Opinion for the Court filed by Circuit Judge ROGERS.
Leonard C. Cooper appeals the district court’s order approving a consent decree settling lawsuits brought by a class of approximately 20,000 African-American farmers, of which Mr. Cooper is a member, against the United States Department of Agriculture (“USDA”).
1
See Pigford v.
I.
The consent decree settling the class action was the product of lengthy and, at times, contentious negotiations. The background is set forth in Judge Friedman’s comprehensive opinion,
Pigford,
USDA indirectly administers programs that provide credit and other benefits to farmers. The USDA’s credit and benefit programs are federally funded, but the decisions to approve or deny applications for credit or benefits are made at the county level by a committee of three to five members elected by local farmers and ranchers. In addition to acting on credit and benefit applications, the county committee appoints a county executive to assist farmers in completing their applications and to recommend to the county committee which applications should be approved. Id. at 86. USDA has promulgated a number of regulations governing how these officials are to administer the credit and benefit programs, but the evidence before the district court shows that USDA has exercised little oversight regarding how applications historically have been processed at the county level. Id. at 86-88. For years, African-American farmers, who have been significantly underrepresented on the county committees, see id. at 87, have complained that county officials have exercised their power in a racially discriminatory manner, resulting in delayed processing or denial of applications for credit and benefits by African-American farmers not experienced by white farmers who are similarly situated. Id. at 87-88. Such discriminatory treatment is prohibited by statute and by regulation. See 15 U.S.C. § 1691(a) (1994); 7 C.F.R. §§ 15.51, 15.52 (1999). In December 1996, the Secretary of Agriculture appointed a Civil Rights Action Team to investigate allegations of racial discrimination in the administration of USDA credit and benefit programs, and, in February 1997, the USDA Inspector General reported that USDA had a backlog of discrimination complaints in need of immediate attention.
On August 28, 1997, three African-American farmers filed suit on behalf of a putative class of similarly situated African-American farmers alleging racial discrimination in the administration of USDA programs and further harm from the allegedly surreptitious dismantling of USDA’s Office of Civil Rights in 1983, which together were alleged to violate the Fifth Amendment, the Administrative Procedure Act, 5 U.S.C. § 551
et seq.;
Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d; and the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691, prohibiting discrimination in consumer credit. Following amendments to the complaint, the district court granted class certification in October 1998.
See Pigford,
As the February 1999 trial date drew near, the parties’ negotiations shifted from individual claims to a global settlement, id., and with the assistance of a court-appointed mediator, the parties developed and agreed to a consent decree that contemplated a two-track dispute resolution mechanism to determine whether individual class members had been the victims of discrimination and, if so, the amount of monetary relief to which they were entitled. If a class member opts for resolution under Track A, “class members with little or no documentary evidence [will receive] a virtually automatic cash payment of $50,-000 and forgiveness of any debt owed to USDA,” id. at 95; whereas, class members opting for Track B resolution have the opportunity to prove their claims in a one-day mini-trial before an arbitrator and, if successful, the amount of monetary damages is not capped. Id. Class members dissatisfied with the opportunity for resolution of their claims under either Track A or Track B could opt out of the class within 120 days of entry of the consent decree, and file individual lawsuits. Id. The district court is to appoint a monitor from a list of names provided by the parties “to track and report on USDA’s compliance with the terms of the Consent Decree.” Id. at 109.
By law, the proposed consent decree could not take effect until the district court had approved it, see Feb.R.CivP. 23(e), and the district court’s approval could not be granted until notice had been given to the class of the proposed settlement and a fairness hearing had been held to determine whether the “settlement is fair, adequate, and reasonable and is not the product of collusion between the parties.”
Pigford,
Following the hearing, the district court suggested fourteen changes to the proposed consent decree, including modifying paragraph 19 to require USDA to use its best efforts to comply with laws prohibiting discrimination and modifying paragraph 21 to make clear that the district court retained jurisdiction to enforce the consent decree with its contempt power. The class and USDA rejected the first suggestion and adopted the second. The district court then allowed another round of written objections to be filed to the revised consent decree. 4 After considering all of the objections and the entire record, the district court approved the proposed consent decree as fair under Rule 23 and ordered that the decree be entered. Mr. Cooper noted an appeal from the order, but he did not seek a stay of proceedings under the consent decree pending appeal. 5
II.
The law is well settled that the decision to approve a consent decree is committed, to the sound discretion of the district court.
See, e.g., In re Prudential Ins. Co. of Am. Sales Practices Litig.,
On appeal Mr. Cooper has abandoned the objections he raised in the district court regarding the lack of prospective structural relief and confines his challenge to the consent decree to paragraphs 19 and 21, which he contends give USDA, in effect, the right to unilaterally withdraw from the consent decree leaving class members with no judicial remedy. Mr. Cooper thus contends that the district court erred by failing to notify class members specifically of the terms of the two paragraphs and by approving the decree without requiring alteration or deletion of the two paragraphs. 6
In his opening brief, Mr. Cooper contended that USDA can use paragraph 19 to renege on its agreement in the consent decree in one of three ways: (1) Congress could pass new legislation that USDA could interpret to preclude some or all of the relief provided by the decree; (2) USDA could promulgate new regulations to the same effect without new legislation; or (3) USDA could interpret existing law to bar the relief provided in the decree without promulgating a rule. In subsequent briefing by appellees class counsel and USDA, and at oral argument, it has been clarified that there was no intent that paragraph 19 include the second and third possibilities; rather, USDA stipulates, and class counsel concurs, in their respective briefs that paragraph 19 “simply recognizes the legal reality that Congress makes the laws, and that it is the obligation of the government to perform prospectively in conformance with the then binding laws enacted by Congress.” See Appellee USDA’s Br. at 25; Appellee Plaintiff Class’ Br. at 11.
With that clarification, USDA’s promise to perform under the consent decree is not illusory because USDA has not reserved a unilateral right to withdraw,
cf. Gray v. American Express Co.,
More fundamentally, even in the absence of paragraph 19, the class would bear the risk of such hypothetical legislation, at least so long as the decree remains executory.
