Two Shields v. United States

United States Court of Appeals for the Federal Circuit ______________________ RAMONA TWO SHIELDS, MARY LOUISE DEFENDER WILSON, INDIVIDUALLY, AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, Plaintiffs-Appellants v. UNITED STATES, Defendant-Appellee ______________________ 2015-5069 ______________________ Appeal from the United States Court of Federal Claims in No. 1:13-cv-00090-LB, Judge Lawrence J. Block. ______________________ Decided: April 27, 2016 ______________________ KENNETH E. MCNEIL, Susman Godfrey LLP, Houston, TX, argued for plaintiffs-appellants. Also represented by SHAWN L. RAYMOND; ANDRES HEALY, Seattle, WA; NANCIE GAIL MARZULLA, Marzulla Law, LLC, Washington, DC. ROBERT HARRIS OAKLEY, Environment and Natural Resources Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by JOHN C. CRUDEN. ______________________ 2 TWO SHIELDS v. US Before PROST, Chief Judge, MOORE and TARANTO, Circuit Judges. PROST, Chief Judge. Appellants Ramona Two Shields and Mary Louise De- fender Wilson brought this action against the United States, seeking redress for themselves and other Native Americans in connection with the government’s alleged mismanagement of oil-and-gas leases on Indian allotment land. The United States Court of Federal Claims found in favor of the government, granting summary judgment on Count I and dismissing Counts II and III. J.A. 1–30. We affirm. I Pursuant to the General Allotment Act of 1887 and the Indian Reorganization Act of 1934, the United States is the trustee of millions of acres of Indian allotment land. The Bureau of Indian Affairs (“BIA”), under the Secretary of the Interior, is the federal bureau responsible for managing the trust lands. Much of this case turns on events from a prior case, commonly referred to as the Cobell litigation. We there- fore begin with a discussion of the facts and circumstanc- es surrounding that case. A In 1996, the Cobell class action lawsuit was filed on behalf of more than 300,000 Native Americans. The plaintiffs alleged that the government had mismanaged their Individual Indian Money (“IIM”) accounts by failing to account for billions of dollars relating to leases of allotment land for oil extractions and logging. The litiga- tion was complex and drawn-out, and eventually settled in 2011. See Cobell v. Salazar, No. 96-1285, 2011 WL TWO SHIELDS v. US 3 10676927 (D.D.C. July 27, 2011). It is the details of the Cobell settlement that are relevant here. The Cobell settlement provided that, following the en- actment of legislation to carry it out, an amended com- plaint would be filed. The amended complaint set forth several different categories of claims. One was “historical accounting claims” asserted by members of the “historical accounting class”—these claims were closely tied to the government’s mismanagement of IIM accounts that was the focus of the original complaint. J.A. 652. Another category of claims was much broader—it included any “land administration claims” held by the “trust admin- istration class,” a class defined as including those individ- uals that held, as of the Record Date of September 30, 2009, “a recorded or other demonstrable ownership inter- est in land held in trust or restricted status.” J.A. 656. The land administration claims were broadly defined as any “known and unknown claims that have been or could have been asserted through the Record Date [of Septem- ber 30, 2009] for Interior Defendants’ alleged breach of trust and fiduciary mismanagement of land, oil, natural gas, mineral, timber, grazing, water and other resources and rights.” J.A. 653. Importantly, the settlement agreement included an opt-out provision. Members of the trust administration class who failed to opt out of the settlement would be “deemed to have released, waived, and forever dis- charged” the government from any claims falling within the scope of the settlement, including any land admin- istration claims. J.A. 686. In December of 2010, Congress passed the Claims Resolution Act of 2010, which ratified the settlement and funded it with $3.4 billion. See Pub. L. 111-291, 124 Stat. 3064 (Dec. 8, 2010). The amended complaint was duly filed with the district court, the settlement approved, and judgment entered in 2011. Cobell, 2011 WL 10676927. In 4 TWO SHIELDS v. US accordance with the settlement terms, the district court provided notice of the settlement, including class mem- bers’ opt-out right. The fairness of the opt-out process was challenged in court (including alleged violations of Fifth Amendment due process and the notice provisions of Fed. R. Civ. Pro. 23), but those challenges were ultimately rejected. See id., aff’d, 679 F.3d 909 (D.C. Cir. 2012), cert denied, 133 