Cobell v. Jewell

• Decision Date: 18 September 2015
• Docket Number: No. 14–5119.,14–5119.
• Citation: 802 F.3d 12
• Parties: Elouise Pepion COBELL, et al., Appellants v. Sally JEWELL, Secretary of the Interior, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

802 F.3d 12

Elouise Pepion COBELL, et al., Appellants

v.Sally JEWELL, Secretary of the Interior, et al., Appellees.

No. 14–5119.

United States Court of Appeals, District of Columbia Circuit.

Argued April 20, 2015.

Decided Sept. 18, 2015.

David C. Smith argued the cause for appellants. With him on the briefs were William E. Dorris, Adam H. Charnes, and Elizabeth L. Winters.

Stephen J. Vaughan was on the brief for amicus curiae Indian Land Tenure Foundation in support of appellants.

Alisa B. Klein, Attorney, U.S. Department of Justice, argued the cause for appellees. With her on the brief were Ronald C. Machen, Jr., U.S. Attorney at the time the brief was filed, and Beth S. Brinkmann, Deputy Assistant Attorney General, and Mark B. Stern, Attorney.

Before: HENDERSON and MILLETT, Circuit Judges, and GINSBURG, Senior Circuit Judge.

Opinion

Opinion for the Court filed by Circuit Judge MILLETT.

MILLETT, Circuit Judge:

This is the eleventh appeal to this court in nearly two decades of litigation arising out of the Department of the Interior's misadministration of Native American trust accounts and an ensuing complex, nationwide litigation and settlement. As the case winds down, the class action representatives have appealed the district court's denial of compensation for expenses incurred during the litigation and settlement process.

We affirm the district court's denial of additional compensation for expenses for the lead plaintiff, Elouise Cobell, because the district court expressly wrapped those costs into an incentive award given to her earlier. We conclude, however, that the district court erred in categorically rejecting as procedurally barred the class representatives' claim for the recovery of third-party payments, and remand for the district court to apply its accumulated expertise and discretion to the question of whether third-party compensation can and should be paid under the Settlement Agreement.

IBackground

This long-running litigation saga has been documented in numerous decisions of this court over the course of multiple appeals. See Cobell v. Kempthorne, 455 F.3d 317, 330–331 (D.C.Cir.2006) (cataloging this court's decisions in eight appeals); Cobell v. Salazar, 573 F.3d 808 (D.C.Cir.2009) ; Cobell v. Salazar, 679 F.3d 909 (D.C.Cir.2012).

In brief, five named plaintiffs (“Class Representatives”) initiated a class action lawsuit in 1996 seeking to compel the United States Department of the Interior to perform a historical accounting of the hundreds of millions of dollars held by the Department in trust for Native Americans. That accounting was required by the American Indian Trust Fund Management Reform Act of 1994, Pub.L. No. 103–412, 108 Stat. 4239. In 2001, we affirmed the district court's conclusion that the Department had unreasonably and unlawfully delayed that statutorily mandated accounting. Cobell v. Norton, 240 F.3d 1081, 1105 (D.C.Cir.2001). For the next decade, the parties, the district court, and Congress all struggled to determine how the Department could feasibly discharge its legal duty to conduct an accounting of the hundreds of thousands of “Individual Indian Money” trust accounts under its control. That would have been a herculean task under the best conditions, but the difficulty of the Department's charge was compounded by its unreliable records of the identity and location of the original account holders, more than a century of deficient bookkeeping by the Department, and decades of “fractionation” as allotment interests passed from one generation to the next. See Cobell v. Kempthorne, 569 F.Supp.2d 223, 226–227 (D.D.C.2008) (chronicling the accounting problems associated with maintaining a “121–year old perpetual trust, managed by civil servants, with rapidly multiplying beneficiaries and a variety of ever-changing assets”), vacated and remanded by Cobell v. Salazar, 573 F.3d 808 (D.C.Cir.2009).¹

We pick up the story in 2010 with the enactment of the Claims Resolution Act (“Claims Act”), Pub.L. No. 111–291, 124 Stat. 3064 (2010). The Claims Act authorized, ratified, and confirmed the parties' comprehensive Settlement Agreement resolving the class action litigation. See id. § 101(c)(1). The Claims Act also referenced a separate agreement on attorneys' fees, costs, and expenses that the parties had negotiated (“Fee Agreement”). Id. § 101(a).

