1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ELOUISE PEPION COBELL, : Civil Action 96-1285 et al. : Plaintiffs : : V. : Washington, D.C. : DIRK KEMPTHORNE, Secretary : of the Interior, et al. : : Defendants : Thursday, August 28, 2008 TRANSCRIPT OF STATUS HEARING BEFORE THE HONORABLE JAMES ROBERTSON UNITED STATES DISTRICT JUDGE APPEARANCES: For the Plaintiffs: DENNIS GINGOLD, ESQUIRE LAW OFFICES OF DENNIS GINGOLD 607 14th Street, NW Ninth Floor Washington, DC 20005 (202) 824-1448 ELLIOTT H. LEVITAS, ESQUIRE WILLIAM E. DORRIS, ESQUIRE KILPATRICK STOCKTON, L.L.P. 1100 Peachtree Street Suite 2800 Atlanta, Georgia 30309-4530 (404) 815-6450 JUSTIN GUILDER, ESQUIRE KILPATRICK STOCKTON, L.L.P. 607 14th Street, N.W. Suite 900 Washington, D.C. 20005 (202) 585-0053 2 For the Defendants: ROBERT E. KIRSCHMAN, JR., ESQUIRE JOHN WARSHAWSKY, ESQUIRE MICHAEL QUINN, ESQUIRE U.S. Department of Justice 1100 L Street, N.W. Washington, D.C. 20005 (202) 307-0010 Court Reporter: REBECCA STONESTREET Official Court Reporter Room 6511, U.S. Courthouse 333 Constitution Avenue, N.W. Washington, D.C. 20001 (202) 354-3249 Proceedings reported by machine shorthand, transcript produced by computer-aided transcription. 3 1 P R O C E E D I N G S 2 COURTROOM DEPUTY: This is civil action 96-1285, 3 Elouise Cobell, et al. versus Dirk Kempthorne, et al. For the 4 plaintiff we have Dennis Gingold and Elliott Levitas; for the 5 defendants John Stemplewicz, John Warshawsky, Robert Kirschman, 6 and Michael Quinn. 7 THE COURT: Good afternoon, everybody. I called this 8 status conference for a three-week period after I issued the 9 opinion that you've all read and probably studied and some of 10 you reacted to on August 7th. I feel some need to begin this 11 conference by re-emphasizing what I hoped was made very clear in 12 the opinion that I issued three weeks ago, but which somehow has 13 been either misconstrued or glossed over or misrepresented in 14 the press. 15 I didn't issue a damages award against the government. 16 The amount of money that I find the government owes to the 17 plaintiff class does not include, does not include most of the 18 claims that I think comprise many of the grievances that Indian 19 country has or thinks it has against the BIA. Income that was 20 not collected is not included in my judgment; assets that may 21 have been sold or leased below market is not included in my 22 decision; funds that may have been stolen or misappropriated are 23 not included in my opinion; any failure on the part of the 24 government or Indian agents to enforce lease terms, not 25 included; any money that may not have been paid on direct pay 4 1 contracts, not included. 2 This line between what is damages or what might be 3 included in a claim by IIM accountholders for mismanagement, 4 this line was carefully drawn on the very first day of the trial 5 we had in October -- not in October, but whenever it was, by the 6 plaintiffs' own witness, Professor Laycock, who was at some 7 pains, as we have all been at some pains, to distinguish what 8 this court can award from what this court cannot award. 9 So whether or not the plaintiffs can recover for any of 10 these things that I've just enumerated under the rubric of 11 damages, I don't know. I do know they can't recover it in this 12 court. And if there's going to be a recovery, it has to be, I 13 think, in the Court of Federal Claims. Whether it can be done 14 as a class action, I don't know. Again, that's for another 15 court and another case. The plaintiffs made the decision to 16 cabin their case very, very carefully so that they would not be 17 seeking damages, which they knew they could not receive in this 18 court. 19 Now, I have to lay frankly at the feet of the 20 plaintiffs the responsibility for hyping expectations about what 21 might result from this case. But $455.6 million is all I think 22 I could possibly have awarded, and the government may take the 23 position that that -- even that was a stretch. 24 The question now is where we go from here. We have 25 never resolved the class action questions that have been lurking 5 1 around the edges of this matter, and what I hope we can have 2 today is some discussion - and I think discussion is the right 3 word for it, unless anybody has a position they want to advocate 4 and argue - a discussion of the questions, of a number of 5 questions that occur to me. And you may have others. 6 One such question is, is it now time to prepare and 7 issue the historical statements of account that the government 8 has wanted me to authorize them to send for years, and wanted 9 Judge Lamberth to authorize to send for years before that. 10 How should the amount that I've concluded the 11 government owes the IIM accountholders, how should it be 12 allocated; per capita, equally per capita, as I think 13 Mr. Gingold has recommended earlier? Is that the equitable way 14 to distribute funds? Should the distribution be weighted for 15 the age of IIM accounts or the size of IIM accounts or both, or 16 is there some other way to allocate these funds? 17 Should the class be notified of a proposed method of 18 allocation by a notice to the class that would be sent to the 19 23(b)(2) class? Rule 23 does contemplate the issuance of 20 notices to the class in a (b)(2) class action. 21 Obviously there will be a share of this recovery to 22 which plaintiffs' counsel are entitled. Do I need a motion for 23 that in a (b)(2) class action? 