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Cobell v. Salazar (D.C. Cir. 2012)

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I'm disappointed by Tuesday's decision in Cobell v. Salazar, the first time I ever lost a federal appeal I've argued. (Of course, as always, the Center for Class Action Fairness is not affiliated with the Manhattan Institute.) [Briefing; Coverage: DC Circuit Review; BLT; ICTMN; AP; Reuters; Cronkite; McClatchy; Oklahoman; wildly inaccurate KFBB.]

It would be one thing if we had lost on 50-50 issues or trying to get the court to adopt new unprecedented law. I wouldn't have brought that appeal: it's hard enough to win cases with logos, the law, on one's side; my general rule of thumb is to only bring the cases with both logos and clear-cut pathos (such as a settlement where the attorneys get $7M and the class only gets $0.5M), and here I was up against both pathos, the dramatic story of cancer-ridden Elouise Cobell successfully challenging the government, and ethos, the government itself supporting this settlement plus a Supreme Court clerk arguing the appeal for the plaintiffs.

We proceeded anyway against these odds because we were unambiguously right on the law, and we lost because the DC Circuit opinion is wrong:

  • We noted that the district court's finding of commonality of a Trust Administration Class involving thousands of individualized claims encompassing dozens of different types of causes of action flouted Wal-Mart v. Dukes's requirement of a "common answer"; the class was considerably broader and heterogenous than the one rejected by Dukes, and the appellees never responded to our challenge to identify a similarly sprawling class certification that survived appellate review. The DC Circuit responded: Although Craven characterizes the Class as "sprawling" and encompassing "dozens of wildly different theories of liability," Appellant's Br. at 42, all of the class members' trust claims revolve around resolution of a single issue -- the extent of the Secretary's fiduciary obligation as trustee of the IIM accounts. But this is an adoption of the "common question" theory of commonality that Dukes expressly rejected. The fiduciary duty of the Secretary with respect to a class member's claim that BIA incompetently leased out oil lands at a fraction of their value is entirely unrelated to the fiduciary duty of the Secretary with respect to a claim that the Secretary overcharged class members for administration expenses, but both claims are extinguished by the unprecedentedly sprawling Trust Administration class. Under the DC Circuit's reasoning, Dukes should have been certified because "all of the class members' [employment-law] claims revolve around resolution of a single issue." (See Dukes's Supreme Court brief at 15.)
  • The DC Circuit gave the back of the hand to our argument that Cobell's request for $13 million in incentive payments created a per se conflict of interest with the class: "Craven thus fails to show... an error of law" (citing no precedent). But the Eleventh Circuit has held that a long-time friendship between a class representative and an attorney was sufficient to defeat adequacy. When the representative is beholden to her attorneys to make arguments for her to be paid $13 million she couldn't be paid otherwise, how can we trust that she's fulfilling her fiduciary duty to the class? (And indeed, there was unambiguous evidence that Cobell favored her attorneys at the expense of the class, given that she made a personal plea to the court to award them $253 million, notwithstanding the $99.9 million limit in the settlement agreement.) The answer is clear under London: we can't, and the class can't be certified. Now, maybe London is wrong, and the DC Circuit made a measured decision to create a circuit split; maybe Cobell presents unique circumstances that distinguish it from London and every other aspect of the law of fiduciary duty. But the district court never performed that inquiry, and the D.C. Circuit never addressed it. See also Murray v. GMAC at 952 ($3000 award to class representative several times greater than he could recover in litigation "untenable").
  • The D.C. Circuit held that "Craven's discussion of a hypothetical conflict is an inadequate basis for vacating the class settlement agreement. See Eubanks v. Billington, 110 F.3d 87, 98 (D.C. Cir. 1997)." Leave aside that that holding of Eubanks isn't good law, having been superseded by Wal-Mart v. Dukes, and that a better signal would have been "Cf." rather than "See," since Eubanks doesn't make the precise holding the D.C. Circuit attributes to it. The broader proposition is simply wrong. The U.S. Supreme Court vacated class action settlements in Amchem (at 625-28) and Ortiz (at 856-59) based on hypothetical intra-class conflicts. So have several appellate courts: see, e.g., In re Literary Works, 654 F.3d 242, 249-55 (2d Cir. 2011); In re Katrina Canal Breaches Litigation, 628 F. 3d 185, 193-94 (5th Cir. 2010); In re Community Bank of Northern Virginia, 622 F. 3d 275, 303-04 (3d Cir. 2010).
  • Cobell XXIII held that Cobell XXII's decision (at 813) that a distribution to the class would be necessarily "arbitrary" and "unfair" isn't law of the case because (a) the earlier decision didn't explicitly consider per capita distribution (which is as arbitrary as possible) and (b) a 23(e) fairness determination is a different question than a judge's equitable powers, so something can be both "unfair" for purposes of restitution for an accounting yet meet Rule 23(e)'s fairness requirement in giving mandatory compensation for settling an accounting. This reasoning is mysterious to me. No authority is cited for the latter proposition. Perhaps the Cobell XXIII court is dissatisfied with Cobell XXII; the oral argument panel kept asking me to resolve hypotheticals assuming that an accounting would be "impossible," a proposition that Cobell XXII rejected. But to claim a finding that any distribution is per se "unfair" is not the same issue of whether a per capita distribution in particular is "fair" seems incorrect—especially when the government had explicitly raised (at 67-68) the problem of per capita and pro rata distributions in its success in defeating the earlier restitution proposals. See also Government 08-5500/5506 Appellate Brief at 56-57.
  • Not relevant to the merits of further review, but interesting: the Cobell plaintiffs repeatedly pushed the tale of James "Mad Dog" Kennerly as the poster-child for why their lawsuit was legitimate. See, e.g., Cobell testimony before Congress; Mother Jones, Sep. 2005; Missoulian; Cobell v documentary. But when push came to shove for defending the settlement, they argued successfully to the D.C. Circuit—using evidence from 2000, years before they stopped pushing the Kennerly story—that Kennerly was not entitled to anything (see Cobell XXIII slip op at 16 & n.8). Some enterprising journalist—perhaps one who reported the story of Kennerly as true?—should inquire why the story changed before and after the settlement, whether Cobell thought she was lying to Congress in 2007 when she claimed that Kennerly was entitled to millions, and why a 2000 report changed the story in 2011 instead of in 2000.

