The opinion of the court was delivered by: WARD
This civil action, for declaratory and injunctive relief under 42 U.S.C. §§ 1983, 1985 and 1986, and 28 U.S.C. §§ 2201 and 2202, is brought on behalf of a certified class of black Protestant
children in need of child care services out of their home, and on behalf of several New York taxpayers. Plaintiffs challenge New York's statutory scheme for the provision of child care services, and the operation of the New York City child care system, on the grounds that the statutes and operation of the New York City system violate the Establishment and Free Exercise Clauses of the First Amendment, the Equal Protection and Due Process Clauses of the Fourteenth Amendment, and Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d. Jurisdiction is alleged under 28 U.S.C. §§ 1331(a), 1343(3) and 1343(4), and 42 U.S.C. § 2000d. Plaintiffs, defendant New York City ("City") and individual defendants currently employed by the City (collectively, "City defendants"), defendant Kaufman, and eighteen intervening child care agencies ("intervenors")
move for an order pursuant to Rule 23(e), Fed. R. Civ. P., approving a proposed stipulation of settlement ("Stipulation") that was presented to the Court on December 19, 1985. For the reasons that follow, and subject to certain conditions set forth below, the motion is granted and the Stipulation is approved.
This litigation, which originated in a lawsuit filed in June 1973, Wilder v. Sugarman, 73 Civ. 2644(HRT) (S.D.N.Y.), has in the course of its development over the past thirteen years assumed very much a life of its own. The official documents filed in the instant case alone - mostly relating to discovery - number over 750. The intersecting constitutional, statutory and child care issues raised in the action have provoked commentary in legal publications, e.g., Note, With the Best of Intentions: The Constitutionality of the Statutory Scheme for Voluntary Child-Care Agencies in New York, 4 N.Y.U. Rev. L. & Soc. Change 21 (1974), independent study by researchers in the fields of child care and public services, e.g., S. Finch & D. Young, Foster Care and Non-Profit Agencies (Lexington Books 1977); D. Gurak, D. Smith & M. Goldson, The Minority Foster Child: A Comparative Study of Hispanic, Black and White Children (Hispanic Research Center, Fordham University, Monograph No. 9, 1982) ("The Minority Foster Child "), and review by government officials or advisory bodies, e.g., Redirecting Foster Care (Report of Mayor's Task Force on Foster Care, issued June 1980).
Much of the relevant history of this litigation is chronicled in previously published decisions, chiefly Wilder v. Sugarman, 385 F. Supp. 1013 (S.D.N.Y. 1974) (three-judge court) ("Wilder I "), and Wilder v. Bernstein, 499 F. Supp. 980 (S.D.N.Y. 1980) ("Wilder I "), familiarity with which is assumed. A selective review of the case's history is helpful, however, to an understanding of its present posture.
The complaint filed in June 1973 and assigned to Judge Tyler of this Court, Wilder v. Sugarman, 73 Civ. 2644(HRT) (S.D.N.Y.), raised constitutional challenges to the New York child care system similar to those still before this Court in the instant action. Judge Tyler referred the case on plaintiffs' motion to a three-judge court convened pursuant to 28 U.S.C. §§ 2281 and 2283. In June 1974, the three-judge panel entered a pretrial order identifying the issue before it as:
[w]hether New York Social Services Law § 373(1), (2) and (5), New York State Constitution Article 6, § 32, Family Court Act § 116(a), New York Social Services Law § 153 and New York Constitution Article 7, § 8(2) violate the Establishment Clause of the First Amendment to the Constitution of the United States on their face. . ..
Thereafter, the panel filed an opinion, Wilder I, addressing "the facial constitutionality of the New York State constitutional and statutory provisions regarding religious matching for publicly-funded foster care of children." 385 F. Supp. at 1018. The opinion expressly disclaimed consideration of "any aspect of the application of these provisions in specific instances." Id.
The three-judge court in Wilder I reviewed the existing statutory scheme in New York for placing children in care outside of the home, in light of the historical development of the state's child welfare system and the longstanding participation in it by religiously affiliated child care institutions. The panel noted in particular the following provisions of the New York Constitution and statutes:
The system has its modern genesis in Article VI, § 32 of the New York Constitution, which provides that a child "shall be committed or remanded or placed, when practicable, in an institution or agency governed by persons, or in the custody of a person, of the same religious persuasion as the child." This constitutional provision is implemented by § 373 of the New York Social Services Law, . . . which states in pertinent part:
"1. Whenever a child is committed to any agency, association, corporation, institution or society, other than an institution supported and controlled by the state or a subdivision thereof, such commitment shall be made, when practicable, to an authorized agency under the control of persons of the same religious faith as that of the child."
Amendments to § 373 of the New York Social Services Law and § 116 of the New York Family Court Act supplement the religious matching provision by specifying that the provisions of those sections "shall, so far as consistent with the best interests of the child, and where practicable, be applied so as to give effect to the religious wishes of the [parents]." New York Social Services Law § 373(7); New York Family Court Act § 116(g).
With respect to public payment of the expenses of caring for the children, Article 7, § 8(2) of the New York Constitution asserts that nothing shall prevent the Legislature from providing, inter alia, for:
". . . the aid, care and support of neglected and dependent children and of the needy sick, through agencies and institutions authorized by the state board of social welfare or other state department having the power of inspection thereof, by payments made on a per capita basis directly or through the subdivisions of the state. . .."
