Cooper v. Federal Reserve Bank of Richmond Brief for Respondent Federal Reserve Bank of Richmond

    No. 83-185

In The

Supreme Court of ttje Pmtefr S tates
October Term, 1983

SYLVIA COOPER, e t a l .,
Petitioners,

v.

FEDERAL RESERVE BANK OF RICHMOND

and

PHYLLIS BAXTER, et al .,
Petitioners,

v.

FEDERAL RESERVE BANK OF RICHMOND.

On Writ of Certiorari 
to the United States Court of Appeals 

for the Fourth Circuit

Brief for Respondent 
Federal Reserve Bank of Richmond

Wm . Dabney Martin, III 
Vice President and 
General Counsel 
Federal Reserve Bank of 

Richmond

George R. Hodges*
Hayden J. Silver, III 

Moore, Van Allen and Allen 
3000 NCNB Plaza 
Charlotte, North Carolina 

28280
Telephone: (704) 374-1300

Counsel for Respondent 
Federal Reserve Bank of 

Richmond
*Counsel o f  Record



QUESTION PRESENTED

Whether a judicial determination in a properly certified class 
action will bind a class member, not opting out after notice, in 
asserting thereafter an individual claim within the range of charges 
determined in the class suit.1

1 The parties have stated the issue in this case in various ways. The 
statement above is that of the Fourth Circuit in its decision below. [P.A. 
177a],

t



TABLE OF CONTENTS

QUESTION PRESENTED............................................   i

TABLE OF AUTHORITIES............................................  iv

STATEMENT OF THE C A SE........................................  1

SUMMARY OF ARGUMENT.......... .............................  4

ARGUMENT:
I. The Fourth Circuit Properly Ruled That 

Petitioners Are Bound By The Adverse
Judgment In The Prior Class Action.................  6

1. Res Judicata................................................  6

a. The Same Cause of Action...................  7

b. The Decision of the District Court. . . .  13

2. Rule 23 Bars Petitioners’ Claims............... 16

a. The Language and Intent of Rule 23 . . 16

b. Petitioners’ E lection.............................  18

c. The Practical Effect of
Petitioners’ E lection.............................. 21

d. Other Decisions of this Court
Involving Rule 2 3 .................................. 23

II. The Bank Did Not Acquiesce In Subsequent 
Individual Actions And The District Court
Did Not Authorize Subsequent Actions..........  24

III. The Claims of Petitioner H arrison...................  28

CONCLUSION.................................................................... 29

Page

ii



ABBREVIATIONS

The following abbreviations are used in citation to various parts
of the Record in this action:

“J.A .” refers to the Joint Appendix filed in this Court

“P A.” refers to the Appendix to the Petition for Writ of Certiorari

‘ I C.A. App.” refers to the Appendix in EEOC and Cooper in the 
court of appeals

“II C.A. App.” refers to the Appendix in Baxter in the court of 
appeals

“Tr.” refers to pages in the trial transcript in EEOC and Cooper 
which were not made part of the Appendix in that action in the 
court of appeals

“PX” refers to plaintiffs’ exhibits in the trial record of EEOC and 
Cooper

“DX” refers to defendant’s exhibits in the trial record of EEOC and 
Cooper

iii



Cases:
Allen v. McCurry,

448 U.S. 90 (1980)..................................................  6
American Pipe & Construction Co. v. Utah,

414 U.S. 538 (1974)......................................  4, 17, 18, 21
23, 24

Balto. Steamship Co. v. Phillips,
274 U.S. 316 (1927)................................................  7

Bogard v. Cook, 586 F.2d 399 (5th Cir. 1978),
cert, denied, 444 U.S. 883 (1979).........................  9

Coe v. Yellow Freight Systems, Inc., 646 
F.2d 444,449 n. 1 (10th Cir. 1981).........................  11

Connecticut v. Teal, 457 U.S. 440 (1982)................. 18
Croker v. Boeing Co., 662 F.2d 975 

(3d Cir. 1981).............................................................  9
Crown, Cork & Seal Co. v. Parker,

16 L. Ed. 2d 628 (1983)......................................  17, 23, 24
Dalton v. Employment Security Comm’n,

671 F.2d 835 (4th Cir.),
cert, denied, 74 L. Ed. 2d 117 (1982)................... 9

Deposit Guaranty National Bank v. Roper, 445 U.S.
326 (1980).................................................................... 10, 22

Dickerson v. United States Steel Corp.,
582 F.2d 827 (3d Cir. 1978)..................................9, 24, 25

Dosier v. Miami Valley Broadcasting Corp.,
656 F.2d 1295 (9th Cir. 1981)................................ 8, 9

Eastland v. T .V .A ., 704 F.2d 613, modified in part,
714 F.2d 1066 (11th Cir. 1983).............................  9

Edwards v. Boeing-Vertrol Co., I l l  F.2d 761 
(3d Cir.), petition for cert, fded, 52 U.S.L.W.
3463 (Nov. 29, 1983) (No. 83-902).......................  10

TABLE OF AUTHORITIES
Page

IV



Page

Federated Department Stores v. Moitie,
452 U.S. 394 (1981)................................................. 6

Fowler v. Birmingham News Co., 608 F.2d 1055
(5th Cir. 1979)...........................................................  8, 9

Furnco Construction Corp. v. Waters,
438 U.S. 567 (1978)................................................. 18

General Telephone Co. v. EEOC,
446 U.S. 318 (1980)................................................. 24

General Telephone Co. v. Falcon,
457 U.S. 147 (1982) ......... .......................................  17,18

Kemp v. Birmingham News Co., 608 F.2d 1049
(5th Cir. 1979)...........................................................  7, 8, 9

Marshall v. Kirkland, 602 F.2d 1282
(8th Cir. 1979)...........................................................  9

McDonnell-Douglas v. Green, 411 U.S. 792
(1973)..........................................................................  10,11

Nevada v. United States, 11 L. Ed. 2d 509 (1983). . 6, 7

Teamsters v. United States, 431 U.S. 324 (1977). . . 10, 11
18, 21

Woodson v. Fulton, 614 F.2d 940 (4th Cir. 1980) . . 8, 9

Statutes and Rules:

Fed. R. Civ. P. 2 3 .....................................................4-6, 16-24

N.C. Gen. Stat. § 1 -5 2 ................................................. 21

Miscellaneous:

Restatement (Second) of Judgments
§ 20(b)(1) (1982)....................................................... 26

Restatement (Second) of Judgments
§ 26(b)(1) (1982)....................................................... 27

v



STATEMENT OF THE CASE

This action arises out of a race discrimination in employment class 
action, EEOC and Sylvia Cooper, et al. v. Federal Reserve Bank of 
Richmond. The action was brought pursuant to Title VII of the Civil 
Rights Act of 1964, 42 U.S.C. § 2000e, et seq., and pursuant to 42 
U.S.C. § 1981. The Respondent is the Federal Reserve Bank of 
Richmond, Charlotte (North Carolina) Branch (hereinafter “the 
Bank”). At all times relevant to this action blacks represented over 
30% of the Bank’s workforce — fifty percent greater than their repre­
sentation in the relevant external labor market (about 20%). [P.A. 
118a]. Moreover, the Bank promoted blacks at a rate greater than 
their representation in its workforce and at a greater rate than whites 
were promoted. [P.A. 121a]. The final judgment on the merits of the 
class action was in favor of the Bank.

Petitioners in this court were the plaintiffs in Baxter, et al. v. 
Federal Reserve Bank. They are all former class members in the 
EEOC and Cooper class action. After an adverse ruling as to their 
sub-class by the district court in the EEOC and Cooper action, they 
filed individual claims in the subsequent Baxter action. The Fourth 
Circuit Court of Appeals held that those claims were barred by the 
judgment in favor of the Bank in the class action.

