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Case number 14-5119, Eloise Pepillon-Cobel et al.

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Appellants v. Sally Jewell, Secretary of the Interior.

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Mr. Smith for the Appellants, Ms.

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Klein for the Appellees.

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Mr. Smith, good morning.

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Good morning.

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If it please the Court, David Smith for the Appellants.

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After 15 years of litigation, the late Eloise Cabell settled this landmark case.

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She couldn't have kept that case going for 15 years without the assistance of foundations that paid for the litigation expenses.

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She couldn't recover those expenses without petitioning the court for them pursuant to the settlement agreement.

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The district court ruled that those expenses weren't recoverable because, in the court's words, they were paid by third parties, foundations, and the court had no authority to award them.

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That's what is at the heart of this appeal.

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What does the settlement agreement say?

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What does the Claims Resolution Act say?

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That's a question of law for this Court.

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Before I address the merits, however, I'd like to address the jurisdictional issue that the Court raised on Friday with the Court's permission.

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As I understand it, the question is whether this court has under 28 U.S.C.

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1291 jurisdiction over this appeal where the court entered a final order with respect to class representative expenses, prejudgment expenses, but there remain two outstanding issues.

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Number one, where there remained an issue about what the, where the court entered a final order with respect to class counsel attorney's fees.

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but there remained an issue regarding the allocation of a portion of those fees between some of those counsel.

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And secondly, there remains an issue regarding the possibility of post-settlement expenses and fees.

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We believe under these circumstances, Your Honor, is that this Court does have jurisdiction under 1291.

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The reasons are this, that the Court below did enter a final order

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with respect to the class representative fees, it was a pre-settlement, pre-judgment order.

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It was for a specific amount, and that to delay this particular order as delaying any order of this nature until the end of the case would propose a, could delay the consideration of this issue for years, if not a decade, and pose difficulties with respect to the administration of the settlement.

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With respect to the dispute concerning pre-settlement fees, where you still have a fight about, I think, one attorney and an organization and how much they get.

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Yes.

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How much longer is that going to take to resolve?

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I don't know the answer to that, Your Honor.

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Will someone be able to appeal from that determination?

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There is a hearing on that issue.

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Of course, it's been pending now since 2009 as this issue has been pending.

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The court has set a hearing on that for, I believe, the 30th of this month.

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What the purpose of that hearing and what the judge will determine, whether the judge will decide that he has to hold a trial on that, we don't know.

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So it could take a matter of years.

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I don't know the answer to that question.

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Do you have authority for the ability to treat as final?

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a time cabin attorney's fee award that is not itself within that time period final, so that I'm talking the pre-settlement time period.

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So with respect to that time period, you don't have a final

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judgment and that there's still a fight over how much fees each person gets within this pool.

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With respect to the, are you talking about the class council fees?

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I think the precedent from this circuit has been that where there is a final order with respect to the liability and the amount of the fees, that that is in appealable order.

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And the case that located was a Gilda Marks Inc.

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versus Wildwood Exercise Inc.

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85 F3rd 675 said it was following the majority of circuits that said where the court has determined both liability and damages at that point in time, at least with respect to class council fees and expenses, it constituted an appealable order.

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It created something of the nature of a bright line rule.

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The court cited us to the case of Pickford v. Vinneman.

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That case is unlike this one, as it dealt with post-settlement council fees.

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It was an advance on fees.

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It was not a determined amount, not for a specific period of time.

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The court determined, under those circumstances, it was not in appealable order.

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It distinguished the Ninth Circuit's decision in Gates v. Rowland.

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In Gates, it was a specific amount.

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The Court determined it was a specific amount for a specific period under the terms of a consent agreement, a settlement agreement.

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And the Court noted the problems that would be caused by delaying the decision to the end of the case.

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That is also a little bit different than our situation, closer to it, but here we're dealing with pre-settlement fees.

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The closest case I could find was a case called Interfaith Community Organization versus Honeywell International, 426 F3rd 694 from the Third Circuit, 2005.

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In that case, it was a RCRA case, Resource Conservation Recovery Act case, where there was a trial, an injunction entered, a judgment granting the injunction, but RCRA also provided for prejudgment and post-judgment fees.

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The court awarded pre-judgment fees.

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Appeal was taken from that order.

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The question was, was that an appealable order under 1291, given the fact that the court could award post-judgment fees, and the fact was,

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awarding post-judgment fees because of the monitoring of the settlement.

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The court, relying on the Gates case, which this court cited in Pickford, said, yes, it's for a finite period of time pre-settlement.

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Yes, it's a specific amount.

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The court wasn't going to change the amount.

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And the court noted that, looking at guidance from the Supreme Court, that 1291 has to be looked at practically rather than technically, that the decision on the merits could be delayed for perhaps a decade because of the amount of time it would take

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to, in fact, to finalize an administration of a... Does this case have the same type of ongoing monitoring obligations as those other cases, even with respect to the post-settlement fees, or is the post-settlement process... I mean, how much longer is the settlement process itself expected to take, put aside these fee disputes?

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Your Honor, that case is very analogous, and the Court noted that in complex litigation, often the post-settlement period is quite long.

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It's been five years now on post-settlement, and we've made great progress on the administration of the settlement, but I can't tell you when it will be finalized.

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We have half a million individuals to distribute money to.

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We're very close.

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We've distributed in one class 92% of the individuals, another class roughly 86%.

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So we're making a great deal of progress given that we started with no addresses for about 80% of those individuals.

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So it's been a long five years.

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Which is 92 and which is 86?

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Excuse me?

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Which is 92 and which is 86?

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Under the first class, the historical, and I realize this is not on the record, but in the historical accounting class, the first class, we were at roughly 92%.

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With respect to the second class, the trust administration class, we started distributions in September of last year, and we've now

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identified and begin distributions to about 86% of those individuals.

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There's still about 70,000 individuals out there, is my recollection, that we have not identified either because they're on the whereabouts unknown list or because they're in states they passed away.

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And that's the hardest part of the settlement, is identifying the individual's heirs who have passed away.

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I can't tell the court how long that might take until it's finalized.

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But on the merits, I just wanted to ask a practical question.

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If these fees for third parties were to be awarded now,

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Whose pocket would they come out of?

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Where would they come from?

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Because my understanding is that the trust account classes' amount of their distribution depends on the residuum after historic and all these fees and stuff are paid.

