Fletcher v. United States

Decision Date17 September 2013
Docket NumberNo. 12–5078.,12–5078.
Citation730 F.3d 1206
PartiesWilliam S. FLETCHER, individually, and as member of the Osage Development Council, and on behalf of himself and all others similarly situated; Charles A. Pratt, individually, and as member of the Osage Development Council, Plaintiffs–Appellants, v. UNITED STATES of America; Department of the Interior; Bureau of Indian Affairs; Sally Jewell, in her official capacity as Secretary of the Interior; Kevin K. Washburn, in his official capacity as Assistant Secretary of the Interior–Indian Affairs, Defendants–Appellees, and Shriners Hospitals for Children, Defendant.
CourtU.S. Court of Appeals — Tenth Circuit

OPINION TEXT STARTS HERE

Jason B. Aamodt of the Aamodt Law Firm, Tulsa, OK (G. Steven Stidham, Tulsa, OK; Krystina E. Hollarn and Dallas L.D. Strimple of the Aamodt Law Firm, Tulsa, OK; and Amanda S. Proctor of the Shield Law Group PLC, Tulsa, OK, with him on the briefs), for PlaintiffsAppellants.

Katherine W. Hazard, Attorney, United Sates Department of Justice, Environment and Natural Resources Division, Washington, D.C. (Alan Woodcock, Office of the Solicitor, United States Department of the Interior, Tulsa, OK; Ignacia S. Moreno, Assistant Attorney General, and Joseph H. Kim and John L. Smeltzer, Attorneys, United States Department of Justice, Environment and Natural Resources Division, Washington, D.C., with her on the brief), for DefendantsAppellees.

Before TYMKOVICH, ANDERSON, and GORSUCH, Circuit Judges.

GORSUCH, Circuit Judge.

After settlers displaced the Osage Nation from its native lands, the federal government shunted the tribe onto the open prairie in Indian Territory, part of what later became the State of Oklahoma. At the time, the government had no idea those grasslands were to prove a great deal more fertile than they appeared. Only years later did the Osages' mammoth reserves of oil and gas make themselves known. When that happened, the federal government appropriated for itself the role of trustee, overseeing the collection of royalty income and its distribution to tribal members. That role continues to this day. In this lawsuit, tribal members seek an accounting to determine whether the federal government has fulfilled the fiduciary obligations it chose to assume. The district court dismissed the tribal members' claims. We reverse.

The statutory story begins in 1906. It was then Congress devised a scheme to deal with the Osages' newfound wealth. See Act of June 28, 1906, Pub.L. No. 59–321, 34 Stat. 539. Congress severed the mineral estate underlying Osage lands from the surface estate, placed the mineral estate in trust, directed the Secretary of Interior to collect royalties, and told the Secretary to distribute the royalties (along with interest income) every quarter on a pro rata basis to individual members of the tribe. Id. § 4, 34 Stat. at 544. To determine who qualified as a tribal member entitled to receive an interest in the mineral estate, Congress provided for the creationof an official tribal roll. Id. § 1, 34 Stat. at 539–40. This same statutory structure remains intact and in force today, though with some amendment. As time passed, various tribal members sold—and others gave away or bequeathed—their royalty interests (sometimes called “headrights”) or portions of them (a process that resulted in “fractionalization”). Sometimes these assignments went to other tribal members; other times they went to non-tribal members. Displeased with the choice by some headright owners to convey their interests to non-tribal members, Congress responded with a series of legislative amendments placing ever increasing limits on the practice. See Felix S. Cohen, Cohen's Handbook of Federal Indian Law § 4.07, at 304–08 (Nell Jessup Newton ed., 2012).

This litigation's story begins in 2002. It was then William Fletcher and Charles Pratt, two Osage tribal members who receive payments under the 1906 Act, charged the federal government with breaching its trust responsibilities. A decade-long blizzard of paper followed—no fewer than seven motions to dismiss, three amended complaints, a first appeal and now this second. Yet even still the case remains stunted at the motion to dismiss stage, never having managed to progress past the pleadings to the facts.

