Years after the late Andrew Breitbart called attention to the multi-billion dollar giveaway of taxpayer money to Friends of Obama under the guise of settling discrimination litigation, the New York Times notices that a political decision to settle meritless litigation that the government was winning in court as if the government had defaulted on all claims has led to an abuse of the Settlement Fund, and a lot of fraudulent claims, with no intent by the government to investigate the theft from taxpayers. (Where are the False Claim Act qui tam suits?) As the late Richard Nagareda and I noted years ago, when you have a mass-tort settlement with no checks for fraud, you will get the Field-of-Dreams problem: "If you build it, they will come," and the claims process will be overrun by fraud. But, as Paul Horwitz notes, the legal academy utterly ignored this aspect of the Pigford litigation.
One settlement of $700 million only presented $300 million of claims (itself a likely exaggerated figure), leaving a $400 million slush fund for the attorneys (Cohen Millstein) for "cy pres," again with apparently no oversight. Will anyone be checking to determine if the money is actually going to its intended purposes instead of to something affiliated with the attorneys?
The story focuses on Department of Agriculture settlements, and thus omits the equally problematic Cobell v. Salazar settlement. There, the government had essentially won the litigation, getting the D.C. Circuit to throw out a judgment of $455 million. Yet, once Obama took office, the case settled for $3.4 billion—including $1800 a pop for hundreds of thousands of class members with absolutely no damages because they correctly had only pennies in their trust accounts. As you recall, I filed an objection on behalf of a class member who complained that class members with actual damages were being shortchanged by the settlement because of the arbitrary payments to the uninjured class members. Yet, though the D.C. Circuit had earlier held that such a distribution "would be inaccurate and unfair to an unknown number of individual trust beneficiaries," it affirmed approval of a settlement with the exact same "inaccurate and unfair" distribution. That taxpayers ended up on the hook for $3 billion more than the D.C. Circuit had already held was unreasonable has gone entirely unreported upon.
Even more remarkable is the fact that the plaintiffs used the D.C. Circuit briefing to admit that they had lied before Congress about their case. James Otis Kennerly, served as the poster child for the class because he had allegedly been cheated out of millions of dollars by poor trust accounting relating to an oil well on his land; lead plaintiff Elouise Cobell testified before Congress about that story as late as 2007. In arguing for rejection of the settlement, we noted that Kennerly was going to get the same $1800 as class members entitled to nothing. In response, plaintiffs argued that Kennerly's case couldn't be used to prove the settlement unfair because Kennerly wasn't actually entitled to anything either, because evidence the government presented years before Cobell's testimony to Congress showed that Kennerly never had a legitimate claim to the oil well. (Mother Jones hasn't run a correction to its story, and a documentary about Cobell is apparently planning to retell the bogus version of the Kennerly account; if you google Kennerly, you will find no indication from anyone other than me that plaintiffs have made this admission.) Again, no consequences: Cobell was awarded $2 million, and her heirs are asking for another $11 million as an "incentive" for her success in this case.