This is implemented by § 153 of the Social Services Law allowing for reimbursements by the State to social services districts, cities, and towns for the administration of public assistance programs.
New York's statutory provisions authorizing the religious matching of children with sectarian foster care agencies, combined with state reimbursement of such institutions for the care of children placed by local government agencies, presented the Wilder I court with at least a "theoretical . . . clash between the Establishment and Free Exercise Clauses of the First Amendment." Id. The court accepted the argument offered by the defendants there that, "far from requiring or mandating placement according to religon," the New York constitution and statutes at issue "simply permit such placement 'so far as consistent with the best interests of the child, and where practicable.'" Id. at 1021 (emphasis added). This interpretation of the New York child placement scheme did not resolve the constitutional question before the panel, however, in part because it did not address the additional problem of state funding of religiously affiliated child care agencies. The three-judge panel therefore found it necessary to examine New York's child care system under the familiar three-part test for Establishment Clause claims set forth in Lemon v. Kurtzman, 403 U.S. 602, 29 L. Ed. 2d 745, 91 S. Ct. 2105 (1971).
Under the first prong of the Lemon v. Kurtzman test, the court in Wilder I had little difficulty concluding that New York's religious matching and child care funding statutes do not have a solely "secular legislative purpose." Lemon, supra. 403 U.S. at 612; see 385 F. Supp. at 1023-24. Indeed, the court noted that one of the principal objectives of the statutes in question is "to provide for the religious education of foster children in accordance with the parents' wishes." 385 F. Supp. at 1024. Even without such an express religious purpose, however, the panel held that the statutory scheme would be vulnerable under the second prong of the Lemon test because its "effect could be to impermissibly inculcate religion." 385 F. Supp. at 1024; see Lemon, supra, 403 U.S. at 612. At this stage of its analysis, the court took particular note of the pervasively religious character of many of the foster care institutions involved, the impressionable age of most children in foster care, and the fact that "[n]othing in the [funding] statute obligate[s] the recipient to earmark the funds for use solely for the child's temporal needs." 385 F. Supp. at 1024. "[R]egardless of how the state's statutes are labelled and whether or not payments made under them exceed the actual cost of the child's secular needs," the panel observed, "the religious institutions or agencies are free under the statutes to use the funds for advancement of the religions propagated by them." Id. Faced with such a statutory scheme, the three-judge court found the conclusion inescapable that the statutes in question "violat[e] . . . the literal language of the Establishment Clause." Id. "Absent countervailing circumstances," the panel held, the statutes would represent "unwarranted governmental involvement in religion." Id.
The "countervailing circumstances" that the Wilder I court had in mind, and that it ultimately held redeemed New York's child placement scheme from facial attack under the First Amendment, were the Free Exercise rights of New York children in foster care. Analogizing state-funded foster care to the government administration of prisons, hospitals and military facilities, the panel noted the "practical accommodation" of Establishment and Free Exercise Clause principles that has been sanctioned in the latter settings to prevent infringement of the Free Exercise rights of individuals who are in the care or control of government institutions. In this regard, for example, the Second Circuit recently upheld the funding of a chaplaincy program by the United States Army against Establishment Clause attack, in part on the ground that military chaplains are reasonably necessary in at least some settings to assure that the Free Exercise rights of soldiers on duty are not violated. Katcoff v. Marsh, 755 F.2d 223 (2d Cir. 1985). See also Cruz v. Beto, 405 U.S. 319, 322, 31 L. Ed. 2d 263, 92 S. Ct. 1079 n.2 (1972) (per curiam) (reasonable opportunities for religious exercise must be afforded to all prisoners). Likewise, the three-judge panel in Wilder I assumed that some accommodation of the Establishment and Free Exercise Clauses would be constitutionally permissible in the New York foster care setting to the extent that the state's religious matching statutes and funding of religiously affiliated child care agencies was "reasonable and necessary" to protect the Free Exercise rights of children in the state's care. 385 F. Supp. at 1026-27.
The three-judge court acknowledged, first, that the state, standing in loco parentis, has the "moral obligation and right" to provide for the essential maintenance and education of children in its care. Id. at 1025. The court further assumed that the state's rights and duties in this area would extend to the provision of moral and religious education. Id. The state's right and obligation to provide such training arise not only from its status as a surrogate parent, the court reasoned, but from the Free Exercise Clause itself. Id. at 1026. Assuming, then, that New York is obligated as a matter of both state law and constitutional principles to provide for the religious upbringing of children in its care, the Wilder I court proceeded to consider whether the existing child placement system is a "reasonable and necessary" means to accomplish that end.
The three-judge-court ultimately concluded that the New York statutes represent, at least on their face, "a fair and reasonable accommodation between the Establishment and Free Exercise Clauses." Id. at 1029. Three findings underlay the court's conclusion. First, the panel noted that the historical participation of religious agencies in New York's foster care system had contributed positively to the community and had never been shown to be harmful to children in foster care or to the public. Plaintiffs did not contend, the court assumed, that the system had been used to favor one religion over another or to favor religion over an absence of religion,
or that most of the government funds paid to religious child care institutions over the years had not been used to meet foster children's "temporal needs." Id. at 1028. Second, the three-judge court observed that plaintiffs had offered no "suitable or constructive alternative" to the present foster care system. The court rejected as fanciful plaintiffs' suggestion that a system of strictly secular homes, agencies and institutions could be established to supplant the state's existing reliance on religious institutions. Id. Finally, the panel conjectured that under a "strictly secular" foster care system such as plaintiffs proposed, the state could become "hopelessly entangled in religion, far beyond its existing simple relationship with foster parents and religious institutions," as it became involved in the "custom-tailoring" of particular children's religious training and participation in communal religious activities. Id. at 1029. The court noted, for example, the "pervasive religious upbringing" that would be demanded by a child raised in the orthodox Jewish tradition. Id. at 1028.
