On May 16, 2017 the U.S. Court of Appeals for the District of Columbia Circuit affirmed the District Court’s April 20, 2016 decision approving the modification of the original settlement agreement in Keepseagle v. Vilsack, allowing each prevailing claimant to be paid an additional $18,500 to their previously approved settlements, along with $2,775 to be paid directly to the IRS.
The May 16, 2017 ruling stems from a series of negotiations and subsequent appeal of how to distribute $380 million of unclaimed settlement funds in Keepseagle v. Vilsack, No. 99-cv-3119 (DDC) (EGS), a nationwide class action. Approved on April 28, 2011, the settlement required the U.S. Department of Agriculture (USDA) to 1) pay $680 million in damages to thousands of Native Americans, to 2) forgive up to $80 million in outstanding farm loan debt, and to 3) improve the farm loan services USDA provides to Native Americans. Any non-claimed, leftover funds were to be distributed to cy pres beneficiaries, i.e., non-profit organizations that provided services to Native American farmers. No party appealed the Final Order and Judgement, Keepseagle v. Vilsack, No. 99-cv-3119 (D.D.C. April 29, 2011), JA 592-93.
Despite more than 3,600 successful claimants applying for damages awards from $50,000 to $250,000 per claimant, more than $380 million in awards remained unclaimed. On April 20, 2016 the District Court approved an addendum to the original settlement agreement, reflecting a compromise between two competing goals: paying out more funds to claimants who successfully recovered through the claims process, and maintaining the cy press distributions for the benefit of the class as a whole.
Two claimants, however, subsequently appealed to the U.S. Court of Appeals asserting that the remaining $380 million should be distributed, pro rata, to successful claimants. On May 16, 2017 the three judge panel ruled 2-1 in favor of the District Court’s modified settlement plan with one dissenting judge, who argued that any remaining unclaimed money be returned to the federal Treasury. No judge voted in favor of the argument made by the two appellants.
The two objecting plaintiffs who filed that appeal subsequently asked the Court of Appeals to re-hear the case en banc (with all judges participating instead of the usual three-judge panel). On September 20, 2017, the Court denied this request for a re-hearing. One of the objectors has filed a petition asking the Supreme Court to hear the case, and the second still has time before the deadline to join the request. The Supreme Court will likely decide whether or not to hear the appeal by spring 2018.
This most recent ruling in effect creates an additional $265 million trust to allocate money to nonprofits servicing the needs of Native American farmers. It will be “the largest philanthropic institution to serve Native Americans in the history of the U.S.,” said Joseph Sellers, partner of Cohen Milstein Sellers & Toll, PLLC, and lead plaintiffs’ counsel, who represented Native American tribes across the U.S. in this historic class action lawsuit.
The trust overseeing any remaining, unclaimed funds could disburse the funds over a 20 year period. Decisions on how to distribute the funds will be made by a board comprised of 14 Native American leaders.
Case Background and Significance
Keepseagle v. Vilsack, No. 99-cv-3119 (DDC) (EGS), a nationwide class action lawsuit was filed more than 18 years ago, on the eve of Thanksgiving 1999. The plaintiffs alleged that since 1981, the USDA denied Native American farmers and ranchers, nationwide, the same opportunities as white farmers to obtain low-interest rate loans and loan servicing, causing them hundreds of millions of dollars in economic losses.
On April 28, 2011, the U.S. District Court for the District of Columbia granted final approval of a historic settlement between Native American farmers and ranchers and the USDA. The Keepseagle settlement agreement required USDA to 1) pay $680 million in damages to thousands of Native Americans, to 2) forgive up to $80 million in outstanding farm loan debt, and to 3) improve the farm loan services USDA provides to Native Americans.
The settlement agreement approved by the court is an extraordinary result: according to an expert report prepared for the plaintiffs by a former USDA economist, the settlement’s $760 million in monetary relief represents about 98% of what the plaintiffs could possibly have won at trial.
“Final approval of the Keepseagle settlement marks the end of an unfortunate chapter in our nation’s history where USDA’s credit discrimination against Native Americans was the norm. Under this settlement, Native American farmers and ranchers will finally receive the compensation and justice they deserve, and we will undertake a process to ensure that the USDA treats Native Americans equally and fairly.” said Sellers. “This case is also especially noteworthy as it represents a successful effort by Native Americans, who understandably regard the United States government with mistrust as a consequence of the mistreatment they received for centuries, to use the judiciary of the United States to hold a major agency of the United States accountable for violations of laws of the United States,”
Named plaintiffs Claryca Mandan, of Mandaree, ND, and Porter Holder, of Soper, OK, who attended the April 28, 2011 fairness hearing also commented on the significance of the court’s official ruling.