The EEOC and Cooper action was initiated by the EEOC in 
March 1977. The EEOC’s Complaint alleged race discrimination in 
promotions in general and race and sex discrimination against 
Cooper in particular. [J.A. 6a], Several months later Cooper and 
three others intervened in the EEOC’s action for themselves and as 
representatives of the class of all present and former employees of 
the Federal Reserve Bank of Richmond, Charlotte Branch. The 
Complaint-in-Intervention alleged racial discrimination against the 
four class representatives and against the class in initial job assign­
ment, training, pay, discipline and promotion in all job grades. [J.A. 
12a]. The Bank did not oppose this intervention.

In April 1978, the class was certified by the district court pursuant 
to a Consent Order agreed upon by all the parties. [J.A. 24a]. By this 
Consent Order, the class represented by the Cooper intervenors was 
certified to include “all black persons who worked for the Federal 
Reserve Bank of Richmond at its Charlotte Branch Office at any

1



2

time since January 3, 1974.” [J.A. 30a]. The EEOC was not certi­
fied as a class representative, but agreed that the scope of the 
persons for whom it sought relief for race discrimination was co­
extensive with the definition of the class represented by the Cooper 
intervenors. [J.A. 31a].

By the Consent Order the parties also agreed upon a Notice to be 
sent to class members. [J.A. 30a-31a]. The Notice advised class 
members of the class action, their membership in the class, their 
right to remain class members or to opt out of the class, and the 
consequences of each option. Specifically, the Notice advised class 
members that:

If you decide to remain in this action, you should be 
advised that: the court will include you in the class in this 
action unless you request to be excluded from the class in 
writing; the judgment in this case, whether favorable or 
unfavorable to the plaintiff and the plaintiff-intervenors, 
will include all members of the class; all class members 
will be bound by judgment or other determination of this 
action. . . .

That Notice was received by each of the Baxter Petitioners. [J.A. 
95a]. None of these Petitioners made any attempt to opt out of the 
class action.

After extensive discovery, the EEOC and Cooper class action 
was tried to the district court in September 1980. The trial of the 
class action was bifurcated upon consent of the parties. The major 
issue at the trial was alleged discrimination in promotions. Petition­
ers each testified at the trial in support of the class action about 
various promotions which they allegedly had been denied. But they 
never moved to intervene, even after the district court ruled that it 
would hear their testimony only on the class issues.

Shortly after the trial, the district court issued a “Memorandum of 
Decision.” [P.A. 91a]. The Memorandum of Decision stated the 
district court’s opinion that that the Bank had discriminated against 
two of the four individual claimants (Sylvia Cooper and Constance 
Russell) and in promotions out of Grades 4 and 5 only, but no relief 
relating to promotions out of Grades 6 and above was indicated.



3

Petitioners were employed in Grades 6 and above2 and, therefore, 
were not members of the class which was awarded relief (i.e. blacks 
denied promotions out of Grades 4 and 5). Four months after the 
filing of the Memorandum of Decision, Petitioners sought to inter­
vene in the class action. [J.A. 39a], Intervention was denied. [P.A. 
286a], Petitioners then filed a separate action alleging individual 
claims of discrimination. [J.A. 63a]. The Bank moved to dismiss 
that action. [J.A. 71a]. The Motion was denied, but the district court 
certified the question for interlocutory appeal. [J.A. 96a], The dis­
trict court’s Findings of Fact and Conclusions of Law in EEOC and 
Cooper were filed May 29, 1981. [P.A. 197a]. There the district 
court defined the class as it had in the Consent Order and concluded 
with respect to promotions in Grades 6 and above as follows:

The Court concludes that there was no showing that the 
Bank had discriminated against black employees with 
respect to promotions out of Grades 6 and above, and that 
defendant did not violate Title VII or 42 U.S.C. §1981 
with respect to promotions out of Grade 6 and above.

[P.A. 284a-285a],

The Bank appealed those portions of the EEOC and Cooper 
judgment that were adverse to it and also appealed the district court’s 
refusal to dismiss the Baxter action. Neither the EEOC nor the 
plaintiff-class representatives appealed from the portions of the judg­
ment adverse to them.

On appeal, the Fourth Circuit held in EEOC and Cooper that the 
district court’s findings of discrimination against two of the named 
individuals and in promotions out of Grades 4 and 5 were clearly 
erroneous. [P.A. 2a-172a]. In Baxter, the Fourth Circuit held that 
the adverse judgment in the EEOC and Cooper class action barred 
the subsequent individual action. [P.A. 172-184a],

2Petitioner Ruffin was actually a Grade 5 employee [P.A. 246a-247a], 
and thus at the time of the Motion to Intervene she was entitled to par­
ticipate in Stage II of the class action.



4

I. The Fourth Circuit Court of Appeals properly ruled that Peti­
tioners are bound by the adverse judgment in the prior class action. 
After notice of their right to pursue their claims individually or to be 
bound by the judgment in the class action, Petitioners elected to 
litigate their claims through the Cooper class representatives and the 
vehicle of the class action. Petitioners made no attempt to litigate 
their claims individually until after they learned that the judgment in 
the class action was adverse to them. Rather, they abided by their 
election and pursued their claims as class members in the class action 
through a decision on the merits. Consequently, they are bound by 
that election and the adverse judgment in the class action.

The class action included the claims of racial discrimination in 
promotions and resolved those claims against Petitioners’ class. The 
fact that the class action was a “pattern and practice” action is 
immaterial to res judicata principles because “pattern and practice” 
is simply an alternative method of proof, not a separate and distinct 
cause of action. Petitioners’ subsequent action involves the same 
cause of action that was resolved in the prior class action. So, it was 
properly barred by the doctrine of res judicata.

The language and intent of Fed. R. Civ. P. 23 also requires that 
the subsequent action be dismissed. The class action is specifically 
designed for the adjudication in one action of “individual claims” 
which are typical of one another and involve common questions of 
law or fact. In fact, a class action is nothing but the aggregation of 
the “individual claims” of class members. Here, the district court 
found— upon Petitioners’ consent — that the class action was supe­
rior to other available methods for fair and efficient adjudication of 
the controversy. Consequently, the action was certified as a class 
action pursuant to Rules 23(b) (2) and (b) (3). This Court noted in 
American Pipe & Construction Co. v. Utah, 414 U.S. 538, 547-48 
(1974), that Rule 23 was specifically amended in 1966 to bind class 
members to the judgment in a class action and to prevent such 
fence-sitting or “one-way intervention” as Petitioners attempt here.

The practical effect of the rule suggested by Petitioners would 
destroy Rule 23 and the class action as a litigation vehicle. If these 
Petitioners were permitted to file subsequent actions, then so could

SUMMARY OF ARGUMENT



5

all the 300 or so other class members. That would result in the 
Bank— after prevailing on the merits in the class action — having to 
defend multiple subsequent actions by former class members. Peti­
tioners seek a rule that would permit them to participate in the class 
action and: (i) if they prevailed, obtain a presumption in their favor; 
and (ii) if they lost in the class action, nonetheless maintain a 
subsequent action on their “individual claims.” Petitioners’ sub­
mission is, in effect, that a class action amounts to a “no lose” 
proceeding for class members and a “no win” proceeding for the 
defendant. Such a result would render Rule 23 and the class action 
meaningless.

