation not raised There is line plaintiffs. 23(b)(3) that this was a class action. Fed.R. holds authority that that where plaintiffs 23(b)(3)(D) (court Civ.P. must consider “diffi- seek fund, distribution from a limited money manage- culties in likely be encountered (b)(1)(A) class certification under is appropri- action.”) ment of a class At one point plain- ate. Cass Inc. v. Northwestern Pub. Clay, 23(b)(2) tiffs contend that is a this class be- (E.D.S.D.1974); Co., Serv. 37 F.R.D. Her- requesting cause their was framed as complaint nandez v. Motor Vessel Skyward, injunctive mandamus, and declaratory, relief. (S.D.Fla.1973). F.R.D. 561 n.8 Illustrative *; Brief at 68 and note Plaintiffs-Appellants are the facts in Cass Clay. Plaintiffs sued manageability and that is not a proper consid- overcharges defendant for rate utility company (b)(2) eration in a class determination. For the customers. The court utility concluded that following reject reasons we conten- sought because distribution plaintiffs from tions. single fund would there be a risk of inconsist- First, it is not at all clear that in problems adjudications ent which would incom- establish managing a class are not action relevant in standards of conduct patible for defendant— certifying (b)(1) (b)(2) class actions. Some that is, distribution Therefore, multiple plans. arise in problems which all of the subdi- the court concluded that under certification 23(b) visions of Rule are common to all forms (b)(1)(A) was We that conclude appropriate. identifying of class cost class, of no- action — this line of cases is to the inapplicable present tice of settlement, and administrative burdens fact case situation. This is a limited fund case litigation. managing on in This is because that these way plaintiffs true especially because of Rule 23 purpose structuring have the settlement pursued disposing to allow an efficient mechanism for —had putative class members been been notified and of multiple claims. Developments, at supra, able to decide the course proper of action j| 1322; 3B Moore’s Federal Practice 23.02[1], (3d fund 1980). would not have been detri- depleted 23-35 at ed. ment of absent class members. cases Also, Second, the record before us indicates that such as Clay Cass which follow the “limited if case, would have certifiable, to be certi- 23(b)(3). fund” are not analysis necessarily only way fied under Rule While plaintiffs at- analyzing these cases. Courts have their also tempt characterize as one complaint damages injunctive held that the mere fact would declaratory relief, it is clear the final have to be to some form of the relief obtained paid be Class others in a monetary subsequent nature. un- action does not place certification (b)(2) (b)(1)(A) category. der is not the case in where the Crasto v. appropriate relief (or obtained) (S.D.N.Y. Kaskel, in this Estate of requested case F.R.D. monetary 1974); (dic- nature. Son, Inc., Hernandez, Al Barnett & Outboard F.R.D. 561 n.8 (D.Del.1974), tum). Furthermore, Marine Corp., 64 F.R.D. of individual presence problem of mind” another agree identifying We issue of “state the class— manage does theory complaint make this case difficult to as a was that state However, class action. we also conclude law chilled residents in the exercise their other rights. the class action fails for reasons. first amendment It could concluded that all state residents were
A.
“chilled” in
such manner and therefore
there was no
toway
identify
It is
action to
those individu-
axiomatic
for a class
als
policies.
affected
defendant’s
“class”
De
See
certified a
must exist.
Bre-
Chaffee,
Short,
F.Supp.
(class
also
(5th
at 448
de-
maecker v.
433 F.2d
Cir.
Practice,
persons
scribed as all
1970);
working to end race
3B Moore’s Federal
H23.-
(3d
encouraging
discrimination and
blacks to
23-111
ed.
04[1]
rights
vague
exercise
too
present
problems
held
because de-
case serious
existed in
mind);
pends
each individual’s
defining
identifying
members
state of
above,
Lynch, Pierce,
cf. Simon v. Merrill
complaint
the class.
noted
Fenner
As
Smith, Inc.,
class as
eligi-
defined the
those individuals
1973) (differences in misrepresentations
ble for
were
al-
CIP assistance but who
denied
leged
degrees
as well
who
reliance thereon
discouraged
assistance or
inappropriate).
made class suit
applying because of the existence of the
regulation promulgated by
invalid
CSA.
Problems
De
similar
those in
Bre
maecker exist in the
case.
first
recognized
difficulty
Cases have
problem
identify
is to
those individuals who
identifying
member
class members whose
qualify
assistance.
ship
depends
CIP
This
no
the class
on each individu
*14
Bremaecker,
or
easy
inexpensive
al’s
mind.
means is an
state of
De
433
task. Cf.
734;
Johnson,
Ihrke v.
Company,
F.2d at
Chaffee v.
229
Northern States Power
445,
(S.D.Miss.1964),
566,
F.Supp.