“We’ve waited three decades for the USDA to be held accountable to the Native American people. So today is a great day, indeed,” said Mandan. “The changes to USDA’s Farm Loan Program will mean that our children and grandchildren will inherit a system that is far more responsive and fair to Native Americans than the system that hampered our generation of farmers and ranchers.”
Added Holder: “This settlement will help thousands of Native Americans who are still farming and ranching. The USDA has some terrific programs, but Native Americans must have equal access to them. That’s what the law requires. We look forward to forging a new era of partnership with the USDA so that our communities can fully benefit from USDA’s farm loan program.”
Presiding U.S. District Judge Emmet G. Sullivan, praised counsel, saying, "It's probably the best negotiated agreement that this court has seen in its experience...the terms of this settlement are historic," and "[Cohen Milstein has] demonstrated the highest level of skills and professionalism."
Background on Claims Process
Under the April 29, 2011 approved settlement agreement, Native American farmers and ranchers had until December 27, 2011 to file claims for damages and debt relief. Keepseagle class members had an option to file individual claims under one of two tracks. Track A permitted eligible class members to recover up to $50,000 by providing information under oath that they are Native Americans, that they farmed or ranched (or attempted to farm or ranch) between 1981 and 1999, that they sought a loan or loan servicing from USDA during that period, and that they complained when they were denied a loan or otherwise treated unfavorably. Track B permitted eligible class members to seek an award of damages up to $250,000, with the amount based upon evidence of their actual economic loss. Track B claims had to include evidence that could be admissible in court to satisfy each of the same elements as Track A, and in addition had to identify a similarly situated white farmer who received more favorable treatment.
As a part of the claims process, starting in July 2011, class counsel conducted a series of meetings to assist Native American farmers and ranchers with filing claims under Track A. These meetings occurred throughout Indian Country from July through December 2011. Class members were encouraged to retain individual counsel for Track B claims. Claims for both tracks were reviewed and approved by a neutral adjudicator.
Additional Settlement Provisions
Under the original settlement agreement and in addition to payment of monetary damages, the USDA also would forgive up to $80 million in debt that was currently held by class members and whose claims were approved under Track A or Track B. When the U.S. District Court granted preliminary approval of the settlement in November 2010, that order put into effect a moratorium on foreclosures, debt accelerations and debt offsets not already referred to the U.S. Treasury Department. The moratorium applied to all Native American farmers and ranchers, and for those who filed Track A or Track B claims the moratorium lasted until the claims process concluded.
The third provision of the settlement agreement called for the USDA to improve the delivery and responsiveness of its farm loan program to Native American farmers and ranchers. One of the most important provisions was the creation of the Native American Farmer and Rancher Council, a new federal advisory committee. The Council has 15 members, 11 of whom are Native American or represent Native American interests and four of whom are top USDA officials. The Council meets at least twice a year, and was guaranteed to continue for at least five years after the settlement approval to discuss how to make USDA’s programs more accessible to Native Americans farmers and ranchers. The Council reports its recommendations directly to senior USDA officials.
In addition to establishing the Council, the USDA was required to take the additional steps to improve its services: 1) create 10 to 15 USDA regional sub-offices that would provide education and technical assistance to Native American farmers and ranchers and their advocates; 2) undertake a systematic review of its farm loan policies to determine how its regulations and policies can be reformed to better assist Native American farmers and ranchers; 3) create a customer guide on applying for credit from the USDA; 4) create the Office of the Ombudsperson to address concerns of all socially disadvantaged farmers and ranchers; and, 5) regularly collect and report data on how well Native Americans fare under USDA’s farm loan programs.
Additional information about Keepseagle v. Vilsack is available at www.IndianFarmClass.com or by calling, toll free, 1-888-233-5506.
Plaintiffs are represented by Cohen Milstein Sellers & Toll, PLLC; Conlon, Frantz & Phelan; Jenner & Block, LLP; Sarah Vogel and The Law Office of Phil Fraas.