filed: February 26, 1990; As Corrected March 9, 1990.
On Appeal from the United States District Court for the Western District of Pennsylvania, D.C. Civil No. 83-2166.
Becker, Nygaard and Rosenn, Circuit Judges
Before the court is a motion to approve a proposed settlement. The action was filed by a class of formerly salaried employees of United States Steel Corporation's Universal Atlas Cement Division (USX), claiming they are entitled to pension or severance benefits resulting from USX's sale of the division in 1980. Following a bench trial, the district court denied relief and the class appealed. The class representatives and USX then negotiated a proposed settlement. Notice of the proposed settlement was sent to the class, and several members filed objections. We appointed Michael D. Brophy, Esquire, as friend of the court ("Amicus"), to file a letter brief on behalf of the objectors, and invited USX and the class representatives to do likewise. For the reasons that follow, we will remand the case to the district court with instructions to approve the settlement.
The class action was filed in 1983 by employees of USX's Atlas Cement Division (UAC). On the day the case was to be tried, the district court certified the class pursuant to Fed.R.Civ.P. 23(b)(2). The class presented two claims for trial; first, that they were entitled to "shutdown pensions" following USX's sale of UAC to Lehigh Portland Cement Company (Lehigh) in 1980; and second, that they were entitled to severance pay following the sale. The primary issue before the district court was whether the pension benefits package to which class members were entitled at Lehigh was comparable to the benefits available at UAC.*fn1 Following a non-jury trial, the court made findings of fact, conclusions of law and denied the class members relief. Specifically, the court found that the sale cost no employee at UAC his or her job; that Lehigh was required to provide comparable salaries, jobs and benefits; and, that the assistant to the vice-president of the pension fund, following a detailed comparison of Lehigh and USX benefit packages, correctly concluded they were equivalent. The district court found that the plaintiffs failed to sustain their burden of proof and concluded that the plan administrator's determinations; (1) that the pension benefits of UAC and Lehigh were similar; and, (2) that no permanent shutdown occurred, were neither arbitrary nor capricious. The court, applying a de novo review, also concluded that the defendants did not breach their fiduciary duty to beneficiaries of the plans by denying plaintiff's claims for severance pay and retirement benefits.
Following an appeal by the class, the parties reached a tentative settlement, and notice was sent to the class. The settlement contained the following:
1. Class members will abandon the claims made in the lawsuit;
2. Defendant/appellees will pay $125,000 to law firm representing the class, Gaffney, Schember & Kete;
3. The law firm will deposit the proceeds in its trust account and distribute the funds as follows:
a. $25,000 to Claude C. Poulin, the expert retained by the class, in full payment for his services;
b. $8,100 to attorney Stephen R. Bruce, who served as counsel to the class prior to the law firm;
c. $62,500 to the firm of Gaffney, Schember & Kete, P.C., which has agreed to satisfy the class' obligations to all other attorneys who have provided services to the class during the course of the lawsuit and to accept ...