Court Opinion

ID: 9484389
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:52:10.199475+00
Date Added: 2024-06-11T17:50:13.272099
License: Public Domain

MANION, Circuit Judge,
dissenting.
The district court determined that LOF acted “in bad faith” when laying off a group of employees; essentially that LOF perpetrated a fraud on the employees. The district court made this factual finding about LOF’s intent without holding an evidentiary hearing. It simply chose between competing factual inferences based on the evidence of record. The parties neither stipulated to this procedure nor implicitly consented to it. The parties had no notice that the court was about to resolve a question of fact. This court upholds the district court’s factual finding and affirms its judgment, holding that the proceedings below amounted to a trial based on a written record under Rule 52, Fed.R.Civ.P. Because I believe that a district court must comply with several procedural formalities when acting as a trier of fact, I respectfully dissent from the decision of this court.
A brief review of the facts is appropriate. LOF and Eirhart settled a 10-year old Title VII class action by a consent decree which became effective on October 1,1988. As part of the remediation afforded to the class under the consent decree, LOF was required to hire 342 class members into “permanent” positions within the company. LOF was to maintain the names of 342 class members on a hire list. As permanent positions within the company became available, LOF was to fill the positions with women from the hire list. LOF’s duty of good faith under the consent decree required that it only offer class members those positions which it truly believed would be permanent.
Around July 1990, LOF decided to hire several permanent employees at its Sherman, Texas plant to replace a group of temporary employees who filled in at the plant as the workload demanded. LOF claims that de*843mand for its products had increased and long-term employees were needed to satisfy this demand. In accordance with the terms of the consent decree, LOF first offered the newly created Sherman positions to members of the class. Between August 13 and October 15, LOF hired 42 class members at the Sherman plant.
On October 22, 1990 General Motors Corporation (GM) announced an unforeseen shutdown of some of its plants due to a major recession in the automobile market. Attendant to this shutdown, GM canceled large portions of its orders for LOF products. Within ten days of GM’s order cancellations, LOF laid off the 42 recently hired class members at the Sherman plant. LOF claimed that its initial hiring of the class members satisfied its obligations to them under the consent decree. Indeed, the consent decree made no guarantees about the permanence of jobs; it simply required LOF to use its best predictive judgment when designating a job as permanent. Accordingly, LOF refused to place the 42 laid-off class members back onto the hire list.
On November 14, 1990, the class members filed a Motion for Recall and Other Relief in the district court, seeking an “order compelling [LOF] to rehire each [job-seeking class member] to whom it offered, but did not provide, a permanent job opening and to compensate each [job-seeking class member] for the days not worked pursuant to [LOF’s] claimed lay-off.” LOF opposed the motion, claiming that it intended to and did hire the class members into permanent positions, but that an unforeseen downturn in the automobile industry caused the sudden layoffs. The class took the position that the hirings were a ruse — a bad-faith attempt to escape the requirements of the consent decree. They pointed to the fact that each of the Sherman positions previously had been designated by LOF as “temporary”, and the temporary positions were usually eliminated at the plant at about the same time of the year that LOF laid off the class members.
The district court held a hearing on this motion and other matters on February 15, 1991. The court characterized that hearing as an “interim status.” No witnesses were sworn; no testimony was taken. If anything, the attorneys merely made oral argument about whether the Sherman jobs were permanent within the meaning of the decree. The district court ordered the parties to submit affidavits and other documents to support their respective positions. The parties never objected to this request and submitted the requested documents.
On May 17, 1991, the district court issued a Memorandum Opinion and Order, finding that LOF hired the Sherman employees “in bad faith”, agreeing with the plaintiff class that LOF intended all along to lay off the Sherman employees. Based on its factual finding, the district court ruled that LOF’s “hiring of the (class members) was not, that of ‘permanent’ openings within the meaning of the Decree.” The court ordered LOF to return to the decree’s hire list the 42 class members who had been laid off. Later, based upon subsequent briefing on the issue of money damages, the court ordered LOF to pay the laid-off class members a total of $199,089.10 in lost wages, benefits, and consequential damages.
On appeal, LOF challenges the finding that it acted in bad faith in laying off the class members. LOF argues the facts support, only one inference: that a sudden downturn in the automobile industry caused the layoffs. LOF asks this court to accept this inference as a matter of law. So confident is LOF in its position that it never concedes in its briefs that there is a possible question of fact. However, LOF argues in its briefs that the plaintiff class failed to demonstrate the absence of an issue of material fact. LOF claims, therefore, that the district court improperly granted summary judgment for the plaintiff class because it ignored the inference that the layoffs were due to the automobile industry downturn. Ultimately, LOF seeks a “remand” of this case to the district court. At oral argument, in response to questions by the court, LOF clarified that it primarily sought judgment in its favor as a matter of law, and absent that, a remand to the district court to conduct an evidentiary hearing.