(8th Cir.),
aff’d on 459 F.2d
vacated
moot,
815,
grounds,
1965),
66,
other
Identification serves at discussed the purposes in the two context of least obvious members: First, it alerts court and certification. hearing, open As discussed at that process that such a parties to the burdens ing program lot of —there way the court might entail. can problems with fact— that. One was the simply the class device decide whether problem identifying one the deter way trying an inefficient year mining eligibility people of those one parties as well as for its lawsuit —for later who had been denied assistance or Second, congested identifying own docket. discouraged complying from [sic].26 actually that those insures harmed point during hearing, At another wrongful will be by defendants’ conduct examined, detail, greater district court eventually provided. recipients relief problems identifying the class: decided, was well aware correctly, The district court of We I think identifying action, problems in the class. At the was not a class I am not January hearing reopen on inclined that issue at this time. practical identifying court stated: difficulties of persons might who entitled going are we to find out How . . . money argue strongly seem[s] applying were chilled persons be- against class certification. knowledge cause of of this shutoff notice requirement? going gath- How are we Hearing App. Oct. at 218. Plain- persons, er the facts on which other than difficulty tiffs’ counsel also noted the plaintiffs, your named were turned down identifying the class: region? We account could precisely Now because spend gathering the 15 million dollars amorphous you class that mentioned that say facetiously, in this case. I facts after extensive discussions with de- them, gather we but the time it will fendants, reluc- counsel year down the be another road and then agreed tantly impractical it was program we would be in the ’81 before try to benefits deliver those indi- actually we decided who entitled to vidual members of class because it *15 any money. it Is worth it? would cost million to $18 locate them. App. at 191. 6, 1980, Hearing App. of Oct. at 219. hearing
At October on vacat- These statements make evident court, ing parties, the settlement decree the district well as putative phasize class members’ of mind state could the cost and time of the court and apply— parties expended be described as conduct—failure which would have to be be- discouraged than state rather their possibly fore Finally, class could even be identified. mind — applying, from and therefore the criticism of presence state of mind issues apply article would to this case. The denying should not be an automatic reason for change of characterization of the issue in the certification, empha- class and the above article case from one state of mind conduct However, point. exercising sizes this discretion, in its as a should serve talisman decide the may the district court on this focus difficult issue of whether an identifiable class factor, others, among considering in the viabili- best, general At exists. statement ty of a class suit. In the circumstances of this present state mind issues are serves as a only prob- case we observe that not were there alerting shorthand method of parties the court and the class, identifying lems in but also with the might difficulty in there be identi- requirements other of Rule infra. discussed Also, fying the class members. the classifica- of an “belief” tion issue as or “conduct” does 6, 1980, Hearing App. of Oct. at 211. Al- issue, many resolve the since matters of though this comment was made in the context by putative may “conduct” class members discussing reopening program —an identify. nonetheless make the class difficult to rejected eventually parties— alternative We believe that whether characterized as the discussion of class member identification putative “state of mind” or “conduct” the remains relevant in other contexts. class members this difficult to identify. reaching In this conclusion we em- problems were aware of the attendant B. identifying the members of the class.27 The As supra discussed in note 24 we believe require district court believed that it would litigation that as this progressed and the great deal of its own time as well as a nature of the apparent, relief became certi
large
money
accomplish
amount of
this
fication,
possible,
if
would have been under
light
task.
of these circumstances
(b)(3)
subdivision
of Rule 23.
23(b)(3)
Rule
certainly
proper
awas
factor
for the dis
sets forth four non-exhaustive
criteria for
denying
trict court to consider in
class certi
the court to
making
consider when
the class
fication.
Although
determination.28
not considered
disposing
27. Plaintiffs contend that
“were never af-
they
of the certification
issue. Final
forded an
to either
briefs
opportunity
ly,
district court’s
experience
the class
or be heard on the class issue
prior
Grieg
summary
action issue in
v. Olivarez, No. 78-C-1646
(N.
the court.”
disposition by
Brief of Plain-
Reply
D.Ill.1978),
fully alerted it to the prob
at 25. See also Brief
tiffs-Appellants
of Plain-
managing
lems in
this class action.
at 60-63. Plaintiffs’ contention
tiffs-Appellants
urge
Plaintiffs
us to also reverse on the basis
is not borne out
the record. Al-
simply
hearing
that no
was held
evidentiary
on the
though
memorandum
plaintiffs’
filed in opposi-
Again,
class issue.
as noted above,
the issue of
tion to the motion to vacate
the settlement
class certification was
explored by
decree does not
address
directly
the issue of
hearings
and the district
court at
the several
certification,
but
is alluded to
in a
only
held on the settlement
decree and on the mo-
footnote,
at 108 n.*, defendants’
brief did
App.
tion to vacate.
Shepard,
relied on
address
the issue,
id. at 136-38. Also, plain-
Guerine v. J. & W. Investment,
Inc., 544 F.2d
argue
nothing
tiffs
there is
in the record to
(5th
1977) (per curiam),
863, 865
Cir.
the court
indicate that
the district court considered man-
hearing
held that
eventually
no evidentiary
ageability
action,
of the class
except
need be held because
the case became moot
reopening
program.
context of
the 1979
As we
after denial of class certification.
Therefore,
stated in note 26
supra,
of class
problems
our focus must be on the
analysis
Guerine.
identification
and cost of identification
and no-
two-page
Guerine is
Unfortunately,
only
per
tice are relevant
to the entire class issue. To
curiam
and offers little in
opinion
way
reopening
be sure,
problem
the 1979
careful
analysis.
However, we do not
read
program
have raised
may
other administrative
setting
requiring
Guerine as
forth a
se rule
per
However,
of class
problems.
problem
iden-
hearing
an
evidentiary
instance
every
dispos-
tification and notice to
class members
putative
ing of the class certification issue. This is clear
reopening
is relevant not
on the issue of
citation
of Marcera v.
program
Chinlund,
the 1979
but
the issue of class certifi-
(2d
1977) (per curiam),
F.2d
Cir.
cation vel non.
grounds
vacated on other
sub nom. Lombard v.
