Cobell v. Kempthorne, 05-5388.

• Decision Date: 11 July 2006
• Docket Number: No. 05-5388.,05-5388.
• Citation: 455 F.3d 301
• Parties: Elouise Pepion COBELL, et al., Appellees v. Dirk KEMPTHORNE, Secretary of the Interior, et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

455 F.3d 301

Elouise Pepion COBELL, et al., Appellees v. Dirk KEMPTHORNE, Secretary of the Interior, et al., Appellants.

No. 05-5388.

United States Court of Appeals, District of Columbia Circuit.

Argued April 11, 2006.

Decided July 11, 2006.

Appeal from the United States District Court for the District of Columbia (No. 96cv01285).

Mark B. Stern, Attorney, U.S. Department of Justice, argued the cause for appellants. With him on the briefs were Peter D. Keisler, Assistant Attorney General, Kenneth L. Wainstein, U.S. Attorney, Gregory G. Katsas, Deputy Assistant Attorney General, Robert E. Kopp, Thomas M. Bondy, Alisa B. Klein, Mark R. Freeman, I. Glenn Cohen, and Isaac J. Lidsky, Attorneys.

Dennis M. Gingold argued the cause for appellees. With him on the brief were Elliott H. Levitas, G. William Austin, III, Mark I. Levy, and Keith M. Harper.

Before: TATEL and BROWN, Circuit Judges, and SILBERMAN, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge BROWN.

BROWN, Circuit Judge.

This case presents for our review yet another clash in a lawsuit that has found its way onto our docket many times in recent years, resulting in seven published opinions from this court. See In re Kempthorne, 449 F.3d 1265 (D.C.Cir.2006); Cobell v. Norton, 428 F.3d 1070 (D.C.Cir. 2005) (Cobell XVII); Cobell v. Norton, 392 F.3d 461 (D.C.Cir.2004) (Cobell XIII); Cobell v. Norton, 391 F.3d 251 (D.C.Cir.2004) (Cobell XII); In re Brooks, 383 F.3d 1036 (D.C.Cir.2004); Cobell v. Norton, 334 F.3d 1128 (D.C.Cir.2003); Cobell v. Norton, 240 F.3d 1081 (D.C.Cir.2001) (Cobell VI). The Department of the Interior appeals a district court order of injunctive relief requiring many of Interior's computer systems to be disconnected from the internet and internal computer networks. The district court sought to protect the integrity of individual Indian trust data (IITD) residing on Interior's computers. Because we conclude the court's broad grant of equitable relief was an abuse of discretion, we vacate the injunction.

I

We need not delve too deeply into the extensive and often repeated history of this case. Briefly, the Secretary of the Treasury and the Secretary of the Interior are currently the designated trustee-delegates for the Individual Indian Money (IIM) trust. Cobell VI, 240 F.3d at 1088-89. Interior is responsible for executing most of the government's trust duties, although Treasury holds and invests IIM funds. Id. Interior's Bureau of Indian Affairs (BIA) is responsible for managing the lands held by the trust, including lease approvals and income collection, while Interior's Office of Trust Funds Management (OTFM) deposits revenues, maintains IIM accounts for individual Indians, and distributes funds to beneficiaries. Id. at 1088.

In 1994, Congress passed the American Indian Trust Fund Management Reform Act (the 1994 Act), Pub.L. No. 103-412, 108 Stat. 4239 (1995), which "recognized the federal government's preexisting trust responsibilities" and "further identified some of the Interior Secretary's duties to ensure `proper discharge of the trust responsibilities of the United States.'" Cobell VI, 240 F.3d at 1090 (quoting 25 U.S.C. § 162a(d)). These duties include "[p]roviding adequate systems for accounting for and reporting trust fund balances," "[p]roviding adequate controls over receipts and disbursements," "[p]roviding periodic, timely reconciliations to assure the accuracy of accounts," and "[p]reparing and supplying periodic statements of account performance and balances to account holders." Id. (internal quotation marks and ellipses omitted).

Appellees, beneficiaries of the IIM trust accounts, brought this class action suit in 1996 "to compel performance of trust obligations." Id. at 1086, 1092. Some of the proceedings subsequently conducted by the district court related to Interior's problems maintaining adequate computer security. On December 5, 2001, the district court entered a temporary restraining order requiring Interior to disconnect from the internet all information technology (IT) systems that housed or provided access to IITD. See Cobell v. Norton, 274 F.Supp.2d 111, 113 (D.D.C.2003) (Cobell IX). Later that month, Interior entered into a consent decree providing that it would only reconnect its systems to the internet with the consent of a special master, id. at 113-14; this arrangement resulted in about 95% of Interior's computers being reconnected within a year, Cobell v. Norton, 310 F.Supp.2d 77, 82 (D.D.C.2004) (Cobell XI). The special master came to suspect, however, that some of Interior's employees were thwarting efforts to test the security of Interior's IT systems. Cobell IX, 274 F.Supp.2d at 114-24. The district court entered a preliminary injunction requiring Interior once again to disconnect all computers from the internet, with a few exceptions, and allowing reconnection only upon the district court's approval. Cobell v. Norton, 310 F.Supp.2d 98, 99-101 (D.D.C. 2004) (Cobell XI Order).