See Pennsylvania v. Wheeling and Belmont Bridge Co.,
As to Mr. Cooper’s contention that paragraph 21 deprives the farmers of the right to ask the district court to modify the decree or reinstate their lawsuit in' the unlikely event that Congress passes legislation nullifying the decree, it too relies on a misplaced concern. Paragraph 21 provides that if the government
defaults
on its obligations under the decree, the plaintiff class can enforce the decree only by motion for civil contempt. Mr. Cooper reads this provision to also “strip[] the district court of its authority to reopen the final judgment” if Congress enacts legislation allowing for the decree to be nullified in whole or in part. However, the very basis for Mr. Cooper’s contention concerning paragraph 19 is, and USDA agrees, that USDA would not be in default under the agreement if Congress passed new legislation nullifying, or directing the Secretary to nullify by regulation, the consent decree. Because that action would not qualify as a default, the provisions of paragraph 21 would not apply. Thus, Mr. Cooper’s contention that the consent decree is unfair because the class would not be able to seek relief under Rule 60(b) of the Federal Rules of Civil Procedure is mistaken. On its face, paragraph 21 does not foreclose that avenue of relief when USDA has not
Moreover, not only do Mr. Cooper’s contentions collapse under their own weight, but even were they to retain some persuasive force, the court must evaluate the district court’s decision to approve the consent decree, with whatever shortcomings paragraphs 19 and 21 might present, in light of the agreement as a whole.
See Thomas,
The ultimate question before the court is whether the district court abused its discretion by approving a consent decree, the principal provisions of which are an indisputably fair and reasonable resolution of the class complaint, containing one paragraph that assigns to the class a risk it would have borne in any event and another paragraph that limits the mode of enforcing the decree in the event of default. To ask the question is to answer it. Because it is clear that no abuse of discretion occurred we do not reach the government’s alternative argument concerning whether it would be equitable for this court to vacate the decree in light of the number of claims that have been resolved in reliance on the decree.
Accordingly, we affirm the order of approval of the district court.
[[Image here]]
OPINION
Forty acres and a mule. As the Civil War drew to a close, the United States government created the Freedmen’s Bureau to provide assistance to former slaves. The government promised to sell or lease to fanners parcels of unoccupied land and land that had been confiscated by the Union during the war, and it promised the loan of a federal government mule to plow that land. Some African Americans took advantage of these programs and either bought or leased parcels of land. During Reconstruction, however, President Andrew Johnson vetoed a bill to enlarge the powers and activities of the Freedmen’s
On May 15, 1862, as Congress was debating the issue of providing land for freed former slaves, the United States Department of Agriculture was created. The statute creating the Department charged it with acquiring and preserving “all information concerning agriculture' and collecting ‘new and valuable seeds and plants; to test, by cultivation, the value of such of them as may require such tests; to propagate such as may be worthy of propagation, and to distribute them among agriculturists.” An Act to establish a Department of Agriculture, ch. 71,12 Stat. 387 (1862). In 1889, the Department of Agriculture achieved full cabinet department status. Today, it has an annual budget of $67.5 billion and administers farm loans and guarantees worth $2.8 billion.
As the Department of Agriculture has grown, the number of African American farmers has declined dramatically. Today, there are fewer than 18,000 African American farms in the United States, and African American farmers now own less then 3 million acres of land. The United States Department of Agriculture and the county commissioners to whom it has delegated so much power bear much of the responsibility for this dramatic decline. The Department itself has recognized that there has always been a disconnect between what President Lincoln envisioned as ‘the people’s department,' serving all of the people, and the
It is difficult to resist the impulse to try to undo all the broken promises and years of discrimination that have led to the precipitous decline in the number of African American fanners in the United States. The Court has before it a proposed settlement of a class action lawsuit that will not undo all that has been done. Despite that fact, however, the Court finds that the settlement is a fair resolution of the claims brought in this case and a good first step towards assuring that the kind of discrimination that has been visited on African
The plaintiffs in this case allege (1) that the United States Department of Agriculture (“USDA") willfully discriminated against them and other similarly situated African American farmers on the basis of their race when it denied their applications for credit and/or benefit programs or delayed processing their applications, and (2) that when plaintiffs filed complaints of discrimination with the USDA, the USDA failed properly to investigate and resolve those complaints. Seventh Amended Complaint at 4-5. Plaintiffs allege that defendant’s actions violated a number of statutes and the Constitution, but both sides agree that this case essentially is brought under the Equal Credit Opportunity Act, IS U.S.C. § 1691 (“ECOA”)- Ses Transcript of Hearing of March 2,1999, at 19. 1
The Court certified this case as a class action on October 9,1998, and preliminarily approved a Consent Decree on January 5, 1999. After a hearing held on March 2, 1999, the parties made some revisions to the proposed Consent Decree and filed a revised
Farming is a hard way to make a living. Small fanners operate at the whim of conditions completely beyond their control; weather conditions from year to year and marketable prices of crops to a large extent determine whether an individual fanner will make a profit, barely break even or lose money. As a result, many farmers depend heavily on the credit and benefit programs of the United States Department of Agriculture to take them from one year to the next. 2 For instance, if an early freeze kills three-quarters of a fanner’s crop one year, he may not have sufficient resources to buy seeds to plant in the following season. Or if a farmer needs to modernize his operations and buy a new grain harvester in order to make his operations profitable, he often cannot afford to buy the harvester without an extension of credit. Because of the seasonal nature of farming, it also is of utmost importance that credit and benefit applications be processed quickly or the fanner may lose all or most of his anticipated income for an entire year. It does a fanner no good to receive a loan to buy seeds after the planting season has passed.
The USDA’s credit and benefit programs are federally funded programs, but the decisions to approve or deny applications for credit or benefits are made locally at the county level. In virtually every farming community, local fanners and ranchers elect three to five member county committees. The county committee is responsible for approving or denying farm
The county committees do not represent the racial diversity of the communities they serve. In 1996, in the Southeast Region, the region in the United States with the most African American fanners, just barely over 1 % of the county commissioners were African American (28 out of a total of2469). Sss CRAT Report at 19. In the Southwest region, only 0.3% of the county commissioners were African American. In two of the remaining three regions, there was not a single African American county commissioner. Nationwide, only 37 county commissioners were African American out of a total of 8147 commissioners - approximately 0.45%. Id.
