Jake Ayers, Jr., Private Lillie B. Ayers Leola Blackmon Randolph Walker Henry Bernard Ayers Ivory Phillips, Dr. Vernon Archer, Dr. Dorothy Walls Francis Oladeleshowl, Dr. Alex D. Acholonu, Dr. v. Bennie G. Thompson, United States Congressman, Second Congressional District Mississippi, and Plaintiff/intervenors (Government) Intervenor v. Haley Barbour, Etc., Haley Barbour, Governor, State of Mississippi, Board of Trustees of State Institutions of Higher Learning v. Louis Armstrong, Movant-Appellant

African-American citizens of Mississippi, on behalf of themselves and all others similarly situated ("the Private Plaintiffs" or "the Private-Plaintiff class"), filed this class-action lawsuit in 1975, seeking to compel the desegregation of Mississippi's system of higher education. After nearly thirty years of litigation, a settlement agreement has been reached between the Private Plaintiffs, the United States (which intervened in this action in support of the Private Plaintiffs), and the State of Mississippi. Among other obligations, the agreement promises approximately $500 million in funding over seventeen years to remedy the present effects of Mississippi's past policies of de jure segregation. After conducting a hearing on the fairness of the proposed settlement agreement and receiving a concurrent resolution from the Mississippi Legislature supporting the proposal and agreeing to fund it, the district court approved the settlement.

Dissatisfied with the relief provided for in the agreement, several of the Private Plaintiffs ("Appellants") appeal to this court, asking us to reverse the district court's decision and, thereby, to invalidate the settlement. Appellants also desire to opt out of this class action and, thus, to continue litigating this controversy. Finally, Appellants' attorney, who represented the Private-Plaintiff class for many years, contends that he must be permitted to proceed separately regarding his fees, even though the settlement agreement provides a lump sum for the fees of all the attorneys who have represented the Private Plaintiffs.

We have reviewed Appellants' objections to the settlement agreement, and we hold that the district court did not abuse its discretion in approving it. In addition, we conclude that the district court correctly denied Appellants' motion to opt out of the Private-Plaintiff class. Finally, we reject the assertion of Appellants' attorney that he is entitled to proceed separately regarding attorneys' fees. Accordingly, we affirm.

The Private Plaintiffs2 filed suit against, among others, the Governor of Mississippi and the Board of Trustees of State Institutions of Higher Learning ("the Board"). The United States subsequently intervened as a plaintiff. In their complaints, the Private Plaintiffs and the United States alleged, inter alia, that the Defendants had not satisfied their affirmative obligation under the Equal Protection Clause and Title VI to disestablish the State's racially dual system of higher education.3 After conducting a trial, the district court ruled that the State — by adopting race-neutral policies and procedures and taking certain affirmative actions — had satisfied its duty to reform the former de jure segregated state-university system. Ayers v. Allain, 674 F.Supp. 1523, 1564 (N.D.Miss.1987). We affirmed. Ayers v. Allain, 914 F.2d 676, 692 (5th Cir. 1990) (en banc).

Reversing, the Supreme Court held that both this court and the district court had applied an incorrect legal standard. See United States v. Fordice, 505 U.S. 717, 729-32, 112 S.Ct. 2727, 120 L.Ed.2d 575 (1992). According to the Court's opinion,

If the State perpetuates policies and practices traceable to its prior system that continue to have segregative effects — whether by influencing student enrollment decisions or by fostering segregation in other facets of the university system — and such policies are without sound educational justification and can be practicably eliminated, the State has not satisfied its burden of proving that it has dismantled its prior system. Such policies run afoul of the Equal Protection Clause, even though the State has abolished the legal requirement that whites and blacks be educated separately and has established racially neutral policies not animated by a discriminatory purpose.

Id. at 731-32, 112 S.Ct. 2727. In other words, the Court ruled that the Equal Protection Clause and Title VI4 require Mississippi to abolish any policy or practice that (1) is traceable to de jure segregation, (2) continues to have segregative effects, (3) is without sound educational justification, and (4) can be practicably eliminated.

