Keeps Eagle v. Veneman ( 2015 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
________________________________
)
MARILYN KEEPSEAGLE, et al., )
)
Plaintiffs, )
)
v. ) Civil Action No. 99-3119 (EGS)
)
TOM VILSACK, Secretary, U.S. )
Department of Agriculture, )
)
Defendant. )
________________________________)
MEMORANDUM OPINION
This case places the Court in the unenviable position of
enforcing a five-year-old bargain that nobody likes. The bargain
at issue is not any old contract; rather, it is a settlement
agreement that resolved a major civil-rights class action, was
approved by the Court in accordance with the Federal Rules of
Civil Procedure, and was made final by that approval and the
lack of appeal therefrom. The story that led this case to its
current posture is as unique as it is disappointing. In brief,
the $680,000,000 in damages that were awarded under the
settlement agreement was intended to compensate Native American
farmers who alleged that the United States Department of
Agriculture discriminated against them personally. The agreement
created a claims process for distributing this money, but the
claims process failed and $380,000,000 remains undistributed.
The scope of this failure is monumental; the reasons for it
remain unclear.
The agreement was finalized before the claims process began,
so no one anticipated such a large amount of excess funds. But
the parties did anticipate that some money might be leftover, so
they included in their settlement agreement a cy pres provision,
which directs that all leftover funds be distributed in equal
shares to a group of charities that serve Native American
farmers and ranchers that were to be chosen by Class Counsel.
Now, faced with the prospect of over half of the plaintiffs’
damages being distributed in equal shares to charities nominated
by Class Counsel, many class members regret that part of their
agreement and want to change it. Principal among those class
members is Marilyn Keepseagle, who has asked the Court to modify
the agreement to create a renewed claims process to distribute
more of the money to individual class members. Others, including
Class Counsel, ask to modify only the charitable-distribution
procedures to accommodate the large amount of money to be
distributed by: (1) allowing it to be distributed in unequal
shares scaled to an organization’s capacity; (2) spreading the
distribution over twenty years; and (3) placing distribution
decisions in the hands of a trust run by Native American
leaders.
2
Unless there is a legal basis for this Court to modify the
agreement, the Court must enforce the agreement reached in 2011.
Doing so would frustrate all parties’ goals. Contrary to the
Keepseagles’s wishes, the funds would remain entirely for
charitable distribution. Contrary to the goals of Class Counsel
and the government, that charitable distribution would be
pursuant to the arguably inefficient procedures that were
designed to handle a much smaller amount of money. This result
could be viewed as both unjust and inefficient. Over half of the
class’s damages would be distributed to third parties, despite
the relative ease with which class members could be identified,
the claims process reopened, and previously successful claimants
permitted to prove that they suffered damages in excess of the
compensation they have obtained.
The Court’s role is not to craft a new compromise based upon
the Court’s own views about the appropriate amount of
compensation due to class members who alleged decades-long, and,
in many cases, life-altering discrimination at the hands of
their federal government. Nor is it to create a preferred
process for distributing the funds to charity. Before the Court
is a simple question: Are any of the narrow circumstances in
which a court’s final judgment may be modified present in this
case?
3
The avenues proposed by the parties for unilateral
modification—Class Counsel’s attempt to realign the charitable-
distribution procedures pursuant to Federal Rule of Civil
Procedure 60(b)(5), and the Keepseagles’s attempt to reopen the
claims process pursuant to the legal doctrine governing
unclaimed funds as well as Rules 60(b)(5) and 60(b)(6)—are
simply inapplicable, as the Court discusses in detail in Parts
II.A and II.B of this Opinion. Absent a way to modify the
agreement unilaterally, the parties must come to a consensus
themselves, which their settlement agreement defines as “the
written agreement of the Parties.” As the Court finds in Part
II.C, this language requires more than the agreement of Class
Counsel and the government, over the objection of at least one
class representative and many class members, which is what is
presented by Class Counsel’s proposed modification. It also
requires more than an alignment between Class Counsel, the class
representatives, and members of the class, who would all prefer
that the money be distributed directly to class members. Because
there is no consensus within the meaning of the agreement, and
because the parties’ proposals for unilateral modification are
legally insufficient, the Court DENIES both pending motions for
modification of the settlement agreement. The Court expects that
there will be review of the legal conclusions reached in this
Opinion by appellate courts. Upon resolution of appellate
4
proceedings, if this Court’s legal conclusions are undisturbed,
the Court will grant the Parties a period of time to negotiate
an agreement that they may jointly present to the Court.
* * *
Before beginning its legal analysis, the Court makes some
observations regarding the government’s arguments. The
government has chosen to oppose any modification of the
settlement agreement that would alter the cy pres nature of the
funds in any way, based upon concerns that class members might
receive a “windfall” in excess of the damages they suffered and
that reopening the claims process would undermine the
government’s interest in the finality of court judgments.
The Executive Branch’s narrow position today stands in stark
contrast to the messages of respect and reconciliation it
expressed upon the settlement of this case. Upon announcement of
the settlement in 2010, the President issued the following
statement:
Today, the Department of Agriculture and the
Department of Justice announced a settlement agreement
with the plaintiffs in the Keepseagle class action
lawsuit. This suit was originally filed in 1999 by
Native American farmers alleging discrimination in
access to and participation in USDA’s farm loan
programs. With today’s agreement, we take an important
step forward in remedying USDA’s unfortunate civil
rights history.
I applaud Secretary Vilsack and Attorney General
Holder for their hard work to reach this settlement–a
settlement that helps strengthen the nation to nation
5
relationship and underscores the federal government’s
commitment to treat all citizens fairly.
Statement by the President on Settlement Agreement in the Native
American Farmers Lawsuit Against USDA, White House Office of the
Press Secretary (Oct. 19, 2010), https://www.whitehouse.gov/the-
press-office/2010/10/19/statement-president-settlement-
agreement-native-american-farmers-lawsuit. A statement issued by
Secretary Vilsack and then-Attorney General Holder expressed
similar sentiments:
“Today’s settlement can never undo wrongs that Native
Americans may have experienced in past decades, but
combined with the actions we at USDA are taking to
address such wrongs, the settlement will provide some
measure of relief to those alleging discrimination,”
Vilsack said. “The Obama Administration is committed
to closing the chapter on an unfortunate civil rights
history at USDA and working to ensure our customers
and employees are treated justly and equally.”
“The settlement announced today will allow USDA and
the Native American farmers involved in the lawsuit to
move forward and focus on the future,” said Attorney
General Holder.
* * *
Under Secretary Vilsack’s leadership, USDA is working
to address past civil rights complaints and today’s
announcement is a major step in that effort. The
Secretary and his leadership team are committed to
addressing allegations of discrimination, and shortly
after he took office he sent a memo to all USDA
employees calling for “a new era of civil rights” for
the Department.
Agriculture Secretary Vilsack and Attorney General Holder
Announce Settlement Agreement with Native American Farmers Who
Claim to Have Faced Discrimination by USDA in Past Decades, USDA
6
Office of Communications (Oct. 19, 2010), http://www.usda.gov/
wps/portal/usda/usdamediafb?contentid=2010/10/0539.xml&printable
=true&contentidonly=true.
The Court is sympathetic to the government’s legal argument
that the settlement is a final judgment and that respect for
final judgments is a cornerstone of our legal system. Indeed,
that argument ultimately binds the Court. That is the Court’s
role: To resolve legal disputes, not make policy decisions, even
when the law dictates a result the Court may disfavor. The
Executive Branch, however, has a broader role: To defend itself
in litigation, for sure, but also to seek justice on a broader
stage. It is for that reason, the Court presumes, that the
government sometimes settles cases that implicate deep-seated
interests of justice, even where the government’s legal defense
may be relatively strong.
This case was not an abstract legal dispute. It was a major
class-action seeking to remedy what many felt was the latest
chapter in the federal government’s sordid history of
mistreating Native Americans. The statements of the President,
Secretary Vilsack, and then-Attorney General Holder make clear
that the government in 2010 understood this dimension of the
case. The government’s position lately evinces a failure to
grapple with that dimension. The government would do well to
remove its legalistic blinders.
7
The result is that $380,000,000 of taxpayer funds is set to be
distributed inefficiently to third-party groups that had no
legal claim against the government. Although a $380,000,000
donation by the federal government to charities serving Native
American farmers and ranchers might well be in the public
interest, the Court doubts that the judgment fund from which
this money came was intended to serve such a purpose. The public
would do well to ask why $380,000,000 is being spent in such a
manner.
Because these considerations move beyond the realm of the law
and into the realm of politics and policy, this Court can only
make observations, bound as it is to the final judgment in this
case and the narrow legal doctrines for modifying a final
judgment. This Court has confronted an analogous situation
before and its words are equally applicable here: “Were this
Court empowered to judge by its sense of justice, the heart-
breaking accounts of” life-altering discrimination suffered by
members of the class at the hands of their federal government
“would be more than sufficient justification for granting all
the relief that they request.” Roeder v. Islamic Republic of
Iran, 195 F. Supp. 2d 140, 145 (D.D.C. 2002). As in Roeder,
however, the authority to grant such relief lies with another
branch of government and “[t]he political considerations that
8
must be balanced prior to such a decision are beyond both the
expertise and the mandate of this Court.” Id.
I. Background
A. The Case is Hard Fought from 1999 to 2010.
On November 24, 1999, the plaintiffs filed this lawsuit
against the Secretary of Agriculture on behalf of a class of
Native American farmers and ranchers who applied to the United
States Department of Agriculture’s farm loan and benefits
programs between January 1, 1981 and November 24, 1999. The
plaintiffs alleged that the Department of Agriculture
discriminated against them in a variety of ways in connection
with these applications and its treatment of complaints of
discrimination arising therefrom. The plaintiffs alleged that
these actions violated the Equal Credit Opportunity Act, 15
U.S.C. § 1691e; the Administrative Procedure Act, 5 U.S.C. §
706(2)(A), and Title VI of the Civil Rights Act of 1964, 42
U.S.C. § 2000d, et seq.
On December 12, 2001, this Court granted in part the
plaintiffs’ motion for class certification. See Keepseagle v.
Veneman, No. 99-3119, 2001 WL 34676944 (D.D.C. Dec. 12, 2001).
Upon finding that the requirements of Federal Rule of Civil
Procedure 23 had been met, the Court:
[C]ertifie[d] the following class for plaintiffs’
claims for declaratory and injunctive relief pursuant
to Fed. R. Civ. P. 23(b)(2): All Native–American
9
farmers and ranchers, who (1) farmed or ranched
between January 1, 1981 and November 24, 1999; (2)
applied to the USDA for participation in a farm
program during that time period; and (3) filed a
discrimination complaint with the USDA individually or
through a representative during the time period.
Id. at *15. The Court did not address certification of
plaintiffs’ claims for monetary relief:
Without a developed factual record and without clear
representation of subclasses, it is impossible for the
Court to make a finding that claims for individual
compensatory relief will destroy the class cohesion.
Similarly, the Court can not ascertain whether, should
it permit class certification on plaintiffs’ claims
for all forms of requested relief, the claims for
monetary damages would overshadow those for
declaratory and injunctive relief.
Id. at *14. Accordingly, the Court stated that it would consider
certification of the plaintiffs’ monetary claims “in the event
that, after the completion of discovery and the identification
of appropriate sub-class representatives, plaintiffs are able to
demonstrate to the Court the existence of a class properly
certifiable as a hybrid class or pursuant to Rule 23(b)(3).” Id.
The D.C. Circuit declined the government’s petition for
interlocutory review of the Court’s class-certification order.
See In re Veneman, 309 F.3d 789 (D.C. Cir. 2002).