Throughout the country, African American fanners complain that county commissioners have discriminated against them for decades, denying their applications, delaying the processing of their applications or approving them for insufficient amounts or with restrictive conditions. In several southeastern states, for instance, it took three times as long on average to process the application of an African American farmer as it did to process the application of a white farmer. CRAT Report at 21. Mr. Alvin E. Steppes is an African American fanner from
In 1994, the entire county of Greene County, Alabama where Mr. George Hall farmed was declared eligible for disaster payments on 1994 crop losses. Every single application for disaster payments was approved by the Greene County Committee except Mr. Hall’s application for four of his crops. SfiS Seventh Amended Complaint at ¶ S. Mr. James Beverly of Nottaway County, Virginia was a successful small farmer before going to FmHA. To build on his success, in 1981 he began working with his FmHA office to develop a farm plan to expand and modernize his swine herd operations. The plan called for loans to purchase breeding stock
The denial of credit and benefits has had a devastating impact on African American farmers. According to the Census of Agriculture, the number of African American farmers has declined from 925,000 in 1920 to approximately 18,000 in 1992. CRA.T Report at 14. The farms of many African American farmers were foreclosed upon, and they were forced out of farming. Those who managed to stay in farming often were subject to humiliation and degradation at the hands of the county commissioners and were forced to stand by powerless, as white fanners received preferential treatment As one of plaintiffs’ lawyers, Mr. J.L. Chestnut, aptly put it, African American farmers “learned the hard way that though the rules and the law maybe colorblind, people are not.” Transcript of Hearing of March 2,1999, at 173.
Any farmer who believed that his application to those programs was denied on the basis of his race or for other discriminatoiy reasons theoretically had open to him a process for filing a civil rights complaint either with the Secretary of Agriculture or with the Office of Civil Rights Enforcement and Adjudication (“OCREA”) at USDA. USDA regulations set forth a detailed process by which these complaints were supposed to be investigated and conciliated, and ultimately a fanner who was unhappy with the outcome was entitled to sue in federal court under ECOA. See Pigford v. Glickman.
Also in February of 1997, the Office of the Inspector General of the USDA issued a report to Secretary Glickman stating that the USDA had a backlog of complaints of discrimination that had never been processed, investigated or resolved. Ssfi Fla’ Motion for Class Certification, Exh. A (Evaluation Report for the Secretaiy on Civil Rights Issues). The
In 1998, Congress provided relief to plaintiffs with respect to the statute of limitations problem by passing legislation that tolls the statute of limitations for all those who filed discrimination complaints with the Department of Agriculture before July 1,1997, and who allege discrimination at any time during the period beginning on January 1,1981 and ending on or before December 31, 1996. Sss Agricultural, Rural Development, Food and Drug
From the beginning, this case has been a contentious and hard fought battle on both sides. The original complaint in this action was filed on August 28, 1997, by three African American farmers representing a putative class of 641 African American farmers. At an initial status conference on October 30,1997, plaintiffs requested that the case be referred to Magistrate Judge Alan Kay for the purpose of discussing settlement. The government opposed that request. The Court refused to require the government to engage in settlement negotiations if it was not prepared to do so in good faith and with an open mind, but it made clear that the case would move quickly.
From plaintiffs’ perspective, the most important pieces of evidence necessary to ensure speedy resolution of the case were the files of the individual farmers that were held by the government. The Court ordered both sides to comply with their obligations under Rule 26(a)(1) of the Federal Rules of Civil Procedure by November 14,1997, and it ordered the government to provide plaintiffs with any files in its possession on any farmer who was pan of the putative class. Sfi£ Order of November 4,1997. The government complied with the Court’s discovery ruling, and since then has continued to provide class counsel with the files of putative class members that it has. SfiE Defs November 17,1997, Report to the Court
In the meantime, a number of motions to intervene were filed on behalf of putative class members represented by other attorneys. The two attorneys who originally had
By mid-November of 1997, the government had rethought its original position with respect to mediation and agreed to explore the option of settlement The parties quickly agreed upon a mediator, Mr. Michael Lewis, but an agreement on the details of the mediation process required a number of status hearings and conference calls. Finally, in late December the
The Court lifted the stay so that the parties could brief plaintiffs’ motion for class certification and plaintiffs’ motion for partial summary judgment on the issue of the statute of limitations. $£6 Order of March 6,1998. The Court also set atrial date of February 1, 1999. Id. Upon the representations of the parties that they wanted to continue trying to mediate the case with Mr. Lewis, the Court also extended the time for mediation. Sfifi Order of April 6,1998.
In the meantime, plaintiffs had filed a second putative das3 action, Brewington v. Glickman. Civil Action No. 98-1693. The putative class in Brewington included those who had
14
Within ten days after the preliminary approval of the Consent Decree, the facilitator mailed a copy of the Notice of Class Certification and Proposed Class Settlement to all then-known members of the class. 3 The facilitator also arranged a print notification program with one-quarter page advertisements in 26 general circulation newspapers for January 21,1999, and in 100 African-American newspapers between January 13, 1999 and
15
The facilitator estimates that on average, the print and television notice campaign “reached 87 percent of African-American farm operators, managers or others in farm-related industries, an average frequency of 2.4 times." Id. at 6. As of February 19, 1999, the facilitator had received 15,132 telephone calls aB a result of its notification campaign. Id- at 7.
The USDA exerted efforts to obtain the assistance of community based organizations, including those organizations that focus on African American and/or agricultural issues, in communicating to class members and potential class members the fact that the Court had preliminarily approved the Consent Decree and the time and place of the fairness hearing. Def s Memorandum in Support of Consent Decree (Declaration of David H. Harris). USDA officials also wete notified that, to the extent possible, they had an obligation to communicate to class members information about the Consent Decree and the fairness hearing. The Court posted a copy of the proposed Consent Decree and the Notice of Class Certification on the Internet Website of the United States District Court for the District of Columbia. Finally, class counsel held meetings in counties throughout the country, particularly in the South, to notify
The Court conducted a fairness hearing on March 2,1999, which lasted an entire day. The Court allocated time for all objectors who previously had filed written objections to the Consent Decree and also allocated time at the end of the day for others who wished to express their views. See Order of February 25. 1999. The Court provided time for class counsel and counsel for the government to explain the proposed Consent Decree and to discuss their view of its fairness. The Court heard from representatives of eight organizations that had filed written objections, six individuals who had filed written objections and ten individuals who had not filed written objections. The Court also heard from class counsel, counsel for the government and the mediator.