Based on these considerations and assumptions, the three-judge panel upheld the challenged New York statutes on their face. The court expressly left open "other questions presented by the pleadings, including the issue of whether or not one or more of these New York constitutional or statutory sections in their implementation deprive plaintiffs of their First Amendment or other federal Constitutional rights." Id. at 1029. Plaintiffs moved for reconsideration of the panel's per curiam opinion. The motion was denied on October 16, 1975.
II. Subsequent Proceedings
Following the opinion rendered by the three-judge court in Wilder I, the parties to that action engaged in extensive discovery and motion practice. The case eventually was reassigned to this Court in September 1977. In March 1978, at the suggestion of this Court, the New York Civil Liberties Union, co-counsel for plaintiffs in Wilder v. Sugarman, filed a new action, Parker v. Bernstein, 78 Civ. 957(RJW), in which they raised similar challenges to the New York child care system, but took into account intervening changes in the system, including changes of personnel in the relevant government and private agencies.
By order dated June 2, 1978, the Court dismissed the earlier-filed suit on stated conditions, among them, that the opinion of the three-judge court in Wilder I would be treated by this Court as stare decisis for purposes of the surviving action.
The complaint filed in Parker v. Bernstein was amended on April 17, 1978 and again on November 16, 1978, at which point it was restyled Wilder v. Bernstein. In an opinion filed October 1, 1980 ("Wilder II "), the Court granted plaintiffs' motion for class certification and granted so much of defendants' motions to dismiss as were directed to plaintiffs' facial attacks in the second amended complaint based on New York statutes and New York City Administrative Code provisions not expressly dealt with by the three-judge court in Wilder I. Those additional provisions, this Court found, were nevertheless part of the statutory scheme upheld on its face in Wilder I, and could only be attacked as applied in this proceeding. The Court denied the remainder of defendants' motions to dismiss, including their challenge to the taxpayer plaintiffs' standing, which the Court found met the requirements for taxpayer standing set forth in Flast v. Cohen, 392 U.S. 83, 20 L. Ed. 2d 947, 88 S. Ct. 1942 (1968). See 499 F. Supp. at 991-92.
After additional discovery and motion practice, the Court filed a memorandum decision on March 3, 1981, granting in part plaintiffs' motion for leave to further amend the complaint, and denying certain defendants' motion for an order certifying for appeal the Court's prior certification of the plaintiff class. A third amended complaint was filed March 23, 1981. After two years of extensive discovery and motion practice, a fourth amended complaint was filed April 27, 1983. By this time, the parties had begun preparations for trial, including the drafting of proposed pretrial orders and the filing of motions to preclude various witnesses' testimony.
III. Plaintiffs' Contentions
As reflected in the fourth amended complaint filed April 27, 1983, and plaintiffs' proposed pretrial order submitted to the Court in the spring of 1983, plaintiffs continue to assert four principal constitutional claims against defendants. First, they contend that the New York City child care system
operates in a racially discriminatory manner, and that Catholic and Jewish child care agencies contracting with the City have been permitted to receive public funds while engaging in a pattern and practice of discrimination against black children in violation of the Fourteenth Amendment. Plaintiffs allege specifically that there are disproportionately low black and high white populations in Jewish and Catholic agencies; that the referral of children to voluntary agencies by New York City's Special Services for Children ("SSC"),
and the placement of children by the agencies in specific programs, has resulted in racial segregation; that racial discrimination by the agencies has been facilitated by SSC's identification of children for placement by race and/or skin color, and by the agencies's unrestricted right to reject children placed with them by SSC under broad subjective admissions criteria; that agencies are reimbursed by SSC for children who apply directly to the agency rather than being referred by a City placement office; and that some agencies have listed vacancies by race. As a result of the racial discrimination alleged, plaintiffs argue, black children wait longer for placement, are more often inappropriately placed, and are disroportionately placed with agencies or in programs of inferior quality. See Fourth Amended Complaint at P P 49, 51, 53-55, 59, 64-67, 71, 73-74; Plaintiffs' Proposed Pretrial Order at 10-16.
Second, plaintiffs contend that the New York City child care system operates in a manner that discriminates on the basis of religion in that Catholic and Jewish child care agencies are permitted to prefer children of their own religion by virtue of the City's practice of making religion a primary criterion in placing children in foster care. This practice of religious discrimination, plaintiffs maintain, also violates the Fourteenth Amendment. Specifically, plaintiffs allege that Catholic and Jewish agencies care for a disproportionately high population of children of their own religion; that SSC refers children to agencies on the basis of their religion even where the parent has not expressed a religious preference; that SSC further facilitates religious discrimination by Catholic and Jewish agencies by identifying the religion of children referred to the agencies and by allowing agencies to veto such placements on the basis of broad, subjective criteria; that SSC reimburses agencies for children who are placed directly by the agency rather than through SSC; that SSC has failed to keep adequate records or vacancy listings so as to monitor the agencies for religious dlscrimination; and that some agencies have listed vacancies by religion. As a consequence of these practices, plaintiffs contend, Protestant children wait longer for placement and are often placed in inappropriate or inferior programs. See Fourth Amended Complaint at P P 48-49, 51, 53-54, 56, 58, 64-67, 70-71, 74; Plaintiffs' Proposed Pretrial Order at 16-21.
