Cohen Milstein Sellers & Toll was one of three firms hit with a contempt sanction. (Photo: Diego M. Radzinschi / ALM)

A fight over legal fees is brewing between the U.S. Justice Department and plaintiffs lawyers who oversaw a landmark $680 million settlement for Native American farmers and ranchers in their discrimination lawsuit against the U.S. Department of Agriculture.

The Justice Department is opposing a supplemental award of fees and costs totaling $3.2 million, an amount on top of the $60.8 million earlier awarded to the attorneys who represented the class in the case Keepseagle v. Perdue. The litigation began nearly 19 years ago. The government paid $680 million into a settlement fund in 2011. An additional $80 million was earmarked for debt relief.

Class counsel—Joseph Sellers of Cohen Milstein Sellers & Toll and Jessica Amunson of Jenner & Block—recently told U.S. District Judge Emmet Sullivan in Washington that the supplemental fee award was necessary to pay for services and expenses that arose “only after an unexpectedly large amount of settlement funds were unclaimed, which the settlement agreement provided be distributed in a cy pres distribution.”

The lawyers said they devoted more than 5,000 hours to that additional work involving the cy pres distribution, they wrote. So-called “cy pres” payments are funds that are given to persons or entities that are not direct parties to the dispute. In the Keepseagle case, $380 million was unclaimed.

The nature of that work, they told the court, was “wholly distinct” from the work encompassed by the initial fee petition and none of it was anticipated at the time the initial fee petition was submitted. Under the 2011 settlement agreement, attorney's fees and costs paid to the firms involved in the case totaled $60.8 million.

The Justice Department, in response to the supplemental fee request, argued that the settlement did not permit the award of additional compensation. The settlement agreement authorized the court to award between 4 percent and 8 percent of $760 million, and the court awarded class counsel fees at the top of the range, Justice Department lawyers in the federal programs branch wrote on Aug. 17.

“Fee requests are reviewed for reasonableness,” the Justice Department said. “An additional award of fees, on top of the massive $60.8 million fee award that class counsel has already received, would not be reasonable.”

The government also argued that the size of the cy pres award undercut the supplemental legal-fee request. “Indeed, the $380 million in unclaimed funds indicates that the initial settlement was larger than it should have been and, by extension, that the percentage-based award of attorneys' fees was similarly inflated,” government lawyers wrote. “No further fees are warranted.”

Marilyn Keepseagle, lead class representative, also seeks $566,537.50 in fees generated by Olsson Frank Weeda Terman Matz, whom she retained separately in order to assist her in seeking an additional award of damages from the unclaimed settlement funds to class members who were successful in their initial claims. That firm is seeking seeking payment for $6,987.56 in unreimbursed expenses associated with representing Keepseagle.

The Keepseagle plaintiffs alleged that beginning in 1981, the Agriculture Department systematically denied Native American farmers and ranchers nationwide the same opportunities as white farmers to obtain low-interest rate loans and loan servicing, causing them hundreds of millions of dollars in economic losses.

Sullivan, the presiding judge, approved a $760 million settlement in April 2011, but payments issued on the initial round of claims in 2012 left roughly $380 million of the settlement undisbursed. The U.S. Supreme Court in March refused to hear appeals to distribution of the unclaimed $380-million cy pres award.

The Justice Department had urged the justices to deny review even though the agency—led by U.S. Attorney General Jeff Sessions—previously had called the third-party agreement “regrettable” in the lower appellate court.  The Justice Department in June announced a new policy that generally prohibits government attorneys from entering into settlement agreements that require “cy pres” payments.

 

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