Opinion ID: 404154
Heading Depth: 1
Heading Rank: 4

Heading: modification of a consent decree

Text: 61 There are three grounds upon which a consent decree may later be modified. First, a decree may be modified in accordance with basic contract principles. Brown, 644 F.2d at 559-560. Moreover, Rule 60(b) provides relief from a consent decree upon a showing that the decree is void or is no longer equitable. Fed.R.Civ.P. 60(b)(4), (5). See EEOC v. Safeway Stores, Inc., 611 F.2d 795, 799 (10th Cir. 1979), cert. denied sub nom., Courtwright v. EEOC, 446 U.S. 952, 100 S.Ct. 2918, 64 L.Ed.2d 809 (1980); Brown, 644 F.2d at 560 n.17; Philadelphia Welfare Rights Org'n. v. Shapp, 602 F.2d 1114, 1120-21 (3d Cir. 1979), cert. denied sub nom. Thornburgh v. Philadelphia Welfare Rights Org'n., 444 U.S. 1026, 100 S.Ct. 689, 62 L.Ed.2d 660 (1980). A trial court's ruling on a Rule 60(b) motion will not be disturbed absent an abuse of discretion. See Dawson v. Pastrick, 600 F.2d 70, 75 (7th Cir. 1979); Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977). Finally, a court of equity has continuing jurisdiction to modify a decree upon changed circumstances. United States v. Swift & Co., 286 U.S. 106, 114-15, 52 S.Ct. 460, 462, 76 L.Ed. 999 (1932); Brown, supra. Modification of a consent decree, of course, requires a full hearing and findings of fact. United States v. Atlantic Refining Co., 360 U.S. 19, 23, 79 S.Ct. 944, 946, 3 L.Ed.2d 1054 (1959); Hughes v. United States, 342 U.S. 353, 357-58, 72 S.Ct. 306, 308, 96 L.Ed. 394 (1952); Brown, 644 F.2d at 560.
62 The 1980 Decree imposes a duty on the City to engage in certain affirmative action in its hiring and promotion decisions. The decree does not contain a provision which would prevent the operation of the decree if one party experiences an economic hardship. In April of 1981, the City experienced an unanticipated economic crisis. The City unilaterally determined that a reduction in the number of City workers could lessen the severity of the crisis. Alternative methods for meeting the crisis were available. The City had ultimate responsibility for determining: 1) that city-wide layoffs were the alternative which would most effectively relieve the crisis; and 2) which job classifications would be subject to the layoff policy. It is uncontroverted that the application of the layoff policy to the job classifications selected by the City would have virtually destroyed the progress belatedly achieved through affirmative action. The City contracted in the 1974 and 1980 Decrees to accomplish precisely that which the layoffs would destroy: a substantial increase in the number of minorities in supervisory positions. 63 The district court, sitting as a court of equity, had the equitable power to order specific performance of the terms of the 1974 and 1980 decrees. As noted, the 1980 Decree is based upon the mutual assent of the parties and a judicial determination of reasonableness. This Decree mandates an increase in the level of minority employment and promotion within the First Department. Minorities hired and/or promoted pursuant to the 1980 Decree were parties to and the intended beneficiaries of the 1980 Decree. Therefore, the City's announcement to these employees was in effect notice of the City's intended anticipatory repudiation of the 1974 and 1980 Decrees. The announcement notified Plaintiffs that 1) relief previously granted pursuant to the Decrees would be diminished; and 2) prospective relief under the Decrees would not be forthcoming. 64 In response to the City's announcement, the Plaintiffs sought to enjoin the proposed layoffs. However, it is apparent from Judge McRae's treatment of this case that he properly recognized that Plaintiffs did not seek to modify contractually the existing consent decrees. Instead, Plaintiffs merely sought to compel compliance with the terms and goals of the Decrees. Under the terms of the Decrees, the City was obligated to employ reasonable, good faith efforts to fulfill the goal of increasing minority representation in each job classification in the fire department to levels approximating the minority population represented in the civilian labor force in Shelby County. 65 The City's failure to fulfill its obligations under the Decrees would have subjected it to liability for violating both its contractual obligations and a judicial order. The City contends that the sole reason for the layoff proposal was economic hardship. This argument is meritless. It is hornbook contract law that economic hardship does not excuse performance under a contract. See J. Calamari and J. Perillo, Contracts, 491 (2d ed.). Neal-Cooper Grain Co. v. Texas Gulf Sulphur Co., 508 F.2d 283 (7th Cir. 1974). Consequently, the decrees remained specifically enforceable. See ITT Continental Baking Co., 420 U.S. at 236, 95 S.Ct. at 934. Plaintiffs were presumptively entitled to full performance of the terms of the Decrees. Therefore, the court's modification of the decree is simply an exercise of its equity jurisdiction to temporarily relieve the hardship on the City which strict compliance with the decrees would have caused. The modification allows the City to proceed with its layoff policy subject to reasonable deference to its obligations under the decrees. In our view, the court's decision to modify the Decrees is a reasonable accommodation of competing interests and obligations. The modification partially alleviates the City's misfortune, while protecting the integrity of the court's initial orders. The court gave due deference to the City in structuring its internal affairs. See National League of Cities v. Usery, supra. Comity and an appreciation of federalism caused the court to exercise its equitable powers to apportion the burden of meeting the City's fiscal crisis on minorities and non-minorities alike. The court retains authority to mandate full compliance with the decrees should circumstances change.