24 Now, I want to hear where you-all are on these 25 questions. And I don't want to try to put my thumb on the scale 6 1 at all, but I do want to make this observation: It seems to me, 2 just because it seems like the most orderly way to do it, that 3 there should be a period in which -- it seems to me that there 4 should be notice to the class. It seems to me that the parties 5 should have time to either try to agree on what that notice 6 would be, or if they can't agree, submit proposed forms of 7 notice to the class. I don't know how much time that would be, 8 a couple of weeks, 30 days. 9 Then you get notice together, you send it out to the 10 plaintiff class, you wait for responses, and somebody reads and 11 analyzes and considers the responses. We're talking about a 12 couple of months, at least. Then you're talking about some time 13 period in which all of this is reduced to a final award or 14 judgment. I think as a practical matter it's not prudent to 15 think that a final judgment on that kind a timetable could be 16 issued much before the end of the year, if then. 17 And the question that I frankly -- I just want to lay 18 on the table, and you people may want to respond to it or not, 19 the question is, if there are going to be appeals, and the 20 plaintiff has indicated to the press that they're certainly 21 going to appeal this, if there are going to be appeals, what's 22 the point of waiting four months? Maybe we should either 23 certify the matter in some interlocutory way or issue a partial 24 summary judgment under Rule 54(b). Because otherwise, to take 25 four months to sort out the details of how the money is to be 7 1 distributed just adds four months to the bottom line. 2 So that, I think, is a brief outline of the 3 discussion - I underscore the discussion - that I would like to 4 have with the parties. And I will hear from anybody who wants 5 to stand up and speak about anything that he or she wants to 6 speak about, I guess. 7 Who's first? Well, thank you very much. It's been 8 nice seeing you-all. 9 MR. GINGOLD: Your Honor, good afternoon. 10 THE COURT: Good afternoon, Mr. Gingold. 11 MR. GINGOLD: I would like to start with your last 12 point first, since it is probably the most important point. 13 Plaintiffs do intend to appeal, and we believe it would be more 14 efficient for this court and better for the parties if the 15 issues that remain unclear at least in plaintiffs' view be 16 resolved by the appellate courts. We believe it would be very 17 difficult to fashion a clear and accurate notice to the class 18 without first resolving many of the issues that exist with 19 regard to, for example, interest, among other things, as to 20 whether or not that's damages or specific relief. 21 We think that the class should be informed as clearly 22 and as comprehensively as possible as to what their rights are, 23 as declared, and what their share is and how that share should 24 be determined. I think it is important to determine those 25 issues, at least resolve those issues on appeal before we can 8 1 make those statements affirmatively -- 2 THE COURT: How are you going to resolve those issues 3 on appeal when they have never been resolved here? 4 MR. GINGOLD: No. For example, I think it makes an 5 enormous difference if this is, in plaintiffs' view, a trust, 6 and if, in plaintiffs' view, there are certain duties and 7 responsibilities and there are certain proofs that are required, 8 and burdens; it would make a significant difference with regard 9 to potentially whether or not there's a pro rata or weighted 10 share, whether or not, for example, the Osage, whose funds were 11 deposited -- the Osage individuals whose funds were deposited in 12 the Osage Tribal Account prior to distribution are included; it 13 would have an effect on the Osage individuals whose funds were 14 deposited at some point in the 14X6039 account. 15 The amount this court has stated clearly is an amount 16 it has determined based on a model that we believe needs to be 17 addressed on appeal. We don't believe that established, based 18 on our understanding of the testimony, accurate account balances 19 or funds that were not distributed. And it all ties back to 20 whatever the controlling law is as we understand it, this Court 21 understands it, or an appellate Court understands it in this 22 circuit and otherwise. 23 And we think it would be -- this process is an 24 expensive process. We've done some -- we've had discussions in 25 the interim period of time with professionals who do that for a 9 1 living. The nature and scope of the class itself is an issue, 2 as this court has defined it in significant part in the 3 January 30th, 2008 opinion; how the class is defined in 4 accordance with the language of the class certification order 5 very well determines the share of individuals. 6 We would envision issues that were not addressed on 7 appeal in the January 30th opinion to be also addressed in this 8 regard, and without a complete resolution, we may have to do 9 this process again. And we think it would be more efficient and 10 very -- much less costly to only have to do this process once 11 and finally. 12 Quite frankly, given, as this court quite accurately 13 noted, plaintiffs do intend to appeal, and if we prevail on 14 perhaps any one of the major issues as we see it, it could 15 dramatically change what was stated in the notice. 