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And if 86% of the trust folks have already been paid, what happens?

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There has been a reserve for expenses, and also there is a reserve for these specific expenses, a general for class administration expenses, and there is also in the mail, I'm sure at some point, that

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that we will not be able to identify individuals.

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Under the terms of the settlement agreement, before it goes to the site prey, which would be the scholarship fund, the Eloise Colbell Scholarship Fund, the expenses would come out of that.

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There's always the possibility, Your Honor, that we find everybody and there's no money left.

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That is certainly always a possibility.

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And then where does this money come from?

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If in those circumstances... You think it's out of the scholarship fund?

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The scholarship fund would be a last resort.

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But if all the money is gone, there would be nothing for the scholarship fund except which comes out of a different fund, the land consolidation fund.

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Right, so if all the money is distributed, 100% for the historic class and 100% for the trust class,

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I'm sorry, I still don't understand.

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Where then does your 8,000, 10,000, 15,000 come from?

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If 100% is distributed, we identify everybody.

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And it would only come if there were any remaining funds held back from expenses.

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I believe about $40 million was held back to cover post-settlement expenses.

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This isn't a post-settlement expense.

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This is a pre-settlement expense.

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Can this come out of the post-settlement expenses if it's a pre-settlement cost?

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It would have to be up to the district court, I believe, if it could come out of that.

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So there is actually no money?

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You're not going to take money back out of the mouths of people that have already been given their payments?

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Absolutely not.

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Is it going to reduce the amount that's available for the remaining 14% of the trust class if you were to get paid?

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Isn't that where the agreement says this money comes out of?

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The money comes out of the common fund, it does.

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Right, because they only get a prorated share of what's, the trust class only gets a prorated share, so in fact it is going to diminish

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what folks in the trust account class can obtain or at least 14% of the people in the trust account can obtain.

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That amount of money has already been allocated and has been distributed and so it would only come out of

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what is not distributed or what is left for expenses.

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Let me make sure I understand this.

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So you cannot say that, or maybe you can, but it sounds like you cannot say that the resolution of the case now before us can have no effect on

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on the outstanding disputes that remain with regard to, you mentioned two types of fees.

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Is that correct?

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You can affect what's left for the members of the class, is that right?

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But not be affected by nor affect the two outstanding matters that you identified at the outset of your argument.

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Right.

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It should have no effect on the amount that has been set aside for the attorneys.

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That has been set aside in a separate amount.

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And they're arguing in a par case on that.

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Right.

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OK.

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Exactly.

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About a fixed sum that's gone.

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Right.

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It's segregated out.

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So nothing that happens here can affect that.

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It can affect the corpus available to the members of the class.

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The way it would not

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The class members come first in this analysis.

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In the allocation, when the distribution was made in September 2014, it was made assuming that it took out the amount the court had awarded for class council fees.

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It took out the amount for post-settlement

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fees and expenses that was provided for in the settlement agreement.

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It took out and allocated them out for expenses.

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Does one of those include the $13 million that's being disposed of?

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Yeah.

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It does.

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But with respect to your class members come first point, so as between trust class members and these third party expenses, that's what you're saying, class members come first?

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Right.

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And the distribution has already been made based on those numbers.

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The distribution began based on those numbers.

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So is your claim even ripe?

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for these costs, because the more they collect, the less it's left for you guys to get for these costs, right?

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I mean, if 100% of the trust class is identified, there's nothing left to pay these costs for anyhow.

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And so unless you think the district is going to let you take it out of the post-settlement fund, which requires a whole other disreport proceeding.

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No, in this argument, we actually asked at one point whether the court would consider allowing these funds to be held back.

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And the district court said no, was convinced by actually the defendant's argument that there should be enough money left over from undispersed amounts.

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I thought the district court's answer was you don't get paid for these expenses.

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Not that there'd be something held back for it.

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Right.

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We asked for a stay on that order pending this appeal.

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And the district court actually said no.

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The government's argument was there is still a lot of money out there, a lot of money that most likely will never be distributed, and there's more than enough to cover the expenses under the terms of the settlement agreement.

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And that's pre-settlement money, not post-settlement money.

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Right.

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And what would happen if you got it and then it turned out you got 100% of the trust people?

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Do you get this paycheck and then it turns out five years from now 100% of the trust class has shown up to get paid?

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I'm just not understanding something about the math here.

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Right.

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If, in fact, you know, and if we find, in fact, 100% of the trust people, they get paid, your honor is exactly right.

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The only way that this $12 billion can be paid is if there's enough money left over in the expenses that have been allocated.

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And that won't be known for a long, long time.

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So this won't get paid right away.

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You just want the legal determination of your right to it now, but you wouldn't actually get the check until this whole process is done?

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At the stage we are right now, I think that's correct.

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It does seem odd then to do the appeal now.

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Your Honor, because this is the problem that's created.

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I think the

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It's important for these issues to be known at the outset, just like class council fees and expenses and just like class representative expenses, because if we can't appeal these orders at this point in time and they're delayed to the end of the case, we really never know how much money there is to distribute.

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And so we need those determinations at the outset before the determination is made.

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So as you have pointed out, one of the difficulties we face is, okay, we've got a trust administration class and you have to determine how many class members you have and you have to determine how much money you have.

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How can you make that determination if there is a question

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about what the class council fees and expenses are and what the class representative incentive fees or expenses are, unless those determinations are made early on in the case and not at the end of the administration.

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That's why an early determination on that, that is necessary and I can't wait till the end.

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All right.

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We'll give you a couple of minutes to reply.

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Okay, thank you.

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Ms.

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Klein.

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May I please record Elisa Klein for the government?

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Regarding jurisdiction, I'll try to help explain the distinct disputes about the attorney's fees and the extent to which there's overlap with the expenses that are an issue on this appeal.

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The incentive awards are a separate award.

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That's the 2.5 million that the district court awarded.

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And separately, there was the 99 million attorney's fees expenses and costs award.

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about 85.5 million was already distributed to class council.

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The 13-plus million that's held in HESCRO that I believe Judge Ginsburg was referring to, that fight really has nothing to do with this appeal.

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That was original class counsel, Mark Brown and Native American Rights Fund, who were saying they're entitled to some of the attorney's fees.

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This has been referred to mediation.

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We're not involved in that dispute, and we don't know anything about when it would end.

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But there is a relationship between a different fight over attorney's fees and the expenses that are issued here.