All those years and all that paper have whittled this case down so much that in this appeal we are asked to resolve only a single legal question: Do Osage tribal member headright holders possess the legal right to seek an accounting from the Secretary of the Interior? No one disputes that the plaintiffs' allegations are sufficient to invoke an accounting, only whether they have the right to demand one. The district court ruled no such right could be found in positive law, granted the government's (latest) motion to dismiss, and entered a final judgment.

We find ourselves unable to agree.

The district court was surely right in its general approach to the question. The government's relationship with and duties to Native American tribes are generally defined in the first instance by “applicable statutes and regulations.” United States v. Jicarilla Apache Nation, ––– U.S. ––––, 131 S.Ct. 2313, 2325, 180 L.Ed.2d 187 (2011). One might be excused for thinking the relationship between the federal government and Native American tribes resembles a traditional trust relationship bearing all the usual attendant fiduciary responsibilities—responsibilities the government seems to have taken up voluntarily and assumed for itself. But traditional trust principles cannot displace what statutes and regulations mandate. Traditional trust principles may help illuminate the meaning of a “specific, applicable, trust-creating statute or regulation.” Id. Indeed, we normally assume Congress has legislated against the background of traditional “adjudicatory principles”—including traditional adjudicatory principles found in trust law. Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 108, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991). But those background principles cannot be used to “override” the language of statutes and regulations “defin[ing] the Government's ... obligation[s] to a tribe or tribal members. Jicarilla Apache Nation, 131 S.Ct. at 2329–30. Congress enjoys considerable latitude in deciding how to organize and manage Native American trusts and it is permitted to “structure the trust relationship to pursue its own policy goals”—sometimes by establishing a full blown trust relationship with all the attendant fiduciary duties we're familiar with from the common law and equity, but sometimes also by “establish[ing] only a limited trust relationship to serve a narrow[er] purpose.” Id. at 2324–25. So, as the district court quite rightly observed, to trigger a duty to account the plaintiffs in this case first had to identify some statute or regulation creating a trust relationship between them and the government.

The district court also correctly held that just such a statute exists. The 1906 Act clearly creates a trust relationship—and not just a trust relationship between the federal government and the Osage Nation, but also between the federal government and the individual Osage headright owners who are plaintiffs in this case. Though the language of the Act is both arcane and antiquated, after laboring through it there's no question about this much. The Act requires the government to collect royalties, place them “to the credit of” each individual headright owner, and then disburse them to each individual headright owner on a quarterly basis, with interest. See 1906 Act § 4(1)-(2), 34 Stat. at 544. A small slice of royalty income may be diverted to tribal operations, id. § 4(3), (4), but all else is “placed ... to the credit” of headright owners and distributed to them personally. In short, the 1906 Act imposes an obligation on the federal government to distribute funds to individual headright owners in a timely (quarterly) and proper (pro rata, with interest) manner. Over the years both Congress and this court have repeatedly recognized that, in this way, the 1906 Act created a trust relationship between the government and individual headright owners.1

On appeal the federal government contests none of this.

The only remaining question, then, is whether, attendant to the—undisputed—trust relationship between government and individual tribal members, the government must provide an accounting when asked. Everyone acknowledges the government has many other duties as a result of its trust relationship, like “supplying account holders with periodic statements of their account performance.” See25 U.S.C. § 162a(d)(5). But does the government have a duty to provide an accounting?

The answer comes clear in 25 U.S.C. § 4011:

(a) Requirement to account

The Secretary [of the Interior] shall account for the daily and annual balance of all funds held in trust by the United States for the benefit of an Indian tribe or an individual Indian which are deposited or invested pursuant to section 162a of this title.

By its plain language this provision appears to impose on the federal government a duty to “account for”—to render a reckoning, answer for, explain or justify, see 1 The Oxford English Dictionary 85 (2d ed.1989)—the daily and annual balances of money it holds in trust. Of course, the government must account, answer or explain itself to someone, and the plain language of the statute seems to tell us who: to the tribe when the funds are held “for [its] benefit,” and to individual tribal members when the funds are held “for [their] benefit.” As we've seen, the trust funds at issue in this case—collected and disbursed under the terms of the 1906 Act—are being held for the benefit of individual members of the Osage Nation. So it would seem that—in our case at least—Congress has chosen to afford individual tribal members the statutory right to seek and obtain an accounting, just as plaintiffs contend.

Other evidence tends to confirm this...

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