Having articulated the legal standard to be applied on remand, the Court closed with an important clarification:

If we understand [the Private Plaintiffs] to press us to order the upgrading of Jackson State, Alcorn State, and Mississippi Valley State solely so that they may be publicly financed, exclusively black enclaves by private choice, we reject that request. The State provides these facilities for all its citizens and it has not met its burden under Brown to take affirmative steps to dismantle its prior de jure system....

Id. at 743, 112 S.Ct. 2727. Thus, the Court affirmed that this litigation concerns eliminating the effects of prior legal segregation, not mandating equality among Mississippi's publicly funded educational institutions. Cf. Missouri ex rel. Gaines v. Canada, 305 U.S. 337, 351, 59 S.Ct. 232, 83 L.Ed. 208 (1938) (explaining that the Fourteenth Amendment guarantees to individuals the equal protection of the laws).

On remand, the district court applied the legal standard articulated by the Supreme Court and found vestiges of segregation with continued segregative effects in several areas of Mississippi's higher-education system. See Ayers v. Fordice, 879 F.Supp. 1419, 1477 (N.D.Miss.1995). To reform these areas, consistent with the Supreme Court's emphasis on educational soundness and practicability, the district court issued a remedial decree, id. at 1494-96, and it ordered the establishment of a three-person committee to monitor the implementation of its decree. Id. at 1494. We describe below only those provisions of the decree that bear on this appeal.

Regarding admissions standards, the court accepted the Board's proposed admissions policy, which remains in place today. Id. at 1494 (accepting the Board's proposed admissions policy); id. at 1477-79 (describing that policy). Previously, admissions standards were stricter at the historically white universities than at the historically black universities, and the standards were based almost exclusively on an applicant's performance on the American College Test (ACT). See Fordice, 505 U.S. at 734-35, 112 S.Ct. 2727. The prior admissions standards were a vestige of de jure segregation that continued to have segregative effects: Because African-American applicants as a class scored lower on the ACT than white applicants, the standards effectively channeled black students to the historically black universities. See Fordice, 505 U.S. at 734-35, 112 S.Ct. 2727. Under the Board's current policy, however, uniform standards govern admission to all of the State's universities. Ayers, 879 F.Supp. at 1477-78. Also, rather than being based almost entirely on ACT scores, the current admissions standards also take into account high school grades. Id. Further, applicants who do not meet the regular admissions criteria can still gain admission through completion of a spring screening process, which for some students leads to participation in a summer remedial program and further remedial instruction during the regular academic year. Id. at 1478-79.

The decree directed the implementation of the Board's proposals for the development of additional academic programs at Jackson State, including programs in the field of allied health and graduate degrees in social work, urban planning, and business. Id. at 1494. The court further instructed the Board to conduct an institutional study of Jackson State, involving examination of the feasibility and educational soundness of providing additional academic offerings there, such as an engineering school, a law school, and a pharmacy program. Id. at 1494-95. Regarding Alcorn State, the district court ordered the establishment of an MBA program at the school's Natchez Center. Id. Additionally, the court ordered the Board to study whether desegregation in the two state universities in the Mississippi Delta region — Delta State and Mississippi Valley State — could only be achieved through consolidating the two institutions. Id.

The remedial decree also directed the State to submit to the monitoring committee a report addressing the practicability of having the State assume control over the facilities-maintenance funds then controlled individually by each of the eight state universities. Id. The district court further instructed the Board "to study the feasibility of establishing system-wide coordination of the community colleges in the State in the areas of admissions standards and articulation procedures, and report to the Monitoring Committee" regarding its findings.5 Id. at 1496.