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And the clearest way to see it is to look at the Lannan Foundation separate lawsuit.

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It's a related case, but it's not a filing in Cobell itself.

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Because we're talking about the same expenses.

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The Lannan lawsuit said we made recoverable grants to Blackfeet, and we were, you know, our right was to be reimbursed out of attorneys.

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So they're basically, this is the 85.5 million that's already been distributed, and it's also before Judge Hogan, but it's a different type of dispute.

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And that's where they're saying, you know, this was our contribution.

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We have essentially just a contractual right against Kilpatrick and Dennis Jingle, and you know, the four and a half million dollars, you know, we're entitled to get that out of the 85.5 million that the lawyers already have.

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the things we don't know, the dispute with Kilpatrick was settled in, it was either May or June, I think it was May of 2014, on terms that are not public.

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We do not know the terms and we do not know whether this appeal, which I believe was filed a month later, was a condition of the settlement, because again,

[00:21:31] Speaker 01:
the money that's an issue that they're planning.

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So in this appeal, what happened was the four individual class representatives filed a petition.

[00:21:40] Speaker 01:
They asked for incentive awards, including expenses.

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The district court's first ruling was, yes, I'm giving you the incentive awards.

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That's the 2.5 million.

[00:21:52] Speaker 01:
I'm not giving you this extra 10 million in expenses.

[00:21:56] Speaker 01:
Those aren't your expenses.

[00:21:57] Speaker 01:
They're the expenses of groups like Lanham, Blackfeet, third party organizations, and I'm not giving you those.

[00:22:06] Speaker 01:
This court, then there was the fairness appeal in which the fairness of the settlement was challenged.

[00:22:14] Speaker 01:
The government defended the fairness of the settlement as did the plaintiffs in the suit that was brought by Kimberly Craven.

[00:22:21] Speaker 01:
and this court in affirming the fairness of the settlement relied in part on the fact that the district court had awarded only 2.5 million in incentive awards and had denied the 10 million that the named plaintiffs hadn't personally incurred.

[00:22:39] Speaker 01:
It wasn't their expenses.

[00:22:41] Speaker 01:
But the reconsideration motion that had been filed but not yet determined was that was when

[00:22:50] Speaker 01:
the plaintiff's lawyers, Hearst said, actually, Eloise Cobell personally guaranteed these debts, and she and the other class members will be thrust into a precarious financial situation if she personally, or perhaps the four of them, are not given this 10 million, the number changed, I'm just gonna say 10 million, $10 million, given to them personally.

[00:23:15] Speaker 01:
And they said there were assignments made, to which

[00:23:19] Speaker 01:
Our response was, well, we're limited because they haven't provided the assignments.

[00:23:23] Speaker 01:
The only one we have shows that, no, the assignment says if Blackfeet or other third parties have any right to recover at all, it's out of the attorney's fee spot.

[00:23:35] Speaker 01:
And the district court, I don't know if you saw on the footnote, the district court said, and also I have before me the Lannan Foundation suit.

[00:23:44] Speaker 01:
in which Lannon has put in all of its own assignments and they all say the same thing, which is we have a claim against the attorney's seat spot.

[00:23:53] Speaker 01:
And so this is why at the end of the day when Judge Hogan had before the court all of the relevant information, Judge Hogan said this money doesn't come out of the Common Fund and it doesn't go to Ms.

[00:24:06] Speaker 01:
Cobell's estate or to the three other individuals to the extent

[00:24:12] Speaker 01:
There are third party organizations out there that actually have legitimate claims for reimbursement.

[00:24:17] Speaker 01:
That comes out of the attorney's fees plot.

[00:24:22] Speaker 01:
And this is not the escrow 13 million.

[00:24:24] Speaker 01:
This is the 85.5 million that has already been distributed to class counsel.

[00:24:31] Speaker 01:
And one additional thing.

[00:24:32] Speaker 01:
So although Kilpatrick and the Lannan Foundation settled on undisclosed terms,

[00:24:37] Speaker 01:
Dennis Jingle is still a defendant.

[00:24:40] Speaker 01:
We don't know what will happen in that.

[00:24:42] Speaker 01:
So there's a claim that the Landon Foundation is currently making against Dennis Jingle personally, and that's the subject of ongoing litigation.

[00:24:51] Speaker 01:
So the bottom line on appellate jurisdiction, I think probably this court does have appellate jurisdiction

[00:24:59] Speaker 01:
to address the district court's rulings on the incentive awards, because the district court has no reason to revisit those rulings.

[00:25:09] Speaker 01:
So ruling one was these are not your expenses, they're expenses of third parties.

[00:25:14] Speaker 01:
Ruling two, informed by more information over the several years that passed, was what I see is that these are actually, to the extent they're reimbursable, they're claims against,

[00:25:26] Speaker 01:
the monies that have been distributed to Kilpatrick and Dennis Jingle, and if you want recovery, that's where you look.

[00:25:34] Speaker 01:
And again, if the court wants a description of this type of dispute, the Lannan Foundation complaint, it's not exhaustive, but it's illustrative of what we're talking about.

[00:25:46] Speaker 04:
How does the fact that the settlement agreement in Section M forbade assignments factor in at all?

[00:25:53] Speaker 01:
Now, I believe that was the pervade assignment of the underlying claims.

[00:25:58] Speaker 01:
So your right to distribution of $1,000 for the historical accounting money.

[00:26:04] Speaker 01:
I do not believe that it prevented, essentially, fights to divvy up the $99 million attorney's fee spot.

[00:26:15] Speaker 01:
And I would be surprised if

[00:26:16] Speaker 01:
the government and there would have been any such provision because it was understood that there were going to be disputes about exactly who gets some of that money.

[00:26:26] Speaker 06:
Well this 2.5 million in the incentive award and the paragraph K2 that says they're entitled to incentive awards including expenses and costs

[00:26:41] Speaker 01:
of the class representatives.

[00:26:43] Speaker 06:
Right.

[00:26:43] Speaker 06:
Well, that's certainly Mrs. Cobell and the others.

[00:26:47] Speaker 06:
It's not?

[00:26:48] Speaker 01:
No, but this is why they came back and said, yes, these are her personal expenses.

[00:26:53] Speaker 01:
She guaranteed them.

[00:26:54] Speaker 01:
But that is not true.

[00:26:55] Speaker 06:
All right.

[00:26:56] Speaker 06:
Let me just finish my question.