Plaintiffs
also cite to several
cases which
Marcera,
S.Ct.
safeguards
disposing
require procedural
(1979) (denial
L.Ed.2d 281
of class certification
certification
issues.
Price
v. Lucky
should not
be made
ordinarily
without
an evi-
(9th
Stores,
Inc.,
we have noted
required
be
for resolution of
trials would
conclusion the court first noted
fraud
predomi-
This does not end the
this issue.
cases
be unsuitable
class treatment
analysis
only the
matter
nation
but is
first
representa
if there are variations
in the
separate
use of
tri-
for consideration. The
degrees
made or
tions
reliance thereon.
of fact
not be
als on individual issues
should
Thus,
23.35
Id. at
was not a.common
the use of the class
absolute bar
representations might
issue because the
Rather,
device.
we must
action
examine
have been
as to
different
various class
any procedural devices can be uti-
whether
might
fact
members and in
never have
the burdens of
lized that would alleviate
reached some class members.
Id. Rather
procedure.
such
trial
analysis
point,
than conclude its
at this
procedural
court continued to discuss the
way
present case
In this
is similar to
problem—
might
devices which
alleviate
Kaskel,
v. Estate of
present case. As Crasto there
well
challenge
Bebchick
a
concerned
to a rate
representations
made as
be variations
Washington,
increase
D.C. transit
regulations.
substance
CSA’s
system.
appeals
The
court
invalidated
Also, issues of reliance or causation —that
rate
supplemental
increase and in a
is,
regulation
whether
the invalid
caused
opinion
the issue
addressed
of how to struc
not be
the harm —would
solved
subclass-
judgment
carry
opinion
ture a
out the
ing. Each class member would have to
illegal
the court —since the
rate had been in
testify
knowledge
on the matter of
prior
effect for a time
to invalidation. The
thereby impose
reliance and
an intolerable
acknowledged
possible
court
that it
Thus,
on the
burden
district court.
sub-
order
refunds to individuals who had
classing would not be available
an alter-
paid the
Nevertheless,
increased fare.
procedure.
native
court ordered that the Transit should utilize
procedural alternative,
possible
Another
money
for the benefit of the users of
actually
one which
is
in the
reflected
system.
at
Id.
203-04.39
decree,
settlement
is the use of a fluid
analogy
The
recovery.
of Bebchick to the
recovery
The fluid
is used where
Yet,
injured
is not
likely
the individuals
are
case
unfounded.
we believe
prove
analysis
come forward and
their claims or
recovery
of the fluid
mechanism
given
cannot be
notice of the case. Devel must take a more critical tack. Plaintiffs
supra
1522.
opments,
recovery
In a fluid
apparently
contend
the harmed indi
money
through
is either distributed
a viduals cannot be identified and therefore a
system
way
market
reduced
recovery
fluid
should be utilized. Strictly
charges
project
or is
to fund
used
a
which speaking, plaintiffs’
proves
contention
too
likely
will
benefit
members of the much.
It sets forth no
criteria
deter
class.38
mining when class
certification
unneces
sary
requirements
and when the
of class
similarly
Plaintiffs
contend that
Indeed,
may
certification
be restructured.
recovery remedy
instant case the fluid
will
accept plaintiffs’ position
would
general
be to
provide
redress for
indi
23,
ignore
requirements
of Rule
such as
viduals harmed
defendants’
conduct.
raising
this
whether an identifiable
exists
rely
contention
Commission,
Bebchick v.
Utilities
whether
Public
notice
class can be exec
(D.C.Cir.) (en
denied,
banc),
Therefore,
F.2d 187
reject any approach
cert.
uted.40
we
applied
Drugs,
Co.,
turned
down for
assist-
Cotler
Inc. v. Chas. Pfizer &
produce
81,
ance because of failure to
(1971).
shut-off
92 S.Ct.
recovery
procedural
mechanism as a
alter-
unconstitutional.42
we believe that
disposition.
case-by-case analysis
class action
a careful
of use
native to
of the
recovery
fluid
ap
mechanism is the better
position
At
other extreme is the
proach.
approach
In this
we focus on the
recovery
a fluid
mechanism is unconstitu
policies
various substantive
that use of a
argument
tional.
raised is that it vio
recovery
particular
fluid
would serve in the
right
by jury.
lates defendant’s
to trial
general inquiry
case. The
is whether the
See,
g.,
Burnham,
e.
Dickinson
197 F.2d
of such a
use
mechanism is consistent with
973,
(2d
denied,
Cir.),
980-81
cert.
