112 Fed. Cl. 274
Fed. Cl.2013Background
- Jicarilla Apache Nation sues the United States for breach of fiduciary duty in managing tribal trust funds (Andersen Period, 1974–1992).
- BIA invested nearly all funds in short-term CDs; little diversification into longer-term, higher-yield assets.
- Plaintiff alleges underinvestment, unauthorized disbursements, deposit lag, and negative interest; seeks damages over $100 million for the Andersen Period.
- Court adopts Cheyenne-Arapaho standard: United States must maximize trust income by prudent investment; BIA’s duty includes diversification and prudent management.
- Court awards $21,017,491.99 for underinvestment and deposit lag; dismisses negative interest; future damages debated in later phases.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did BIA breach fiduciary duty by underinvesting Jicarilla funds? | Underinvestment caused lost returns; diversification and longer-term yields would have increased income. | Short-term investments prudent due to liquidity; statutory constraints limited risk of loss of principal. | Yes; BIA breached by underinvesting and failing to diversify. |
| Did BIA’s disbursements for payroll count as authorized disbursements? | Unauthorized disbursements occurred without tribal approval. | Disbursements could be authorized with tribal resolutions; burden on trustee to prove authorization. | Plaintiff prevails on unauthorized disbursement claim. |
| Was there improper deposit lag in transferring funds to interest-bearing accounts? | BIAM deadlines were regularly violated causing loss of interest. | Delays were justified by administrative practicalities. | Yes; deposit lag constituted breach entitling damages. |
| Should damages include extended damages beyond 1992 for continued mismanagement? | Damages should extend using a Barclays UST proxy to trial date. | Extend damages to 1992 only; post-1992 damages to be determined later. | Damages limited to 2/22/1974–9/30/1992; extended damages not awarded at this stage. |
| Are damages to be calculated using the plaintiff’s damages model and proxy portfolio? | Rocky Hill/Goldstein models reflect plausible, high-yielding portfolios per modern portfolio theory. | Defendant’s model is preferable; discrepancies in liquidity assumptions and Sharpe ratios. | Court adopts plaintiff’s model (Barclays UST proxy) yielding $21,015,651.45 for underinvestment plus $1,840.54 for deposit lag. |
Key Cases Cited
- Cheyenne-Arapaho Tribes of Indians of Oklahoma v. United States, 512 F.2d 1390 (Ct. Cl. 1975) (maximizing trust income by prudent investment; burden on trustee)
- Osage Tribe of Indians v. United States, 72 Fed. Cl. 629 (2006) (prudent investor standard; allocation of investment risk)
- United States v. Navajo Nation, 537 U.S. 488 (2003) (fiduciary duties and breach standards in tribal trusts)
- White Mountain Apache Tribe v. United States, 537 U.S. 465 (2003) (fiduciary standards in trust administration)
- Jicarilla Apache Nation v. United States, 131 S. Ct. 2313 (2011) (Supreme Court on tribal-trust fiduciary standards and related precedents)
- Confederated Tribes of Warm Springs Reservation of Oregon v. United States, 248 F.3d 137 (Fed. Cir. 2001) (damages framework for trust breaches; burden shifting in damages)
- Manchester Band of Pomo Indians, Inc. v. United States, 363 F. Supp. 1238 (N.D. Cal. 1973) (pooling of tribal funds and investment considerations)
- Pueblo of San Ildefonso v. United States, 35 Fed. Cl. 777 (1996) (damages and extension of trust-fund liability concepts)