Finally, there are many benefits that a class member receives by 
litigating his claims in the class action — an increased chance of 
success and economies of scale resulting from pooled resources. 
But, those benefits are not totally one-sided. They involve a trade­
off borne of judicial economy. That is, if the class action device is 
to succeed in avoiding needless multiplicity of suits and to permit 
adjudication of numerous claims in one suit, the judgment in the 
class action must be binding on class members.

II. The district court did not expressly reserve Petitioners’ sub­
sequent actions in ruling on their post-trial Motion to Intervene. At 
most, the district court stated an opinion that Petitioners could file 
a subsequent action — an erroneous opinion which was reversed by 
the Fourth Circuit. Moreover, at the time of Petitioners’ Motion to 
Intervene in EEOC and Cooper and the district court’s statements, 
the court had already ruled against Petitioners’ class, so the Bank 
was then entitled to a judgment against Petitioners.

III. Petitioner Harrison was actually a Grade 6 employee and not 
a Grade 3 as mistakenly noted by both courts below. Consequently, 
his position is no different than that of the other Petitioners.

IV. The rule that this Court should adopt is that: a properly 
certified class action is made up of the “individual claims” of class 
members, and those class members who, after notice, elect to liti­
gate their claims in the class action are thereafter precluded from 
re-litigating individual claims within the range of issues determined 
in the class action. Consequently, the decision of the Court of 
Appeals for the Fourth Circuit should be affirmed.



6

ARGUMENT
I. The Fourth Circuit Properly Ruled That 

Petitioners Are Bound By The Adverse 
Judgment In The Prior Class Action

The Bank submits that res judicata bars Petitioners’ claims in the 
subsequent Baxter action. Petitioners knowingly elected to litigate 
their “individual claims” of discrimination through the vehicle of the 
EEOC and Cooper class action. They are therefore bound by the 
judgment in that action and precluded from pursuing the claims 
which they attempt to re-litigate in this subsequent action. Their 
subsequent action is also barred by the language and intent of Fed. 
R. Civ. P. 23. Binding Petitioners to their election is particularly 
appropriate here because they are classic “fence sitters” who seek in 
the Baxter action a second chance to litigate their claims. Finally, 
the practical effect of Petitioners’ submission would be to render 
Rule 23 and the class action meaningless.

1. Res Judicata
The doctrine of res judicata provides that a “final judgment on the 

merits of an action precludes the parties or their privies from re­
litigating issues that were or could have been raised in that action.” 
Federated Department Stores v. Moitie, 452 U.S. 394, 398 (1981); 
see also Nevada v. United States, 77 L. Ed. 2d 509 (1983); Allen v. 
McCurry, 448 U.S. 90 (1980). Whether Petitioners’ claims are 
barred by res judicata turns on whether the cause of action asserted 
in the EEOC and Cooper class action was the “same cause of action” 
that Petitioners seek to assert here. Nevada v. United States, 77 L. 
Ed. 2d at 525.

The test for whether a subsequent action is barred by res judicata 
does not center on the evidence presented. Rather, it focuses on the 
violation of a right which the evidence shows. This Court has stated 
the analysis as follows:

A cause of action does not consist of facts, but of the 
unlawful violation of a right which the facts show. The 
number and variety of the facts alleged do not establish 
more than one cause of action so long as their result, 
whether they be considered severally or in combination,



7

is the violation o f but one right by a single legal wrong.
The mere multiplication of grounds of negligence alleged 
as causing the same injury does not result in multiplying 
the causes of action.

Balto. Steamship Co. v. Phillips, 274 U.S. 316, 321 (1927) 
(Emphasis added), cited with approval, Nevada v. United States, 77 
L. Ed. 2d at 525 n. 12.

In the present case, the individual claims of each Petitioner stated 
in their Complaint relate solely to their failure to receive certain 
promotions. [J.A. 65a-66a]. The denial of these promotions is pre­
cisely what each Petitioner previously testified about in the trial of 
the class action. [I C.A. App. 452-688], Similarly, the violation 
of the right is the same as in the prior class action— alleged denial 
of promotions because of their race. That is precisely the “right” that 
was litigated in the EEOC and Cooper class action and resolved 
against Petitioners. Consequently, this subsequent action is barred 
by principles of res judicata and the binding effect of the class action 
judgment.

Petitioners concede that a class action judgment on the merits of 
an issue precludes re-litigation of that issue. But, they attempt to 
escape that principle by asserting that the EEOC and Cooper class 
action did not include the individual claims of Petitioners. The Bank 
submits that: (a) the pattern and practice issue in the class action 
encompassed Petitioners’ individual claims and, thus, their sub­
sequent action involved the “same cause of action” and is barred by 
res judicata; and (b) the prior class action involved the issue of 
discrimination in promotions and concluded in the district court with 
a determination that the Bank had not discriminated against Peti­
tioners’ class in promotions.

a. The “Same Cause o f Action”
A class member’s “individual claims” are encompassed in the 

class action and thus represent the “same cause of action” and may 
not be re-litigated.

Several circuit court decisions have established this rule. In Kemp 
v. Birmingham News Co., 608 F.2d 1049 (5th Cir. 1979), the 
plaintiff sought to raise personal claims for harassment and demotion



8

in an individual action after entry of a consent decree in a class action 
in which he was a non-named class member. The Fifth Circuit held 
the plaintiff bound by the class action decree. There the issues in the 
class action involved a “system” of “limiting the employment and 
promotional opportunity” of class members. 608 F.2d at 1052. The 
Fifth Circuit noted that since the plaintiff’s claims arose prior to 
entry of the judgment in the class action and “were or could have 
been brought” before the court in the class action, the same cause of 
action was involved and the plaintiff was bound by the prior class 
action decree. 608 F.2d at 1053.

A companion case, Fowler v. Birmingham News C o ., 608 F.2d 
1055 (5th Cir. 1979), confirms Kemp , but also adds an additional 
feature. Like Petitioners, Fowler complained that he had been 
denied promotions and passed over for supervisory positions. Also 
similar to this case, Fowler was not entitled by the class action 
decree to all of the relief that other class members had obtained. 
Nevertheless, his personal claims were barred by the prior class 
action decree because they were within the scope of the general 
issues resolved in the class action.

The Ninth Circuit has also followed Kemp in affirming the dis­
missal of a plaintiffs claims arising from incidents that occurred 
prior to settlement of a class action in which the plaintiff has been 
a class member. Dosier v. Miami Valley Broadcasting C o r p 656 
F.2d 1295 (9th Cir. 1981). There, the plaintiffs personal claims of 
denial of promotions were barred by the decree in the prior class 
action which settled the issue of classwide denial of “employment 
opportunities.” But, other claims of retaliation that were not part of 
the classwide allegations in the prior class action were not dis­
missed. 656 F.2d at 1298-99.

The Fourth Circuit has also recognized this principle in two deci­
sions preceding this case: Woodson v. Fulton, 614 F.2d 940 (4th 
Cir. 1980) (class action consent decree involving issues of discrim­
ination in hiring, discipline and promotion barred class member’s 
subsequent individual action on issues of his personal discrimination 
discipline and hindrance of advancement, but not his claim relating



9

to discharge not included in the class action); Dalton v. Employment 
Security Comm’n, 671 F.2d 835 (4th Cir.), cert, denied, 1A L. Ed. 
2d 117 (1982), (consent decree barred subsequent individual action 
on issues subject to the decree).3 4

Dicta in Dickerson v. United States Steel Corp., 582 F.2d 827 
(3d Cir. 1978), states that class members in an unsuccessful class 
action may re-litigate their personal claims in a subsequent individ­
ual action. That decision is directly contrary to Woodson, Dalton, 
Kemp, Fowler and Dosier,4 and by implication has been tacitly 
rejected by those decisions which occurred subsequent to its publica­
tion. Moreover, as the Fourth Circuit noted here, the dicta in Dick­
erson was subsequently rejected by the Third Circuit en banc in 
Croker v. Boeing C o ., 662 F.2d 975, 997 (3d Cir. 1981). There the

3 The EEOC contends that this line of decisions merely “effectuatefs] the 
salutary policy against double recovery.” [EEOC Br. at 12 n.14]. In fact, 
Kemp, Fowler, Dosier, Woodson and Dalton make no mention of the 
prospect of “double recovery.” Rather, each decision held that the doctrine 
of res judicata barred class members’ subsequent claims and that the class 
action involved the same cause of action raised by a class member in a 
subsequent suit. See, e.g., Woodson, 614 F.2d at 941-42; Kemp, 608F.2d 
at 1052-53; Dosier, 656 F.2d at 1298-99.