Third, plaintiffs argue that defendants' conduct under the statutes implicated in New York's child care system amounts to the establishment of religion in violation of the First and Fourteenth Amendments. Plaintiffs allege specifically that the child care system involves government financing of agencies that are controlled by or responsible to religious organizations; that certain of these agencies employ clerics or members of religious orders, or give preference in employment to those of the same religion; that many of them offer religious services only of their own faith; that children in their care attend parochial schools or yeshivas; that they prominently display religious symbols on their premises and on special days of religious observance; that many of the agencies share or adjoin premises occupied by a religious order or organization; and that the stated purpose of many Catholic or Jewish agencies is to care for children of their own religion. The purpose and effect of New York's child care system as implemented by defendants, plaintiffs argue, is to advance religion and to favor some religions over others and religion over nonreligion. Plaintiffs contend further that religious child care agencies historically have exerted control over New York City's foster care system, that the City's auditing procedures are inadequate to guard against excessive reimbursement of religious agencies and use of public funds by the agencies to advance impermissible religious interests, and that agencies claim and receive reimbursement for clearly religious purposes, including payments to religious charities or religious orders with which its employees are affiliated. All of these practices, plaintiffs argue, involve an excessive entanglement of government with religion. See Fourth Amended Complaint at P 223; Plaintiffs' Proposed Pretrial Order at 21-38.
Fourth, plaintiffs maintain that defendants' practices under the statutory scheme in question burden the Free Exercise rights of Protestant children in violation of the First and Fourteenth Amendments. Plaintiffs assert specifically that there are no agencies operated by members of most of the various Protestant sects that Protestant children are more frequently placed in unsuitable programs than are Catholic and Jewish children; and that when Protestant children are placed in Catholic and Jewish agencies, they are chilled in the exercise of their own religion by the religious practices and generally pervasive environment of the agency (and in the case of placement with Catholic agencies, are denied access to birth control information and devices and information about obtaining abortions). See Fourth Amended Complaint at P P 68-69, 225; Plaintiffs' Proposed Pretrial Order at 38-39.
In addition, plaintiffs claim that defendants' denial of equal access to child care services for black Protestant children violates Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d, see Fourth Amended Complaint at P P 226, 230; Plaintiffs' Proposed Pretrial Order at 39-41, and that the City defendants' provision of child care services in a manner that discriminates against black Protestant children violates 18 N.Y.C.11.R. §§ 301.1 and 303.2, Fourth Amended Complaint at P 232.
IV. Settlement Negotiations
At earlier stages in the litigation, attempts had been made at settlement, involving all parties, but without success. Shortly before trial was to begin in August 1983, plaintiffs and the City defendants entered anew into settlement discussions with the knowledge of the other parties. Negotiations and discussions with other parties to the action and with interested outside groups continued into 1984. In April 1984, plaintiffs and the City defendants presented a proposed stipulation of settlement to the Court for approval pursuant to Rule 23(e), Fed. R. Civ. P. The Court thereafter directed that notice of the proposed settlement be given to members of the plaintiff class. In an order filed June 15, 1984, the Court granted leave to nineteen voluntary child care agencies ("intervenors") to intervene in the action for the purpose of opposing the proposed settlement.
Through the summer of 1984, the Court received numerous submissions relevant to the proposed settlement from parties, organizations of child care professionals, and individuals expert in child care and the public services field. Beginning August 6, 1984, the Court conducted a hearing on the fairness, reasonableness and adequacy of the settlement. Sparked primarily by the criticisms and suggestions of by the intervenors, the parties thereafter embarked on a series of meetings in open court to attempt to resolve the numerous legal and child care concerns aired at the August 6 hearing. These sessions continued through the fall. On January 2, 1985, the final version of a second proposed stipulation of settlement was submitted to the Court. With one significant addition,
that is the Stipulation now before the Court.
Notice of the second settlement proposal again was directed to be given to members of the plaintiff class, and submissions were filed for and against the revised settlement. A second hearing was held on March 4, 1985, this time focusing primarily on legal objections to the second settlement proposal. By this time, the Commissioner of the New York State Department of Social Services and the Comptroller of the State of New York ("State defendants") had withdrawn their substantive objections to the settlement proposal. See Letter of R. Scott Greathead, First Assistant Attorney General, and Judith Kramer, Assistant Attorney General, to the Court (dated Dec. 10, 1984). At this stage, the intervenors had withdrawn their principal child care objections to the settlement, subject to an acceptable designation of the "qualified and impartial person" who would rule on the "therapeutic objections" of contracting agencies to individual placement decisions made by SSC. See infra at 17.
In the months that followed, representatives of plaintiffs, the City defendants and intervenors solicited resumes and interviewed child care experts to decide upon a mutually acceptable "qualified and impartial person." Once that person and an alternate were selected, see supra note 9, the Stipulation was circulated for signature and presented to the Court on December 19, 1985.
Little would be gained by summarizing in detail the various features of the Stipulation now before the Court. Indeed, the task would be formidable, since the document runs to forty pages and includes over eighty distinct provisions, many of which contain subparts and cross-references. An overview of the salient features of the Stipulation is helpful, however, for purposes of later discussing the settlement's legality and fairness. The summary that follows, therefore, is meant to serve only as a point of reference, and does not represent a "binding interpretation" of the Stipulation.