After the hearing, the Court sent a letter to the parties summarizing some of the objections that had been raised at the hearing and suggesting changes to the proposed Consent Decree that might alleviate some of the concerns raised. The Court indicated that it would not
The Court originally certified a class pursuant to Rule 23(b)(2) of the Federal
Rules of Civil Procedure for purposes of determining liability. The class was defined as
Alt African-American farmers who (1) farmed between January 1, 1983, and Februaiy 21,1997; and (2) applied, during that time period, for participation in a federal farm program with USDA, and as a direct result of a determination by USDA in response to said application, believed that they were discriminated against on the basis ofrece, and filed a written discrimination complaint with USDA in that time period.
Pigford v. Glickman.
Order certifying the class and certified a new class pursuant to Rule 23(b)(3) of the Federal
Rules of Civil Procedure. The newly certified class is defined as:
All African American farmers who (1) farmed, or attempted to farm, between January 1, 1981 and December 31, 1996; (2) applied to the United States Department of Agriculture (USDA) during that time period for participation in a federal farm credit or benefit program and who believed that they were discriminated against on the basis of race in USDA's response to that application; and (3) filed a discrimination complaint on or before July 1, 1997, regarding USDA's treatment of such farm credit or benefit application.
Order of January 5, 1999.
There are three changes to the substantive definition of the class. The first change relates to the time frame within which a class member is required to have filed his or her discrimination complaint with the USDA. Under the original class definition, a class member was required to have filed his complaint with the USDA before February 21, 1997. The putative class in Brewingtnn included those who had filed their complaints of
The second change also involves timing issues. The original class definition specified that class members must have fanned between January 1, 1983, and February 21, 1997, and applied for a credit or benefit program during that same time period. The definition of the class certified by Order of January 5, 1999, requires class members to have farmed or attempted to farm between January 1, 1981, and December 31, 1996, and to have applied for a credit or benefit program during that time period. As with the changed discrimination complaint filing dates, this change in class definition is consistent with the recently-enacted
The primary difference between the class certified by the Court on October 9, 1998 and the class certified by the Court on January S, 1999, is more procedural than substantive: the former was certified pursuant to Rule 23(b)(2) of the Federal Rules of Civil Procedure for purposes of determining whether the USDA is liable to class members and the latter was certified for all purposes pursuant to Rule 23(b)(3).
4
Rule 23 provides that all class
The ultimate settlement of this action envisions the creation of a mechanism on a class-wide basis that will then be utilized to resolve the individual claims of class members outside the traditional litigation process, most of them (Track A) in a rather formulaic way. Most members of the class lack documentation of the allegedly discriminatory transactions at issue. Without any documentation of those transactions, it would be difficult if not impossible for an individual farmer to prevail in a suit in federal court under a traditional preponderance of the evidence standard. The parties acknowledge, however, that it is not the fault of class members that they lack records. Since class members’ lack of documentation is at least in part attributable to the passage of time which has been exacerbated by the USDA’s failure to timely process complaints of discrimination, there is a common issue of whether and how best to
in. PROVISIONS OF PROPOSED CONSENT DECREE
The proposed Consent Decree, as revised after the fairness hearing and jointly filed by the parties on March 19, 1999, is a negotiated settlement that resolves all of the claims raised by plaintiffe in the Seventh Amended Complaint. The purpose of the Consent Decree is
25
Those who choose to remain in the class have ISO days from the entry of the Consent Decree within which to file their claim packages with the facilitator. Consent Decree at 1 3(c).
5
When a claimant submits his claim package, he must include evidence that he filed a discrimination claim with the USDA between January 1, 1981 and July. 1, 1997. See id. at 1 3(b).
6
In the absence of documentation that a complaint was filed with the USDA, a claimant may submit a declaration from “a person who is not a member of the claimant's family” stating
27
A claimant asserting discrimination in a credit transaction can satisfy this burden by presenting evidence of four specific things: (1) that he owned or leased, or attempted to own or lease, farm land; (2) that be applied for a specific credit transaction at a USDA county office between January 1, 1981 and December 31, 1996; (3) that the loan was denied, provided late, approved for a lesser amount than requested, encumbered by restrictive conditions, or USDA failed to provide appropriate loan service, and such treatment was less favorable than that accorded specifically identified, similarly situated white farmers; and (4) that USDA’s treatment of the loan application led to economic damage to the class member. jSss Consent Decree at ¶ 9(a)(i). A claimant asserting discrimination only in a non-credit benefit program can satisfy his burden by presenting evidence (1) that he applied for a specific non-credit benefit program at a USDA county office between January 1,1981 and December 31,1996, and
If the adjudicator finds in the claimant’s favor and the claim involves discrimination in a credit transaction, the claimant will receive (1) a cash payment of $50,000; (2) forgiveness of all debt owed to the USDA incurred under or affected by the program that formed the basis of the claim; (3) a tax payment directly to the IRS in the amount of 25 % of the total debt forgiveness and cash payment; (4) immediate termination of any foreclosure proceedings that USDA initiated in connection with the loan(s) at issue in the claim; and (5) injunctive relief including one-time priority loan consideration and technical assistance. Consent Decree at ¶¶ 9{a)(iii); 11. If the adjudicator finds in the claimant’s favor and the
If the arbitrator finds that the claimant has demonstrated by a preponderance of the evidence that he was the victim of racial discrimination and that he suffered damages from that discrimination, the claimant will be entitled to actual damages, the return of inventory property that was foreclosed and other injunctive relief, including a one-time priority loan consideration. Consent Decree at 1110(g), 11. As with Track A claimB, the decision of the arbitrator is final except that the Monitor shall direct the arbitrator to reexamine the claim if he
The Court retains jurisdiction to enforce the Consent Decree through contempt proceedings. Consent Decree at 121. If one side believes that the other side has violated the terms of the Consent Decree, there is a mandatory procedure for attempting to resolve the problem with the assistance of the Monitor that the parties must follow before filing a contempt motion with the Court, but the Court remains available in the event that the terms of the decree are violated. Id. at 113. Finally, the Consent Decree provides that class counsel shall be
Under Rule 23 of the Federal Rules of Civil Procedure, no class action may be dismissed, settled or compromised without the approval of the Court: Rule 23(e), Fed. R. Civ. P. Before giving its approval, the Court must provide adequate notice to all members of the class, id-, conduct a “fairness hearing,” and ñnd, after notice and hearing, that the “settlement is fair, adequate and reasonable and is not the product of collusion between the - parties.” Thomas v. Albright,
In this circuit there is “no obligatory test* that the Court must use to determine whether a settlement is fair, adequate and reasonable. Osher v. SCA Realty I. Inc.,
