Two years ago, U.S. Justice Department and plaintiffs’ lawyers were quarreling over the structure of a potentially massive class action among black farmers who missed out on a government loan discrimination settlement more than a decade ago.
The plaintiffs’ attorneys — including a range of solo practitioners and attorneys from small and large firms — fought with each other over legal fees and whether the case in U.S. District Court for the District of Columbia should proceed as a class action at all. The government supported class treatment.
This month, a federal judge in Washington quietly approved a $1.25 billion settlement, certified the class and conditionally agreed to a fee range that could generate a $92.5 million award to be split among all the lawyers. The infighting that plagued the farmers’ litigation has subsided, three attorneys involved in the case said.
“We were able to resolve some of the issues among counsel — who will take on responsibility, how fees would be shared — so everyone could move forward together, effectively,” said Crowell & Moring litigation partner Andrew Marks, co-lead class counsel.
On May 13, U.S. District Judge Paul Friedman preliminarily approved the black farmers’ settlement. Friedman set the fairness hearing for Sept. 1. The consolidated case — put together from more than a dozen suits filed in Washington since 2008 — includes more than 40 lawyers as class counsel.
None of the lawyers filed an opposition to the motion for preliminary approval of the settlement. Friedman appointed three firms to take the lead: Crowell; Orlando, Fla.’s Morgan & Morgan; and Selma, Ala.’s Chestnut, Sanders, Sanders, Pettaway & Campbell.
“We had a multitude of lawyers involved in the case,” Morgan & Morgan partner Gregorio Francis said. “While initially we were not necessarily all on the same page, we got on the same page to work out differences we had as lawyers in the interest of moving along the process.”
Assistant Attorney General Tony West of the Justice Department’s Civil Division applauded Friedman’s ruling. Settlement negotiations were intensive, West said, but there was an equal “desire to really settle these lawsuits once and for all to help these farmers move to a new relationship with the Department of Agriculture.”
The proposed deal compensates farmers whose claims in the earlier case, Pigford v. Glickman, which settled in 1999, were not filed in a timely fashion. Congress last year approved $1.15 billion to fund the latest settlement, which had earlier received $100 million through a federal farm bill in 2008.
Class lawyers anticipate more than 40,000 claimants will seek payment through one of two nonjudicial tracks. One path, which involves a lower standard of proof, caps awards at $50,000, and the other at $250,000. The plaintiffs’ lawyers said there’s a good probability $1.25 billion won’t be enough to pay all the claims. The goal, the lawyers said, is to treat similarly situated class members equitably.
Lawyers for the plaintiffs said without the settlement individual claimants would face “significant practical and evidentiary” hurdles in proving claims at trial. Claims in the litigation go back as far as 30 years. “We think it’s a fair settlement that will provide fair compensation to the class members, something we have worked long and hard on for now nearly three years,” said class counsel David Frantz of Washington’s Conlon, Frantz & Phelan. “We’re bound and determined to get class members paid expeditiously.”
The plaintiffs’ attorneys have not yet filed a fee petition. The settlement terms said class counsel can receive between 4.1% and 7.4% — or about $51.3 million to $92.5 million. The plaintiffs’ lawyers agreed to abandon their uniform 20% contingent agreement. Individual farmers and estate representatives are free to keep or retain personal counsel to pursue a claim. For nonclass counsel, the settlement restricts contingent fees to either 2% or 8%, depending on the claims track the farmer takes.
The Justice Department reserves the right to argue that fees should be restricted to 4.1%. In two other large-scale class actions in Washington federal district court, DOJ lawyers in recent months argued for the lowest end on the range. In a ruling on April 28, the plaintiffs’ lawyers representing a class of Native American farmers and ranchers in Keepseagle v. Vilsack received the highest possible fee award, $60.8 million — 8% of the $760 million settlement.
West said DOJ lawyers “want as much relief to be given to the farmers who deserve it.” Still, he said, “that’s not to say we don’t think attorneys should be fairly compensated.”
In another long-running class action, in which Native Americans are pursuing a $3.4 billion settlement for mismanagement of Indian trust accounts, Justice lawyers and the plaintiffs’ team agreed to a fee range between $50 million and $99.9 million. But the plaintiffs’ lawyers, led by Washington solo Dennis Gingold and a Kilpatrick Townsend & Stockton team, now argue $223 million is fair compensation.
In an interview, Gingold questioned the fee range in the black farmers’ litigation, saying the case was not as complicated or litigated for nearly as long as Cobell v. Salazar. “Everybody is jumping on us because we’re greedy?” Gingold asked.
In Cobell, Gingold said, the class members will not have to pay taxes on any award. That’s not the case in the black farmers’ settlement.
In a letter to class counsel April 25, Friedman noted the deal puts the burden on claimants to comply with tax obligations. “This is not acceptable,” the judge said. He noted that tax issues caused “mass confusion” in the earlier Pigford settlement.
Crowell’s Marks said in response on May 11 that it’s not appropriate for class counsel to serve as tax advisers because the issues could vary widely from one claimant to another.
Marks said class attorneys are discussing the possibility of using University of the District of Columbia David A. Clarke School of Law students to assist class members with tax questions.
Earl Moorer of Lowndesboro, Ala., a truck driver whose late father was a soybean farmer, is a lead class member. He praised Friedman’s ruling to move the settlement forward. But he said there are some things that can never be regained from the resolution of a legal case.
“When you lose your land, you lose your familyhood, your upbringing,” said Moorer, 46. “We can never recoup that.”
Mike Scarcella can be contacted at firstname.lastname@example.org.