For nearly ten years, the parties engaged in extensive and
contentious discovery and motions practice. A recounting of the
full history of this phase is unnecessary at this time, but this
nearly decade-long battle resulted in a narrowing of the
10
plaintiffs’ claims. The Court granted in part a motion for
judgment on the pleadings, dismissing the plaintiffs’ Title VI
claim, which the plaintiffs had ultimately conceded was barred
by the law in this jurisdiction at that time. See Opinion &
Order, ECF No. 275. Plaintiffs filed a series of Amended
Complaints, and ultimately rested in their Eighth Amended
Complaint on their Equal Credit Opportunity Act claim. Eighth
Am. Compl., ECF No. 460 ¶¶ 131–36. Discovery on this claim was
completed by November 2009. With certification of the
plaintiffs’ monetary claims still a hotly contested issue, the
parties jointly sought to stay briefing on December 3, 2009,
representing that “given the current status of the litigation,
settlement discussions are appropriate at this time.” Joint Mot.
to Stay, ECF No. 548 at 2. The case was in settlement
discussions for most of 2010.
B. The Parties Reach a Settlement Agreement.
On October 19, 2010, the parties informed the Court that they
had reached a settlement. See Notice, ECF No. 570. Three days
later, the plaintiffs moved for preliminary approval of that
settlement. See Mot. for Prelim. Approval, ECF No. 571. In
connection with this motion, the plaintiffs noted that their
expert witness had come to a conclusion that the damages
suffered by the class were approximately $776,000,000, making
11
the $680,000,000 settlement award nearly 90% of the plaintiffs’
estimated total damages. See Pls.’ Suppl. Br., ECF No. 572 at 4.
On November 1, 2010, the Court granted preliminary approval of
the settlement. See Order, ECF No. 577. In so doing, the Court
affirmed its prior certification of the class’s injunctive
claims and also certified the class’s claims for monetary relief
under Federal Rule of Civil Procedure 23(b)(3). See id. at 2.
The Court also approved the parties’ plan for disseminating
notice of the Agreement, required that objections to the
Agreement and requests to opt out be postmarked by no later than
February 28, 2011, and scheduled a fairness hearing for April
28, 2011. See id. at 3.
The relevant provisions of the settlement agreement were
described in a prior Opinion of this Court:
The Agreement created a Compensation Fund (“the Fund”)
of $680,000,000 “for the benefit of the Class.”
[Agreement, ECF No. 621-2] ¶ VII.F (p. 7).1 The Fund
was to be used in part to cover the attorney-fee award
and individual awards to those who served as class
representatives. See id. Primarily, however, the Fund
1
In 2012, the Agreement was modified to alter provisions related
to the distribution of certain awards. See Mot. to Amend, ECF
No. 621 at 1; Amended Settlement Agreement, ECF No. 621–2. This
modification was done without opposition from any party. See
Minute Order of August 1, 2012. For clarity, the Court refers
throughout this Opinion to the version of the Agreement as
modified in 2012, as it has in prior Opinions. The amended
agreement contains typographical errors that resulted in
duplicative paragraph numbering. As the Court has in prior
Opinions, the Court refers in its citations to the listed
paragraph number as well as the page number on which the cited
material appears.
2
An appeal of one of these decisions is currently pending before
12
would “pay Final Track A Liquidated Awards, Final
Track A Liquidated Tax Awards, Final Track B Awards,
and Debt Relief Tax Awards, to, or on behalf of, Class
Members pursuant to the Non-Judicial Claims Process.”
Id.
The Agreement described how leftover funds, if any,
would be disbursed: “In the event there is a balance
remaining . . . the Claims Administrator shall direct
any leftover funds to the Cy Pres Fund.” Agreement ¶
IX.F.9 (p. 37). “Class Counsel may then designate Cy
Pres Beneficiaries to receive equal shares of the Cy
Pres Fund.” Id. These designations “shall be for the
benefit of Native American farmers and ranchers.” Id.
The Agreement made eligibility as a recipient
contingent upon being “recommend[ed] by Class Counsel
and approv[ed] by the Court.” Id. Potential recipients
were also only “non-profit organization[s], other than
a law firm, legal services entity, or educational
institution, that has provided agricultural, business
assistance, or advocacy services to Native American
farmers between 1981 and [November 1, 2010].” Id. ¶
II.I (pp. 6–7).
The Class received notice of all relevant provisions
of the Agreement. The Claim Form provided to potential
claimants contained a section that required the
claimant to acknowledge that “[y]ou . . . forever and
finally release USDA from any and all claims and
causes of action that have been or could have been
asserted against the Secretary by the proposed Class
and the Class Members in the Case arising out of the
conduct alleged therein.” Ex. C to Agreement, ECF No.
576–1 at 63. The Agreement, moreover, provided that
the Class “agrees to the dismissal of the Case with
prejudice.” Id. ¶ VI.A (p. 15). The Claim Form also
notified Track A claimants that they would be
“eligible for . . . [a] cash award up to $50,000.” Ex.
C to Agreement, ECF No. 576–1 at 63. The Notice that
was sent to the Class similarly described the $50,000
maximum under Track A and the fact that participation
would result in a resolution of the individual’s legal
claim, and stated that “[i]f any money remains in the
Settlement Fund after all payments to class members
and expenses have been paid, then it will be donated
to one or more organizations that have provided
agricultural, business assistance, or advocacy
13
services to Native Americans.” See Ex. I to Agreement,
ECF No. 576–1 at 87, 88, 92.
Keepseagle v. Vilsack (“Keepseagle I”), No. 99-3119, 2014 WL
5796751, at *2 (D.D.C. Nov. 7, 2014) (alterations in original).
The Court has also summarized the proceedings that followed:
On March 18, 2011, Class Counsel filed copies of
thirty-five letters raising objections to the
Agreement. See Notice, ECF No. 585. Class Counsel
filed their motion seeking final approval of the
Agreement, which also responded to those objections,
on April 1, 2011. See Mot. for Final Approval, ECF No.
589. Only two written objections related to cy pres.
See id. at 62–63. One objector requested that his
organizations be granted cy pres funds. See Kent
Objection, ECF No. 585–2 at 7–8. Class Counsel noted
that this request was premature. See Mot. for Final
Approval, ECF No. 589 at 62. Another objector
indicated his preference that excess funds be used for
outreach purposes and not be limited to groups that
already existed in 1981. See Givens Objection, ECF No.
585–4 at 19–20. Class Counsel noted that this desire
was entirely consistent with the existing cy pres
provisions. See Mot. for Final Approval, ECF No. 589
at 62–63.
The Court held a fairness hearing on April 28, 2011.
See Minute Entry of April 28, 2011. The issue of cy
pres was not raised by any objector. See generally
Transcript of April 28, 2011 Fairness Hearing, ECF No.
609. After hearing from all who attended the fairness
hearing, the Court found that the Agreement was fair
and reasonable and approved it pursuant to Federal
Rule of Civil Procedure 23(e). See Order, ECF No. 606.
No appeal was filed from the Court’s approval of the
Agreement.
Id. at *3.
14
C. The Settlement Fund is Distributed, Leaving $380,000,000
Leftover.
By design under the Agreement, the Court was largely
uninvolved in the distribution process that followed final
approval of the Agreement, with one exception. Over the course
of the distribution, a handful of potential claimants petitioned
this Court for relief from allegedly erroneous determinations
made during the Non-Judicial Claims Process. See Smith Mot. to
Intervene, ECF No. 622; LaBatte Mot. to Intervene, ECF No. No.
635; Jones Mot. to Intervene, ECF No. 693. The Court rejected
these requests for similar reasons. See Order Denying Smith
Mot., ECF No. 633; Order Denying LaBatte Mot., ECF No. 692;
Order Denying Jones Mot., ECF No. 720.
Because this case had settled, the Court’s jurisdiction was
limited. See Order Denying LaBatte Mot., ECF No. 692 at 7–8. The
putative intervenors had to rely on the Court’s ancillary
jurisdiction, but “[a]ncillary jurisdiction . . . is a
relatively limited source of jurisdiction[,] aris[ing]: ‘(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 authority, and effectuate
its decrees.’” Id. at 8 (quoting Kokkonen v. Guardian Life Ins.
Co., 511 U.S. 375, 379–80 (1994)). Neither criterion was
15
satisfied, however. The first was inapplicable because the facts
alleged by each putative intervenor—erroneous determinations
during the Non-Judicial Claims Process—were distinct from the
underlying claims of discrimination. See, e.g., id. The second
was inapplicable because “‘[d]istrict courts enjoy no free-
ranging ‘ancillary’ jurisdiction to enforce consent decrees, but
are instead constrained by the terms of the decree and related
order.’” Id. at 8–9 (quoting Pigford v. Veneman, 292 F.3d 918,
924 (D.C. Cir. 2002)). “The Agreement sharply limits the
circumstances under which the Court may exercise jurisdiction,”
and although the Court retained jurisdiction “‘to supervise the
distribution of the Fund and to ensure that Debt Relief Awards
issued by the Track A and Track B Neutrals are applied by
USDA,’” “that provision is limited by a more specific provision
of the Agreement precluding the Court from reviewing any ‘Claim
Determinations, and any other determinations made under th[e]
Non-Judicial Claims Process.’” Id. at 9 (quoting Agreement, ECF
No. 621-1 ¶¶ V.A.7 (p. 40), IX.A.9 (p. 19)). These provisions,
the Court held, are reconciled by “foreclos[ing] judicial review
of certain decisions as to who is entitled to receive an award,
while permitting judicial supervision over distribution of the
Fund . . . after those decisions have been made.” Id. (quoting
Order Denying Smith Mot., ECF No. 633 at 8).2
2
An appeal of one of these decisions is currently pending before
16
The Court previously described what occurred at the end of the
distribution process:
On August 30, 2013 Class Counsel filed a status
report, notifying the Court that nearly all
distributions from the Fund had been made and
approximately $380,000,000 remained leftover. See
Status Report, ECF No. 646 at 3.3 Class Counsel
asserted that this “render[ed] some of the conditions
for cy pres distribution impractical.” Id. at 5. Class
Counsel also outlined a potential modification of the
Agreement, which would have involved the endowment of
a new foundation “which could fund non-profit
organizations serving the needs of Native American
the D.C. Circuit. See Keepseagle v. Vilsack, No. 14-5223 (D.C.
Cir. filed Sept. 11, 2014).
3
It remains unclear why such a large amount was left over. Class
Counsel proposes four causes: (1) “many of the farmers and
ranchers who were otherwise eligible to participate in the
settlement were deceased by the time the claims process began in
mid-2011,” and although their heirs could file claims on behalf
of their estate, “the heirs simply lacked sufficient information
in order to complete the claim form”; (2) “[s]ome Native
American farmer[s] and ranchers who believed they had been
denied loans for discriminatory reasons regarded it futile to
lodge complaints with the USDA,” so they were unable to prove
their claim in the Non-Judicial Claims Process (which required
some proof of having filed such a claim); (3) “the USDA’s
historic failure to conduct sufficient outreach to much of the
Native American farming and ranching community,” which, Class
Counsel asserts, meant “that otherwise eligible Native Americans
never applied or attempted to apply for loans” (such individuals
were “included in the expert analysis of people eligible for
loans,” but could not make a claim under the Agreement because
they had never applied for a loan); (4) “there were some
potential claimants who were so distrustful of the federal
government for historic reasons, that they did not have
confidence in the validity of the settlement process, and thus
did not submit claims.” Class Counsel’s Status Report, ECF No.
646 at 5 n.3. The government has proposed an additional
explanation: “[T]he simplest [explanation] is that there are
simply fewer people with claims than Plaintiffs originally
argued.” Gov’t Opp. to Keepseagle Mot. to Modify, ECF No. 786 at
8 n.5.
17
farmers and ranchers.” Id. at 8. The Department of
Agriculture opposed this proposal. See Response to
Status Report, ECF No. 649.
