Marilyn Keepseagle v. Sonny Perdue
2017 U.S. App. LEXIS 8559
| D.C. Cir. | 2017Background
- Native American farmers sued USDA in 1999 for discriminatory denial of farm credit/benefits; a class settlement was approved in 2011 creating a $680 million compensation fund and an administrative (non‑judicial) claims process.
- The settlement awarded claimants fixed awards (Track A/Track B) and created a cy‑pres fund to receive any unclaimed remainder; the agreement also contained a modification clause requiring "written agreement of the Parties" and court approval.
- After the claims process concluded, only ~$300 million was paid to claimants and ~$380 million remained, prompting multiple attempts to modify the settlement’s cy‑pres distribution scheme.
- First modification attempt (class counsel) failed; a later compromise (addendum) provided $18,500 supplemental payments to successful claimants, $38 million to nonprofits promptly, and placement of the remainder in a 20‑year trust for Native American agricultural purposes.
- The district court approved the addendum as fair, reasonable, and adequate under Rule 23(e)(2) and held the modification clause does not require unanimous assent of class representatives. Two class members (Mandan and Tingle) appealed, raising contract‑interpretation, fairness, constitutional (Appropriations Clause/Judgment Fund Act), and fiduciary‑duty claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the settlement’s modification clause required unanimous assent of class representatives | Mandan: "written agreement of the Parties" requires assent of class representatives (unanimity) | Govt./class counsel: "Parties" read in context does not demand unanimity; court supervision and Rule 23 protections suffice | Reversed Mandan’s unanimity claim — clause not reasonably read to require unanimous assent; district court’s interpretation affirmed (de novo review) |
| Whether the addendum is fair, reasonable, and adequate under Rule 23(e)(2) | Mandan/Tingle: addendum is inadequate; remaining funds should be distributed pro rata to successful claimants | District court/class counsel: addendum is a good‑faith compromise balancing supplemental claimant payments and workable cy‑pres administration | Affirmed — district court did not abuse discretion; extensive notice/hearing and reasons support fairness determination |
| Whether Mandan may raise Appropriations Clause / Judgment Fund Act challenges to the cy‑pres provision on appeal | Mandan: cy‑pres violates Appropriations Clause and Judgment Fund Act because leftover funds lack congressional appropriation and recipients have no claims against the U.S. | Govt./class counsel: claims were waived/forfeited below; allocation to cy‑pres was part of a negotiated settlement and falls within settlement authority/judgment fund usage | Court declined to reach merits — Mandan waived/forfeited these legal challenges by not raising them in district court and expressly declining to pursue them at the fairness hearing |
| Whether class counsel or class representatives breached fiduciary duties | Tingle: counsel/representatives conflicted and favored cy‑pres/side deals | Opposing parties: no record evidence of conflicts, incentives are standard and disclosed; process included hearings and approvals | Rejected — no evidence of breach in the record; allegations insufficient to overcome district court’s findings |
Key Cases Cited
- United States v. Winstar Corp., 518 U.S. 839 (1996) (avoid contract interpretations that yield absurd results)
- Greenlaw v. United States, 554 U.S. 237 (2008) (appellate courts should generally decide only issues presented by the parties)
- Pigford v. Johanns, 416 F.3d 12 (D.C. Cir. 2005) (standard of review: district court approval of class settlement modification reviewed for abuse of discretion)
- Richardson v. Edwards, 127 F.3d 97 (D.C. Cir. 1997) (interpretation of contract language judged by what a reasonable person in parties’ position would understand)
- Gonzalez v. Dep’t of Labor, 609 F.3d 451 (D.C. Cir. 2010) (settlement agreements interpreted under contract law principles)
- Thomas v. Albright, 139 F.3d 227 (D.C. Cir. 1998) (a settlement can be fair despite significant class objections)
- United States v. Olano, 507 U.S. 725 (1993) (distinguishing waiver from forfeiture; waiver is intentional relinquishment of a known right)