Preliminarily, the Court considers those objections that address the fairness of the way in which the settlement negotiations were conducted, the amount of discovery completed at the time of settlement, the definition of the class, whether there is any evidence of collusion between class counsel and counsel for the government, and whether class members have had adequate notice and opportunity to be heard on the proposed settlement. See Thomas v. Albright,
34
Some of the objectors maintain that settlement came too early and that class counsel undertook insufficient discovery in this case before settling it, A review of the history of the case, however, reveals that “[tjhere has been a literal mountain of discovety provided and reviewed.” Transcript of Hearing of March 2,1999 at 170 (Comments of Mr. J.L. Chestnut). Less than three months after the case was filed, the Court ordered the USDA to open its files to plaintiffs within fifteen days. On the fifteenth day, the government provided plaintiffs with ten boxes of documents containing approximately 35,000 to 40,000 pages of records related to approximately 105 pending claims of race discrimination. Sfifi Def s November 17,1997 Report to the Court, Declaration of Arnold Grundeman at ¶ 4. Three days later, the government delivered an additional 20,000 pages related to another 30 pending cases of discrimination. Sss Ü at ¶ 5. At the time, the government represented that it was continuing to search for files, many of which had already been sent to a federal records repository. Since that time, the government has continued to provide plaintiffs with the files of class members.
The problem for plaintiffs has been that files simply do not exist for many class members. Providing additional time for discovety would not have solved that problem. As class counsel has pointed out, on the issue of liability of the USDA, the government’s own documents and own admissions are the most damning evidence. See Transcript of Hearing of March 2, 1999 at 184 (Commentsof Mr. Alexander Pires) (“I have an office full of admissions. I have tape recordings of Mr. Glickman. I have tape recordings of Govememnt officials. I’ve interviewed everybody there is to interview. I have documents. I have the CRAT Report
2. Class Definition
The class is defined to include all African American fanners who (1) fanned, or attempted to farm, between January 1, 1981 and December 31, 1996; (2) applied to the United States Department of Agriculture (USDA) during that time period for participation in a federal farm credit or benefit program and who believed that they were discriminated against on the basis of race in USDA's response to that application; and (3) filed a discrimination complaint on or before July 1, 1997, regarding USDA's treatment of such farm credit or benefit
Some also have objected that the class as currently defined does not include all members of the putative Brcwington class because under the current class definition, the fanner is required to have filed a complaint of discrimination prior to July 1,1997, while the proposed class in Brewington would have included African American farmers who had filed their discrimination complaints prior to July 7,1998. As previously discussed, sfiS page 20 above, the statutory waiver of ECOA’s two-year statute of limitations as recently enacted by Congress applies only to those farmers who filed complaints of discrimination by July 1,1997. The claims of those who do not meet that deadline face separate and additional legal barriers not faced by the class as currently defined. Broadening the class would inject legal and factual issues into the
Some objectors maintain that it is unfair to require an affidavit from someone who is not a family member because, as Mr. Vernon Breckinridge put it, “getting loans from USDA is just like you go to a normal bank and get a loan. You don’t noimelly go around and tell everybody in the neighborhood that you’ve gone to the bank to secure a loan.” Transcript of Hearing of March 2,1999 at 101. While it may be that some will be precluded from obtaining relief because they cannot use affidavits from family members, the class membership determination is designed to be mechanistic so that it can be done quickly by the facilitator. If family members were permitted to submit affidavits, the facilitator would be required to make
The Court finds that there is absolutely no evidence of collusion between the class counsel and counsel for the government. See Thomas v. Albright,
Nor has the Court has seen any evidence of collusion or other impropriety op the part of counsel on either side. From the day this case was filed, Mr. Alexander Fires has tenaciously asserted that hi3 clients had a right to receive relief from the government. Even faced with difficult statute of limitations issues and a serious lack of documentation, he has never wavered from his fundamental position that the government had wronged generations of African American farmers and must provide compensation. Even when settlement negotiations were ongoing, both sides maintained their positions and continued to assert the interests of their respective clients in every filing and at every status conference. At the status hearing on March
When a class is certified and a settlement is proposed, the parties are required to provide class members with the “best notice practicable under the circumstances.” Rule 23(c)(2), Fed. R. Civ. P.; See Eisen v. Carlisle and Jacquelin.
First, the timing and breadth of notice of the class settlement was sufficient under Rule 23. Notice was mailed to all known class members by January 15,1999, nearly six weeks before the fairness hearing and a month before the deadline for comments, providing class members with ample time to submit their objections. Sfifi MaYwalt v. Parker and Parsley Petroleum Co,,
Third, the Court gave objectors ample opportunity to present their objections to the Consent Decree. As noted above, the Court considered all of the written objections that were filed and provided objectors with an opportunity to present their objections orally at the fairness hearing, while the Court denied a request for an evidential^ hearing made by one group of objectors, afi£ Order of March il, 1999, the Court is not obligated to hold an evidentiary hearing, especially in view of the fact that it accepted and considered affidavits in place of testimony. See Jones v. Nuclear Pharmacy, Inc.,
Finally, because the Court has received a number of objections, it is clear that class members do not unanimously support the settlement. It is significant, however, that there are relatively few objections to the settlement in comparison with the size of the class. Ssfi
As our court of appeals has said, in considering a proposed class action settlement, the Court first must compare the likely recovery that plaintiffs would have realized if they had gone to trial with the terms of the settlement. firs Thomas v. Albright,
1. Likely Recovery If Case Had Proceeded to Trial
If the case had proceeded to trial, plaintiffs would have had in their possession strong evidence that the USDA discriminated against African American farmers. The reports of the Inspector General and the Civil Rights Action Team provide a persuasive indictment of the civil rights record of the USDA and the pervasive discrimination against African American fanners. There does not appear to be much dispute that racial discrimination has occurred
Some
objectors have suggested that the issue of damages could have been resolved by trying the claims of representative members of the class. See Transcript of Hearing of March 2,1999 at 46. As Mr. Alexander Pires explained, however, “I would never take the
2. Overall Structure of Settlement: Track A and Track.5
As currently structured, class members have three options: they have 120 days after the entry of the Consent Decree within which to notify the facilitator if they want to opt out of the class altogether, they may remain in the class and choose Track A or they may remain in the class and choose Track B. 18 Those who do not opt out have 180 days from the entry of the decree within which to file their claim packages and, for those who choose Track A, to submit their proof. Consent Decree at ¶¶ 5(c), S(d).