16 THE COURT: Sure. Sure. 17 MR. GINGOLD: Therefore, this case has gone on for over 18 12 years, the trust is over 121 years old; whatever views are 19 correct we believe need to be finally determined and 20 expeditiously determined in order to finally resolve it, so 21 we're not caught up in proceedings simultaneously in the claims 22 court, in this court, in the Federal Circuit, in the DC Circuit. 23 The efficiencies are important, the cost is very 24 important, the reliance on whichever systems need to be relied 25 on to even determine the beneficiaries -- and by the way, Your 10 1 Honor, I believe at least as of the most recent quarterly 2 report, there are over 80,000 Whereabouts Unknown trust 3 beneficiaries identified. How the class is defined will affect 4 the ability to even deliver notice to the right people. 5 We need these issues resolved. They are material 6 issues. We understand and respect what this court has done. As 7 this court knows from our pretrial submissions and also our 8 posttrial submissions, we interpret things a great deal 9 differently, and we would hope that we can accomplish what this 10 court seeks, which is a fair and expeditious resolution, more 11 appropriately if we can get the issues resolved on appeal first. 12 There are so many issues we believe are necessary to 13 provide a clear and accurate notice that they cannot be 14 provided -- 15 THE COURT: So not to put too fine a point on it, what 16 you want me to do is either by means of partial summary judgment 17 or by means of a judgment that just -- a judgment that says the 18 plaintiff class is entitled to $455.6 million, you want that put 19 into appealable form and you want to leave all the rest of this 20 stuff aside until you hear from the Court of Appeals. Is that 21 right? 22 MR. GINGOLD: You're absolutely right, Your Honor. 23 THE COURT: What says the government? 24 MR. QUINN: Good afternoon, Your Honor. 25 THE COURT: Good afternoon. 11 1 MR. QUINN: I understand Mr. Gingold's comments just 2 now, and empathize with the concern about going through the 3 process of issuing notice and so forth. 4 However, there have already been a fair number - in 5 fact, I've lost number of the exact number - of appeals that 6 have already gone up to the DC Circuit on this one case. 7 THE COURT: Nine I think is the last count. 8 MR. QUINN: I knew I needed at least two hands to count 9 them, but I wasn't sure of the exact number. And with the last 10 appeal, the court urged this court, revisiting, remanding the 11 case, to move forward with all due speed to resolve the case. 12 I think there's a way that Your Honor could come to a 13 final judgment without having to send a further piecemeal appeal 14 up to the DC Circuit. I think, in fact, you could enter a final 15 judgment that considers all these issues, distribution, who's in 16 the class, what the attorney's fee -- if there's anything to be 17 charged against the award, how that would be done. I think it 18 would be less efficient, in essence, to send the case on a 19 partial summary judgment, leaving all these issues unresolved. 20 I heard Mr. Gingold say we want these issues resolved. 21 I think it's better that the court address and resolve all these 22 issues and enter a final judgment that reserves jurisdiction to 23 administer and oversee distribution as whatever the court 24 finally enters as the plan for distribution, and then take all 25 those issues up. 12 1 Taking plaintiffs' position, you could have the 2 consequence of having an appeal go up, where in effect you are 3 affirmed and it comes back and we go through the process of 4 defining the distribution, and there's a further dispute and we 5 wind up yet having another appeal because some of these 6 remaining issues haven't been resolved now. 7 I think it's in everyone's interest to try to come to 8 the best final conclusion of the case, short of actually 9 disbursing the money or going through the notice process, and 10 making those determinations now, so that if there is a 11 difference of opinion, the parties have an issue that's been 12 decided by this court that could be incorporated with any appeal 13 to the Circuit Court. 14 THE COURT: Well, we all have our own -- we all bring 15 our own ideas of what might happen here to the table. My own 16 view is that what really -- aside from the question of whether 17 the Osage are in or out, which is not a small question, what the 18 plaintiffs are most exorcised about is that this dollar has two 19 fewer zeros than they wanted, and one fewer than they really 20 thought they were entitled to, even without the interest and 21 the -- or whatever -- I'm happy to hear Mr. Gingold call this 22 number interest. He was steering away from that number -- that 23 word like crazy until today, but calling it what it sort of is, 24 that's where the most dollars are. 25 The next most dollars have to do with this whole burden 13 1 of proof question, and the third most dollars have to do with 2 the Osage question. I think when those three questions are 3 resolved, there's not going to be a lot of nifnawing about 4 notice to the class or who gets it or how it's sent out. 5 I haven't heard the government say what their view is 6 of this opinion. Are you going to defend it or cross appeal, or 7 do you know? 8 MR. QUINN: I think in essence we were waiting to hear 9 and see what exactly the plan -- how the plaintiffs would 10 propose to bring this to resolution. There were seven things we 11 were going to suggest that plaintiffs -- that the court should 12 ask the plaintiffs to brief as part of their proposal for 13 distribution, and I could tick those off if you like. 14 THE COURT: Yeah, tick them off. 15 MR. QUINN: And then the government would respond to 16 that proposal. 