trial, plaintiffs would seek to establish liability based on only two grounds: 1) the Due Process Clause of the Fourteenth Amendment to the United States Constitution; and 2) § 504 of the Rehabilitation Act of 1973.
Plaintiffs also sought injunctive relief requiring defendants to: 1) develop for class members individual exit plans into CLAs; 2) place class members into suitable CLAs if such facilities exist; and 3) if no suitable CLAs are available, fund the creation of new CLAs so that class members can be placed in such facilities.
Defendant Secretary moved for summary judgment or, in the alternative, for a stay on the ground that plaintiffs were members of the class certified in Halderman v. Pennhurst State School and Hospital, 446 F. Supp. 1295 (E.D.Pa. 1977), aff'd in part, 612 F.2d 84 (3d Cir. 1979), vacated and remanded, 451 U.S. 1, 101 S. Ct. 1531, 67 L. Ed. 2d 694 (1981); judgment restated on remand, 673 F.2d 647 (3d Cir. 1982), rev'd and remanded, 465 U.S. 89, 79 L. Ed. 2d 67, 104 S. Ct. 900 (1984) (" Pennhurst "), and therefore were barred under the doctrines of res judicata and collateral estoppel from maintaining this action. The Pennhurst action was filed in May, 1974 by retarded residents and former residents of Pennsylvania State School and Hospital (now Pennhurst Center), an institution owned and operated by the Commonwealth of Pennsylvania, to obtain, inter alia, an injunction closing Pennhurst and requiring the state to provide care, training and education for class members in CLAs. Pennhurst, 456 F. Supp. at 1298. In November, 1976 the Pennhurst court certified a class consisting of all retarded persons "who as of May 30, 1974, and any time subsequent, have been or may become residents of Pennhurst . . . ." 446 F. Supp. at 1300. The class included all retarded persons residing at Pennhurst on that date, those on the waiting list and those who may be placed at Pennhurst because of the unavailability of "alternative services in the community." Id. The defendants were "Pennhurst; the Pennsylvania Department of Public Welfare; various state and county officials responsible for supervising the Commonwealth's and the counties' retardation programs; and the superintendent and various employees of Pennhurst." 446 F. Supp. at 1301-02 (footnote omitted).
On June 11, 1984, this court granted summary judgment for defendants on the ground that the named plaintiffs were members of the Pennhurst waiting list and therefore were barred from bringing this action.
An appeal was taken but plaintiffs' subsequent request that the Third Circuit Court of Appeals remand this action for consideration of a Rule 60(b) motion was granted on August 27, 1984. The Rule 60(b) motion was based on newly discovered evidence, i.e., the Pennhurst settlement agreement, executed on July 12, 1984, provided no relief to the named plaintiffs or members of the putative class in this action. The relief granted in Pennhurst was limited to its then present residents and the Pennhurst settlement class was modified accordingly. See Halderman, et al. v. Pennhurst State School, et al., 610 F. Supp. 1221, 1228 (E.D.Pa. 1985).
This court gave favorable consideration to the Rule 60(b) motion and on July 3, 1985, with the consent of the parties, certified a Rule 23(b)(2) liability class of, "All mentally retarded individuals currently residing at Woodhaven Center whose domicile is or was Philadelphia County who have been recommended by treatment teams at Woodhaven Center for discharge to less restrictive community living arrangements."
On August 30, 1985, the parties submitted a stipulation of settlement for approval of the court. Under the proposed settlement, the Department of Public Welfare for the Commonwealth of Pennsylvania will provide sufficient funding to the Philadelphia Office of Mental Health/Mental Retardation for placement of at least 23 members of plaintiffs' class in CLAs each year, beginning on July 1, 1986. There are 115 members in the class so that all class members who should be placed in CLAs may be so placed by 1991. After class members are placed in CLAs, the state will provide sufficient funding to maintain the placements.
While the state defendant will provide funding, the City defendants will provide the actual CLAs. The City defendants also will provide community services to ensure minimally adequate habilitation for each class member.
The actual placement decisions will be made by an interdisciplinary team. Plaintiff class members and their parents and/or guardians, or closest relatives, will play a significant role on that team in the placement decision-making process. Nothing in the settlement agreement requires the interdisciplinary team to place any member of the class in a CLA. In addition, the settlement agreement specifically provides that absent the availability of an appropriate placement, no class member will be moved merely to meet a timetable.
Implementation of the agreement is contingent upon the availability of state funds. In the event that there are insufficient funds, plaintiffs retain the right to litigate their claims. The court will maintain active jurisdiction until June 30, 1991 to ensure compliance with the agreement but the court will play no role in the placement decision-making process. On June 30, 1991, the case may be dismissed with prejudice.
On September 13, 1985, the court ordered that notice of the proposed settlement be sent by first class mail on or before September 20, 1985, to each member of the class and to a family representative of each class member. The notice stated that any member of the class or family representative who objected to the settlement could appear and be heard on the proposed settlement on November 4, 1985 so long as any objections had been filed in written form on or before October 25, 1985. The court finds this notice complied with Fed.R. Civ.P. 23(e) and was the best practicable under the circumstances.
APPROVAL OF SETTLEMENT
Rule 23(e) of the Federal Rules of Civil Procedure mandates court approval of a class action settlement:
A class action shall not be dismissed or compromised without the approval of the Court, and notice of the proposed dismissal or compromise shall be given to all members of the class. . . .
Approval of a proposed class action settlement is discretionary with the court. Girsh v. Jepson, 521 F.2d 153, 156 (3d Cir. 1975); Ace Heating & Plumbing Company v. Crane Company, 453 F.2d 30, 34 (3d Cir. 1971). Settlement is a course favored by law, Weight Watchers of Philadelphia, Inc. v. Weight Watchers International, Inc., 455 F.2d 770, 773 (2d Cir. 1972), but a settlement will be approved only if it is "fair, adequate, and reasonable" to the members of the class, Walsh v. Great Atlantic and Pacific Tea Company, Inc., 726 F.2d 956, 965 (3d Cir. 1983). The settlement must be both substantively reasonable compared to the likely rewards of litigation, Shlensky v. Dorsey, 574 F.2d 131, 147 (3d Cir. 1978), and the result of good faith, arms length negotiations, Weinberger v. Kendrick, 698 F.2d 61, 74 (2nd Cir. 1982).
The appellate courts have specified factors to be considered prior to decision upon the fair, reasonable and adequate nature of a proposed class action settlement. See Malchman v. Davis, 706 F.2d 426, 433-34 (2d Cir. 1983) (nine factors); Reed v. General Motors Corp., 703 F.2d 170, 172 (5th Cir. 1983) (six factors); Officers for Justice v. Civil Service Commission, 688 F.2d 615, cert. denied, 459 U.S. 1217, 75 L. Ed. 2d 456, 103 S. Ct. 1219 (1983) (eight factors). In Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975), the Third Circuit Court of Appeals noted the relevancy of the following nine factors in determining the fairness of a settlement:
. . . (1) the complexity, expense and likely duration of the litigation . . .; (2) the reaction of the class to the settlement . . .; (3) the stage of the proceedings and the amount of discovery completed . . .; (4) the risks of establishing liability . . .; (5) the risks of establishing damages . . .; (6) the risks of maintaining the class action through the trial . . .; (7) the ability of the defendants to withstand a greater judgment; (8) the range of reasonableness of the settlement fund in light of the best possible recovery . . .; (9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation . . .