ROGERS, Circuit Judge:
This is an appeal from the approval of a class action settlement agreement related to the Secretary of the Interior's breach of duty to account for funds held in trust for individual Native Americans. Class member Kimberly Craven challenges the fairness of the settlement, contending principally that an impermissible intra-class conflict permeates the scheme to compensate class members for surrendering their established right to injunctive relief and that this conflict undermines the commonality, cohesiveness, and fairness required by Federal Rule of Civil Procedure 23 and due process. The record, however, fails to confirm either the existence of the purported intra-class conflict or a violation of due process. Rather, the record confirms that the two plaintiff classes possess the necessary commonality and adequate representation
In 1996, Eloise Cobell and four other Native Americans filed a class action alleging a breach of fiduciary duties by the Secretary in managing the class members' "Individual Indian Money" ("IIM") trust accounts. "The bulk of the trust assets `are the proceeds of various transactions in land allotted to individual Indians under the General Allotment Act of 1887, known as the Dawes Act.'" Cobell v. Salazar ("Cobell XXII"), 573 F.3d 808, 809 (D.C.Cir.2009) (citation omitted). The class, certified pursuant to Federal Rule of Civil Procedure 23(b)(1)(A) and (b)(2), sought injunctive and declaratory relief in the form of an historical accounting. Id.
At trial, the Secretary offered evidence regarding the latest plan ("the 2007 Plan") for accomplishing an historical accounting in compliance with the 1994 Act. The 2007 Plan relied on statistical sampling for account and transaction reconciliation to an even greater extent than the 2003 Plan. In addition, the total number of transactions to be reconciled was significantly reduced, and the provision of asset statements to account beneficiaries was eliminated. See id. at 56-58. The Secretary's explanation for these changes to the scope and methodology of the proposed accounting echoed those offered in 2003 for tailoring the 2002 proposal: "Original cost and time estimates
Given this state of affairs and the likelihood of many more years of litigation, the parties entered into settlement negotiations in the summer of 2009. On December 7, 2009, the parties entered into a class settlement agreement. See Class Action Settlement Agreement, Ex. 2 to Joint Mot. for Prelim. Approval of Settlement, Cobell v. Salazar (No. 1:96-cv-01285) (Dec. 10, 2010). We describe its basic parts:
First, an amended complaint would be filed setting forth two classes:
The settlement envisioned that the Historical Accounting Class would be certified pursuant to Rule 23(b)(1)(A) and 23(b)(2), in the alternative, with no individual right to opt out of the class; the Trust Administration Class would be certified pursuant to Rule 23(b)(3) with an opt-out right. Id. § B ¶ 4.b.
Second, the Secretaries of Interior and Treasury would deposit $1.412 billion into a settlement fund. Id. § E ¶ 2.a. From this fund, each member of the Historical Accounting Class would receive $1,000, id. § E ¶ 3.a, in exchange for the release of the Secretary of Interior's "obligation to perform a historical accounting of [the class member's] IIM Account or any individual Indian trust asset," id. § I ¶ 1. The Trust Administration Class members would receive a baseline payment of $500 plus an additional pro rata share of the remaining settlement funds in accordance with an agreed-upon compensation formula. Id. § E ¶ 4.b. The Trust Administration Class payment would release the Secretary from liability arising out of any past mismanagement of IIM accounts and trust properties. The scope of that release would not be unlimited: for example, claims for payment of existing account balances,
Third, in addition to the class and compensation structure, the proposed settlement provided for:
The proposal also stated that the class settlement agreement was contingent upon the enactment of legislation by Congress to authorize certain aspects of the settlement. Id. § B ¶ 1.