A number of class members complain that they lack sufficient information to select among these three options and that the settlement is structured to force class members to choose Track A. At meetings throughout the country, class counsel currently is making every
48
In order for a claimant to prevail under Track A, he must present specified evidence, including evidence that he was treated less favorably than a “specifically identified, similarly situated" white farmer. Ssfi Consent Decree at ¶¶ 9(a)(iXC), 9(b)(i)(B). Some objectors contend that it will be too difficult for some claimants to present evidence of a specific, similarly situated white fanner who received more favorable treatment, especially since there is no right to discovery under Track A. At this point, however, class counsel has amassed a significant amount of material regarding the treatment by the USDA of both African American farmers and white farmers, and claimants will he able to call upon that material in completing
A hearing on a Track B claim lasts eight hours. Consent Decree at ¶ 10(f). There is no live direct testimony. All direct testimony is submitted in writing. The eight hours at the hearing are comprised entirely of cross-examinations: each side is allotted four hours to cross-examine any witness of the opposing side. Several objectors contend that the claimant should be able to present live direct testimony, rather than presenting it only in written form. As with the Track B discovery issue, class counsel clearly was trying to balance the need for expedition with
Some objectors complain about the Track A/Track B structure because those claimants who select Track B and fail to demonstrate by a preponderance of the evidence that they were the victims of race discrimination and that they suffered economic harm as a result will recover nothing under the settlement, sss Consent Decree at ¶ 10(h), rather than being permitted
Finally, the decisions of the adjudicators on Track A claims and the decisions of the arbitrators on Track B claims are final; there is no right to appeal those decisions, except that
Any claimant who prevails on a Track A claim for discrimination in a credit transaction will receive: (1) a cash payment of $50,000; (2) forgiveness of all debt owed to the 11SDA incurred under or affected by the program that formed the basis of ihe claim; (3) a tax payment directly to the IRS in the amount of 25% of the total of the debt forgiveness and cash payment; (4) immediate termination of any foreclosure action that USDA initiated in connection with the loan(s) at issue in the claim; and {5) injunctive relief including one-time priority loan consideration and technical assistance. Hus relief package is the source of two objections.
54
To the extent that a specific value can be put on such compensation, however, class counsel have thoroughly researched the issue and provided persuasive evidence that the amount is fair.
21
As class counsel points out, every claimant who prevails under Track A wilt receive not $50,000 but at least $62,500 (the sum of a $50,000 cash payment plus $12,500 in tax relief). And most who prevail under Track A will receive much more than that. The government
56
The failure of both Track A and Track B to include certain measures of individual relief also has led to objections. First, some contend that the USDA should provide relief from loans owed to creditors other than the USDA. They argue that because the USDA discriminated in its credit programs, many African American farmers either had to obtain loans from private banks at very high interest rates or had to buy their equipment and supplies on credit from private companies at high interest rates. They therefore seek to have all of those loans forgiven or at least to have loans that were guaranteed by the USDA forgiven. Class counsel clearly tried to negotiate for as much debt forgiveness as possible. But as Mr. J.L. Chestnut put it, “There is no likelihood the United States government is going to go around to... commercial banks paying off private loans of black farmers, whether it relates to discrimination or not. Nobody is going to be able to negotiate that with the United States government. How do I know that? Because I tried.” Transcript of Hearing of March 2,1999 at 168.
Second, some have objected that the Consent Decree does not contain a provision to protect a class member’s settlement award from his bankruptcy estate. The parties to this action cannot, however, determine whether the bankruptcy estate has a right to a claimant’s settlement award. Those matters are controlled by operation of the bankruptcy laws and will turn on issues such as whether the claim is considered the property of the estate. See 11 U.S.C. § 541. Those matters properly are resolved in bankruptcy court between the parties to those actions and cannot be resolved by the parties to this action.
Third, a claimant who prevails under Track B is entitled to “any USDA inventory properly that was formerly owned by the class member but which was foreclosed in connection
C. Monitoring and Enforcement Provisions
Some objectors contend that at the very least the enforcement and monitoring provisions of the Consent Decree must be strengthened. The Consent Decree provides for the appointment of a Monitor for a period of five years to track and report on the USDA’s compliance with the terms of the Consent Decree. Under the original proposed Consent Decree, the Monitor was appointed by the Secretary of Agriculture, subject to class counsels’ approval. A number of objections noted that the USDA did not have any incentive to appoint a strong and
0. Absence of Provisions Preventing Future Discrimination
The stated purpose of the Consent Decree is to “ensur[e] that in their dealings with the USDA, all class members receive full and fair treatment that is the same as the treatment accorded to similarly situated white persons.” Consent Decree at 2. The Consent Decree does not, however, provide any forward-looking injunctive relief. It does not require the USDA to take any steps to ensure that county commissioners who have discriminated against class members in the past are no longer in the position of approving loans. Nor does it provide a
60
Third, even if plaintiffs had prevailed on their ECOA claims at trial, it is not at all clear that the Court could have or would have granted the broad injunctive relief that the objectors now seek. The injunctive relief that the objectors seek, essentially an injunction requiring the USDA to change the way it processes credit applications, may be authorized where plaintiffs prove a constitutional violation, s££ Hills v. Gautreaux,
Those legal responses, however, provide little comfort to those who have experienced discrimination at the hands of the USDA and who legitimately fear that they will continue to face such discrimination in the future. The objections arise from a deep and overwhelming sense that the USDA and all of the structures it has put in place have been and
First, under the terms of this Consent Decree, the USDA is obligated to pay billions of dollars to African American fanners who have suffered discrimination. Those billions
Most importantly, the farmers who have been a part
of
this lawsuit have demonstrated their power to bring about fundamental change to the Department of Agriculture, albeit more slowly than some would have wanted. Each individual fanner may feel powerless, but as a group they have planted seeds that are changing the landscape of the USDA. As a group, they spurred Secretary Glickman in 1996 to look inward at the practices of the USDA and to examine African American farmers’ allegations that the discrimination of the USDA waa leading them to the point of financial ruin. As a group, they led Secretary Glickman to create the
Forty acres and a tnule. The government broke that promise to African American fanners. Over one hundred years later, die USDA broke its promise to Mr. James Beverly. It promised him a loan to build farrowing houses so that he could breed hogs. Because he was African American, he never received that loan. He lost his farm because of the loan that never was. Nothing can completely undo the discrimination of the past or restore lost land or lost opportunities to Mr. Beverly or to all of the other African American farmers whose representatives came before this Court. Historical discrimination cannot be undone.