Initially, it is important to properly characterize the proceedings which took place be*844fore the district court. Did the district court merely interpret the meaning of the word “permanent” as it is used in the consent decree, or did the district court make a factual finding regarding LOF’s intent? This court posits in a footnote that
In the issue before us, the focus is not on LOF’s intent when it offered the JSCMs jobs at the plant. Judge Shadur did not find that LOF offered the JSCMs these jobs in bad faith in order to remove JSCMs from the hire or transfer hire lists. Rather, the judge found the jobs were not permanent jobs within the meaning of the consent decree. There is no need for a hearing to be held to resolve LOF’s intent in order to enforce the consent decree in this instance.
(Opn. page 841). On the contrary, the district court based its decision upon an explicit finding that LOF acted in “bad faith” in offering the Sherman jobs to the class members.1 If the district court simply interpreted a term in the consent decree, there would have been no need for any factual findings, and no authorization for clearly erroneous review. Interpretation of the terms of a consent decree is a legal determination which we would review under a de novo standard. South v. Rowe, 759 F.2d 610, 613 (7th Cir.1984). In this case, the district court interpreted the consent decree to mean that LOF was required to hire the job-seeking class members as full-time or permanent employees. LOF does not dispute this interpretation. It concedes its obligation to hire the class members into permanent or full-time positions and claims that the Sherman positions met those requirements.2 This is not a case, therefore, where we have been asked to review the district court’s interpretation of a consent decree.
The disputed issue in this case is LOF’s intent. The district court found, based solely upon the documentary evidence submitted by the parties, that LOF acted in “bad faith” in hiring the Sherman class members — that LOF never intended the jobs to be permanent. In essence, the court found that LOF hired the class members as a ruse to avoid the requirements of the consent decree. The district court determined that LOF’s change in characterization of the jobs from temporary to permanent conclusively established that LOF intended all along to lay off the class members hired at the Sherman plant.
Because the true issue in this case concerns LOF’s intent when it hired the class members, there is a need to hold an eviden-tiary hearing to resolve the fact sensitive issue of intent. The court confronts the need for an evidentiary hearing by taking alternative positions: asserting that “[f]or all intents and purposes” the proceedings before the district court amounted to an evidentiary hearing (opn. page 841), and also that LOF nevertheless waived its right to an evidentia-ry hearing.
In support of its position that the proceedings below were an evidentiary hearing, the court points out that the district court considered not only the written record, but also held several hearings over a number of years at which it considered matters related to the consent decree. However, the ten years of court activity leading up to the consent decree had no connection to the 42 jobs at the Sherman plant. The only hearing at which the district court considered the Sherman layoffs was the one held on February 16, 1991. In any event, the Motion for Recall and Other Relief was not a matter “tried to the court” under Rule 52. A trial to the court includes several procedural formalities, none of which were present in the district court’s informal consideration of the issue. Rule 39 describes the practice of trying a *845factual issue to the court, and Rule 48 describes the method of taking testimony in such proceedings. Attendant to this practice are several procedural safeguards: the Federal Rules of Evidence usually apply, and Rule 52 requires specific findings of fact which are reviewed under a “clearly erroneous” standard.
The proceedings before the district court embraced none of these procedural formalities. No witnesses were sworn. No testimony was taken. No documents were authenticated in the courtroom. They were only submitted attached to memoranda or as additional filings. Nor were any of the documents subject to contemporaneous objection under the Federal Rules of Evidence. At the hearing held on February 15, 1991, lawyers only made legal arguments. In short, the proceedings below did not amount to a trial to the court from which the judge could make factual findings.
The court seems to take the position that because Rule 52 contemplates that some decisions may be based on documentary evidence, the district court was justified in relying upon documents of record to choose between competing factual inferences. It is true that judges often may make decisions in bench trials based mostly or even solely on documentary evidence. Sometimes documentary evidence is the most persuasive evidence available to the factfinder. But just because Rule 52 specifically applies the “clearly erroneous” standard to decisions based on documentary evidence does not authorize a district court to forego the formalities of trial to the court when it deems the record sufficient to choose between competing factual inferences. The “clearly erroneous” standard authorized by Rule 52 applies to documents only when a matter is tried to the court, and the Motion for Recall and Other Relief was never tried to the court.3
Along with its conclusion that “for all intents and purposes” the proceedings below amounted to an evidentiary hearing, the court makes several arguments that LOF nevertheless waived its right to such a hearing. The court posits that LOF waived its right to an evidentiary hearing because it never explicitly requested one at the district court. But LOF had no notice that the district judge was preparing to bypass the Rules of Civil Procedure to make a factual finding based on the cold record. Certainly, a party'is not required to specifically request an evidentiary hearing in order to preempt a district court from making an unauthorized factual determination.