In 2010, Congress enacted the Claims Resolution Act of 2010 ("the CRA"), Pub.L. No. 111-291, 124 Stat. 3064 (Dec. 8, 2010), which "authorized, ratified, and confirmed" the proposed settlement, id. § 101(c)(1). It also authorized the district court to certify the Trust Administration Class without regard to the requirements of the Federal Rules of Civil Procedure, and provided that such a certification would be treated as a certification pursuant to Rule 23(b)(3). Id. § 101(d)(2). The CRA appropriated funds including funds for the settlement and land-consolidation funds. Id. § 101(e)(1)(C)(I), (j)(1)(A). Settlement funds received by class members would be tax-exempt under the Internal Revenue Code. Id. § 101(f). Congress also increased the total amount of the settlement fund by $100 million, from $1.412 billion to $1.512 billion, id. § 101(j)(1)(A), resulting in approximately a $300 increase in the baseline payment (from $500 to $800) due members of the Trust Administration Class.
On December 10, 2010, the parties filed a joint motion for preliminary approval of the class settlement agreement, which the district court granted on December 21, 2010. The district court also certified the Historical Accounting Class pursuant to, in the alternative, Rule 23(b)(1)(A) and (b)(2), and the Trust Administration Class pursuant to, in the alternative, CRA § 101(d)(2) and Rule 23(b)(3). Appellant Kimberly Craven and ninety-one other class members filed timely objections. At a fairness hearing on June 20, 2011, the district court heard testimony from objecting class members, including Craven's intra-class conflicts objections, along with arguments in support of the settlement agreement by counsel for the plaintiff class and the Secretary. At the close of the hearing the district court explained why it concluded the settlement was fair, reasonable, and adequate. We summarize relevant parts.
To begin, the district court acknowledged the objectors' concerns and that the settlement "may not be . . . as fortuitous as some wished and do[es not] provide redress for their wrongs." Fairness Hr'g Tr. at 217. Nonetheless, the district court explained that it was "not persuaded that striking a different balance would have been either achievable in the negotiating process or more favorable to more members
By order of July 27, 2011, the district court granted final approval to the class settlement agreement that the lawsuit be settled and that the United States pay $3.412 billion—$1.512 billion to the settlement fund and $1.9 billion to the land-consolidation fund—in accordance with the terms of the settlement agreement and the CRA. Among other actions, the order set forth the scope of the two plaintiff classes and their respective claim releases, listed the individuals who had chosen to opt out of the Trust Administration Class, and awarded attorneys' fees and incentive payments to the remaining class representatives, while denying most requested additional expenses.
As an initial matter, Craven contends that the law of the case bars approval of the settlement agreement. She points to Cobell XXII, where this court vacated the judgment in favor of the plaintiff class and the order of a restitution award, holding that such an award would be arbitrary, inaccurate, and unfair to some class members in the absence of an historical accounting, 573 F.3d at 813. A lump-sum award, whose magnitude was of uncertain origin, the court stated, was an improper equitable judgment for the class's claim; "without an accounting, it is impossible to know who is owed what," and so "[t]he best any trust beneficiary could hope for would be a government check in an arbitrary amount." Id. Although Cobell XXII did address the issue of a remedy for the historical-accounting claim, the law-of-the-case doctrine has no application here.
Under the law-of-the-case doctrine, "the same issue presented a second time in
The class settlement agreement was the result of discussions post-dating Cobell XXII in which the parties, facing nigh insurmountable obstacles to achieving their original goal, decided to pursue another approach to resolving their protracted differences. Given the distinction between Cobell XXII and the current appeal, the law of the case does not foreclose approval of the class settlement agreement. To the extent Craven suggests that the lawsuit could be settled only for some type of historical accounting but not for monetary relief, her contention fails, see infra Part II.B; to the extent she contests the fairness of the distribution scheme, her contentions also fail, see infra Part II.C.
Craven contends with respect to the Historical Accounting Class that "a mandatory [Rule] 23(b)(2) class settlement without [an] opt-out right is inappropriate where relief is predominantly monetary, especially when individual class members are required to waive rights to injunctive relief already won in litigation." Appellant's Br. at 28 (capitalization removed). This argument mischaracterizes the Historical Accounting Class.
