Cobell v. Norton

283 F.Supp.2d 66

Elouise Pepion COBELL, et al. Plaintiffs, v. Gale A. NORTON, Secretary of the Interior, et al., Defendants.

No. CIV.A.96-1285(RCL).

United States District Court, District of Columbia.

September 25, 2003.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Keith M. Harper and Lorna K. Babby, Washington, DC, Robert Meyer Peregoy, Ronan, MT, Elliott H. Levitas, Kilpatrick Stockton, LLP, Dennis Marc Gingold and Mark Kester Brown, Washington, DC, for plaintiffs.

Robert D. Luskin, Patton Boggs LLP, Tom C. Clark, Susan Virginia Cook, Brian L. Ferrell, Andrew M. Eschen, Charles Walter Findlay, III, Sarah D. Himmelhoch, Sandra Marguerite Schraibman, Connie S. Lundgren, Edith R. Blackwell, Washington, DC, John Charles Cruden, Annandale, VA, Lewis Steven Wiener, Sutherland, Asbill & Brennan, L.L.P., J. Christopher Kohn, Mark E. Nagle, Robert Craig Lawrence, Scott Sutherland Harris, Jo-Ann Shyloski and Barry Weiner, Henry A. Azar, Jr., Washington, DC, Terry M. Petrie, Denver, CO, Seth Brandon Shapiro, Jonathan Brian New, Sandra Peavler Spooner, David J. Gottesman, Peter Blaze Miller, Cynthia L. Alexander, Mathew J. Fader, John Stemplewicz, Amalia D. Kessler, John S. Most, Jennifer R. Rivera, Phillip Martin Seligman, Michael John Quinn, Gino D. Vissicchio, John Warshawsky, John J. Siemietkowski, John R. Kresse, Timothy E. Curley, Tracy Lyle Hilmer, Dodge Wells, Daniel Gordon Jarcho, Herbert Lawrence Fenster, Christina M. Carroll and Michael James Bearman, McKenna Long & Aldridge, LLP, Elizabeth Wallace Fleming, Trout & Richards, P.L.L.C., B. Michael Rauh Manatt, Phelps & Phillips, L.L.P., Washington, DC, for defendants.

MEMORANDUM OPINION

("Historical Accounting")

LAMBERTH, District Judge.

Table of Contents

I.    Introduction ........................................................ 72
      A.   Factual Background ............................................. 72
           1. The Removal of the American Indians ......................... 72
           2. The Allotment Process ....................................... 74
           3. The Individual Indian Money (IIM Trust) ..................... 76
      B.   Procedural Background .......................................... 81
           1. The Filing of the Present Case .............................. 81