The filing of the August 30, 2013 status report
prompted the [Choctaw Nation of Oklahoma and its
affiliated Jones Academy Foundation] and [a group of
class members calling themselves the] Great Plains
Claimants to move to intervene. See Mot. to Intervene,
ECF No. 647; Mot. to Intervene, ECF No. 654. These
motions, however, sought to intervene in proceedings
that did not yet exist. No one had proposed any
modification to the Court and the hypothetical
proposal outlined by Class Counsel was opposed by the
defendant. Accordingly, the Court allowed the parties
additional time to come to an agreement on whether and
how to modify the Agreement.
On September 24, 2014, Class Counsel filed an
unopposed motion to modify the Agreement. See Mot. to
Modify, ECF No. 709. The modification proposes that
10% of the Cy Pres Fund be distributed immediately to
non-profit organizations “proposed by Class Counsel
and approved by the Court” that must also meet the
following criteria:
(1) they must have “provided business assistance,
agricultural education, technical support, or
advocacy services to Native American farmers or
ranchers between 1981 and November 1, 2010 to
support and promote their continued engagement in
agriculture”; and
(2) they must be “either a tax-exempt
organization described in Section 501(c)(3) of
the Internal Revenue Code . . . educational
organization described in Section
170(b)(1)(A)(ii) of the Code; or an
instrumentality of a state or federally
recognized tribe, including a non-profit
organization chartered under the tribal law of a
state or federally recognized tribe, that
furnishes assistance designed to further Native
American farming or ranching activities.”
Proposed Addendum to Agreement, ECF No. 709–2 ¶ II.A.
18
The modification utilizes the remainder of the Cy Pres
Fund to create a trust “for the purpose of
distributing the cy pres funds” which “shall seek
recognition as a non-profit organization under §
501(c)(3).” Id. ¶ II.B. The trust would be required
“to distribute the funds over a period not to exceed
20 years” and would be charged with disbursing the
funds to “not-for-profit organizations that have
served or will serve Native American farmers and
ranchers.” Mot. to Modify, ECF No. 709–1 at 1. The
Trust would be authorized to make grants subject to
the following restrictions:
(i) “grants must be to a tax-exempt organization
described in Section 501(c)(3) of the Code;
educational organization described in Section
170(b)(1)(A)(ii) of the Code; or an
instrumentality of a state or federally
recognized tribe, including a non-profit
organization chartered under the tribal law of a
state or federally recognized tribe, that
furnishes assistance designed to further Native
American farming or ranching activities”; and
(ii) “the organization must use the funds to
provide business assistance, agricultural
education, technical support, and advocacy
services to Native American farmers and ranchers,
including those seeking to become farmers or
ranchers, to support and promote their continued
engagement in agriculture.”
Proposed Addendum to Agreement, ECF No. 709–2 ¶ II.B.
Shortly before the motion to modify the Agreement was
filed, the Great Plains Claimants filed a renewed
motion to intervene. See Second Great Plains Mot. to
Intervene, ECF No. 705. On September 18, 2014, the
Court denied without prejudice the earlier motions to
intervene of the Great Plains Claimants and the
Choctaw Movants and set a schedule for the briefing of
renewed motions to intervene. See Minute Order of
September 18, 2014. The Choctaw Movants filed a
renewed motion to intervene on October 1, 2014. See
Second Choctaw Mot. to Intervene, ECF No. 714.
Keepseagle I, 2014 WL 5796751, at *3–4.
19
D. The Court Denies Requests to Intervene.
On November 7, 2014, the Court issued an Opinion denying both
requests to intervene for lack of standing, which the Court
found was a prerequisite for intervention as of right and for
permissive intervention. See id.
The Choctaw Movants lacked Article III standing “because any
injury [they may face] will arise only if a multitude of
speculative events occur.” Id. at *6. Their purported economic
injury was conjectural: “The Choctaw Movants have no existing
involvement with the Cy Pres Fund. They have not received a cy
pres distribution, been approved to receive one, or had their
eligibility assessed. Accordingly, modification of the cy pres
provision would not affect them in the direct ways described in
the cases they cite.” Id. It was unclear whether they would even
satisfy the requirements for obtaining a cy pres distribution
under the existing agreement as the Choctaw Nation was a tribal
government and “the Agreement does not include tribal
governments as potential recipients of cy pres distributions.”
Id. at *7. In any event, the Choctaw Movants had not yet been
recommended by Class Counsel to receive a distribution, which
was “problematic for standing, as the Supreme Court is
‘reluctant to endorse standing theories that require guesswork
as to how independent decisionmakers will exercise their
judgment.’” Id. at *8 (quoting Clapper v. Amnesty Int’l, 133 S.
20
Ct. 1138, 1150 (2013)). The Court also noted the “highly
speculative” nature of predicting what amount the Choctaw
Movants might receive if they were approved under the Agreement.
See id. “These twin uncertainties—whether the Choctaw Movants
would receive an award at all and, if so, how large an award
they would receive—render[ed] it highly speculative to assert
that the proposed modification would harm them.” Id. At the same
time, it was hypothetical at best to say that the procedures as
modified would harm, rather than help, the Choctaw Movants’s
ability to receive a cy pres distribution and to say whether
they would be likely to receive a larger or smaller amount if
they were approved. See id. Finally, the Court rejected the
argument that the Choctaw Movants would suffer a lost
opportunity to compete, as they “lose no opportunity to compete
under the modification” and their ability to compete under the
original Agreement appeared to be “illusory.” Id.
The Choctaw Movants also independently lacked prudential
standing because they sought to “assert a legal right to compete
under the existing procedures for cy pres distribution that were
created by a settlement (which has nothing to do with them), to
be distributed for the benefit of a class (of which they are not
a part), to remedy claims of discrimination (which they did not
suffer).” Id. at *9. “In doing so, they assert rights under the
Agreement that do not belong to them.” Id. Because the Choctaw
21
Movants could not show that they were in any way intended
beneficiaries they could not seek to enforce rights purportedly
created by that Agreement. See id. at *9–10. The Court rejected
their argument that the Agreement created a trust of which the
Choctaw Movants were intended beneficiaries: Both the purpose of
cy pres and the text of the Agreement itself “confirm[ed] that
[the cy pres provision’s] purpose was geared toward the Class.”
Id. at *10.
The Court also found that the Great Plains Claimants lacked
Article III standing. Those individuals were all class members
who had successfully pursued claims under the Agreement. See id.
at *12. Although none had objected to the cy pres provision when
the Agreement was approved and none had filed an appeal from
that approval, they sought to intervene to undo the cy pres
provision, on the ground that they had a legally protected
interest in the leftover funds. Id. The Court noted, however,
that the class members had “intentionally satisfied their legal
claims” by entering into the Agreement and thereby gave up any
legal claim they may have had. See id. This Court also surveyed
the law governing unclaimed settlement funds, which counseled
strongly in favor of finding that “‘neither the class members
nor the settling defendants have any legal right to unclaimed or
excess funds.’” Id. (quoting Diamond Chem. Co. v. Akzo Nobel
22
Chems. B.V., 517 F. Supp. 2d 212, 217 (D.D.C. 2007)).
Accordingly, the Court held:
The Great Plains Claimants have received the full
value of their claims pursuant to the Agreement and
thereby fully satisfied those legal claims. The fact
that their claims, if ultimately successful at trial,
could have resulted in higher damages awards changes
nothing. As the Court emphasized during the April 28,
2011 fairness hearing: “There are risks in litigation
as we all know. This case could have gone to trial,
presumably, and the Plaintiffs not recovered anything.
Class certification was not a foregone conclusion, and
you’re aware, I’m sure, of other cases in this court,
not before this judge, wherein class certification
issues were not as successful as the class members
would have liked. . . . So there were no guarantees
that this case went forward at all.”
Id. at *13 (quoting Transcript of April 28, 2011 Fairness
Hearing, ECF No. 609 at 24:9–18). In sum, the Court found that
the Great Plains Claimants “cannot now claim a property right in
funds that were intended to pay the claims of other class
members who did not claim their award.” Id.
The Choctaw Movants timely appealed the Court’s intervention
decision. See Notice of Appeal, ECF No. 746. Their appeal
remains pending before the D.C. Circuit, Keepseagle v. Vilsack,
No. 15-5011 (D.C. Cir. filed Jan. 20, 2015), and they have
indicated that they will not move to stay proceedings before
this Court unless and until the Court grants any motion for
modification of the Agreement. See Choctaw Mot. to Extend
Deadline for Mot. to Stay, ECF No. 750 at 2. The Great Plains
Claimants did not appeal the Court’s decision.
23
E. Ms. Keepseagle Obtains Separate Counsel.
Shortly before the Court issued its Opinion denying the
motions to intervene, the Court scheduled a status hearing for
December 2, 2014 and informed the parties that once the
intervention issue was resolved, the Court would address the
following issues:
(1) whether the Court must direct notice to the Class
and hold a fairness hearing pursuant to Federal Rule
of Civil Procedure 23(e); (2) whether, if Rule 23 does
not permit the Court to require such notice and a
hearing, the Court may nonetheless exercise discretion
to direct notice to the class and to permit class
members to give their thoughts on the proposed
modification during a status hearing or motion
hearing; and (3) what content and form any notice—
whether required by Rule 23(e) or permitted by the
Court’s discretion—should take.
Minute Order of October 20, 2014.
In advance of the December 2, 2014 status hearing, the Court’s
staff was contacted by individuals on behalf of class
representative Marilyn Keepseagle, who indicated that Ms.
Keepseagle would attend the December 2, 2014 hearing, and
requested an opportunity to be heard by the Court. A recent
Opinion of this Court summarized what transpired next:
The Court began the status hearing by permitting Ms.
Keepseagle to speak. Ms. Keepseagle discussed her
opposition to Class Counsel’s proposed modification
and her support for a proposal under which the cy pres
funds would instead be distributed to members of the
class. See Transcript of Dec. 2, 2014 Hearing, ECF No.
756 at 5:12–8:5, 9:19–10:3. The Court responded:
24
I’m not suggesting at all by any stretch of the
imagination that the theory has legal support. I
don’t know. But I very clearly heard [Ms.
Keepseagle] tell me in her words very eloquently,
as she is, that she wants relief from this
judgment which sounds like a Rule 60(b) motion.
So, the thought then is, what should the Court do
at this juncture to enable her to develop her
theory? I’m not going to lose sight of the fact
that she’s without individual counsel, from what
I can determine based on our brief discussion in
open court.
Id. at 12:25–13:18. Accordingly, the Court held
further proceedings in abeyance, and granted Ms.
Keepseagle time to secure legal representation. See
id. at 22:4–9.
Keepseagle v. Vilsack (“Keepseagle II”), No. 99-3119, 2015 WL
1851093, at *2 (D.D.C. Apr. 23, 2015).
Ms. Keepseagle’s new attorneys entered their appearances on
February 9, 2015 and indicated their desire to file two
preliminary motions before proceeding to address the settlement-
modification issue. See id. Over the objection of Class Counsel
and the government, the Court set an expedited schedule for
separate adjudication of those motions. See id. One motion
sought “a Court Order removing Porter Holder and Claryca Mandan
as class representatives” on the grounds that they were
inadequate because they supported Class Counsel’s proposed
modification, while the other motion sought “an Order compelling
Class Counsel to produce certain materials” related to public
gatherings at which Class Counsel discussed their proposed
modification with members of the class. Id.
25
On April 23, 2015, the Court denied both motions. See id. The
Court found that Porter Holder and Claryca Mandan remained
adequate class representatives because their position—while
unpopular with many class members—was a principled outgrowth of
their representation of the entire class and consideration of
various litigation risks. See id. at *5–8. In any event, the
Court found that it would lack the authority to remove class
representatives at this stage of litigation because Federal
Rules of Civil Procedure 23(a)(4) and 23(c)(1)(C) do not “permit
the Court to modify the class certification order in light of
allegedly inadequate representation by a class representative .
