UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ________________________________ ) MARILYN KEEPSEAGLE, et al., ) ) Plaintiffs, ) ) v. ) Civil Action No. 99-3119 (EGS) ) TOM VILSACK, Secretary, U.S. ) Department of Agriculture, ) ) Defendant. ) ________________________________)
MEMORANDUM OPINION
“On October 19, 2010, after nearly eleven years of litigation,
Plaintiffs Marilyn Keepseagle, Luther Crasco, Gene Cadotte,
Porter Holder, Keith Mandan, and Claryca Mandan, individually
and on behalf of all others similarly situated . . . and
Defendant Tom Vilsack, the Secretary of the U.S. Department of
Agriculture . . . entered into a Settlement Agreement . . . to
resolve Keepseagle v. Vilsack . . . a nationwide class action
lawsuit that allege[d] systemic racial discrimination in the
USDA’s Farm Loan Program during the period from 1981 through
1999.” Mem. in Supp. of Mot. for Prelim. Approval, ECF No. 571-1
at 1; see Settlement Agreement (“Agreement”), ECF No. 621-2.1 The
Agreement created a $680,000,000 fund, most of which was
1 The Agreement was modified in 2012 in a manner not relevant to the issues currently pending before the Court. For clarity, the Court refers throughout this Opinion to the version of the Agreement as modified. dedicated to providing compensation to class members who were
able to prove their claims in a non-Judicial Claims Process. See
Agreement ¶ VII.F (p. 13). The Agreement limited the length of
the claims process: Class members had 180 days from the
effective date of the Agreement to submit their claims. See id.
¶ II.B (p. 1), IX.A.1 (pp. 15–16).
In crafting the Agreement, the parties agreed to terms that
would govern the distribution of the fund in the event that
money was left over after the non-Judicial Claims Process was
completed. If that occurred, the Agreement required that “the
Claims Administrator shall direct any leftover funds to the Cy
Pres Fund.” Agreement ¶ IX.F.9 (p. 33) (emphasis added). The
Agreement also contained provisions detailing precisely how the
Cy Pres Fund must be distributed “for the benefit of Native
American farmers and ranchers.” Id. ¶¶ II.I (pp. 2–3), IX.F.9
(p. 33–34). This Court approved the Agreement after providing
notice to the class, receiving written comments, and holding a
fairness hearing. The objections the Court received to the
Agreement were unrelated to the cy pres issues now before the
Court. See Mot. for Final Approval, ECF No. 589 at 62–63; Kent
Objection, ECF No. 585-2 at 7–8; Givens Objection, ECF No. 585-4
at 19–20; Transcript of April 28, 2011 Fairness Hearing, ECF No.
609. No appeal was filed from the Court’s approval of the
Agreement.
2 Nearly three years later, Class Counsel notified the Court
that although the non-Judicial Claims Process had been
completed, approximately $380,000,000 remained unclaimed. See
Status Report, ECF No. 646 at 3. For some reason, far fewer
class members had filed claims than the parties expected, far
fewer had been successful on their claims, or both. Class
Counsel accordingly embarked on attempts to modify the Agreement
to address the far-larger-than-expected excess. The Agreement
itself allows its own modification “only with the written
agreement of the Parties and with the approval of the District
Court, upon such notice to the Class, if any, as the District
Court may require.” Agreement ¶ XIV (p. 49).
Class Counsel first proposed to the government a modification
of the Agreement that would have provided for an additional
distribution to members of the class, including successful
claimants as well as those whose claims were denied, but in
Class Counsel’s view required “further review.” Opp. to Mot. to
Remove at 4. The government strongly opposed any such
modification and threatened to seek reversion of the excess
funds if Class Counsel pursued such a modification unilaterally.
Faced with such a risk, along with the need for the government’s
consent to obtain a modification under the Agreement and the
less-than-clear path for obtaining such a modification
unilaterally, Class Counsel settled on an approach that would
3 maintain the cy pres nature of the funds, but modify the
procedures for their distribution.
On September 24, 2014, Class Counsel filed a proposed
modification of the Agreement, which the Department of
Agriculture does not oppose. See Mot. to Modify, ECF No. 709.
Most importantly, the modification would use the bulk of the Cy
Pres Fund to create a trust with a twenty-year life span, which
would distribute the funds to organizations that are deemed to
serve Native American farmers and ranchers. The idea being that
a longer time horizon for distribution, combined with the
creation of an independent and specialized entity for directing
the distribution, would more efficiently distribute the funds
than the existing cy pres provisions.
The government and Class Counsel have asked this Court to
approve the modification without directing notice to the Class
or holding a fairness hearing pursuant to Federal Rule of Civil
Procedure 23(e), on the grounds that the Rule is inapplicable
where a modification would not affect a class’s legal rights. On
December 2, 2014, the Court held a status hearing, in part to
discuss that issue. The Court began the status hearing by
permitting Ms. Keepseagle to speak. Ms. Keepseagle discussed her
opposition to Class Counsel’s proposed modification and her
support for a proposal under which the cy pres funds would
instead be distributed to members of the class. See Transcript
4 of Dec. 2, 2014 Hearing, ECF No. 756 at 5:12–8:5, 9:19–10:3. The
Court responded:
I’m not suggesting at all by any stretch of the imagination that the theory has legal support. I don’t know. But I very clearly heard [Ms. Keepseagle] tell me in her words very eloquently, as she is, that she wants relief from this judgment which sounds like a Rule 60(b) motion. So, the thought then is, what should the Court do at this juncture to enable her to develop her theory? I’m not going to lose sight of the fact that she’s without individual counsel, from what I can determine based on our brief discussion in open court.
Id. at 12:25–13:18. Accordingly, the Court held further
proceedings in abeyance, and granted Ms. Keepseagle time to
secure legal representation. See id. at 22:4–9.