S. Ct. 543 (2012). B Appellants in this case, Ms. Two Shields and Ms. Defender Wilson, are “Indian allotees” who hold interests in allotment land located on the Fort Berthold Indian Reservation in North Dakota. Appellants’ allotments are located on part of the Bakken Oil Shale—one of the country’s largest contiguous deposits of oil and natural gas. Pursuant to legislation enacted in 1998, Fort Berthold allotees cannot lease their oil-and-gas interests unless the Secretary approves the lease as “in the best interest of the Indian owners of the Indian Land.” Pub. L. No. 105-188, 122 Stat. 620 (1998) (“Fort Berthold Act”) (amending 25 U.S.C. § 396). This approval step is “intended to ensure that Indian mineral owners desiring to have their re- sources developed are assured that they will be developed in a manner that maximizes [the Indian owners’] best economic interests and minimizes any adverse environ- mental impacts or cultural impacts resulting from such development.” 25 C.F.R. § 212.1(a). In 2013, Appellants sued the government for violating its obligations relating to approval of oil-and-gas leases on Fort Berthold allotment lands. Appellants alleged that, between 2006 and late 2009, a company called Dakota-3 obtained leases on thousands of acres of Fort Berthold allotment land at below-market rates, then turned around and sold those leases to the Williams Companies in No- vember of 2010 for a profit of nearly $900 million. Appel- TWO SHIELDS v. US 5 lants alleged that the BIA knew the below-market rates were not in the Indian owners’ best interests, but none- theless rubber-stamped every Dakota-3 lease. The complaint contained three counts. The primary one, Count I, alleged that the BIA breached its fiduciary duty under 25 U.S.C. § 396 to ensure leases are in the best interests of the Indian owners. The government sought summary judgment on this count, arguing that Appellants were barred from asserting it by the Cobell settlement. It is undisputed that Ms. Two Shields and Ms. Defender Wilson are members of the trust admin- istration class and that they failed to opt out of the set- tlement. 1 The government therefore argued that it was entitled to summary judgment because Count I was a land administration claim released by Appellants’ failure to opt out of the Cobell settlement. The Court of Federal Claims agreed, granting summary judgment for the government. J.A. 14–21. The complaint’s Counts II and III were made in the alternative. In Count II, Appellants alleged that the government breached a wholly separate fiduciary duty—a duty to have disclosed to Appellants, during the Cobell settlement proceedings, information relating to the Fort Berthold claims Appellants assert in this case. The Court of Federal Claims dismissed this count for lack of subject matter jurisdiction, agreeing with the government that there was no source of federal law that set forth the specific fiduciary duty alleged to be breached. J.A. 25–27. In Count III, Appellants alleged that the Claims Resolu- tion Act of 2010 was a legislative taking of Counts I and 1 While Appellants refused to concede that they were members of the trust administration class below, the Court of Federal Claims made a finding that they were members of the class, and Appellants do not dispute that finding on appeal. 6 TWO SHIELDS v. US II, in violation of the Fifth Amendment. The Court of Federal Claims dismissed this count as well, finding that Counts I and II did not amount to a cognizable property interest that could be the subject of a takings claim be- cause they lacked a final judgment; that Appellants could not show an unjust taking occurred; and that, in any event, Count III appeared to be a due process claim “masquerading” as a takings claim, and therefore outside the Court of Federal Claims’ jurisdiction. J.A. 27–29. Appellants now appeal to us. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(3). II We review a summary judgment determination by the Court of Federal Claims “completely and independently, construing the facts in the light most favorable to the non- moving party.” Am. Airlines, Inc. v. United States, 204 F.3d 1103, 1108 (Fed. Cir. 2000). We review de novo the Court of Federal Claims’ dismissals based on lack of jurisdiction, Holmes v. United States, 657 F.3d 1301, 1309 (Fed. Cir. 2011), and failure to state a claim for which relief can be granted, Hartford Fire Insurance Co. v. United States, 772 F.3d 1281, 1284 (Fed. Cir. 2014). A We begin with what both parties agree is the primary question in this case: whether the Cobell settlement bars Appellants from now asserting Count I against the gov- ernment. We treat the Cobell settlement as a contract, VanDesande v. United States, 673 F.3d 