But the Consent Decree represents a significant first step. A first step that has been a long time coming, but a first step of immeasurable value. As Mr. Chestnut put it, "Who really knows the true value, if there is one, for returning a small army of poor black farmers to the business of farming by the year 2000 who otherwise would never make it back? I am not wise enough to put a dollar value on that and I don’t think anybody on this planet is wise enough to reduce that to dollars and cents." Transcript of Hearing of March 2, 1999 at
DATE:
(TsLt. PAUL L. FRIEDMAN United Stares District fudge
66
Notes
. Mr. Cooper is the only member of the class to appeal although in noting his appeal he purported to file on behalf of himself individually and as a representative of a class of African-American farmers, sending copies to nine named persons. None of those persons
. The district court’s opinion appears as an appendix to this opinion.
. See Pub.L. No. 105-277, § 741, 112 Stat. 2681 (codified al 7 U.S.C. § 2279, notes); see also Statement By President William J. Clinton Upon Signing H.R. 4328, 34 Weekly Comp. Pres. Doc. 2108 (Nov. 2, 1998) ("This bill will also address the long-standing discrimination claims of many minority farmers by adopting my request to waive the statute of limitations on USDA discrimination complaints that date back to the early 1980s.”), reprinted in 1998 U.S.C.C.A.N. 582.
. Objections made directly by Mr. Cooper questioned whether class counsel truly represented the interests of the class members and suggested that the decree contain a provision rendering it void if either USDA or class counsel took steps to obstruct the district court’s jurisdiction to enforce the proposed decree. Mr. Cooper’s counsel, on behalf of Mr. Cooper, filed eight pages of objections, which also questioned the capacity of class counsel to represent the class, but made no mention of either paragraphs 19 nor 21 nor of the enforceability of the decree as a general matter. In addition, the North Carolina Association of Black Lawyers Land Loss Prevention Project at North Carolina Central University Law School filed a set of objections jointly with three other organizations, including NCCBOA, which stressed, among other things, the view that in light of paragraphs 19 and 21, the district court’s contempt power was inadequate to enforce the decree.
. Although the figures differ, USDA and class counsel represented in their respective briefs that more than 20,000 persons have filed claims under the decree. See Appellee USDA’s Br. at 15; Appellee Plaintiff Class' Br. at 12. At oral argument, class counsel represented that as of February 25, 2000, decisions in 9,573 Track A cases had been rendered of which 5,746 claims were granted and paid in an amount totaling $359,125,000. Of the 3,827 Track A claims that were denied in whole or in part, one third have been appealed under the terms of the consent decree. In addition, approximately 146 class members have opted for resolution under Track B. Four cases have been completed, and eighty others are in discovery.
. The paragraphs under attack provide:
19. Defendant's Duty Consistent With Law and Regulations
Nothing contained in this Consent Decree or in the Final Judgment shall impose on the defendant any duty, obligation or requirement, the performance of which would be inconsistent with federal statutes or federal regulations in effect at the time of such performance.
21. No Effect if Default
Subject to the terms of ¶ 17, above, [conditioning the decree's obligations on a final judgment dismissing the complaint] and following entry by the Court of Final Judgment, no default by any person or party to this consent Decree in the performance of any of the covenants or obligations under this Consent Decree, or any judgment or order entered in connection therewith, shall affect the dismissal of the complaint, the preclusion of prosecution of actions, the discharge and release of the defendant, or the judgment entered approving these provisions. Nothing in the preceding sentence shall be construed to affect the Court’s jurisdiction to enforce the Consent Decree on a motion for contempt filed in accordance with ¶ 13 [requiring parties to conciliate before filing contempt motion].
The last sentence of paragraph 21 was added after the fairness hearing.
. It is to be noted that the relief Mr. Cooper seeks, an order vacating the decree and remanding for trial, could require that plaintiffs’ cases be tried over a number of years,
see Pigford,
Most of the class members are complaining about racial discrimination in the USDA’s credit programs. ECOA provides the statutory basis for claims of discrimination in credit transactions. See 15 U.S.C. § 1691. A small number of class members, approximately 5% of the class, complain about the USDA’s administration of its benefit programs, especially its disaster relief programs. SfiS Seventh Amended Complaint at ¶ 76. The benefit programs are not subject to ECOA, and the claims against the USDA for alleged acts of discrimination in these programs are brought under the Administrative Procedure Act, 5 U.S.C. § 706. The differences between the two types of claims lead to slight variations in the burdens of proof and the relief provided.
The technical differences among USDA’s various credit and non-credit programs are set forth in detail in a previous Opinion of this Court See Pigford v. Glickman.
The “facilitator” is the Poorman-Douglas Corporation, ¿¡sc Consent Decree at. 1 l(i). Among other responsibilities, the facilitator is required to mail copies of the Notice of Class Certification and Proposed Class Settlement to all known class members within ten days of the Court’s preliminary approval of the proposed Consent Decree and to undertake an advertising campaign notifying potential class members of the class certification and proposed class settlement. See id. at 113, 4.
