                                                                                                                           Opinions of the United
1995 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-28-1995

In Re: Unisys Corp (Mem Op)
Precedential or Non-Precedential:

Docket 94-2166




Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_1995

Recommended Citation
"In Re: Unisys Corp (Mem Op)" (1995). 1995 Decisions. Paper 173.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/173


This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 1995 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
                               NOT FOR PUBLICATION

            UNITED STATES COURT OF APPEALS
                FOR THE THIRD CIRCUIT
                     ___________

                     No. 94-2166
                     ___________

    IN RE: UNISYS CORP. RETIREE MEDICAL BENEFIT
    "ERISA" LITIGATION

          *Waldo R. Udarbe, Geraldine S. Seaman, Peter
          Freeman, Lawrence M. Merck, Reed C. Jansen, David
          M. Burton, Dean Wright Martin, Frederick A.
          Benson, Roger Vincent Gillette, Charles P.
          Johnson, Lloyd E. VanDeBerg, Joan R. Johnson,
          George Alvin McKellar, Kenneth Raymond Fechter,
          Arthur Blaine Buckner, Marlan L. Nielson, Anthony
          T. Dagostino, Lucille C. Amell, Dale E. Allar,
          Robert B. Rademacher, Harry W. Duchene, Philip H.
          Desilets, Jean B. Baregi, LeRoy C. Rees, Fred R.
          Murray, Joan D. Harty, Charles M. Harkness,
          Wallace L. Anderson, Edward J. Joa, Lewis H.
          Sampson, James A. Moha, Billy M. Garrish, John
          Kourajian, Marion K. Doody and other members of
          the Sperry class who should have been included in
          the settlement group but were not,

                               Appellants

          *(Pursuant to F.R.A.P. Rule 12(a))
                     ___________

    Appeal from the United States District Court
      for the Eastern District of Pennsylvania
              (D.C. Civil No. MDL-969)
     District Judge: Honorable Edward N. Cahn
                    ___________

                        Argued
                      May 4, 1995
Before:   MANSMANN, SCIRICA and McKEE, Circuit Judges.

                (Filed June 28, 1995)
                     ___________

           MEMORANDUM OPINION OF THE COURT
                      __________
MANSMANN, Circuit Judge.

             This appeal is one of five presently before us with

origins in a class action suit filed on behalf of retired

employees of Unisys Corporation and its predecessors, Sperry

Corporation and Burroughs Corporation.1    These employees contend

that Unisys violated provisions of the Employee Retirement Income

Security Act ("ERISA") when it terminated its post-retirement

medical plan effective January 1, 1993 and implemented a revised

plan.   The former employees challenge this change in plan,

alleging breach of contract, breach of fiduciary duty, and

equitable estoppel.

             While multiple issues are presented in the five

appeals, our focus in this particular appeal is limited.

Specifically, we must determine whether a sub-group of former

employees has standing to challenge the district court's October

26, 1994 approval of a settlement reached between Unisys and

certain other retirees following trial.     Because we conclude that

the appellants in this matter lack standing to challenge the

settlement, we will affirm the order of the district court to the

extent that the order was based upon findings with respect to

standing.2


1
 .        The four other pending appeals Nos. 94-1800; 94-1801;
94-1875 and 94-1912 do not bear directly upon the issue presented
here and will be treated in separate opinions.
2
 .        Our opinion is confined to the issue of standing; we
make no determination regarding the terms of the partial
settlement.
                                 I.

            Because the factual underpinnings of this case are not

in dispute, we include here only those facts necessary to place

our decision in context.

            Following the filing of multiple lawsuits by retirees

against Unisys in several states, the suits were consolidated and

transferred to the Eastern District of Pennsylvania where a class

action was certified.    From some 21,000 former employees of

Burroughs, Sperry, and Unisys, three separate classes were

created:    Sperry retirees, Burroughs retirees, and Unisys

retirees.    For each corporate employer, the retirees' claims were

divided into two groups.    The first group of claims was made on

behalf of all "regular" retirees.     A second set of claims was

made on behalf of "early" retirees who left Unisys and its

predecessors under various early retirement incentive programs.

            In October, 1993, the district court granted a partial

summary judgment in favor of Unisys on all claims brought by

Burroughs and Unisys regular retirees and on the breach of

fiduciary duty and equitable estoppel claims brought by Sperry

regular retirees.    In re Unisys Corp. Retiree Medical Benefits

ERISA Litg., 837 F. Supp. 670 (E.D. Pa. 1993).

            The remaining claims were tried to the court.

Following the trial but before the decision was announced, Unisys

negotiated a settlement on behalf of Sperry and Burroughs early

retirees.   The proposed stipulation of settlement and dismissal

included those 7,400 former employees classified as VRIPs and
expressly excluded all Sperry regular retirees including those

former employees classified as VRIFs.

           Taking the proposed settlement into account, the

district court further subdivided the Sperry retirees.   Retirees

who had taken early retirement pursuant to a Voluntary Early

Retirement Plan (VRIPs) were distinguished from those who had

elected to retire early under the terms of a Voluntary Reduction

in Force Plan (VRIFs).   VRIFs were classified as "regular" rather

than "early" retirees for purposes of further litigation.     The

district court then disposed of the remaining claims by entering

judgment in favor of Unisys on the contract claims made by

regular Sperry retirees and on the contract, estoppel and

fiduciary duty claims of the Unisys VRIPs.   Judgment was entered

on behalf of the Sperry regular retirees (including the VRIFs)

with respect to the breach of fiduciary duty claim.   Timely

appeals were filed.

           Proceedings in the district court continued while the

proposed settlement agreement was submitted for court approval.