4 Petitioners cite several cases as also being contrary to the cases dis­
cussed above. Each case involves a defect not present here and is dis­
tinguishable from the cases discussed above: In Bogard v. Cook, 586 F.2d 
399, 408 (5th Cir. 1978), a subsequent individual action was permitted 
because it alleged acts directed at the plaintiff after the record in the class 
action had been closed and it sought damages for specific acts of physical 
abuse which were not included in the prior class action and which sought 
only equitable relief from general prison conditions. In Marshall v. Kirk­
land, 602 F.2d 1282, 1298 (8th Cir. 1979), a subsequent action was 
permitted because there had been no notice to class members regarding the 
class action. Finally, in Eastland v. T.V.A., 704 F.2d 613, modified in 
part, 714 F.2d 1066 (11th Cir. 1983), involved only consolidation for trial 
with the class action of the individual claim of a purported class representa­
tive who had been found not to be an adequate class representative.



10

court dismissed as barred by res judicata two individual claims 
“because they were not named plaintiffs but rather were class- 
member witnesses whose class-wide claims had been unsuccessful” 
in the earlier class action (just as Petitioners here).5

The EEOC and Petitioners contend that a “pattern and practice” 
claim of discrimination is a different cause of action than an individ­
ual suit under Title VII or 42 U.S.C. § 1981. In fact these are no 
more than two methods of proving the same fact: whether a particu­
lar employment decision was racially premised. Teamsters v. United 
States, 431 U.S. 324, 335 (1977). In Teamsters this Court rejected 
the assertion that a Title VII plaintiff could carry the burden of proof 
only by presenting evidence according to the standards of 
McDonnell-Douglas v. Green, 411 U.S. 792 (1973), and stated that 
“‘[t]he facts necessarily will vary in Title VII cases, and the specifi­
cations ... of the prima facie proof required from [a plaintiff] is not 
necessarily applicable in every respect to differing factual situ­
ations.’” Teamsters, 431 U.S. at 358, citing McDonnell-Douglas, 
411 U.S. at 802 n.13. Accordingly, the bifurcated trial of “pattern 
and practice” discrimination merely “illustrates another means by 
which a Title VII plaintiffs initial burden of proof can be met.” 
Teamsters, 431 U.S. at 359 (Emphasis added). Simply because a 
“pattern and practice” method of proof differs from the elements of 
a McDonnell-Douglas method of proof does not create two causes 
of action. The injury alleged is the same, the statutes under which 
the cause of action arises are identical, and the ultimate issue adju­
dicated by the court does not differ, regardless of the method of 
proof.

In fact, a “pattern and practice” class action is by its nature an 
aggregation of the “individual claims” of each of the class members. 
Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 339 
(1980). In a private class action there is nothing involved but

5 In Edwards v. Boeing-VertolCo., 717 F.2d 761 (3dCir. 1983), a panel 
of the Third Circuit permitted a subsequent action by an unsuccessful class 
member under principles of tolling. A Petition for Certiorari is presently 
pending in this Court in that case.



11

individual claims. A class action is not a separate cause of action 
itself. Without the individual claims there would be nothing to 
litigate in the class action. This is particularly true in a disparate 
treatment action which alleges a “pattern and practice” of discrimi­
nation, such as this case. Such an action attempts to show that 
discrimination is “the regular rather than the unusual practice.” 
Teamsters v. United States, 431 U.S. at 336. So, the “pattern and 
practice” attempted to be demonstrated consists of an aggregation of 
separate, distinct promotion decisions involving numerous 
individuals — not an additional substantive cause of action.

The incongruity of the Petitioners’ position is easily demon­
strated. Under Title VII and 42 U.S.C. § 1981, an individual plain­
tiff can carry his burden of proof of discrimination either by demon­
strating that the employer engaged in a “pattern and practice” of 
discrimination or by introducing evidence in accordance with the 
pattern of McDonnell-Douglas and its progeny. Teamsters, 431 
U.S. at 359. A Title VII plaintiff who filed an individual action 
alleging a pattern and practice of discrimination, of which he was a 
victim, would surely be bound by an adverse determination in his 
individual suit. He would not be able to file a second lawsuit that 
alleged again that he had been discriminated against, but that this 
time his evidence would be presented in accordance with the pattern 
of McDonnell-Douglas. An individual possesses only one cause of 
action under Title VII and 42 U.S.C. § 1981, but he has two 
different ways of proving his cause of action. Teamsters v. United 
States, 431 U.S. at 359; see also, Coe v. Yellow Freight Systems, 
Inc ., 646 F.2d 444, 449 n. 1 (10th Cir. 1981). He may decide to 
pursue one method of proof rather than the other, but he cannot 
splinter his cause of action into different lawsuits and continue to 
attempt to prove the same injury under different theories in different 
lawsuits.

This conclusion does not change simply because a Title VII plain­
tiff has pursued a pattern and practice claim as a class member of a 
class action suit. The mere fact that he was a member of a class 
action which litigated a “pattern and practice” action does not splin­
ter his cause of action into two causes of action, one for a “pattern 
and practice” and one for individual acts of discrimination pursuant 
to the pattern of McDonnell-Douglas.



12

Thus, an individual’s cause of action for racial discrimination is 
procedurally indistinguishable for res judicata purposes from a 
class wide cause of action for discrimination. Both the individual and 
class claims vindicate the same right and focus on the same issue: 
whether the employer has discriminated against an employee on the 
basis of race.6

Here, there can be little doubt that these Petitioners’ promotion 
claims were encompassed within the allegations of classwide dis­
crimination in promotions in the class action. Their claims stated in 
their Complaint in the Baxter action [J.A. 63a] relate to the denial 
of various promotions to each Petitioner. Denial of promotions was 
the primary issue litigated and decided in the class action. Virtually 
all of the trial in EEOC and Cooper was directed to the promotion 
issue. Plaintiffs offered over fifty statistical exhibits directed to the 
promotion issue. [PX 34-37, 34a-37a, 114a-114tt]. Moreover, Peti­
tioners each testified at the trial in support of the class action, and 
their testimony concerned the denial of the very promotions they 
now allege in the Baxter Complaint.7 This class action clearly liti­
gated and decided the issue of discrimination in promotions. Con­
sequently, the subsequent Baxter action involves the “same cause of 
action” decided in the EEOC and Cooper class action. So, re­
litigation of the “individual claims” is barred by res judicata.

6 Although the issue presented here happens to arise in a discrimination 
suit, it is not peculiar to that type of action. The issue here is of general 
procedural applicability. It would be present in antitrust, securities, and 
consumer class actions— in fact, it would be present in any class action.