[00:26:58] Speaker 06:
In the 2.5 that's already been awarded as incentive award, what portion, if any, of that is expenses and costs, and what were they?

[00:27:09] Speaker 01:
What the district court said was, I know that Ms.

[00:27:13] Speaker 01:
Cobell spent $390,000 of her own money.

[00:27:18] Speaker 01:
I'm not making a separate award of expenses for that.

[00:27:21] Speaker 01:
I've taken that into account in the general sense.

[00:27:25] Speaker 01:
by giving her $2 million.

[00:27:26] Speaker 01:
And there was, I don't believe, any claim for costs personally expended by the three other class members.

[00:27:35] Speaker 06:
So the $2.5 million is strictly what I would call a bonus.

[00:27:40] Speaker 06:
I mean, it isn't any expenses, any costs.

[00:27:43] Speaker 06:
If that's true, then why aren't they entitled to

[00:27:46] Speaker 06:
Leaving aside whether these are recoverable expenses or costs, why aren't they entitled, in addition to the bonus, to expenses and costs that you recognize as expenses and costs?

[00:28:00] Speaker 01:
Okay, so two answers.

[00:28:01] Speaker 01:
First, is that in the language of K2?

[00:28:05] Speaker 01:
They're entitled to file a petition for incentive awards, including expenses and costs of the class representatives.

[00:28:14] Speaker 01:
So that is why they tried to say these were Ms.

[00:28:18] Speaker 01:
Cobell's personal expenses, or at least that she guaranteed the debts that she would have to repay them.

[00:28:25] Speaker 01:
That was not true.

[00:28:26] Speaker 01:
So when the district court in denying reconsideration rejected that claim, the court also said that it was waived.

[00:28:33] Speaker 01:
But more important, it is not true.

[00:28:37] Speaker 01:
And in fact, this is in the Kilpatrick complaint as well.

[00:28:40] Speaker 06:
What is not true?

[00:28:41] Speaker 01:
What is not true?

[00:28:42] Speaker 01:
These are not Ms.

[00:28:43] Speaker 01:
Covell's personal expenses.

[00:28:45] Speaker 01:
These were just

[00:28:47] Speaker 01:
grants made.

[00:28:48] Speaker 06:
Well, these were the loans or grants, whatever, from other entities.

[00:28:52] Speaker 01:
Not to her personally, though.

[00:28:54] Speaker 06:
Oh, I know that.

[00:28:55] Speaker 06:
I know that.

[00:28:55] Speaker 06:
Oh, so you're reading class representatives as personal expenses and costs of the class representatives as personal expenses and costs?

[00:29:06] Speaker 01:
Yes.

[00:29:06] Speaker 01:
And that's because there was a separate $99 million award that was called in the settlement agreement, attorney's fees, expenses, and costs.

[00:29:16] Speaker 06:
For class counsel.

[00:29:17] Speaker 01:
Well, again, we're circling back because these are the debts of class council.

[00:29:21] Speaker 01:
Again, if you look, the claims are that class council has unpaid bills.

[00:29:26] Speaker 01:
They kept the $85.5 million when they really were supposed to use part of that to reimburse Blackfeet and Lannan and Otto Bremer and Pricewaterhouse, all these third parties.

[00:29:38] Speaker 01:
That is why Lannan Foundation is suing the lawyers.

[00:29:42] Speaker 01:
And in the complaint, they say the lawyers told them, go after Ms.

[00:29:45] Speaker 01:
Cobell as a state.

[00:29:46] Speaker 01:
And they basically said, that's outrageous.

[00:29:48] Speaker 01:
Our claim is against the attorney's fees fund.

[00:29:52] Speaker 01:
It's not against Ms.

[00:29:53] Speaker 01:
Cobell personally.

[00:29:53] Speaker 03:
Is that just Lannan or are the others trying to?

[00:29:56] Speaker 01:
The lawsuit is just Lannan Foundation.

[00:29:59] Speaker 01:
we are not aware of any other public claims that were made against the attorney's fees fund.

[00:30:06] Speaker 01:
As far as I know, there is absolutely no evidence of anyone trying to recover against either Ms.

[00:30:11] Speaker 01:
Cobell's estate or personally against the three class representatives.

[00:30:15] Speaker 06:
If the 2.5 million already paid is strictly bonus, and there is this 370,000 that I think everyone agrees were personal expenses of Mrs. Cobell,

[00:30:28] Speaker 06:
Why isn't, I mean, how can the district court both say both that this is strictly bonus, which is what I think I heard you say, and then say, but you don't get any expense, but you can get your expenses out of that bonus as well.

[00:30:44] Speaker 01:
it's the meaning of including as used here.

[00:30:47] Speaker 01:
It's basically saying district court, you have absolute discretion to decide whether to give, let's just use Ms.

[00:30:53] Speaker 01:
Cavell, any incentive award.

[00:30:55] Speaker 05:
And you did.

[00:30:56] Speaker 05:
You gave 2.5.

[00:30:56] Speaker 01:
Yes.

[00:30:57] Speaker 01:
Well, 2 million.

[00:30:58] Speaker 01:
The .5 was for district court.

[00:30:59] Speaker 01:
But that's right.

[00:31:00] Speaker 01:
So 2 million.

[00:31:01] Speaker 01:
That includes, takes into account the fact that she spent $390,000.

[00:31:05] Speaker 01:
And the court said repeatedly, I understand that.

[00:31:09] Speaker 01:
I mean, the court could have said, okay, I'll give her, you know, $1.6 million as bonus and $390,000 as expenses, but it wasn't required to do that.

[00:31:18] Speaker 01:
It's all,

[00:31:19] Speaker 01:
This was entirely up to the district court's discretion.

[00:31:22] Speaker 06:
Okay, so then are you wrong when you say the two million to Mrs. Cobell was not strictly bonus.

[00:31:28] Speaker 06:
It included the 370,000 personal expenses.

[00:31:32] Speaker 01:
Yes, included in the sense of, as the district court put it, took into account.

[00:31:36] Speaker 01:
Okay.

[00:31:37] Speaker 01:
Okay.

[00:31:37] Speaker 01:
All right.

[00:31:41] Speaker 01:
So just on the merits, the question is, did the district board abuse its discretion at the end when looking at everything?

[00:31:50] Speaker 04:
In the Lanham case, is the defense that we don't owe you this money?