           2. The Phase I Trial ........................................... 82
           3. The Second Contempt Trial ................................... 83
           4. The Phase 1.5 Trial ......................................... 85
II.   An Overview of Institutional Reform Litigation ...................... 86
      A.   A Model of an Institutional Reform Case ........................ 87
      B.   Major Settings of Institutional Reform Litigation .............. 92
           1.   Schools ................................................... 92
           2.   Prisons ................................................... 95
           3.   Mental Health Facilities ................................. 100
           4.   Public Housing ........................................... 101
           5.   Other Settings ........................................... 104
      C.   Conclusion .................................................... 107
III.  Separation of Powers ............................................... 108
      A.   Introduction .................................................. 108
      B.   Judicial-Executive Separation of Powers Cases ................. 110
      C.   Analysis ...................................................... 118
      D.   The Role of the Courts in Trust Cases ......................... 127
           1.  Introduction .............................................. 127
           2.  American Trust Law ........................................ 127
      E.   Conclusion .................................................... 134
IV.   The Mandates of the D.C. Circuit ................................... 136
      A.   Cobell VI ..................................................... 136
      B.   Cobell VIII ................................................... 140
      C.   The Nature and Scope of the Court's Review .................... 141
V.    The Plans .......................................................... 147
      A.   An Overview of Interior's Accounting Plan ..................... 147
           1.  Introduction .............................................. 147
           2.  The Collection Process .................................... 148
               a.  Indexing of Trust Records ............................. 148
               b.  Collection of Missing Trust Records from Third Parties. 148
               c.  Compilation of Transaction Histories .................. 149
           3.  The Accounting Process .................................... 149
               a.  The Three Categories of Accounts ...................... 150
               b.  Verification of Transactions .......................... 151
           4.  The Reporting Process ..................................... 151
           5.  The Quality Control Process ............................... 151
               a.  Tests of the IIM Trust Systems ........................ 151
               b.  Other Quality Control Measures ........................ 151
      B.   Adequacies and Deficiencies of Interior's Accounting Plan ..... 152
           1.  The Collection Process .................................... 152
               a.  The Availability of Adequate Records .................. 152
               b.  Collection of Missing Trust Records from Third Parties. 155
               c.  Indexing of Trust Records and Compilation of Transaction
                   Histories ............................................. 161
           2.  The Accounting Process .................................... 166
               a.  Introduction .......................................... 166
               b.  Special Deposit Accounts (SDAs) ....................... 166
               c.  Judgment and Per Capita Accounts ...................... 168
               d.  Land-Based Accounts ................................... 169
                   (1) Proposed Termination Date of the Accounting ....... 169
                   (2) Proposed Start Date of the Accounting ............. 172
                   (3) Deceased Beneficiaries ............................ 173
                   (4) Assets ............................................ 175
                   (5) Direct Pay ........................................ 177
                   (6) Contract/Compact/Cooperative Agreement ............ 180

                   (7) Land Escheatment .................................. 181
               e.  Method of Verification ................................ 183
                   (1) Accounting Standards Manual ....................... 184
                   (2) Statistical Sampling .............................. 187
           3.  The Reporting Process ..................................... 198
           4.  The Quality Control Process ............................... 200
               a.  System Tests .......................................... 200
               b.  Other Quality Control Measures ........................ 204
      C. Plaintiffs' Accounting Plan ..................................... 207
VI.   Relief to Be Ordered ............................................... 211
      A.   The Four-Part Test ............................................ 211
           1.  Substantial Likelihood of Prevailing on the Merits ........ 211
           2.  Irreparable Injury ........................................ 212
           3.  Balance of Hardships ...................................... 212
           4.  Furtherance of the Public Interest ........................ 212
      B.   Structural Injunction ......................................... 213
      C.   Appointment of a Monitor ...................................... 214
      D.   Timetable ..................................................... 220
      E.   Retention of Jurisdiction ..................................... 224
VII.   Conclusion ........................................................ 224

This matter comes before the Court after a forty-four day bench trial. Having undertaken a careful review of all the evidence presented and all representations made during that trial, of the record in this case, and of the applicable law, the Court now enters a structural injunction and appoints a monitor to oversee its implementation.

This memorandum opinion is the first of two opinions issued this date. The present opinion deals solely with the further relief ordered by this Court relating to the historical accounting owed by defendants to plaintiffs. The second opinion will treat the further relief ordered by the Court relating to the obligation of the Interior defendants to bring themselves into compliance with the fiduciary duties owed to plaintiffs as the trustee-delegate of the United States for the individual Indian money trust.

A decent respect for all who will be affected by today's rulings makes it appropriate that the Court should provide a full explanation of the reasons compelling it to order such relief. Only an appreciation of the full context in which the present trial emerged will make clear precisely why this Court has determined such relief to be necessary. Part I of this opinion provides a synopsis of this litigation to date. Part II examines the tradition of institutional reform cases, and explains how the present case fits within that tradition. Part III analyzes relevant separation-of-powers issues. Parts IV and V present in detail the Court's specific findings of fact and conclusions of law. Part VI describes the relief ordered this date. Finally, in Part VII, the Court provides a brief explanation of the profound necessity for the entry of a structural injunction in this matter.

I. I...