. . where post-judgment actions will not affect class members’
legal rights.” Id. at *3. This was such a situation, as “the
class members in this case have no legal right to the Cy Pres
Fund,” and thus “the proposed modification would not implicate a
class member’s legal right.” Id. at *5. As for the motion to
compel, the Court found that the Keepseagles failed to supply an
appropriate legal basis for such discovery at this stage of
proceedings. See id. at *8–11.
F. The June 29, 2015 Hearing and the Pending Modification
Proposals.
Having resolved all pending requests for intervention, Ms.
Keepseagle’s representation status, and the preliminary motions
filed by her counsel, the Court set a schedule for the
26
simultaneous briefing of the Keepseagles’s motion to modify and
Class Counsel’s motion to modify. See Order, ECF No. 771 at 1–2.
The Court also scheduled a hearing on these motions for June 29,
2015. See id. at 2.
In anticipation of this hearing, the Court resolved the last
preliminary issue: the applicability of Federal Rule of Civil
Procedure 23(e). Agreeing with the government and Class Counsel,
the Court found Rule 23(e) inapplicable to Class Counsel’s
proposed modification. See Keepseagle v. Vilsack (“Keepseagle
III”), No. 99-3119, 2015 WL 1969814, at *4–8 (D.D.C. May 4,
2015). The Court first held that Rule 23(e) “applies only when a
modification materially hinders a class member’s legal right.”
Id. at *4. This is so because the entire purpose of Rule 23—and
in particular Rule 23(e)—is to provide procedural protections at
various stages of class-action litigation to ensure that the
rights of absent class members are appropriately protected. See
id. Unless a proposed modification would hinder such a class
member’s legal right in some way—whether by expanding the scope
of the res judicata effect of the judgment or otherwise limiting
the remedy available to a class member—there would be no need
for such protections. See id. at *5–6. The Court found—for
reasons similar to its findings that the Great Plains Claimants
lacked a legal interest in the Cy Pres Fund and that the
Keepseagles could not remove class representatives at this stage
27
of proceedings—that Class Counsel’s proposed modification would
not have such an effect. See id. at *6–7. Notwithstanding this
finding, the Court held that it had the authority, under both
Rule 23 and the Agreement itself, to order Class Counsel to
provide notice to the class of its motion to modify and of the
June 29, 2015 hearing, and also to permit class members to speak
during the hearing to provide their perspectives on the issue.
See id. at *7–9. The Court’s Order provided that class members
could submit written comments to the Court’s chambers—which have
been posted on the docket—and could also speak during the June
29, 2015 hearing. See Order, ECF No. 775.
The June 29, 2015 hearing lasted the entire day in the Court’s
Ceremonial Courtroom. After hearing extensive argument from
counsel, the Court was able to hear oral statements from all
individuals who wished to give them. See generally Transcript of
June 29, 2015 Hearing, ECF No. 806. Many individuals spoke in
favor of a proposal akin to Ms. Keepseagle’s, under which the
excess funds would be distributed to class members directly.
Many also shared the heart-wrenching stories of discrimination
they allegedly suffered at the hands of the federal government,
and the lasting effects of that discrimination.
The motions for modification of the settlement agreement are
now ripe for resolution. As described above, Class Counsel seeks
a modification of the procedures for the cy pres distribution,
28
and the government does not oppose that motion. See Class
Counsel Mot., ECF No. 709. The Keepseagles request a
modification that would either provide pro rata distribution to
class members who were successful under the initial Claims
Process or, in the alternative, provide for a second claims
period for those who were not successful under the original
process and then distribute the remainder pro rata to all who
were successful in either round of the distribution process. See
Keepseagle Mot., ECF No. 779. The Court has received amicus
curiae briefs from three groups—(1) the Association of American
Indian Farmers, (2) the Great Plains Claimants, and (3) the
Indian Land Tenure Foundation and Intertribal Agriculture
Council. See Assoc. of Am. Indian Farmers Br., ECF No. 740;
Great Plains Claimants Br., ECF No. 784; Indian Land Tenure Br.,
ECF No. 787. Finally, the Court has received extensive
correspondence from class members and others expressing their
views on the proposals.4
4
See First Set of Letters, ECF No. 780; Second Set of Letters,
ECF No. 789; Third Set of Letters, ECF No. 790; Fourth Set of
Letters, ECF No. 791; Fifth Set of Letters, ECF No. 794; Sixth
Set of Letters, ECF No. 795; Seventh Set of Letters, ECF No.
796; Eighth Set of Letters, ECF No. 797; Ninth Set of Letters,
ECF No. 798; Tenth Set of Letters, ECF No. 799; Eleventh Set of
Letters, ECF No. 800; Twelfth Set of Letters, ECF No. 801;
Thirteenth Set of Letters, ECF No. 802; Fourteenth Set of
Letters, ECF No. 803; Fifteenth Set of Letters, ECF No. 804;
Sixteenth Set of Letters, ECF No. 805; Seventeenth Set of
Letters, ECF No. 807.
29
II. Analysis
The Court begins with the undisputed proposition that the
Agreement is a final judgment. As this Court has noted on two
recent occasions, “[a]n agreement between the parties dismissing
all claims is the equivalent of a decision on the merits and
thus claims settled by agreement are barred by res judicata.”
Chandler v. Bernanke, 531 F. Supp. 2d 193, 197 (D.D.C. 2008);
see Keepseagle II, 2015 WL 1851093, at *4; Keepseagle I, 2014 WL
5796751, at *12. The Supreme Court has made this issue clear
with regard to consent decrees similar to the Agreement in this
case. “A consent decree no doubt embodies an agreement of the
parties and thus in some respects is contractual in nature. But
it is an agreement that the parties desire and expect will be
reflected in, and be enforceable as, a judicial decree that is
subject to the rules generally applicable to other judgments and
decrees.” Rufo v. Inmates of Suffolk Cnty. Jail, 502 U.S. 367,
378 (1992); see also Pigford, 292 F.3d at 923 (treating a
settlement of a very similar case involving the claims of
African-American farmers under Rufo’s standard for consent
decrees).
Because the Agreement is a final judgment, the Court’s
authority is circumscribed. “[D]istrict courts enjoy no free-
ranging ‘ancillary’ jurisdiction to enforce consent decrees, but
are instead constrained by the terms of the decree and related
30
order.” Pigford, 292 F.3d at 924 (quoting Kokkonen, 511 U.S. at
381). “As our court of appeals has rhetorically asked: ‘Who
would sign a consent decree if district courts had free-ranging
interpretive or enforcement authority untethered from the
decree’s negotiated terms?’” In re Black Farmers Discrim.
Litig., 950 F. Supp. 2d 196, 200 (D.D.C. 2013) (quoting Pigford,
292 F.3d at 925). Indeed, the importance of respecting the
finality of a judgment is deeply embedded in our legal system.
See, e.g., Massaro v. United States, 538 U.S. 500, 504 (2003)
(noting “the law’s important interest in the finality of
judgments”). Any party seeking to overrule, modify, or rescind
the Agreement therefore bears the burden of demonstrating a
legal basis for doing so. Three avenues have been raised by one
or more of the parties: (1) the law governing the disposition of
unclaimed settlement funds; (2) Federal Rule of Civil Procedure
60(b); and (3) the modification provision of the Agreement
itself. The Keepseagles rely upon the first and second avenues,
while Class Counsel relies upon the second and third.
A. The Law Governing the Disposition of Unclaimed Settlement
Funds Does Not Override the Mandatory Language of the
Agreement.
The Keepseagles focus a large portion of their arguments—both
in favor of their proposal and in opposition to Class Counsel’s
proposal—on the legal doctrine governing the distribution of
excess funds. Their argument is that this doctrine has become
31
increasingly inhospitable to the use of cy pres except as a last
resort. They assert that the current circumstances of this case
do not render other distribution methods unworkable, so the
Court should not utilize a cy pres remedy. Class Counsel and the
defendant note that the Keepseagles are eliding an important
fact that renders this case unique: The question is not which
distribution method the Court should choose in a vacuum; rather,
the Court is presented with specific and mandatory language in a
final settlement that was never challenged or appealed.
1. Questions Have Arisen Regarding the Legal Rules
Applicable to Cy Pres Remedies.
Courts in this Circuit have approved generally of the use of
cy pres in distributing leftover settlement proceeds. See
Democratic Cent. Comm. of D.C. v. Washington Metro. Area Transit
Comm’n, 84 F.3d 451, 455, 457 (D.C. Cir. 1996); In re Living
Social Marketing & Sales Practice Litig., 298 F.R.D. 1 (D.D.C.
2013); Diamond Chem. Co., 517 F. Supp. 2d 212; Diamond Chem.
Co., Inc. v. Akzo Nobel Chems. B.V., Nos. 1-2118, 2-1018, 2007
WL 2007447 (D.D.C. July 10, 2007). The Keepseagles are not wrong
to suggest that cy pres has fallen out of favor in recent years,
however. In a statement concurring in the denial of certiorari,
Chief Justice Roberts summarized the many legal issues lurking
to be decided:
Granting review of this case might not have afforded
the Court an opportunity to address more fundamental
32
concerns surrounding the use of such remedies in class
action litigation, including when, if ever, such
relief should be considered; how to assess its
fairness as a general matter; whether new entities may
be established as part of such relief; if not, how
existing entities should be selected; what the
respective roles of the judge and parties are in
shaping a cy pres remedy; how closely the goals of any
enlisted organization must correspond to the interests
of the class; and so on. This Court has not previously
addressed any of these issues. . . . In a suitable
case, this Court may need to clarify the limits on the
use of such remedies.
Marek v. Lane, 134 S. Ct. 8, 9 (2013) (Roberts, C.J.). The
American Law Institute has also set forth principles to govern
the use of cy pres, which limit the circumstances in which a
court may choose cy pres over other distribution methods:
• (a) If individual class members can be identified
through reasonable effort, and the distributions are
sufficiently large to make individual distributions
economically viable, settlement proceeds should be
distributed directly to individual class members.
• (b) If the settlement involves individual
distributions to class members and funds remain after
distributions (because some class members could not be
identified or chose not to participate), the
settlement should presumptively provide for further
distributions to participating class members unless
the amounts involved are too small to make individual
distributions economically viable or other specific
reasons exist that would make such further
distributions impossible or unfair.
• (c) If the court finds that individual distributions
are not viable based upon the criteria set forth in
subsections (a) and (b), the settlement may utilize a
cy pres approach. The court, when feasible, should
require the parties to identify a recipient whose
interests reasonably approximate those being pursued
by the class. If, and only if, no recipient whose
interests reasonably approximate those being pursued
33
by the class can be identified after thorough
investigation and analysis, a court may approve a
recipient that does not reasonably approximate the
interests being pursued by the class.
Principles of the Law of Aggregate Litigation § 3.07 (2010). The
Keepseagles urge the Court to follow these Principles and
thereby decline to utilize a cy pres remedy in this case because
individual distributions to class members would not be
especially difficult. Their argument is reasonable: This is not
a case where further distribution of unclaimed funds to the
class would be terribly inefficient. The large amount of money
remaining to be distributed, combined with the large number of
identifiable potential claimants would make further
distributions relatively straightforward. Those who were
unsuccessful during the previous claims process could be put
through a renewed process, while those who previously received
compensation could prove that they suffered damages in excess of
the award they already received. Were this case in a traditional
posture, the issue would be relatively clear.
2. This Case Involves the Unique Circumstance in which a
Cy Pres Remedy Has Already Been Approved and Neither
Objected to Nor Appealed from.
