George Keepseagle v. Thomas Vilsack , 815 F.3d 28 ( 2016 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 2, 2016 Decided March 4, 2016
No. 14-5223
GEORGE B. KEEPSEAGLE, ET AL.,
APPELLEES
TIMOTHY LABATTE,
APPELLANT
v.
THOMAS J. VILSACK, SECRETARY OF AGRICULTURE,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:99-cv-03119)
Erick G. Kaardal argued the cause and filed the briefs for
appellant.
Carleen M. Zubrzycki, Attorney, U.S. Department of
Justice, argued the cause for appellee. On the brief were
Benjamin C. Mizer, Principal Deputy Assistant Attorney
General, Vincent H. Cohen Jr., Acting U.S. Attorney, and
Charles W. Scarborough and Katherine Twomey Allen,
Attorneys.
Before: BROWN, PILLARD, and WILKINS, Circuit Judges.
2
Opinion for the Court filed by Circuit Judge WILKINS.
WILKINS, Circuit Judge: Appellant Timothy LaBatte, a
class member in a class action against the United States
Department of Agriculture (“USDA”), seeks to intervene in
that class action – despite the fact that the action was settled
and closed – after his claim for compensation under the terms
of the action’s settlement agreement was denied. We affirm
the District Court’s determination that it lacked ancillary
jurisdiction to hear Labatte’s challenge. We do so because
LaBatte’s motion to intervene is unrelated to the underlying
lawsuit and because the District Court was not required to
hear LaBatte’s motion in order to effectuate its decrees.
I.
A.
The instant litigation stems from a class action filed in
1999, alleging that the USDA discriminated against Native
American farmers in its provision of loans. The parties
settled the action in November 2010. The District Court
approved the settlement, and dismissed the suit with prejudice
in April 2011, stating that it “retain[ed] continuing
jurisdiction for a period of five years . . . for the limited
purposes set forth in . . . the Settlement Agreement.” Final
Order and Judgment, Keepseagle v. Vilsack, No. 99-CV-3119
(D.D.C. 2011), ECF No. 607, J.A. 63.
The Settlement Agreement (“Agreement”) created two
tracks for recovery, Track A and Track B, each of which
allowed for different amounts of damages based on different
burdens of proof. Relevant here, Track B required a class
claimant to establish, by a preponderance of the evidence, a
number of factual points, including that (1) the claimant
3
applied for a loan with the USDA and was denied, given less
than she asked for, or given unfavorable terms; and (2) that
the treatment the claimant received from the USDA was “less
favorable than that accorded a specifically identified,
similarly situated white farmer(s).” Revised Settlement
Agreement § IX.D.1.e, J.A. 126. Claimants were permitted to
meet their evidentiary burden as to the “similarly situated
white farmer” by providing a “credible sworn statement based
on personal knowledge by an individual who is not a member
of the Claimant’s family.” Id. § IX.D.2.a, J.A. 127.
The Agreement provided for a “Non-Judicial Claims
Process,” id. § IX, J.A. 116, whereby each claimant’s claim
would be processed by a Claims Administrator, id. § IX.B,
J.A. 121-23, and reviewed by a third-party claims
adjudication company (termed a “Neutral”), id. § IX.B.7, J.A.
123, whose role was to “determine the merits of the claims
submitted” under either Track A or Track B, id. §§ II.OO,
II.AAA, J.A. 108, 110. The Agreement stated that the final
determinations of these Neutrals are not reviewable:
The Claim Determinations, and any other
determinations made under this Non-Judicial
Claims Process are final and are not
reviewable by the Claims Administrator, the
Track A Neutral, the Track B Neutral, the
District Court, or any other party or body,
judicial or otherwise. The Class
Representatives and the Class agree to forever
and finally waive any right to seek review of
the Claim Determinations, and any other
determinations made under this Non-Judicial
Claims Process.
Id. § IX.A.9, J.A. 120.
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The Agreement also specified the precise – and limited –
contours of the District Court’s jurisdiction over the
Agreement going forward. It stated that “[t]he Court shall
retain jurisdiction over this action beyond the date of final
approval of this Agreement only as set forth below.” Id.
§ XIII.A, 1 J.A. 141 (emphasis added). The Agreement then
specified five areas of continuing jurisdiction, only one of
which is relevant to the instant case:
Non-Judicial Claims Process. The Court shall
retain jurisdiction over this action to supervise
the distribution of the Fund . . . . This
continuing jurisdiction will continue until final
payment from the Fund . . . .