17 The first would be addressing fees and expenses that 18 may be charged against the award. I think Your Honor, under 19 Rule 23(h), to the extent there are any attorneys' fees that 20 will be petitioned to the court that would come out of an award, 21 Your Honor is required to give notice to the class with respect 22 to any legal fee petition. 23 Earlier in this case, on the first phase EAJA petition, 24 where the fees weren't even coming out of plaintiffs' pocket but 25 the fees were coming through the EAJA Act from the government, 14 1 Judge Lamberth ordered notice be issued with respect to that fee 2 petition in accordance with Rule 23(h). 3 So I think at a minimum, Your Honor will have to 4 issue -- if there's going to be requests with respect to the 5 award, Your Honor will be required to issue a notice to class. 6 And then the question becomes what other kinds of notice would 7 you include in that if you're going to issue anything to the 8 class. 9 As part of the written description, we would like to 10 know from plaintiffs, for instance, in terms of what specific 11 recovery will be given to the named plaintiff parties here. In 12 some class actions there's certain additional awards that are 13 given to named parties. I don't know whether the plaintiffs 14 considered that. They haven't indicated that at all. I don't 15 want to suggest that, but to the extent there's going to be any 16 difference in payments between the named plaintiffs, the 17 representative plaintiffs, and the class members, that ought to 18 be made known. 19 What if any - we've already addressed this - notice to 20 class members would be distributed, what the wording of that 21 notice would be, what the manner of distribution would be. 22 Fourth, whether and the process by which class members 23 could at all object. 24 Five would be a final -- you know, what plaintiffs' 25 final determination -- what their argument would be in terms of 15 1 finally determining who's in the class, class membership issues. 2 Six would be a description about how the disbursement 3 of the award would be distributed, the actual mechanics. Would 4 you hire an administrator, who would hold the money, how that 5 would be accomplished, the time frames and so forth. 6 And then seven, actually the physical aspects, if you 7 will, about how the judgment would be distributed and how that 8 would be accomplished. And we sort of envision that plaintiffs, 9 obtaining the benefit of the award and representing the class 10 members as a whole, would submit a written proposal, if you 11 will, to the court on these and any other issues that they 12 believe are germane for purposes of the award, and that the 13 government would respond to those points that were of concern. 14 THE COURT: Well, two questions occur to me after what 15 you've said. The first is whether any of those are questions 16 that have to be decided now if the plaintiffs want to take an 17 appeal. And the second, quite frankly, is which of those 18 questions is a question in which the government actually has any 19 interest? I mean, the payment of the money would be by the 20 government, but after that point I'm not sure the government has 21 much skin in the question of the final determination of who's in 22 the -- except, of course, that the government continues to be 23 the fiduciary for all of the members of the plaintiff class, and 24 so I suppose in its capacity as fiduciary, it continues to be 25 interested in that. 16 1 MR. QUINN: Well, I agree with you. I think that's 2 accurate, from a general perspective. It's just that class 3 action cases are all animals of a different color. They all 4 have their own particularities about them, and the manner -- the 5 specifics, the things that would prompt concern by the 6 government would be based upon what the specifics are of how 7 this thing would be administered; how many years it would be 8 open, how the costs are going to be borne, what kind of 9 information demands would be made of the government. 10 It's one thing if you are going to do a pro rata 11 distribution, whether it's by number of accounts or by number of 12 accountholders, and quite another if you're going to say, well, 13 we're going to consider how long somebody has held an account or 14 how much has gone through the account. Because you could wind 15 up putting information demands on the government that are close 16 to if not equal or exceeding the cost of conducting the 17 accounting itself. I mean, you wind up going back to the same 18 information sources to make those determinations. 19 So we were requesting that the court direct the parties 20 to brief these issues, asking plaintiffs to make their proposal, 21 and that we would respond to those particular items that are of 22 concern to the government, making suggestions on those points. 23 Some points, as you mentioned, we wouldn't have any comment on 24 one way or the other. 25 But I think it's beneficial to all parties to have 17 1 finality, to get to a judgment that can be appealed completely, 2 short of actual execution of the notice and award of -- 3 distribution of funds. 