1342, 1350 (Fed. Cir. 2012), the proper interpretation of which is a ques- tion of law, Landmark Land Co. v. FDIC, 256 F.3d 1365, 1373 (Fed. Cir. 2001). Appellants offer four reasons why the Cobell settlement should not be interpreted as releas- ing their claims. We take each in turn. First, Appellants argue that Count I does not fall within the definition of “land administration claims,” TWO SHIELDS v. US 7 which is limited to only those claims that could have been asserted by the Record Date of September 30, 2009. Appellants contend that the crucial event in this case was the November 2010 sale of leases from Dakota-3 to the Williams Companies, at a profit—that Appellants’ claims did not accrue until that time and thus do not meet the September 30, 2009 cut-off date for “land administration claims.” Appellants are correct that “a claim does not accrue until all events necessary to fix the liability of the defend- ant have occurred.” Catawba Indian Tribe v. United States, 982 F.2d 1564, 1570 (Fed. Cir. 1993). But the November 2010 sale to the Williams Companies was not an event necessary to fix the government’s purported liability. Instead, “[a] cause of action for breach of trust traditionally accrues when the trustee ‘repudiates’ the trust and the beneficiary has knowledge of that repudia- tion.” Shoshone Indian Tribe of Wind River Reservation v. United States, 364 F.3d 1339, 1348 (Fed. Cir. 2004). “A trustee may repudiate the trust by express words or by taking actions inconsistent with his responsibilities as a trustee.” Id. Here, the government’s purported liability was fixed at the time it allegedly repudiated its trust duties as set forth in § 396—when it approved the Dako- ta-3 leases at below-market rates. Appellants do not argue that they lacked knowledge of the below-market rates at the time of approval, nor do they argue that any of the approvals occurred after the September 30, 2009 cut-off date. Thus, although the November 2010 sale to the Williams Companies was, in some sense, a final link in the chain, Appellants’ claims had accrued, and could have been asserted, back when the BIA approved the below-market Dakota-3 leases. Count I therefore is a “land administration claim” settled by Cobell—it compris- es “known and unknown claims that have been or could have been asserted through the Record Date [of Septem- ber 30, 2009].” 8 TWO SHIELDS v. US Second, Appellants argue that the Cobell settlement’s payment mechanics show that Count I was not released. The Cobell settlement provided that each member of the trust administration class would receive a base payment of approximately $800, plus an additional pro rata pay- ment based on the amount of money deposited in the member’s IIM account from October 1, 1985, through September 30, 2009. Appellants argue that these pay- ments “make[] no sense” as applied to the present case: that individuals received an average of only $1,600 under the Cobell settlement while they stand to receive any- where from $100,000 to $150,000, if successful in this case. Opening Br. 30. Appellants argue that invoking Cobell’s release language in these circumstances would mean that Appellants “waived their claims for nothing.” Id. at 31. Appellants’ argument is foreclosed by the simple fact that they chose not to opt out of the settlement. Even if the Cobell payments are less than satisfactory in rectify- ing the Fort Berthold harm, Appellants are bound by the settlement’s payment terms because they chose not to opt out. Further, challenges to the fairness and adequacy of the Cobell payment scheme have already been rejected. In 2012, the United States Court of Appeals for the Dis- trict of Columbia considered an argument that the Cobell settlement’s distribution scheme was unfair because some class members “likely possess more valuable claims than do others and . . . the per capita baseline payment under- compensates the former while over-compensating the latter, an inequity that the pro rata payment does not remedy.” Cobell v. Salazar, 679 F.3d at 918–19. The court rejected this argument and closed the issue, stating that “the distribution scheme is fair and ‘[i]t is hard to see how there [c]ould be a better result.’” Id. at 919 (citation omitted). The court further reasoned that “the existence of the opt-out alternative effectively negates any inference TWO SHIELDS v. US 9 that those who did not exercise that option considered the settlement unfair.” Id. at 920. We agree. Third, Appellants argue that the Cobell settlement should not be construed as releasing the government’s liability for Count I because the government failed to provide “full information” about Appellants’ claims (e.g., details regarding the specific damages and