1                   UNITED STATES COURT OF APPEALS
                  FOR THE DISTRICT OF COLUMBIA CIRCUIT
 2

 3

 4.                                    -

 5   ELOUISE PEPION COBELL,  ET AL.,

 6            Plaintiffs/
              Appellants,

          v.                                    No.  05-5269

     GALE A. NORTON,  SECRETARY OF
     THE INTERIOR,  ET AL.,
10
              Defendants/
11            Appellants.

12

13                                       Tuesday, April 11,   2006

14                                       Washington,  D.C.

15            The above-entitled matter came on for oral

16  argument pursuant to notice.

17       BEFORE:

18            CIRCUIT JUDGES TATEL,   SILVER!N, AND BROWN

19       APPEA!NCES:

20
              ON BEHALF OF THE APPELLANTS:
21
              PETER D.  KEISLER,  ESQ.
22
              ON BEHALF OF THE APPELLEES:
23
              KEITH M.  HARPER,  ESQ.
24

25
                          Deposition Seivices, Inc
                            6245 Executive Boulevard
                             Rxkville MD 20852
                       Tel: (301) 881-3344 Fav: (301) 881-3338
                 inf&J3epositionSevices coin www.D epositionSetvices corn


JAD                                                                         2

                                   CONTENT S

          ORAL ARGUMENT OF:                                          PAGE

                Peter D. Keisler,  Esq.
                On Behalf of the Appellants                         3; 42

                Keith M. Harper,  Esq.
                On Behalf of the Appellees                          13; 54


JAD                                                                         3

     1                          PROCEEDINGS

     2                 ORAL ARGUMENT OF PETER D.  KEISLER,  ESQ.

     3                       ON BEHALF OF THE APPELLANTS

     4               MR. KEISLER:   Thank you,  Your Honor.   This second

     5    appeal is from the District Court's decision of July 12th!

     6    That decision,  under the asserted authority of Rule 23(d)

     7    would require the Department of the Interior to include a

     8    warning notice over and over again in every communication it

     9    sends out on any subject member -- subject matter that might

    10    reach a class member.    The District Court identified two

    11    explicit objectives in requiring this warning notice and

    12    neither is authorized by Rule 23 (d)

    13               First,  from time to time trust beneficiaries choose

    14    to voluntarily sell trust assets and this warning notice

    15    implements the District Court's view that they shouldn't do

    16    that for a few years until the completion of the accounting.

    17    Instead,  the District Court said they should retain their

    18    trust assets in as unaltered a state as possible until the

    19    completion of the required accounting.     In fact,  the District

    20    Court said that optimally all trust-related transactions would

    21    be suspended for that period of years,    but it went on to say

    22    that unfortunately that would be impracticable and it regarded

    23    this warning notice as the best possible step towards

    24    achieving that end.

    25               The second objective that this warning notice


JAD                                                                           4

     1    implements is that it implements the District Court's desire

     2    to warn beneficiaries of,     in the District Court's words,    the

     3    danger of placing any further confidence in the Department of

     4    the Interior because,     the District Court states,   Interior will

     5    not !Ihesitate to lie to Indians!I.     And,  indeed, the message

     6    that this notice sends out is unmistakable.        It is don't trust

     7    anything you get from the government.

     8                 Now, neither of these purposes is authorized by Rule

     9    23 (d) .   Subsection 2 authorizes --

    10                 THE COURT:   Couldn't you first address the

    11    appealability of the issue?

    12                 MR. KEISLER:   Certainly,  Your Honor.   This is

    13    appealable as an injunction under the Carson case.        Carson

    14    says regardless of how an order is nominated,       it is an

    15    appealable injunction if it prevents -- presents serious,

    16    perhaps irreparable consequences --

    17                 THE COURT:   Wait a minute.   Why do we -- I mean,

    18    even if you're right that it's not authorized by Rule 23,       we

    19    can just consider an injunction.

    20                 MR. KEISLER:   Well, the District Court said --

    21                 THE COURT:   We can consider it as that,   can't we?

    22                 MR. KEISLER:   I don't think so,  Your Honor.   There

    23    are two separate questions.      Not authorized by Rule 23(d).

    24    It's an injunction in its effect,      and therefore,  it's

    25    appealable.     But because the District Court didn't regard it


JAD                                                                         5

     1    as an injunction,   it was explicit in Note 7 in saying I'm not

     2    relying on my injunctive authority;    I'm relying on Rule 23(d),

     3    the District Court didn't do any of the things it would have

     4    to do before you would issue an extraordinary --

     5               THE COURT:   No, that may be why -- that may be the

     6    reason why we would vacate the injunction.

     7               MR. KEISLER:   That's right,  Your Honor.

     8               THE COURT:   But since you're arguing that we have

     9    jurisdiction because it's an injunction,    then even if we --

    10    why don't we just go ahead and consider the merits of it?

    11               MR. KEISLER:   I'm happy to do that --

    12               THE COURT:   Let's just assume you're right about

    13    Rule 23(d)  and go on and look at the merits.

    14               MR. KEISLER:   If that's the assumption of members of

    15    the Court and there's no question that this isn't authorized

    16    by Rule 23(d)  --

    17               THE COURT:   Well, I'm only speaking for myself.    My

    18    colleagues may have 23(d)   questions.

    19               MR. KEISLER:   If there are no questions about Rule

    20    23(d),  then let me move to defend this as an injunction -- or,

    21    attack this as an injunction.

    22               THE COURT:   I thought -- you didn't mean defend.

    23    Did you say defend --

    24               MR. KEISLER:   I meant to attack --

    25               (Interruption off the record.)


JAD                                                                         6

     1               MR. KEISLER:   If this order is like anything,   we

     2    compared it in our brief to an extraordinary hypothetical

     3    injunction in products liability case in which defendant would

     4    be required to post a warning notice outside his products.      As

     5    I said,  the District Court didn't do anything that it would

     6    have to do to justify an injunction under this Court's

     7    decision in the last internet disconnection order where this

     8    Court said there's an injunction,    there's disputes,  there has

     9    to be a hearing,  there have to be rigorous findings and a

    10    clear showing of irreparable harm likely to excess bounds of

    11    equities.   None of that happened here because the District

    12    Court said in Note 7 it wasn't relying on its injunctive

    13    authority.

    14               THE COURT:   Is it --

    15               MR. KEISLER:   Nor do we think --

    16               THE COURT:   Is it your view that the - do you take

    17    the position that the statement that the District Court -- set

    18    aside the question of it being sent with every document,     okay?

    19    Just set that aside for a minute.     But is the statement that

    20    -- is the statement that account information !Imay be

    21    unreliable!I -- is that a not accurate statement?     Is that an

    22    inaccurate statement?

    23               MR. KEISLER:   We don't believe there's any factual

    24    basis for a pronouncement today --

    25               THE COURT:   So, you think all the information's


JAD                                                                         7

     1    reliable?

     2               MR. KEISLER:   Based on what we're seeing today,   we

     3    have no indication that the trust data is unreliable to the

     4    degree that a prudent person would postpone a trust

     5    transaction as a result.

     6          Let me talk about the two types of data that the District

     7    Court might have had in mind,   Your Honor,   and answer your

     8    question directly in that context.     First, there are

     9    appraisals,  and that's the kind of information that trust

    10    beneficiaries actually consider in deciding whether to sell

    11    their lands.

    12               THE COURT:   Suppose all it said was,   you know, you

    13    go on and make whatever decisions you want,    but you need to be

    14    careful because we can't assure you that the information in

    15    these accounts is reliable?    Would that we a problem?

    16               MR. KEISLER:   There would have to be some record

    17    today based on our knowledge today that would support that,

    18    and that's what the District Court didn't do.      It relied on an

    19    impressionistic survey of what it called accumulated detritus

    20    of nine years spent examining Interior's odious performance as

    21    trustee delegates.