On February 9, 2015, an attorney appeared on behalf of George
and Marilyn Keepseagle. See Notice of Appearance, ECF No. 755.
The Keepseagles subsequently indicated that they requested a
decision on two preliminary motions before any deadline for
filing a motion for relief from judgment. See Joint Status
Report, ECF No. 758 at 1. Although the government and Class
Counsel preferred to brief all motions simultaneously, the Court
granted the Keepseagles’s request to brief their preliminary
motions first. See Minute Order of February 24, 2015.
The Keepseagles filed their motions on March 13, 2015. The
first motion seeks a Court Order removing Porter Holder and
Claryca Mandan as class representatives. See Mem. in Supp. of
Mot. to Remove (“Mot. to Remove”), ECF No. 760-1. The second
5 motion seeks an Order compelling Class Counsel to produce
certain materials. See Mem. in Supp. of Mot. to Compel (“Mot. to
Compel”), ECF No. 759-1. Class Counsel filed oppositions to both
motions on March 20, 2015. See Opp. to Mot. to Remove, ECF No.
762; Opp. to Mot. to Compel, ECF No. 764. The government “takes
no position on the relief sought in the Keepseagles’ motions,”
but filed a brief indicating its disagreement with their
contention “that the cy pres fund belongs to the class.” Gov’t
Response, ECF No. 763 at 1 (quotation marks and alteration
omitted). The Keepseagles filed reply briefs in further support
of both motions on March 27, 2015. See Reply in Supp. of Mot. to
Compel., ECF No. 766; Reply in Supp. of Mot. to Remove, ECF No.
767. At the Court’s direction, the Keepseagles and Class Counsel
filed supplemental briefs on April 2, 2015. See Class Counsel’s
Suppl. Br., ECF No. 768; Keepseagles’s Suppl. Br., ECF No. 769.
Upon consideration of the motions, the responses and replies
thereto, the applicable law, and the entire record, the Court
DENIES the motions.2
2 The Court directed the parties to address whether the Keepseagles must move to intervene to obtain the relief they seek in these motions. See Minute Order of February 24, 2015. Although Class Counsel and the Keepseagles dispute whether George Keepseagle must intervene—he was once a class representative, but was removed for health reasons in 2006—they agree that Marilyn Keepseagle need not intervene because she remains a class representative. See Mot. to Remove at 11–12; Opp. to Mot. to Remove at 17. Because Marilyn Keepseagle’s
6 I. Motion for Removal of Class Representatives
The Keepseagles seek the removal of Porter Holder and Claryca
Mandan as class representatives on the basis that they are no
longer adequate representatives of the class. They argue that
Holder and Mandan have “abdicated their fiduciary duties” by
supporting Class Counsel’s proposal even though “a substantial
minority—and, in all likelihood a majority, of the class
members” oppose the proposal and because Holder and Mandan have
been proposed as potential trustees of the Trust to be created
by the modification, rendering their interests divergent from
those of the class. See Mot. to Remove at 2. Upon reviewing the
pleadings regarding this motion, the Court noted that the Order
requested by the Keepseagles seeks a post-judgment modification
of the class-certification order, which is arguably barred by
Federal Rule of Civil Procedure 23’s provision of authority to
“alter[] or amend[]” an “order that grants or denies class
certification” only “before final judgment.” Fed. R. Civ. P.
23(c)(1)(C) (emphasis added). Because neither party had
addressed the issue, the Court requested supplemental briefing.
See Minute Order of March 30, 2015.
status is undisputed, the Court need not address George Keepseagle’s status at this time.
7 A. The Court is Not Authorized to Remove Class Representatives After a Final Judgment Has Been Approved.
In their supplemental brief, Class Counsel asserted that post-
judgment modifications of class-certification orders are
permitted only when “the amendment will materially affect the
legal rights of the members of the class,” a circumstance not
present here because class members have no legal right to the Cy
Pres Fund and therefore would not have any rights altered by
modifying the method of its distribution. Class Counsel’s Suppl.
Br. at 2–3. The Keepseagles disagree, arguing that the Court
must reassess the adequacy of representation at all times, and
that the proposed modification will “bind” class members. See
Keepseagle Suppl. Br. at 6–7.3 The question is therefore whether,
3 The Keepseagles’s supplemental brief focused largely on an attempt to recharacterize their motion for removal of class representatives as one pursuant to Federal Rule of Civil Procedure 60(b). See id. at 1–6. On the same page of that brief, they recognize that they “did not explicitly cite to Rule 60(b) as the basis of this Court’s authority to grant the Motion to Remove,” yet assert without explanation that the motion to remove was “premised” on Rule 60(b). Id. at 2 & n.4. Rule 60, however, was not discussed as a basis for the motion to remove or reply in support thereof, nor were the very specific circumstances under which a Rule 60 motion may be granted discussed in either document. The Keepseagles’s attempt fundamentally to alter their motion in a supplemental brief is rejected. See Herbert v. Nat’l Acad. of Sciences, 974 F.2d 192, 196 (D.C. Cir. 1992) (describing the general rule that courts “refuse[] to entertain arguments raised for the first time in [a] reply brief” because of the court’s “dependence as an Article III court on the adversarial process for sharpening the issues for decision”). The Keepseagles, moreover, have indicated their intent to file a Rule 60 motion to seek modification of the Agreement. The Court will consider their Rule 60 arguments
8 when a class action has resulted in a final settlement that
resolves both liability and remedy issues, Rules 23(a)(4) and
23(c)(1)(C) permit the Court to modify the class certification
order in light of allegedly inadequate representation by a class
representative.