breaches relating to the Fort Berthold allegations) back when the Cobell release was effectuated. As support for its “full disclosure” theory, Appellants rely on a 2003 decision from the Court of Federal Claims, Shoshone Indian Tribe v. United States, 58 Fed. Cl. 542 (2003). The Shoshone case does not stand for the broad- sweeping proposition made by Appellants. At issue in that case was the government’s motion in limine to ex- clude evidence based on a letter sent by the Indian plain- tiffs, which the government argued constituted a release of the plaintiffs’ claims. Id. at 544. The Court of Federal Claims denied the government’s motion to exclude. Relying on a general treatise on trusts, the court found that no release occurred because the government had not provided plaintiffs “with the full information plaintiffs would have needed before releasing the claims listed in the 1997 letter.” Id. at 545. This decision is not control- ling here. First, we are not bound by decisions of the Court of Federal Claims. Second, as explained later in this opinion, more recent cases from the Supreme Court make clear that a general trust relationship between the United States and its beneficiary is not enough to impose an information-disclosure obligation found nowhere in the governing statute. See infra pp. 12–14. Finally, Appellants argue that the named Cobell plaintiffs lacked standing to assert Appellants’ Count I Fort Berthold claims. The Cobell settlement releases any claims “that were, or should have been, asserted in the Amended Complaint when it was filed.” J.A. 686. Appel- 10 TWO SHIELDS v. US lants point out that the named Cobell plaintiffs had no Fort Berthold oil-and-gas interests and the Cobell com- plaint did not contain a single fact regarding the specific Fort Berthold claims. They contend that the named Cobell plaintiffs lacked standing to assert Appellants’ Count I Fort Berthold claims because the “alignment of interest and injury must be exact” as between class repre- sentatives and the other class members. Opening Br. 35. Appellants are incorrect that exact alignment of injury is required between class representatives and other class members. Id. The question, instead, is whether or not the claims of the class representatives and other class members “implicate a significantly different set of con- cerns.” Gratz v. Bollinger, 539 U.S. 244, 265 (2003). Here, it is clear that the concerns implicated by the Cobell claims and Appellants’ Count I claims are not significantly different. Appellants assert in this case that the BIA approved leases that were below market value, and therefore were not in their “best interests” as re- quired by the Fort Berthold Act. Those concerns are precisely the same as the ones implicated by Cobell’s land administration claims, which specifically included any alleged “[f]ailure to obtain fair market value on leases” and “failure to prudently negotiate leases” by the Secre- tary on Indian allotment land. J.A. 654. The fact that the named Cobell plaintiffs’ oil-and-gas interests may have been tied to a location other than Fort Berthold is of no moment—the alleged harm in both Cobell and this case is not significantly different. Likewise, the fact that the Cobell complaint did not specifically reference the Fort Berthold Act is also insignificant, as the “best interest” standard of the Fort Berthold Act adds little to the lan- guage already present in § 396. See 25 U.S.C. § 396 (“The Secretary of the Interior shall have the right to reject all bids [for mineral leases] whenever in his judgment the interests of the Indians will be served by so doing, and to advertise such lease for sale.”). There is no standing issue TWO SHIELDS v. US 11 that precludes application of the Cobell release to Appel- lants’ Count I claims. For the aforementioned reasons, we reject all four of Appellants’ arguments as to why the Court of Federal Claims was wrong to construe the Cobell settlement as releasing their claims. We also reject Appellants’ contention that the Court of Federal Claims erred by arriving at its conclusion without first allowing discovery of extrinsic evidence regarding the facts and circumstances surrounding the negotiation and execution of the Cobell settlement. Appellants’ position is that this extrinsic context evidence must be considered in determining whether the Cobell release language applies to Appellants’ Count I claims. We disagree. “Outside evidence may not be brought in to create an ambiguity where the language is clear.” City of Tacoma v. United States, 31 F.3d 1130, 1134 (Fed. Cir. 1994); see also R.B. Wright Constr. Co. v. United States, 919 F.2d 1569, 1572 (Fed. Cir. 1990). Although we have noted that evidence of “trade