17 Fair Empl.prac.cas. 24, 16 Empl. Prac.dec. P 8180airline Stewards and Stewardesses Association, Local 550,twu, Afl-cio, et al., Plaintiffs-appellees, v. American Airlines, Inc., Defendant-appellee,andassociation of Professional Flight Attendants, Intervenor-appellant, 573 F.2d 960 (7th Cir. 1978)

The issue in this case is whether the district court abused its discretion by approving the settlement of a case under Title VII of the Civil Rights Act of 1964¹  without litigating the merits of the plaintiffs' claims and by not requiring a full evidentiary hearing on the effect of the settlement on the interests of the defendant's incumbent employees.

* The plaintiffs in this case are a certified class composed of all female persons employed as flight cabin attendants whose employment with the defendant, American Airlines, was terminated due to their having children on or after July 2, 1965. The intervenor, the Association of Professional Flight Attendants (APFA), is the exclusive bargaining agent for those attendants presently employed by American Airlines.

This suit was filed in 1970 in response to the defendant airline's policy of terminating stewardesses who became pregnant or adopted children and not allowing women with children to work as stewardesses. The suit²  was brought by the Air Line Stewards and Stewardesses Association (ALSSA), the intervenor's predecessor as the bargaining representative of defendant's flight cabin attendants. The ALSSA entered into a settlement agreement with defendant which provided neither back pay nor retroactive seniority to those attendants who had been discharged under defendant's policy. That agreement was approved by the district court, but reversed by this court. Air Line Stewards & Stewardesses Ass'n, Local 550 v. American Airlines, Inc., 490 F.2d 636 (7th Cir. 1973), cert. denied sub nom. Air Line Stewards & Stewardesses Ass'n, Local 550 v. Zipes, 416 U.S. 993, 94 S. Ct. 2406, 40 L. Ed. 2d 773 (1974).

On remand, after discovery and extensive briefing, the district court granted plaintiffs' motion for summary judgment. Defendant appealed that judgment to this court,³  but during the briefing for that appeal, a settlement was reached. The settlement provides, inter alia, for the payment of cash, the restoration of accrued company seniority and provision for the court to decide whether occupational seniority⁴  was appropriate if the APFA did not agree to a full restoration of that latter type of seniority.

The APFA filed a motion to intervene and requested a hearing on its objections to the settlement. The district court recognized that "for a complete resolution of the issues that arise out of this proposed settlement, that the Union should have a voice concerning it" and therefore, the court granted APFA's motion and conducted a hearing on the issues raised (Tr. at 2).

At the hearing, the intervenor declined to present any evidence, but instead argued orally on behalf of the incumbent employees' rights.⁵  Intervenor's only complaint with the agreement was its provision for full retroactive "occupational seniority" for those flight attendants seeking reinstatement. Since occupational seniority is used under the collective bargaining agreement as the basis for determining many working conditions, e. g., choice of bases and order of lay-off, intervenor argued that the granting of this relief would be an onerous burden on the incumbent employees. After the intervenor's argument, the court stated that "the equities are on the side of approving the settlement agreement. . . . I think it is the best and most equitable result we can achieve in the case." Subsequently, the court entered an order approving the settlement agreement and providing for the restoration to those plaintiffs requesting reinstatement of their accrued occupational seniority from the time of their discharge. Intervenor appeals that judgment.

II

Intervenor initially argues, relying on United Airlines, Inc. v. Evans, 431 U.S. 553, 97 S. Ct. 1885, 52 L. Ed. 2d 571 (1977), that the district court erred in not requiring each plaintiff to demonstrate that her claim is not time barred under 42 U.S.C. § 2000e-5(d) (1970).⁶  Intervenor also argues, relying on International Brotherhood of Teamsters v. United States, 431 U.S. 324, 97 S. Ct. 1843, 52 L. Ed. 2d 396 (1977), that the district court erred in not requiring each plaintiff to prove that she would have continued in employment in the years between her pregnancy and the settlement but for the defendant's wrongful termination. While we believe that in a controverted Title VII case the issues raised by intervenor would be both difficult and interesting, we must recognize that we are here reviewing the propriety of a settlement and not a judgment rendered after a trial. We believe that the issues raised by the intervenor should not be decided on the basis of Title VII law, but rather must be decided on the basis of legal principles regulating judicial review of settlement agreements. Relying on those principles, we conclude that the district court correctly declined to decide those issues relevant to the merits of the plaintiffs' claims prior to deciding merely whether the settlement agreement was appropriate.

It is a well-settled principle that the law generally favors the encouragement of settlements. See Florida Trailer & Equipment Co. v. Deal,284 F.2d 567, 571 (5th Cir. 1960). That general rule has been recognized as applicable to settlements in Title VII cases. Patterson v. Newspaper & Mail Deliverers Union of N.Y. & Vicinity, 514 F.2d 767, 771 (2d Cir. 1975), cert. denied sub nom. Larkin v. Patterson, 427 U.S. 911, 96 S. Ct. 3198, 49 L. Ed. 2d 1203 (1976). In fact, one court has concluded that it is "the clearly expressed intent of that Act to encourage settlements." Flinn v. FMC Corp.,528 F.2d 1169, 1174 (4th Cir. 1975), cert. denied, 424 U.S. 967, 96 S. Ct. 1462, 47 L. Ed. 2d 734 (1976). See also Cotton v. Hinton, 559 F.2d 1326, 1331 (5th Cir. 1977).

