Pigford v. Veneman

• Citation: 292 F.3d 918
• Decision Date: 21 June 2002
• Docket Number: No. 02-5052.,No. 02-5053.,02-5052.,02-5053.
• Parties: Timothy C. PIGFORD, et al., Appellees, v. Ann M. VENEMAN, Secretary, United States Department of Agriculture, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

Page 918

292 F.3d 918

Timothy C. PIGFORD, et al., Appellees, v. Ann M. VENEMAN, Secretary, United States Department of Agriculture, Appellant.

No. 02-5052.

No. 02-5053.

United States Court of Appeals, District of Columbia Circuit.

Argued May 1, 2002.

Decided June 21, 2002.

Appeals from the United States District Court for the District of Columbia (No. 97cv01978) (No. 98cv01693).

Howard S. Scher, Attorney, U.S. Department of Justice, argued the cause for appellant. With him on the briefs were Roscoe C. Howard, Jr., U.S. Attorney, and Robert M. Loeb, Attorney, U.S. Department of Justice.

Jason A. Levine argued the cause for appellants. With him on the brief were Anthony Herman and Alexander J. Pires, Jr.

Before: SENTELLE, RANDOLPH and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:

The question presented in this appeal concerns a district court's authority to interpret or modify a consent decree — here, the settlement of a class action brought by over 20,000 African-American farmers charging the United States Department of Agriculture with racial discrimination in lending practices. Due to class counsel's failure — "bordering on legal malpractice," the district court called it — to meet critical consent decree deadlines, the district court interpreted the decree to allow extension of such deadlines "so long as justice requires." Although we find that the district court exceeded its interpretive authority under the decree, we hold that class counsel's conduct justifies modifying the decree under Federal Rule of Civil Procedure 60(b)(5). But because the order does not satisfy the "tailor[ing]" requirement for a Rule 60(b)(5) modification, see Rufo v. Inmates of the Suffolk County Jail, 502 U.S. 367, 383, 112 S.Ct. 748, 760, 116 L.Ed.2d 867 (1992), we reverse and remand for further proceedings.

I.

Proceeding under the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f, three African-American farmers filed this class action against the United States Department of Agriculture alleging racial discrimination in the administration of federally funded credit and benefit programs. The class ultimately included 22,000 similarly situated farmers from fifteen states. Shortly before the farmers filed suit, the Department released a report commissioned by then-Secretary Dan Glickman "to address [the agency's] long-standing civil rights problems," documented since the 1960s by numerous federal government "[s]tudies, reports, and task forces." CIVIL RIGHTS ACTION TEAM, USDA, CIVIL RIGHTS AT THE UNITED STATES DEPARTMENT OF AGRICULTURE 2-3 (1997), available at http://www.usda.gov/news/civil/cr_next.htm. Examining the "painful history" of its dealings with African-American farmers, the Department concluded that local credit and loan agencies responsible for administering Department programs often discriminated against the farmers. Id. at 6. According to the Glickman report, Department officials had "effectively dismantled" the Office for Civil Rights Enforcement — the very office charged with addressing discrimination complaints. Id. at 47-48 (internal quotation marks and citation omitted). "[O]ften mak[ing] matters worse," the "complaints processing system" was a "bureaucratic nightmare" that "processed [complaints] slowly, if at all," resulting in a huge "backlog," while at the same time the agency "proceed[ed] with farm foreclosures — even where discrimination may have contributed to the farmers' plight." Id. at 22-25. "Minority farmers," the report concluded, "lost significant amounts of land and potential farm income as a result of discrimination by [USDA] programs." Id. at 30.

After Congress intervened to preserve the farmers' claims by tolling the Equal Credit Opportunity Act's two-year statute of limitations, see Pigford v. Glickman, 185 F.R.D. 82, 88-89 (D.D.C.1999) (citing 15 U.S.C. § 1691e(f)), the parties entered into a consent decree. Designed to "ensur[e] that in their dealings with USDA, all class members receive full and fair treatment that is the same as the treatment accorded to similarly situated white persons," the decree establishes procedures for resolving class members' individual claims. Consent Decree at 2. Specifically, the decree allows class members to choose between two claims procedures, known as Tracks A and B. In recognition of the fact that "most... [class] members ... had little in the way of documentation or proof" of either discriminatory treatment or damages suffered, Track A awards $50,000 to those farmers able to "meet only a minimal burden of proof." Pigford, 185 F.R.D. at 103. Track B — the mechanism at issue here — imposes no cap on damages, but requires farmers who choose this track, after limited discovery consisting "essentially [of] an exchange of lists of witnesses and exhibits and depositions of the opposing side's witnesses," to prove their claims by a preponderance of the evidence in one-day mini-trials before an arbitrator. Id. at 106. Set forth in paragraph 10 of the decree, Track B establishes strict time frames: the arbitrator sends a hearing notice within 10 days of receiving a Track B claim and holds a hearing no more than 150 days later; at least 90 days before the hearing, the Department and claimant file and serve on each other witness lists, summaries of direct testimony, and copies of all exhibits; discovery ends no later than 45 days before the hearing; and no fewer than 21 days before the hearing, both sides list witnesses they intend to crossexamine and file summaries of all legal and factual issues. Consent Decree ¶ 10(a)-(e). Track A and B decisions are final, except that the losing side may petition for review by a court-appointed monitor. Id. ¶ ¶ 9(a)(v), 9(b)(v), 10(i), 12(b)(iii).

