A historic $3.4 billion class action settlement over the mismanagement of government trust funds for hundreds of thousands of Native Americans survived a challenge in a federal appeals court in Washington.
A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit unanimously upheld a trial judge’s finding last summer that the settlement, which required congressional authorization, was fair and reasonable. The appellate ruling is here.
The settlement, reached in December 2009 after more than a decade of litigation in U.S. District Court for the District of Columbia compensates hundreds of thousands of Native Americans. Lead plaintiff Elouise Cobell, who has since died, sued in 1996 over allegations the Interior Department violated its duty to account for funds the government held in trust for individual Native Americans.
“The Court of Appeals released wise and thoughtful decisions,” a lawyer for Cobell, Dennis Gingold, said this morning. “We wish Elouise lived to see this day. It vindicates her extraordinary efforts on behalf of individual Indian trust beneficiaries.”
The settlement includes $1.51 billion for direct compensation to members of the historical accounting class. Each member in that class would receive $1,000 in exchange for releasing the government from its obligation to perform an accounting of trust funds. The plaintiffs’ attorneys received $99 million in fees.
The Justice Department’s Thomas Bondy, a Civil Division appellate lawyer, represented the Interior Department in the appeals court. DOJ, which urged the appeals court to affirm the settlement, declined to comment on the settlement. A team from Kilpatrick Townsend & Stockton also represented the name plaintiffs.
Theodore Frank of the Center for Class Action Fairness, in Washington, who challenged the merits of the settlement, said "we're evaluating our options, and consulting with Indian tribes."
Frank, representing a class member named Kimberly Craven, said a conflict among class members undermines, as the D.C. put it, the “commonality, cohesiveness and fairness” of the deal.
Frank said in court papers in the D.C. Circuit that the $3.4 billion settlement “flunked the requirement of intraclass equity.”
Frank argued, among other things, that class members don’t equally benefit from the $1,000 payment. Some class members, he said, stand to gain more from the payment than their claims are actually worth. Others in the class would not receive a large enough payment.
The settlement, Frank said in court papers, “provided windfalls for many class members who suffered little or no harm, but fell far short of compensating class members” who have suffered the greatest injuries.
"The historical-accounting records examined thus far have revealed only minor errors in trust accounting," D.C. Circuit Judge Judith Rogers said in the ruling, joined by judges David Tatel and Janice Rogers Brown. The D.C. Circuit panel said certification of the historical accounting class was "appropriate because of the unusual circumstances surrounding this litigation."
Information produced by an historical accounting, the appeals court said, is not likely "to be worth significantly more to some class members than to others, and thus the $1,000 settlement payment is properly viewed as nonindividualized and does not run afoul" of the U.S. Supreme Court decision in Wal-Mart Stores, Inc. v. Dukes.
The D.C. Circuit called the class action "extraordinary in that Congress not only expressly authorized, ratified, and confirmed the settlement, but also appropriated $3.4 billion to fund it. Congress, however, did not make an express finding on the merits of class certification.
Responding to the court's ruling, Frank said in an e-mail: "If, as the Court suggested, we can avoid aspects of the fairness inquiry by giving weight to Congress's decision to appropriate spending for the settlement, even in the absence of any Congressional findings, then the legislation should've precluded the fairness hearing formality entirely and simply distributed the money in early 2011 rather than waste the class's time with legal proceedings whose result was preordained."