Id. § XIII.A.1, J.A. 141-42. This portion of the Agreement
mentions nothing about the decisions of the Claim
Administrator or the Track A or B Neutral and therefore
confers on the District Court no jurisdiction over those
determinations. After listing these narrow areas where the
Court retains jurisdiction, the Agreement reiterates that
“[o]ther than the provisions expressly described above . . . ,
the Court will not retain jurisdiction over any aspect of this
action, or in connection with the enforcement of any of its
provisions, after the date of the final approval of this
Agreement.” Id. § XIII.A, J.A. 143.
1
The revised Agreement erroneously renumbered many of the
agreement’s sections and sub-sections. For instance, what should
be numbered as Section XIII.A.1, is numbered as Section V.A.7,
despite the fact that it is the thirteenth section in the Agreement,
and the first, not seventh, sub-sub-section. Section V already exists
earlier in the agreement. Compare J.A. 111, with J.A. 141. This
opinion retains the original, correct section numbering, which was
used in the original Agreement, see J.A. 47, and is also reflected in
the table of contents to the revised Agreement, see J.A. 100-01.
5
The Agreement also sets forth the process a claimant
must follow to enforce the Agreement. It notes initially that a
claimant can seek an order asking the District Court to
enforce the Agreement, but only concerning an “alleged
violation of the provisions of th[e] Settlement Agreement that
are enforceable by the Court.” Id. § XIII.B, J.A. 143
(emphasis added). To do so, however, the claimant must first
serve the opposing party with a written notice “that describes
with particularity the term(s) of the Settlement Agreement
that are alleged to have been violated, the specific errors or
omissions upon which the alleged violation is based, and the
corrective action sought.” Id. § XIII.B.1, J.A. 143. The
opposing party then has 45 days to respond to the notice. Id.
§ XIII.B.2, J.A. 143. If that party fails to respond, or the
parties are unable to resolve their dispute, the claimant may
then move the Court to enforce “the provisions of th[e]
Settlement Agreement that are enforceable by the Court.” Id.
B.
To file a claim, LaBatte recognized that he needed to find
at least one witness who could submit a declaration on his
behalf stating that similarly situated white farmers received
better treatment from the USDA than did LaBatte. LaBatte
claims that he found two such witnesses: Russell Hawkins
and Tim Lake. Both individuals currently work for the
Bureau of Indian Affairs (“BIA”). LaBatte alleges that after
he spoke with both witnesses and drew up their declarations,
the Government prohibited Hawkins and Lake from signing
them.
LaBatte filed his claim under the Agreement in
December 2011, via Track B. Because he lacked signed
declarations attesting to similarly situated white farmers,
LaBatte submitted the declarations that Hawkins and Lake
6
allegedly would have signed, along with an additional
declaration from his attorney explaining that the BIA
prohibited Hawkins and Lake from signing the declarations.
The Track B Neutral rejected LaBatte’s claim, stating
that LaBatte “failed to satisfy the requirement of the
Settlement Agreement, through a sworn statement, that named
white farmers who are similarly situated to [LaBatte] received
USDA loans . . . that w[ere] denied to [LaBatte].” J.A. 155.
The Neutral specifically found the unsigned declarations,
along with LaBatte’s attorney’s declaration accusing the
Government of interfering with LaBatte’s claim, to be
inadequate. Id. at 155-56.
C.
After receiving his rejection notice, LaBatte attempted to
follow the requirements of the Agreement by serving the
Government with a written notice alleging that, by prohibiting
Hawkins and Lake from signing LaBatte’s declarations, the
Government impermissibly interfered with the Keepseagle
claims process. In doing so, LaBatte alleged, the Government
breached the “covenant of good faith and fair dealing”
implied in the Agreement. See J.A. 157-60. His notice did
not otherwise accuse the Government of violating any
particular provision in the Agreement.
The Government never responded to LaBatte’s notice.
After waiting the appropriate amount of time, LaBatte filed a
“complaint in intervention,” which the District Court treated
as a motion to intervene. He alleged that the Government had
breached the Agreement, Compl. ¶¶ 191-215, had violated his
due process and First Amendment rights, id. ¶¶ 216-45, and
had violated the Equal Credit Opportunity Act and the
Administrative Procedure Act, id. ¶¶ 254-59. He also sought
a declaratory judgment finding that the Government rendered
7
the Agreement’s Track B process “illusory,” and had
otherwise violated LaBatte’s constitutional and other rights.