Rule 23(b)(2) provides for class certification where "the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief . . . is appropriate respecting the class as a whole." FED. R. CIV. P. 23(b)(2). Just such a circumstance presents itself here: the Secretary refused to provide an historical accounting to IIM account holders; their claim for injunctive and declaratory relief in Count I of the amended complaint applied to the Historical Accounting Class as a whole.
Craven disagrees. The $1,000 per capita settlement payment, she maintains, monetizes the historical-accounting claims so that what was a uniform, indivisible remedy becomes divisible and individualized, and therefore certification of the Historical Accounting Class pursuant to Rule 23(b)(2) is precluded by Wal-Mart Stores, Inc. v. Dukes, ___ U.S. ___, 131 S.Ct. 2541, 2557-58, 2560, 180 L.Ed.2d 374 (2011). This is so, Craven says, because the historical accounting has greater value to class members with significant trust-mismanagement claims, who may use the information from the accounting to obtain substantial monetary relief, than to those with negligible trust-mismanagement
Assuming that the $1,000 per capita settlement payment monetized the requested injunctive relief, certification of the Historical Accounting Class as a Rule 23(b)(2) class was nonetheless appropriate because of the unusual circumstances surrounding this litigation. Craven's argument ignores that the record developed through extensive and hard-fought litigation indicates that the different interests she alleges likely do not exist and that even if they do exist, they would not be revealed by the type of sampling-heavy accounting that would almost certainly occur if the plaintiff class prevailed in the litigation. See Fairness Hr'g Tr. at 213, 218; Cobell XX, 532 F.Supp.2d at 56, 103. Interior had performed a fairly extensive accounting in the course of the litigation but found only minor discrepancies. At trial, the district court observed that "one permissible conclusion from the record would be that the [Secretary] has not withheld any funds from plaintiffs' accounts." Cobell XXI, 569 F.Supp.2d at 238. This court's decision in Cobell XXII placed significant limits on the Secretary's accounting duty, clarifying that Interior need only provide "the best accounting possible . . . with the money that Congress is willing to appropriate." 573 F.3d at 813. Given that any additional accounting funded by Congress would likely rely heavily on statistical sampling, even if latent intraclass conflicts did exist, they would be unlikely ever to be discovered. All of this suggests that the information produced from an historical accounting is not likely to be worth significantly more to some class members than to others, and thus the $1,000 settlement payment is properly viewed as nonindividualized and does not run a foul of Wal-Mart.
Moreover, this case is extraordinary in that Congress not only expressly authorized, ratified, and confirmed the settlement, but also appropriated $3.4 billion to fund it. Although Congress made no express findings about the propriety of (b)(2) certification of the Historical Accounting Class, given the lengthy litigation and the limited funds available for further accounting, Congress's judgment that uniform payments would adequately compensate class members for an accounting right that it created carries significant weight and sets this case apart from others.
Craven also contends that the Trust Administration Class's distribution scheme is unfair under Federal Rule of Civil Procedure 23(e) "because it bears no relation to the underlying claims and perversely undervalues the claims of the most injured class members while providing windfalls to class members who have suffered little or no injury." Appellant's Br. at 23 (capitalization removed). Her challenge rests again on an alleged intra-class conflict that arises from the distribution scheme's under- and over-compensation of class members. Although disclaiming any suggestion that Rule 23(e) fairness requires a perfect allocation of payments among individual class members, see Appellant's
Indeed, the existence of the opt-out alternative effectively negates any inference that those who did not exercise that option considered the settlement unfair. The district court, although acknowledging the possibility that some class members may not have read or fully understood the settlement-notice documents, was satisfied that the opt-out provision fulfilled its purpose of protecting objecting class members, Fairness Hr'g Tr. at 225, finding that the "extensive and extraordinary notice" procedures, id. at 230, ensured "hundreds of thousands" of class members "knew about th[e] settlement and understood what they were getting into and approved it," id. at 238. Craven does not suggest these findings are clearly erroneous. See FED. R. CIV. P. 52; In re Vitamins Antitrust Class Actions, 327 F.3d 1207, 1209 (D.C.Cir.2003).