4 THE COURT: Well, I indicated in the last line of the 5 opinion I issued a few weeks ago that perhaps it would not be 6 too much to suggest that the parties could have some offline 7 discussion and settle this case. I guess that was too much to 8 expect and that's not happening. 9 MR. QUINN: There have been offline -- at your 10 suggestion, Your Honor, there has been offline conversations 11 between the parties. I haven't been privy to that conversation. 12 If you would like to address those, I would ask Mr. Kirschman to 13 come up. 14 THE COURT: Well, if there's anything anybody wants to 15 tell me about it. I mean, settlement discussions are by their 16 nature very private. I don't want -- there's a lot of people in 17 this courtroom. I don't want any of that to be spread on the 18 public record. If there have been discussions, more power to 19 you. 20 But I have to tell you that when I took this case on, I 21 tried to make it very clear to everybody that one of my 22 principal concerns was getting it done and getting it over with. 23 And I'm still working on that project. And from what you've 24 said and from what Mr. Gingold has said, it seems to me that the 25 most efficient use of my time and your time and the Court of 18 1 Appeals' time is to put this thing in a posture where it can be 2 appealed right now. 3 The question is exactly how to do that. I mean, 4 Rule 54(b) -- there's Rule 54(b) and there's 1492(b). One is an 5 interlocutory appeal the other is an appeal from a partial 6 judgment. I don't know of any other way to get it to the Court 7 of Appeals. 8 MR. QUINN: Not without a final judgment, Your Honor. 9 THE COURT: 54(b) is a little problematical because it 10 permits me to direct entry of final judgment as to one or more 11 but fewer than all claims or parties. This is a class action. 12 If I just say the government owes the plaintiff class 13 $455.6 million, so adjudged and decreed, that doesn't really -- 14 it actually doesn't even tee up the question that Mr. Gingold 15 wants teed up, which is what about the Osage. It does, I think, 16 tee up the question about interest. Can we all call it that 17 shorthand? Interest and the whole burden of proof question, the 18 allocation of burdens. 19 MR. QUINN: Your Honor, if I may, there's one 20 additional concern. And we're going to address this at another 21 juncture, but I think it's a factor here in terms of getting to 22 a final judgment or whether you do something short of a final 23 judgment at this point. 24 And that is, there are certain orders in effect, 25 interim orders that have been going on in place throughout this 19 1 case, that impose certain reporting duties on the department, 2 some with trust reform aspects, fixing the system, that are for 3 all intents and purposes over. That part of the case is over, 4 yet those reporting obligations have continued. 5 I think we would expect with a final judgment in place 6 that the government would be relieved of those burdens. To the 7 extent that those could be addressed short of final judgment, 8 that might make a difference as well. 9 But there are continuing burdens to leaving the case 10 open and having any kind of further appeal short of a final 11 judgment. And I still think you can get to a quick judgment 12 without going through the notice process, which seemed to be the 13 primary concern, the costs of distributing a notice and so 14 forth. 15 THE COURT: Yeah, I agree with you. I think we can 16 clean up a lot of these housekeeping matters that have been 17 running along for some time, status reports, quarterly reports, 18 maybe even historical statements of account. Because as I 19 understand Mr. Gingold, and I'm not surprised by what he says, 20 again the main questions that drive the plaintiffs' 21 dissatisfaction with this opinion are interest, whether they 22 proved their $4 billion, and what do we do about the Osage. I 23 think the rest of it is nickel-dime issues, relatively speaking. 24 All right. Thank you. Maybe it's time for me to hear 25 from the plaintiffs again. 20 1 MR. DORRIS: Good afternoon, Your Honor. 2 THE COURT: Good afternoon, sir. 3 MR. DORRIS: We would request that the judgment be 4 entered under 54(b). I believe that it can be fashioned along 5 the lines that you're talking about in terms that the defendants 6 are ordered to pay the amount to the plaintiff class, and then 7 stay further proceedings regarding the distribution of those 8 amounts until the appeals. 9 Kind of a belt and suspenders approach would be to then 10 also state that you would be granting interlocutory appeal with 11 respect to any and all issues arising out of your two orders 12 here, or your two opinions that you've issued, the one in 13 January and now the one in August. And I think that that would 14 clear up -- if there became an issue as to the extent to which 15 that judgment was appealable, we would still be able to get up, 16 get the issues heard, and back. 17 The reason that the -- one of the reasons the plaintiff 18 thinks it's important that the judgment be entered under 54(b) 19 is that that would at least start the clock ticking on 20 postjudgment interest. As the court is well aware, all of the 21 calculations for that $455 million amount were through the end 22 of fiscal year 2007, so it's been even a year since that has 23 stopped. So we would ask that the court do it in fashion that 24 would at least get the postjudgment interest clock ticking on it 25 as we move forward. 