Under the Settlement Agreement, each member of what was known as the “Historical Accounting Class” received $1,000 in lieu of an actual accounting. The money would come from the Accounting/Trust Administration Fund, which was to be created by the government's payment of $1.412 billion into a settlement account. See Cobell v. Salazar, 679 F.3d 909, 914 (D.C.Cir.2012).² A separate class, known as the “Trust Administration Class,” received a baseline payment of $500 and a prorated share of any funds left over in the settlement account after specified payments were made, including attorneys' fees and awards to the Class Representatives. Id. at 914–915. In exchange, all class members released the Department of Interior from liability arising out of prior mismanagement of their trust accounts.Id.³ Plaintiffs inform us that, to date, “91% of all settlement funds have been distributed.” Cobell Supp. Br. 4.

The Settlement Agreement separately provided for the recovery of “attorneys' fees, expenses, and costs” “for Class Counsel.” Settlement Agreement ¶ J(1). The Agreement required the Class Representatives to file a notice with the district court, prior to the preliminary hearing on approval of the Settlement Agreement, that would disclose the up-to-date amount of attorneys' fees, expenses, and costs requested. Id. ¶ J(2). Post-settlement amounts were governed by a separate procedure. Id. ¶ J(4). The Settlement Agreement further provided that the amount ultimately to be awarded would be “within the discretion of the [District] Court in accordance with controlling law[.]” Id. ¶ J(5).

The Fee Agreement mirrored that structure, separating pre- and post-settlement requests for attorneys' fees, expenses, and costs. Fee Agreement ¶¶ 4–5. In the Fee Agreement, the plaintiffs agreed not to seek more than $99.9 million above amounts previously paid by the government, and the government agreed that it would not argue for less than $50 million above those amounts. Id. at ¶ 4(a)-(b).

The Claims Act also authorized the district court to grant “incentive awards” to the Class Representatives. Claims Act § 101(g)(1). The Settlement Agreement that was ratified and confirmed by the Claims Act, see id. §§ 101(a)(8), (c)(1), elaborated that the “petition for incentive awards” shall “includ[e] expenses and costs[ ] of the Class Representatives.” Settlement Agreement ¶ K.2. The Settlement Agreement recorded the plaintiffs' estimate that the total amount of the expenses and costs requested would be “in the range of $15 million above those paid by Defendants to date.” Id. ¶ K.1.

In January 2011, the plaintiffs filed both a Petition for Class Counsel's Fees, Expenses and Costs Through Settlement, and a Petition for Class Representatives' Incentive Awards and Expenses. In the Attorneys' Fees Petition, the plaintiffs requested $99.9 million in attorneys' fees “in accordance with the literal provisions” of the Fee Agreement, but argued “that a fee award of $223 million, plus expenses and costs of $1,276,598, is in accordance with controlling law and within this Court's discretion.” J.A. 748. The government argued that the total award should be limited to $50 million.

In the Incentive Awards Petition, the Class Representatives requested a total of $2.5 million in incentive awards for themselves, and an additional $10.5 million in “reimbursement” for expenses and costs incurred in prosecuting the litigation. The government contended that the Class Representatives should not receive more than a total award of $1 million to cover both personal expenses and incentives. The government also argued that the additional $10.5 million should be denied because it was for the expenses of third parties, not those of the Class Representatives.

The district court held a fairness hearing on June 20, 2011. At the close of the hearing, the court granted four of the Class Representatives a total of $2.5 million in incentive awards.⁴ But the court denied their separate request for reimbursement of expenses and costs. With respect to the $390,000 that Ms. Cobell said she had spent out of her personal funds, the district court ruled that amount should be reimbursed “out of her sizeable” $2 million “incentive award.” J.A. 1761. The court then denied the additional $10.5 million in requested expenses on the ground that the expenses were not incurred by the Class Representatives, and the court otherwise lacked authority to award expenses paid by third parties. The court also awarded $99 million in “attorneys' fees, expenses and costs.” J.A. 1763.

The plaintiffs filed a motion for reconsideration relating to the denial of expenses on June 27, 2011, one week after the court's oral ruling at the fairness hearing, but before the district court entered a written order reflecting its rulings.

On July 27, 2011, the district court entered a written order granting final approval to the settlement and setting forth the rulings made during the fairness hearing. That order reflected the grant of incentive awards to the four Class Representatives, and the denial of an additional $10.5 million in expenses “because plaintiffs have not shown that these are expenses or liabilities of the Class Representatives.” J.A. 1790. The written order made clear that the plaintiffs' pending motion for reconsideration would “be the subject of a further order,” and otherwise made no reference to its authority to reimburse third-party expenses incurred by Class Representatives or Class Counsel. J.A. 1790 n. 2. The district court entered final judgment on August 4, 2011.

Two years later, the plaintiffs filed a “Notice of Supplemental Information and...