Id. ¶¶ 183-90, 246-53.
The District Court held that it lacked jurisdiction to hear
LaBatte’s motion. Because the Court had dismissed the case
with prejudice following settlement, it determined that it was
only through its ancillary jurisdiction that it could hear
LaBatte’s motion. Memorandum Order at 7-8, Keepseagle v.
Vilsack, No. 99-CV-3119 (D.D.C. 2014), ECF No. 692, J.A.
239-40. Relying on the fact that the Court had retained
jurisdiction over the case only in very limited areas, none of
which applied to LaBatte’s motion, it found that LaBatte had
failed to establish that the Court had ancillary jurisdiction
over his motion. Id. at 8-10, J.A. 240-42.
LaBatte now seeks our review of the District Court’s
determination.
II.
Because “[f]ederal courts are courts of limited
jurisdiction,” “[i]t is to be presumed that a cause lies outside
this limited jurisdiction, and the burden of establishing the
contrary rests upon the party asserting jurisdiction.”
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377
(1994) (internal citations omitted). The doctrine of “ancillary
jurisdiction” “recognizes [that] federal courts[] [have]
jurisdiction over some matters (otherwise beyond their
competence) that are incidental to other matters properly
before them.” Id. at 378. The Supreme Court has defined
two separate purposes for which courts may assert ancillary
jurisdiction: “(1) to permit disposition by a single court of
claims that are, in varying respects and degrees, factually
interdependent; and (2) to enable a court to function
successfully, that is, to manage its proceedings, vindicate its
8
authority, and effectuate its decrees.” Id. at 379-80 (internal
citations omitted).
Interpreting Kokkonen as it pertains to settlement
agreements, we have explained that “district courts enjoy no
free-ranging ‘ancillary’ jurisdiction to enforce consent
decrees, but are instead constrained by the terms of the decree
and related order.” Pigford v. Veneman (Pigford I), 292 F.3d
918, 924 (D.C. Cir. 2002); accord Pigford v. Vilsack (Pigford
II), 777 F.3d 509, 514 (D.C. Cir. 2015) (“While it may be a
‘well-established principle . . . that a district court retains
jurisdiction under federal law to enforce its consent
decree[s],’ it retains this authority only if the parties’
agreement or the court order dismissing the action reserves
jurisdiction to enforce compliance.” (quoting Beckett v. Air
Line Pilots Ass’n, 995 F.2d 280, 286 (D.C. Cir. 1993)) (citing
Kokkonen, 511 U.S. at 381)).
“We review a district court decision interpreting a
consent decree and any underlying agreement de novo.”
Pigford II, 777 F.3d at 513. “We review the denial of a
motion to intervene de novo for issues of law, for clear error
as to findings of fact and for abuse of discretion on issues that
involve a measure of judicial discretion.” Defs. of Wildlife v.
Perciasepe, 714 F.3d 1317, 1322 (D.C. Cir. 2013) (internal
quotation marks omitted).
III.
The District Court correctly applied Kokkonen and
determined that it did not have jurisdiction to hear LaBatte’s
claim. LaBatte’s claim is not “factually interdependent” with
the Keepseagle class action itself, nor would the District
Court’s consideration of LaBatte’s claim enable the Court to
“effectuate its decrees.”
9
A.
LaBatte first argues that the “distribution of the
Settlement Fund and a right to non-government interference
with the Track B process . . . are interrelated and
interdependent to the claims LaBatte asserted in his
complaint.” Principal Br. of Appellant at 37 (emphasis in
original). His argument misapplies Kokkonen’s first prong.
Whether his claim is factually interdependent with the
Agreement that stemmed from that class action is irrelevant to
Kokkonen’s first prong. What matters is that LaBatte’s claim
is not factually interdependent with the underlying
Keepseagle class action.
In Kokkonen, the parties settled a suit that involved the
alleged breach of a “general agency agreement.” 511 U.S. at
376. After a disagreement over the parties’ obligations under
the settlement, the defendant brought suit asking the District
Court to enforce the settlement. Id. at 377. Assessing what it
had established as the first ancillary jurisdiction prong, the
Supreme Court held that the defendant failed to establish
jurisdiction because “the facts underlying respondent’s
dismissed claim for breach of agency agreement and those
underlying its claim for breach of settlement agreement have
nothing to do with each other; it would neither be necessary
nor even particularly efficient that they be adjudicated
together.” Id. at 380.