The stated purposes of the Stipulation are:
to ensure that all New York City children whose placement in foster care is the responsibility of the New York City Commissioner of Social Services receive services without discrimination on the basis of race or religion and have equal access to quality services[,] and to ensure that appropriate recognition be given to a statutorily permissible wish for in-religion placement in a manner consistent with principles ensuring equal protection and non-discrimination as defined in applicable New York State and federal laws, regulations and the Constitution.
Stipulation at P 4 ("P4)"). The foster care settings contemplated by the Stipulation include foster boarding homes, agency-operated boarding homes, group homes, group residences and child care institutions. Id. at 2 n.*. The Stipulation distinguishes in certain of its provisions between "foster boarding homes" and "congregate care programs," but otherwise its terms apply generally to the range of child care facilities and programs funded by SSC, including the City's own Direct Care programs. (P9) The signatories' stated intent in entering into the Stipulation is "to resolve difficult legal issues and to improve the lives of children and families who are part of the [New York City] foster care system" and "to avoid a trial which might set back the efforts made on behalf of children in need of foster care." (P2) The Stipulation further states that "this settlement is in no way an implication of wrongdoing." Id.
The Stipulation contemplates three areas in which outside persons would be hired to implement the terms of the settlement proposal. The first area involves the classification or alternative evaluation of child care programs for use by SSC in determining appropriate placements. A system of classification or alternate evaluation would be designed by one or more "qualified consultant(s)" selected by the City with the participation of plaintiffs' counsel, and the signatory and nonsignatory agencies. (P P 6-8)
The second area involves disputes between SSC and contracting agencies that may arise under the Stipulation where SSC places a child with an agency, the agency objects to the placement on stated therapeutic grounds, and SSC seeks to override the agency's objection. The dispute would be referred for resolution to a "qualified and impartial person" paid by SSC. (P 35) As noted above, the intervenors had conditioned their approval of the Stipulation on the selection of an acceptable person to fill this position. After several months of interviews and consultations by plaintiffs, the City defendants and the intervenors, the "impartial person" and an alternate were chosen. See supra note 9.
Finally, the Stipulation envisions outside monitoring of compliance with the terms of the settlement by a three-member panel. Nominations would be made by a committee of the signatory parties, who would attempt to reach a consensus as to some or all of the panel members. Consensus or not, the Court would make the final selection after a hearing at which all interested parties could participate. The panel would be paid on a per diem basis by the City. (P 71)
The heart of the Stipulation lies in the provisions governing SSC's placement of children with voluntary child care agencies. Two principles underlie these placement provisions: first, that children would be placed on a first-come, first-served basis; and second, that the expression of a preference (usually by a parent) that a child be placed with an agency of a particular religious affiliation would not give that child greater access to a program over other children for whom the program was also appropriate. (P P 19-20)
Generally, SSC would place a child in the best available program appropriate for the child's needs, using the classification system or alternative evaluation of the various programs that would have been developed by the consultant(s) mentioned previously. Where a parent expressed a preference for placement of the child in an agency or program of a particular religious affiliation (or SSC inferred such a parental preference according to its established procedures), SSC would place the child in the best available program of the relevant religious affinity, provided it had determined that such a placement was in the child's best interest and that it was practicable to make the placement. Such placement would not be "practicable" within the meaning of the Stipulation if there was no vacancy in the best "in-religion" program or if there was a waiting list for that program. Under those circumstances, the parent would have the option of (a) having the child wait until there was a vacancy in the best "in-religion" program, (b) having the child placed in the next best "in-religion" program, or (c) having the child placed in the best available "out-of-religion" program. If the child were over 14, he or she would be consulted and "serious consideration" would be given to the child's wishes. (P P 24, 29-30)
The first-come, first-served principle of placement is tempered by allowance in the Stipulation of exceptions for "compelling therapeutic reasons." (P 21) These include, but are not limited to, emergencies and "extraordinary circumstances" in which religious beliefs and practices so pervade a child's life that a particular religious placement is required. See id., see also id. at P 61. The Stipulation also provides that an agency may take a child's race and religion into account in matching the child with a particular foster family, provided those are not the only factors considered. (P 25)
SSC would have final administrative authority over all placement decisions "[s]ubject to the terms of [the] Stipulation," and would reimburse agencies only for placements made according to the Stipulation's terms. (P 22) An agency could reject a placement by SSC only on the ground that it had no vacancy, that it did not have a suitable foster family for the child in the case of a referral for foster boarding home care, or that there was a valid therapeutic reason for not accepting the child into its program. See id. As noted above, disputes between SSC and an agency over a particular therapeutic objection to an SSC placement decision would be referred to the "qualified and impartial person" designated in P 35.
