The Justice Department today defended in a Washington federal appeals court the historic $3.4 billion settlement to resolve claims that the government mismanaged Native American trust accounts for decades.
The settlement in U.S. District Court for the District of Columbia, which ended more than a twelve years of hostile litigation, received congressional approval in December 2010.
The deal compensates potentially 500,000 individual Indian trust account holders. The federal government collected money from leases for farming, timber sales, mining and other activities. Lead plaintiff Elouise Cobell, who died in October, filed suit to obtain an historical accounting of the trust program.
Critics of the deal contend the settlement will overcompensate some class members while not paying enough to others. The class attorneys, including a team from Kilpatrick Townsend & Stockton, contend the overwhelming majority of potential class members support the settlement. A trial judge in Washington called the settlement fair and reasonable.
A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit took up the settlement's fairness today at 45-minute hearing. The court examined, among other things, the cost and potential impossibility of an historic accounting. The panel did not immediately rule.
The Justice Department’s Thomas Bondy in court called the settlement rational and sensible.
“Its terms are fair to the members of the plaintiffs’ class,” Bondy said. “In the government’s view, this settlement represents a significant and welcome step forward in terms of Indian trust reform.”
Bondy acknowledged that the settlement contains what he called an element of “rough justice.” Still, he argued the deal is not random and arbitrary. “This is more than a fair settlement,” he said. “It’s a generous settlement.”
Theodore Frank of the Center for Class Act Fairness, representing a class member who is opposed to the settlement, said the government and counsel for the plaintiffs took “procedural shortcuts” to reach the deal. He rejected the notion that there are sufficient similarity among class members to allow the group to be certified.
Frank argued today that inter-class conflicts—among other things, the potential for arbitrary monetary awards—undermines the fairness of the settlement. The “fatal flaw” in the settlement, Frank declared, is that not every class member is fairly compensated by a $1,000 payment.
“How do we know that at this point in the litigation?” Judge David Tatel asked.
Frank pointed to Cobell’s testimony before Congress, in which she talked about claims worth millions of dollars. Frank said his client, Kimberly Craven, has a variety of trust interests whose value remains undetermined.
“You can’t know whether it’s worth $1,000 until you have the actual accounting,” Frank said at the hearing today.
Tatel questioned whether any examination of the trust accounts will come close to providing answers to Frank’s question. Members of Congress have expressed a disinclination to fund an historical accounting.
A panel in the D.C. Circuit ruled earlier in the case that an accounting of "low-hanging fruit" is possible. The panel judges seemed puzzled at defining "low-hanging fruit" and whether such a review would be beneficial anyway.
Indeed, Tatel and Judge Judith Rogers explored the extent to which an historical accounting is impossible. Rogers noted that the plaintiffs rejected a statistical modeling program to develop an historical accounting.
The size and importance of the settlement is inconsequential, Tatel said, if there is evidence that class members are being overcompensated or undercompensated. “It would be unfair,” the judge said.
“This court, more than anyone else, knows how long it’s taken to get here,” Tatel said. “We got the point.”
Kilpatrick partner Adam Charnes, based in the firm’s Winston-Salem office, argued today for the class members.
Earlier rulings in the D.C. Circuit, Charnes said, have made it “crystal clear” that there will be no “meaningful” historical accounting. Historical account class members are giving up their right to a full review of trust money in exchange for $1,000.
At the end of the hearing, Tatel asked Frank whether the case can be settled without an historical accounting. The government, Tatel said, wouldn’t likely agree to a deal where individual plaintiffs can opt out of any settlement in order to seek an historical accounting.
Frank argued that individual Native Americans who want to pursue their own accounting claims can file suit for monetary damages in the U.S. Court of Federal Claims.