On appeal, we explained that the district court had "authority to exercise its discretion as a court of equity in fashioning a remedy to right a century-old wrong or to enforce a consent decree." Cobell XII, 391 F.3d at 257. As "[t]he district court did not order . . . wholesale programmatic changes" or "include particular tasks for Interior to perform based on policies developed by the district court," we rejected Interior's argument that the injunction "violated the separation of powers." Id. at 258. Nevertheless, we still found that the district court erred in issuing the preliminary injunction. The district court had erroneously shifted the burden of persuasion to Interior to show why disconnection was unnecessary, id. at 259, and had also erred by disregarding Interior's certifications on IT security as procedurally and substantively defective, id. at 260-61. Finally, we stated that the district court abused its discretion in granting the injunction without first holding an evidentiary hearing, as material facts were in dispute and almost nine months had passed since a previous hearing. Id. at 261-62.

II

Before proceeding to our discussion of the current disconnection order, we pause to address an alleged conflict between our prior decisions in this case. Both parties cite this court's prior precedent in support of opposing perspectives. Interior argues that the district court, by issuing the new computer disconnection order, has improperly injected itself into the day-to-day management of the agency, ignoring this court's prior warnings against judicial entanglement in policy disputes. The class members argue that Interior's arguments are foreclosed by Cobell XII; they claim that Cobell XIII and XVII conflict with that slightly earlier decision (as well as with Cobell VI), and that in deciding this case, we are not bound by the later opinions. As we explain, the alleged conflict is illusory, though some degree of confusion is understandable. In the course of this litigation, we have repeatedly described the interaction of the Administrative Procedure Act (APA) and the common law of trusts, though with slightly different emphases depending on the issue before us. Yet careful analysis reveals no significant, substantive disagreement between our decisions. As in earlier cases, both the APA and the common law of trusts apply in this case; the specific question to be addressed determines which body of law becomes most prominent.

In Cobell VI, we addressed the district court's finding that Interior had breached its trust duties. We noted that the class members sought injunctive and declaratory relief; thus, the federal government's sovereign immunity was waived under the APA. 240 F.3d at 1094-95. We also looked to the APA for resolution of another jurisdictional issue, i.e., the presence of final agency action, which is a prerequisite to judicial review. Id. at 1095. While we found no final action in that case, we nonetheless found the class members' claims to be reviewable, since under the APA, "federal courts may exercise jurisdiction to compel agency action `unlawfully withheld or unreasonably denied.'" Id. (quoting 5 U.S.C. § 706). However, though we looked primarily to administrative law concepts in resolving jurisdictional issues, we did not proceed in the same manner when construing the trust duties implied by the 1994 Act. We acknowledged that under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), "ordinarily we defer to an agency's interpretations of ambiguous statutes entrusted to it for administration," but we declined to defer to Interior's interpretation of the Act. Cobell VI, 240 F.3d at 1100. We gave Interior's interpretation "`careful consideration,'" id. at 1101 (quoting Muscogee (Creek) Nation v. Hodel, 851 F.2d 1439, 1445 n. 8 (D.C.Cir.1988)), but the normally-applicable deference was trumped by the requirement that "`statutes are to be construed liberally in favor of the Indians, with ambiguous provisions interpreted to their benefit,'" id. (quoting Montana v. Blackfeet Tribe of Indians, 471 U.S. 759, 766, 105 S.Ct. 2399, 85 L.Ed.2d 753 (1985)).

In determining the scope of the government's duties, we found that both administrative law and trust law applied. "While the government's obligations are rooted in and outlined by the relevant statutes and treaties, they are largely defined in traditional equitable terms." Id. at 1099. Thus, "`the government's fiduciary responsibilities necessarily depend on the substantive laws creating those obligations,'" id. at 1098 (quoting Shoshone Bannock Tribes v. Reno, 56 F.3d 1476, 1482 (D.C.Cir.1995)), but "[c]ourts `must infer that Congress intended to impose on trustees traditional fiduciary duties unless Congress has un-equivocally expressed an intent to the contrary,'" id. (quoting NLRB v. Amax Coal Co., 453 U.S. 322, 330, 101 S.Ct. 2789, 69 L.Ed.2d 672 (1981)). At the...