William Modlin v. Social Security Administration
01A24054
February 20, 2003
.
William Modlin,
Complainant,
v.
Jo Anne B. Barnhart,
Commissioner,
Social Security Administration,
Agency.
Appeal No. 01A24054
Hearing Nos. 120-99-6378X, 120-99-6379X, 120-99-6380X
DECISION
INTRODUCTION & BACKGROUND
Complainant filed the present appeal to challenge the fairness of a
class action settlement agreement entered into on January 11, 2002.<1>
Complainant filed an individual objection to the terms of a class
action settlement agreement with the EEOC Administrative Judge (AJ)
responsible for the case. The AJ reviewed complainant’s objection,
and several others, to determine whether the proposed class action
settlement agreement was fair, adequate, and reasonable to the class as
a whole. Prior to making his determination, the AJ convened a “Fairness
Hearing” to take additional testimony from objecting class members,
and from supporters of the settlement. On June 11, 2002, the AJ issued
a decision approving the settlement, and complainant appealed.
The settlement agreement, signed by agency representatives, class counsel,
and all three class agents, concerned the settlement of claims brought by
a class of male African-American employees at the agency’s headquarters,
who on or after January 1987, were not selected or promoted, or who
were otherwise subjected to disparate treatment in regard to performance
appraisals, awards, bonuses, and disciplinary actions.<2> The settlement
occurred, “on the eve of trial,” after years of discovery involving
thousands of documents. Administrative Judge’s Decision Granting Final
Approval of Settlement Agreement, at 8 (June 11, 2002). It provided,
in relevant part:
IV. Monetary Relief
. . . .
B. Class Counsel has devised a formula for distributing the proceeds of
this settlement. Six million, three hundred and fifty thousand dollars
($6,350,000) will be paid by the agency in accordance with the Formula
attached as Appendix A.
. . . .
In addition to the relief available to all Class Members, the Class
Agents will be entitled to the following specific relief:
Upon the Effective Date of this Settlement Agreement, [class agent 1]
will be retroactively promoted to a GS-15, Step 10, effective March 31,
1998. . . .;
Upon the Effective Date of this [A]greement, [class agent 2] will
be retroactively promoted to a GS-13, Step 10, effective June 1,
1996. . . .; and,
[Class agent 3] agrees to arrange and begin a 1-year interagency detail
within 30 days of the Effective Date of the Settlement Agreement.
Once [class agent 3] begins the interagency detail, he will be promoted
to a GS-12, Step 10[,] and the agency will expunge from his records all
reference to his demotion from GS-12 to GS-10. Following completion or
other termination of the detail, he will retire from Federal service
or otherwise separate from employment with the Agency. At that time,
he will be retroactively promoted to a GS-13, Step-10, effective 3
years prior to his separation date. . . . If [class agent 3] fails
to arrange and begin the 1-year detail within 30 days of the Effective
Date of the Settlement Agreement, he agrees to separate no later than
6 months after the Effective Date of the Agreement, at which point he
will be retroactively promoted to a GS-12, Step 10, effective 3 years
prior to his separation date.
The distribution formula in appendix A provided for $2,300,000 for awards
and Quality Step Increases (QSI’s). For awards, the formula assumed each
employee should have received an award every other year, then subtracted
the number of awards actually received. After the calculations, $500
was available for every award due. With respect to QSI’s the formula
assumed each class member should receive a QSI every other year of service
since 1991, but not in a year of grade change. After the calculations,
$686 was available for every QSI due. For promotions and service,
the formula provided $1,700,000. For every year of service, each class
member received $50. For promotions, $1,000 was available to any class
member who did not receive at least one promotion since November 21,
1991, and had eight years or more of subsequent service.
Funds also were available based on class members’ participation in filing
or maintaining the complaint. Each class member on the pre-hearing
witness list was to receive $2,000. Class members who have filed
individual EEO complaints alleging nonselection claims split $600,000.