practice and custom” should be consid- ered when interpreting contracts, that is not the type of evidence Appellants seek to rely on here and, in any event, even that type of evidence cannot be used “to create an ambiguity where a contract was not reasonably sus- ceptible of different interpretations at the time of con- tracting.” Metric Constructors, Inc. v. Nat’l Aeronautics & Space Admin., 169 F.3d 747, 751 (Fed. Cir. 1999); see also id. (warning against “according undue weight to [a] party’s purely post hoc explanations for its conduct”). Likewise, this is not a case where the court below errone- ously relied on a general dictionary definition to ascertain the meaning of a contract, divorced from the context of the agreement. See Rockies Exp. Pipeline LLC v. Salazar, 730 F.3d 1330, 1340–41 (Fed. Cir. 2013). Here, the language of the Cobell settlement is clear. As explained above, Appellants have failed to show any reason why Count I is 12 TWO SHIELDS v. US not barred by its terms. We therefore affirm the Court of Federal Claims’ grant of summary judgment. B Appellants’ Count II alleges that, even if Count I is barred by Cobell, the government breached a wholly separate fiduciary duty—a duty to have disclosed to Appellants, during the Cobell settlement proceedings, information relating to the Fort Berthold claims Appel- lants assert in this case. Appellants rely on 25 U.S.C. § 396 and its regulations as supplying the requisite statu- tory authority for this fiduciary duty. The Court of Fed- eral Claims dismissed Count II for lack of jurisdiction, finding that § 396 does not supply the fiduciary duty alleged to be breached. We agree. Both the Tucker Act, 28 U.S.C. § 1491, and the Indian Tucker Act, 28 U.S.C. § 1505, create subject matter juris- diction for the Court of Federal Claims over certain claims brought against the United States. There are “two hur- dles that must be cleared” before jurisdiction can be invoked pursuant to these statutes. United States v. Navajo Nation, 556 U.S. 287, 291 (2009). “First, the tribe ‘must identify a substantive source of law that establishes specific fiduciary or other duties, and allege that the Government has failed faithfully to perform those du- ties.’” Id. (quoting United States v. Navajo Nation, 537 U.S. 488, 490 (2003) (Navajo Nation I)). If that threshold is passed, the court must then determine whether the relevant source of substantive law can be fairly interpret- ed as a money-mandating. Id. Appellants’ Count II fails at the first hurdle. When determining whether the government owes a particular fiduciary duty, “the analysis must train on specific rights- creating or duty-imposing statutory or regulatory pre- scriptions.” Navajo Nation I, 537 U.S. at 506. Although common-law principles can be used to inform the scope of liability that Congress has imposed, United States v. TWO SHIELDS v. US 13 White Mountain Apache Tribe, 537 U.S. 465, 475–76 (2003), “‘a general trust relationship between the United States and the Indian People’ . . . alone is insufficient to support jurisdiction under the Indian Tucker Act.” Nava- jo Nation I, 537 U.S. at 506 (quoting United States v. Mitchell, 463 U.S. 206, 225 (1983)). Rather, “the United States is only subject to those fiduciary duties that it specifically accepts by statute or regulation.” Hopi Tribe v. United States, 782 F.3d 662, 667 (Fed. Cir. 2015). The Supreme Court has found that some “statutes and regulations . . . clearly establish fiduciary obligations of the Government.” Mitchell, 463 U.S. at 226; id. at 220 (finding specific fiduciary duties of timber management in light of a statutory and regulatory scheme creating obli- gations on “virtually every aspect of forest management”); see also White Mountain Apache Tribe, 537 U.S. at 475 (finding specific fiduciary duties to maintain and preserve property that is “actually administer[ed]” in trust). But where the relevant statute cannot be fairly read as impos- ing the specific fiduciary duty alleged to be breached, the Court has refused to impose the obligation on the gov- ernment. See Navajo Nation I, 537 U.S. at 507–13 (find- ing no specific fiduciary duties to ensure a specific rate of return on coal leases or to proscribe ex parte communica- tions in an administrative appeal process); United States v. Jicarilla Apache Nation, 131 S. Ct. 2313, 2329–30 (2011) (finding no specific fiduciary duty to disclose all information related to the administration of Indian trusts); see also Hopi Tribe, 782 F.3d at 668–71 (finding no specific fiduciary duty to ensure adequate water quali- ty on the Hopi reservation). Appellants here rely on 25 U.S.C. § 396 as creating a very specific fiduciary duty of the government—a duty to have “disclose[d] ‘full information’ to Two Shields or their counsel about their § 396 claims before securing their release.” Reply Br. 23. But nothing in § 396 imposes such an obligation. Section 396 is directed to the lease of 14 TWO SHIELDS v. US Indian allotment land for mining purposes; it states that the Secretary “is authorized to perform any and all acts and make such rules and regulations as may be neces- sary” and gives to the Secretary “the right to reject all bids whenever in his judgment the interests of the Indi- ans will be served by so doing.” 