Following notification of all class members included in the

settlement, the district court held a fairness hearing after

which the court issued an order approving the agreement, stating

that its terms were fair, reasonable, and adequate.   The

settlement was approved despite objections raised by VRIF

retirees, who argued that they should have been included in the

settlement given that there was no rational basis upon which they

could be distinguished from the other Sperry early retirees (the

VRIPs).   In its memorandum discussing the approval of the
settlement, the district court rejected the VRIF challenge,

stating that:
          [T]hese retirees do not have standing to
          object to the settlement before this court.
          This settlement does not pertain to them;
          rather it is a settlement of the claims of
          7400 other members of the plaintiff class.
          Unisys saw these retirees and their claims as
          distinct from the settlement class and thus
          refused to include them in settlement
          negotiations. The fact that Unisys did so
          does not make the existing settlement unfair.
          Moreover, these plaintiffs not included in
          the settlement will continue to have their
          claims litigated as regular retirees.


In re Unisys, MDL No. 969 (E.D. Pa. 1994) at p.10.

          The Sperry VRIF retirees ask that we vacate the

settlement approved by the district court.   They attack the

settlement on a number of grounds, arguing that:     (1) the

settlement is invalid because it discriminates against members of

the Sperry class by providing benefits to some members of the

class (the VRIPs) while denying benefits to other members of the

class (the VRIFs); (2) there is no rational basis for
surrendering the rights of non-settling (VRIF) members of the

class; (3) the plaintiffs' attorney had conflicts of interest;

and (4) the non-settling members of the class (the VRIFs) were

not adequately represented.

          Because we conclude that the Sperry VRIF retirees lack

standing to challenge the validity of the partial settlement

between Unisys and the Sperry and Burroughs VRIP retirees, we

need not reach the merits of the VRIF claims.
                               II.

          Standing is an "essentially legal question" and our

review is plenary.   In re School Asbestos Litigation, 921 F.2d

1330, 1332 (3d Cir. 1990), cert. denied, 499 U.S. 976 (1991).

          Our caselaw is clear that the appellants bear the

burden of establishing standing and that, in order to meet this

burden, a non-settling party to a settlement agreement must do

more than claim an interest in the lawsuit; the non-settling

party "must show some cognizable prejudice to a legal

relationship between it and the settling parties."   Id.   See also

In re Fine Paper Litig. State of Wash., 632 F.2d 1081, 1087 (3d

Cir. 1980) (non-party to a settlement cannot object to settlement

terms not affecting non-party's rights); Utility Contractor's

Ass'n of New Jersey v. Toops, 507 F.2d 83, 85 (2d Cir. 1975)

(non-party lacks standing to object to partial settlement absent

showing of interference with legal relationship between non-party

and those settling).

           The VRIF retirees in this matter have failed to meet

their burden with respect to standing in that the partial

settlement reached between Unisys and Sperry and Burroughs VRIP

retirees does not affect the VRIFs' separate claims against

Unisys.   The claims of breach of contract, equitable estoppel and

breach of fiduciary duty were pursued diligently at each stage of

the proceedings in the district court and continue to be pressed

in the related appeals.   While we well understand that the Sperry

VRIF retirees would prefer to have been included in the

settlement reached, their exclusion, without more, does not
constitute legal prejudice.   "[C]ourts have repeatedly held that

a settlement which does not prevent the later assertion of a non-

settling party's claims . . . does not cause plain legal

prejudice to the non-settling party."    Agretti v. ANR, Freight

Sys., Inc., 982 F.2d 242, 247 (7th Cir. 1992).

            The order of the district court approving the partial

settlement places no limits whatever on the rights of the Sperry

VRIF retirees.   In fact, the very essence of these retirees'

challenge to the settlement is that their rights were not

affected.   The position of the VRIFs may be understandable.

Nonetheless, it is not legally cognizable.



                                III.

            We will affirm the order of the district court to the

extent that it is based on the finding that Sperry VRIF retirees

lack standing to challenge the settlement.




                   UNITED STATES COURT OF APPEALS

                       FOR THE THIRD CIRCUIT
                 ___________



                 No. 94-2166

                 ___________



IN RE:   UNISYS CORP. RETIREE MEDICAL BENEFIT

"ERISA" LITIGATION



     *Waldo R. Udarbe, Geraldine S. Seaman, Peter

     Freeman, Lawrence M. Merck, Reed C. Jansen, David

     M. Burton, Dean Wright Martin, Frederick A.

     Benson, Roger Vincent Gillette, Charles P.

     Johnson, Lloyd E. VanDeBerg, Joan R. Johnson,

     George Alvin McKellar, Kenneth Raymond Fechter,

     Arthur Blaine Buckner, Marlan L. Nielson, Anthony

     T. Dagostino, Lucille C. Amell, Dale E. Allar,

     Robert B. Rademacher, Harry W. Duchene, Philip H.

     Desilets, Jean B. Baregi, LeRoy C. Rees, Fred R.

     Murray, Joan D. Harty, Charles M. Harkness,

     Wallace L. Anderson, Edward J. Joa, Lewis H.

     Sampson, James A. Moha, Billy M. Garrish, John

     Kourajian, Marion K. Doody and other members of

     the Sperry class who should have been included in

     the settlement group but were not,



                                          Appellants
                *(Pursuant to F.R.A.P. Rule 12(a))

                           ___________


          Appeal from the United States District Court
            for the Eastern District of Pennsylvania
                    (D.C. Civil No. MDL-969)
           District Judge: Honorable Edward N. Cahn
                          ___________

     Before:    MANSMANN, SCIRICA and McKEE, Circuit Judges.
                             __________

                             JUDGMENT


          This cause came to be considered on the record from the

United States District Court for the Eastern District of

Pennsylvania and was argued on May 4, 1995.

          On consideration whereof, it is now here ordered and

adjudged by this court that the judgment of the district court

entered on Oc