Both Rules make clear that the answer is “no,” at least where
post-judgment actions will not affect class members’ legal
rights. Rule 23(c)(1)(C), which provides district courts with
authority to modify a class-certification order “before final
judgment” implies a clear limitation—modification cannot come
after final judgment. Cf. Larionoff v. United States, 533 F.2d
1167, 1183 (D.C. Cir. 1976) (finding, in connection with a prior
version of the Rule which provided authority for modification
before a “decision on the merits,” that the Rule “‘implies, even
if it does not state expressly, that such a decision should be
made in advance of the ruling on the merits’”) (quoting Jimenez
v. Weinberger, 523 F.2d 689, 697 (7th Cir. 1975) (Stevens, J.)).
Indeed, two courts of appeals have found that Rule 23(c)(1)(C)
generally does not apply in post-settlement requests for
modification. See Jeff D v. Andrus, 899 F.2d 753, 758 (9th Cir.
1989) (finding Rule 23(c)(1)(C) “inapplicable” where the
district had previously “entered a final judgment in the form of
in connection with that motion, to which Class Counsel and the government will be able to respond.
9 an order approving the . . . Settlement Agreement”); Cox v.
Shah, 187 F.3d 629, at *7 (4th Cir. 1999) (same). The
Keepseagles’s request for removal of class representatives would
require modification of the class-certification order underlying
the judgment. See Order Preliminarily Approving Settlement, ECF
No. 577 at 2 (“The following individuals are approved as Class
Representatives: Gene Cadotte, Keith Mandan, Porter Holder,
Marilyn Keepseagle, and Claryca Mandan.”); Agreement ¶ II.F (p.
2) (listing Porter Holder and Claryca Mandan as “Class
Representatives”).
To be sure, as Class Counsel admitted, the bar on
modifications after “final judgment” is flexible: “Following a
determination of liability, for example, proceedings to define
the remedy may demonstrate the need to amend the class
definition or subdivide the class. In this setting the final
judgment concept is pragmatic. It is not the same as the concept
used for appeal purposes, but it should be flexible,
particularly in protracted litigation.” Fed. R. Civ. P.
23(c)(1)(C), Adv. Comm. Notes. The “final judgment” language was
inserted in 2003 in place of the phrase “decision on the
merits,” to ensure that a class certification order could be
modified after a liability finding but before the finalization
of the appropriate remedy. Id.; see also Wright & Miller,
Federal Practice and Procedure § 1785.4 (3d ed. 2014). This
10 flexibility regarding the finalization of a remedy, however,
does not apply here. The Agreement not only settled and
extinguished the class’s liability claims, but also provided
detailed resolution of the appropriate remedy, including precise
provisions requiring the transfer of all unclaimed funds at the
conclusion of the non-Judicial Claims Process to a Cy Pres Fund,
and requiring the distribution of the Cy Pres Fund pursuant to
cy pres procedures.
Rule 23(a)(4)’s adequacy-of-representation requirement is
similarly targeted at ensuring that class members who may be
bound by a judgment are properly represented in proceedings that
may bind them. The Rule requires that “the representative
parties will fairly and adequately protect the interests of the
class,” Fed. R. Civ. P. 23(a)(4), and “[b]asic consideration[s]
of fairness require that a court undertake a stringent and
continuing examination of the adequacy of representation by the
named class representatives at all stages of the litigation
where absent members will be bound by the court’s judgment.”
Nat’l Ass’n of Reg’l Med. Programs v. Mathews, 551 F.2d 340,
344–45 (D.C. Cir. 1976) (emphasis added). As the emphasized text
indicates, these concerns are tied to the res judicata effect of
any judgment on class members—a class-action judgment binds
absent class members, so if the class representatives are
inadequate, it would be unfair to allow the case to proceed as a
11 class action. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591,
625–27 (1997).
The problem in this case is that the lawsuit is, for res
judicata purposes, over. See Keepseagle v. Vilsack, No. 99-3119,
2014 WL 5796751, at *12 (D.D.C. Nov. 7, 2014) (“the Great Plains
Claimants, with notice, have intentionally satisfied their legal
claims”); Chandler v. Bernanke, 531 F. Supp. 2d 193, 197 (D.D.C.
2008) (“An agreement between the parties dismissing all claims
is the equivalent of a decision on the merits and thus claims
settled by agreement are barred by res judicata.”). Indeed, the
Agreement made clear that the Class’s claims would be dismissed
and “forever barred and precluded.” Agreement ¶¶ VI.A. (p. 11),
X (pp. 47–48). Accordingly, the res judicata interests that Rule
23(a)(4) is designed to protect have dissipated.
That is not to say that such interests never arise after a
final judgment is entered. Just as the final-judgment concept of
Rule 23(c)(1)(C) is pragmatic, so too are the concerns
underlying Rule 23(a)(4). The D.C. Circuit has found that
concerns regarding binding the legal rights of class members
continue to animate the adequacy requirement post-judgment. For
example, where a post-judgment order granted class counsel an
attorney-fee award to be paid by the class members out of the
funds they had received as damages, the Circuit found the
adequacy requirement implicated because the class
12 representative, an association that had entered into a retainer
agreement with class counsel under which the association would
pay a flat-fee that would be reimbursed from the ultimate class
award, had interests directly in conflict with those of the
class. Mathews, 551 F.2d at 344–45. Proceeding with that
judgment would have subjected class members to court-ordered
payment of attorney’s fees. See id. Post-judgment adequacy
concerns may also arise when a class member’s legal rights under
a settlement are bargained away. See Twelve John Does v.
District of Columbia, 117 F.3d 571, 572 (D.C. Cir. 1997)
(assessing the adequacy of a representative where class counsel
sought to bargain away the right to enforce a consent decree
regarding living conditions in a District of Columbia jail in
exchange for an agreement to meet “certain staffing levels”).