7 Petitioners’ reliance on the district court’s Findings relating to their 
testimony [Pet. Br. 39] is misplaced. Those “findings” were prepared by 
plaintiffs’ counsel and adopted by the district court apparently without 
critical review. [P.A. 13a-24a], Therefore, they suffer the same flaw as 
other such Findings criticized by the Fourth Circuit and found to be clearly 
erroneous. In fact, their “findings” are merely a summary of Petitioners’ 
assertions and they completely ignore the ample rebuttal evidence offered 
by the Bank.



13

b. The Decision o f the District Court
Petitioners contend that the judgment of the district court did not 

include their claims. They focus on the district court’s informal 
“Memorandum of Decision,” but ignore the other parts of the 
Record which define the scope of the class action — the class certi­
fication Consent Order, the Notice and the Findings of Fact and 
Conclusions of Law finally entered by the district court and incorpo­
rated into the Judgment.

The Consent Order certifying the EEOC and Cooper class dem­
onstrates that both classwide as well as individual issues of discrim­
ination were being adjudicated. There, the district court explicitly 
found that: “there are common questions of law and fact involved”; 
“the claims and defenses... are typical of the claims and defenses of 
the class...”; “the plaintiff-intervenors will adequately protect the 
interest of the class they seek to r e p r e s e n t . a n d  “questions of law 
or fact common to the members of the class predominate over any 
questions affecting only individual members....” [J.A. 28a-29a]. 
Such findings would have been unnecessary if “individual claims” of 
discrimination were not in issue.

Similarly, the district court defined the class to include all black 
employees employed by the Bank “who have been discriminated 
against because of their race in promotions, training, wages, disci­
pline and discharge.” [J.A. 53a Hi (Emphasis added)]. The Notice 
mailed to class members informed Petitioners of their right “to 
pursue in this action any claim of racial discrimination in employ­
ment that you may have against the defendant.” [J.A. 35a-37a 
(Emphasis added)]. Neither the class certification Consent Order, 
the Notice to class members, nor the final definition of the class 
limited the cause of action in the EEOC and Cooper action to a 
“pattern and practice” claim. On the contrary, the district court 
defined both the class and the class issues in broad, across-the-board 
terms.

The Findings of Fact and Conclusions of Law also demonstrate 
that the claims of Petitioners and their class were actually decided in 
the class action. Petitioners continually point out that the district 
court’s “Memorandum of Decision” stated merely that the court did



14

not find a pattern of discrimination in Grades 6 and above “pervasive 
enough” to order relief. [Pet. Br. 16; EEOC Br. 15]. But, Petitioners 
completely ignore the Findings of Fact and Conclusions of Law 
subsequently entered by the district court which, contrary to their 
counsel’s proposal, clearly decided “that defendant did not violate 
Title VII or 42 U.S.C. §1981 with respect to promotions out of 
Grade 6 and above.” [P.A. 285a (Emphasis added)].

The significance of that conclusion is highlighted by the fact that 
Petitioners’ counsel sought a quite different conclusion. The Memo­
randum of Decision directed Petitioners’ counsel to prepare pro­
posed Findings of Fact and Conclusions of Law. Petitioners’ counsel 
proposed on this point that the district court decertify the class as to 
employees in Grades 6 and above and proposed the following 
conclusion:

27. Plaintiffs called several individual witnesses at the 
trial, some within the class as originally defined and some 
within the class as modified. The court expresses no 
position at this stage as to the entitlement to relief of the 
witnesses outside the modified class [the present Petition­
ers]....8

[Proposed Findings of Fact and Conclusions of Law (Emphasis 
added)]. Contrary to the suggestion that “no position” be expressed 
as to the entitlement to relief of these very Petitioners (who were “the 
witnesses outside the modified class”), the district court entered a 
decision that the Bank had not discriminated against those class

8 The proposed Findings were included in the Record in the Fourth 
Circuit, but not in the Joint Appendices there or in this Court. The proposal 
for certification of a class that included only Grade 4 and 5 employees and 
the proposed expression of no position on the claims of Petitioners appear 
at pages 28 and 39 of the Proposed Findings of Fact and Conclusions of 
Law.



15

members. The district court’s conclusion adopted in lieu of Petition­
ers’ counsel’s proposal was that:

27. The Court concludes that there was no showing 
that the bank had discriminated against black employees 
with respect to promotions out of Grades 6 and above, and 
that defendant did not violate Title VII or 42 U.S.C. 
§1981 with respect to promotions out o f Grade 6 and 
above.

[P.A. 285a (Emphasis added)]. This decision by the district court is 
made even more important by the fact that it is the only significant 
change to the proposed Findings that the district court made — all 
other changes were merely grammatical.9

As Petitioners suggest, it is important to focus on the “actual 
language of the judgment” [Pet. Br. 24] to ascertain the scope of the 
decision. Here, the district court’s decision was not limited to 
“pattern” or “class” issues. Rather, the “actual language of the 
judgment” stated the affirmative conclusion that the Bank “did not 
violate Title VII or 42 U.S.C. § 1981 with respect to promotions out 
of Grade 6 and above.” [P.A. 285a].10 Furthermore, Petitioners did 
not appeal this conclusion.

9 A “marked” copy of the Findings which shows all changes from the 
proposed to the finally adopted Findings was submitted to the Fourth 
Circuit following ora! argument below, and was included in the Record 
there. The Court of Appeals was highly critical of the district court ’s virtual 
verbatim adoption of Petitioners’ counsel’s proposed Findings. [See P.A. 
13a-24a.] Petitioners sought certiorari on that issue, but it was not granted.

10 The formal “Judgment” filed contemporaneously with the Findings of 
Fact and Conclusions of Law makes no specific mention of Grades 6 and 
above (other than by implication), but the Judgment does specifically state 
that it is based on those Findings of Fact and Conclusions of Law. The 
Judgment makes no mention of the Memorandum of Decision.



16

In summary, the Consent Order certifying the class action 
included Petitioners’ claims in the class action. In the Findings of 
Fact and Conclusions of Law, the district court rejected the proposal 
to “express no position” on Petitioners’ claims and instead con­
cluded affirmatively that the Bank did not discriminate in pro­
motions out of Petitioners’ job Grades. So, the “actual language” of 
the district court expressly demonstrates an adverse decision on the 
merits of Petitioners’ claims. The doctrine of res judicata now bars 
Petitioners from re-litigating those claims.

2. Rule 23 Bars Petitioners’ Claims
By participating as class members in the EEOC and Cooper class 

action, Petitioners elected to litigate their claims of discrimination 
against the Bank through the Cooper class representatives. Rule 23 
requires that Petitioners be bound by the judgment entered in that 
action. Indeed, Petitioners’ attempt to file individual claims only 
after the district court indicated it would rule against Petitioners in 
the class suit is precisely the type of “one-way intervention” which 
Rule 23 does not permit. Plus, the practical effect of Petitioners’ 
assertion would be to render Rule 23 and the class action meaningless.

a. The Language and Intent o f Rule 23
The very language of Fed. R. Civ. P. 23 precludes subsequent 

actions by class members following their participation in an unsuc­
cessful class action. Rule 23 (c) (3) provides that:

The judgment in an action maintained as a class action 
under subdivision (b)(1) or (b) (2), whether or not favor­
able to the class, shall include and describe those whom 
the court finds to be members of the class. The judgment 
in an action maintained as a class action under sub­
division (b) (3), whether or not favorable to the class, 
shall include and specify or describe those to whom the 
notice provided in subdivision (c)(2) was directed, and 
who have not requested exclusion, and whom the court 
finds to be members of the class.



17

Fed. R. Civ. P. 23 (c) (3) (Emphasis added). Thus, Rule 23 requires 
that class members be bound by an adverse judgment.