[00:31:56] Speaker 04:
Ms.

[00:31:58] Speaker 04:
Cabell does?

[00:32:00] Speaker 01:
The Lanham complaint?

[00:32:02] Speaker 01:
No, again, this has now settled with Bill Patrick Stockton.

[00:32:08] Speaker 04:
Was there ever an answer or any defense filing whatsoever so that we would know what their position was?

[00:32:13] Speaker 04:
I believe there were.

[00:32:14] Speaker 04:
Is this question fully answered as to who's responsible for this?

[00:32:21] Speaker 01:
No, I don't think it was conclusively answered.

[00:32:23] Speaker 01:
So paragraph six of the Lannan Foundation complaint said, despite receiving millions of dollars from the attorney's fees award, defendants, meaning the attorneys, have refused to repay the grants, a set board,

[00:32:38] Speaker 01:
in the grant agreements.

[00:32:39] Speaker 01:
Instead, they have taken the position that contrary to the clear terms of the agreements, the Lannan Foundation has no right to be repaid from the $99 million attorney's fees award, and instead may pursue repayment only from the personal assets of the class representatives, or in the case of Ms.

[00:32:56] Speaker 01:
Coppell, who passed away in October 2011, her estate.

[00:33:00] Speaker 01:
I do not believe that opposing counsel is sticking with that position.

[00:33:05] Speaker 01:
I believe if opposing counsel is asked

[00:33:08] Speaker 01:
Did Ms.

[00:33:09] Speaker 01:
Cobell put herself personally at risk?

[00:33:11] Speaker 01:
Is she personally indebted?

[00:33:13] Speaker 01:
Even though that is what they argued in district court, they haven't renewed that argument on appeal.

[00:33:19] Speaker 01:
And since, as far as we can tell, there's absolutely no evidence to support it.

[00:33:23] Speaker 01:
It would be a very big claim to make if it's not accurate.

[00:33:29] Speaker 01:
And I don't hear them to be making it anymore.

[00:33:32] Speaker 04:
I think the court was supposed to decide these issues based on controlling law.

[00:33:37] Speaker 04:
So what does controlling law mean?

[00:33:39] Speaker 01:
Consistent with controlling law, though.

[00:33:41] Speaker 04:
What's controlling law?

[00:33:42] Speaker 01:
Well, again, here it's hard to know exactly what that could mean, because ordinarily, to get litigation expenses, you have to be the prevailing party.

[00:33:50] Speaker 01:
And as the court knows, the part of the case that the plaintiffs won, 2001 and prior, that was the subject of an interim IJRA award of $7 million, plus some additional money related to discovery disputes.

[00:34:04] Speaker 01:
That was paid long ago.

[00:34:07] Speaker 01:
That's not what, like now we're just talking about expenses, for example, associated with the 2007 trial.

[00:34:16] Speaker 01:
And all of the relief ordered by the district court after 2001 was reversed by this court.

[00:34:22] Speaker 01:
So invocations of controlling law and unjust enrichment, equitable doctrines, they don't map on.

[00:34:29] Speaker 01:
What we do have are settlement terms

[00:34:33] Speaker 04:
that are on point, the district court was correct to say... The settlement told the district court to decide the rest of this dispute based on controlling law, and it's your settlement.

[00:34:41] Speaker 01:
That's in addition to the specific terms, which said, here's what the class, you know, four human beings can get.

[00:34:48] Speaker 01:
They can get incentive awards in your discretion, and those can take into account their expenditures, the expenses of the class representatives, and then separately, you can award

[00:35:01] Speaker 01:
if it wasn't literally up to 99 million, but there couldn't be an appeal if the award was below 99 million of attorney's fees, expenses, and costs.

[00:35:11] Speaker 01:
those two provisions.

[00:35:12] Speaker 01:
And third, the paragraph M said no third party beneficiaries, no rights or remedies in third parties.

[00:35:18] Speaker 01:
And so none of these third parties could come and say, we want to be paid out of the common fund.

[00:35:24] Speaker 01:
But that's effectively the relief that's being sought here.

[00:35:26] Speaker 01:
It's diminish the money that would be available either for distribution to the trust administration class or to the extent they can't be located, which is a distinct possibility.

[00:35:38] Speaker 01:
that money under the settlement agreement goes to the Indian Education Scholarship Fund, because the whole purpose was to be benefiting Native Americans generally.

[00:35:47] Speaker 01:
That was the design of the settlement.

[00:35:50] Speaker 04:
So with respect to their position that they can't even know if there'll be any money left to pay them until this whole process is over, how does that affect finality now?

[00:36:01] Speaker 01:
Well, again, I mean, the district court issued a definitive ruling saying

[00:36:07] Speaker 01:
I'm not paying you.

[00:36:11] Speaker 01:
I suppose it's possible that there could be zero money left over, but my understanding is the same way Interior had difficulty locating the heirs because of the way these accounts were passed on over time, I believe there may be some inevitable difficulty in locating everyone, and that's why Congress approved a settlement that said,

[00:36:32] Speaker 01:
the excess money goes to the Indian Education Fund.

[00:36:34] Speaker 01:
So I can't predict exactly how much that will be, but it was assumed that not everyone would be identified, and some money would end up in the scholarship fund.

[00:36:45] Speaker 04:
And so if they were to prevail, that money would come out of that.

[00:36:49] Speaker 04:
Do you agree that's the only place it could come out of would be that scholarship fund?

[00:36:52] Speaker 01:
It can't come out of the FISC.

[00:36:53] Speaker 01:
That's clear.

[00:36:54] Speaker 01:
And so one way or another, it's either coming, it's reducing the pro rata distribution to

[00:37:01] Speaker 01:
trust administration class members or it's coming out of the scholarship fund.

[00:37:06] Speaker 01:
And one last point I meant to make, though I do not believe there are so many issues before the court, is that since the court asked about post-settlement fees, there is a pending petition

[00:37:17] Speaker 01:
for about $11.2 million in post-settlement fees.

[00:37:23] Speaker 01:
It's been pending for several years.

[00:37:25] Speaker 01:
It has not yet been acted on, and so obviously that money is not... But what is the cap on the post?

[00:37:29] Speaker 04:
Isn't it $10 million?

[00:37:30] Speaker 04:
A $12 million.

[00:37:30] Speaker 04:
A $12 million.

[00:37:31] Speaker 01:
And we've styled as interim, so there's potentially another request for post-settlement fees.