344 U.S.
policy
policies
or
reflected
the stat
875,
(1952);
73 S.Ct.
The final whether the statute has of Much our discussion of the issue of compensatory purpose, weigh predominance fa- concept does in overlaps with the of recovery. authorizing vor of above, fluid The Act manageability. any As noted discus- programs predominance CSA to administer assistance had sion incorporate of must assisting as its chief low concept manageability aim income indi- of because the issues dealing high viduals in of adjudication may with the cost for individual ade- Indeed, energy. purpose managed quately procedural statute with certain purely Nonetheless, compensatory. devices. there are factors concept manageability within the of which However, we believe that even this factor significance independent have of the notion clearly require does not recovery. fluid For predominance. of problem such One year fiscal Congress funded a much special problem is of concern courts is larger energy program assistance Practice, of 3B notice. Federal Moqre’s therefore recovery absence of fluid will not at 23-370. 123.45[4-4] deprive plaintiffs of relief. The challenged Bank, this action CSA’s administra- Schaffner v. Chemical tion (S.D.N.Y.1972) of the 1979 CIP. F.Supp. plaintiff For CSA admin- energy program istered an of improper manage- assistance sued trustee approximately pro- 1.6 billion dollars. The ment of investments. The class gram “Energy was referred to approximately as the Crisis included five thousand Program” (ECAP). trusts, Fed.Reg. Assistance which included thousands of benefi- Memorex, Developments, supra, distinguishes 45. This See where defend- at 1522-27 for a allegedly engaged large-scale assessing ant in a fraud discussion of these the use factors owners of its securities. recovery. a fluid The court putative remaindermen. held number of eiaries and members certified the case should as clear, appear class members is not it does of the factors class action. One participants number CSA difficulty notifying emphasized was programs numbered more than one million. all the class members: members, notifying The cost of the class Management of this case a class attempted after the of identi difficult task create substantial and unnec- action could individuals, fying proper these was a factor essary difficulties.... denying consider certification.48 problem of individual notice to [TJhe problems issues the individual and remainder- the income beneficiaries knowledge regulation and whether or day presents trusts men of the modern discouraged problems. not the individuals were enormous applying regu assistance because of F.Supp. at 335.47 along problems identifying lation case, court, Similarly, in this the class members lead us to conclude that problems identifying was aware of the use of the class action device have notifying the class members and then them. Hearing 6,1980, App. unmanageable.49 at 218. While been Oct.
47. See also
v. Carlisle
of
at
Eisen
&
Addendum
139 —a
Jacquelin,
Defendants-Appellees
1968);
(2d
strikingly
v.
to
F.2d 555
Boshes
General
class
similar
the
class
Cir.
(N.D.Ill.1973);
(Complaint
case.
at 2
present
Motors
V.
Not all
proceedings
ex
vi
process
olate due
or even
raise
serious
parte
that ex
contacts
Plaintiffs contend
Cf.
65(b)
constitutional issue.
Fed.R.Civ.P.
intervening
by the
United States Senators
(temporary restraining
order
be en
process.
deprived plaintiffs of
These
due
tered
party).
without notice to adverse
Nor
a letter written
parte
ex
contacts consist of
right
there
orally
an absolute
to be
heard
Rios
Paul Laxalt to defendant
Senator
disposition
legal
on the
aof
issue. Dredge
“inquiries
propriety
into the
Corporation
v. Penny, 338 F.2d
462 n.14
Capital50
Grady’s
Judge
made
order”
1964).51Thus,
at the first level or
argue
they
were not
office. Plaintiffs
analysis
reject any
we
our
notion of due
given Capital’s motion to intervene and re process
place
pro
an absolute
quest for
from the settlement order
relief
all
parte
proceed
hibition on
ex
contacts
day
until
status conference and ings.
Capital’s
copy
were never served a
mem
procedural
process
essence of
due
support
of their
to va
orandum
motion
opportunity
notice and
heard.
contend,
This, plaintiffs’
cate.
is a violation
Mullane v. Central Hanover Bank & Trust
process
they
of due
because
were unable to Co.,
306, 313-14,
339 U.S.
70 S.Ct.
656-
allegations
by Capital.
respond to the
made
(1950). Therefore,
an problems process due arise. serious Id. consideration. However, litigants preju- when the are not proceedings full adversarial rather In by given the contact are a full diced proceedings princi this than administrative legal pro- participate in all opportunity prejudicial ple of error in the context ex prejudice. there no ceedings parte has acknowle contacts also been analyzing Those decisions the effect ex Green, dged.53 In United States v.
parte contacts in the
context
administrative
(3d
1976),
denied
F.2d
cert.
sub
prejudice
by
have looked to the
caused
States,
nom. Tefsa v.
United
Corp.
contacts.
Coastal States Gas
(1977)
97 S.Ct.
its
these
light
dispensable
In
circumstances
proper
matters.
resolution of
parte
ex
that the minimal
con-
cause,
we conclude
may
appro-
association
be an
separation
pow-
not violate the
tacts did
priate representative
members,
en-
its
doctrine.
ers
jurisdiction.
