Fletcher v. United States

Decision Date07 December 2020
Docket NumberNo. 19-1246,19-1246
PartiesFLETCHER, et al., Plaintiffs, v. THE UNITED STATES, Defendant.
CourtU.S. Claims Court

Tribal Trust; Native American Trust Management; Tucker Act; 28 U.S.C. § 1491; Indian Tucker Act; 28 U.S.C. § 1505; Motion to Dismiss; RCFC 12(b)(1); Subject Matter Jurisdiction; RCFC 12(b)(6); Standing; Issue Preclusion; RCFC 12(e); Motion to Strike; RCFC 12(f).

Jason Bjorn Aamodt, Indian and Environmental Law Group, LLC, Tulsa, OK, for plaintiffs.

Sara E. Costello, U.S. Department of Justice, Environment & Natural Resources Division, Washington, DC, for defendant.

OPINION AND ORDER

SMITH, Senior Judge

This action is before the Court on defendant's Motion to Dismiss pursuant to Rules 12(b)(1), 12(b)(6), and 12(e) of the Rules of the Court of Federal Claims ("RCFC"), and on defendant's Motion to Strike pursuant to RCFC 12(f). On August 21, 2019, plaintiffs filed their Complaint with this Court, seeking "monetary restitution" for defendant's "gross mismanagement of the Osage Headright Trust fund." Complaint at 1-2 [hereinafter Compl.]. On December 20, 2019, defendant filed its Motion to Dismiss, arguing the following: (1) plaintiffs do not have a legally protectable interest to support standing; (2) this Court lacks jurisdiction over plaintiffs' claims under the Indian Tucker Act, the Tucker Act, and other authorities identified in plaintiffs' Complaint; and (3) plaintiffs' claims are barred by the doctrine of issue preclusion. United States' Motion to Dismiss for Lack of Subject Matter Jurisdiction and Failure to State a Claim upon Which Relief Can Be Granted at 1-2, ECF No. 7 [hereinafter Def.'s MTD]. For the reasons set forth below, the Court grants both defendant's Motion to Dismiss and defendant's Motion to Strike.

I. Background
A. Historical Facts

Under Article I of the United States Constitution, Congress possesses the plenary power to "regulate Commerce with foreign nations, and among the several states, and with the Indian Tribes." U.S. Const. art. I, § 8. In 1872, Congress established a reservation for the Osage Tribe of Indians ("Osage Tribe" or "Osage Nation")1 in the Oklahoma Territory, Osage Nation v. Irby, 597 F.3d 1117, 1120 (10th Cir. 2010), which "contained about a million and a half acres of fertile well-watered prairie land and of heavily timbered hill lands, largely underlaid with petroleum, natural gas, coal and other minerals." McCurdy v. United States, 246 U.S. 263, 265 (1918). Once the federal government discovered the resources beneath the Osage lands, it designated itself trustee in order to collect and distribute royalty payments to tribal members. Fletcher v. United States, 730 F.3d 1206, 1207 (10th Cir. 2013) ("Fletcher II").

In furtherance of this trust scheme, Congress passed the Osage Allotment Act of 1906 which "severed the mineral estate underlying Osage lands [('Osage Mineral Estate')] from the surface estate, placed the mineral estate in trust, [and] directed the Secretary of Interior to collect [and distribute] royalties," with interest, to individual members of the Osage Tribe on a quarterly, pro rata basis. Id.; see also Act for the Division of the Lands and Funds of the Osage Indians in Oklahoma Territory, and for other Purposes, Pub. L. No. 59-321 §§ 3-4, 34 Stat. 539, 543-44 (1906) [hereinafter 1906 Act].

Specifically, Section Three of the 1906 Act, severed the Osage Mineral Estate from the surface estate, reserving "the oil, gas, coal, or other minerals" for the Osage Nation. 1906 Act § 3. Section Three allows the Osage Tribe to lease the Osage Mineral Estate for oil, gas, and mineral development with the approval of the Secretary of the Interior, provided that royalties are paid to the Osage Tribe under any mineral lease as determined by the President of the United States. Id. Section Four of the 1906 Act establishes the trust ("Osage Tribal Trust Account") relationship between the United States and the Osage Tribe. See id. § 4. Section 4 details that the funds of the Osage tribe "shall be segregated" and "placed to the credit of the individual members of the [] Osage tribe on a [pro rata basis with] division among the members of [the] tribe."2 Id. Funds from the Osage Tribal Trust Account are distributed to headright owners by direct check or, more likely, distributions made to Individual Indian Money ("IIM") accounts.3 Fletcher v. United States, 153 F. Supp. 3d 1354, 1356 (N.D. Okla. 2015) ("Fletcher I"). "An IIM account is 'an interest bearing account for trust funds held by the Secretary that belong to aperson who has an interest in trust assets.'" Id. (citing 25 C.F.R. § 115.002). Individual headright owners may withdraw funds from their IIM accounts to access their money.

