Law360 (February 22, 2018, 7:03 PM EST) — The U.S. Department of Agriculture told the U.S. Supreme Court on Wednesday that it should turn down challenges to a ruling that allowed for the redistribution of $380 million left over from the department’s landmark settlement of Native American farmers and ranchers’ racial discrimination claims.
The USDA filed a brief opposing separate petitions for certiorari by class representative Keith Mandan and class member Donivon Craig Tingle, with which they seek to contest a D.C. Circuit ruling rejecting their calls to upend a modified plan for divvying up the large unclaimed portion of the $680 million deal.
That plan entails distributing the remaining funds from the settlement among not only successful claimants but, through cy pres provisions, nonprofits that serve tribal farmers and ranchers.
Mandan claims that the district court erred in approving the modification to the cy pres provisions because the cy pres distribution flouts the appropriations clause of the Constitution, but the USDA said Wednesday that the D.C. Circuit appropriately found that he waived his right to make that argument by neglecting to raise it when the modification was first proposed.
And while Tingle contends that the district court erred in finding the modification to the cy pres provisions was fair, reasonable and adequate and not the product of collusion, the USDA argued that the D.C. Circuit already rejected that contention and that its “highly factbound determinations” need not be reviewed.
The USDA also pointed out that U.S. Attorney General Jeff Sessions recently instituted a policy prohibiting future settlements containing cy pres provisions and conceded that they raise concerns about the public perception that this kind of litigation is sometimes settled for an inflated amount in order to fund cy pres distributions.
“That new policy will prevent the recurrence of circumstances like those that led to the modified cy pres provision here, in turn eliminating any need for this court’s guidance regarding the principles that would govern the legality and administration of cy pres provisions in settlements involving the federal government,” the USDA argued.
The underlying $680 million deal, which was approved in 2011, resolved protracted class action litigation in which lead plaintiff Marilyn Keepseagle and others alleged that a USDA loan program favored white farmers over Native American farmers for nearly two decades.
The plan at issue came about after lengthy negotiations over what to do with the money that went unclaimed. Ultimately, a district court in 2016 approved a proposal to divide some of the funds among the successful claimants but distribute $38 million immediately to nonprofits and put the remaining $265 million in a trust to be paid out to nonprofits over 20 years, via an amendment to the settlement’s cy pres provisions.
Mandan and Tingle appealed to the D.C. Circuit, arguing among other things that none of the extra money should go to the nonprofits. But in May, the majority of a panel of three of the circuit court’s judges refused to dismantle the plan.
Dissenting, Circuit Judge Janice Rogers Brown slammed the executive branch for using cy pres provisions to score political points with “photo-op compassion towards a discriminated minority group” and to ship money to nonprofits that had no claims against the federal government, in violation of Congress’ power to appropriate funds.
“Perhaps one day, I will possess my colleagues’ schadenfreude toward the executive branch raiding hundreds-of-millions of taxpayer dollars out of the Treasury, putting them into a slush fund disguised as a settlement, and then doling the money out to whatever constituency the executive wants bankrolled,” Brown wrote. “But, that day is not today.”
Mandan and Tingle then separately filed their certiorari petitions at the Supreme Court in December. Last month, Keepseagle and the class also urged the justices to spurn those petitions, saying the money would benefit class members even though it would not all go directly to successful claimants.
Representatives for the class declined to comment on Thursday. Representatives for Mandan, Tingle and Keepseagle could not immediately be reached for comment. The federal government does not comment on pending litigation.
Mandan is represented by William A. Sherman of Dinsmore & Shohl LLP.
Tingle is representing himself.
The class is represented by Joseph M. Sellers and Christine E. Webber of Cohen Milstein Sellers & Toll PLLC, Jessica Ring Amunson and Andrew C. Noll of Jenner & Block LLP, David J. Frantz of Conlon Frantz & Phelan, and Sarah Vogel and Phillip L. Fraas.
Keepseagle is represented by Marshall L. Matz and John G. Dillard of Olsson Frank Weeda Terman Matz PC.
The USDA is represented by Chad A. Readler, Charles W. Scarborough and Carleen M. Zubrzycki of the U.S. Department of Justice.
The cases are Tingle v. Perdue and Mandan v. Perdue, case numbers 17-807 and 17-897, in the Supreme Court of the United States.
–Additional reporting by Andrew Westney. Editing by Jack Karp.