Other portions of the record also contradict the inequity Craven alleges. The historical-accounting records examined thus far have revealed only minor errors in trust accounting. In 2007, Interior reported that it successfully traced 94.7% of over 47 million IIM transactions occurring between 1985 and 2007,
Craven's attempt to support her intra-class conflict attack by turning, in her reply brief, to the accounting received by the class representatives is not well taken. She maintains that, prior to the settlement agreement, the class representatives received historical accountings that showed their trust claims to be of little value; their interests therefore were in conflict with those of the rest of the class members who did not know how they would fare under the distribution scheme. First, as discussed, few if any class members are likely to have trust claims of substantial
Furthermore, as mentioned, the record indicates that any feasible accounting would be unlikely to provide evidence of the alleged intra-class conflict. Craven's position leaves this problem unaddressed, neglecting to account for the changed circumstances during the fifteen years between the commencement of this litigation and its settlement in 2011. By the time the parties entered settlement negotiations following Cobell XXII, it had become clear that the Secretary would be unable to perform an accounting of the IIM trust under the 1994 Act with the degree of accuracy desired by the plaintiff class. See Cobell XXII, 573 F.3d at 813-15; Cobell XX, 532 F.Supp.2d at 103. Trust records had been lost or destroyed, Cobell XX, 532 F.Supp.2d at 45-46, fractional ownership rendered accounting difficult, see Cobell XXI, 569 F.Supp.2d at 249, and changes to Interior's trust-accounting system had complicated accounting efforts, see Cobell XX, 532 F.Supp.2d at 43-44; HISTORICAL RESEARCH ASSOCS., supra note 8, at 25 (Pls.-Appellees' App'x 119). Preliminary work had revealed that even a partially complete accounting would be prohibitive in cost, see Cobell XX, 532 F.Supp.2d at 81-82; the record was clear "on the tension between the expense of an adequate accounting and congressional unwillingness to fund such an enterprise," id. at 103 n. 21. In view of these realities, this court in July 2009 instructed "the district court to use its equitable power to enforce the best accounting that Interior can provide, with the resources it receives, or expects to receive, from Congress." Cobell XXII, 573 F.3d at 811. This instruction underscored the reality that the original goal of the litigation—a complete historical accounting for each class member—would not be realized. Instead, any historical accounting that would result from continued litigation would likely be severely limited in scope, heavily restrained by cost, and thus unlikely to reveal the existence of—much less remedy—the intra-class conflict Craven alleges.
Viewed, then, not in the hypothetical light cast by Craven's challenge, but in the actual light illuminating the parties' negotiations, the district court reasonably concluded that the class settlement agreement offered a fair resolution of the plaintiff classes' claims free of impermissible intra-class conflict.
Additionally, Craven challenges the certification of the Trust Administration Class as inconsistent with constitutional due process. She maintains that the commonality and cohesiveness requirements of Rule 23 are of constitutional magnitude inasmuch as they inform adequacy of representation, which is a clear constitutional
Where money damages are sought, due process requires: (1) adequate notice to the class; (2) an opportunity for class members to be heard and participate; (3) the right of class members to opt out; and (4) adequate representation by the lead plaintiff(s). Phillips Petroleum, 472 U.S. at 811-12, 105 S.Ct. 2965. Given the district court's findings regarding the extensive notice of the proposed settlement that was provided to class members, the opportunity for class members to present their objections and participate in the fairness hearing, and the right to opt out, Craven's due-process objection boils down to a challenge to the adequacy of class representation. As Craven suggests, the adequate-representation element of due process overlaps with Rule 23(a)'s requirement that "there are questions of law or fact common to the class," FED.R.CIV.P. 23(a)(2). See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 626 n. 20, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997). Under Rule 23(a), commonality requires that plaintiffs advance a "common contention" that "must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Wal-Mart, 131 S.Ct. at 2551. The Trust Administration Class satisfies this requirement. 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. To the extent Craven's commonality objection rests on the purported intra-class conflict between over- and under-compensated class members, her contention fails for lack of persuasive evidentiary support, see supra Part II.C.2.