On appeal, while upholding most of the district court's decision, this court rejected a few of its conclusions, and we set forth several instructions to be followed on remand. We focus here only on those aspects of our 1997 opinion that are relevant to this appeal. We concluded that the district court erred in finding that the use of ACT cutoffs to award scholarships was not traceable to the de jure system and that this policy did not continue to foster segregation. Ayers v. Fordice, 111 F.3d 1183, 1209 (5th Cir.1997), cert. denied, 522 U.S. 1084, 118 S.Ct. 871, 139 L.Ed.2d 768 (1998). Thus, we remanded for consideration of the practicability and educational soundness of reforming this aspect of the undergraduate scholarship policies at the historically white universities and of implementing, if necessary, appropriate remedial relief. Id. at 1209, 1228. In addition, we directed the district court to investigate the status of the Board's proposal to consolidate Mississippi Valley State and Delta State. Id. at 1214, 1228. If the district court determined that the Board planned not to merge the two schools, we instructed the court to order the Board to study other methods of desegregating Mississippi Valley State, including adding academic programs at that school. Id. We also concluded that the Board should report to the monitoring committee on new academic and land-grant programs that would have a reasonable chance of increasing the number of non-African-American students attending Alcorn State. Id. at 1214, 1228. Additionally, we remanded the issue of equipment funding, asking the district court to investigate the cause and segregative effect of disparities between the money received by the historically white universities and the historically black universities and, if necessary, to implement appropriate relief. Id. at 1225, 1228. Finally, we instructed the district court to monitor closely the effectiveness of the summer remedial program. Id. at 1228-29. We indicated that the program should be reformed as necessary to achieve the objective of identifying and admitting students who are capable — with reasonable remediation — of performing at the university level, but who fail to qualify for regular admission. Id.

5. Proceedings on Remand From Our 1997 Decision

Below we briefly review the aspects of the proceedings conducted and the orders issued by the district court on remand from our 1997 decision in this case that are relevant to this appeal.

In June 1998, the district court ruled that it would no longer consider the consolidation of Mississippi Valley State and Delta State, since the Board had concluded that the merger was not practical. Thus, as we instructed it to do in our 1997 opinion, the court directed the Board to study programs that could be implemented at Mississippi Valley State to attract non-African-American students. Next, the district court found that the Board was in the process of implementing a Ph.D. program in social work at Jackson State. After observing that, in response to our 1997 decision, the Board had ceased using ACT scores as the sole criterion for awarding scholarships, the district court instructed the Board to submit information to the court and to the Plaintiffs regarding the educational soundness of using ACT scores as one aspect of the scholarship-award criteria.

In August 1998, the district court appointed a monitor to aid the court and the parties in implementing the remedial decree: Dr. Jerry Boone, a former state university administrator from Tennessee.6

In October 1999, the district court ruled that the Board had fully complied with several of its obligations concerning Jackson State. After considering the monitor's status report, the court concluded that the Board had implemented academic programs in allied health, social work (Ph.D.), urban planning (masters and Ph.D.), and business (Ph.D.) at Jackson State. The court also noted that the Board had conducted an institutional study of Jackson State and had prepared to establish an engineering school at the university. Accordingly, the court stated that the Board had complied with most of its duties regarding new academic programs at Jackson State.

In July 1999, the district court ruled that the Board had complied with the paragraph of the remedial decree concerning coordination of admissions standards and establishment of articulation agreements between the State's community colleges and its universities. The court found that Mississippi's community colleges had approved an open-admissions policy. Further, the court observed that the Board had standardized "an alternative procedure for students to qualify for university admission by completing specified requirements at a community college." The court also noted that, under the Board's policy, students who unsuccessfully attempt the summer remedial program are counseled regarding community-college enrollment.

In July 2000, the district court approved the Mississippi Legislature's appropriation of funds to construct a facility to house the court-ordered MBA program at Alcorn State's Natchez campus. See Ayers v. Fordice, No. 4:75CV009-B-D, 2000 WL 1015839, 2000 U.S. Dist. LEXIS 9877, at *9 (N.D.Miss. July 6, 2000).

In January 2001, the district court issued an order regarding legal and pharmacy education at Jackson State. Finding no unmet demand for legal education in the Jackson area, the court concluded that the Board need not establish a law school at Jackson State for the purpose of desegregating that institution. The district court also found that the existing pharmacy program at the University of Mississippi was meeting the State's need for pharmacy education. It further ruled that the creation of either a law school or a pharmacy school at Jackson State was neither feasible nor educationally sound.7 The district court then announced that "[w]ith these issues resolved, the court finds that all elements of the Ayers Remedial Decree having to do with Jackson State University and involving significant expenditures of funds have now been completed."

In February 2001, the district court concluded that the Board's proposal regarding facilities-maintenance funds essentially satisfied this aspect of the remedial decree.