The court also insinuates that LOF waived its right to an evidentiary hearing by submitting documents at the district court and by failing to label its Motion for Recall and Other Relief a “motion for summary judgment”. But one does not consent to the district court making a finding of fact just because one submits documents. If this were so, every motion for summary judgment accompanied by an affidavit would be an invitation to the district court to choose between competing factual inferences. Nor does LOF’s failure to apply the “summary judgment” label to its motion authorize the district court to choose between competing factual inferences without holding an eviden-tiary hearing. No matter how the motion was labelled, the district court was not authorized to make factual findings without complying with the applicable rules.
In the past, the only times we have given deference to a district court’s findings of fact made without the benefit of an evidentiary hearing have been when the parties stipulate to this procedure, Lac Courte Oreilles v. Voigt, 700 F.2d 341, 349 (7th Cir.1983), or explicitly consent to it, May v. Evansville Vanderburgh School Corp., 787 F.2d 1105 (7th Cir.1986). In May, the district court granted summary judgment and the losing party appealed. We concluded that May *846was a unique sort of case where “both parties move for summary judgment because they do not want to bear the expense of trial but instead want the trial judge to treat the record of the summary judgment.proceeding as if it were the trial record.” Id. at 1115. The appellant in that case did not seek to overturn the decision of the trial court because of the existence of a material issue of fact. Rather, she considered the documentary evidence so supportive of her position that she sought summary judgment in her favor. We noted “[tjhis is not an alternative contention, with a trial as a backup request; it is the only thing she asks us to do (except for a remand to assess damages and formulate the injunctive decree).” Id. at 1116. At oral argument “[h]er lawyer was emphatic in stating that his client did not want a trial.” Id.
Unlike the appellant in May, from the outset of this appeal LOF has sought to overturn the decision of the trial court because it improperly resolved a question of fact. In its brief, LOF states that “the plaintiffs, nevertheless, failed to prove [the] absence of a genuine issue of material fact.” The court ignores LOF’s clear expression in its brief regarding the existence of a material issue of fact. The court incorrectly posits that “LOF has never once argued that a material issue of fact exists which precludes finding in favor of Eirhart.” (Opn. page 840). As noted above, however, LOF explicitly made this argument. LOF goes on to argue that because “a reasonable jury could have rendered a verdict for the nonmoving party” — for LOF — “the court must reverse the decision.” LOF concluded its brief by asking this court to remand this matter. At oral argument, LOF clarified that although it considered itself entitled to judgment in its favor as a matter of law, as an alternative it desired a remand to the district court to choose between competing factual inferences. Certainly, LOF has not expressed a desire to waive its right to present its evidence to a factfinder. See Market Street Associates Ltd. Partnership v. Frey, 941 F.2d 588, 590 (7th Cir.1991); Cf. Charles A. Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and Procedure § 2720 at 16-17 (1988) (“[T]he fact that both parties simultaneously are arguing that there is no genuine issue of material fact does not establish that a trial is unnecessary thereby empowering the court to enter judgment as it sees fit.”).
Under the federal rules, there is no procedural basis for the district court’s determination that LOF violated the consent decree. The finding was improper under Rule 52 because the proceeding was not an “action tried upon the facts without a jury.” There was no trial; no evidentiary hearing. Further, the resolution of a fact question is not permissible when a district court renders judgment under Rule 56. Because the district court’s finding that LOF had a bad intent was not made pursuant to a trial to the court, we cannot review the finding under a clearly erroneous standard. The only way to view it is as an improper resolution of a question of fact. The unusual circumstance of the hiring and almost immediate layoffs, combined with the evidence that the job classifications were suddenly changed from temporary to permanent, support the inference that LOF’s actions were a ruse. But the competing inference that LOF hired the class members in good faith only to encounter a sudden downturn in the automobile industry, coupled with substantial cancellation of orders, is also significant. These competing inferences should not be resolved without an evidentiary hearing. The district court’s judgment should be reversed and remanded.

. Contrary to the assertions made in the court’s opinion, on several occasions in its Memorandum Opinion and Order regarding the Sherman employees, the district court specifically "found" that "LOF acted in bad faith in hiring the JSCMs”. Because it found that LOF never intended the jobs to be permanent — that it acted in bad faith — the district court concluded that the jobs were not permanent within the meaning of the decree.

. The district court concluded that the word "permanent" as used in the consent decree should be interpreted according to its ordinary meaning, and is not in any way limited or expanded by the parenthetical "(more than 120 days)” which immediately follows the word in the consent decree. Neither party appeals this ruling.

. Rule 52’s specific reference to documentary evidence simply makes clear that when reviewing a district court's decision based on such evidence, an appellate court should avoid the temptation to apply its own impressions to interpreting the documents (even though the appellate court is in as good a position to review the documentary evidence as the district court). That was the essential holding of Anderson v. Bessemer City, 470 U.S. 564, 105 S.Ct. 1504, 84 L.Ed.2d 518 (1985), where the Supreme Court reversed an appellate court's decision to overturn a district court's findings made after a 2-day trial. The Supreme Court reasoned that even though the district court’s findings did not rest on credibility determinations but on documentary evidence, Rule 52 required "clearly erroneous” review.