21 1 I don't know that I need to address all of the seven 2 issues that were listed, but I do want to say, because the court 3 asked about a motion for fees and expenses, and under 23(h)(1), 4 that is going to be done at a time when the court sets and asks 5 the plaintiffs for that type of motion. Typically, and what we 6 would think would be the most economical and efficient fashion, 7 is that that's done in conjunction with -- when the case comes 8 back down from the appeal, Your Honor, would be done as part of 9 the same notice that goes out to the plaintiff class so that 10 it's all done one time. 11 That's a very expensive process, to provide notice 12 certainly to this many plaintiffs, and we would ask that that be 13 set by the court when it comes back down from appeal to be 14 addressed all at the same time, so there's one single notice 15 that goes out to the plaintiff class. 16 I'm not sure if there's anything else, Your Honor, you 17 would like me to address that's been brought up, but we'll be 18 glad to try to do so. 19 THE COURT: No, I don't think so. 20 MR. DORRIS: Thank you. 21 THE COURT: Yes, sir, good morning. Good afternoon. 22 MR. KIRSCHMAN: Good afternoon, Your Honor. To the 23 extent that we would be moving to a final judgment, there are 24 issues, as Mr. Quinn indicated, that would assist us in being 25 resolved, would close out the record. 22 1 One of those was the question you yourself raised 2 regarding the HSA's. A question Interior has that we have is 3 not only regarding the HSA's that are presently before you that 4 have been pending, but those that they have been preparing since 5 we first addressed this issue. Work has continued, as we've 6 told you, and those are on both the per capita and judgment 7 accounts, and also more recently more modern land-based 8 accounts. 9 So a question we would like resolved, if we could, we 10 would like to have answered, is what you view as Interior's 11 responsibility to continue to prepare those for your 12 consideration, those that are not yet before you. And also, 13 once final judgment is issued, what Interior's responsibilities 14 regarding historical accounting are, at least for the time that 15 your finding of impossibility is the law of the case. 16 This is a question that's very significant because of 17 funding and the allocation of resources, especially in light of, 18 as you're well aware, the Tribal cases. But it's a question 19 that burdens our client, because they have certainly continued 20 with the accounting of the IIM accounts. They feel, we feel 21 that there is a ruling under Cobell VI, an interpretation under 22 Cobell VI that found a responsibility to do that under the 23 '94 Act, but also too as trustee we face a question of 24 impossibility. 25 So that's an important issue for the Department of 23 1 Interior, and it goes I think hand in hand with not only should 2 we issue now the HSA's that have been before the court, but 3 should we continue to follow the process that we have, provide 4 you with notice of subsequent documents that have been prepared. 5 Regarding any appeal or apparently a cross appeal, that 6 is a subject that there's been no decision on. It would 7 ultimately be up to the Solicitor General's office to make such 8 a decision. So that is something that's being considered, but 9 certainly we can't represent today what that decision is or what 10 issues could possibly be appealed. It's a complex matter, 11 obviously. 12 So those are the issues I wanted to further raise with 13 the court. Thank you. 14 MR. GINGOLD: Your Honor, with respect to the HSA's, 15 there was no evidence regarding the HSA's that was introduced 16 during the trial that was completed this June. Issues were 17 raised with regard to both the understanding of the description 18 of what the HSA's were and the basis for the decisions that were 19 made with regard to amounts estimated. And Your Honor, I say 20 estimated because the administrative record demonstrated there 21 was debate among the contractors with regard to how issues were 22 to be resolved on the HSA's, particularly, Your Honor, with 23 regard to the allocation and computation of the compound 24 interest that was reflected in the administrative record, and 25 questions were raised substantially in that regard. However, 24 1 Your Honor, there was no evidence introduced during the trial 2 that was completed in that regard. 3 And Your Honor may recall, one of the issues that was 4 involved - and we briefed this - was the HSA's were to be used 5 as the basis to trigger an anticipated administrative process 6 that would effectively require each beneficiary to present his 7 information, to be able to challenge HSA's, when Your Honor, our 8 clients have never been provided the information. That was one 9 of the critical problems associated with the HSA's, in addition 10 to the fact that the computation of interest remained a question 11 mark that was not provided, and answers to which were not 12 provided in the administrative record. 13 So without the evidence introduced, Your Honor, we 14 think it would be unfair and almost impossible for the 15 individual members of the class whose funds are included in the 16 judgment accounts to be put through a process where nothing has 17 ever been provided to them that can be determined as verified or 18 otherwise. This court has noted in its January 30th, 2008 19 opinion the difficulties that exist with regard to the records. 