25 U.S.C. § 396. The Fort Berthold Act further obliges the Secretary to approve only those leases that it has determined to be “in the best interest of the Indian owners of the Indian land.” Fort Berthold Act, § 1(a)(2)(A)(ii). The obligations imposed on the Secretary relate solely to the approval of mineral leases on allotted land; nothing in the statute creates litigation-related disclosure obligations, and certainly not the specific Cobell settlement disclosure obligations sought by Appellants in this case. Like the Supreme Court in Jicarilla, we conclude that the relied-upon statute here does not include a general duty “to disclose all information related to the administration of Indian trusts.” Jicarilla, 564 U.S. at 2330. Because Appellants point to no other source of law providing the fiduciary duty alleged to be breached, we affirm the Court of Feder- al Claims’ dismissal of Count II. C Finally, in Count III, Appellants allege that if their Counts I and II fail, the Claims Resolution Act of 2010 was a legislative taking of Counts I and II without just compensation, in violation of the Takings Clause of the Fifth Amendment. The Court of Federal Claims dis- missed Count III for failure to state a claim. We agree with the dismissal, but not for the reasons relied on by the court. We assume here, contrary to the Court of Federal Claims, J.A. 28, that Counts I and II constitute property protected by the Takings Clause. And we apply the requirements of the Takings Clause—the only Clause invoked by Count III and invoked by Appellants here— TWO SHIELDS v. US 15 without re-characterizing the claim as a due process claim. Cf. J.A. 28–29. We conclude that no taking oc- curred here. The Claims Resolution Act of 2010 ratified the Cobell settlement agreement. That settlement gave Appellants and other Cobell class members two options: accept the settlement terms and agree to releasing all covered claims against the government, or opt out of the settlement and retain the ability to pursue covered claims against the government. The choice was up to Appellants—they could give up their claims against the government, or they could retain them. By failing to exercise their opt-out right, Appellants voluntarily chose to forfeit their claims against the government—including Counts II and III. In these circumstances, no unjust taking occurred. Our sister circuit has reached the same conclusion in similar circumstances. See Littlewolf v. Lugan, 877 F.2d 1058 (D.C. Cir. 1989). In Littlewolf, the D.C. Circuit rejected an argument by tribe members that the White Earth Reservation Land Settlement Act of 1985 was an unconstitutional taking in violation of the Fifth Amend- ment. Id. at 1059. That Act extinguished the Indians’ claims to land illegally transferred earlier in the century in return for payment of compensation based on the fair market value at the time of transfer plus five percent interest. Id. As an alternative to the statutory compen- sation, the Act also gave claimants the option of filing an action for judicially-determined compensation within six months of the issuance of the notice of the payment due them, in which case they would forgo their statutory compensation. Id. The D.C. Circuit affirmed the district court’s determination that no unjust taking occurred in those circumstances because “a Tucker Act ‘safety net’ suffices when ‘a statute’s “basic compensation scheme . . . is valid but could result in payment of less than the constitutional minimum.”’” Id. at 1065 (quoting Littlewolf v. Hodel, 681 F. Supp. 929, 946 (D.D.C. 1988) (quoting 16 TWO SHIELDS v. US Regional Rail Reorganization Act Cases, 419 U.S. 102, 150 (1974))). In other words, as the district court in that case put it, “[t]here is not taking” when “those affected are afforded a reasonable opportunity to bring suit.” Little- wolf v. Hodel, 681 F. Supp. at 944 (citing Texaco v. Short, 454 U.S. 516, 531–32 (1982), Block v. N. Dakota, 461 U.S. 273, 286 n.23 (1983), and Keller v. Dravo Corp., 441 F.2d 1239, 1242 (5th Cir. 1971), cert denied, 404 U.S. 1017 (1972)). The same rationale applies here. The decision of the Court of Federal Claims is af- firmed. AFFIRMED