Court Opinion

ID: 9464849
Source: CourtListenerOpinion
Date Created: 2023-08-04 23:44:42.406839+00
Date Added: 2024-06-11T17:38:51.208231
License: Public Domain

GEE, Circuit Judge.
This appeal revolves around the interpretation of one section of a consent decree entered into by the parties and accepted by the district court in 1973.
The consent decree in question settled the claims of a group of black employees who had initiated an action under Title VII of the 1964 Civil Rights Act, 42 U.S.C. § 2000e, et seq., against Courtaulds of North America and against the local and national units of the Textile Workers Union of America. Among other things, the black employees had contended that the defendants maintained a discriminatory promotional and seniority system. This, they said, was due in part to the past practice of segregated job classifications under which black employees had been placed in undesirable labor classifications only; although by the time of the lawsuit black employees had gained the right to transfer, they could do so only at the cost of their seniority. This in turn was because under the collective bargaining agreement between the union and Cour-taulds, seniority was reckoned by service within particular sections or “lines of progression,” rather than by an employee’s total length of service with the company. When one departed one “line” to enter another, then he began in the new “line” with no seniority, and that regardless of how long he had been employed at the plant.
*89Whatever the truth of those allegations, the parties did arrive at the 1973 settlement agreement that purported, among other things, to solve these problems of seniority. For seniority purposes the agreement set out special provisions for an “Affected Class” of 57 named black employees who had been hired in the “labor section” before October 21,1968, and provided that, subject to certain specific limitations, the “Affected Class” members would be entitled to what was called “Court Seniority” in connection with promotions, demotions and layoffs. This “Court Seniority” was defined by the employee’s length of continuous service with Courtaulds.
The present controversy concerns the application of the settlement agreement’s “Court Seniority” clauses in the context of a reduction in force. The paragraphs under dispute are the following:
[VII.]D. 1. When members of the Affected Class compete with each other or with employees not of the Affected Class as to layoff, demotion and recall, Court Seniority shall be the applicable seniority for such purposes and may be utilized by Affected Class employees and any other employees so competing. Court Seniority for the purposes of demotion, layoff and recall shall not be lost by failure either to bid or to accept an entry level job as is set forth in preceding Paragraph “C”.
2. Subject to the express exception in Paragraph III. (F) above, an Affected Class employee or any other person can only use his Court Seniority in case of demotion, layoff or recall from his position in the line of progression in which he is as of the date of this Settlement Agreement downward to the entry job in that same line of progression. He can at no time use Court Seniority to jump from section to section or from department to department.
(Emphasis added).
The entire case hinges on the referent of the prepositional clause beginning with “in which” in the emphasized portion: if this clause modifies “position,” one result emerges; but if it modifies “line of progression,” it has quite a different meaning. At the time this controversy arose the company and the union read the “in which” clause to modify “position.” On this reading the company could, at the time of a layoff, bump each Affected Class employee back to the position he had occupied at the time of the 1973 agreement, and the employee could only apply his Court Seniority to avoid further drops' in position. Each of the appellants had transferred to the Spinning Department prior to the 1973 settlement, and each had used his Court Seniority in that line of progression to advance to a job position higher than that to which he would have advanced under ordinary section seniority. But when a reduction in force occurred in 1974 the company, applying its interpretation of paragraph VII.D.2. of the agreement, bumped each plaintiff back to his pre-settlement position in the Spinning Department.
The plaintiffs contested this procedure, arguing that it was based on a misreading of paragraph D.2. They contend that the “in which” clause modifies “line of progression” rather than “position.” On this reading the Affected Class members, in case of a reduction in force, should be able to apply Court Seniority to protect themselves in the new positions they have attained as a result of the settlement, without first being bumped back by section seniority to their pre-settlement positions. The company’s interpretation, they argue, turns paragraph D.2. into an exception that virtually swallows the rule of Court Seniority as applied to layoffs by paragraph D.l. Upon their demotions the plaintiffs filed grievances. These were denied, and an arbitrator decided in favor of the company, unaccountably finding no ambiguity in the disputed clause.1 Meanwhile, appellants applied to *90the district court for a declaration of their rights and enforcement of the settlement agreement. The district court, like the arbitrator, determined that the phrase in question was not ambiguous and that the defendants’ interpretation was correct.
We reverse. We note preliminarily that we are not bound by the clearly erroneous standard of review of Federal Rule of Civil Procedure 52(a).2 The Supreme Court has said that “since consent decrees and orders have many of the attributes of ordinary contracts, they should be construed basically as contracts,” United States v. ITT Continental Baking Co., 420 U.S. 223, 236, 95 S.Ct. 926, 934, 43 L.Ed.2d 148 (1975), and this court has observed that the contractual aspects of a consent decree exist “chiefly . in regard to disputes concerning what the parties actually consented to as reflected by the judgment in question.” United States v. Kellum, 523 F.2d 1284, 1287 (5th Cir. 1975). The present issue thus should clearly be treated as a matter of contractual interpretation. It has been frequently stated, however, that the interpretation of the written language of a contract is a matter of law and is reviewable'as such. See, e. g., First National Bank of Miami v. Insurance Co. of North America, 495 F.2d 519 (5th Cir. 1974); C. Wright & A. Miller, Federal Practice & Procedure: Civil, § 2588. The reason was stated in our opinion in Illinois Central Railroad Co. v. Gulf, Mobile & Ohio Railroad Co., 308 F.2d 374, 375 (5th Cir. 1962):