In urging the Court to resort immediately to the ALI
Principles—which address whether to use a cy pres remedy in the
first place—the Keepseagles gloss over a key fact that places
this case in a unique posture: “[T]his is not a case where
34
parties seek to . . . address whether cy pres is appropriate in
the first instance,” Keepseagle I, 2014 WL 5796751, at *1, nor
is it one in which the Court is presented with a settlement
agreement that contains a cy pres provision and must assess
whether it is “fair, reasonable, and adequate” before approving
it. Fed. R. Civ. P. 23(e)(2); cf. Keepseagle III, 2015 WL
1969814, at *6 (“The question . . . is not whether choosing to
utilize a cy pres remedy in the first instance would alter the
class’s legal rights if the Settlement Agreement were silent on
the disposition of excess funds (that ship sailed in 2011).”).
If the Court were presented with such a blank slate and asked to
decide how to distribute $380,000,000 in leftover funds, the
Keepseagles would likely be correct that of the four general
options available to a court considering how to distribute
unclaimed funds—(1) allowing the funds to revert to the
defendant; (2) pro rata distribution to class members who filed
claims; (3) escheat to the state or federal government; or (4)
cy pres distribution—the Court would choose a pro rata
distribution. See Newberg on Class Actions § 12:28 (5th ed.
2015) (as a general matter, “a court’s goal in distributing
class action damages is to get as much of the money to the class
members in as simple a manner as possible”).
35
As Professor Rubenstein notes in Newberg on Class Actions, the
existence of mandatory language in a final settlement agreement
cannot be ignored:
[T]he parties’ settlement agreement will typically
include a provision expressing the settling parties’
preference with regard to unclaimed funds. The Court
will review that provision at final approval to ensure
it is ‘fair, reasonable, and adequate’ from the
perspective of the class; if it is, the court will
enforce the provision and follow its distributional
instructions, even if the court (or objectors) might
have chosen a different path.
Id. The Keepseagles ignore the fact that a final judgment speaks
directly to the issue in this case and mandates the use of a cy
pres remedy. The Court, however, must recognize the powerful
force of a final judgment agreed upon by all parties, approved
by the Court, and neither objected to nor appealed from, “even
if the court (or objectors) might have chosen a different path”
knowing what is known now. Id.
3. Most Case Law Regarding the Use of Cy Pres Does Not
Address the Circumstance in Which Cy Pres Has Already
Been Finally Approved.
The authorities on which the Keepseagles rely for the
proposition that a cy pres distribution is inappropriate in this
case largely addressed situations in which no final settlement
agreement spoke to the issue. See, e.g., In re Baby Prods.
Antitrust Litig., 708 F.3d 163, 169, 172, 173 (3d Cir. 2013)
(reviewing objector’s direct appeal of the district court’s
approval of a settlement that directed excess funds to “one or
36
more charitable organizations proposed by the parties and
selected by the Court,” finding “that a district court does not
abuse its discretion by approving a class action settlement
agreement that includes a cy pres component directing the
distribution of excess settlement funds to a third party to be
used for a purpose related to the class injury,” but vacating
the approval of the settlement because the district court “did
not have the factual basis necessary to determine whether the
settlement was fair to the entire class”—namely, the district
court’s approval came before it was informed of the unexpectedly
high amount of unclaimed funds because “counsel did not provide
this information to the Court”); Nachshin v. AOL, LLC, 663 F.3d
1034, 1037–38 (9th Cir. 2011) (reviewing objector’s direct
appeal of a district court’s approval of a settlement in which
no damages would go to the class and would instead be
distributed entirely as cy pres); Masters v. Wilhelmina Model
Agency, Inc., 473 F.3d 423, 428, 435–36 (2d Cir. 2007)
(reviewing objector’s direct appeal of a district court’s
approval of a settlement that provided that if there were excess
funds “the Court shall, in its discretion, determine the
disposition . . . after hearing the views of the parties hereto
as to such disposition” and reversing insofar as the district
court viewed its hands as tied in rejecting a request for an
37
award of treble damages to the class, in lieu of cy pres).5 Two
decisions warrant a more detailed review, as they frame the
fact-specific inquiry that is required when assessing whether cy
pres is mandated or permitted by a settlement.
In the case In re Lupron Marketing & Sales Practices
Litigation, 677 F.3d 21 (1st Cir. 2012), a class of “medical
patient consumers . . . alleging fraud in overcharging for the
medication Lupron” reached a settlement agreement which the
district court approved. Id. at 23–24. A fairness hearing was
held, at which time a group of dissident class members—one of
whom had been allowed to intervene to “participat[e] in the
process established by the court for the evaluation of the
proposed settlement”—objected “that the amount of the settlement
allocated to the class of consumer purchasers of Lupron was
inadequate.” Id. at 25. After the district court approved the
settlement over objection, the dissidents “said they would
pursue appeals of the settlement agreement unless they received
more,” so the parties negotiated an “implementation agreement”
5
In re Katrina Canal Breaches Litig., 628 F.3d 185, 196–98 (5th
Cir. 2010) is wholly distinct. That decision declined to
consider “whether a cy pres distribution of the settlement fund,
without any monetary distribution would be fair, reasonable, and
adequate” as such a decision “would be premature” and later
found that a proposed notice of class-action settlement was
inadequate because it failed to inform class members of the
possibility that excess funds would be distributed cy pres. The
notice in this case did not suffer from such deficiencies. See
Keepseagle I, 2014 WL 5796751, at *2.
38
which increased the payments available to the consumer class in
exchange for the withdrawal of the objectors’ appeals and
objections. See id. at 26. The district court approved the
settlement and the implementation agreement. See id. After a
four-year-long claims period, over $11,000,000 remained in
unclaimed funds. See id. The district court heard proposals on
the disposition of those funds and ultimately “decided to make a
cy pres award of all of the unclaimed settlement funds” to a
hospital. See id. at 27. Three of the dissidents noted an appeal
of this decision. See id. at 28. The First Circuit affirmed the
decision to use cy pres because class members had received the
full amount of their damages and the class’s relief “was
established for the benefit of all consumer purchasers of
Lupron, not just the 11,000 who filed claims.” Id. at 34.
Although the First Circuit found that application of the ALI
Principles was appropriate at that stage, it was presented with
a settlement agreement, unlike the one before this Court, that
directed that unclaimed funds “shall be distributed in the
discretion of the Settlement Court as it deems appropriate,”
noting that “[i]f all or part of any unclaimed funds is
distributed to one or more charitable organizations,” the
defendant reserved the right to claim a tax deduction. Id. at
26. Thus, unlike the Keepseagle settlement, the district court
in Lupron had to make a threshold determination whether to
39
utilize cy pres or another distribution mechanism. Were the
Court presented with such a circumstance, this case would be
very different.
The issue is therefore very fact-specific when it arises in a
case resolved by a settlement agreement, as the Fifth Circuit
explained in Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468
(5th Cir. 2011). In Klier, the Fifth Circuit was presented with
a class-action settlement resolving “claims of persons
assertedly injured by the toxic emissions of an industrial plant
near Bryan, Texas.” Id. at 471. The settlement created three
subclasses and allocated monetary relief among them. See id. One
subclass—of individuals who did not yet have medical conditions
resulting from the emissions—obtained medical monitoring as
relief. See id. at 472. Another class included individuals
“suffering serious injuries,” who received direct payments. See
id. at 470, 472. Upon completion of the medical-monitoring, the
funds allocated to that subclass were not exhausted, but the
fund for the subclass of individuals who suffered injury was
exhausted. See id. at 473. The district court then granted the
defendant’s request to distribute the funds as cy pres, and a
class member opposed the proposal, arguing “that an additional
distribution to members of [the injury subclass] was
economically feasible and would be equitable since the members
of [that subclass] had been found to suffer [serious injuries]
40
that are compensable under the settlement.” Id. The Fifth
Circuit reversed the district court’s decision to utilize a cy
pres remedy, focusing on the fact that the settlement agreement
itself contained no such remedy and in fact contained three
interrelated provisions that counseled in favor of
redistribution to members of the other subclass. See id. at 476–
77 (one provision required “that any money left over in any
subclass fund ‘shall be distributed pro rata to all Claimants in
that subclass,” another provision permitted the court to “make
changes to the terms of this protocol as necessary for the
benefit of the Settlement Class Members,” and a third provision
allowed the settlement administrator to petition the court “for
reallocation of available funds among the [subclasses] on a
showing of good cause if . . . he determines that considerations
of equity and fairness require reallocation”) (alterations in
original). The Fifth Circuit emphasized a district court’s role
in administering a class-action settlement:
Because a district court’s authority to administer a
class-action settlement derives from Rule 23, the
court cannot modify the bargained-for terms of the
settlement agreement. That is, while the settlement
agreement must gain the approval of the district
judge, once approved its terms must be followed by the
court and the parties alike. The district judge must
abide the provisions of the settlement agreement,
reading it to effectuate the goals of the litigation.
This is not a free exercise of cy pres, but a
determination of how the settlement agreement’s many
provisions define the class’s property interests and
allocate those interests once created. The terms of
41
the settlement agreement are always to be given
controlling effect.
Id. at 475–76; see also id. at 476 (“This is not a case where
the settlement agreement itself provides that residual funds
shall be distributed via cy pres.”).
4. The Eighth Circuit’s Decision in In Re Bank America
Corporation Securities Litigation Is Unpersuasive.
Only one decision cited by the Keepseagles addressed the
situation in which a settlement agreement mandated the use of cy
pres. That decision found it appropriate to overrule an
agreement that had been approved by a district court and
affirmed as fair by the Eighth Circuit, all without objection to
the cy pres provision.
In re BankAmerica Corp. Securities Litigation (“BankAmerica
II”), 775 F.3d 1060 (8th Cir. 2015) involved a settlement of a
securities-fraud class action, resulting in a $333,200,000 fund
for a subclass of shareholders of NationsBank. See id. at 1062.
A class representative objected that the class should receive
more money because of the strength of its claims. See id. That
objection was overruled, and the objector appealed. See id. at
1069. “At that time[, the objector] did not raise any objection
to . . . the provision that settlement funds remaining after one
or two distributions ‘may be contributed as a donation to one or
more non-sectarian, not-for-profit 501(c)(3) organizations as
determined by the Court in its sole discretion.’” Id. (emphasis
42
in original). The Eighth Circuit affirmed the district court’s
approval of the settlement agreement, which included that term.
See In re BankAmerica Secs. Litig. (“BankAmerica I”), 350 F.3d
747, 752 (8th Cir. 2003). A round of distributions occurred in
2004 and another took place in 2009, after which approximately
$2,400,000 remained. See BankAmerica II, 775 F.3d at 1062. In
2012, class counsel moved, over objection of the same objector
who brought the appeal in BankAmerica I, to distribute the
remainder as cy pres, and the district court agreed and ordered
the funds distributed to Legal Services of Eastern Missouri. See
id. The objector appealed from that determination and the Eighth
Circuit reversed. In so doing, the Eighth Circuit discussed
extensively the ALI Principles and the Court’s belief that cy
pres was inappropriate in the case. See id. at 1063–66.
The Eighth Circuit addressed only briefly the fact that the
language of the final settlement agreement, to which the very
same objector had failed to object originally and failed to
mention in his prior appeal, “stat[ed] that the balance in the
settlement fund ‘shall be contributed’ to non-profit
organizations ‘determined by the court in its sole discretion.”
Id. at 1066. The Eighth Circuit’s reasoning for ignoring the
settlement agreement was as follows:
In the first place, the agreement and order stating
that a cy pres distribution would be made in the
district court’s ‘sole discretion’ was contrary to our
43
controlling decisions in Airline Tickets I and Airline
Tickets II; that provision was void ab initio. See In
re Lupron, 677 F.3d at 38 (“Distribution of funds at
the discretion of the court is not a traditional
Article III function.”). More importantly, we agree
with the Ninth Circuit that “[a] proposed cy pres
distribution must meet [our standards governing cy
pres awards] regardless of whether the award was
fashioned by the settling parties or the trial court.”
