Opinion ID: 160839
Heading Depth: 2
Heading Rank: 2

Heading: The Scope of the District Court's Equitable Modification Power

Text: 14 Utah concedes that courts possess the equitable power to modify consent decrees when changed circumstances support modification. Utah argues, however, that the court's modification power is circumscribed and cannot be exercised to substantially alter an unambiguous provision that is material to the parties' agreement. Utah contends that the Termination Provision is not properly subject to equitable modification because it is both unambiguous and a material provision that lies at the very heart of the parties' deal settling this lawsuit without going to trial. 15 Utah's position that courts have no equitable power to modify material provisions is foreclosed by Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367 (1992). In Rufo, the district court refused to order modification of a consent decree, in part, because the provision was an important element . . . perhaps even the most important element of the decree. See Inmates of the Suffolk County Jail v. Kearney, 734 F. Supp. 561, 565 (D. Mass. 1990). The Supreme Court, however, specifically addressed and unambiguously rejected the district court's conclusion, stating that [i]f modification of one term of a consent decree defeats the purpose of the decree, obviously modification would be all but impossible. That cannot be the rule. The District Court was thus in error in holding that . . . modification of the [provision] was necessarily forbidden. Rufo, 502 U.S. at 387. Thus, it is apparent from Rufo that a court's equitable modification power extends to material provisions in a consent decree. 16 In support of its position that a court's equitable power is circumscribed by an unambiguous termination provision in a consent decree, Utah relies on cases in which the court was interpreting the decree, not exercising its equitable modification powers. See, e.g., South v. Rowe, 759 F.2d 610, 613 (7th Cir. 1985); Sanders v. Shell Oil Co., 678 F.2d 614, 617-18 (5th Cir. 1982). The issue we address here, however, is whether the district court possessed the equitable power to modify its own order if changed circumstances warrant such modification. We do not address the question of whether the district court erred in interpreting the terms of the Agreement or exceeded its authority in enforcing the Agreement. See supra, note 1. While it may be true that a court charged with interpreting a consent decree is bound by an unambiguous termination provision contained in the decree, a court exercising its broad equitable power to modify the consent decree is not similarly constrained. Thus, the authority upon which Utah relies is inapposite. Additionally, if we accept Utah's argument, in every modification case the district court would be required to make an initial determination whether the termination provision is ambiguous. We decline to impose any such obligation on the court. 17 Contrary to Utah's assertions, a court's equitable power to modify its own order in the face of changed circumstances is an inherent judicial power that cannot be limited simply because an agreement by the parties purports to do so. See South, 759 F.2d at 613 (Of course, the parties could not agree to restrict the court's equitable powers to modify its judgment enforcing the consent decree, including the two-year limitation period, in light of 'changed circumstances.'). A court's broad, equitable power to modify its own orders is not limited to modification of ambiguous provisions. To hold otherwise would allow the parties, by the terms of their agreement, to divest a court of its equitable power or significantly constrain that power by dictating its parameters. 18 Finally, Utah argues that courts can exercise their equitable powers to relieve defendant parties of obligations they assumed when they entered into unlitigated decrees, but that courts have no authority to modify unlitigated consent decrees if the modification expands the defendant party's obligations. Utah submits that the district court thus lacked the authority to modify the Termination Provision because the modification expanded the obligations it voluntarily assumed under the terms of the Agreement. 19 Utah concedes generally, as it must, that a court sitting in equity has the authority to modify an unlitigated consent decree. See United States v. Swift & Co., 286 U.S. 106, 114 (1932) (We are not doubtful of the power of a court of equity to modify an injunction in adaptation to changed conditions, though it was entered by consent. . . . If the reservation had been omitted [from the terms of the decree], power there still would be by force of principles inherent in the jurisdiction of the chancery.); Sys. Fed'n No. 91 v. Wright, 364 U.S. 642, 646-47 (1961). It is equally settled that a court has the equitable power to impose additional obligations on a defendant party to a consent decree when the decree is entered into after an adjudication of wrongdoing on the part of the defendant. See United States v. United Shoe Mach. Corp., 391 U.S. 244, 251 (1968). Utah, however, attempts to distinguish between the scope of a court's power to modify litigated consent decrees and its power to modify unlitigated decrees. It argues that a court has no authority to modify an unlitigated consent decree if the modification imposes additional, substantial obligations on the defendant party. See Lorain NAACP v. Lorain Bd. of Educ., 979 F.2d 1141, 1153 (6th Cir. 1992); Fox v. HUD, 680 F.2d 315, 323 (3d Cir. 1982). 20 If we unconditionally accept Utah's argument, a plaintiff party to an unlitigated consent decree could never seek equitable modification of the decree pursuant to Rule 60(b) of the Federal Rules of Civil Procedure because any such modification would invariably impose an additional obligation on the defendant party. The plain language of Rule 60(b), however, makes no distinction between plaintiffs and defendants but allows either party to seek relief from a judgment or order. See Fed. R. Civ. P. 60(b). Thus, Rule 60(b) does not categorically prohibit a plaintiff party to an unlitigated consent decree from seeking modification of the decree. Additionally, nothing in Rufo limits its application to cases in which modification is sought by the defendant party. See Rufo, 502 U.S. at 383 (stating the holding by using the neutral language, a party seeking modification and [i]f the moving party meets this standard); see also Juan F. v. Weicker, 37 F.3d 874, 879 (2d Cir. 1994) (applying Rufo in a case where modification was sought by the plaintiff party); Williams v. Edwards, 87 F.3d 126, 131-32 (5th Cir. 1996) (same). We reject the general proposition that only defendants can seek equitable modification of unlitigated consent decrees. 21 It is unnecessary for this court to decide whether a court lacks authority to modify an unlitigated consent decree in a way that materially expands the defendant party's obligations because this case does not present that question. Here, the district court granted Appellees relief from the four-year Termination Provision by extending the term of the Agreement. Regardless of how Utah attempts to characterize the court's modification, the extension of the term of the Agreement to allow Utah to fulfill the very obligations it voluntarily undertook when it entered into the Agreement is not itself an imposition of additional, material obligations on Utah. We thus reject Utah's argument that the district court lacked authority to modify the Termination Provision because the modification expanded its obligations. 2 22 Having considered and rejected each of Utah's arguments, we conclude that the district court had the authority to modify the Termination Provision. 3 23