Rule 23 is designed to avoid a “needless multiplicity of suits” and 
to permit the adjudication of numerous claims in one proceeding. 
American Pipe & Construction Co. v. Utah, 414 U.S. 538, 553 
(1974); Crown, Cork & Seal Co. v. Parker, 76 L. Ed. 2d 628, 634 
(1983). To avoid the impracticalities of joining numerous parties, a 
class action is litigated through class representatives and their coun­
sel. In EEOC and Cooper Petitioners elected not to pursue their 
claims individually, but instead chose to rely on the class represen­
tatives.11 Rule 23 is designed to adjudicate the claims of class 
members in the one action. General Telephone Co. v. Falcon, 457 
U.S. 147, 155 (1982). It does not permit class members to sit on the 
fence awaiting judgment in the class action and then to pursue a 
subsequent “individual” action if the result is not to their liking — as 
Petitioners seek to do here.

Rule 23 was amended in 1966 to prevent the very procedure which 
Petitioners seek here. Prior to 1966, Rule 23 provided no means for 
establishing, prior to the entry of a final judgment, which persons 
were class members and would be bound by the judgment. American 
Pipe & Construction Co. v. Utah, 414 U.S. at 545-46. Under the 
present version of Rule 23, however, a class member may not await 
the outcome of the trial in the class action, and then decide whether 
to pursue the same course of action in another proceeding. In Amer­
ican Pipe, 414 U.S. at 547-49, this Court noted that the 1966 
amendments to Rule 23 were specifically intended to cure the former 
procedures permitting class members to await developments in the 
trial “or even final judgment” before deciding whether to opt out as 
class members. This Court stated that, as presently written, Rule 23 
requires that:

potential class members retain the option to participate in 
or withdraw from the class action only until a point in the 
litigation ‘as soon as practicable after the commence­
ment’ of the action.... Thereafter they are either non­

11 Petitioners have not asserted that their representation in the class action 
was inadequate.



18

parties to the suit and ineligible to participate in a recov­
ery or to be bound by the judgment, or else they are full 
members who must abide by the final judgment, whether 
favorable or adverse.

414 U.S. at 548-49.

After electing to litigate their claims in the class action, Petition­
ers now seek to avoid the judgment in that action and gain a second 
chance to re-litigate those claims. That is precisely what Rule 23 was 
amended to prevent.

b. Petitioners’ Election
Petitioners correctly state several principles: The fact that an 

employer’s workforce is racially balanced does not immunize an 
employer from liability for specific acts of discrimination, Furnco 
Construction Corp. v. Waters, 438 U.S. 567 (1978); an employer’s 
“bottom line” in promotions is not an affirmative defense to a claim 
of particular acts of discrimination, Connecticut v. Teal, 457 U.S. 
440 (1982); conversely, the existence of an individual act of discrim­
ination does not require an inference that such treatment is typical of 
an employer’s practices, General Telephone Co. v. Falcon, 457 
U.S. at 157-58; and the fact that there is no showing of a “pattern 
and practice” of discrimination does not require the conclusion that 
there may not have been isolated or sporadic individual acts of 
discrimination, Teamsters v. United States, 431 U.S. at 336. [Pet. 
Br. 43-45 j. All of those principles are true, but they are principles 
of proof, not of substantive procedure. While individual acts of 
discrimination may exist even in the absence of a “pattern and 
practice” of discrimination, that does not determine the vehicle for 
litigating ones’ claims. Here, these Petitioners elected not to pursue 
their claims individually, but to join in the class action. They were 
not denied their right to pursue their claims individually. In fact the 
Notice advised them of that right. But, they elected not to pursue 
their claims in that manner, but to pursue them as class members in 
the class action.

Petitioners accuse the Bank of “thwarting” their efforts to pursue 
their individual claims. [Pet. Br. 12]. In fact, it was Petitioners 
themselves who “thwarted” their right to an individual suit by elec­



19

ting not to exercise that right. The class action Complaint was filed 
by four intervenors in 1977. Upon Petitioners’ consent, the EEOC 
and Cooper action was conditionally certified as a class action in 
April 1978 pursuant to both Rule 23(b)(2) and (b)(3). [J.A. 30a], 
When the district court conditionally certified the class, it required 
that a Notice be sent to each class member. Each of these Petitioners 
actually received the Notice. [J.A. 95a], The Notice informed Peti­
tioners that they would “be bound by the determination in this 
action” unless they excluded themselves from the class, and that if 
they opted out of the class they would not be bound by the decision 
in the class action.12 Petitioners did not opt out of the class action; 
nor did they seek to intervene in it as named parties (prior to the

12 The Notice stated in pertinent part:
3. The class of persons who are entitled to participate in this action 

as members of the class represented by the plaintiff-intervenors, for 
whom relief may be sought in this action by the plaintiff-intervenors and 
who will be bound by the determination in this action is defined to 
include: all black persons who were employed by the Federal Reserve 
Bank of Richmond at its Charlotte Branch Office at any time since 
January 4, 1974.

4. ... if you so desire, you may exclude yourself from the class by 
notifying the Clerk, United States District Court, as provided in para­
graph 6 below.

5. If you decide to remain in this action, you should be advised that:
the court will include you in the class in this action unless you request 
to be excluded from the class in writing; the judgment in this case, 
whether favorable or unfavorable to the plaintiff and the plaintiff- 
intervenors, will include all members of the class; all class members 
will be bound by the judgment or other determination of this action__

6. If you desire to exclude yourself from this action, you will not be 
bound by any judgment or other determination in this action and you 
will not be able to depend on this action to toll any statutes of limitations 
on any individual claims that you may have against the defendant ....

[J.A. 35a-37a (Emphasis added)]. Petitioners raise a question about the 
adequacy of this Notice. However, the Notice tracks the language of Rule 
23 itself. Moreover, Petitioners’ counsel consented to the Notice in the 
Consent Order. [J.A. 24a].



20

adverse ruling as to their class). Instead, they elected to pursue their 
claims as class members and actually testified in support of the class 
action.

Binding Petitioners to the adverse judgment in the class action is 
particularly appropriate in this case because:

— Petitioners had never filed charges of discrimination 
with the EEOC:

— they were given notice of the opportunity to pursue 
their claims as individuals when the class was certified 
two years prior to trial;

— they never moved to intervene in the class action even 
though their counsel had intervened on behalf of four 
other individuals and the Bank had not opposed that 
intervention;

— their counsel consented to a bifurcated trial of the class 
action;

— they first “appeared” in the class action on a witness 
list filed four days prior to the trial, but did not attempt 
to intervene even then;

— they appeared and testified at the trial of the class 
action, but made no attempt to intervene — even after 
the district court stated that it would not make a deter­
mination of their personal claims; and

— they made no attempt to assert their personal claims 
until four months after they learned that their class had 
lost the class action.

As class members in the previous class action, these Petitioners 
received notice of the proceedings and were given the option of 
pursuing their claims via the class action or opting out of that action 
and pursuing them individually. The Notice spelled out the fact that 
they would be bound by the judgment in that action “whether favor­
able or unfavorable” unless they opted out of the class action. With 
that knowledge, Petitioners elected to pursue their claims as class 
members in the class action. The class action judgment was adverse 
to their class. Accordingly, Rule 23 requires that Petitioners be 
bound by their election.



21

c. The Practical Effect o f Petitioners’ Assertion
The practical effect of Petitioners’ submission would destroy the 

class action as a vehicle for litigating multiple claims and would 
effectively erase Rule 23 from the Federal Rules of Civil Procedure.

