NEW ORLEANS - A federal judge had the authority to overturn a colleague's findings in a class action lawsuit over a change in discounts given to employees and retirees of a phone company, an appeals court has ruled.
U.S. District Judge Xavier Rodriguez, of Texas' western district, ruled that the discount plan offered to employees and retirees of SBC Communications, which became AT&T, should not be classified as retirement benefits. He did this after Judge William Justice had ruled that it was a benefits plan.
Justice, though, never entered a final order and transferred the case to Rodriguez, who was already handling a similar case involving BellSouth. The plaintiffs said Rodriguez abused his discretion by substituting his findings for Justice's.
Judge Carl Stewart, of the U.S. Court of Appeals for the Fifth Circuit, wrote Monday that Rule 54(b) of the Federal Rules of Civil Procedure allowed Rodriguez to make a ruling contrary to Justice's. The rule allows judges to vacate their own findings.
"Here, nobody disputes that Judge Justice's interlocutory memorandum opinion was an 'order or other decision' that 'adjudicate(d) fewer than all the claims or the rights and liabilities of fewer than all the parties," Stewart wrote.
"Judge Rodriguez's order then 'revised' Judge Justice's order 'before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.'
"The language of Rule 54 does not distinguish between, on the one hand, a situation where a trial judge revises his own order, and, on the other hand, a situation where a second judge revises the earlier order of a previous judge."
The plaintiffs argued that Rule 52, which says "findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous," applied to the case.
Stewart wrote that Rule 52 applies only to appellate courts considering the findings of trial courts. Since Rodriguez was acting as a trial court judge and not a reviewing court judge, Rule 52 did not apply, Stewart wrote.
The Fifth Circuit has also previously upheld Rodriguez's findings in the BellSouth case. At issue was a practice of providing discounted telephone service to employees and retirees who lived within a region that BellSouth served, and reimbursement for telephone services of BellSouth's competitors to retirees who lived outside BellSouth's competitors.
In SBC's case, it had imposed a $25 per month cap in 2003 on discounts, and it was converted to a block of 600 minutes of free long distance per year.
And instead of free local service and discounted long-distance, in-region retirees were given SBC@home, which enabled them to pay a discounted amount for a package of services that included local, long-distance, Internet and wireless.