    22               THE COURT:   You think the -- you think Interior's

    23    2003 plan is too old to rely on?

    24               MR. KEISLER:   In the decision that this Court issued

    25    in the Fall reversing the second structural injunction,      it


JAD                                                                         8

     1    criticized the District Court for,    among other things,  relying

     2    on the findings of fact from its vacated contempt decision.

     3    You said -- first,   you vacated that contempt decision so you

     4    can't rely on those --

     5               THE COURT:  No,  no, I was asking you about

     6    Interior's --

     7               MR. KEISLER:   Right, but the section --

     8               THE COURT:  --   '03 plan, which acknowledges that the

     9    information is unreliable.

    10               MR. KEISLER:   It acknowledges that there's an

    11    accounting to do.

    12               THE COURT:  Right.

    13               MR. KEISLER:   The fact that there --

    14               THE COURT:  No,  but it also acknowledges that the

    15    information is unreliable.

    16               MR. KEISLER:   We don't say the information is

    17    unreliable.   The accounting is going to produce at the end of

    18    the day --

    19               THE COURT:  Wrong.   Let me quote.    !IWithout an

    20    assurance that all current account balances are reliable,

    21    Interior cannot assure an accurate accounting.!I     That's your

    22    own compliance report.

    23               MR. KEISLER:   That explains the purpose of

    24    historical accounting.    It is to provide the assurance --

    25               THE COURT:  But why would you do an accounting if


JAD                                                                         9

     1    they were -- oh,  you think the historical accounting they show

     2    they're all accurate?

     3               MR. KEISLER:   Absolutely,  Your Honor.   Your Honor,

     4    time hasn't stood still since 1999 when all the findings the

     5    District Court rely on were made.     Congress has obligated more

     6    than $100 million and we've been spending that money and we've

     7    been working on it,   and I don't want to make any statement

     8    until the end of the accounting,   but based on what we're

     9    seeing now,   so far we are not finding systemic errors or

    10    systemic unreliability.    And if any injunction of this sort

    11    were to issue,   it would have to be based on some -- of the

    12    knowledge today;  not the accumulated detritus,    in the District

    13    Court's words of nine years of litigation.     And that's what

    14    Your Honor --

    15               THE COURT:   But how will you know until the

    16    accounting --

    17               MR. KEISLER:   Exactly --

    18               THE COURT:   -- all we have in the record is an

    19    enormous amount of evidence,   including the Department's own

    20    reports that this data may be unreliable,    and I was only

    21    asking whether or not -- what would be the problem with a

    22    statement which says we cannot assure you -- I mean,     it sounds

    23    to me that that's an accurate statement of the current

    24    situation.

    25               MR. KEISLER:   Not --


JAD                                                                        10

     1               THE COURT:   Quote, that the Interior Department

     2    cannot assure you.    I'm not saying the argument -- the

     3    information may be unreliable.     I'm simply asking what's wrong

     4    with the statement the Department cannot assure you of its

     5    reliability?   You're not saying that that's --

     6               MR. KEISLER:   Look, Your Honor,  context --

     7               THE COURT:   Isn't that,  in fact, the -- isn't

     8    that --

     9               MR. KEISLER:   Let me respond to that.

    10               THE COURT:   Yeah.

    11               MR. KEISLER:   I don't think in the context it is

    12    accurate.   Just as no internet system is one hundred percent

    13    secure,  no piece of data,  nothing you get from Wachovia is one

    14    hundred percent reliable.    When you issue a notice that says

    15    this data may be unreliable,   you should keep that in mind in

    16    deciding whether to engage in trust transactions,     you're --

    17               THE COURT:   Well, you just changed my hypothetical.

    18               MR. KEISLER:   I was taking from the notice,   but if

    19    you send out a notice saying the data may be unreliable --

    20               THE COURT:   No, no, no.   I didn't mean to say that.

    21    I wasn't asking you about this order.     I was asking about a

    22    different one,  which is,  !IWe cannot assure you of this

    23    information's reliability!I.