The same can be said for the instant case. Although the
Keepseagle class action generated the Agreement, the
operation of which is contested in this suit, the facts of the
two actions are not “interdependent.” LaBatte’s claim that the
Government interfered with his ability to file properly a claim
pursuant to the Keepseagle Agreement has nothing to do with
the facts underlying the Keepseagle class action, which
10
involved discrimination in providing loans to Native
American farmers. As in Kokkonen, there would be no
advantage to or logic in adjudicating the two disputes
together.
Thus, LaBatte cannot establish ancillary jurisdiction
under Kokkonen’s first prong.
B.
LaBatte fares no better under Kokkonen’s second prong:
whether hearing LaBatte’s motion would “enable [the] court
to function successfully, that is, to manage its proceedings,
vindicate its authority, and effectuate its decrees.” Id.Because courts retain jurisdiction over a settlement such as
the one at issue here “only if the parties’ agreement or the
court order dismissing the action reserves jurisdiction to
enforce compliance,” Pigford II, 777 F.3d at 514, Kokkonen’s
second prong applies only if the District Court in this case
retained the authority to enforce the portion of the Agreement
that LaBatte alleges the Government violated – namely, the
Track B decisionmaking process. See Compl. ¶ 185 (alleging
that the Government “interfered and denied LaBatte a Track
B process by instructing Hawkins and Lake as BIA
employees not to sign the prepared declarations.”).
LaBatte argues that the District Court did retain such
authority, focusing on the provision in the Agreement that
provided the District Court with jurisdiction over “the
distribution of the Fund.” Revised Settlement Agreement
§ XIII.A.1, J.A. 141. He claims that by interfering with
LaBatte’s ability to prove his claim, the Government
disrupted the Track B process generally, which affected the
distribution of funds. See Principal Br. of Appellant at 38
(“The process of distribution included the Track B process.
There is no distribution without a process . . . .”).
11
However, LaBatte’s understanding of the meaning behind
“distribution of funds” runs counter to the use of the term
“distribute” (or its variations) in the remainder of the
Agreement. For instance, section IX.F.8 describes post-
determination procedures for dispending funds to successful
claimants. See J.A. 134 (“All checks distributed under this
Section . . . will be valid for 180 calendar days from the date
of issue.” (emphasis added)). Similarly, section X.A.5 notes
that class counsel must provide information to class members
“regarding the status of claims processing or the distribution
of funds,” J.A. 135 (emphasis added), clearly distinguishing
the one from the other. In both instances, the notion of
“distribution” concerns only processes that take place after the
claims determination process. See also id. § XII.E.1, J.A. 140
(describing “the distribution of a Debt Relief Award” as being
separate from “the Claims Determination”).
Additionally, LaBatte’s argument fails to account for the
Agreement’s strong finality language declaring all claim
determinations final and unreviewable. See Revised
Settlement Agreement § IX.A.9, J.A. 120 (“The Claim
Determinations, and any other determinations made under this
Non-Judicial Claims Process are final and are not reviewable
by the Claims Administrator, the Track A Neutral, the Track
B Neutral, the District Court, or any other party or body,
judicial or otherwise.”); id. § II.C, J.A. 102 (defining “Claim
Determination” as “the binding and final result of a Track A
or Track B adjudication [that] represents whether a Class
Member is eligible to receive an award as a result of the Non-
Judicial Claims Process, and if so, the amount of the award”).
The Agreement’s determination that the District Court would
maintain continuing jurisdiction over “the distribution of the
Fund” must be interpreted in light of such finality language.
See Pigford II, 777 F.3d 514-15 (“The Consent Decree, as a
written reflection of the parties’ bargain resolving their case,
12
should be interpreted as a contract.”); Pigford I, 292 F.3d at
924 (holding that “an enforcement clause limited by its plain
language” to only certain kinds of enforcement disputes does
not confer ancillary jurisdiction over disputes that extend
beyond that limiting language).
Following LaBatte’s argument to its logical conclusion
would write the finality provision out of the Agreement
almost entirely. If any dispute concerning the Track B
process is, in essence, a dispute concerning the distribution of
funds because “[t]here is no distribution without a process,”
Principal Br. of Appellant at 38, then the entire non-judicial
claims process would be open to judicial review (whether
Track A or Track B), a result in direct contravention to the
finality provision. Given the explicit terms circumscribing
the Court’s jurisdiction, such an interpretation of fund
distribution would run counter to the intent of the parties in
entering into the Agreement.