To summarize the status of this litigation when the district court was presented with the proposed settlement agreement, most of both the district court's remedial decree and our instructions on remand had been implemented. Thus, only the following issues remained to some extent unresolved: (1) further review of the uniform admissions standards;8 (2) continued evaluation of the summer remedial program;9 (3) investigation of potential new academic programs that might help to desegregate Mississippi Valley State and Alcorn State; (4) assessment of equipment funding; and (5) consideration of the use of ACT scores as a component of the criteria for awarding scholarships.

B. Proceedings Concerning the Settlement Agreement

After lengthy negotiations, all of the Defendants, the United States, and the lead Private Plaintiff (Congressman Bennie Thompson),10 on behalf of both himself and the Private-Plaintiff class, reached a settlement agreement. By its terms, "[j]udicial approval of [the] Agreement is to relieve the Board, and all other defendants, of any further obligations under the remedial decree." Further, the "only obligations of the Board, and other defendants, arising out of or related to the Ayers litigation will be those specified in [the] Agreement." We describe below the major obligations contained in the Agreement.

Under the agreement, the State will provide special funding in the amount of $500,000 annually for five years (from 2002-2006) and $750,000 annually for five additional years (from 2007-2011) to supplement the need-based financial aid presently available to summer program participants.11 Further, the agreement obligates the Board to "widely" publicize both the opportunity to enroll in the summer remedial program and the availability of financial aid for program participants.12

The agreement provides for the establishment, continuation, or enhancement of a variety of academic programs at Alcorn State, Jackson State, and Mississippi Valley State.13 Further, beginning with fiscal year 2002, annual appropriations are to be provided to the historically black universities for seventeen years, in the total amount of $245,880,000, to fund the numerous academic programs detailed in the agreement.14

The agreement establishes both a publicly funded and a privately funded endowment for the benefit of Alcorn State, Jackson State, and Mississippi Valley State. Mississippi will create the public endowment, which will consist of $70 million, over the course of fourteen years. Additionally, the agreement requires the Board to use its best efforts over a seven-year period to raise $35 million for the privately funded endowment.

Initially, the endowments will be managed by a seven-person committee composed of the presidents of the historically black universities, the Commissioner of Higher Education, two members of the Board, and a member to be agreed on by the other members. The income from both endowments will be allocated 28.3% to Alcorn State, 43.4% to Jackson State, and 28.3% to Mississippi Valley State, with the schools being required to use the funds for other-race15 marketing and recruitment, including the employment of other-race recruiting personnel and the award of other-race student scholarships. The schools may also expend the endowment income on the academic programs provided for in the agreement.

Alcorn State, Jackson State, and Mississippi Valley State will each receive its pro rata share of the endowments when the institution attains a total other-race enrollment of ten percent and sustains that enrollment for three consecutive years. After obtaining full control over the endowment funds, the historically black universities may use the income for "sound academic purposes such as faculty compensation, academic program enhancements and student scholarships."

The agreement authorizes various capital improvements, at a total cost of up to $75 million, at Alcorn State, Jackson State, and Mississippi Valley State.

According to the agreement, the funding necessary to implement the agreement's provisions supplements the usual appropriations made to the state-university system and does not supplant normal funding for Alcorn State, Jackson State, and Mississippi Valley State.

Acknowledging that Jackson State presently offers a broad array of academic programs and that its service area extends beyond the Jackson, Mississippi, metropolitan area, the Board agrees that Jackson State should be "recognized as a comprehensive university." The additional programs, facilities, and other resources to which comprehensive recognition entitles Jackson State are those provided for in the agreement.

Under the agreement, the attorneys for the Private Plaintiffs will receive a total of $2.5 million for fees, costs, and expenses. Additionally, the agreement states that

The class representative (Congressman Thompson) and Class counsel Byrd, Derfner and Pressman specifically represent that North Mississippi Rural Legal Services, The Center for Law and Education, and Alvin O. Chambliss, Jr. have knowledge of these provisions (i) that the Ayers defendants' obligations for attorneys' fees, costs and expenses will be fully satisfied on payment of $2,500,000 ... and (ii) that no present or former counsel for the Class, or member of the Class, may seek attorneys' fees, costs and expenses other than as set forth in this Agreement.