Money was available to officers, board members, fundraisers, and members
of Black Males for Justice, Inc., a corporation founded to provide
financial support for the litigation.<3>
In his petition, complainant argued that more, if not all, class members
should receive a promotion under the settlement agreement. He agreed that
the class agents should receive promotions, but believed that limiting the
promotions to class agents was unfair. He also believed the distribution
of $1,000 per promotion was wholly inadequate. Complainant presented
extensive background information regarding his personal attempts to
obtain a promotion.
The AJ addressed complainant’s objections in his June 11, 2002
decision. The AJ noted that the terms of the settlement must be viewed
in light of the years of expensive litigation ahead absent an agreement,
and the risk that the agency would have prevailed at trial. Citing to
the testimony of the parties and the “settlement judge”<4> from the
Fairness Hearing, the AJ found that the “hard-fought and contentious”
nature of the settlement negotiations belied any contention that the
class agents merely looked out for themselves in obtaining promotions.
The AJ also stressed the significant equitable remedies available in
the settlement. According to the class counsel’s expert, approximately
fifty (50) individuals were “under-promoted,” and the AJ found it
would be inherently more difficult to decide which fifty individuals
would receive a promotion among the class of 2,200 members, instead of
providing a monetary award. Administrative Judge’s Decision Granting
Final Approval of Settlement Agreement, at 11 (June 11, 2002).
On appeal, complainant argues that the lack of promotions was the primary
reason the class action was filed, but has become a minor portion of
the relief. He contends that although promotions represent a larger
portion of pay denied to class members, the settlement agreement unfairly
provided less monetary relief for promotions than for QSI’s and awards,
and only promotes a minuscule percentage of those, like himself, who
were actively involved in the complaint. Complainant also notes that
the amounts do not account for differences in grade, and therefore are
not fair to class members like himself who are near the top of the GS pay
scale — the $1,000 for a promotion and $686 for a QSI is smaller than the
amount he would receive if he was just given a promotion to GS-14 or a
quality step increase. Complainant notes that the pay inequity continues
for awards under the settlement agreement, because, as a GS-13, the
minimum performance award he would receive under agency policy is $890.
The agency and class agents, via class counsel, responded in a joint
opposition to complainant’s appeal. They note that complainant’s
claims, at heart, do not involve the fairness of the settlement to
the class as a whole, but concern the individual relief complainant is
entitled to receive under the agreement. Regarding non-promotions, the
respondents note that while class counsel believed they could prove 50
under-promotions had occurred, the agency just as strongly believed that
it would prove the class members were promoted at the same or a higher
rate than other ethnic groups. The respondents argue that given the
uncertainty of this issue, and the reality that the litigation, already
seven years old, would continue for several more years, the settlement
provided a legitimate, fair compromise for the issue of nonpromotions.
The respondents contend that complainant failed to show how distributing
50 promotions between 2,200 class members would be more fair to the
class as a whole than providing a monetary sum to all who meet the
distribution criteria.
ANALYSIS AND FINDINGS
Class action complaints may be resolved at any time, provided they comply
with the approval process outlined in the regulations. See 29 C.F.R. §
1614.204(g)(2). When resolution of a class complaint is proposed,
notice of resolution must be given to all class members. 29 C.F.R. §
1614.204(g)(4). This notice must state that within thirty (30) days, any
member of the class may petition the AJ to vacate the resolution because
it benefits only the class agent, or is otherwise not fair, adequate,
and reasonable to the class as a whole. Id. The AJ must consider
these petitions, and determine whether to vacate the agreement. Id.