Nachshin, 663 F.3d at 1040. In arguing to the contrary
[Class Counsel] misstates the holding of Klier, which
overturned the district court’s cy pres award because
‘a cy pres distribution to a third party of unclaimed
settlement funds is permissible only when it is not
feasible to make further distributions to class
members.” 658 F.3d at 475.
Id. The Court is not persuaded by this reasoning.
First, the Court is not persuaded that it has any authority to
declare void portions of an agreement that was negotiated by the
parties, approved by the Court pursuant to Federal Rule of Civil
Procedure 23, and finalized on appeal (either by affirmance of
the Court of Appeals or by the lack of any timely appeal). The
Eighth Circuit’s finding that the cy pres provision with which
it was presented was nonetheless “void ab initio” is difficult
to square with this reality, and the Eighth Circuit cited no
authority for the proposition that courts may line-item-veto
final settlements in this manner.6 To the extent that the Eighth
6
Even if this reasoning were persuasive, the D.C. Circuit does
not appear to have any precedent that would have rendered the cy
pres provisions of the Keepseagle settlement void ab initio.
Furthermore, the Keepseagle settlement does not devote the cy
pres distribution to the Court’s discretion; rather, it mandates
that the funds be transmitted to a cy pres fund by the claims
administrator, makes Class Counsel responsible for soliciting
44
Circuit relied upon In re Lupron for such authority, this Court
is unconvinced. The general statement in Lupron cited by the
Eighth Circuit—that “[d]istribution of funds at the discretion
of the court is not a traditional Article III function”—does not
establish the authority for a court to find a provision of a
settlement agreement void after that very court had approved the
agreement. Lupron, moreover, affirmed the application of cy pres
consistent with the ALI Principles when dealing with a
settlement that gave the district court discretion in discerning
how excess funds should be distributed. 677 F.3d at 30–36.
Second, the Eighth Circuit’s reliance on a decision of the
Ninth Circuit for the proposition that cy pres distributions
must comply with legal standards governing whether cy pres is
appropriate “regardless of whether the award was fashioned by
the settling parties or the trial court,” Nachshin, 663 F.3d at
1040, is unhelpful because that decision was a direct review of
a district court’s approval of a settlement agreement, so it was
the Ninth Circuit’s job to confirm whether the entire
settlement, including the cy pres provision, was fair,
reasonable, and adequate in the face of objections. At that
stage, a court obviously must apply the doctrine governing the
appropriate disposition of unclaimed funds. Nachshin does not
applications and making recommendations, and places the Court in
a minor administrative role of approving those recommendations.
45
address a court’s role after final approval and affirmance on
appeal (or when no appeal is filed).
Third, the final sentence of the Eighth Circuit’s reasoning on
this point criticizes class counsel in that case for
“misstat[ing] the holding of Klier, which overturned the
district court’s cy pres award because ‘a cy pres distribution
to a third party of unclaimed settlement funds is permissible
only when it is not feasible to make further distributions to
class members.” 658 F.3d at 475. Klier, however, is a paean to
the sanctity of class-action settlement agreements. Indeed, the
Fifth Circuit in that case found that the applicable settlement
agreement not only failed to provide affirmatively for a cy pres
distribution, but actually contained provisions indicating that
pro rata distribution to another subclass was appropriate. See
id. at 476–77. The Fifth Circuit specifically distinguished the
circumstance presented in BankAmerica II and in this case: “This
is not a case where the settlement agreement itself provides
that residual funds shall be distributed via cy pres.” Id. at
476. And the Fifth Circuit could not have been clearer on the
importance of following the settlement agreement’s terms:
Because a district court’s authority to administer a
class-action settlement derives from Rule 23, the
court cannot modify the bargained-for terms of the
settlement agreement. That is, while the settlement
agreement must gain the approval of the district
judge, once approved its terms must be followed by the
court and the parties alike. The district judge must
46
abide the provisions of the settlement agreement,
reading it to effectuate the goals of the litigation.
. . . The terms of the settlement agreement are always
to be given controlling effect.
Id. at 475–76.
In this Court’s view, the Eighth Circuit’s reasoning for
overruling a final settlement is unpersuasive. Courts are
appropriately bound by the language of final settlement
agreements and may deviate from them only when authorized by
law. In the context of class actions, settlement agreements
reflect the considered judgment of the class, its counsel, the
defendant, and the Court, after following extensive procedural
protections. The truly terrible facts of the case before this
Court arguably cry out for a resolution that does not result in
$380,000,000 being distributed as cy pres where class members
are readily identifiable and may either prove their previously
unsuccessful claims or prove that they suffered damages in
excess of what they already received. Notwithstanding this
reality, the Court must resist the temptation to allow these bad
facts to make bad law. Following the Eighth Circuit’s holding
would make bad law by undermining the finality of a judgment
without a clear legal basis for doing so.
* * *
For these reasons, the Court is bound to the final judgment
proposed by the parties and approved by the Court after full
47
compliance with Rule 23 procedures—an approval to which no class
member objected in relevant part or appealed from at all.
Whether the cy pres doctrine as it exists in 2015 may bar a
finding that a cy pres provision like the one approved by this
Court in 2011 is fair, reasonable, and adequate is not an issue
before the Court.7
7
This case should serve as a cautionary tale to litigants in
complex class actions. It should be the rare case where a major
settlement agreement is completely finalized, only to find that
a massive amount of unclaimed funds are leftover due to starkly
lower-than-expected turnout by members of the class. Parties
must do a much better job of predicting turnout and facilitating
class-member participation in settlements. Such settlements are
presented to district courts in a non-adversarial posture unless
there are vocal objectors, making district courts especially
ill-equipped to assess the reasonableness of a settlement’s
predictions for class-member participation.
That does not leave district courts at the mercy of the accuracy
of the parties’ predictions, however. To reduce the chances of
the circumstances of this case repeating themselves, the Court
suggests one of two paths. One option is “to withhold final
approval of a settlement until the actual distribution of funds
can be estimated with reasonable accuracy.” In re Baby Prods.,
708 F.3d at 174; see also In re Living Social, 298 F.R.D. at 14
(giving final approval to a settlement that included a cy pres
remedy only after the claims process had completed, at which
point the court knew that $1,900,000 would be distributed to
class members while $2,500,000 would be distributed as cy pres).
This could allow the parties to modify certain portions of the
preliminary settlement to reflect especially high or low
turnout. Another option is for parties to include in the
settlement terms that would be triggered in the event of a
larger-than-expected excess to ensure that, similar to the
result in Klier, class members who did participate are able to
benefit, so long as that benefit would not exceed their actual
damages. See In re Baby Prods., 708 F.3d at 174 (“[A] court may
urge the parties to implement a settlement structure that
attempts to maintain an appropriate balance between payments to
the class and cy pres awards.”). These approaches would have
48
B. Federal Rule of Civil Procedure 60(b) Does Not Provide a
Method for Modifying the Agreement.
The parties each seek modification of the Agreement pursuant
to Federal Rule of Civil Procedure 60(b). Class Counsel relies
upon Rule 60(b)(5), while the Keepseagles invoke Rules 60(b)(5)
and 60(b)(6). Under Rule 60(b)(5), both parties argue that the
far-larger-than-expected amount of excess funds is a changed
circumstance that renders prospective application of the
Agreement inequitable. Under Rule 60(b)(6), the Keepseagles
argue that the issue is so important that it meets the
extraordinary-circumstances test necessary for application of
that Rule. Neither party has a convincing argument.
“‘[T]he decision to grant or deny a Rule 60(b) motion is
committed to the discretion of the District Court.’” Green v.
AFL-CIO, 287 F.R.D. 107, 109 (D.D.C. 2012) (quoting Kareem v.
FDIC, 811 F. Supp. 2d 279, 282 (D.D.C. 2011)) (alteration in
original). “‘The movant has the burden to establish that [he is]
entitled to relief under Rule 60(b).’” Cohen v. Bd. of Trustees
of Univ. of D.C., No. 14-754, 2014 WL 6890705, at *2 (D.D.C.
Dec. 9, 2014) (quoting F.S. v. District of Columbia, No. 10–
1203, 2014 WL 4923025, at *2 (D.D.C. Oct. 2, 2014)) (alteration
in original). Ultimately, “under Rule 60(b) the trial judge must
prevented the result in this case. Unfortunately, because this
issue arose after final judgment, the ability of the parties and
the Court to rectify the problem is much more limited.
49
strike a ‘delicate balance between the sanctity of final
judgments and the incessant command of a court’s conscience that
justice be done in light of all the facts.’” Twelve John Does v.
District of Columbia, 841 F.2d 1133, 1138 (D.C. Cir. 1988)
(alteration omitted; emphasis in original).
1. Federal Rule of Civil Procedure 60(b)(5) Does Not
Apply Because the Cy Pres Provision Is Not Prospective
and Circumstances Have Not Changed in a Manner
Warranting Relief.
Federal Rule of Civil Procedure 60(b)(5) provides: “On motion
and just terms, the court may relieve a party or its legal
representative from a final judgment, order, or proceeding
[when] the judgment has been satisfied, released or discharged;
it is based on an earlier judgment that has been reversed or
vacated; or applying it prospectively is no longer equitable.”
The parties rely only on the final clause—when prospective
application of the judgment is inequitable due to changed
circumstances. Two elements are inherent in this clause: (1)
that the judgment has prospective application; and (2) that
circumstances have changed to make that application inequitable.
Neither element is satisfied here.
a. The Cy Pres Provision Does Not Have Prospective
Effect.
“Rule 60(b)(5) allows a court to amend any judgment that has
prospective effect.” Kapar v. Islamic Republic of Iran, No. 2-
cv-78, 2015 WL 2452754, at *3 (D.D.C. May 22, 2015) (quotation
50
marks omitted). “Although the principal significance of this
portion of the rule is with regard to injunctions, it is not
confined to that form of relief, nor even to relief that
historically would have been granted in courts of equity.” 11
Charles Alan Wright & Arthur R. Miller, Federal Practice and
Procedure § 2863 (3d ed. 2015)). A judgment may also be
prospective only in part, in which case Rule 60(b)(5) could
permit modification only of the portion of the judgment that has
prospective effect. Cf. Pennsylvania v. Wheeling & Belmont
Bridge Co., 59 U.S. 421, 431 (1855) (in a decision that forms
the foundation for the changed-circumstances doctrine, the
Supreme Court found that a prior judgment ordering the removal
of a particular bridge could be reconsidered insofar as the
prior judgment “direct[ed] the abatement of the obstruction,”
but portions of the judgment regarding payment of costs were not
subject to reconsideration).
The D.C. Circuit has described the prospective-effect
requirement as follows:
Virtually every court order causes at least some
reverberations into the future, and has, in that
literal sense, some prospective effect; even a money
judgment has continuing consequences, most obviously
until it is satisfied, and thereafter as well inasmuch
as everyone is constrained by his or her net worth.
That a court’s action has continuing consequences,
however, does not necessarily mean that it has
‘prospective application’ for the purposes of Rule
60(b)(5).
51
Twelve John Does, 841 F.2d at 1138. Reviewing the Supreme
Court’s decision in Wheeling & Belmont, as well as a subsequent
decision, United States v. Swift & Co., 286 U.S. 106 (1932), the
D.C. Circuit concluded that “the standard we apply in
determining whether an order or judgment has prospective
application within the meaning of Rule 60(b)(5) is whether it is
‘executory’ or involves ‘the supervision of changing conduct or
conditions.’” Twelve John Does, 841 F.2d at 1139; see Swift, 286
U.S. at 114 (“A continuing decree of injunction directed to
events to come is subject always to adaptation as events may
shape the need,” but will be found to be continuing only if it
“involve[s] the supervision of changing conduct or conditions
and [is] thus provisional and tentative”). Accordingly, the D.C.