    24               THE COURT:   Until the accounting is completed.

    25               THE COURT:   !IUntil the accounting is completed.!I


JAD                                                                        11

     1               MR. KEISLER:   I think the proper way to write a

     2    notice of the sort Your Honor is describing -- and,     by the

     3    way,  it wouldn't require an injunction,   but could be done

     4    straight under Rule 23(d)   would be a classic Rule 23(d)   notice

     5    that says there's a suit that's been filed -- accounting.      The

     6    District Court issued a declaratory ruling in 1999 finding

     7    that Interior was in breach of its duty to provide a timely

     8    accounting that unreasonably delayed the accounting.       The

     9    lawsuit is ongoing.    The accounting is ongoing.    If you have

    10    questions of class counsel,   Mr. Gingold and Mr.   Harper, here

    11    is their phone number.    And what that does in the scheme that

    12    Rule 23 envisioned,   that advice about whether or not you need

    13    to know something about the litigation that would affect your

    14    investment or whether you should trust of mistrust the

    15    Department of Interior is advice that goes from attorney to

    16    client.   It doesn't go from court to class,   it doesn't go from

    17    the court to the Interior.    It goes from attorney to client.

    18    And Rule 23(d)  sets up a perfectly reasonable mechanism for

    19    accomplishing any sort of professional advice that the class

    20    should get of what it should do with trust transactions,     what

    21    it should know about the data it receives.     And that's - and

    22    that's --

    23               THE COURT:   So, your fundamental objection is what

    24    it does is it undermines more than you think should be done

    25    the Department's credibility.


JAD                                                                        12

     1               MR. KEISLER:   Absolutely.

     2               THE COURT:   That's your fundamental concern,   right?

     3               MR. KEISLER:   Imagine what happens when this notice

     4    goes out,  Your Honor.   First of all,  we start getting phone

     5    calls from all of the beneficiaries,    or many of them --

     6               THE COURT:   Well, wouldn't it have the same thing if

     7    it came from class counsel?

     8               MR. KEISLER:   But then it's our statement,   Your

     9    Honor.   Then it's not a court-ordered statement.     When we get

    10    phone calls saying what does this mean,    and if it came from

    11    counsel,  we can say we disagree with it.    But any field office

    12    person who said I disagree with this court-ordered notice

    13    would be up before the Court on a contempt proceeding right

    14    away.   So, they'd have to say we can't tell you anything about

    15    this.   Just read the notice;  that's the Court's order.

    16               THE COURT:   Uh-huh.

    17               MR. KEISLER:   And then they'd get another notice

    18    again when they're invited to back-to-school night in a

    19    written communication from the Interior-run school.      And then

    20    they get it again when they get some benefits from the

    21    Department of Interior and so for years and years,     they keep

    22    on getting this legend attached to all sorts of extraneous

    23    written communications that have nothing to do with it.

    24               And I think what that -- I don't know they were

    25    supposed to do with this information,    but I do think the


JAD                                                                         13

     1     confusion and mistrust that would result from something that's

     2     simultaneously this vague and this threatening indicates that

     3     this really isn't about conveying information at all;     it is

     4     about an attempt to induce paralysis -- paralysis in trust

     5     transactions and to sow mistrust on the Department of Interior

     6     because those are the District Court's two stated objectives.

     7     We don't think those are justified under Rule 23(d).      We don't

     8     think they're justified under any other source of authority

     9     we're aware of.    There's absolutely no showing sufficient to

    10     support an injunction to create those kinds of irreparable

    11     (indiscernible)

    12                If the Court has no further questions,    I'll reserve

    13     the remainder of my time for rebuttal.

    14                THE COURT:   Thank you.

    15                  ORAL ARGUMENT BY KEITH M.   HARPER, ESQ.

    16                         ON BEHALF OF THE APPELLEES

    17                MR. HARPER:   Good morning,  Your Honors.   May it

    18     please the Court,   Keith Harper for plaintiffs,   Elouise Cobell,

    19     et al.  and 500,000 individual Indian trust beneficiaries.