titled to invoke
court’s
(cited
683 Therefore, On judgment September plaintiffs of the district the filed court is affirmed. motions a temporary restraining for order preliminary injunction
and a to restrain SWYGERT, dissenting. Judge, returning unobligated Circuit CSA from funds from the Treasury.3 1979 CIP to the of appeal is an from an order the This granted district temporary court the re vacating previous approval district court its order, straining was which continued for pursuant of a to Fed.R. consent decree days indefinitely ten by and thereafter 60(b), grounds Civ.P. on of and voidness agreement parties. the and misrepresentation. I would reverse re- proceedings the case con- mand for further partial then Plaintiffs moved for summa- opinion. sistent with this ry judgment. hearing January At a on
1980, Judge Grady indicated that he intend- I grant motion, ed to the and that the next complaint by This was initiated nine step a certify to class. Defend- plaintiffs behalf named on of themselves ants’ suggested par- counsel then the similarly and other situated individuals1 try settlement, ties to reach a and the case alleging Community Ad Services purpose. continued for that (CSA) unlawfully ministration administered 25, 1980, April parties On presented (CIP), Program the 1979 Crisis Intervention copy district court with the final provided emergency which for assistance in settlement, which product ap was the payment poor elderly fuel bills to and proximately three negotiations.4 months of people 222(a)(5) pursuant to section Counsel for both recommended that Opportunity Economic Act of settlement, court approve district 2809(a)(5), by U.S.C. as amended Pub.L. § provided the named No.95-568, (1978). Stat. 2425 com each remaining $250.00 receive that the and plaint sought injunctive mandamus and and unspent funds from the 1979 CIP be to used declaratory regulation promulgat relief. A fund programs other CSA that were de by required applicants produce ed CSA signed impact high to reduce the energy disconnect, notice to 1061.53- C.F.R. § upon poor costs elderly.5 The dis 3(c), Fed.Reg. as amended trict judge proposed reviewed the settle (1979); regula held the ment, signed contrary tion unlawful then and entered the consent because congressional statute and intent.2 decree. complaint initially possible 1. The class was defined in the as: counsel Plaintiffs’ raised two resolving reopening means of either case: persons eligible all income low otherwise for putting the 1979 CIP the 1979 funds into the participation in the 1979 CIP who were de- program. opposed Defendants both alter- nied 1979 CIP assistance federal de- natives, suggested instead that the estimat- discouraged applying fendants or from for program $18 ed million left over from the 1979 they delinquent assistance because were not programs be used to fund other CSA payment their fuel bills impact high reducing directed toward energy upon poor elderly. costs Opportunity 2. The Economic Amendments of 1978, 5(d), (1978), provided § Stat. “[e]ligibility any programs programs 5. The authorized to be funded under the terms solely under this section not be on shall based settlement included weatherization delinquency payment program provide stripping of fuel bills.” The weather homes families, Report hypothermia program Conference amendments con- low income statement, H.R.Rep.No.95- provide counseling clothing tained same to senior Cong., (1978). hypothermia, Sess. 3 citizens 95th 2d at risk from a solariza- program tion to install solar collectors in the families, advocacy homes low income required unspent 3. The law CSA to return programs provide legal program Treasury assistance to low funds disputes persons income involved in with utili- September 1979. Pub.L.No.95 — ty companies. Stat. 1604 *27 20,1980, August the Wall Jour- concluded that the Street since ease between On article in which published plaintiffs the settle- nal named and defendants was set- case criti- order entered was ment payment plaintiffs tled of all that contrary congres- and to, cized as collusive they were entitled and since class no was 16, 1980, September sional intent. On Sen- certified, controversy no or then case re- Rios, wrote to defendant ator Paul Laxalt jur- mained and the court therefore had no system jus- adversary that stating “our approve isdiction to the settlement. The may compromised by the tice have been questioned court also whether the court had in the case.” Senator Laxalt settlement authority order, the enter the settlement stop disbursing pur- ordered CSA to funds expenditures provided whether decree until he had an suant consent consent decree were with consistent opportunity into to look the matter further. congressional intent. The court further copy that The letter indicates was sent to parties stated that counsel for both misled Judge Grady. judge disclosing not relevant infor- regarding congressional mation intervene, intent and According its motion to Foundation, informing not the court that without a Capital Legal acting on behalf Laxalt, Hatch, required order any court the statute that Orin Ed Senators unspent Zorinsky “pursued inquiry CIP funds be returned to Trea- ward its into sury. propriety Judge Order F. John Judge Grady, Grady’s acting office.” sua appeal Plaintiffs from the district court’s sponte, hearing then scheduled status vacating order October 29 the consent October 1980 because has come to “[i]t decree. Plaintiffs appeal contend on questions
our attention been have April void, judgment not as to raised whether the [consent decree] parties court, not mislead the did 25, 1980, April may provide this case dated parte ex Capital communication between programs funding for the which Con Judge Grady’s chambers violated due gress did not intend to be funded in this process separation powers, and that parties matter.” Counsel for both were denying the trial court erred in certifi- requested appear, Capital given cation. hearing.6 notice hearing, Capital At the October status II filed a motion to intervene and a motion to A. Jurisdiction vacate the consent decree. intervene,