Circuit concluded that an order dismissing the Attorney General
as a party to a prison-conditions lawsuit involving District of
Columbia inmates “did not have the requisite prospective
application”: “The order did not compel him to perform, or order
him not to perform, any future act; it did not require the court
to supervise any continuing interaction between him and the
other parties to the case; rather, it definitively discharged
the Attorney General from any further involvement in the case.”
Twelve John Does, 841 F.2d at 1139. By contrast, a prototypical
example of a consent decree that is prospective under Rule
60(b)(5) is one that resolved a church’s challenge to the denial
52
of building permits by allowing construction with limitations:
“[I]t imposes ongoing restrictions on Northridge’s ability to
build or undertake various activities, all of which are
supervised by the district court.” Northridge Church v. Charter
Twp. of Plymouth, 647 F.3d 606, 613 (6th Cir. 2011).
The application of these principles to the case at bar is
somewhat novel. “The consensus among Courts of Appeal, including
the D.C. Circuit, is that a claim for money damages is not
‘prospective’ for the purposes of Rule 60(b)(5).” Kapar, 2015 WL
2452754, at *3; see also, e.g. Twelve John Does, 841 F.2d at
1138; Stokors S.A. v. Morrison, 147 F.3d 759, 762 (8th Cir.
1998); Marshall v. Bd. of Educ., 575 F.2d 417, 425 (3d Cir.
1978); Ryan v. U.S. Lines Co., 303 F.2d 430, 434 (2d Cir. 1962).
The cy pres provision of the Agreement addresses the final step
in the payment of damages. Thus, in one sense, it is an
execution of the award of money damages, not a prospective
judgment.
The cy pres provision arguably has some characteristics of a
prospective order, however, insofar as the distribution process
requires Class Counsel to solicit and recommend cy pres
recipients and creates an administrative task for the Court to
approve the recommendations. In that regard, Class Counsel
pointed the Court to the D.C. Circuit’s decision in Pigford, 292
F.3d 918, in which the D.C. Circuit applied Rule 60(b)(5) to a
53
damages-distribution process very similar to the Non-Judicial
Claims Process in this case. The D.C. Circuit did not discuss
the prospective-effect requirement in applying Rule 60(b)(5) in
Pigford, but it was dealing there with a request to reconsider
deadlines that very clearly had prospective effect. If those
deadlines were not modified, they would have barred a number of
class members from participating in the claims process under the
settlement, even though their failure to meet deadlines was due
to their counsel’s apparent malpractice. See id. at 925–27.
Ultimately, the cy pres provision in this case lacks this type
of binding effect on a party’s future behavior that makes a
judgment prospective within the meaning of Rule 60(b)(5). It
does not, in the language of the D.C Circuit, “compel [anyone]
to perform, or order [anyone] not to perform, any future act; it
d[oes] not require the court to supervise any continuing
interaction between [anyone] and the other parties to the case.”
Twelve John Does, 841 F.2d at 1139. Although Class Counsel has a
limited responsibility to propose recipients under the
Agreement, that is not the same thing as a party to the case
being subject to limitations on future conduct, and courts have
emphasized the need for such limitations if a judgment is to be
considered prospective. See, e.g., Comfort v. Lynn Sch. Comm.,
560 F.3d 22, 28 (1st Cir. 2009) (“[W]e have limited the
provision’s application to injunctions and consent decrees that
54
involve long-term supervision of changing conduct or
conditions.”) (quotation marks omitted). The cy pres portions of
the Agreement are thus akin to unpaid damages: The mere fact
that they have yet to be paid out, leaving some administrative
responsibilities to be executed, does not render them
prospective. See Kapar, 2015 WL 2452754, at *3; Marshall, 575
F.2d at 425 n.7 (“A ‘prospective’ injunction envisions a
restraint of future conduct, not an order to remedy past wrongs
when the compensation payment is withheld from the beneficiaries
until some subsequent date.”).8 The Court therefore finds that
the cy pres provision of the Agreement is not prospective within
the meaning of Rule 60(b)(5), making that Rule inapplicable.
b. The Parties Have Not Demonstrated Changed
Circumstances Within the Meaning of Rule 60(b)(5).
Even if the cy pres provision was prospective, it is not clear
that the larger-than-expected excess is the type of factual
8
It is telling that Class Counsel and the government have argued
repeatedly that the modification proposed by Class Counsel would
have no binding effect on the legal rights of any class member.
That argument, which the Court accepted, served to support
findings that class members lacked standing to intervene,
Keepseagle I, 2014 WL 5796751, at *11–14; that Rules 23(a)(4)
and 23(c)(1)(C) did not apply to police the adequacy of a class
representative at this stage of proceedings, Keepseagle II, 2015
WL 1851093, at *3–5; and that Rule 23(e) did not require the
provision of renewed notice and the holding of another fairness
hearing, Keepseagle III, 2015 WL 1969814, at *4–7. That the
proposed modification would have no binding effect on the legal
rights of class members in the future is consistent with the
Court’s finding that the cy pres provision it sought to modify
has no prospective effect.
55
change that warrants relief under Rule 60(b)(5). Rule 60(b)(5)
requires truly changed circumstances, not a difference in degree
of what was expected that renders a judgment less efficient, and
certainly not mere disagreement with the judgment: “We are
asking ourselves whether anything has happened that will justify
us now in changing a decree. The injunction, whether right or
wrong, is not subject to impeachment in its application to the
conditions that existed at its making. We are not at liberty to
reverse under the guise of readjusting.” Swift, 286 U.S. at 119.
The inquiry is twofold: “[A] party seeking modification . . .
bears the burden of establishing that a significant change in
circumstances warrants revision. . . . If the moving party meets
this standard, the court should consider whether the proposed
modification is suitably tailored to the changed circumstance.”
Rufo, 502 U.S. at 383. The initial factor may be met “by showing
either a significant change . . . in factual conditions or in
law.” Id. at 384.
A change in factual conditions—the only change pressed here—
may support modification when it “make[s] compliance with the
decree substantially more onerous,” when “a decree proves to be
unworkable because of unforeseen obstacles,” or “when
enforcement of the decree without modification would be
detrimental to the public interest.” Id. For example, where a
state agency was under a consent decree regarding housing
56
facilities, modification of that decree was warranted where it
was not possible to find appropriate housing facilities for
certain patients. See id. (citing N.Y. State Ass’n for Retarded
Children v. Carey, 706 F.2d 956, 969 (2d Cir. 1983)). Another
example cited by the Supreme Court was where modification of a
prison-conditions decree was necessary to avoid the need to
release individuals accused of violent felonies. See id. at 385
(citing Duran v. Elrod, 760 F.2d 756, 759–61 (7th Cir. 1985)).
Unlike in these decisions, nothing about the need to distribute
significantly more money via a cy pres provision is unworkable
or against the public interest. To be sure, it may be difficult
to distribute under the existing cy pres provision and it may
result in an inefficient distribution in view of the need to
distribute the funds all at once and in equal shares, but the
essence of the provision would still be served: The leftover
funds would go to the types of organizations the parties
initially contemplated when they entered the Agreement.
The D.C. Circuit’s decision in Pigford, 292 F.3d 918
illustrates this distinction. There, the Court addressed the
application of Rule 60(b)(5) to a substantially similar
settlement of the claims of African-American farmers. Class
counsel in that case had failed adequately to represent the many
class members whom it was obliged to assist in proving their
claims under that settlement’s claims process. Id. at 925. The
57
failure to assist the class through that process was “an
‘unforeseen obstacle’ that makes the decree ‘unworkable’”
because it resulted in many class members missing the deadline
for filing claims. Id. at 927. In Pigford, the very purpose of
the settlement—distributing damages to class members—was totally
undermined by the lawyers’ actions. The larger-than-expected
excess in this case does not undermine the purpose of the
settlement in the same way, even if a modification would make
the settlement more efficient. Accordingly, circumstances have
not changed in a manner that would trigger the application of
Rule 60(b)(5).
c. If The Parties Had Demonstrated Changed
Circumstances, the Keepseagles’s Proposal Is Not
Tailored to that Change.
It is not enough simply to show that the judgment has
prospective effect and that circumstances have changed. “Once a
moving party has met its burden of establishing either a change
in fact or in law warranting modification of a consent decree,
the district court should determine whether the proposed
modification is suitably tailored to the changed circumstance.”
Rufo, 502 U.S. at 391. A change in circumstances is not a free
pass to rewrite a consent decree; rather “the focus should be on
whether the proposed modification is tailored to resolve the
problems created by the change in circumstances.” Id. The D.C.
Circuit has applied this rule stringently, rejecting an attempt
58
in Pigford to correct Class Counsel’s failure to represent class
members through the claims process by “vesting arbitrators with
generic authority to revise deadlines ‘so long as justice
requires.’” Pigford, 292 F.3d at 927. “Whatever tailoring method
the district court ultimately adopts,” the Circuit held, “must
preserve the essence of the parties’ bargain.” Id.
Under this standard, even if the cy pres provision were
prospective and the parties had demonstrated changed
circumstances under Rule 60(b)(5), the Keepseagles’s proposals
would be inappropriate subjects of a Rule 60(b)(5) motion. The
changed circumstances cited by the parties are the fact that far
more money is leftover than was expected. This would render
application of the judgment inequitable, if at all, by virtue of
the difficulty it causes under the existing cy pres distribution
plan, which requires an immediate distribution in equal shares
to a limited set of entities. Neither of the Keepseagles’s
proposals—an immediate pro rata distribution to successful
claimants or a second claims process followed by a pro rata
distribution—are tailored to those changed circumstances.
Although the Court is very sympathetic to the perspective of
class members that the larger-than-expected excess provides an
opportunity to distribute more compensation to class members,
the goal of Rule 60(b)(5) is to “preserve the essence of the
parties’ bargain,” while accommodating the changed circumstance.
59
Pigford, 292 F.3d at 927. If, as the D.C. Circuit held, it was
not properly tailored in Pigford for a court to respond to class
counsel’s representational failings that caused missed deadlines
by permitting the arbitrators to extend the deadlines as justice
required, id., it is surely not tailored to respond to a larger-
than-expected excess by deleting the entire cy pres provision
that the parties included in the Agreement, did not object to,
and did not appeal from, and replace it with a term directing a
very different disposition of the leftover funds. Whether due to
concern with ensuring that excess funds would be used to provide
some indirect benefit to those who did not participate in the
claims process, or the government’s concern that a distribution
process that could result in Track A claims exceeding $50,000 in
the event of a surplus might lead to pressure to provide
similarly higher compensation to participants in the settlements
involving other farmers, the parties specifically agreed upon a
cy pres remedy for the disposition of excess funds. Whatever the
reasons for the provision initially, the Court would not be
empowered to undo the bargain entirely, even if Rule 60(b)(5)
were otherwise applicable.
2. The Keepseagles Have Not Demonstrated the
Extraordinary Circumstances Necessary to Invoke Rule
60(b)(6).
Federal Rule of Civil Procedure 60(b)(6) provides: “On motion
and just terms, the court may relieve a party or its legal
60
representative from a final judgment, order, or proceeding for .
. . any other reason that justifies relief.” To avoid allowing
this exception to swallow the rule, “[r]elief under Rule
60(b)(6) . . . require[s] a showing of ‘extraordinary
circumstances.’” Kapar, 2015 WL 2452754, at *3 (quoting Kramer
v. Gates, 481 F.3d 788, 791 (D.C. Cir. 2007)); see also Twelve
John Does, 841 F.2d at 1140 (Rule 60(b)(6) “should be only
sparingly used”) (quotation marks omitted). Such extraordinary
circumstances have been found due to “an adversary’s failure to
comply with a settlement agreement that was incorporated into a
court’s order, fraud by the ‘party’s own counsel, by a
codefendant, or by a third-party witness[,]’ or ‘when the losing
party fails to receive notice of the entry of judgment in time
to file an appeal.’” More v. Lew, 34 F. Supp. 3d 23, 28 (D.D.C.