Kimberly Craven was making the same arguments that Elouise Cobell did in 2007; in 2011 and 2012, Elouise Cobell's attorneys successfully argued that Elouise Cobell was wrong in 2007.

Of course, being right on the merits, and being able to point out where the D.C. Circuit is wrong doesn't mean that a motion for rehearing or rehearing en banc, or a petition for certiorari, will be successful; there's a reasonable judicial bias for finality, and the pathos of being able to bring to conclusion a 15-year-old case has an effect that cuts against further review of a unanimous decision. Page limits mean I couldn't raise all these issues even if it wouldn't be counterproductive to do so. I wouldn't want to keep fighting if fighting is futile, and would only delay the resolution of this settlement, even if I believe it's illegal; spending time on a losing case has the opportunity cost of taking time away from being able to pursue winning cases where I can make a difference.

Update: On June 27, Kimberly Craven retained new counsel, replacing me. I have no control over her decision whether to appeal further. Please do not contact me to complain about her appeal.

5 Comments

Can you comment on what there is to evaluate? The appeal was lost, so why put a settlement on hold even longer?

I for one am glad you appealed it the lawyers got way to much should of went with John Mccain's settlement offer back in 2007

I really think that anyone who thinks this will go to the Supreme court is wrong. I don't think they will hear it and you need to look at how they have ruled on 2 important issues of late.

too bad this didnt go through..... is ms craven planning a second appeal?

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Project Manager,
Center for Legal Policy at the
Manhattan Institute
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