    20                First,  I would like to address the appellate

    21     jurisdiction.   There is no appellate jurisdiction in the

    22     circumstances.   The government's principle argument that this

    23     is appealable as an injunction under 1292 is absolutely

    24     incorrect.

    25                They point to three things.    They say that it


JAD                                                                        14

     1    directs conduct,  that it's punishable by contempt,    and that

     2    somehow it cannot be reviewed at the end of the case and

     3    creates a serious or irreparable harm.     That final factor

     4    doesn't exist,  but more importantly,   that is not sufficient

     5    for appellate jurisdiction.    If that were sufficient,   many,

     6    many discovery orders would be appealable because they

     7    obviously mandate the party taking action,    they are subject to

     8    contempt proceedings as set forth in Rule 37,     and further,

     9    they can be certainly irreparable harm at the end.       If you

    10    have to produce documents,   you have to produce the documents.

    11               Those kinds of discovery orders and these kinds of

    12    case management orders are routinely denied appellate

    13    jurisdiction.   They are not appealed.    You need -- they are

    14    not injunctions.   You need another factor.

    15               THE COURT:   Suppose you deal with counsel's

    16    hypothetical.   Suppose in a product liability case,     class

    17    action,  a District Judge issues or directs a notice to be sent

    18    to the class indicating the product is unreliable?

    19               MR. HARPER:   If it was similar to this circumstance,

    20    Your Honor,  then the fact that it was unreliable would be

    21    undisputed in the court below --

    22               THE COURT:   I beg your pardon?   Would it be

    23    appealable?

    24               MR. HARPER:   It would not be appealable.

    25               THE COURT:   Would not be appealable.


JAD                                                                        15

     1               MR. HARPER:   No, Your Honor.

     2               THE COURT:   District Judge could say that before

     3    trial a notice must go out to all the owners of the product

     4    indicating that the product is unreliable and dangerous.

     5               MR. HARPER:   Well, the question would be,   Your

     6    Honor --

     7               THE COURT:   Then let's stop.   Unreliable and

     8    dangerous.   Appealable?

     9               MR. HARPER:   I'm not sure if that particular fact

    10    pattern is appealable.    The question would be does it provide

    11    some or all of the substantive relief in the case?      The Avery

    12    decision that the government --

    13               THE COURT:   What's the answer?

    14               MR. HARPER:   In that circumstance I don't know.    It

    15    may or may not --

    16               THE COURT:   You're supposed to know.    You're the

    17    lawyer.   I'm supposed to be in doubt.

    18               MR. HARPER:   That is true.  And I would say that it

    19    would be appealable because it grants substantive relief that

    20    is sought for in the complaint.    And that's --

    21               THE COURT:   So, why is that not different -- why is

    22    that different from this case?

    23               MR. HARPER:   Because in this case there is no

    24    substantive relief that's granted.     Your Honor,  I turn your

    25    attention to the actual order here.     It's a notice.   Provides


JAD                                                                        16

     1    basic information.    It tells --

     2               THE COURT:   Wait a minute.   I sat here last fall to

     3    hear counsel start to describe all the equitable relief that

     4    you expected down the road in this case,    and it looked --

     5    sounded to me like a more than an accounting.      So, why

     6    wouldn't this be part of the relief?

     7               MR. HARPER:   Because we haven't sought --

     8               THE COURT:   Yet.

     9               MR. HARPER:   There's nothing in our complaint,   nor

    10    have we at any juncture sought this relief.     Now,   let me

    11    explain what this relief is.    All this relief is is not curing

    12    the problem,  but warning of the problem.

    13               THE COURT:   You want to freeze the linebackers.    No

    14    transactions.