Since this Court is in as good position to interpret the . written contract as was the district court, we cannot rely upon the clearly erroneous rule, but must ourselves construe the contract without any presumption in favor of the judgment of the district court.
Thus, our review of the district court’s interpretation of the consent decree’s language is comparable to review of a district court’s contract interpretation and is not restricted by the clearly erroneous rule of F.R.Civ.P. 52(a); the matter may rather be considered afresh by this court as a matter of law. See Kimbell Foods, Inc. v. Republic National Bank, 557 F.2d 491 (5th Cir. 1977).
If possible, we are required to analyze a contract’s meaning by its language without resort to extrinsic considerations. This is because the language of an agreement, unless ambiguous, represents the parties’ intention. Kimbell, supra at 496. Of settlement agreements in particular, the Supreme Court has said that:
[T]he agreement reached normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with the litigation. Thus the decree itself cannot be said to have a purpose; rather the parties have purposes, generally opposed to each other, and the resultant decree embodies as much of those opposing purposes as the respective parties have the bargaining power and skill to achieve. *91For these reasons, the scope of a consent decree must be discerned within its four corners, and not by reference to what might satisfy the purposes of one of the parties to it.
United States v. Armour & Co., 402 U.S. 673, 681-82, 91 S.Ct. 1752, 1757, 29 L.Ed.2d 256 (1971). Where ambiguities exist in the language of a consent decree, the court may turn to other “aids to construction,” such as other documents to which the consent decree refers, as well as legal materials setting the context for the use of particular terms. ITT Continental Baking, supra, 420 U.S. at 238-43, 95 S.Ct. 926.
We are puzzled by the district court’s stated view that the syntactically opaque language of clause VII.D.2 is “not ambiguous,” but we think that the district court was correct in attempting to construe this clause in the light of other portions of the agreement. We disagree, however, with the district court’s ultimate construction of the phrase. That interpretation focused on the opening clause of paragraph VII.D.2, “Subject to the express exception in Paragraph III.(F) . . .” This clause refers to the ten named members of the Affected Class who had not yet transferred at the time the settlement agreement went into effect; paragraph III.F entitled them to transfer within thirty days after the settlement without forfeiting Court Seniority in the new section. The district court reasoned that since this group of ten employees was excepted from the operation of paragraph VII.D.2, these ten had full Court Seniority for purposes of demotion, as provided in paragraph VII.D.l, whereas the other members of the Affected Class had only the restricted Court Seniority of paragraph VII.D.2; that is, they could be bumped back to their immediate pre-settlement positions before Court Seniority applied. Thus, the court said, the exception clause removed any ambiguity in paragraph D.2, since it meant that the general Court Seniority of paragraph D.l had at least some applicability, namely to the ten employees who had not transferred prior to the settlement.
This argument is unconvincing. It assumes the very point at issue, i. e., that the “in which” clause modifies “position” rather than “line of progression” and that consequently all but the excepted ten of the fifty-seven Affected Class members could indeed be bumped back to their pre-settlement positions before Court Seniority would apply. Moreover, the argument is even less appealing when paragraphs VII.D.2 and 2 are read together and in the context of the entire agreement.
To recapitulate, paragraph VII.D.l provides in general language that Court Seniority is to apply in case of layoff, demotion and recall of the 57 Affected Class members. The next paragraph is VII.D.2, the paragraph in dispute here. In the main it deals with the subject of section transfers by Affected Class members. The first clause refers to the ten named Affected Class members who had not yet transferred and reserves to them the right to transfer one time without loss of Court Seniority;3 the last sentence states that Court Seniority may not be used to jump from section to section.
Sandwiched between these two phrases dealing with transfers is the language at issue. The appellants argue, we think compellingly, that their reading of the language is the natural and appropriate reading, since it also relates to section transfers, i. e., if the “in which” clause refers to “Line of progression,” the clause in question merely restricts the use of full Court Seniority to those who refrain from transferring after the date of the settlement. The appellees’ reading, on the other hand, would have the disputed clause shift abruptly from the subject of section transfers to an entirely different subject, namely the bumping back to a baseline job of all but ten of the fifty-sev*92en Affected Class members. We think it highly unlikely that the parties would have placed so severe a restriction on the use of Court Seniority, by all but a few of the Affected Class members, in the middle of a paragraph that ostensibly deals with inter-sectional transfers. Nor does the decree as a whole give any hint of a reason why the ten who have not yet transferred should be awarded full Court Seniority in the event of demotions, whereas their brethren would not — particularly when paragraph VII.D.l appears on its face to give equal rights to all 57 of the Affected Class members. Thus, we think that the appellees’ reading of the language is highly artificial.
The Supreme Court has cautioned against the use of such “strained” constructions of settlement agreements. United States v. Atlantic Refining Co., 360 U.S. 19, 22, 79 S.Ct. 944, 3 L.Ed.2d 1054 (1959); see also Hughes v. United States, 342 U.S. 353, 72 S.Ct. 306, 96 L.Ed. 394 (1952). The natural reading of paragraph VII.D.2 is as a restriction on intersectional transfers; thus, the “in which” clause should be read to modify “line of progression” so that all 57 members of the Affected Class are entitled to full Court Seniority in the event of demotion or layoff, subject of course to the transfer restrictions of paragraph D.2 and any further restrictions embodied elsewhere in the settlement.
Because of our reading of the language of the decree, we do not reach appellants’ further contentions as to modification of the decree.
We reverse and remand for further proceedings consistent with this opinion.
REVERSED AND REMANDED.