judge denied the motion to but 17, 1979, plaintiffs On October filed a stated he was “inclined to vacate the motion for class certification. The district order”; judgment counsel for agreed CSA approved decree, proposed court consent to halt further disbursement of funds while compromised the claims of both question pro- briefed the of the named putative and absent priety vacating judgment. members, April 25, prior on to taking 29, 1980, any certify. On October action the district court on motion to Then 29, 1980, vacating entered an order on de October the court consent entered an pursuant 60(b)7 grounds vacating cree Rule of order the settlement approval of misrepresentation. voidness and April grounds The court 25 on misrep- voidness and attorneys they proceeding following 6. Plaintiffs’ state that or for the reasons: . . . Capital appear, (3) notified that counsel for misrepresentation, fraud or other .... they any papers nor were served with party; (4) judg- of an misconduct adverse by Capital day filed in court on the void; (6) any ment ... or other reason hearing. justifying operation relief from judgment.. . . This rule does limit 60(b) provides part: 7. Rule in relevant power judgment of a court to ... set aside upon On motion and such are terms as upon for fraud the court. . . . just, party legal the relieve his order, representative judgment, from a final
685 order, 60(b). rule that resentation under deprive determination does not the court of certify jurisdiction approve the motion to was denied. The proposed a settle court reasoned since no class had been putative Further, ment a class action. certified, only parties dispute jurisdiction not does the court have plaintiffs defendants, approve proposed were the a prior named settlement to cer tification, plaintiffs duty so when settled their a the named it has to do when so claims, controversy or putative being no case existed claims of the class are com among any parties. disagree.8 promised. I Wallican See v. Waterloo Com District, munity 492, School 80 F.R.D. 493 The Fourth Circuit held in a recent case (N.D.Iowa (“Rule 1978) general purpose 23’s District “before a Court consider policies its underlying .. . indicate that approve voluntary pre-certification or set . . . subject should dismissal be to court begun action, tlement of an action as a class prior certification”). review . . . even it is compelled to undertake the labori also v. Airways, See McArthur Southern process arriving ous at a certification ” Inc., 298, (5th 556 1977); F.2d 302-03 Cir. 23(c)(1) determination under . . . . Shel Magana Inc., Shipyard, v. Platzer 74 F.R.D. Inc., 1298, (4th Pargo, ton v. 582 1314 F.2d 61, (S.D.Tex.1977). 66 stated, however, 1978). court Cir. The settlement, prior approving the trial Hearing B. Notice and a hearing court must hold to determine majority concludes that settle- being settled, what claims are and whether ment process violated the due clause be- putative absent class members cause the proposed notice of “If, settlement prejudiced by proposed settlement. given should putative have been to absent hearing, as a result such the court class 23(e) provides: members. Fed.R.Civ.P. clearly satisfied that has been there no abuse action device and no A class action shall not be dismissed or members, prejudice putative to absent compromised approval without the it may approve the court, settlement dismissal proposed and notice of the dismiss- going through without with a certification al or compromise given shall be to all ” ... . determination Id.9 members of the class in manner such the court directs.
I would therefore reverse the trial court’s
juris-
23(e)
requirement
determination
court lacked
The notice
of Rule
does
approve
compro-
apply
diction to
the settlement
when certification has been de
mising
plain-
the claims of both
Ecological
Corp.,
the named
nied. Pearson v.
Science
putative
171,
(5th
1978),
tiffs and absent
class members.
522 F.2d
cert.
177
Cir.
de
nied,
912,
Although
recognize
1508,
I
that in most cases the
425
47
U.S.
96 S.Ct.
L.Ed.2d
class certification issue
762
should
addressed
Most courts to
consider
issue,
prior
approval
however,
district
of a
have held
notice
dismissal,
requirement
settlement and
apply
pro
see Susman v.
does
when
Corp.,
866,
Lincoln American
F.2d
pose
prior
587
870
to dismiss
settle
decision
(7th
1978),the
g.,
Cir.
absence of a certification
McAr-
on the certification motion. E.
p.
maj. op.,
denied,
950,
supra.
1870,
8. See
668 n.23
cert.
398
90 S.Ct.
26
(1970);
L.Ed.2d 290
Yaffe v. Detroit Steel
pre
uncertainties
as to
“[W]hatever
exist
Corp.,
(N.D.Ill.1970).
50
483
F.R.D.
See
brought
cise status of an action
as a class
23.50,
also 3B Moore’s Federal Practice
H
action, during
filing
the interim between
23—424. Cf. Susman v. Lincoln American
23(c)(1)
court,
determination
it must
Corp.,
(7th
1978) (“when
F.2d
Cir.
purposes
be assumed to be a class action for
pur
a motion for
been
class certification has
compromise
23(e)
dismissal or
under
unless
diligence
sued with reasonable
and is then
contrary
and until a
determination is made.”
pending
court,
a case
before the
does
Philadelphia Electric Co. v. Anaconda Ameri
merely
not become
moot
because of
tender
Co.,
(E.D.Pa.
can
Brass
F.R.D.
to the named
mon
their individual
Accord,
McArthur v. Southern Air
ey damages”).
ways, Inc.,
(5th
1977);
F.2d
Cir.
Rosentiel,
(3d Cir.),
Kahan v.
Inc.,
Airways,
type
given
F.2d
of notice to be
is a matter
v.
thur
Southern
court,
1977);
left to
Wallican
the discretion of the district
Waterloo
“subject
only to
District,
the broad
80 F.R.D.
‘reasonableness’
Community School
*29
imposed by
process.”
standards
due
Grunin
(N.D.Iowa 1978); Magana
493
v. Platzer
Pancakes,
v. International House of
513
Inc.,
61,
(S.D.Tex.
Shipyard,
74 F.R.D.
66
114,
(8th
denied,
Cir.),
F.2d
cert.
121
423
1977);
Goodyear Tire
Duncan v.
& Rubber
864,
124,
(1975).
U.S.
S.Ct.
96
Ill
granted.
HEW to
illegally
recover the funds
promulgated
The district court stated in its October
HEW
plan,
then
a remedial
*32
provided
that “there was no lawful
give
order
basis for which
to
pri-
that states had
order,”
and that
therefore
ority
applicants
to
[settlement]
those
who have been
reality
unjustified
“the order
an
previous
denied funds under the
[was]
unlawful
judicial
legislative
of
fiat
substitution
for
administration of the statute.