LaBatte’s reliance on our decision in Pigford II is no
more helpful. In Pigford II, a claimant, McGiniss, sought to
pursue his claim under the Track B process, but his claim was
mistakenly and finally reviewed under the Track A process,
which resulted in him receiving less money from the
settlement than he might have otherwise. 777 F.3d at 512-13.
According to the consent decree in that case, a “facilitator”
was supposed to send Track A claims to an “adjudicator” and
Track B claims to an “arbitrator.” Id. at 511. As in the
instant case, the consent decree there also included a finality
provision, stating that “decisions of the adjudicator and
arbitrator are ‘final’ . . . and the parties consent ‘to forever
waive their right to seek review in any court’ of ‘any claim
that is, or could have been[,] decided by the adjudicator or
arbitrator.’” Id. at 511-12 (quoting from the consent decree).
Unlike the settlement here, however, the consent decree
13
provided the District Court with much broader continuing
jurisdiction, stating that the District Court would retain
jurisdiction “to issue orders ‘concerning the alleged violation
of any provision’” of the consent decree. Id. at 511 (quoting
from the consent decree). Because the Pigford II consent
decree required the facilitator to send Track A claims to the
adjudicator and Track B claims to the arbitrator, we explained
that the facilitator had failed to comply with the consent
decree when it sent McGinnis’s Track B claim to an
adjudicator. Id. at 514. Accordingly, we held that by
correcting the facilitator’s error, “the District Court did no
more than enforce the parties’ agreement,” as it had
jurisdiction to do under the language of the consent decree.
Id.
The instant case differs from Pigford II in two important
ways. First, the consent decree in Pigford II provided the
District Court with much broader jurisdiction over the
enforcement of the settlement generally: jurisdiction over any
violation of any provision in the consent decree. Thus, our
focus on conduct antecedent to the rejection of McGinnis’s
claim (namely, the facilitator’s erroneous transfer of
McGinnis’s claim to a Track A adjudicator, instead of a Track
B arbitrator) was warranted because the Court’s jurisdiction
there was defined in such a way that, so long as it did not
involve the finality of claim determinations, the Court could
seemingly hear any other dispute over a violation of the
consent decree. In the instant case, however, the jurisdiction
retained by the District Court was much narrower. There is
nothing in the Keepseagle Agreement that confers jurisdiction
on the District Court unless the conduct at issue involves one
of the specified, narrow ways in which the Court maintained
jurisdiction, such as over the distribution of the settlement
fund.
14
Second, the finality bar in the Pigford II agreement
conflicted with the agreement’s broad enforcement provision.
In the circumstances of that case, the contradiction could be
reconciled by reference to “the parties’ purpose in rendering
adjudicator decisions final” to enforce the facilitator’s correct
tracking of claims, which entailed no review of any final
adjudicator or arbitrator decision. Id. at 515. No such
contradiction exists here. The District Court’s jurisdiction is
drawn exceedingly narrowly, and, as relevant here, exists only
as to matters concerning the distribution of the settlement
fund. There is no explicit and direct conflict between such
matters and claim determinations. Funds are distributed only
after claim determinations have been made, and that
distribution is therefore separate from the claim determination
process.
Accordingly, LaBatte cannot establish ancillary
jurisdiction under Kokkonen’s second prong.
C.
None of LaBatte’s remaining arguments is persuasive.
LaBatte claims that the District Court erred because it was
required to determine whether the USDA breached the
Agreement before it determined whether it had ancillary
jurisdiction. However, LaBatte did not raise this argument
below, and therefore it is forfeited. See Benoit v. USDA, 608
F.3d 17, 21 (D.C. Cir. 2010).
LaBatte also claims that the Government’s interference
with LaBatte’s declarations constitutes spoliation. The
District Court refused to consider the argument below because
LaBatte “never explained how these allegations, if true, create
jurisdiction.” Memorandum Order at 11, Keepseagle v.
Vilsack, No. 99-CV-3119 (D.D.C. 2014), ECF No. 692, J.A.
243. On appeal, LaBatte makes the same mistake. He never
15
explains how his spoliation argument is at all relevant to the
Court’s jurisdiction. It is axiomatic that a court must have
jurisdiction before it can hear any argument on the merits.
See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94-
95, 101-02 (1998).
***
For the foregoing reasons, we affirm the District Court’s
judgment.
So ordered.