[00:37:36] Speaker 04:
You said post-settlement dispute doesn't interfere with finality.

[00:37:40] Speaker 04:
It's when it looked like there was going to be ongoing monitoring for the next 10, 20, 30, 40, 50 years.

[00:37:46] Speaker 04:
And that doesn't sound like that's the case.

[00:37:48] Speaker 01:
I agree.

[00:37:48] Speaker 01:
I'm not suggesting that the post-settlement dispute has any bearing on finality.

[00:37:52] Speaker 01:
It's just since the court asked, I just wanted to answer that question.

[00:37:57] Speaker 03:
The district court said it was without authority to make the award.

[00:38:05] Speaker 03:
Case law looks the other direction.

[00:38:08] Speaker 01:
The district court was interpreting a settlement agreement that had two distinct types of award.

[00:38:16] Speaker 01:
And what the court said, both in its first ruling and then again in the denial of reconsideration was, I am not awarding you for individuals personally reimbursement for expenses that you didn't pay and you don't owe.

[00:38:34] Speaker 01:
And then on reconsideration said,

[00:38:36] Speaker 01:
You're claiming you do owe it, but that's not true.

[00:38:40] Speaker 01:
I've looked at the assignments to the extent that they've been provided to me, and what they show consistently is if anyone owes the money, it's the lawyers.

[00:38:51] Speaker 01:
It's the other pot of money, the $99 million.

[00:38:54] Speaker 03:
So you don't think the district court acted under the view that it could not lawfully

[00:39:07] Speaker 03:
I believe interpreting the settlement agreement in the first ruling I believe your honor is accurate the court said the settlement agreement

[00:39:26] Speaker 01:
does not give me authority, even taking into account controlling law, to just take money out of the common fund for third parties.

[00:39:35] Speaker 01:
But then, by reconsideration, when the court had a lot more information, this, I believe, is where the discussion came in, and the court essentially said, I'm not paying this, you know, any money about these expenses to the four named plaintiffs, because I see that to the extent there's evidence of any unpaid debts

[00:39:55] Speaker 01:
there are unpaid lawyer bills.

[00:39:56] Speaker 01:
They're claims against the attorneys he's sent.

[00:40:00] Speaker 03:
So you're saying the district court never relied upon the view that, quite apart from the settlement, that the controlling law precluded?

[00:40:10] Speaker 01:
No.

[00:40:11] Speaker 01:
No, Your Honor.

[00:40:11] Speaker 01:
And again, controlling law, if you think about the normal case, where imagine we're just the defendant, and there's an attempt on behalf of the class as a whole to get litigation expenses from us,

[00:40:24] Speaker 01:
That's quite different from poor individuals attempting to get third party expenses taken away from the 500,000 absent class members.

[00:40:36] Speaker 01:
That's why

[00:40:37] Speaker 01:
this was an issue in the fairness hearing, and on this appeal, that's the reason this court emphasized that, you know, Kimberly Craven says 13 million, the class representatives were getting 13 million, that's just the request.

[00:40:50] Speaker 01:
The district court only gave them only 2.5 million.

[00:40:54] Speaker 01:
It's a lot of money relative to what the class had.

[00:40:57] Speaker 03:
Why was the district court inverting then to rule 54?

[00:41:03] Speaker 01:
Okay, I'm sorry.

[00:41:03] Speaker 03:
Why did the district court invert to rule 54?

[00:41:07] Speaker 01:
The district court.

[00:41:08] Speaker 03:
I thought it was in the course of saying it was without authority.

[00:41:13] Speaker 01:
Well, it was.

[00:41:14] Speaker 01:
Oh, no.

[00:41:14] Speaker 01:
That, I believe, was just because it was interlocutory.

[00:41:18] Speaker 01:
Because of the sequence, there was the petition for class representative incentive awards.

[00:41:25] Speaker 01:
And then the court said no in the fairness hearing.

[00:41:28] Speaker 01:
And then a week later, there was a reconsideration motion where that's where they said, you know, Luis Cabell is personally liable.

[00:41:36] Speaker 01:
Then there was the entry of final judgment.

[00:41:41] Speaker 01:
And then only a few years later, the denial of the reconsideration motion.

[00:41:46] Speaker 01:
I think the court was just making a procedural point.

[00:41:49] Speaker 01:
But it was quite clear from the arguments the government was making was that there is not a basis under the settlement agreement, as ratified by Congress, to give Eloise Cobell or the other three members

[00:42:03] Speaker 01:
$10 million that weren't their expenses and that they didn't owe.

[00:42:11] Speaker 01:
Unless the court has further questions.

[00:42:13] Speaker 03:
So here's something from the district court's opinion.

[00:42:19] Speaker 03:
The court did not take

[00:42:21] Speaker 03:
a position on the merits of this issue.

[00:42:24] Speaker 03:
Do you know what I'm referring to?

[00:42:25] Speaker 03:
I believe, but... We'll go back.

[00:42:26] Speaker 03:
This is at the end of the... In the motion for reconsideration, the plaintiffs argued that the settlement agreement provided for the payment of costs and expenses, quote, wholly independent of and in addition to expenses and costs of class counsel.

[00:42:40] Speaker 03:
That's the district court quoted in the reconsideration.

[00:42:43] Speaker 03:
The court need not take position on the merits of this issue because it could have been raised before the court ruled on the incentive award petition.

[00:42:51] Speaker 03:
and therefore is not a proper subject of the motion for reconsideration.

[00:42:57] Speaker 01:
I understand the quote and the question.

[00:42:59] Speaker 01:
I took the original briefing, the petition that the class representatives filed, and our response saying these aren't your expenses, to be

[00:43:10] Speaker 01:
briefing on that issue so I don't know and and I believe it may have been raised before.

[00:43:17] Speaker 01:
I believe it was raised.

[00:43:19] Speaker 03:
It's not subject of a reconsideration.

[00:43:20] Speaker 01:
I know I believe that.

[00:43:21] Speaker 03:
It's to say and I'm not going to reach it on the merits.

[00:43:25] Speaker 01:
It's to say because we're rule 54 right?

[00:43:27] Speaker 01:
I don't understand that.

[00:43:28] Speaker 01:
I know what you're talking about and I don't understand the sentence because as we understood ruling number one it was these are not your personal expenses

[00:43:37] Speaker 01:
And I'm not taking money away from the class as a whole to give to you for expenses that aren't yours.