The AJ’s decision must inform the former class agent (if the settlement
is vacated) or the petitioner (if the settlement is upheld) of his or
her right to appeal to this Commission. 29 C.F.R. § 1614.204(g)(4)
The requirement that class action settlements be fair, adequate, and
reasonable to the class as a whole follows the standard enunciated for
Federal Rule of Civil Procedure 23(e) in Thomas v. Albright, 139 F.3d
227, 233 (D.C. Cir. 1998). 64 Fed. Reg. 37644, 37652 (July 12, 1999)
(summarizing and explaining the November 1999 changes to 29 C.F.R. part
1614); see Branch v. Department of Veterans Affairs, EEOC Appeal
No. 01902620 (November 7, 1990) (noting that Fed. R. of Civ. P. 23(e)
precedent should be applied to administrative procedure for assessing
fairness of a class action settlement). Under such standards, the
judge’s primary task is to evaluate the terms of the settlement in
relation to the strength of the complainant’s case. Thomas v. Albright,
139 F.3d 227, 231 (D.C. Cir. 1998), cert den., 525 U.S. 1033 (1998);
see 64 Fed. Reg. at 37652 (citations omitted). The settlement should
not be rejected “merely because individual class members complain that
they would have received more had they prevailed after trial.” Albright,
139 F.3d at 231 (citing EEOC v. Hiram Walker & Sons, Inc. 768 F.2d 884,
889 (7th Cir. 1985)); see 64 Fed. Reg. at 37652 (citations omitted).
In the present case, the AJ discussed the fairness of the settlement
in light of the litigation risks in great detail. Promotions were
not the largest part of relief available to the class due to the low
number of under-promotions identified by the class counsel’s expert.
See Fairness Hearing Transcript at 34 (Settlement Judge notes, “the bulk
of the relief, the prospective relief if this case went forward to trial,
was almost certainly going to be in awards and other elements of the like
[rather than promotions], and that very much was on the minds of all the
parties during the discussion of the agreement.”). Settlements inherently
involve compromise from both parties; complainant should not expect the
agency to provide the full relief to which they would be entitled if the
claim was successful in trial. Further, the monetary relief provided,
rather than promotions, is a reasonable compromise; it is not so “grossly
inadequate” that it should be disapproved. Branch v. Department of
Veterans Affairs, EEOC Appeal No. 01902620 (November 7, 1990) (citations
omitted); see Albright, 139 F.3d at 232 (refusing to vacate settlement
because the parties reached a reasonable compromise that only a portion
of the 47 possible under-promotions was corrected in the agreement).
The settlement also benefits more than just the class agents. Although
they are the only employees to receive promotions under the agreement,
the settlement provides extensive relief for the other class members,
including money for QSI’s and awards. It also provides for equitable
relief in the form of oversight boards and commissions to review the
agency’s future selection and promotion practices. The settlement also
prevents a select few from receiving all benefits by capping the award
any individual can receive — the distribution formula explains that
“no class member will receive greater than $150,000, regardless of
formula allocation. The class agents are rewarded for their efforts to
spearhead the claim, but complainant also is entitled to some such relief
as a witness and contributing member of Black Males for Justice, Inc.
Finally, complainant’s argument that he will receive smaller QSI’s and
awards than he would be entitled as a GS-13, while lower graded employees
may receive a greater portion in relation to their grade-level, is not
sufficient reason to vacate the settlement. The settlement is fair to
the class as a whole.
CONCLUSION
Accordingly, the Administrative Judge’s finding that the January 11,
2002 settlement agreement is fair, adequate, and reasonable to the class
as a whole is AFFIRMED.
STATEMENT OF RIGHTS – ON APPEAL
RECONSIDERATION (M0701)
The Commission may, in its discretion, reconsider the decision in this
case if the complainant or the agency submits a written request containing
arguments or evidence which tend to establish that:
1. The appellate decision involved a clearly erroneous interpretation
of material fact or law; or
2. The appellate decision will have a substantial impact on the policies,
practices, or operations of the agency.
