HIGHLIGHTS:

  • After years of post-settlement wrangling in a class action lawsuit brought by Native American farmers and ranchers for damages arising from what they claimed was systemic discrimination against them by the U.S. Department of Agriculture (USDA), the parties overcame additional differences last month and reached agreement on a modification to their initial settlement.
  • Most, if not all, of their disagreements appeared to be resolved in December 2015 after lengthy negotiation between various class counsel and the USDA.
  • A hearing will be held on Feb. 4, 2016, to allow individual class members to comment on the recently proposed revision.

After years of post-settlement wrangling in a class action lawsuit brought by Native American farmers and ranchers for damages arising from what they claimed was systemic discrimination against them by the U.S. Department of Agriculture (USDA), the parties reached agreement last month on a modification to their initial settlement.

Settlement Background and "Cy Pres" Funds

The case, Keepseagle et al v. Vilsack (99-cv-03119, U.S. District Court, D.C.), was filed in 1999. After more than a decade of litigation, U.S. District Court Judge Emmet Sullivan approved a settlement agreement in 2011 that created a $680 million fund and included precise terms regarding the distribution of that fund to individual Indian ranchers and farmers who, as class members, could prove their claims in a non-judicial claims process. Two award structures were followed: "Track A" claimants with less documentation received $50,000, and "Track B" claimants with more documentation received $250,000. In addition, some claimants received debt relief from USDA and substantial income tax relief assistance.

The settlement agreement specifically required that any funds left over from the $680 million judgment, the so-called "cy pres" money, be distributed in "equal shares" to "non-profit organization[s], other than a law firm, legal services entity, or education institution, that has provided agricultural, business assistance, or advocacy services to Native American farmers between 1981 and [Nov. 1, 2010]." The agreement gave class counsel the discretion to decide which organization[s] received these funds.

As it turned out, the cy pres funds totaled a staggering $380 million. The size of the cy pres fund was unprecedented. The recent dispute had centered on what to do with that money.

The USDA indicated it might seek to return the $380 million to the U.S. Treasury. Some class members wanted the $380 million to be used to increase their individual awards of $50,000 and $250,000. Other Indian farmers and ranchers who did not seek awards or submit timely documentation sought the opportunity to have payments made to them. Some class members and class counsel proposed to have the $380 million transferred to a limited number of organizations and a trust fund in perpetuity. The Choctaw Nation of Oklahoma moved to intervene to try to ensure that the $380 million remained under the control of Indian Country for the benefit of Indian ranchers and farmers.

New Agreement Proposed

Most, if not all, of these disagreements appeared to be resolved in December 2015 after lengthy negotiation between various class counsel and the USDA. Rather than transferring all of the undistributed $380 million that remains in the cy pres fund to a perpetual trust fund and a few organizations, the new agreement will first pay approximately $22,000 in additional cash and tax benefits to each class member who previously received a $50,000 or $250,000 award, and then distribute the remainder as proposed on Sept. 24, 2014. That means $38 million will go to organizations providing agricultural, business assistance or advocacy services, and the residual balance to a foundation controlled by leadership from Indian Country that would pay it out over 20 years in grants to Indian organizations.

After reviewing the new agreement, the Choctaw Nation withdrew its appeal that was pending. Choctaw Nation Chief Gary Batton explained that it had originally been concerned that the $380 million might be diverted away from the interests of Indian Country and the benefit of Native American farmers and ranchers, but under the revised settlement agreement the cy pres money will be distributed "to individual Choctaw and other Indian ranchers and farmers and ... to tribal organizations working for the sake of ranching and agriculture in Indian Country. Since this is consistent with the Choctaw Nation's overarching goals, we ... now ... will urge the Court to accept the proposed settlement agreement as recently revised."

Judge Sullivan will hold a hearing on Feb. 4, 2016, to allow individual class members to comment on the recently proposed revision to the settlement agreement.