[00:43:42] Speaker 01:
And that is, I believe, what your honor is describing.

[00:43:46] Speaker 01:
That would be saying that four of us can get $10 million in expenses that weren't our personal expenses.

[00:43:55] Speaker 03:
Are you referring that to reconsideration or the original?

[00:44:00] Speaker 01:
Well both I mean that reconsider that I don't understand that sentence in the denial of reconsideration because I took that to be The original argument if it's a little I can see why the district court might have been confused because the terminology that the plane is used would they would say in this cobell incurred a

[00:44:21] Speaker 01:
I believe meaning not incurred personally, but perhaps I was involved in grants by third parties to other organizations.

[00:44:32] Speaker 01:
But I don't actually have a satisfying explanation for why the district court didn't think it had already addressed that issue, because that's what we understand the first ruling to be.

[00:44:43] Speaker 01:
We said, these aren't your expenses.

[00:44:45] Speaker 01:
And the court said, I'm not awarding them.

[00:44:47] Speaker 01:
And again, this court on the appeal also said, the district court

[00:44:51] Speaker 01:
Rejected that request because they were not directly incurred by the class representatives.

[00:44:56] Speaker 01:
So I believe that's how this court understood it I also believe that's how it was

[00:44:59] Speaker 01:
described in the government's briefing and the plaintiff's briefing on the last appeal.

[00:45:04] Speaker 01:
So I don't know why that sentence is in the reconsideration order.

[00:45:08] Speaker 03:
Well, it's there.

[00:45:09] Speaker 01:
No, I understand.

[00:45:11] Speaker 03:
And if it suggests that the district court thought it was without legal authority as opposed to contractual authorization, then perhaps it ought to reconsider that.

[00:45:24] Speaker 01:
No, but it would have been correct because, again, the settlement agreement, there are two types of awards.

[00:45:31] Speaker 01:
One is incentive awards.

[00:45:33] Speaker 01:
for four human beings, and that can include their personal expenses.

[00:45:38] Speaker 01:
Because otherwise there would be no justification to be taking money away from the class as a whole, and giving it to these four people.

[00:45:44] Speaker 01:
And that would just effectively be a windfall, and one that comes at the expense of the class as a whole.

[00:45:49] Speaker 03:
I just thought that was the court's... That's the reason for the court's discretion not to make the decision.

[00:45:57] Speaker 03:
That way it doesn't reflect on its power.

[00:45:59] Speaker 01:
No, Your Honor, I disagree.

[00:46:01] Speaker 01:
That's the reason that the settlement agreement had two separate types of awards.

[00:46:06] Speaker 01:
One, which was for the, and this was a limit on the authority.

[00:46:09] Speaker 01:
The district court could give bonuses, incentive awards, taking into account personal expenses of Ms.

[00:46:15] Speaker 01:
Cobell or the other class members.

[00:46:17] Speaker 01:
And that, that happened to the district court's authority.

[00:46:19] Speaker 01:
We do not believe the district court could have said, and there are lots and lots of third parties that have unpaid debts,

[00:46:26] Speaker 01:
And I'm going to pay Ms.

[00:46:28] Speaker 01:
Cobell or her state or the other three representatives millions of dollars on account of those third party organizations.

[00:46:37] Speaker 03:
So if the court were to read the settlement agreement differently than you do, it's not foreclosing this possibility, then it would follow, I guess, that the district court would have to take that into account, revisit the issue, and decide, understanding that it has discretion and wide discretion.

[00:47:02] Speaker 01:
If the court reads the reconsideration order as a whole,

[00:47:06] Speaker 01:
to rest on a misunderstanding.

[00:47:08] Speaker 01:
I think that if you look at the reconsideration order as a whole and understand that Judge Hogan knew full well that these were unpaid lawyer bills.

[00:47:15] Speaker 01:
And to the extent there were valid claims, there were claims against the attorney's fund.

[00:47:20] Speaker 01:
The court said quite clearly and repeatedly, if you want to get recovery, third party organizations, you look to the attorney's fees plot.

[00:47:27] Speaker 01:
And that is clearly within the court's discretion.

[00:47:30] Speaker 03:
That's its reading of the settlement.

[00:47:34] Speaker 01:
No, no.

[00:47:34] Speaker 01:
I believe that was also saying,

[00:47:37] Speaker 01:
I've looked at the nature of these claims, and they are on their face, claims against the attorney's fees award.

[00:47:45] Speaker 01:
And to the extent they're valid, then I'm not taking this away from the class as a whole.

[00:47:51] Speaker 01:
I'm not going to deplete the common fund because I see that there are potential claims against the attorney's fees award.

[00:47:57] Speaker 01:
I believe that was an exercise of discretion.

[00:48:00] Speaker 06:
All right.

[00:48:01] Speaker 06:
Thank you.

[00:48:03] Speaker 06:
Does Mr. Smith have any time left?

[00:48:14] Speaker 04:
Who's personally liable for these expenses?

[00:48:17] Speaker 02:
The common fund is responsible for these expenses.

[00:48:20] Speaker 04:
And the reason is because that's what the... The Common Fund didn't sign, didn't loan out the money, or didn't obtain a loan of this money.

[00:48:30] Speaker 02:
Right, but the, but Eloise Cobell spent 15 years raising this money and raising it from foundations and she's the one who raised the money for the litigation expenses and set up the Black... So is she personally, is her estate personally liable?

[00:48:47] Speaker 02:
No, her estate is not personally liable.

[00:48:49] Speaker 04:
If it doesn't get paid out of the common fund, who's going to have to pay it?

[00:48:52] Speaker 04:
Her estate or the attorneys?

[00:48:56] Speaker 02:
Your Honor, her estate is not responsible.

[00:49:00] Speaker 02:
In the way I read, and I have the same benefit of the record as you do, as I read these documents, her personal liability is limited to funds that actually come into her possession.

[00:49:14] Speaker 02:
And these Lannan documents, this- We have a personal liability so they can get all two million.

[00:49:22] Speaker 02:
only to the extent they relate to attorney's fees and expenses.

[00:49:27] Speaker 02:
Her incentive fee had nothing to do with attorney's fees and expenses as the lower court found.

[00:49:32] Speaker 02:
So in the Lannon agreement, and this relates to only part of the expenses, the roughly $4 million Lannon fee expenses, as I understand it, Mr. Gingold and Eloise, Ms.