20 Our clients are the beneficiaries, they're not the trustees, and 21 they have not been provided this information, nor would they be 22 in a position -- because it would be done on an individual 23 basis, nor would they be in a position to address the particular 24 statements that would be given to them. 25 I think, Your Honor, our clients would be put in an 25 1 impossible position to be able to challenge the HSA's, because 2 there are time periods within which they would have to be 3 challenged effectively or they are out of luck. I don't think 4 those issues, Your Honor, should be addressed at this point in 5 time because the bigger issues have to be addressed first at the 6 circuit which this court -- 7 THE COURT: What's your reaction to the -- what's your 8 response to the question of whether the government should 9 continue to prepare and complete HSA's for land-based accounts 10 and keep that whole process going? Or just bag it, since I've 11 said that it's impossible? 12 MR. GINGOLD: Your Honor, there are two elements of the 13 issue we're dealing with. And as this court and the Court of 14 Appeals has noted, the accounting -- an accounting involves 15 three components, the historical accounting, the current 16 accounting, and future accountings. 17 Your Honor, they have specific statutory duties with 18 regard to accounting. Those statutory duties exist whether or 19 not this litigation was ever brought. They are trustees and 20 they have the duty to do this, and Your Honor, they're paid 21 significant fees by the beneficiaries to do this. As this court 22 may recall, evidence was introduced in the October trial from 23 the administrative record that confirmed that eight to 24 10 percent of all revenue generated by timber is paid to the 25 government as fees, administrative fees, that out of the 26 1 Agua Caliente or the Palm Springs agency office, leases -- there 2 were lease schedules in place where in one case a $60,000 fee 3 was paid as administrative fees. 4 Your Honor, the government is obligated as a trustee to 5 do this anyway. This trial is about a historical accounting. 6 At the beginning of this case, for many years we sought reform 7 of the systems to ensure that the current and future accountings 8 could also be done properly, and it could not be done without 9 adequate systems, staffing, and records. This court is well 10 aware of how those have been resolved, but the Court of Appeals 11 has never backed away from the fact that the obligation to do 12 current and future accountings exists. 13 So Your Honor, we believe the obligation exists. We 14 believe every trustee has that duty, and the government is not 15 excluded. In fact, Congress has reinforced that with the 16 Trust Reform Act. 17 But Your Honor, there are also damages issues that this 18 court has raised. The list that this court identified are 19 damages issues, and we have never shied away from that and we 20 were never dancing on the head of the pin. We brought this 21 action, as the Court of Appeals confirmed, to enforce the duties 22 owed -- the trust obligations owed by the United States 23 government. That included an accounting, it included 24 restitution, it included what we believe is also specific 25 relief. That's an issue this court believes, with regard to 27 1 interest, although it's provided by statute, is also damages. 2 That issue needs to be addressed as quickly as possible 3 at the Court of Appeals. The other damages issues, Your Honor, 4 would have to be resolved properly either in the Court of 5 Claims, or, if the Little Tucker Act is invoked, in this court 6 as well. 7 THE COURT: By individuals? 8 MR. GINGOLD: No. Your Honor, the Little Tucker Act 9 provides, and all the authorities are in accord, that where you 10 have a class action, it's $10,000 apiece. Subject to the Little 11 Tucker Act, it's not $10,000 aggregate, it's $10,000 per member 12 of the class. 13 THE COURT: Would that be a related case assigned to 14 me? 15 MR. GINGOLD: That could also be part of this case, 16 Your Honor. If it was filed in this court separately -- 17 THE COURT: No way, Mr. Gingold. 18 MR. GINGOLD: I think Your Honor would not like to see 19 us a lot more, so -- but Your Honor, I just wanted to point out, 20 there are damages issues that can be addressed in this court, up 21 to $10,000 per beneficiary, and Your Honor, if it's 500,000 22 beneficiaries, that's $5 billion. If it's other damages issues, 23 such as the ones you identified, they're properly in the claims 24 court. 25 But Your Honor, we don't believe HSA's should go out, 28 1 we don't believe any new processes should be triggered, we don't 2 believe the government's accounting duties have been in any way 3 suspended or should be suspended by a final judgment or by an 4 interim order or by a certification for interlocutory appeal. 5 Those obligations have existed prior to the '94 Act, and 6 continue to exist and are reaffirmed explicitly. 7 THE COURT: Okay. 8 MR. QUINN: Your Honor? 9 THE COURT: Yes. 10 MR. QUINN: Let me just quickly -- just a couple of 11 quick points in response to Mr. Gingold's comments just now. 12 What we're referring to is just the historical 13 accounting aspect, not the current accounting aspect. We 14 continue with those present current duties. 