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    The Lawletter Blog

    CIVIL PROCEDURE: Simultaneous Involvement in Cobell Settlement Claim Bars Plaintiffs' Mineral Lease Complaint Against United States

    Posted by Charlene J. Hicks on Thu, Mar 19, 2015 @ 12:03 PM

    The Lawletter Vol 40 No 1

    Charlene Hicks, Senior Attorney, National Legal Research Group

         A class action settlement may have far-reaching, unintended effects for particular class members who choose not to opt out of the settlement. This point is highlighted in a recent decision by the U.S. Court of Federal Claims in Two Shields v. United States, No. 13-90 L, 2015 WL 513315 (Fed. Cl. Feb. 6, 2015).

         In that case, two Native Americans filed claims against the United States, alleging that the Government had breached its fiduciary duty to prudently manage their mineral rights, which were held in trust by the United States. The plaintiffs were allottees of Indian lands on the Fort Berthold Indian Reservation who, in 2007 and 2008, had granted oil leases to a private party known as Dakota-3. The plaintiffs alleged that the United States had rubber-stamped its approval of the leases at below-market rates. In November 2010, Dakota-3 re-leased the plaintiffs' allotments for a bonus price roughly 20 times the original lease rate. The plaintiffs alleged that the United States had breached its duties under the Indian Long-Term Leasing Act, 25 U.S.C. § 396, which requires the Government to approve only those mineral leases that are in the best interests of the Indian owners.

         The Court of Federal Claims entered summary judgment on the plaintiffs' breach-of-fiduciary-duty claims, based on a prior release entered in a class action case known as the Cobell Settlement, Cobell v. Salazar, No. 1:96CV01285 (TFH), 2011 WL 10676927 (D.D.C. July 27, 2011), aff'd, 679 F.3d 909 (D.C. Cir.), cert. denied, 133 S. Ct. 543 (2012). Cobell involved claims for Government mismanagement of Individual Indian Money ("IIM") accounts. The United States entered into a comprehensive settlement that released the Government from all known and unknown Indian land administration claims that had been or could have been asserted through September 30, 2009.

         The Two Shields plaintiffs were members of the Cobell class because they held IIM accounts in their names and they had not opted out of the Settlement. The Court of Federal Claims ruled that the Two Shields plaintiffs' breach-of-fiduciary-duty claims against the United States were land administration claims within the meaning of the Cobell Settlement because they were known or unknown claims that accrued when the oil leases were originally executed in 2007 and 2008. As a result, the claims were barred by the Cobell Settlement. This was true despite the fact that the Settlement did not mention the Fort Berthold oil leases, and the underlying action in the Cobell case involved IIM accounts rather than mineral leases. If the plaintiffs had wanted to protect their claims, the court indicated that they should have exercised their right to timely opt out of the Cobell class.

         As Two Shields demonstrates, a class action settlement in one case may be broad enough to encompass seemingly unrelated causes of action that may exist in a wholly different context but that involve the same defendant. Accordingly, a class action member who potentially may have more than a single claim against the defendant should exercise great caution in choosing not to opt out of the class, lest his or her participation in the class have the effect of barring all other potential causes of action.

    Topics: civil procedure, class action, opt-out option

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