Petitioners’ submission is simple: after an adverse decision in a 
class action — that the Bank did not discriminate in promotions in 
Grade 6 and above — Petitioners can nevertheless pursue their 
“individual claims” that they had been discriminated against in pro­
motions in Grade 6 and above. If these Petitioners can pursue such 
an action, so can each and every one of the 300 or so other class 
members.13 And, after prevailing on the merits of the class action, 
the Bank may face “individual” suits by each and every class 
member.

If Petitioners’ assertion is the rule, then the practical result is that 
no purpose is served by Rule 23 and the class action. Although 
Petitioners assert that they do not seek “one-way intervention,” that 
is precisely the result of their submission. Petitioners’ rule would 
permit them to participate as non-named class members in the class 
action (as they did) and: (i) if they won the class action, obtain a 
presumption of discrimination14 in their favor; and (b) if they lost 
the class action, still maintain their “individual claims” for relief. 
What Petitioners suggest is a “no lose” situation that any litigant 
would envy. It makes the class action a no-risk situation for plaintiffs

l3The tolling effect of the class action, American Pipe, 414 U.S. 538 
(1974), if added to the three-year limitations period for § 1981 actions, 
N.C. Gen. Stat. § 1-52, may render the potential claims of each class 
member still vital, even though the claims are possibly 10 years old. Of 
course, if, as Petitioners assert, the “individual claims” were not part of the 
class action, then the class action should not toll the running of statutes of 
limitations and those claims may be barred on that account.

14 In the trial of a bifurcated class action, Stage I of the trial determines 
liability. If a pattern and practice of discrimination is demonstrated in Stage 
I, each class member receives a rebuttable presumption that he is a victim 
of that discrimination and is presumed to be entitled to relief in Stage II of 
the proceeding. See Teamsters v. United States, 431 U.S. 324, 359-362 
(1977).



22

and a no-win situation for the defendant— since even if the de­
fendant prevails on the merits in the class action, the class can roll 
on “individually.”

Petitioners suggest that the Fourth Circuit’s decision will force all 
class members to intervene in the class action.15 Multiple inter­
vention is a false fear because there are many good reasons for class 
members to elect to litigate their “individual claims” as class 
members— as Petitioners did. First, a class member’s chances of 
winning relief are probably greater in a class action than in an 
individual suit. The pattern and practice class action has proved to 
be an effective and successful device for plaintiffs in employment 
discrimination cases. Methods of proof— such as the “pattern and 
practice” proof scheme and statistical proof— may be available in a 
class action that would not be probative in an individual action. The 
cumulative effect of multiple claims may have greater impact than 
an individual claim. And, once successful in Stage I of the class 
action, each class member receives a valuable presumption of enti­
tlement to relief that may convert a losing claim into a winning one. 
Second, there are real economic advantages to litigating one’s 
“individual claim” as a class member. This Court has noted that “a 
central concept of Rule 23” is that a class member has access to the 
pooled resources of the entire class, and the costs of litigation are 
shared among the entire class. Deposit Guaranty National Bank v. 
Roper, 445 U.S. at 338 n.9. In this very case, for example, 
Petitioners— as class members — were represented by three lawyers 
and as many paralegals and had the benefit of an expert statistician 
who performed analyses and testified at the trial (for $50,000.00).16 
An individual employee certainly could not muster that kind of 
support for his “individual claims” in an individual action. Thus, 
there are real, practical benefits for class members who elect to 
litigate their claims as a class member in a class action.

15 Of course, if class members are permitted to pursue “individual 
claims” after an unsuccessful class action as Petitioners suggest, then it 
would behoove the defendant to move the court to join all the class mem­
bers as named parties in order to obtain a binding judgment against them.

16 See, Motion for Attorneys Fees and supporting Affidavits filed in the 
Record of the district court in EEOC and Cooper.



23

Petitioners’ proposition is also inherently inconsistent. It would 
permit each and every one of the 300 passive members of the EEOC 
and Cooper class to file individual suits against the Bank despite the 
district court’s conclusion that the Bank did not discriminate as to 
promotions in Grade 6 and above. This is simply “massive 
intervention” of a different type. Surely the prospect of 300 individ­
ual suits against the Bank, filed at various times and perhaps in 
various forums, is much worse than requiring that all class members’ 
claims be managed and adjudicated by the district court in one 
proceeding.

Petitioners’ suggestion that, under their rule, a defendant would 
benefit by class members not being able to assert a “pattern and 
practice” of discrimination as evidence in subsequent “individual” 
actions is similarly unsound. The purpose of Rule 23 and the class 
action device is not to establish a rule of evidence. The Bank certain­
ly cannot be expected to defend this action for over six years — at 
great expense — just to eliminate one piece of evidence from multi­
ple subsequent individual actions. In fact, this assertion demon­
strates the illogic of Petitioners’ position. Their position— by their 
own submission— would reduce a class action into nothing more 
than an evidentiary ruling. Such a result is certainly not contem­
plated by Rule 23 and is wholly illogical.

The purpose of Rule 23 and the class action is to avoid needless 
multiplicity of suits and to adjudicate numerous claims in one suit. 
If this purpose is to be effected, the judgment in the class action must 
be binding on class members.

d. Other Decisions o f this Court Involving Rule 23
The decision of the Fourth Circuit barring Petitioners’ subsequent 

action is consistent with other decisions of this Court involving class 
actions. It fits well within the framework of this Court’s other 
decisions involving Rule 23. In fact, the result here has been sug­
gested in other decisions of this Court.

In American Pipe & Construction Co. v. Utah, 414 U.S. 538 
(1974), the Court held that the pendency of the class action tolled the 
running of statutes of limitations on class members’ right to inter­
vene in the action as individuals after denial of class certification.



24

414 U.S. at 553. That principle was recently applied to class mem­
bers’ rights to file separate actions. Crown, Cork & Seal Co. v. 
Parker, 76 L. Ed. 2d 628 (1983). However, both of those cases 
dealt only with the tolling of limitations periods pending class certi­
fication . In both of those cases class certification was denied. Puta­
tive class members were freed to file individual actions because 
there was no judgment in the class action. In contrast, in this case 
the class was certified and there was a judgment on the merits in the 
class action. So, the fact that the limitations periods for individual 
actions by class members may have been tolled during the pendency 
of the putative class action is consistent with extinguishing the right 
to an individual action by the adverse class action judgment on the 
merits. In fact, American Pipe actually noted that Rule 23 had been 
amended to prevent the “one-way intervention” Petitioners seek to 
accomplish here. 414 U.S. at 547-49.

In General Telephone Company v. EEOC, 446 U.S. 318 (1980), 
this Court held that the EEOC could seek relief for a group of 
aggrieved individuals without certification as a class representative 
pursuant to Rule 23. The Court noted that one effect of the ruling 
was that the individuals would not be bound by the relief obtained 
by an EEOC judgment or settlement. 446 U.S. at 333. But, in the 
course of discussing that result, the Court suggested that the result 
would be different in a private class action certified pursuant to Rule 
23. This Court noted that: “We are sensitive to the importance of the 
res judicata aspects of Rule 23 judgments. . . ” 446 U.S. at 332.

The Fourth Circuit’s decision that Petitioners are bound by the 
adverse judgment in the prior, private class action is consistent with 
the language and intent of Rule 23 and with the decisions of this 
Court. Further, it follows the result suggested in General 
Telephone.

II. The Bank Did Not Acquiesce In Subsequent 
Individual Actions And The District Court 
Did Not Authorize Subsequent Actions

Petitioners’ assertion that the Bank acquiesced in or acknowl­
edged Petitioners’ right to pursue individual claims in subsequent 
suits is misleading. In the course of opposing intervention in the 
class action after the trial, the Bank’s counsel, relying on certain



25

portions of dicta in Dickerson v. United States Steel Corp., 582 
F.2d 827 (3d Cir. 1978), did state Petitioners might file a subsequent 
action.17 But, the Record is clear that the Bank’s position throughout 
was that Petitioners’ individual claims were barred by res judicata.