An action may appropriately be certified pursuant to Rule 23(b)(2) of the Federal Rules of Civil Procedure if “the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.”
An action may appropriately be certified pursuant to Rule 23(b)(3) of the
The Court may grant an extension of this 180 day period ‘where the claimant demonstrates that his failure to submit a timely claim was due to extraordinary circumstances beyond his control.” Consent Decree at ¶ 3(g).
For a claimant who otherwise meets the class definition but who filed his complaint of discrimination after July 1, 1997, the claims package will be forwarded to JAMS-Endispute, Inc. JAMS-Endispute, Judicial Arbitration and Mediation Services Endispute, is a California-based cotps of retired judges with offices throughout the country that provides alternative dispute resolution mechanisms. JAMS-Endispute will determine whether the claimant should be allowed to proceed as a class member despite his failure to timely file bis discrimination complaint. 2a Consent Decree at l(a)(ii), 6.
For purposes of the proposed Consent Decree, a “discrimination complaint" means either a communication directly from the class member to the USDA or a communication from the claimant to a member of Congress, the White House, or a state, local, or federal official who forwarded the communication to the USDA asserting that the USDA had discriminated against the claimant on the basis of race in connection with a federal farm credit transaction or benefit application. Consent Decree at 11(h).
Class counsel is available to perform these services without charge to the claimant.
Claimants asserting discrimination in non-credit benefit programs are only entitled to proceed under Track A. Consent Decree at ¶ 5(d).
The Consent Decree defines “substantial evidence’ as ’such relevant evidence as appears in the record before the adjudicator that a reasonable person might accept as adequate to support a conclusion after taking into account other evidence in the record that fairly detracts from that conclusion.” Consent Decree at 11(1).
The arbitrator will either be Mr. Michael Lewis, the mediator, or will be a person selected by Mr. Lewis from a list of arbitrators pre-approved by class counsel and counsel for the government. Sss Consent Decree at 1 1(b); Letter of March 19,1999 from the Parties to the Court at 11.
The parties indicated in their letter of March 19,1999, that one of the changes to the original Consent Decree would be that the Monitor would provide copies of his report to the Court. That change was not reflected in the revised Consent Decree that was filed by the parties on March 19, 1999, but the parties have since filed a corrected page 21 of the revised Consent Decree so that the Monitor in fact will be required to provide copies of the report to the Court. See Notice of Filing of April 9, 1999.
The Third Circuit has adopted a nine-factor test for determining the fairness of a settlement of a class action, see Girsh v. Jepson,
The Court has received written objections or comments from the following organizations: Black Farmers and Agriculturists Assoc.; Black Farmers of North Carolina; Central Piedmont Economic Assoc.; Concerned Black Farmers of Tennessee, Arkansas, Mississippi, Georgia and North Carolina; Coordinating Council of Black Farm Groups; Kansas Black Farmers Assoc.; Land Loss Prevention Project; Federation of Southern Cooperatives Land Assistance Fund; Lawyers’ Committee for Civil Rights Under Law; NAACP; National Black Farmers; National Council of Community Based Organizations in Agriculture; National Family Farm Coalition; Oklahoma Black Fanners and Agriculturalists Assoc.; and United States Dept, of Agriculture Coalition of Minority Employees. The Court has received written objections or comments from the following
All of the organizations and most of the individuals who had submitted written comments or objections spoke at the hearing on March 2, 1999. In addition, the following individuals spoke at the hearing: Mattie Mack; Kevin Pyle; Sherman Witchler; Eddie Slaughter; Ridgeley Mu’Min Muhammed; Willie Frank Smith; John Bender; Troy Scroggins; and Willie Head.
All of the objections and comments, whether received in the form of letters to the Court or as formal filings, have been filed as part of the official record of this case. To the extent possible, the Court has attempted to address all of the objections that have been raised. Whether or not specifically mentioned in this Opinion, the Court has carefully considered the objections and appreciates the extent to which the objectors have shared their thoughts and views.
One objector maintains that notice was insufficient because the facilitator did not advertise in the United States Virgin Islands. With the exception of that one objection, no one appears to believe that the scope of the notice provided was insufficient.
Certain of the original named plaintiffs, including both Mr. Timothy Pigford and Mr. Cecil Brewington, have objected to the terms of the settlement. The Court has carefully considered their objections but nonetheless concludes that the settlement is fair, adequate and reasonable. Thomas v. Albright,
With one exception, ass Order of March 11,1999, the Court has considered all objections and comments that it received by April 2, 1999. Some of those who have submitted objections do not appear to be members of the class and therefore lack standing to challenge the fairness of the Consent Decree, see Mayfield v. Barr,
For those class members who allege only discrimination in a benefit transaction, Track B is not an option.
In fact, several objectors contend that the Track B mechanism, even with the shortened discovery period, takes too long to resolve claims. It is clear from the tensions between these two sets of objections that class counsel had to strike a delicate balance between resolving Track B claims expeditiously and obtaining the necessary discovery, and tire balance finally struck appears eminently reasonable to the Court.
The Court also notes that it is not unprecedented to conduct hearings in this way, even in trials in federal court, ües Transcript at 51; Charles R. Richey, “Rule 16 Revised and Related Rules; Analysis of Recent Developments for the Benefit of Bench and Bar,'
To the extent that objectors are claiming that class counsel had no economic basis for agreeing to settle the case for the amount they did, that argument is belied by the fact that class counsel consulted a number of economists. Sfifi Pis’ Response to Post-Hearing Submissions. Moreover, while one objector submitted affidavits from other economists that contend that the value of class members’ claims may have been worth more than $50,000, those economists do not take into account the breadth of relief provided by the settlement. See id-, Exh. A {Declaration of Dr. Mervin J. Yetley).
Class counsel also conducted an extensive study of the settlement of four previous civil rights actions in which plaintiffs alleged egregious violations of civil rights, including the case brought by Japanese Americans interned during World War Q and the Tuskegee case involving the claims of African Americans injected with syphilis as part of government experiments. Sss Pis’ Response to Post-Hearing Submissions at 2, n.2. Class counsel reasonably concluded that this settlement, which affords class members greater monetary relief than that afforded to individuals in those four cases, was fair and adequate.