Requests to reconsider, with supporting statement or brief, must be filed
with the Office of Federal Operations (OFO) within thirty (30) calendar
days of receipt of this decision or within twenty (20) calendar days of
receipt of another party’s timely request for reconsideration. See 29
C.F.R. § 1614.405; Equal Employment Opportunity Management Directive for
29 C.F.R. Part 1614 (EEO MD-110), 9-18 (November 9, 1999). All requests
and arguments must be submitted to the Director, Office of Federal
Operations, Equal Employment Opportunity Commission, P.O. Box 19848,
Washington, D.C. 20036. In the absence of a legible postmark, the
request to reconsider shall be deemed timely filed if it is received by
mail within five days of the expiration of the applicable filing period.
See 29 C.F.R. § 1614.604. The request or opposition must also include
proof of service on the other party.
Failure to file within the time period will result in dismissal of your
request for reconsideration as untimely, unless extenuating circumstances
prevented the timely filing of the request. Any supporting documentation
must be submitted with your request for reconsideration. The Commission
will consider requests for reconsideration filed after the deadline only
in very limited circumstances. See 29 C.F.R. § 1614.604(c).
COMPLAINANT’S RIGHT TO FILE A CIVIL ACTION (S0900)
You have the right to file a civil action in an appropriate United States
District Court within ninety (90) calendar days from the date that you
receive this decision. If you file a civil action, you must name as
the defendant in the complaint the person who is the official agency head
or department head, identifying that person by his or her full name and
official title. Failure to do so may result in the dismissal of your
case in court. “Agency” or “department” means the national organization,
and not the local office, facility or department in which you work. If you
file a request to reconsider and also file a civil action, filing a civil
action will terminate the administrative processing of your complaint.
RIGHT TO REQUEST COUNSEL (Z1199)
If you decide to file a civil action, and if you do not have or cannot
afford the services of an attorney, you may request that the Court appoint
an attorney to represent you and that the Court permit you to file the
action without payment of fees, costs, or other security. See Title VII
of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.;
the Rehabilitation Act of 1973, as amended, 29 U.S.C. §§ 791, 794(c).
The grant or denial of the request is within the sole discretion of
the Court. Filing a request for an attorney does not extend your time
in which to file a civil action. Both the request and the civil action
must be filed within the time limits as stated in the paragraph above
(“Right to File A Civil Action”).
FOR THE COMMISSION:
______________________________
Carlton M. Hadden, Director
Office of Federal Operations
February 20, 2003
__________________
Date
CERTIFICATE OF MAILING
For timeliness purposes, the Commission will presume that this decision
was received within five (5) calendar days after it was mailed. I certify
that this decision was mailed to complainant, complainant’s representative
(if applicable), and the agency on:
__________________
Date
______________________________
Equal Opportunity Assistant
1The agreement settled the class action complaint certified in Dunbar,
et al. v. Social Security Administration, EEOC Appeal Nos. 01975435,
01975436, 01975437 (July 8, 1998), req. for recons. den., EEOC Request
No. 05981075 (January 22, 1999).
2The Commission granted class action certification for the time period on
or after June 23, 1995. Dunbar, et al. v. Social Security Administration,
EEOC Appeal Nos. 01975435, 01975436, 01975437 (July 8, 1998), req. for
recons. den., EEOC Request No. 05981075 (January 22, 1999). The AJ later
expanded the class to include members from January 1987, and to encompass
African-American males at the agency’s Woodlawn Complex, Security West,
and Metro West facilities, in addition to the Headquarters building.
Administrative Judge’s Decision Granting Final Approval of Settlement
Agreement, at 2 (June 11, 2002).
3Officers were granted $10,000 per year of service, board members received
$5,000, fundraisers took $1,000, and the regular members split $1,000,000
based on their monetary contributions.
4A separate AJ was appointed to serve as the “settlement judge,”
or mediator, during the settlement negotiations. The class agents,
through their counsel, and the agency, explicitly waived any right to
confidentiality in the negotiations in order to allow the settlement
judge to testify at the Fairness Hearing.