66 The relief granted under Fed.R.Civ.P. 60(b) is extraordinary and may be granted only upon a showing of exceptional circumstances. Mayberry v. Maroney, 558 F.2d 1159, 1163 (3d Cir. 1977); Philadelphia Welfare Rights Org'n., 602 F.2d at 1119; Brown, 644 F.2d at 560, n.17. A change in the facts upon which the consent decree is based usually constitutes an exceptional circumstance. See King-Seeley Thermos Co. v. Aladdin Industries, Inc., 418 F.2d 31, 35 (2d Cir. 1969), on remand, 320 F.Supp. 1156 (D.Conn.1970). See also Safeway Stores, 611 F.2d at 800. A consent decree may also be modified where a better appreciation of the facts in the light of experience indicates that the decree is not properly adapted to accomplishing its purposes. Chance v. Board of Examiners, 561 F.2d 1079, 1086 (2d Cir. 1977), quoting King-Seeley Thermos Co., 418 F.2d at 35. The availability of relief under Rule 60(b) is not squarely presented on this appeal. 19 We, therefore, express no opinion on whether the 1980 Decree could have been modified pursuant to Rule 60.
67 A trial court has broad discretion in administering consent decrees. See, e.g., Brown, supra; Safeway Stores, 611 F.2d at 799; American Telephone and Telegraph Co., 556 F.2d at 178. While acting within its equity jurisdiction, a trial court has continuing jurisdiction to modify a consent decree upon a showing that changed circumstances have transformed the original decree into an instrument of wrong. See, e.g., United States v. Swift & Co., 286 U.S. 106, 114-115, 52 S.Ct. 460, 462, 76 L.Ed. 999 (1932); Hughes v. United States, 342 U.S. 353, 72 S.Ct. 306, 96 L.Ed. 394 (1952); Brown, supra. The court's power to modify the terms of a decree should not be exercised lightly. Swift & Co., supra. Modification is proper where it has been demonstrated in an evidentiary hearing that new and unforeseen conditions have created a hardship. See Brown, 644 F.2d at 559. Accord Chrysler Corp. v. United States, 316 U.S. 556, 562, 62 S.Ct. 1146, 1149, 86 L.Ed. 1668 (1942) (The test is whether the change served to effectuate or thwart the basic purpose of the original consent decree.). See United States v. Chicago, 663 F.2d 1354, 1360 (7th Cir. 1981) (en banc) (the standard for modification is not based solely on hardship. It incorporates consideration of whether the purpose of the decree has been achieved). See also Sarabia v. Toledo Police Patrolman's Ass'n, 601 F.2d 914, 916 (6th Cir. 1979). See generally Requests By The Government For Modification of Consent Decrees, 75 Yale L.Rev. 657 (1966); Flexibility and Finality in Antitrust Consent Decrees, 80 Harv.L.Rev. 1303 (1967). New and unforeseen conditions exist where there has been a fundamental change in the essential facts upon which the decree is based. See Safeway Stores, 611 F.2d at 800 (new, unforeseeable circumstances not present where there is no evidence indicating that the facts-e.g., the nature and makeup of Safeway employees and operations-against which the decree and the interpreting order were framed have substantially changed.). 68 It is well settled that a court can modify a consent decree where layoffs caused by an unanticipated economic crisis threatens to frustrate the purpose of the decree. See Brown, 644 F.2d 551; Bolden, 73 F.R.D. at 371-72; Castro v. Beecher, 522 F.Supp. 873 (D.Mass.1981). Thus, even if Judge McRae's decision is not construed as compelling compliance with the terms of the Decrees, there exists an independent justification for the modification. 69 In Brown, this court held that a trial court could exercise its inherent authority to modify a consent decree where an economic crisis unexpectedly caused the City of Toledo to lay off firemen. The layoffs were a new and unforeseen changed circumstance which threatened to frustrate the purpose of the Brown decree by destroying its mandated affirmative action. The nature and racial composition of the Toledo Fire Department would also have been radically altered by the layoffs. 70 The factual situation which Judge McRae faced was virtually identical to that which confronted Judge Young in Brown. Judge McRae specifically found that: 1) the proposed layoffs were an unexpected circumstance not anticipated by the parties when they entered the decree; 2) the purpose of the 1980 Decree was to correct the past hiring and promotion practices of the City through affirmative action; and 3) the proposed layoffs would have a devastating and retrogressive effect on the affirmative action mandated in the 1974 and 1980 Decrees. These findings have not been challenged on appeal. The findings are not clearly erroneous. 71 The proposed layoffs would impose an undue hardship on Plaintiffs. The Plaintiffs have relied on the affirmative action provisions of the 1980 Decree. Thus, they have foregone their right to litigate the City's past employment practices and possibly obtain greater relief. The proposed layoffs would wrench the belated relief provided by the 1980 Decree from the Plaintiffs. The City unilaterally selected the job classifications in the Fire Department which would be affected by the proposed layoffs. The job classifications selected were those where minorities had recently made the most gains under the affirmative action provisions of the 1974 and 1980 Decrees. Judge McRae was correct in not allowing the City to eradicate the belated affirmative action it had contracted to accomplish in the 1974 and 1980 Decrees. Judge McRae did not issue a blanket order enjoining the layoff of all minority workers. Instead, the court merely prevented the City from reducing the percentage of minorities in each job classification. Judge McRae did not abuse his discretion in modifying the consent decree and enjoining the City from reducing the percentage of blacks in certain job categories within the City Fire Department.