2014) (quoting 11 Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 2864 (3d ed. 2015))
(alterations in original); see also, e.g., Austin v. Donahoe,
No. 5-1824, 2014 WL 6779132, at *3 (D.D.C. Dec. 2, 2014)
(finding extraordinary circumstances where a party “asserts that
[her counsel] not only was negligent in failing to oppose the
[defendant’s] motion, resulting in the dismissal of her case,
but that he consistently misled her into believing that her case
was progressing when, in fact, it had long since been removed
from the Court’s docket”). Finally, “[c]laims under Rule
61
60(b)(6) must not be ‘premised on one of the grounds for relief
enumerated in clauses (b)(1) through (b)(5).’” Green, 287 F.R.D.
at 109 (quoting Liljeberg v. Health Servs. Acquisition Corp.,
486 U.S. 847, 863 (1988)).
The Keepseagles appear to rely on the same argument they made
under Rule 60(b)(5)—that the larger-than-expected excess is
extraordinary. This is simply insufficient for relief under Rule
60(b)(6), which cannot be premised on the bases enumerated in
other portions of the Rule. See Green, 287 F.R.D. at 109. Even
if the larger-than-expected excess were a cognizable reason for
modification under Rule 60(b)(6), all parties to this case chose
the terms of the Agreement, which included the cy pres terms.
That they no longer like those terms because of factual
developments does not constitute an extraordinary circumstance,
and Rule 60(b)(6) “may not be employed simply to rescue a
litigant from strategic choices that later turn out to be
improvident.” Salazar ex rel. Salazar v. District of Columbia,
633 F.3d 1110, 1120 (D.C. Cir. 2011) (quotation marks omitted).
There has been no suggestion of the kinds of extraordinary
representational failings or complete lack of notice that has
animated prior grants of relief under Rule 60(b)(6).
Accordingly, Rule 60(b)(6) does not provide an avenue for
modification.
62
C. The Settlement Agreement Permits Its Own Modification
Only with the Consent of “the Parties,” Not Just Class
Counsel and the Defendant.
The final legal avenue that was proposed lies in the Agreement
itself. The Agreement’s modification provision states: “This
Settlement Agreement may be modified only with the written
agreement of the Parties and with the approval of the District
Court, upon such notice to the Class, if any, as the District
Court may require.” Agreement ¶ XIV (p. 49). The government does
not oppose the use of this provision for Class Counsel’s
proposed modification, so Class Counsel asks the Court to rely
on it to grant its motion.
The Court briefly notes that, as all parties appear to agree,
the Court retains jurisdiction to enforce this provision.
“Federal courts are courts of limited jurisdiction” and “[i]t is
to be presumed that a cause lies outside this limited
jurisdiction.” Kokkonen, 511 U.S. at 377. As the Court has
analyzed previously, the Court’s ancillary jurisdiction over the
Agreement is limited. See Order Denying LaBatte Mot., ECF No.
692 at 8 (citing Kokkonen, 511 U.S. at 379–80). “[D]istrict
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, 292 F.3d at 924. Although
the Agreement’s retention-of-jurisdiction provision did not
specifically mention the modification provision, Agreement ¶¶
63
V.A–B (pp. 40–42), the modification provision can only be used
with Court involvement and approval, id. ¶ XIV (p. 49), so any
interpretation of the Agreement as withholding jurisdiction to
enforce the modification provision would render that provision a
complete nullity. Unlike the requests for review of
determinations made during the Non-Judicial Claims Process,
moreover, exercising jurisdiction over requests for modification
would not contradict another of the Agreement’s terms. See Order
Denying LaBatte Mot., ECF No. 692 at 9–12. Therefore, although
the Court’s jurisdiction at this stage of proceedings is
limited, that jurisdiction extends to approving a modification
that is properly reached.
Class Counsel’s “unopposed” motion does not meet the
substantive requirements for obtaining modification under the
Agreement, however. Although the modification provision requires
consent of “the Parties,” the three represented groups—the
government, Class Counsel, and the Keepseagles—all seem to have
operated under the assumption that the provision requires
consent of Class Counsel and the government alone. The
Agreement, however, defines “the Parties” as “the Plaintiffs and
the Secretary,” Agreement ¶ II.DD (p. 10), and further defines
“the Plaintiffs” as “the individual plaintiffs named in
Keepseagle v. Vilsack, No. 1:99CV03119 (D.D.C.), the members of
the Class, and the Class Representatives.” Id. ¶ II.EE (p. 10).
64
The plain language of the Agreement, therefore, does not support
a reading that would allow Class Counsel to enter unilaterally
into an “unopposed” agreement to modify. Here, the Court is
presented with stark disagreement, including a class
representative and named plaintiff who has obtained separate
counsel and specifically opposed the proposed modification.
The Court raised this issue during the June 29, 2015 hearing
and gave the parties time to review the Agreement before
responding. The parties’ responses were unconvincing. The
Agreement plainly does not say that a modification may be
approved as “unopposed” when a class representative—who happens
to be the named plaintiff who gives this lawsuit its name—has
expressed written opposition through separate counsel.9 Class
Counsel and the government ultimately rested on the position
that Class Counsel serves as a representative of the entire
class and may therefore enter into an Agreement on behalf of
“the Plaintiffs.” This certainly squares with the general nature
of representative litigation, and the usual case would involve a
modification proposal by Class Counsel to which no class member
raised any objection. In that circumstance, the Court could—as
it did in 2012—approve the modification. But the posture of this
9
Indeed, Class Counsel’s response to certain of the Court’s
questions made clear the vital status of, at a minimum, the
class representatives, as “parties” to this case. See Transcript
of June 29, 2015 Hearing, ECF No. 806 at 41:16–47:17.
65
case demonstrates that Class Counsel’s view does not represent
the view of even all of the class representatives. The parties
in drafting this Agreement chose to require the consent of “the
Parties,” defined to include more than just Class Counsel and
the government. This choice must be given effect, much as Class
Counsel and the government have argued strenuously that the
Court must give effect to the Agreement’s cy pres provision.
As the Court’s discussion with Class Counsel regarding another
provision of the Agreement illustrated, even the
representational nature of class-action litigation counsels in
favor of recognizing that the class representatives must also be
on board with a proposal:
MR. SELLERS: Okay. In the middle of that paragraph it
says, “Class counsel and class representatives, as
defined earlier, will be appointed to represent the
class in its pursuit of monetary relief under Rule
23(b)(3),” which is consistent with the introduction I
mentioned, that is, we and the class representatives
have been appointed to represent the class, whether
the class is individually or separately or
collectively in connection with this agreement and the
pursuit of monetary relief.
THE COURT: All right. Does that mean that all class
representatives must agree?
MR. SELLERS: Do all class representatives, as opposed
to the individuals?
THE COURT: Right.
MR. SELLERS: Um...
THE COURT: Ms. Keepseagle was a class representative,
correct?
66
MR. SELLERS: Right.
* * *
THE COURT: So does this mean, then -- putting aside
parties and plaintiffs, putting aside that plain
language -- does this plain language mean that all
class representatives must, indeed, approve a request
for modification?
MR. SELLERS: I don’t think so, because the –
THE COURT: What number must approve it, then, if not
all, and where does it say so?
MR. SELLERS: I don’t think it contemplates a majority
or minority. It treats them as a group.
THE COURT: Which begs the question, then: Do all
members of that group need to approve?
MR. SELLERS: Right.
THE COURT: And the answer is?
MR. SELLERS: The answer is: I don’t think the
agreement provides that they all have to agree.
Transcript of June 29, 2015 Hearing, ECF No. 806 at 66:10–67:19
(discussing Agreement, ECF No. 621-2 ¶ VI.A.7 (p. 43).10
The Court agrees that the modification provision would be
absurd were it to recognize the consent of “the Parties” only
10
It is telling that Class Counsel could not clearly answer the
following question about how the Court could interpret the
modification provision: “So the Court would have to say
something like this: Notwithstanding the plain language of the
agreement that identifies plaintiffs as the individual
plaintiffs named in Keepseagle v. Vilsack, the members of the
class and class representatives, notwithstanding that, comma,
the true plaintiffs are -- now how would you finish that
sentence?” Transcript of June 29, 2015 Hearing, ECF No. 806 at
54:21–55:1.
67
upon written consent from every single member of the Class. The
Agreement, as Class Counsel argued, is representational in
nature. But the representational nature of the case does not end
with Class Counsel. This Court appointed class representatives
for a reason, and the breadth of the modification provision
counsels in favor of requiring their consent, as do the other
portions of the Agreement cited by Class Counsel during the June
29, 2015 hearing. Were the Court presented with an agreement to
which all class representatives agreed, Class Counsel’s
assertions regarding the representational nature of this
litigation would be convincing. Because the Court is not
currently presented with such an agreement, it cannot grant
relief under the Agreement’s modification provision at this
time.11
III. Conclusion
For the foregoing reasons, the Court DENIES the pending
motions for modification of the Agreement. The Agreement speaks
11
The Keepseagles indicated in one of their pleadings that they
may ultimately prefer Class Counsel’s proposal to the existing
Agreement, if the choice comes down to the two options alone.
See Keepseagle Opp., ECF No. 785 at 15–20. This conditional
statement is not, in the Court’s view, sufficient to constitute
consent of “the Parties.” During the June 29, 2015 hearing,
moreover, one of the Keepseagles’s attorneys expressed openness
to renewed negotiations with the government and Class Counsel,
and also seemed to hint at potential appellate proceedings. In
the event the case returns to this Court with this Opinion’s
legal conclusions intact, the Parties will be permitted time to
present whatever agreement they deem appropriate.
68
directly to this issue and existing doctrine regarding cy pres
cannot overrule a final agreement that was neither objected to
nor appealed from. Rule 60(b)(5) cannot be used to alter the
Agreement because the cy pres provision does not have
prospective effect and circumstances have not changed such that
the provision is inequitable. Rule 60(b)(6) does not apply
because the Keepseagles have not cited any “extraordinary
circumstance” that could trigger its application. Finally, on
the current record, the Court cannot grant Class Counsel’s
motion under the Agreement itself because the Agreement requires
consent of more than just Class Counsel and the government.
These legal rulings are not the end of the matter, however.
Over the past year, the Court has issued four published Opinions
that addressed a number of legal issues. Some of these
conclusions will likely be reviewed by appellate courts. The
simplest resolution, however, is the same path that took this
case from one of the hardest-fought cases on this Court’s docket
to one of the more monumental civil-rights settlements in recent
memory. The Parties have the ability to reach a compromise that
the Court can approve and which would give this case finality.
In considering this option, the Executive Branch would do well
to consider the remarks of President Obama, given in June 2014
while on the Standing Rock Sioux Reservation (the tribe to which
Marilyn Keepseagle and many other class members belong):
69
I know that throughout history, the United States
often didn’t give the nation-to-nation relationship
the respect that it deserved. So I promised when I ran
to be a President who’d change that -- a President who
honors our sacred trust, and who respects your
sovereignty, and upholds treaty obligations, and who
works with you in a spirit of true partnership, in
mutual respect, to give our children the future that
they deserve.
* * *
We’ve responded and resolved longstanding disputes.
George Keepseagle is here today. (Applause.) A few
years ago, my administration reached a historic
settlement with George and other American Indian
farmers and ranchers.
* * *
There’s no denying that for some Americans the deck
has been stacked against them, sometimes for
generations. And that’s been the case for many Native
Americans. But if we’re working together, we can make
things better. We’ve got a long way to go. But if we
do our part, I believe that we can turn the corner. We
can break old cycles.
Remarks by the President at the Cannon Ball Flag Day
Celebration, The White House (June 13, 2014), https://www.
whitehouse.gov/photos-and-video/video/2014/06/13/president-
obama-speaks-cannon-ball-flag-day-celebration#transcript.
* * *
An appropriate Order accompanies this Memorandum Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan
United States District Judge
July 24, 2015
70