As the Court has previously held, the class members in this
case have no legal right to the Cy Pres Fund. See Keepseagle,
2014 WL 5796751, at *12–14. They agreed to—and did not appeal—a
final settlement that entirely extinguished their legal claims,
provided a framework for the distribution of damages, and
mandated that all excess funds be distributed pursuant to a cy
pres remedy. See id. The process for distributing the Cy Pres
Fund is the sole target of Class Counsel’s pending motion for
modification, so the proposed modification would not implicate a
13 class member’s legal right.4 Unlike the class in Mathews, they
would not be subject to a judgment to be paid out of their own
pocket; rather, the Cy Pres Fund contains money that was
allocated to pay the damages claims of other class members who,
for whatever reason, were unsuccessful under the non-Judicial
4 The Court recognizes that the Keepseagles intend to argue in their motion for modification that the unclaimed funds are the property of the individual class members. See Reply in Supp. of Mot. to Remove at 4–5 n.5. This Court’s November 2014 Opinion held, in rejecting a request for intervention, that class members lacked standing to intervene because they had no legal or property interest in the Cy Pres Fund and therefore faced no imminent legal injury from Class Counsel’s proposed modification. See Keepseagle, 2014 WL 5796751, at *11–14. The Keepseagles’s characterization of this holding as “dicta,” Reply in Supp. of Mot. to Remove at 5 n.5, is incorrect; the lack of a property interest was necessary to the Court’s holding that class members faced no imminent injury. The Keepseagles are free, of course, to argue that this conclusion was wrong. Their brief attempt to do so in connection with the pending motions, however, is unconvincing. Their citation to Klier v. Elf Atochem N. Am., 658 F.3d 468 (5th Cir. 2011) ignores what Klier actually held: That settlement proceeds belonged to a class where the settlement agreement did not provide for a cy pres remedy and permitted the reallocation of excess funds to compensate another subclass. See Keepseagle, 2014 WL 5796751, at *13 (noting that the Fifth Circuit also emphasized that it did not have “‘a case where the settlement agreement itself provide[d] that residual funds shall be distributed via cy pres,’ and . . . that ‘the relevant provisions’ of the Agreement ‘shape the property interest created by the Agreement’”) (quoting Klier, 658 F.3d at 476, 478). The recent Eighth Circuit decision, In re BankAmerica Corp. Securities Litig., 775 F.3d 1060 (8th Cir. 2015), may well support an argument that the Court’s prior holding should be reconsidered—although the Eighth Circuit appears not to have been confronted with a settlement agreement that mandated that the settlement administrator direct all excess funds to a Cy Pres Fund—but the Keepseagles have not elaborated their reliance on that case, so the Court has no occasion to address it at this time.
14 Claims Process or did not participate in the process. And unlike
the class in Twelve John Does, no one is bargaining away any
legal right regarding the enforcement of the Agreement.
Accordingly, the Court does not have the authority to remove
class representatives at this stage of proceedings, where a
final judgment has been entered and the pending proposal for
modification of the Agreement does not implicate the legal
rights of class members. For that reason, the Court DENIES the
Keepseagles’s motion to remove.
B. Porter Holder and Claryca Mandan Remain Adequate Representatives.
Although the Court lacks the authority to remove class
representatives in the peculiar posture in which this motion
arises, even if the Court had such authority, removal of Holder
and Mandan would be inappropriate because they remain adequate
representatives. The adequacy requirement ensures that “the
named representative must not have antagonistic or conflicting
interests with the unnamed members of the class.” Twelve John
Does, 117 F.3d at 575 (quotation marks omitted). This is
necessary because “[a] class representative whose interests are
materially adverse to some of the class cannot be an adequate
representative for the whole class because in promoting her own
interests she may undercut the interests of other class
members.” Newberg on Class Actions § 3:54 (5th ed. 2014).
15 The Keepseagles argue that Holder and Mandan do not have the
same interests as those of the class because: (1) they support a
proposed modification that is opposed by many class members; and
(2) they have been proposed as trustees of the Trust to be
created by the proposed modification and stand to receive
compensation for that position. See Mot. to Remove at 2–4.5 Class
Counsel responds that Holder and Mandan have merely taken a
different strategic position than the Keepseagles, and that no
conflict of interest arises from their nomination as trustees
because they stand to gain even more from any proposal under
which the Cy Pres Fund would be distributed to successful class
members. See Opp. to Mot. to Remove at 8–15.
The Court agrees that class representatives do not become
inadequate merely because other class members disagree with
their strategic decisions. See Newberg on Class Actions § 3:65
5 The Keepseagles’s counsel repeatedly suggest, without providing any evidentiary support, that Holder and Mandan may have received some type of secret compensation in exchange for supporting Class Counsel’s motion for modification. See, e.g., Mot. to Remove at 4 n.3. They even go so far as to appear to imply that Class Counsel provided large class-representative awards to Holder and Mandan—in the 2011 settlement—as compensation for their support for the proposed modification—the need for which could not have been apparent in 2011. See Mot. to Remove at 9 & n.9; Reply in Supp. of Mot. to Remove at 19 n.21. The former allegations, which would be deeply concerning if true, are wholly unsupported by evidence; the latter implication defies logic. The Court recognizes the sincere and deep disagreement regarding these issues, but no party’s position is advanced by leveling wholly unsupported allegations.
16 (5th ed. 2014); Californians for Disability Rights, Inc. v. Cal.
Dep’t of Transp., 249 F.R.D. 334, 348 (N.D. Cal. 2008) (“A
difference of opinion about the propriety of the specific relief
sought in a class action among potential class members is not
sufficient to defeat certification.”). The same is true when
portions of the class disagree with a proposed settlement. Cf.
Thomas v. Albright, 139 F.3d 227, 232 (D.C. Cir. 1998) (“a
settlement can be fair even though a significant portion of the
class and some of the named plaintiffs object to it”); Grant v.
Bethlehem Steel Corp., 823 F.2d 20, 22–24 (2d Cir. 1987)
(approving class-action settlement, under standard that required
“that the class members’ interests were represented adequately,”
even though all class members who expressed an opinion on the
settlement opposed it). “Rule 23(a)(4) ensures that
representative parties will fairly and adequately protect the
interests of the entire class.” Council of & for the Blind v.