The Stipulation provides that SSC will continue to conduct evaluations of children in accordance with applicable provisions of the New York Social Services Law and "good social work practice." (P 48) These evaluations would be conducted prior to placement or, where a child is placed prior to the evaluation, no later than thirty days after placement. Id. In evaluating a child after an initial placement has been made, SSC would take into account the child's need to avoid unnecessary movement and, where "good social work judgment" indicated that a change of placement would harm the child, would not require such a move. (P 39)
SSC would not identify children for placement by race or religion unless it had determined that such information was therapeutically necessary, or unless an agency had requested such information for stated therapeutic reasons. (P 32) Under the Stipulation, SSC must provide agencies with "adequate, current and complete evaluations of all children requiring foster care to the extent available" and, if additional information is deemed necessary, must provide it promptly. (P 51) The Stipulation provides for additional diagnoses and evaluations to be performed at an agency's request, including direct observation of the child and family. Disputes concerning such supplemental evaluations would be referred to the "impartial person" identified in P 35. (P P 49-50) Finally, the Stipulation requires SSC to establish waiting lists for particular agency programs where appropriate (P P 44-47), and requires agencies to report their vacancies for New York City children to SSC. (P 53)
D. "Specially Designated" Agencies
The Stipulation acknowledges the existence of "certain religions which have adherents whose religious beliefs pervade and determine the entire mode of their lives, regulating it with detail through strictly enforced rules of the religion." (P 61) It assumes further that there are New York City children in need of foster care whose parents "believe it imperative that their children continue to practice the extensive religious customs and rituals which have been part of the child's life." Id. Notwithstanding other provisions in the Stipulation, therefore, it authorizes SSC to determine that certain child care agencies or programs will be "specially designated" to care solely for children of these religious groups.
The Stipulation provides that where a parent requests placement of a child in such an agency or program, the request shall be honored as long as the placement is "diagnostically appropriate" for the child. Where the child is over 14, his or her wishes are also to be taken into account. (P 61(c)) Plaintiffs' counsel retain the right to challenge a "special designation" by SSC that they believe is inconsistent with the terms of the Stipulation. (P 61(e))
In order to "ensure the free exercise rights of all children in placement in the agencies," the Stipulation provides that certain policies and practices will be adopted by SSC and followed by the contracting agencies. (P 70) Specifically, each agency would provide "comparable opportunities" for children to practice their own religion and observe religious holidays, would permit but not require children in its care to attend religious or holiday observances on its premises, would not impose religious dietary practices (to the extent practicable) on children who do not wish to follow them, would provide benefits and privileges to children without regard to religion, and would not convey religious tenets regarding family planning except in the course of providing religious counseling. Id. SSC would ensure that all children have "meaningful access to the full range of family planning information, services and counseling" through the agency or an outside source or both. (P 70(7)) Religious symbols would be permitted in children's rooms at their request; agencies would not display "excessive religious symbols." (P 70(9))
F. Administration and Enforcement
The Stipulation contains various recordkeeping requirements applicable to SSC, the contracting agencies, and the settlement panel. E.g., P P 63-66, 73. The Stipulation also memorializes an agreement between the State and City to review existing paperwork requirements so as to reduce the paperwork burden on all participants in New York City's child care system.
The City would retain an advisor to recommend measures to be taken by both State and City to meet this end. (P 62) The City is also committed under the Stipulation to provide the necessary training of SSC staff to ensure compliance with its terms, and to continue efforts to improve the quality of child care. (P P 68-69)
The duration of the Stipulation is three years after full implementation of the classification system or alternative evaluation noted above, or five years after entry of the Stipulation, whichever is sooner. (P 79) The City or a majority of the signatory agencies could seek modification of the Stipulation by negotiation with the other signatories or, failing that, by petition to the Court. (P 77) In the event plaintiffs' counsel believed any defendants were not complying with the terms of the Stipulation, they would be required to seek voluntary compliance before petitioning the Court for relief. (P 75) The final provision of the Stipulation dismisses the State defendants from the action. (P 84)
Rule 23(e) of the Federal Rules of Civil Procedure requires that "[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. . ." The court's approval or rejection of a class action settlement typically follows the holding of some form of hearing at which individual class members can voice their objections, if any, to the settlement proposal. 7B C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 1797 at 354-55 (2d ed. 1986) ("7B Wright & Miller") (holding of evidentiary hearing and extent of testimony allowed depend on circumstances of case). The Second Circuit has made clear that settlement hearings should not become "mini-trials on the merits," Malchman v. Davis, 706 F.2d 426, 433 (2d Cir. 1983), for that would "emasculate the very purpose for which settlements are made," City of Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2d Cir. 1974) (quoting Young v. Katz, 447 F.2d 431, 433 (5th Cir. 1971)). See also Handschu v. Special Services Division, 787 F.2d 828, 834 (2d Cir. 1986). Nonetheless, a district court must "explore the facts sufficiently to make intelligent determinations of adequacy and fairness." Malchman, supra, 706 F.2d at 433; Grinnell, supra, 495 F.2d at 462-63. Moreover, the Circuit has "strongly hinted" that findings of fact and conclusions of law should be made "whenever the propriety of the settlement is seriously in dispute." Malchman, supra, 706 F.2d at 433; see Plummer v. Chemical Bank, 668 F.2d 654, 659 (2d Cir. 1982) (discussing Title VII class settlements).
In determining the fairness, reasonableness and adequacy of a class action settlement, a district court must consider both "the substantive terms of the settlement compared to the likely result of a trial" and "the negotiating process, examined in light of the experience of counsel, the vigor with which the case was prosecuted, and the coercion or collusion that may have marred the negotiations themselves." Malchman, supra, 706 F.2d at 433; see In re Warner Communications Securities Litigation, 798 F.2d 35, slip op. at 4917, 4922 (2d Cir. 1986); Handschu supra, 787 F.2d at 833. To this end, some or all of the following factors will be relevant:
(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.
Grinnell, supra, 495 F.2d at 463 (citations omitted); see Malchman, supra, 706 F.2d at 433-34; Robertson v. National Basketball Ass'n, 556 F.2d 682, 684 n.1 (2d Cir. 1977). Finally, without "in effect try[ing] the case by deciding unsettled legal questions," the court must satisfy itself that "the settlement authorizes no future conduct that is clearly illegal." Robertson, supra, 556 F.2d at 686.