Plaintiffs
regard
disposition
action in
of the
objected
aspects
to some
of the remedial
money,”
granted
and that the relief
in the
plan, but the district court overruled these
“only arguably
consent decree was
related”
affirmed,
objections.
appeals
The court
congressional
disagree
intent.16 I
operation
HEW
directed
to continue
court,
the district
and would find that clear
plan.
the remedial
16. The
did not reach
See
this issue.
p.
supra.
663 n.16
Congressional
programs
B.
Intent
and activities
under
paragraph.
The district court stated
its
October
2809(a)(5) (Supp.
42 U.S.C.
Ill
§
expenditures
order that “the various
re-
grant
authority clearly
This broad
en-
quired
only argu-
the consent order were
compasses
type
expenditures
re-
ably
Congressional
purpose.”
related to
quired by the consent decree.
provided
I believe that the relief
congres-
consent decree is consistent with
Appropriations
the Supplemental
Act
intent,
95-240,
be broadly
sional
which should
con- of
No.
Pub.L.
Stat. 112
past
(1977),
context
remedying
Congress
$200,000,000
strued in the
appropriated
appropriat-
“Community
of the
for the
Program”
unlawful administration
Services
un-
report
der CSA. A
Appro-
ed funds.
from the Senate
priations Committee stated:
Congress appropriated
money
When
The Committee
$200,000,-
recommends
year
for CSA for fiscal
Pub.L. No.
grants
000 for
to low-income households
95-824,
(1978),
place
Stat.
did not
extraordinarily
alleviate
burden of
any limitations on
administration of
CSA’s
high
heating
during
residential
costs
beyond
the funds
the restrictions contained
emergency.
winter
Opportunity
in the Economic
Act as amend-
ed.
provision
of the Act relevant
[*]
[*]
#
[*]
[*]
[*]
program
provides:
at issue here
The Committee
directs
these funds
on
contingency
be used
basis when
program
A
“Emergency
be known as
there is a
energy
clear and demonstrated
Energy
designed
Conservation Services”
emergency.
to enable low-income individuals and
families,
including
elderly
95-564,
S.Rep.
and the
Cong.,
No.
95th
1st Sess.
poor,
participate
energy
near
conser-
congressional
Such
statements
however,
programs designed
reports,
vation
legally binding
to lessen the
are not
impact
government
high
agencies, according
energy
opin-
cost of
on such
to an
Comptroller
ion
individuals and families and
General:
to reduce
family
individual
energy consump-
Congress
recognized
has
in most in-
tion.
pro-
The Director is authorized to
stances it is desirable to maintain execu-
flexibility
vide financial and other assistance for
tive
to shift around funds
activities,
programs
lump-sum
particularly
within a
including,
appropri-
but
to,
agencies
ation
energy
limited
account so that
conservation
can make
adjustments
necessary
program;
and education
“unforeseen
winterization of
developments, changing requirements,
in-
dwellings,
old
substandard
*33
improved
price estimates, wage-rate adjust-
correct
space
insulation;
conditioning, and
emer-
ments, changes in the international situa-
loans,
gency
grants,
revolving
funds
legislation
tion and
subsequent
enacted
energy
to install
conservation technolo-
appropriations.”
gies and
deal
housing
with increased
expenses
crisis;
Accordingly,
it
relating
is our view
when
energy
to the
Congress merely appropriates lump sum
supplies, special
alternative
fuel
fuel
statutorily restricting
amounts without
stamp
voucher or
programs; alternative
funds,
what can be done with those
transportation
designed
activities
to save
clear inference arises that
does
fuel and assure continued access to train-
impose
intend
education,
legally binding
ing,
restric-
employment; appro-
tions,
reports
and indicia in committee
efforts;
priate
per-
outreach
furnishing
legislative history
and other
as to
how
coordinators,
sonnel to act as
providing
funds
or are expected
spent
should
to be
legal
assistance,
or technical
or otherwise
any legal
requirements
do
establish
representing the
poor
interests of the
agencies.
on Federal
crisis;
relating
energy
efforts
nu-
trition, health,
supportive
318,
and other
serv-
Comp.Gen.
(1975) (emphasis
318-19
cases;
ices in emergency
added).
and evaluation
Community
See also American
Builders,
Commissioner,
Inc. v.
funds had to be
Treasury.
returned to the
(7th
1962) (“Resort
legislative
agree
I
majority’s holding
with the
that the
history
place
judicial
has a
construction
support
record before us does not
the dis-
only
of statutes
when resort thereto is nec
trict court’s conclusion.
essary
patent ambiguity
to resolve a
in the
V
language
statute.”);
United
v.
States
parte commu-
that ex
Corp.,
United States
Plaintiffs contend
Steel
IV
when on
16, 1980, Senator
Laxalt wrote a letter to Rios expressing the
the district
ground upon which
Another
concern that “our adversary system jus
vacating
relied in
the consent decree
tice
have been compromised
60(b)
misrepresenta-
by the
pursuant
Rule
case,”
settlement
and asking
the court
tion.
In its order of October
Rios to
stop further disbursement of the
by
stated:
funds
CSA.
face of that letter
parties,
by what
indicates that
I believe that
both
copy
Judge
sent to
did,
Grady,
they
misled
but
they
what
coun
said
sel for
did
the law.
I
not learn
both as to the facts and
me
letter
aware,
not,
until
I
after the
they were
as was
consent
believe
decree was vacated.
expenditures required by
Capital,
Then
the various
according
to their motion to
(he
arguably
re-
consent order were
intervene
appeal,
“pursued
its in
Congressional purpose and
quiry
lated to the
into
propriety
of the Order with
bootstraps method
the order was a
Judge John Grady’s
F.