Regan, 709 F.2d 1521, 1547 (D.C. Cir. 1983) (emphasis added).
This may require consideration of the views of vocal class
members, but a class representative must also exercise judgment
as to the propriety and likelihood of success of any particular
course of action. Cf. Twelve John Does, 117 F.3d at 576
(rejecting a contention that class counsel was inadequate in
negotiating with the defendant regarding violations of a consent
decree for failing to seek “concessions not contained in the
17 consent decree”). A class representative’s support for a
particular course of action, then, must be judged not only
against the views of the class, but also against the strategic
calculations that factored into that support.
Although reasonable minds could—and clearly do—disagree on the
best approach in this case, there is ample reason for Holder and
Mandan to view Class Counsel’s proposal as the strategic
decision that is most in the Class’s interest. The fact remains
that the Agreement that was approved mandates, in provisions
neither objected to nor appealed from, that all leftover funds
be distributed by the Claims Administrator to the Cy Pres Fund
and that the Cy Pres Fund be distributed to Cy Pres
Beneficiaries. See Agreement ¶¶ II.I (pp. 2–3), IX.F.9 (p. 33–
34). In considering whether to propose any modification of the
Agreement, Holder and Mandan would have to review the limited
avenues for obtaining such a modification. One path lies with
the Agreement itself, which permits modification “only with the
written agreement of the Parties.” Id. ¶ XIV (p. 49). Another
path arguably may lie with Federal Rule of Civil Procedure
60(b), which provides for relief from judgment under certain
narrow circumstances. After learning that the government would
not only withhold consent to a modification that provided
additional payments directly to class members, but would seek to
obtain reversion of the excess funds if Class Counsel sought
18 such a modification unilaterally, Holder and Mandan could
reasonably have decided that seeking supplemental payments was
not worth the risk. Their decision could be bolstered by the
uncertainty inherent in seeking a modification of the Agreement
under Federal Rule of Civil Procedure 60(b). See, e.g., In re
Black Farmers Discrimination Litig., 950 F. Supp. 2d 196, 199–
201 (D.D.C. 2013) (rejecting Rule 60 motion for modification of
a similar settlement agreement that resolved similar
discrimination claims raised by African-American farmers); In re
Black Farmers Discrimination Litig., 29 F. Supp. 3d 1, 3–5
(D.D.C. 2014) (same). Were such a motion pursued in lieu of the
agreed-upon modification and subsequently denied, the class
would be stuck with the deal it originally struck—resulting in a
large Cy Pres Fund to be distributed in an arguably inefficient
manner. Worse, the government might follow through with its
promise to seek reversion of the entire excess. Of course, a
class representative might also decide—as Ms. Keepseagle has
decided—that the risk of losing a Rule 60 motion is worthwhile,
and that the government is unlikely to obtain reversion of the
funds. But that is precisely the point; either strategic path
has its benefits and its risks. Weighing these benefits and
risks is the job of a class representative, and Holder and
Mandan cannot be faulted for reaching a reasonable conclusion
that differs from that reached by many class members.
19 The Court also finds that Holder and Mandan do not have a
conflict of interest that would render them inadequate
representatives. To be sure, Holder and Mandan have been
nominated as potential trustees of the Trust that Class Counsel
seeks to create to oversee the distribution of the Cy Pres Fund.
See Class Counsel’s Notice of Nominations, ECF No. 712 at 1, 2.
If confirmed to this position, they would be eligible to receive
up to $10,000 annually for as long as they served, although
their service would be subject to reappointment and limited to a
maximum possible term of ten years. See Proposed Trust
Agreement, ECF No. 709-3 at 7, 9. The Keepseagles argue that
this creates an incentive to support the modification because
Holder and Mandan stand to gain up to $100,000 and would be in a
position to direct the distribution of a significant Cy Pres
Fund.6 Class Counsel responds that if Holder and Mandan were
financially motivated, they would be much better served by
6 The Keepseagles’s attorneys also appear to challenge the qualifications of Holder and Mandan to serve as trustees. They imply that both are totally unqualified for the job: “Upon information and belief, neither Holder nor Mandan has ever served on a non-profit entity with a substantial endowment and neither has substantial experience with grants.” Mot. to Remove at 3. This is misleading. Clarcya Mandan has experience with various non-profit organizations. See Mandan Bio, ECF No. 712-8. Porter Holder, moreover, has served on the Council for Native American Farming and Ranching, which was created by the Agreement in this case to advise and oversee the Department of Agriculture regarding issues that affect Native American farmers and ranchers. See Holder Bio, ECF No. 712-5.
20 seeking supplemental payments directly to class members. See
Opp. to Mot. to Remove at 9.
Adequacy is not questioned whenever class representatives have
any divergence of views or interests; “not every potential
distinction between the proposed representative and other class
members will render the representative inadequate.” Newberg on
Class Actions § 3:58 (5th ed. 2014). “Only conflicts that are
fundamental to the suit and that go to the heart of the
litigation prevent a plaintiff from meeting the Rule 23(a)(4)
adequacy requirement.” Id. Holder and Mandan do not have such a
deep divergence of interests. For one, their nomination is
contingent on being approved by the Court, and would be subject
both to term limits and to their reappointment. See Proposed
Trust Agreement, ECF No. 709-3 at 7, 9. They would not be given
money for nothing; they would be required to serve as Trustees
and supervise what would surely be a complex distribution
process. Finally, and most importantly, Holder and Mandan are
successful claimants under the existing Agreement. If they were
to support a redistribution of the excess funds to the class as
a whole or to previously successful class members, they would be
among those who would directly benefit, without the need for
approval of a nomination, continued service, years of work, or
reappointment. Indeed, if the excess funds were distributed pro
rata to all those who successfully submitted claims, Holder and
21 Mandan would receive approximately $100,000 each, Opp. to Mot.
to Remove at 9—the maximum amount they could receive for serving
as trustees, which would come only if they served for ten years.
