Keepseagle v. Vilsack
118 F. Supp. 3d 98
D.D.C.2015Background
- Keepseagle settled a class action (Native American farmers v. USDA) for $680,000,000 in 2011; settlement approved by the court and not appealed.
- The settlement created a non-judicial claims process for individual awards and a cy pres provision directing any leftover funds to charities recommended by Class Counsel and approved by the Court.
- The claims process left approximately $380,000,000 undistributed. Class Counsel and the government now propose modifying the cy pres distribution (unequal shares, 20-year trust, Native-run trust).
- Class representative Marilyn Keepseagle (with new counsel) seeks court modification to reopen claims or distribute surplus pro rata to (successful) class members.
- Court must decide whether any legal avenue permits unilateral modification of a final, approved settlement: (1) doctrines on unclaimed funds, (2) Fed. R. Civ. P. 60(b), or (3) the settlement’s own modification clause.
Issues
| Issue | Plaintiff's Argument (Keepseagle) | Defendant's Argument (USDA / Class Counsel) | Held |
|---|---|---|---|
| Whether cy pres can be displaced by the law governing unclaimed funds | Cy pres is disfavored; ALI and recent cases favor direct or pro rata distribution when class members can be identified | Settlement itself mandates cy pres; final judgment must be enforced | Court: Settlement’s mandatory cy pres controls; law on cy pres cannot override an unappealed, approved agreement |
| Whether Rule 60(b)(5) permits modification for changed circumstances (large surplus) | The unexpectedly large surplus makes prospective application inequitable; warrants reopening/distribution changes | Rule 60(b)(5) applies only to judgments with prospective effect and significant unforeseen changes; cy pres here is not prospective | Court: 60(b)(5) inapplicable — cy pres provision is not sufficiently prospective and factual change is not the kind warranting relief |
| Whether Rule 60(b)(6) allows relief as an extraordinary-circumstance safety valve | Extraordinary relief justified by moral and practical unfairness of diverting $380M to third parties | No extraordinary circumstances like fraud, lack of notice, or counsel misconduct; parties bargained for cy pres | Court: 60(b)(6) not met — no extraordinary circumstances to reopen the final judgment |
| Whether the settlement’s modification clause authorizes the proposed change based on agreement of the Parties | Keepseagle: (in effect) Class Counsel and gov’t can agree to modification | Class Counsel & gov’t argue their agreement suffices; government does not oppose Class Counsel’s proposal | Court: Clause requires written agreement of “the Parties” (Plaintiffs, the Class, and Class Representatives). Because at least one class representative (Keepseagle) objects, consent of Class Counsel + government alone is insufficient; modification denied |
Key Cases Cited
- Rufo v. Inmates of Suffolk Cnty. Jail, 502 U.S. 367 (1992) (standard for modifying consent decrees under changed circumstances)
- Pigford v. Veneman, 292 F.3d 918 (D.C. Cir. 2002) (limits on ancillary jurisdiction and application of Rule 60(b) in class settlement distributions)
- Twelve John Does v. District of Columbia, 841 F.2d 1133 (D.C. Cir. 1988) (prospective-effect requirement for Rule 60(b)(5))
- In re Lupron Mktg. & Sales Practices Litig., 677 F.3d 21 (1st Cir. 2012) (application of cy pres after settlement when court had discretion)
- Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468 (5th Cir. 2011) (enforcing the text of settlement agreements; courts must follow bargained-for terms)
- In re BankAmerica Corp. Sec. Litig., 775 F.3d 1060 (8th Cir. 2015) (Eighth Circuit reversed cy pres distribution despite earlier settlement language; discussed ALI principles)
- Democratic Cent. Comm. of D.C. v. Wash. Metro. Area Transit Comm’n, 84 F.3d 451 (D.C. Cir. 1996) (recognition of cy pres in class distributions)