The Stipulation before this Court for approval, although characterized by its proponents as a class action settlement, must also be treated as a consent decree because it contemplates the Court's continuing jurisdiction over the subject matter of the Stipulation, with powers to enforce and modify its terms upon proper application by one or more parties. See Berger v. Heckler 771 F.2d 1556, 1567-68 (2d Cir. 1985). As a plurality of the Fifth Circuit sitting en banc observed in United States v. City of Miami, 664 F.2d 435 (5th Cir. 1981) (Rubin, J., concurring in per curiam opinion), a court presented with a proposed consent decree faces a similar task to that of the court evaluating a class action settlement, namely, to ascertain that the settlement is "fair, adequate and reasonable." Id. at 441; see also Janus Films, Inc. v. Miller d.b.a. Cable Films, 801 f.2d 578, 582 (2d Cir. 1986). However, "[b]ecause the consent decree does not merely validate a compromise but, by virtue of its injunctive provisions, reaches into the future and has continuing effect," the terms of a proposed decree "require more careful scrutiny." City of Miami, supra, 664 F.2d at 441.
As a matter of policy, courts favor settlement, particularly when the government agency(ies) charged with enforcing the laws implicated in the litigation approve of the compromise achieved. United States v. Hooker Chem. & Plastics Corp., 776 F.2d 410, 411 (2d Cir. 1985) (per curiam); see Citizens for a Better Environment v. Gorsuch, 231 U.S. App. D.C. 79, 718 F.2d 1117, 1127-29 (D.C. Cir. 1983), cert. denied, 467 U.S. 1219, 104 S. Ct. 2668, 81 L. Ed. 2d 373 (1984). Nonetheless, a court examining the terms of a proposed consent decree must ascertain both that the settlement is fair to the parties and "that it does not put the court's sanction on and power behind a decree that violates [the] Constitution, statute[s], or jurisprudence." City of Miami, supra, 664 F.2d at 441. To the extent "the decree also affects third parties, the court must be satisfied that the effect on them is neither unreasonable nor proscribed." Id. Finally, the court must consider "the nature of the litigation and the purposes to be served by the decree." Id. The Supreme Court reemphasized this past Term that the relief provided under a consent decree may properly be broader than what a court could have awarded after trial. Local Number 93, Int'l Ass'n of Firefighters, AFL-CIO C.L.C. v. City of Cleveland, 478 U.S. 501, 54 U.S.L.W. 5005, 5011, 106 S. Ct. 3063, 92 L. Ed. 2d 405 (U.S. July 2, 1986) ( "Cleveland Firefighters "). Even so, the court must be satisfied that the decree resolves the dispute before it and that it furthers the objectives of the laws on which the parties' claims are based. Id.
With these principles in mind, the Court turns to the Stipulation at hand. There is little question that the settlement proposal deserves the Court's careful scrutiny. The Stipulation contemplates substantial changes in the administration of New York City's child care system. It therefore implicates not only significant constitutional and statutory issues, but important social policies as well. Clearly, the Court must do more than simply apply the Grinnell factors set forth above. Those factors, like any analytical framework employed to review settlements under Rule 23(e), Fed. R. Civ. P., focus almost entirely on the question of the fairness of a class action settlement to members of the plaintiff class particularly absent, passive members whose interests might conceivably be compromised by fainthearted or greedy class representatives. See 7B Wright & Miller § 1797 at 340-41 & 392-93. To approve the Stipulation, the Court must be satisfied not only that it suffers no obvious legal infirmity, but also that it fairly accommodates all of the conflicting constitutional and statutory interests represented in this litigation and does not threaten to impair the delivery of foster care services to New York City children.
The Court first will consider the legal objections raised by the nonconsenting agency defendants ("objectors" or "objecting defendants") to the Stipulation. Then the Court will examine the fairness, reasonableness and adequacy of the settlement proposal as it relates to members of the plaintiff class, to the objecting defendants, to the New York City foster care system, and to the general public.
The objecting agency defendants attack the Stipulation on various legal grounds, some of which go generally to the Court's jurisdiction over the lawsuit and power to approve and enforce the Stipulation, others of which go to the legality of particular provisions in the settlement proposal. The Court first will address the objecting defendants' "jurisdictional" arguments and then will turn to their "substantive" objections.
The objecting defendants challenge the standing of both the taxpayer plaintiffs, Clark, Moody, Cloward and Davis, and the two remaining class representatives, Herbert and Parker.
With regard to the taxpayer plaintiffs, defendants argue that, notwithstanding this Court's determination in Wilder II that those plaintiffs met the two-prong test for taxpayer standing set forth in Flast v. Cohen, supra, 499 F. Supp. at 991-92, the Court should reconsider its original holding in light of recent Supreme Court cases and the nature of the government activity at issue in this case. Defendants' arguments must be relected.