See Proposed Trust Agreement, ECF No. 709-3 at 7, 9.
Accordingly, Holder and Mandan may stand to benefit under the
proposed modification, but they would also directly benefit
under a proposal akin to the Keepseagles’s plan. It is thus not
a conflict of interest that is driving their support for Class
Counsel’s motion, but a difference of opinion regarding the best
strategy.
In their reply, the Keepseagles argue that Holder and Mandan
would not benefit from the Keepseagles’s forthcoming motion to
modify the Agreement because the Keepseagles intend to move for
supplemental distributions only to class members who
successfully prosecuted a claim under Track A of the Agreement,
and Holder and Mandan were Track B claimants. See Reply in Supp.
of Mot. to Remove at 18–20. This argument illustrates the
fundamental flaw in the Keepseagles’s motion. If the Court were
to grant the motion, and the Keepseagles were to propose the
modification they say they intend to file, it would render
Marilyn Keepseagle subject to removal as a class representative.
The Keepseagles seek to remove Holder and Mandan for supporting
a modification that would not directly benefit all class
members, yet intend to propose a modification that would
22 distribute the excess funds only to successful Track A
claimants. This would omit all successful Track B claimants, all
class members whose claims were denied during the non-Judicial
Claims Process, and all class members who did not participate in
the non-Judicial Claims Process. That, however, is not how class
representation works: Porter Holder, Claryca Mandan, and Marilyn
Keepseagle have divergent views on the strategic options
available to the Class in seeking potentially to modify the
Agreement they struck in 2011. Given the posture of this case,
the uncertain legal issues involved, and the seeming
impossibility of reaching a modification that would benefit all
class members equally, their divergent views are understandable
and reflect not a conflict of interest, but that they all
continue to serve as strong representatives of the class,
despite their disagreements about the best strategy going
forward.
Holder and Mandan thus find themselves in a position far
different from those of the inadequate class representatives
referenced by the Keepseagles. Many of the cases relied upon by
the Keepseagles addressed class representatives whose underlying
legal claims differed in material ways from those of the class.
See Rosario v. Rockefeller, 410 U.S. 752, 759 n.9 (1973) (class
representatives who were not subject to challenged practice were
not members of the class); Hall v. Beals, 396 U.S. 45, 49 (1969)
23 (same); Bailey v. Patterson, 369 U.S. 31, 32–33 (1962) (same).
There is no dispute that Holder and Mandan had identical
substantive claims against the Department of Agriculture. Other
cases relied upon by the Keepseagles established the proposition
that a class should not be represented by an individual who,
under the class’s allegations, herself engaged in the challenged
conduct. See Wagener v. Taylor, 836 F.2d 578, 595 (D.C. Cir.
1987) (employment-discrimination class that included managers
who allegedly participated in the discriminatory conduct against
lower-level employees who were also class members). There could
be no allegation that Holder or Mandan were involved in the
Department of Agriculture’s actions that gave rise to this
lawsuit.
Nor are Holder and Mandan anything like the self-dealing class
representatives of Eubank v. Pella Corp., 753 F.3d 718, 723 (7th
Cir. 2014) and Mathews, 551 F.2d at 346. Mathews found
inadequate a class representative that had fronted the costs of
class counsel’s representation of the class and sought a post-
judgment order directing other class members to reimburse those
costs out of the damages recovered in the underlying suit. 551
F.2d at 344–46. Holder and Mandan do not stand to take anything
from class members (even if they become trustees, the Cy Pres
Funds with which the Trust will operate are not the property of
class members, supra at 13–14 & n.4), and unlike the
24 representative in Mathews, they actually would stand to gain
from an alternative modification proposal. Eubank demonstrated a
severe conflict of interest, where a class representative was
the father-in-law of class counsel, class counsel was facing
significant financial difficulties, and the class representative
therefore had a strong incentive to support proposals that
financially benefited class counsel over the class itself. 753
F.3d at 721–24. No such situation has been alleged here.
Accordingly, even if the Court had the authority to consider the
adequacy of class representatives at this stage, the Court would
DENY the Keepseagles’s motion.
II. Motion to Compel
Between July 30, 2014 and August 26, 2014, Class Counsel held
“in-person informational meetings” in Tulsa, Oklahoma;
Albuquerque, New Mexico; Phoenix, Arizona; Rapid City, South
Dakota; Bismarck, North Dakota; Spokane, Washington; Billings,
Montana; and Raleigh, North Carolina. See Class Counsel’s Mem.
in Supp. of Mot. to Modify, ECF No. 709-1 at 24. They also held
conference calls on August 6, 2014; August 16, 2014; and August
20, 2014. See id. “Each of these meetings spanned an entire day,
while each call lasted three hours, and included presentations,
questions and answers, and remarks by Class Members and members
of the public.” Id. On behalf of Class Counsel, the Indigenous
Food & Agriculture Initiative of the University of Arkansas
25 School of Law compiled a summary report of the comments made
during these so-called listening sessions. See Listening Session
Report, ECF No. 709-6; Mot. to Compel at 3.
The Keepseagles would like access to the Indigenous Food &
Agriculture Initiative’s “notes and the other correspondence
from class members and others related to the Listening Sessions”
(“the Listening Session Materials”). Mot. to Compel at 5; see
also Reply in Supp. of Mot. to Compel at 2 (describing the
materials sought as “letters, faxes and e-mails sent to IFAI
and/or Class Counsel, and IFAI’s transcriptions of the Listening
Sessions”). They assert that these materials “are the best
evidence of class members’ goals and interests with respect to
the distribution of the cy pres funds” and that “[a]n Order
compelling the production of the Listening Sessions records will
permit the Keepseagles to demonstrate that a substantial
minority—if not a broad majority—of the class members oppose
Class Counsel’s proposed modification and instead support a
supplemental distribution of the cy pres funds to class
members.” Mot. to Compel at 4.