For example, at the hearing on Petitioners’ Motion to Intervene, 
the Bank’s counsel stated its position in the following manner:

MR. HODGES: The problem, Your Honor, is that 
these people chose to participate in this case as class 
members, and in a class action the judgment of the Court 
is that their part of the class should receive no relief, so 
they are not entitled to proceed any further. They have a 
judgment entered against them on the part of the class.
[p. 4],

^  j}c jfc

MR. HODGES: That’s right, and they could go file 
charges with the EEOC, file a case under 1981, but they 
could not participate any longer in this case. They are not 
entitled simply to go into Stage 2 to pursue their claims. 
They’ve got to do what any other Plaintiff with a com­
plaint has got to do and that is to go through the proper 
procedure. They are people that actually showed up in 
this case about a week before trial and just happened to 
come in and testify, and I don’t believe that gives them 
any additional status than any of the other class members 
in Grades 6 and above would have. They are bound by the 
judgment against them. [p. 8].

COURT: You’re unnecessarily complicating the possi­
bility of getting an ultimate decision on the merits by 
skipping what would ordinarily be normal procedure.

17 Petitioners’ selective quotation of statements made at the hearing on 
their Motion to Intervene appears to imply that counsel misled the district 
court about the Bank’s position. Actually, if the district court was led into 
an erroneous conclusion about Petitioners’ right to file a subsequent action, 
it was by the statements in dicta in Dickerson and not any statements by 
counsel.



26

MR, HODGES: Your Honor, that doesn’t avoid the 
problem that you’ve got that they should have a judgment 
entered against them as they are part of a class, [p. 10],

*  *  *  *  *

MR. HODGES: The Third Circuit decided otherwise.
They said the intervention of class members would preju­
dice the Defendant severely. From the outset this lawsuit 
was tried as a class action, based primarily upon the 
allegations of across the board discrimination. That’s 
exactly the case here. There’s no reason to give these 
Plaintiffs a second bite out of the apple in this case. Stage 
2 proceedings are for the successful class members, not 
the unsuccessful. Otherwise why have a Stage 1 pro­
ceeding. [p. 17],

* * * * *

MR. CHAMBERS: As to the class. I f  the Court fo l­
lows that reasoning, it would say that the individuals now 
are barred by res judicata.

MR. HODGES: That’s exactly what they [sic] ought to 
do. [p. 19-20],

[Citations are to the transcript of the hearing on Petitioners’ Motion 
to Intervene, May 8, 1981, which has been filed in this Court with 
the Joint Appendix (Emphasis added)]. The Bank clearly did not 
acquiesce in or agree to Petitioners’ subsequent action. Rather, the 
Bank’s position was that it was entitled to a judgment against Peti­
tioners and any subsequent actions would be barred by res judicata. 
Consequently, when the subsequent action was filed, the Bank 
moved that it be dismissed on that basis.

Petitioners’ assertion that the district court authorized the sub­
sequent action misapplies principles relating to splitting claims and 
misconstrues what the district court actually did. Restatement (Sec­
ond) of Judgments § 20 (l)(b), by its terms, applies only where the 
plaintiff is “nonsuited” or his claims “dismissed” without prejudice. 
Here, there was a judgment on the merits. Plus, all that was 
“dismissed” was their Motion to Intervene — not a prior action as



27

contemplated by the Restatement. The assertion that the district 
court “expressly reserved” Petitioners’ right to maintain a second 
action misapplies Restatement (Second) of Judgments § 26. That 
applies only where causes of action are “split” and the claims 
“reserved” are omitted from the first action. It does not permit 
“reservation” of claims included in the first action such as is the case 
here — especially after a decision on the merits has been announced. 
See Restatement (Second) of Judgments § 26 comment b. More­
over, the district court here did not “expressly reserve” any rights. 
In the Order denying intervention the district court merely expressed 
an opinion that the Petitioners might be able to pursue a separate 
action:

I see no reason why, if any of the would be intervenors 
are actively interested in pursuing their claims, they can­
not file a Section 1981 suit next week, nor why they could 
not file a claim with EEOC next week . . .  All motions for 
leave to intervene are thus denied without prejudice to 
any underlying rights the intervenors may have.

[P.A. 288a-289a (Emphasis added)]. The Restatement exception 
applies to express reservations of rights, not to advisory comments 
about possible rights as the statement above. Consequently, there 
was no reservation of rights by the district court nor acquiescence by 
the Bank as to Petitioners’ subsequent action.



28

II. The Claims of Petitioner Harrison
Both courts below stated Petitioner Harrison to be a Grade 3 

employee. But, in fact, Harrison was at all times a Grade 6 employ­
ee. The Bank has furnished counsel for Petitioners portions of Har­
rison’s employment records, all of which confirm that he was a 
Grade 6 employee.18 Accordingly, counsel for Petitioners has ad­
vised the Bank that they have withdrawn their assertions based upon 
the erroneous statements of the courts below that Harrison was a 
Grade 3 employee. [Pet. Br. 53-56], Thus, the parties now agree that 
Harrison’s position is the same as the other Petitioners, and the Bank 
makes no substantive response to the assertions regarding Harrison.

18 Harrison’s job Grade was not a significant issue at this trial, so there 
is little in the actual Record regarding his Grade. Harrison testified first that 
he was a Grade 3 but when asked if he was not actually a Grade 6, he said 
he did not know. [I C.A. App. 537, 540]. The Record also contains a 
group of job descriptions [DX 70] which shows that Harrison’s job of 
“stock clerk” (he called it “supply clerk” [I C.A. App. 537]) was a Grade 
6 job. [DX 70 page 5-291].



29

CONCLUSION
For the reasons stated above, the Bank submits that the rule this 

Court should adopt is that: a properly certified class action is made 
up of the “individual claims” of class members, and those class 
members who, after notice, elect to litigate their claims in the class 
action are thereafter precluded from re-litigating individual claims 
within the range of issues determined in the class action. Con­
sequently, the decision of the Fourth Circuit Court of Appeals 
should be affirmed.

Respectfully submitted this 26th day of January, 1984.

George R. Hodges* 
Hayden J. Silver, III

Vice President and 
General Counsel

Wm . Dabney Martin, III
Moore, Van Allen and Allen 
3000 NCNB Plaza 
Charlotte, North Carolina 28280

Federal Reserve Bank 
of Richmond

Telephone: (704) 374-1300
Counsel for Respondent 
Federal Reserve Bank of Richmond

*Counsel o f Record



30

CERTIFICATE OF SERVICE

The undersigned hereby certifies that he has this day served other 
parties in this action by causing three copies each of the foregoing 
Brief for Respondent Federal Reserve Bank of Richmond to be 
deposited in the United States Mails, postage prepaid and properly 
addressed to:

J. LeVonne Chambers, Esq.
John T. Nockleby, Esq.
Chambers, Ferguson, Watt, Wallas, Adkins & Fuller 
Suite 730 E. Independence Plaza 
951 South Independence Boulevard 
Charlotte, North Carolina 28202
Eric Schnapper, Esq.
Suite 2030
10 Columbus Circle
New York, New York 10019
Rex Lee, Solicitor General 
% Harriet Shapiro, Esq.
Office of the Solicitor General 
Washington, D.C. 20530

This 26th day of January, 1984.

/ s / George R, Hodges
George R. Hodges