The agreement obligates the Board to report annually to lead counsel for the Private Plaintiffs and counsel for the United States on the agreement's implementation. In addition, it expresses the parties' decision to submit to the exclusive jurisdiction of the district court any dispute relating to the agreement. Also, the agreement will not become final until its approval is no longer subject to further appeal or judicial review.

Unhappy with the relief provided for in the agreement, Appellants filed a motion to opt out of the Private-Plaintiff class. After holding a two-day evidentiary hearing, the district court denied their motion. See Ayers v. Musgrove, No. 4:75CV009-B-D, 2001 U.S. Dist. LEXIS 19730, at *1, *18 (N.D.Miss. Nov. 26, 2001).

3. The District Court's Approval of the Settlement Agreement

Several months after it ordered that notice of the proposed settlement be published in newspapers throughout Mississippi, the district court conducted a fairness hearing, receiving testimony from proponents of and objectors to the settlement. See Ayers v. Musgrove, No. 4:75CV009-B-D, 2002 WL 91895 (N.D.Miss. Jan. 2, 2002). The district court acknowledged that it had heard persuasive arguments both for and against approving the settlement. Id. at *3.16 Despite having concerns about the proposed settlement, including its high cost and long duration, the district court expressed a preference for ending this case through agreement of the parties. Id. at *4. But it worried that none of the parties involved had the authority to appropriate the substantial sum necessary to fund the proposal. Id. at *4. Accordingly, the district court stated that — if the Mississippi Legislature would endorse the agreement and agree to fund it — the court would approve the settlement. Id. at *5.

After the district court received a concurrent resolution evidencing the Legislature's support for and agreement to fund the settlement, the court issued a final judgment approving the settlement. According to the district court,

[I]f the State of Mississippi through its elected representatives, the policymakers of the State, wants to go further in the enhancements to the historically black institutions than called for by the court — and they have advised the court they do — then their actions will be given precedence. It is not illegal to do more than that required by the Constitution.

Ayers v. Musgrove, No. 4:75CV009-B-D, slip op. at 2, 2002 WL 32127613 (N.D.Miss. Feb. 15, 2002). The court's decision, inter alia, specified that (1) this suit is a class action certified under Rule 23(b)(2); (2) the settlement agreement is incorporated by reference into the final judgment; (3) the agreement "affords the Class Members considerable relief in light of the established law of this case, the present stage of these proceedings and the range of possible recovery through further litigation, and is, in all respects, fair, reasonable, adequate and in the best interest of the Class"; and (4) all claims relating to this controversy are dismissed with prejudice.17 Id. at *2-4. In addition to appealing the district court's final judgment approving the settlement, Appellants challenge the district court's denial of their motion to opt out of the Private-Plaintiff class.18

A district court's findings of fact must be accepted unless those findings are clearly erroneous, but we review de novo a district court's conclusions of law. See Prudhomme v. Tenneco Oil Co., 955 F.2d 390, 392 (5th Cir.1992). In addition, "[o]ur appellate review of the district court's approval of a settlement is limited; an approved settlement will not be upset unless the court clearly abused its discretion." Parker v. Anderson, 667 F.2d 1204, 1209 (5th Cir. Unit A 1982) (citing Young v. Katz, 447 F.2d 431, 432 (5th Cir.1971)); accord Reed v. Gen. Motors Corp., 703 F.2d 170, 172 (5th Cir.1983). Finally, a district court's denial of a motion to opt out of a class certified under Rule 23(b)(2) is reviewed for abuse of discretion. See Penson v. Terminal Transp. Co., 634 F.2d 989, 994 (5th Cir. Unit B Jan. 1981).

A. The District Court's Approval of the Settlement Agreement

A district court has discretion to approve a class-action settlement under Rule 23(e) if the settlement is fair, adequate, and reasonable. Parker, 667 F.2d at 1208-09. Our cases instruct that the district court's "exercise of discretion is to be tested by inquiries that `ensure that the settlement is in the interest of the class, does not unfairly impinge on the rights and interests of dissenters, and does not merely mantle oppression.'" Reed, 703 F.2d at 172 (quoting Pettway v. Am. Cast Iron Pipe Co., 576 F.2d 1157, 1214 (5th Cir.1978)). Further, six factors guide our review of a decision to approve a settlement agreement resolving a class-action suit:

(1) the existence of fraud or collusion behind the settlement; (2) the complexity, expense and likely duration of the litigation; (3) the stage of the proceedings and the amount of discovery completed; (4) the probability of plaintiffs' success on the merits; (5) the range of possible recovery; and (6) the opinions of the class counsel, class representatives, and absent class members.