Following notice to the class and a hearing, the district court approved the consent decree as "fair, adequate, and reasonable," pursuant to Federal Rule of Civil Procedure 23. Pigford, 185 F.R.D. at 113. According to the district court, the decree represents an "historical first step toward righting the wrongs visited upon thousands of African-American farmers for decades by the [USDA]." Pigford v. Glickman, 127 F.Supp.2d 35, 40 (D.D.C. 2001). Our opinion affirming the district court's approval of the decree noted its importance for both the farmers and the government: the "United States is likely to provide an estimated $2 billion in debt relief and monetary payments in consideration for the dismissal of the class'[s] complaint." Pigford v. Glickman, 206 F.3d 1212, 1214 (D.C.Cir.2000). Ultimately, 21,546 claims were accepted for review — 21,358 under Track A and 188 under Track B.

The decree provided for class counsel to receive an advance payment of $1 million in fees to cover decree "implementation." Consent Decree ¶ 14(b). The decree entitled counsel to seek additional fees under the Equal Credit Opportunity Act, 15 U.S.C. § 1691e(d), for their work in connection with filing the action and implementing the decree, Consent Decree ¶ 14(a). One year into the implementation process, the district court "took the extraordinary step of awarding a second advance" — this time for $7 million. Order of the United States District Court for the District of Columbia at 2 (Mar. 8, 2001) (No. 97cv01978). The Department and class counsel eventually settled all fee claims for $14.9 million. Attorneys and firms sharing the fees were: Alexander J. Pires, Jr., of Conlon, Frantz, Phelan, Pires & Leavy; Philip L. Fracas, of Tattle, Tabor & Heron; JB. Chestnut, of Chestnut, Sanders, Sanders & Pettily; T. Roe Framer, of Langshan, Frazer, Sweet & Freese; Hubbard Saunders IV, of The Terney Firm; Othello Cross, of Cross, Kearney & McKissic; Gerard Lear, of Speiser Krause; and William J. Smith.

Several months after class counsel received their second fee advance and just two weeks prior to the deadline for filing petitions for monitor review for the "vast majority of claimants [in both tracks]," class counsel filed an emergency motion seeking an extension of time. Order of the United States District Court for the District of Columbia at 2 (Nov. 8, 2000) (No. 97cv01978). Counsel revealed that they had filed only a small fraction of the total petitions requested by the farmers. Concerned that "counsel's failings ... not be visited on their clients," id. at 3, and relying on "explicit assurances" by counsel as to the work load they could realistically shoulder into the future, Pigford v. Veneman, 141 F.Supp.2d 60, 62 (D.D.C.2001), the district court permitted counsel to file pro forma petitions by the original deadline and then to either file supporting materials or to withdraw the petitions at the rate of at least 400 petitions per month, see Order of the United States District Court for the District of Columbia at 5-6 (Nov. 8, 2000) (No. 97cv01978).

A few months later, the district court observed "a very disturbing trend": class counsel had failed to meet their monthly quota "even once." Pigford, 141 F.Supp.2d at 62. Worse still, counsel had "drastically cut [their] staff, bring[ing] Class Counsel's ability to represent the [farmers] into serious question." Id. "[A]larmed by Class Counsel's consistent failure" to meet decree timelines, the district court noted counsel's "remarkable admission that they never had a realistic expectation of meeting" agreed-upon or court-ordered deadlines for the monitor review process. Order of the United States District Court for the District of Columbia at 2-3 (Apr. 27, 2001) (No. 97cv01978). The court described counsel's performance as "dismal" — "border[ing] on legal malpractice" — and "wonder[ed]" whether class counsel would have been in such a predicament had they not filed "three new sister class actions" against the Department. Id. at 2-3 & nn. 1, 5.

The district court eventually imposed a series of escalating daily fines on class counsel for untimely monitor review filings. Pigford v. Veneman, 143...