    15               MR. HARPER:   That's not true,  Your Honor.   We don't

    16    want a freeze.   What we want is so that individual trust

    17    beneficiaries,  when making critical decisions that can affect

    18    their rights in this litigation,    have at least a warning that,

    19    to quote the notice,   evidence introduced shows -- evidence

    20    introduced shows that the information regarding individual

    21    Indian trusts may be unreliable.

    22               THE COURT:   Now, that sounds like a preliminary

    23    injunction to me.    It's preliminary to an injunction that

    24    after the trial would say the information is unreliable.

    25               MR. HARPER:   Your Honor,  our hope is that at the


JAD                                                                        17

     1    end--

     2               THE COURT:   You may be right that you need this,   but

     3    I -- it's very hard for me to see why it's not preliminary

     4    injunctive relief.    You're not just advising the parties of

     5    some procedural elements of the case,    which is what 23(d)

     6    seems to be about.    You're ordering the Department to take a

     7    preliminary step towards a remedy.

     8               MR. HARPER:   Your Honor,  I -- respectfully I

     9    disagree that we are asking for anything preliminary and any

    10    relief at all.   All we're saying is that individuals should be

    11    warned that the data that they make decisions on is not

    12    necessarily reliable.

    13               THE COURT:   Well, how is that different from the --

    14    then it sounds exactly like the hypothetical in the brief and

    15    that Judge Silverman just asked you about in products

    16    liability cases.

    17               MR. HARPER:   No, because in that circumstance --

    18               THE COURT:   You warn them that the toys may be

    19    unsafe.

    20               MR. HARPER:   In that circumstance,  Your Honor,   that

    21    is granting some of the substantive relief or is in the

    22    pathway toward the substantive relief.     And under the

    23    precedents that is considered injunctive in nature.

    24               Here, you don't have that necessary missing element.

    25               THE COURT:   But doesn't this notice attempt to


JAD                                                                        18

     1    protect the interest of the class members and their trust

     2    assets and isn't that part of the substantive relief that

     3    you're seeking?

     4               MR. HARPER:   No, Your Honor.   In our view what this

     5    notice does is merely provide you warning.

     6               THE COURT:   Wait, excuse me.   That's not the relief

     7    you're seeking?

     8               MR. HARPER:   Ultimately,  the relief that we're

     9    seeking is an accounting and a restatement of accounts --

    10               THE COURT:   Well, just answer Judge Brown's

    11    question.   Just answer the question she asked.

    12               MR. HARPER:   I'm sorry,  Your Honor.   Could you --

    13               THE COURT:   Doesn't the notice seem to protect the

    14    interests of the class members and their trust assets,     and

    15    isn't that,   in fact, part of the substantive relief that

    16    you're seeking?

    17               MR. HARPER:   Our ultimate relief is to protect the

    18    assets of the trust;   that is correct.   But this does not

    19    protect the assets in the trust.     It protects their interest

    20    in the litigation,   and that's the purpose of the order.    This

    21    is an information notice,   Your Honor.

    22               THE COURT:   But it's not -- ordinarily,   under Rule

    23    23,  you would be seeking to protect their ability to

    24    participate in the lawsuit.

    25               MR. HARPER:   That is one of the functions of Rule 23


JAD                                                                         19

     1    and 23 (d) (2) .  They set forth a non-exhaustive list of

     2    functions for the rule and they are intended to generally

     3    protect the members of the class,      as is stated in Rule 23

     4    expressly.   This we believe does protect the members of the

     5    class and their interest in this litigation.

     6               THE COURT:     But it's going beyond their interests in

     7    the litigation,    isn't it?   It's going to the protection of the

     8    actual trust assets.      The idea is don't do anything.    Don't

     9    dissipate your trust assets until the case is resolve.        Isn't

    10    that what the Court's trying to do here?

    11               MR.   HARPER:   I think that there is some language in

    12    the order -- excuse me,     in the memorandum opinion that would

    13    suggest that.     The actual order,   however, is very limited in

    14    focus.   All it provides -- all it provides is that some

    15    evidence at trial in the case indicates that the information

    16    may be unreliable.      That's far narrower,  far more modest and

    17    falls squarely within the ambit of 23 (d)

    18               THE COURT:     Is there anything in the record that

    19    indicates that any information other than the accounts

    20    themselves is unreliable?

