Keepseagle v. Perdue

Decision Date16 May 2017
Docket NumberNo. 16-5189,C/w 16-5190,16-5189
Citation856 F.3d 1039
Parties Marilyn KEEPSEAGLE, et al., Appellees v. Sonny PERDUE, Appellee Donivon Craig Tingle, Silent Class Member, Appellant
CourtU.S. Court of Appeals — District of Columbia Circuit

William A. Sherman, Washington, DC, argued the cause for appellant. With him on the briefs were Reed D. Rubinstein and James W. Morrison.

D. Craig Tingle filed the briefs for appellant.

Joseph M. Sellers argued the cause for appellees Porter Holder; CLARYCA Mandan, on behalf of themselves and the plaintiff class. With him on the brief were Christine E. Webber, Paul M. Smith, Jessica R. Amunson, and Amir H. Ali, Washington, DC.

Benjamin C. Mizer, Principal Deputy Assistant Attorney General, U.S. Department of Justice, and Charles W. Scarborough and Carleen M. Zubrzycki, Attorneys, were on the brief for federal appellee.

Marshall L. Matz and John G. Dillard were on the brief for plaintiff-appellee Marilyn Keepseagle. Phillip L. Fraas, David J. Frantz, Stewart D. Fried, Washington, DC, and Sarah M. Vogel, Bismarck, ND, entered appearances.

Before: Brown and Wilkins, Circuit Judges, and Edwards, Senior Circuit Judge.

Concurring opinion filed by Circuit Judge Wilkins.

Dissenting opinion filed by Circuit Judge Brown.

Edwards, Senior Circuit Judge:

In 1999, a class of Native American farmers and ranchers filed suit against the United States Department of Agriculture ("the Department"), contending that the Department discriminated against Native American applicants in their claims under farm credit and benefits programs. After more than a decade of contentious litigation, the District Court approved a Settlement Agreement ("the Agreement") in 2011 that created a $680 million compensation fund for the benefit of class members who participated in a non-judicial, administrative claims process.

At the conclusion of the claims process, $380 million still remained in the compensation fund. Under the terms of the Agreement, any leftover funds were to be distributed to cy-près beneficiaries—i.e. , non-profit organizations that provided services to Native American farmers. Because the parties had not anticipated such a large remainder, they entered into negotiations to modify the Agreement. The parties' initial attempt at modification was unsuccessful. However, a second effort resulted in an addendum to the Agreement that is the subject of the dispute in this case. Under the terms of the addendum, the cy-près process would be reformed to distribute funds more efficiently and supplemental payments would be awarded to class members who had successfully recovered from the compensation fund.

The District Court approved the addendum to the Agreement, concluding that it was "fair, reasonable, and adequate" under Federal Rule of Civil Procedure 23(e)(2) (" Rule 23"). The District Court found that the addendum reflected a compromise between two competing goals: paying out more funds to claimants who successfully recovered through the claims process, and maintaining the cy-près distributions for the benefit of the class as a whole.

Two class members—class representative Keith Mandan ("Appellant Mandan") and class member Donivon Craig Tingle ("Appellant Tingle")—appealed to this court, raising four principal arguments. First , Appellant Mandan claims that under the Agreement's modification clause, the proposed addendum cannot be approved without his assent. Second , Appellant Mandan disputes that the addendum is "fair, reasonable, and adequate." Third , Appellant Mandan asserts that the cy-près provision of the Agreement is unconstitutional, in violation of the Appropriations Clause, and unlawful under the Judgment Fund Act. Fourth , Appellant Tingle alleges that class counsel and class representatives breached their fiduciary duties to class members. Both Appellants, who successfully obtained payments through the claims process, contend that all of the $380 million still remaining in the compensation fund should be distributed pro rata to the successful claimants.

We affirm the judgment of the District Court. We reject the claim that the modification clause requires Appellant Mandan's assent before the Agreement can be amended. We further hold that the District Court did not abuse its discretion in finding that the addendum was fair, reasonable, and adequate. We decline to reach the merits of Appellant Mandan's legal challenges to the cy-près provision because these claims were explicitly waived before the District Court. The claims were also forfeited because Appellant Mandan never raised any legal challenges to the cy-près provision before the District Court despite clear opportunities to do so. And there are no good reasons at this late date in the litigation for this court to entertain Appellant Mandan's legal challenges to the cy-près provisions in the first instance. Finally, we find no merit in Appellant Tingle's breach of fiduciary duty claims.