Although the motion clearly articulates what the Keepseagles
want, it does not clarify the legal basis for getting there.
This case settled years ago pursuant to the Agreement over which
the Court retained only narrow jurisdiction. The Keepseagles
have not invoked the civil-discovery rules of the Federal Rules
26 of Civil Procedure as a basis for their motion to compel, nor
have they relied upon any provision of the Agreement itself.
Finally, the Keepseagles have not relied upon authority
permitting the Court to grant limited discovery in support of a
Rule 60(b) motion.7 The Keepseagles rely on two sources for their
motion to compel: First, they assert that Class Counsel’s
professional obligations require them to provide the Keepseagles
with the Listening Session Materials. See Mot. to Compel at 5–6.
Second, they invoke a doctrine that permits an objector to a
class-action settlement to obtain discovery in support of her
objection. See id. at 7.8
7 Their motion argued that the discovery would be useful to their forthcoming Rule 60 motion, but did not tie that to any legal basis for granting the motion to compel. In any event, the circumstances under which discovery is allowed in support of a Rule 60 motion appear limited to those in which the discovery sought is directly relevant to proving the applicable basis for relief from judgment. See, e.g., Bowie v. Maddox, 677 F. Supp. 2d 276, 285 (D.D.C. 2010) (discovery “to further develop . . . claims of fraud” may be permitted in support of a Rule 60(b)(3) motion where the plaintiff “demonstrates a colorable claim of fraud”). The level of class-member opposition to a competing motion for modification, by definition, is not relevant to any basis for relief from judgment under Rule 60—all of which speak to defects in or changed circumstances regarding the underlying judgment.
8 The motion to compel also contains conclusory and unexplained arguments that, to the extent they seek to establish additional bases for the motion, are rejected. First, the motion states that “[i]n addition to the Keepseagle[s]’s right under the Rules of Professional Conduct to files in Class Counsel and/or their agent’s possession, this Court has authority to compel Class Counsel to produce all such records.” Mot. to Compel at 6 (emphasis in original). To the extent this argument was intended
27 A. The Keepseagles Waived Their Professional Responsibility Argument.
The Keepseagles’s invocation of the Rules of Professional
Responsibility was based upon their assertion that Ms.
Keepseagle “possesses a traditional attorney-client relationship
with Class Counsel.” Mot. to Compel at 5. Pursuant to Rule
1.16(d) of the D.C. Rules of Professional Responsibility, such a
relationship requires that “[i]n connection with any termination
of representation, a lawyer shall take timely steps to the
extent reasonably practicable to protect a client’s interests,
such as . . . surrendering papers and property to which the
client is entitled.” The Keepseagles accordingly argue that they
“are entitled to prompt production of files relevant to their
case.” Mot. to Compel at 6. Class Counsel responded that the
Keepseagles fail to grapple with the differences between a class
to be distinct from the class-action-objector argument, it is wholly unexplained. The legal decision cited in the following sentence for the proposition that “district judges presiding over class actions are expected to give careful scrutiny to the terms of proposed settlements in order to make sure that class counsel are behaving as honest fiduciaries for the class as a whole” has nothing to do with a district court’s authority to grant a post-judgment motion to compel. See id. (citing Uhl v. Thoroughbred Technology & Telecomms., Inc., 309 F.3d 978, 985 (7th Cir. 2002)). Similarly, the final paragraph of the motion to compel invokes decisions regarding the Court’s authority to impose sanctions for misconduct, a situation wholly unrelated to compelling the production of documents. See id. at 16 (citing Clarke v. Washington Metropolitan Area Transit Auth., 904 F. Supp. 2d 11, 20 (D.D.C. 2012); Shepherd v. Am. Broad. Co., 62 F.3d 1469, 1472 (D.C. Cir. 1995).
28 action and individual representation. Although Class Counsel
acknowledge their attorney-client obligations to the
Keepseagles, and agree to, “of course, turn over to the
Keepseagles materials that pertain to their claims,” Class
Counsel also note that they have “a fiduciary obligation to the
class apart from their attorney-client relationship with the
Keepseagles.” Opp. to Mot. to Compel at 5. They correctly state
that none of the authority cited by the Keepseagles establishes
a right to all files related to a class action—including
communications between the lawyer and other class members. See
Opp. to Mot. to Compel at 8–9 (distinguishing Cobell v. Norton,
212 F.R.D. 14 (D.D.C. 2002) and In re Cmty. Bank of N. Va., 418
F.3d 277 (3d Cir. 2005) because the cases involved “alleged
ethical violations of lawyers other than class counsel” and did
not involve questions related to the return of client files)
(emphasis in original). Class Counsel also cited authority for
the proposition that its ethical obligations are different from
those of counsel for an individual. See Opp. to Mot. to Compel
at 5–9.
The Keepseagles have not provided the Court with any authority
supplying a basis for this Court to adjudicate an ethical
dispute involving the D.C. Rules of Professional Responsibility,
and the source of such authority is not clear. Cf. Shelvy v.
Wal-Mart Stores, East, No. 11-cv-9176, 2013 WL 6081514, at *1
29 (N.D. Ill. Nov. 19, 2013) (expressing skepticism that a district
court would have jurisdiction over a motion to compel based
solely upon a similar rule of professional responsibility). The
Court need not address the issue, however, because the
Keepseagles abandoned the entire argument in their reply brief
by failing to respond to any of Class Counsel’s points regarding
the differences between individual and class representation and
the applicable rules of professional conduct. See generally
Reply in Supp. of Mot. to Compel., ECF No. 766. “‘Because the
[Keepseagles] failed to address these issues in [their] motion
and failed to respond to [Class Counsel’s] points in [their]
Reply, the Court will deem them abandoned.’” Coleman ex rel.