    21               MR.   HARPER:   I'm sorry,  Your Honor;  I didn't --

    22               THE COURT:     Is there anything in the record to

    23    indicate that there's any concern about a liability other than

    24    the accounts themselves?

    25               MR.   HARPER:   Oh, yes.   There is extraordinary


JAD                                                                        20

     1    amounts in the record regarding unreliability.

     2               THE COURT:   Well, no,  that wasn't my question.

     3               MR. HARPER:   I'm sorry,  Your Honor.

     4               THE COURT:   I know there's evidence of the

     5    unreliability of the accounts.     But this notice has to be sent

     6    with every mailing,   whether it has to do with an account or

     7    not,  correct?

     8               MR. HARPER:   That is correct --

     9               THE COURT:   I mean,  it has to be included in

    10    mailings about education programs --

    11               MR. HARPER:   That's correct.

    12               THE COURT:   -- that have nothing to do with this.

    13    Is there any evidence that that's unreliable?

    14               MR. HARPER:   Well, it only points to the information

    15    -- the individual Indian trust information is unreliable.       It

    16    does go to people in other circumstances.

    17               THE COURT:   Well, why would you do that?    What's --

    18    where did the -- what would be the reason for sending this --

    19    to have this sent for -- let's assume you're right,     that you

    20    can justify warning recipients about the reliability of their

    21    trust accounts.   Why would you require this notice in every

    22    mailing,  even those that have nothing to do with the trust

    23    account?

    24               MR. HARPER:   Well, there's two answers there.    The

    25    first answer is what the District Court actually says with


JAD                                                                        21

     1    respect to why he had this order sent out beyond merely two

     2    communications with respect to the trust accounts,     and that is

     3    that he wanted to be over-inclusive and make sure --

     4               THE COURT:   Can a District Court do that?

     5               MR. HARPER:   It certainly may,  Your Honor --

     6               THE COURT:   But this is injunctive relief.    How can

     7    a District Court be over-inclusive?

     8               MR. HARPER:   Well, this is not --

     9               THE COURT:   Isn't it supposed to balance?    Well,

    10    assume you're wrong about whether it's an injunction.

    11               MR. HARPER:   If we're wrong on whether it's an

    12    injunction,  then the District Court does have an obligation to

    13    balance the interests.

    14               THE COURT:   Right.

    15               MR. HARPER:   But we believe that in this

    16    circumstance there's no harm to the defendants.      What is the

    17    harm?   They have not demonstrated that this is overburdensome

    18    in any way.   They don't even make that argument on appeal.      If

    19    they made the argument that it's somehow overburdensome,

    20    then --

    21               THE COURT:   Well, their argument on appeal is this

    22    is,  in effect, a scarlet letter,   if you're familiar with

    23    literature on that.    You know what a scarlet letter is?

    24               MR. HARPER:   I do, Your Honor.

    25               THE COURT:   That's what this is;  a scarlet letter


JAD                                                                        22

     1    notice.   And that's not harm?   There's no harm to that?

     2               MR. HARPER:   No, Your Honor,  and I'll tell you why.

     3    For two reasons.

     4               THE COURT:   Hester regarded it as a harm.    As an

     5    adulteress.

     6               MR. HARPER:   We are talking about here a trust that

     7    this Court has held is being managed in a way that is

     8    hopelessly inept.    This Court has called their actions not

     9    nonfeasance,  not misfeasance,  but malfeasance,   meaning evil-

    10    doing,  intentional wrongdoing.

    11               THE COURT:   So, this notice is to describe to the

    12    class that the government is an evil-doer.