[00:49:50] Speaker 02:
Cabell,

[00:49:51] Speaker 02:
signed these agreements.

[00:49:53] Speaker 02:
And they provided something of the nature of a security interest for Lannon.

[00:50:03] Speaker 02:
What was the security interest?

[00:50:05] Speaker 04:
The recovery under the settlement agreement?

[00:50:07] Speaker 02:
It looks to be like, and it changed with various agreements.

[00:50:11] Speaker 02:
And they're at the various places in the records.

[00:50:14] Speaker 02:
In some respects, it was for specific expenses, such as accounting expenses.

[00:50:19] Speaker 02:
In some respects, there was no security agreement at all.

[00:50:25] Speaker 04:
So if you lose your common fund argument, the money comes out of Ms.

[00:50:31] Speaker 04:
Cabell's estate?

[00:50:33] Speaker 02:
No.

[00:50:33] Speaker 02:
I mean, there is a pending lawsuit with Mr. Jingle.

[00:50:38] Speaker 02:
Out of his attorney's fees?

[00:50:41] Speaker 02:
Out of his attorney's fees.

[00:50:43] Speaker 02:
That's correct.

[00:50:46] Speaker 02:
The Land and Agreement,

[00:50:48] Speaker 02:
It doesn't change, however, what the Settlement Agreement says, and it doesn't change what the Claims and Resolution Act says.

[00:50:56] Speaker 02:
And it's, in fact, consistent with it.

[00:50:57] Speaker 02:
And that's part of the reason why it's phrased the way it is.

[00:51:04] Speaker 02:
And one thing I want to emphasize is everybody understood

[00:51:08] Speaker 02:
going in that it was Eloise who had raised this money from foundations, that these foundations were paying these litigation expenses.

[00:51:15] Speaker 02:
There was never any question about that.

[00:51:18] Speaker 02:
If you look at the record at JA 1421, note 15, the government acknowledges that early on in this litigation, they were aware that foundations were paying these expenses, including the Black Beat Reservation Development Fund, that third parties were.

[00:51:35] Speaker 02:
Again, JA 1546, affidavit from a former class counsel, Thaddeus Holt, at the time that this is January of 1997, at the time of class certification, he had to document where the payments were coming from.

[00:51:51] Speaker 02:
He filed an affidavit saying that Ms.

[00:51:53] Speaker 02:
Cobel was raising funds for these expenses for litigation from foundations.

[00:51:58] Speaker 02:
So the government was well aware that she wasn't paying these expenses, that third parties were paying these expenses, foundations.

[00:52:06] Speaker 03:
Well, but foundations ordinarily make grants and don't expect to recover them later on.

[00:52:11] Speaker 02:
Right.

[00:52:12] Speaker 02:
The government acknowledged in footnote 15 that they knew from the outset that some of these were recoverable.

[00:52:18] Speaker 02:
And that's in fact what some of these, in fact, were.

[00:52:22] Speaker 02:
You know, whether they have to be paid back or not, I don't think is the issue.

[00:52:28] Speaker 02:
And Louise's personal liability, whether she has to pay them back.

[00:52:33] Speaker 02:
Third parties who pay expenses should be reimbursed.

[00:52:36] Speaker 02:
If someone is in form of papyrus and has to rely on a benefactor to pay their expenses, third parties won't contract with the plaintiff.

[00:52:46] Speaker 02:
They'll only contract with the third party who has money.

[00:52:50] Speaker 06:
If we dig deep enough, will we be able to determine how much of the money loaned by Blackfeet, the others, went to attorney's fees versus accountants versus other expenses, travel for the

[00:53:06] Speaker 06:
class representatives and so forth.

[00:53:09] Speaker 06:
Will we be able to know of this 8 to 10 million that's still outstanding, how much is attorney's fees, how much is other litigation expenses?

[00:53:19] Speaker 02:
As I understand it, none of the foundation money went to attorney's fees.

[00:53:24] Speaker 02:
That's what I thought.

[00:53:25] Speaker 02:
Right.

[00:53:25] Speaker 02:
Yeah, there was a provision in there that none could go to attorney's fees.

[00:53:29] Speaker 02:
The argument that the settlement agreement says this money should go to attorney's fees is simply wrong.

[00:53:37] Speaker 02:
And that's why you have two complementary sections in here.

[00:53:42] Speaker 02:
You have the provision in J1 and 2 regarding attorney's fees that says the class counsel can apply for fees and expenses.

[00:53:51] Speaker 02:
And at the same time, there is a separate document signed at the exact same date, December 7, 2009, a document entitled, Agreement on Attorney's Fees and Expenses, signed with the government that defined exactly what those expenses were.

[00:54:07] Speaker 02:
And it's in the record at 1433, and it's defined as the expenses that were incurred by class counsel.

[00:54:15] Speaker 02:
If you look at K1 and 2 regarding the class representative's expenses, it doesn't have that kind of language.

[00:54:22] Speaker 02:
The government hangs their hat on the word of, but that's not, it's simply taken out of context because it's specifically those expenses that were, quote, not paid for by class counsel.

[00:54:36] Speaker 02:
And a much broader reading, not those that were simply not personally incurred by Ms.

[00:54:46] Speaker 02:
Cobell.

[00:54:47] Speaker 02:
So.

[00:54:47] Speaker 02:
Okay, you need to wind it up.

[00:54:50] Speaker 02:
Okay.

[00:54:52] Speaker 02:
I'm sorry.

[00:54:52] Speaker 05:
You have another point to make.

[00:54:53] Speaker 05:
You need to wind it up.

[00:54:54] Speaker 02:
OK.

[00:54:55] Speaker 02:
And finally, I think it's consistent with controlling law.

[00:54:59] Speaker 02:
This court has long held that expenses should come out of the Common Fund because of principles of equity that all class members should share in the expenses of the... Excuse me?

[00:55:11] Speaker 02:
Isn't that for the district court to decide?

[00:55:13] Speaker 02:
That's correct, John.

[00:55:14] Speaker 02:
And here, the district court never had an opportunity to do it because it determined that...

[00:55:19] Speaker 03:
In no event would we resolve that.

[00:55:22] Speaker 03:
That's correct.

[00:55:23] Speaker 03:
Let's not talk about it.

[00:55:25] Speaker 02:
Thank you, Your Honor.

[00:55:26] Speaker ?:
I appreciate it.