. These matters were referred to arbitration in accordance with Article IX of the settlement agreement, which provides that “any dispute or disagreement arising under this Settlement Agreement involving matters governed by the Collective Bargaining Agreement as it may be modified by the Settlement Agreement shall be referred for resolution to the grievance process *90provided by the Collective Bargaining Agreement in effect at the time in question. . This article does not explicitly make the arbitrator’s decision binding on the parties; moreover, the settlement agreement explicitly provides that the district court — which initially heard the litigation and accepted the settlement — was to retain jurisdiction over the agreement. We think that the district court correctly treated this enforcement action as one requiring de novo review by the court. Such review appears to be contemplated by the settlement agreement. In addition, while the settlement agreement casts the case in a different light from an initial Title VII action, there are certain analogies to such an action. Here, too, the appellants’ nondiscrimination rights are governed in large part by a legal document, here the settlement agreement, that is independent of the collective bargaining agreement. Deferral to the arbitrator’s decision would raise at least some of the same difficulties that could be raised in deferral to arbitration in a Title VII suit, due for example to the different nature of the arbitration forum and possible conflicts of interest between the grievants and their union representatives in arbitration proceedings. See Alexander v. Gardner-Denver Co., 415 U.S. 36, 55-60, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974).

. Since this issue involves interpretation of the language of an existing settlement, rather than the initial acceptance of a consent decree as fair to the parties, the district court’s exercise of discretion is not in question, and we do not review for abuse of discretion.

. It seems apparent that this provision was intended to permit the laggards to escape from the undesirable lines as their more enterprising brethren already had. That it should intend to put them on a par is understandable; that the .clause should be intended to reward their timidity is not.