Contrary to defendants' counsel's assertion at the March 4, 1985 hearing on the fairness and legality of the Stipulation, Hearing Transcript at 913-17 ("(H.T. 913-17)"), neither Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 70 L. Ed. 2d 700, 102 S. Ct. 752 (1982), nor Allen v. Wright, 468 U.S. 737, 82 L. Ed. 2d 556, 104 S. Ct. 3315 (1984), has overruled Flast v. Cohen, supra, on which this Court based its 1980 ruling on taxpayer standing. In neither decision did the Supreme Court expressly reject or modify the two-part test established in Flast for evaluating taxpayer challenges to Congress's exercise of its taxing and spending powers under Article I, § 8 of the Constitution. Indeed, the Court recently reaffirmed the validity of Flast v. Cohen in upholding taxpayers' standing to challenge state programs for providing remedial instruction to children in nonpublic schools. See Grand Rapids School Dist. v. Ball, 473 U.S. 373, 105 S. Ct. 3216, 3221, 87 L. Ed. 2d 267 n.5 (1985).
The Second Circuit likewise has continued to apply the Flast test to determine the standing of taxpayers challenging particular government expenditures, and has distinguished Valley Forge on the ground that the government activity at issue in that case was HEW's decision to transfer a parcel of federal property under the Property Clause, Article IV § 3 of the Constitution, and not an exercise of the taxing and spending power of Article I, § 8. See Katcoff v. Marsh, supra, 755 F.2d at 231.
Defendants argue further, however, that the taxpayer plaintiffs here lack standing because even if they obtained the declaratory and injunctive relief they have sought in the action, this would not have any appreciable effect on their tax bills. "If the City did not purchase fostercare services from voluntary agencies," defendants maintain, "its obligations [to care for needy children] would not cease; rather the City would simply be required to provide other services and facilities for children at demonstrably greater expense to the public." Brief in Support of Defendants' Objections to Proposed Settlement ("Objectors' Brief") at 5.
It is unclear whether this argument goes to the question of taxpayer standing under Flast, supra, or whether defendants have in mind the general Article III standing requirement that individuals seeking to invoke the jurisdiction of the federal courts must show that they have suffered "some actual or threatened injury as a result of the putatively illegal conduct of the defendant," Gladstone, Realtors v. Village of Bellwood, 441 U.S. 91, 99, 60 L. Ed. 2d 66, 99 S. Ct. 1601 (1979), that "is likely to be redressed by a favorable decision," Simon v. Eastern Ky. Welfare Rights Org., 426 U.S. 26, 38, 96 S. Ct. 1917, 48 L. Ed. 2d 450 (1976). In either case, defendants effectively seek to reopen the taxpayer standing question previously determined in Wilder II.
Defendants concede that that opinion is the law of the case for purposes of the issues decided therein.
This Court is free to modify its own pretrial rulings at any time before it enters a final judgment. See In re United States, 733 F.2d 10, 13 (2d Cir. 1984). Nonetheless, the jurisprudential concerns that underlie the law-of-the-case doctrine counsel against reopening issues previously decided in an action absent compelling circumstances to justify taking a "second look." These include "an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." 18 Wright & Miller § 4478 at 790. Cf. Doe v. New York City Dep't of Soc. Servs., 709 F.2d 782, 789 (2d Cir.), cert. denied, 464 U.S. 864, 104 S. Ct. 195, 78 L. Ed. 2d 171 (1983) (same grounds apply to appellate court's adherence to its own prior ruling in same litigation); see also Baden v. Koch, Nos. 84-7844 et ano., slip op. at 5223, 5230 (2d Cir. Aug. 21, 1986) (same). With these principles in mind, the Court sees no reason to redetermine the taxpayer standing issue it decided in Wilder II.
As noted above, recent Supreme Court case law only confirms the vitality of the Flast test applied in Wilder II. Defendants offer no evidence on the taxpayer standing question that was not before the Court in 1980. Nor does defendants' "tax impact" argument persuade the Court that it committed "clear error" or "manifest injustice" in originally holding that the taxpayer plaintiffs have standing to sue. By suggesting that the taxpayer plaintiffs lack standing because their tax bills would show no appreciable decrease if the City were required to provide foster care by means other than contracting with sectarian agencies, defendants misperceive the nature of plaintiffs' alleged injury and the general requirements for establishing taxpayer standing under Flast v. Cohen.
Plaintiffs' grievance is not that their tax bills are too high, but that their tax dollars are being spent on New York City foster care in violation of the United States Constitution, specifically its First and Fourteenth Amendments. Under Flast, plaintiffs need not allege that the expenditures they challenge exceed what government normally would spend for legitimate purposes, but rather, that "the challenged enactment exceeds specific constitutional limitations imposed upon the exercise of the congressional taxing and spending power. . .." Flast, supra, 392 U.S. at 102-03. As this Court noted in Wilder II, it is well settled that the Establishment Clause is such a "specific constitutional limitation" within the meaning of Flast. 499 F. Supp. at 992. In sum, nothing tempts the Court to disturb its previous ruling that the taxpayer plaintiffs have standing to sue on the Establishment Clause claims they have raised in this action.
Defendants' challenge to the standing of Barry Parker and Robin Herbert as representatives of the plaintiff class raises not one legal objection, but two. Defendants contend, first, that Parker and Herbert lack standing because their individual claims by now have become moot. Parker, plaintiffs' counsel conceded at the March 4, 1985 hearing, was arrested on a delinquency charge while the instant litigation was in discovery and disappeared before defendants could depose him a second time. (H.T. 925-26) Herbert eventually was placed with one of the Catholic agency defendants. Plaintiffs' counsel stated at the hearing, however, that Herbert had testified in deposition that she had been denied access to birth control information while at the agency. (H.T. 924) In any event, both plaintiffs presumably are now beyond the age when they would require or request foster care services to be provided through SSC.
Second, defendants suggest that, even assuming plaintiffs' individual ...