In addition, it is generally recognized that settlements are entered into because of "the very uncertainties of outcome in litigation, as well as the avoidance of wasteful litigation and expense . . . ." Florida Trailer & Equipment Co. v. Deal, 284 F.2d 567, 571 (5th Cir. 1960). Based on these considerations, this court has held that a district court in reviewing a settlement agreement "should not attempt to decide the merits of the controversy . . . (because) (a)ny virtue which may reside in a compromise is based upon doing away with the effect of such a decision." Patterson v. Stovall, 528 F.2d 108, 114 (7th Cir. 1976). See generally Note, Factors Considered in Determining the Fairness of a Settlement, 68 Nw.U.L.Rev. 1146, 1154 (1974).

Applying these general principles to this case, we believe the district court correctly declined to decide the merits of each of the plaintiffs' claims. Intervenors essentially ask this court to require in excess of 100 mini-trials on issues dealing with the adequacy of each plaintiff's complaint and the availability of defenses. It seems to us beyond serious dispute that no reasonable parties are going to settle any case if an intervenor can force them to litigate separately the merits of each claim. The rule urged by the intervenor would most seriously discourage efforts to settle Title VII cases, and we refuse to sanction such a result.

The only argument that intervenor offers to support a contrary result is that the district court had a duty to consider the interests of the incumbent employees before approving the settlement. See Mandujano v. Basic Vegetable Products, Inc., 541 F.2d 832, 837 (9th Cir. 1976); Alaniz v. California Processors, Inc., 73 F.R.D. 289, 293 (N.D. Cal. 1976). We have no quarrel with that general proposition, but it certainly does not lead to the conclusion that the court had a duty to litigate the merits of the plaintiffs' claims prior to approving the settlement. At most the court was required to permit APFA to intervene and offer it an opportunity to present to the court its members' interests in the proposed remedy. This intervenor had an opportunity to do. The district court was required to do no more. See EEOC v. American Tel. & Tel. Co., 556 F.2d 167, 173 (3d Cir. 1977) (interests of a third party in a consent decree limited to appropriateness of the remedy).

III

Intervenor's final argument is that the district court abused its discretion by approving this settlement without sufficiently apprising itself of the facts as to the settlement's impact on the incumbent employees. To evaluate this contention, we must focus in some detail on what transpired at the settlement approval hearing.

At the beginning of the hearing, the court recognized explicitly the importance of having the APFA's members' interests represented and thus permitted the union to intervene. Then, the court acknowledged that the intervenor had witnesses available and, although it did not encourage having them testify, it seems clear from the record that the court was willing to permit intervenor to make an offer of proof. Intervenor's counsel, in turn, stated that "(i)f we can avoid it, I think we would be better off . . ." (Tr. at 3).

The district court then permitted both sides to argue as to the likely effect of this agreement on the incumbent employees. It was established that the parties' best estimate was that at most 150 flight attendants⁷  would seek reinstatement and that there were about 5000 incumbent flight attendants. Thus, the numerical impact of the agreement appeared to be minimal. In addition, the court was told that a flight attendant "who wishes to go back to work will only be assigned to a base when there is an opening in that base and the people will be assigned to that base over a rather lengthy period of time . . ." (Tr. at 7-8). The court finally was informed that no incumbent flight attendant would lose his or her job as a result of the agreement (Tr. at 7). Based on these considerations, the court decided that the settlement was fair and that it should be approved.

In assessing that conclusion, we should make clear at the outset what legal standard should guide a district court's determination of whether this remedy is appropriate in the face of a challenge by incumbent employees. We believe that in this type of a settlement case, the Supreme Court's standard as to the appropriateness of "competitive status"⁸  seniority announced in Franks v. Bowman Transportation Co., 424 U.S. 747, 96 S. Ct. 1251, 47 L. Ed. 2d 444 (1976), applies with full force.⁹  Cf. United States v. Trucking Employers, Inc., 561 F.2d 313, 317 n.15 (D.C. Cir. 1977). In Franks, the Court held:

(D)istrict courts should take as their starting point the presumption in favor of rightful-place seniority relief, and proceed with further legal analysis from that point; and that such relief may not be denied on the abstract basis of adverse impact upon interests of other employees but rather only on the basis of unusual adverse impact arising from facts and circumstances that would not be generally found in Title VII cases.

424 U.S. at 779 n.41, 96 S. Ct. at 1271, (emphasis added). Thus, contrary to intervenor's contention that the burden at the hearing was somehow on the district court to determine on some abstract basis the fairness of the settlement, we conclude that the burden was on the intervenor to demonstrate some "unusual adverse impact" that justified not permitting full retroactive seniority.

Examining the district court's action in light of this standard, we find that there was clearly no abuse of discretion. First, intervenor declined to make any evidentiary showing at the hearing of an "unusual adverse impact" that this relief would create. In fact, intervenor in the arguments made to this court has still not suggested in anything more than conclusory statements how this settlement will unduly disadvantage the incumbent employees who might not even be employed but for the injury done to the plaintiffs.

Second, the district court made an admirable effort to sort out the likely impact of and the "balance of equities" surrounding the provision of retroactive occupational seniority. It assured itself that no present employees would lose their positions because of this agreement and also that the number of returning employees was not so large as to create undue problems. On the record before us, we find not the slightest basis for concluding that the court abused its discretion.

For these reasons, we believe that the district court's judgment approving the settlement agreement must be

Affirmed.