March 05, 2018

The Trump administration’s Justice Department, despite its announced regret, is asking the U.S. Supreme Court not to review challenges to $380 million that third-parties are set to receive as part of a larger U.S. government settlement with Native American farmers and ranchers.

U.S. Attorney General Jeff Sessions in June announced a new policy that prohibits, with a few exceptions, government attorneys from entering into settlement agreements that require so-called “cy pres” payments—funds that are given to persons or entities that are not direct parties to the dispute.

The $380 million at issue in the consolidated cases now at the Supreme Court, Tingle v. Perdue and Mandan v. Perdue, would be distributed to nonprofit groups that work with Native American farmers and ranchers. The funds were part of a bigger $680 million settlement that the U.S. government reached in 2011 with the plaintiffs in the case in Washington’s federal trial court.

U.S. Solicitor General Noel Francisco, in his Supreme Court brief opposing review, said the Justice Department’s new policy “will prevent the recurrence of circumstances like those that led to the modified cy pres provision here, in turn eliminating any need for this court’s guidance regarding the principles that would govern the legality and administration of cy pres provisions in settlements involving the federal government.”

Justice Department lawyers, in the U.S. Court of Appeals for the D.C. Circuit, called the third-party funds “regrettable.” The government said “there are only loose controls on how this money will be spent, and no allowance for public input or oversight concerning expenditure choices.” The government said the settlement would not have been approved under the new policy, and that the department “has now taken steps to ensure that a settlement of this nature will not occur again.”

Joseph Sellers of Cohen Milstein Sellers & Toll, counsel to the class in the underlying case, also asked the Supreme Court to deny review.

Sellers said the government could have taken a new course and asked the justices to grant review and reject the settlement. “They have been known to change sides,” he said. The government, however, might have had a hard time repudiating the deal in the Supreme Court after having asked a lower appeals court not to reject the deal, he said.

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Francisco and class counsel Sellers contend the D.C. Circuit correctly ruled that Mandan had waived or forfeited his constitutional objections to the cy pres provision despite multiple opportunities to raise them in the trial court. The appellate court also, they contend, properly rejected Tingle’s arguments that class counsel had a conflict of interest in negotiating the addendum.

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Sellers said he reads the Justice Department’s new policy to mean the department will not enter into—except in rare circumstances—settlements that contain cy pres provisions.

“They don’t say that they might not choose, under the Class Action Fairness Act, to come in non-federal government cases and question the use of cy pres,” Sellers said. “It doesn’t foreclose them from challenging cy pres and they may be invited in by private parties. We’re going to have to see.”

The full article can be read here.