In summary, the United States places funds derived from the Osage Mineral Estate into the Osage Tribal Trust Account, which is later segregated and placed into IIM accounts, as a means of distribution to headright owners. See 1906 Act § 4. Sections Three and Four of the 1906 Act obligate the United States to hold in trust and, consequently, manage all mineral royalties received on behalf of the Osage Tribe. See 1906 Act §§ 3-4.

B. Prior Related Litigation

In 2000, the Osage Nation filed a separate complaint with this Court, asserting that the United States breached its fiduciary duties to the Osage Nation "in the mismanagement of tribal trust funds and for failure to account." Osage Nation v. United States, 57 Fed. Cl. 392, 393 (2003) ("Osage I"). On October 14, 2011, after years of litigation, the parties executed a settlement agreement to resolve that case. See United States' Motion to Strike the Declarations of Jim Gray and Wilson Pipestem, ECF No. 15 [hereinafter Def.'s Mot. to Strike], Ex. 1 [hereinafter Osage Settlement Agreement]. The Osage Settlement Agreement, among other terms and resolutions, resulted in the payment of $380,000,000.00, of which $345,800,000.00 was deposited into the Osage Tribal Trust Account. Osage Settlement Agreement at 9. The Osage Settlement Agreement expressly waived and released any and all of the Osage Nation's claims and/or liabilities "based on harms or violations . . . that relate to the Osage Tribe's monetary or non-monetary trust assets or resources that have been or could have been asserted by the Osage Tribe on behalf of itself and/or the [h]eadright [h]olders on or before September 30, 2011." Id. at 10. Additionally, Section Eleven, paragraph g of the Osage Settlement Agreement expressly prohibits the "Osage Tribe, its officers or employees, including the Osage Minerals Council . . . [from] aid[ing], assist[ing], or support[ing] in any way any individual or party in the development, initiation, or litigation of a claim against the United States that the Osage Tribe has otherwise waived in this Agreement." Id. at 24-25.

In 2002, plaintiffs originally brought a complaint in the Northern District of Oklahoma ("District Court") over "tribal voting rights of non-headright-owning Osage Indians" which later evolved into a complaint concerning the federal government's "allegedly wrongful distribution of Osage royalty income to non-Osages and its failure to account to the headright owners." Fletcher I, 153 F. Supp. 3d at 1357-58. The federal government moved to dismiss plaintiffs' accounting claim, inter alia, because it argued that there was no trust relationship between the federal government and headright owners. Id. The District Court held that "the 1906 Act created a limited trust relationship between the federal government and the Osage headright owners" which "only took effect upon distribution [to the headright owners] and that, prior to distribution, royalty funds were held in trust for the Osage Nation only." Id. The District Court held that, based on this limited trust relationship, plaintiffs could not seek an accounting. Id. The United States Court of Appeals for the Tenth Circuit ("Tenth Circuit") reversed the District Court, holding that plaintiffs could seek an accounting. Fletcher II, 730 F. 3d at 1209-10 (holding that the trust funds collected and disbursed under the 1906 Act for the benefit of individual Osage tribal members indicates that "Congress has chosen to afford individual tribal members the statutory right to seek and obtain an accounting.").

On remand, the District Court used its discretion to determine the nature and scope of the accounting due to plaintiffs. Fletcher I, 153 F. Supp. 3d at 1360. After the District Court determined the scope and time period of the accounting, plaintiffs challenged that ruling, arguing that the accounting should go back to 1906, instead of 2002, and that the government should give a "more detailed accounting." Fletcher v. United States, 854 F.3d 1201, 1204-05 (10th Cir. 2017) ("Fletcher III"). The Tenth Circuit held that the District Court did not abuse its discretion in determining the time period or scope of accounting. Id. Regarding the time period, the Tenth Circuit stated that "district courts must be reasonable, not punitive, when sitting in equity, and requiring the government to sift through more than 100 years of records does not achieve the balance we envisioned in Fletcher II." Id. at 1206 (citing Fletcher II, 730 F.3d at 1214). As to the scope of accounting, the Tenth Circuit stated that it was bound by Fletcher II, and a duty to account is not the same as a "duty to respond to and disprove any and all potential breaches of fiduciary duty a beneficiary might wish to pursue once the accounting information is in hand." Id. (citing Fletcher II, 730 F.3d at 1215). Accordingly, the Tenth Circuit affirmed the District Court's holding. Id. at 1207.

C. Current Litigation

On December 20, 2019, defendant filed its Motion to Dismiss with this Court, arguing that plaintiffs lack standing, that the Indian Tucker Act does not provide this Court with jurisdiction over plaintiffs' claims, and that plaintiffs' claims are barred by the doctrines of claim preclusion, issue...

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