Id. (citing Parker, 667 F.2d at 1209). Accordingly, we focus below on the Parker factors, and we also address both Appellants' inadequate-representation contention and their challenge to the agreement's provision regarding attorneys' fees.

Appellants' brief contains several vague assertions of collusion. Primarily, Appellants claim that they had insufficient access to and participation in the settlement negotiations. Further, they suggest that collusion occurred in the negotiation of attorneys' fees.

It is unclear why Appellants' attorney, Alvin Chambliss (who represented the Private-Plaintiff class for many years), did not participate in the settlement negotiations. The lead Private Plaintiff, Congressman Thompson, testified at the fairness hearing that every effort was made to keep Mr. Chambliss informed regarding the negotiations. Further, letters and facsimiles — indicating correspondence between lead counsel for the class and Mr. Chambliss concerning the settlement talks — were presented as exhibits at the fairness hearing. Regardless, the district court found Appellants' allegations of collusion to be unsupported. Ayers, 2001 U.S. Dist. LEXIS 19730, at *16. Because Appellants have pointed to no record evidence that contradicts this finding — let alone evidence showing it to be clearly erroneous — we reject their contention that collusion was present in the settlement negotiations.

2. The Complexity, Expense, and Likely Duration of the Suit and the Stage of the Proceedings

The second and third Parker factors — the complexity, expense, and likely duration of the litigation and the stage of the proceedings and the amount of discovery completed — weigh in favor of affirming the district court's decision. First, regarding the second factor, settling now avoids the risks and burdens of potentially protracted litigation concerning several aspects of our remand instructions and the district court's remedial decree. See supra notes 8-9 and accompanying text (describing five issues that were not fully resolved when the parties reached their agreement). Specifically, settlement eliminates the transaction costs that further proceedings would impose on the process of desegregating Mississippi's state-university system. The agreement also provides relief for the class sooner than continued litigation would.

Second, examination of the stage of the proceedings and the amount of discovery completed weighs in favor of upholding the settlement. The several trials and appeals that have already occurred in this case have largely resolved the controlling legal issues. Thus, the parties and the district court possess ample information with which to evaluate the merits of the competing positions.

3. Likelihood of Success on the Merits and Range of Possible Recovery

Because two trials and several appeals have already occurred in this case, the probability of the Plaintiffs' success on the merits and the range of possible recovery have largely been resolved. Our 1997 opinion conclusively determined nearly all of the State's obligations.19 Most of our instructions to the district court in that opinion concerned the remedial decree, see Ayers, 111 F.3d at 1228-29, and as discussed above, the district court concluded — before the parties reached their settlement — that much of the remedial decree had been satisfied.20

Nevertheless, aside from their allegations of collusion, Appellants' main objections to the settlement agreement center on their view that the relief it provides is inadequate. Appellants primarily seek more money for academic programs and facilities at the historically black universities and lower admissions standards. But they also object to the requirement that the historically black universities reach and sustain an other-race enrollment of ten percent before gaining full control over the endowments created by the settlement agreement. Additionally, Appellants assert that the agreement does not adequately address institutional mission designations,21 faculty salaries, governance, accreditation, and the allocation of land-grant functions between Alcorn State and Mississippi State University. We address each of Appellants' specific contentions in turn below and explain why Appellants are unlikely to achieve greater relief through further litigation.

Concerning Appellants' desire for more funding for and programs at the historically black universities, our 1997 decision affirmed the district court's finding that "merely adding programs and increasing budgets is not likely to desegregate" a historically black university. Ayers, 111 F.3d at 1213 (citation and internal quotation marks omitted). Additionally, we upheld the district court's determination that the State's funding formula is not traceable to de jure segregation.