Nor, as Craven maintains, did the district court's award of incentive payments to class representatives create an impermissible conflict requiring decertification of either class. To the extent Craven's argument that the incentive awards create an intra-class conflict hinges on the size of the incentive awards, her brief focuses on the class representatives' request, not on the terms of the class settlement agreement, the district court's findings, or the district court's actual award. Although the district court acknowledged in ordering the incentive payments that such awards "are routinely provided to compensate named plaintiffs for the services they provide and the risks they incur[ ] during the course of class-action litigation," Fairness Hr'g Tr. at 238, the class settlement agreement provided no guarantee that the class representatives would receive incentive payments; it left that decision and the amount of any such payments to the discretion of the district court. The Secretary's opposition to the magnitude of the class representatives' proposed incentive payments highlighted the uncertain status of such payments at the time of the settlement. In describing Ms. Cobell's singular, selfless, and tireless investment of time, energy, and personal funds to ensure survival
Craven thus fails to show either an error of law or clear factual error in the district court's due-process analysis.
Craven's other challenges also fail. First, the district court's reference to the small number of objectors was one of many observations, not a dispositive finding in its fairness analysis amounting to legal error. Nothing in the district court's observation was inconsistent with the caution that should be exercised in "inferring support from a small number of objectors to a sophisticated settlement," In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 812 (3d Cir.1995). See also In re Gen. Motors Corp. Engine Interchange Litig., 594 F.2d 1106, 1137 (7th Cir.1979).
Second, Craven fails to show that any prejudice resulted from the district court's striking of her supplemental brief as untimely, so the error, if any, was harmless. See Burkhart v. Wash. Metro. Area Transit Auth., 112 F.3d 1207, 1214 (D.C.Cir.1997). The district court allowed Craven's counsel to present those arguments at the fairness hearing. See Fairness Hr'g Tr. at 77-78. Even now Craven fails to identify any argument in her supplemental brief that was not presented to the district court.
Finally, Craven's general objection to the fairness of the class settlement agreement focuses on the information-deficit concern discussed previously: without an historical accounting, it is impossible to tell whether some members are being over-compensated while others are being under-compensated, and yet class members are being forced to surrender their right to an historical accounting and are thereby left without the information needed to establish the value of their claims. The protracted and contentious nature of this litigation underscores the reasonableness of the district court's evaluation of the fairness and adequacy of the class settlement agreement under Rule 23(e). Congress had shown no inclination to fund the historical accounting to which the plaintiff class was entitled under the 1994 Act. The question was could the class nonetheless benefit appropriately without it. Class counsel acknowledged that, despite significant work with existing data, efforts had failed to show significant accounting errors in the IIM accounts, see Cobell XXI, 569 F.Supp.2d at 238. The class settlement agreement was the result of an arms-length negotiation. What interests it protected and what benefits it provided were weighed by the district court, and considered in view of the class-member objections. The settlement acknowledged the plaintiff class' entitlement to an historical accounting and that the United States would pay for the surrender of that right and for trust claims in accordance with an agreed-upon formula. The settlement further provided that the Secretary would attempt to purchase fractional ownership shares to enable accurate accounting in the future in fulfillment of the Secretary's trust responsibilities. Congress has approved the settlement and appropriated
Accordingly, we hold that in approving the class settlement agreement pursuant to Rule 23(e) the district court did not abuse its discretion in focusing on the significant benefits for each class member in view of the realities facing them after fifteen years of litigation, including multiple appeals, and we affirm the judgment certifying the two classes, approving the terms of the settlement, and encompassing the provisions of the July 27, 2011 order.