Bunn v. District of Columbia, No. 13-1456, 2014 WL 4819092, at
*17 (D.D.C. Sept. 30, 2014) (quoting McGinnis v. District of
Columbia, No. 13-1254, 2014 WL 4243542, at *15 (D.D.C. Aug. 28,
2014) (alterations omitted)).
B. The Keepseagles Are Not Entitled to Objector Discovery of the Listening Session Materials.
The second basis invoked by the Keepseagles for their motion
to compel relates to discovery that may be granted to class-
action objectors. “Class members, including those who become
objectors, are entitled to some opportunity to review the record
of the case so as to inform their views about the value of the
certification motion, settlement, and/or fee request.” Newberg
30 on Class Actions § 13:32 (5th ed. 2014). Even so, “[c]lass
members who object to a class action settlement do not have an
absolute right to discovery.” In re Lorazepam & Clorazepate
Antitrust Litig., 205 F.R.D. 24, 26 (D.D.C. 2001); see also In
re Cmty. Bank of N. Va., 418 F.3d at 316. The Manual for Complex
Litigation suggests that “[d]iscovery should be minimal and
conditioned on a showing of need.” Manual for Complex
Litigation, Fourth § 21.643; see also Newberg on Class Actions §
13:32 (5th ed. 2014) (“The touchstone for discovery is that it
will ultimately assist the court in determining the fairness of
the settlement.”). As another Judge of this Court put it: “[T]he
Court may in its discretion allow discovery if it will help the
Court determine whether the settlement is fair, reasonable, and
adequate.” In re Lorazepam & Clorazepate Antitrust Litig., 205
F.R.D. at 26 (emphasis added); see also, e.g., Wal-Mart Stores,
Inc. v. Visa, USA, Inc., 396 F.3d 96, 120 (2d Cir. 2005) (if
“the District Court had before it sufficient facts intelligently
to approve the settlement offer,” there would be “no reason . .
. to give appellants authority to renew discovery.”); In re
Cmty. Bank of N. Va., 418 F.3d at 316 (“The District Court has
discretion to employ the procedures that it perceives will best
permit it to evaluate the fairness of the settlement.”)
(quotation marks omitted); In re Prudential Ins. Co. Am. Sales
Practice Litig., 148 F.3d 283, 342 (3d Cir. 1998) (“whether to
31 grant discovery is committed to the sound discretion of the
court”).
The Keepseagles justify their discovery request as “directly
relevant to the propriety of Class Counsel’s motion and the
issue of whether their motion is supported by a majority of the
members of the class they purport to represent,” and rightly
note the potential relevance of class-member opposition to the
Court’s consideration of a settlement. Mot. to Compel at 7.
Class Counsel oppose the request on the grounds that discovery
of the Listening Session Materials would not add anything
because all parties agree “that most class members who spoke at
the eleven Listening Sessions or otherwise contacted Class
Counsel prefer a supplemental distribution instead of the
proposed modification.” Opp. to Mot. to Compel at 2; see also
Class Counsel’s Mot. to Modify, ECF No. 709-1 at 25(“most Class
Members who spoke . . . expressed their preference that some or
all of the cy pres funds be distributed directly to Class
Members who filed claims”); Summary of Comments, ECF No. 709-6.
The Court largely agrees with Class Counsel that the discovery
sought by the Keepseagles would be duplicative of existing
stipulations. It is well established that discovery is not
warranted where the underlying factual issue is one to which all
parties stipulate. See, e.g., Jones v. ReliaStar Life Ins. Co.,
615 F.3d 941, 945 (8th Cir. 2010) (where plaintiff “emphasize[d]
32 that discovery should be allowed to explore [the defendant’s]
conflict of interest, but [the defendant] concede[d] that it was
both insurer and administrator of the plan, . . . discovery is
unnecessary to establish the existence of a conflict”); Estevez-
Yalcin v. Children’s Village, 331 F. Supp. 2d 170, 180 (S.D.N.Y.
2004) (where a party “concedes that it did no background check
at all on [a particular individual], . . . further discovery on
that issue is unnecessary”); Med. Billing Consultants, Inc. v.
Intelligent Med. Objects, Inc., No. 1-cv-9148, 2003 WL 1809465,
at *2 (N.D. Ill. Apr. 4, 2003) (“Discovery of these documents at
this point in the litigation is not necessary as defendants are
willing to concede the most important issue.”). The point the
Keepseagles intend to make—that class members expressed broad
opposition to Class Counsel’s proposal—has largely been
stipulated to. Indeed, the comments received by the Court—all of
which have been posted on the docket—also demonstrate strong
opposition by many class members.
To the extent the Keepseagles intend to object to the
modification based upon the precise number of individuals
opposed to it or the precise words used to describe their
opposition, Reply in Supp. of Mot. to Compel at 3–5, the Court
would be better served by receiving written and oral statements
from these individuals directly. Such statements would be far
more persuasive proof of the positions of class members than
33 comments made by a relatively small subset of the class nearly
one year ago, some of which may have been intended to be private
communications to Class Counsel. The Court, moreover, intends to
solicit such a broad and timely array of comments from the
class. Because the Court intends to receive such input—the true
best evidence of the class’s perspective on Class Counsel’s
motion and the Keepseagles’s forthcoming motion—and because the
materials the Keepseagles seek have been largely stipulated to,
the Court finds that the Keepseagles’s proposed discovery would
not assist the Court in determining “whether the settlement is
fair, reasonable, and adequate,” In re Lorazepam & Clorazepate
Antitrust Litig., 205 F.R.D. at 26, and therefore DENIES the
motion to compel.
III. Conclusion
For the foregoing reasons, the motions to remove class
representatives and to compel are DENIED. An appropriate Order
accompanies this Memorandum Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan United States District Judge April 23, 2015