I. BACKGROUND

In 1999, over two hundred Native American farmers and ranchers filed a class-action suit against the United States Department of Agriculture, contending that the Department discriminated against Native American applicants in their claims for credit and benefits under various government programs. Plaintiffs alleged violations of the Equal Credit Opportunity Act, the Administrative Procedure Act, and Title VI of the Civil Rights Act of 1964. In 2001, the District Court found that the plaintiffs had satisfied the requirements of Rule 23(b)(2), and certified a class of

[a]ll Native–American farmers and ranchers, who (1) farmed or ranched between January 1, 1981 and November 24, 1999; (2) applied to the [the Department] for participation in a farm program during that time period; and (3) filed a discrimination complaint with the [the Department] individually or through a representative during the time period.

Keepseagle v. Veneman , No. 99-cv-3119, 2001 WL 34676944, at *6 (D.D.C. Dec. 12, 2001). The District Court declined to decide whether certification under Rule 23(b)(3), for monetary relief, was appropriate at the time. Id. at *14. However, the court noted that it "maintain[ed] the power to revisit the definition of the class at any point." Id.

A. The Initial Settlement

After more than a decade of extensive discovery practice, the parties reached agreement in 2010 and drew up a settlement agreement for the District Court's approval. See Motion for Preliminary Approval of Settlement, Keepseagle v. Vilsack , No. 99-cv-3119 (D.D.C. Oct. 22, 2010), ECF No. 571. The proposed Settlement Agreement provided both programmatic and monetary relief. See Settlement Agreement §§ IX, XII, Judicial Appendix ("JA") 405–23, 424–29. The programmatic relief included establishing the Council for Native American Farming and Ranching, requiring the Department to collect and evaluate data pertaining to its Farm Loan Program, and enhancing services and education for Native American farmers and ranchers. Id. § XII, JA 424–29. To provide monetary relief, the Agreement sought certification of a Rule 23(b)(3) opt-out class. Id. § IV(A), JA 400. The Agreement established a $680 million compensation fund financed by the Department of the Treasury. Id. § VII(F), JA 403. Under an administrative claims process set forth in the Settlement Agreement, claimants would receive either $50,000, if they had "substantial evidence" of certain circumstances required in the Agreement, or up to $250,000, if they met a higher evidentiary standard. See id. § II(SS), (VV), JA 398 (setting out the dollar amounts of awards); § IX, JA 405–23 (outlining the non-judicial claims process). Claimants were given 180 days from the effective date of the agreement to submit their claims. Id. § II(B), JA 392. Some funds were also allocated to the named class representatives as "service awards." Id. § XV(C), JA 433–34.

In the event that the $680 million compensation fund was not exhausted during the claims process, the Agreement contained a cy-près provision. Id. § IX(F)(7), JA 422–23. That provision created a "Cy Pres Fund," defined as "a fund administered by Class Counsel designated to hold any leftover funds" from the claims process. Id. § II(J), JA 393. The Cy Pres Fund was to be distributed in equal shares to cy-près beneficiaries designated by class counsel. Id. § IX(F)(7), JA 422–23. The Agreement limited cy-près beneficiaries to "any non-profit organization, other than a law firm, legal services entity, or educational institution" that served Native American farmers. Id. § II(I), JA 393.

The Agreement also contained a provision permitting modification of the settlement, but "only with the written agreement of the Parties and with the approval of the District Court, upon such notice to the Class, if any, as the District Court may require." Id. § XXII, JA 438. The Agreement defined "Parties" as "the Plaintiffs and the Secretary," and "Plaintiffs" as "the individual plaintiffs named in Keepseagle v. Vilsack , ... the members of the Class, and the Class Representatives." Id. § II(DD), (EE), JA 396.

The District Court received thirty-five letters objecting to the proposed Agreement. See Notice of Filing Objections and Opt Out Requests, Keepseagle v. Vilsack , No. 99-cv-3119 (D.D.C. Mar. 18, 2011), ECF No. 585. Neither Appellant Mandan nor Appellant Tingle submitted objections. Three letters related to the Cy Pres Fund: one objector offered up organizations he had started as potential cy-près beneficiaries, id. at Exhibit 2; another recommended that cy-près awards be used for outreach to farmers, id. at Exhibit 33; a third cautioned that it was "simply wrong" to distribute remaining funds to cy-près beneficiaries "as determined by class counsel," id. at Exhibit 32.

Class counsel responded to the objections in a motion seeking final approval of the settlement, and the District Court held a fairness hearing on April 28, 2011. The District Court found that the terms of the settlement were fair and...

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