15 But as it relates to this case, to the extent the case 16 remains open and doesn't go to a final judgment, the faster it 17 goes to a final judgment, the claim that was presented to this 18 court for the historical accounting, and the findings of this 19 court with respect to the historical accounting obligation, that 20 issue, that claim becomes merged into any judgment that's 21 entered by this court. And that would define the rights and 22 obligations of the parties as adjudicated by this court. 23 To the extent that the judgment -- no final judgment is 24 entered, it leaves open these questions about the continuing 25 historical obligation vis-a-vis this class of plaintiffs. I 29 1 think if the plaintiffs ask for a historical accounting, the 2 court has ruled as a matter of law it's impossible. If you 3 conclude that case and essentially made an order with respect to 4 $456 million in terms of a finding, that resolves the matter 5 between the parties as to the historical accounting aspects for 6 purposes of rendering that accounting. 7 But as long as the judgment remains open, we continue 8 to have these issues about, as an ongoing basis, to go back and 9 continue to do the accounting. 10 THE COURT: Are you telling me the government wants to 11 stop preparing historical statements of account for land-based 12 accounts? 13 MR. QUINN: We would like to know whether we need to 14 continue to do so. I think it's the lack of certainty. When 15 members of the department go up to ask and make appropriations 16 requests on the Hill, there are always competing obligations and 17 they get asked to justify the request. 18 THE COURT: All right. Here's what I think we ought to 19 do. And I'm going to need some agreement from the parties, if 20 that's possible, to get there. 21 I think I should put this case in a posture as soon as 22 possible, as soon as next week, so that the plaintiffs have 23 something that they can appeal if they want to appeal it. I 24 think the plaintiffs are right that that's Rule 54(b). I don't 25 think it's too hard to form an order that qualifies as a final 30 1 judgment under Rule 54(b) that permits -- that leaves open 2 issues of administration of the plaintiff class, attorneys' 3 fees, and so forth. 4 I invite either or both parties to present me with 5 forms of order that they think will satisfy that responsibility 6 or those requirements. And, as I said, I think we can get this 7 entered by the end of next week, so when I say invite forms of 8 orders, I think you better get something in my hands no later 9 than Wednesday. 10 But there are ongoing questions that have to do with 11 historical statements of account, that have to do with quarterly 12 status reports, that have to do with I don't know what else, but 13 what I would like to have from the parties is the agreement that 14 my jurisdiction to deal with those matters is not terminated or 15 ousted by the pendency of an appeal. 16 In other words, we can run on two tracks. We can deal 17 with -- and I don't think it is -- I think an appeal of the 18 basic underlying obligation to pay does not stop everything in 19 this court. That's my belief anyway, but I would be much more 20 comfortable if the parties would both recite their agreement to 21 that so that we can deal with this HSA question and other 22 related questions on a more deliberate basis with maybe written 23 motions or written requests and I can sort them out. I'm not 24 going to sort them out here in this courtroom this afternoon. 25 And I don't want to stop the music while we have a 31 1 round of motions to deal with them, either. Because I do think 2 the most efficient way to get this case to the finish line is if 3 it's going to be appealed - and I'm not surprised that it will 4 be - is to get that started as soon as possible. Let the clock 5 start ticking, and Mr. Gingold makes a correct point about 6 postjudgment interest as well. 7 MR. DORRIS: Your Honor, on behalf of plaintiffs, we 8 would agree to what you've just proposed in terms of your 9 jurisdiction. 10 THE COURT: Government okay with that? 11 MR. KIRSCHMAN: I will have to address it with others. 12 I'm sorry, I can't answer that right now. We will have a quick 13 answer for you, but I can't address it standing here. 14 THE COURT: All right. I'll have a quick answer in a 15 few days, and by the middle of next week you'll tell me. I 16 think I have the jurisdiction to deal with these housekeeping 17 matters even if the underlying case is on appeal anyway, but if 18 you have a different view, let me know and let me know why. 19 So we have sort of a plan here: Proposed forms of 20 order or judgment by the middle of next week, something entered 21 by the end of next week, and unless I'm convinced that I don't 22 have any jurisdiction to do otherwise, then we'll deal with this 23 HSA question in a more deliberate fashion by renewed motions or 24 whatever you want to present to me. 25 Anything else today, counsel? Thank you very much. 32 1 We're adjourned. 2 (Proceedings adjourned at 4:01 p.m.) 3 4 5 6 CERTIFICATE OF OFFICIAL COURT REPORTER 7 8 I, Rebecca Stonestreet, certify that the foregoing is a 9 correct transcript from the record of proceedings in the 10 above-entitled matter. 11 12 13 14 _______________________________ _________ 15 SIGNATURE OF COURT REPORTER DATE 16 17 18 19 20 21 22 23 24 25