Capital
office.”
fur
accomplishing
expenditures.
those
ther stated
Judge
Grady scheduled the
imposed upon
the court
fail-
Counsel
hearing
status
of October
“[a]s
full,
ing
of all rele-
to make
disclosure
result
Capital’s
inquiries.” Plaintiffs’
vant considerations.
counsel were not notified that counsel for
79-C-3960,
Capital
Olivarez,
appear
op.
mem.
No.
at the
Simer
status hearing,
nor
(Oct.
they
The court also said
prior
at 9
served
hearing
the court that
that counsel failed to inform
motions
filed
Capital
day
on the
order,
unobligated
hearing.19
a court
without
*34
activity
program
any
Moreover,
(1976) (Chapter
carry
or
such
out
2966
to
§
17.
U.S.C.
authority
chapter
transferred
42) provides explicit
for
under
this
34 of Title
carry-
purpose
of
twenty percent
appro-
for the
up
the Director
of
used
to transfer
CSA
activity
program
any
or
programs
ing
such
priated
other
under the Eco-
out
funds to other
chapter.
Act,
Opportunity
this
amended. 42 U.S.C.
under
nomic
as
(1976) provides:
§
Capital
hearing,
filed
status
At the October
Notwithstanding
any
appro-
limitation on
motion
intervene and
motion to
a consolidated
activity
any
priations
program or
under
order.
from the
for relief
any
authorizing appropri-
chapter
or
Act
activity,
program or
. . . not
ations for such
proof
service
of
to include
failure
per
the amount
centum ...
of
exceed
majority
7(b), as the
Rule
of N.D.I11.
violation
appropriated
any appropri-
or allocated from
p.
supra.
See
notes.
n.52
purpose
enabling
ation for the
of
the Director
appear
parte communications shadow the
would
Capital
notice that
had no
“[E]x
appearance
at least the
of
impartiality,
copies
they have
hearing, nor did
judicial proceeding”
impartiality,
any
to vacate
to intervene
Capital’s motions
circumstances,
“may,
constitute
in some
Although plaintiffs had an
the settlement.
deprivation
process
due
law.”
motions
respond to those
opportunity
Meachum,
(1st
Grieco v.
F.2d
prior
notice
writing,
lack of
later in
parte
The ex
communication in
some disad-
surely put them at
hearing
highly improper,
the case at bar was
and it
at the status
arguments
vantage in their
appears likely
judge
that the district
would
contacts
parte
ex
hearing. Because these
hearing
not have called the status
but for
unethical,
find that
I would
obviously
by Capital
the concerns raised
in the ex
violated;
there-
process clause
the due
Nevertheless,
parte communications.
“[i]n
vacating
order
fore,
find that
I would
any showing
absence of
the [ex
and I would
is void
decree
the settlement
parte
infected the fact-
communications]
cer-
for reconsideration
remand the case
trial,
finder’s determination
issues at
and notice.
tification
challenged practice
. . . the
not vio-
[does]
Grieco,
process
supra,
.
late
. . due
of law.”
hold separation powers occurred. Neverthe- My examination of the record leads me less, general princi- I must state that as a parte conclude that these ex contacts were communication from members ple, parte ex First, prejudicial. previously, as I noted Congress judiciary regarding legis- judge doubtful the district pending litigation at issue in lation reopened have the case in the absence of judiciary endangers independence Second, plaintiffs’ counsel *35 those contacts. tendency but also has a undermine separation pow-
fundamental doctrine of
ers.
I would also find that the communication
between Senator Laxalt and defendant Rios
did not violate the separation-of-powers Rios,
doctrine. Defendant as director of
CSA, had counsel to advise him regarding unlikely case. I therefore think it
the letter from Laxalt Senator hindered performing
him legal his duties. stated,
For the reasons I would reverse vacating district court’s order the con-
sent decree and remand the case for further
proceedings. W. John KNOX and Everett B. Kohn, Shands, Elbert, Gianoulakis & Gil- Best, Appellees, jum, Gianoulakis, John John A. Klobasa and Lueckenhoff, Terry Louis, Mo., ap- St. for LICHTENSTEIN, Sr.,
David B. William A. pellees. Gerard, Lyle Woodcock, Sidney S. N. Thompson, Walther, Frank, Gaebe & Ha- Held, Lichtenstein, Jr., David B. Oscar Gaebe, Jr., Patten, rold C. Keith D. St. Love, Algren. H. Carl A. Louis, Mo., appellant. for Appeal of AMERICAN NATIONAL BRIGHT, Before STEPHENSON and BANK IN ST. LOUIS. McMILLIAN, Judges. Circuit No. 80-1351. ORDER ON PETITION FOR Appeals,
United States Court of REHEARING Eighth Circuit. petition rehearing is denied.
Sept.
However,
opportunity
we take this
to clari-
fy
previously
opinion
case,
filed
in this
Cir.,
In its rehearing American argues National Bank this court mis- takenly ruling affirmed the district court’s 60(b)(6). on the basis of Fed.R.Civ.P. argues American National Bank enjoin district court refused to the state because, court action as the memorandum attached to the district court’s order ex- plained, prior pursuant dismissal to Fed. 9(b) 12(b)(6) prej- R.Civ.P. was without