    13               MR. HARPER:   No, that's not -- see,   although this

    14    Court held that,  this particular notice is far more modest.

    15    All this requires --

    16               THE COURT:   Is likely to be an evil-doer.

    17               MR. HARPER:   Perhaps.   Your Honor, the point being,

    18    if I may,  that this order is very modest.     It says evidence

    19    introduced at trial in this case shows --

    20               THE COURT:   It's more than what you asked for,   isn't

    21    it?

    22               MR. HARPER:   No, Your Honor.    It's less than what we

    23    asked for.   We asked for --

    24               THE COURT:   That's a change.

    25               MR. HARPER:   We asked for -- we asked for a


JAD                                                                       23

     1    declaration in essence that they had --

     2               THE COURT:   All you asked for -- in your order all

     3    you asked for was a statement that they don't know whether the

     4    information they are providing to you is accurate.      That's all

     5    you asked for.

     6               MR. HARPER:   And then we said --

     7               THE COURT:   And the District Court said any

     8    information related to the IIM trust or the lands or other

     9    assets,  etcetera,  etcetera, etcetera may be unreliable.    The

    10    District Court broadened this considerably beyond what you

    11    asked for.

    12               MR. HARPER:   The District Court added some language,

    13    Your Honor,  and it deleted a substantial amount of language.

    14    There were substance-based objections made by the trustee

    15    delegates.   And each and every substance-based objection they

    16    made,  the District Court considered those and not only

    17    considered those,   modified the order in conformity with those

    18    suggestions.   The government never suggested below that the

    19    information was reliable.    They never made that suggestion.

    20    In fact,  until this appeal,  they have never made that

    21    suggestion.   And there's a reason for it.

    22               The reason is,  Your Honor,  because the information

    23    is not reliable.    They have conceded that point time and

    24    again.   Right now presently,  there is a data cleanup sub-

    25    project that is ongoing.    The purpose of that data cleanup


JAD                                                                        24

     1    sub-project,  Your Honors,   is to clean up the data; meaning to

     2    correct incorrect information because there's such a long

     3    history of inaccurate information that they well concede.

     4               This project is in its pilot phases in Oklahoma.

     5    How possibly can they have accurate data if they have a

     6    project spending millions of dollars to correct incorrect

     7    data?   So, that -- and that's presently today.     Their present

     8    auditors say that they cannot even do an audit because they're

     9    not sure about the systems; whether the systems have

    10    integrity.

    11               THE COURT:   Why can't you get -- why couldn't you

    12    have gotten adequate relief under Judge Tatel's hypothetical,

    13    a notice typical under Rule 23,   which simply states what the

    14    lawsuit's about and suggests that the beneficiaries be given

    15    your phone number?

    16               MR. HARPER:   Your Honor,  had the government raised

    17    that below -- you recall,    Your Honor, that the analysis

    18    here --

    19               THE COURT:   Well, the government doesn't have to

    20    raise that.   The government's arguing that the notice that

    21    they're required to give is illegal and improper.      They don't

    22    have to come up with a suggestion as to what would be a proper

    23    notice.   I'm asking you why wouldn't you get all the adequate

    24    relief with a proper notice under Rule -- well,     I've assumed a

    25    conclusion when I say a more orthodox notice under Rule 23


JAD                                                                       25

     1    which Judge Tatel had hypothesized?

     2               MR. HARPER:   Because we have 500,000 individual

     3    Indian trust beneficiaries and we would -- and we believe that

     4    they have -- that they ought to be warned,    they ought --

     5               THE COURT:   No, no, no,  they could get -- they could

     6    get -- well,  should we call it a Tatel letter under Rule 23.

     7               MR. HARPER:   Or,  a Judge Silverman letter;  either.

     8               THE COURT:   No, but wouldn't that provide the relief

     9    you seek?

    10               MR. HARPER:   No,  I don't think that would be

    11    adequate,  Your Honor.

    12               THE COURT:   Why?

    13               MR. HARPER:   The reason it wouldn't be adequate is

    14    because it wouldn't put them on notice the information they're

    15    actually receiving may be unreliable.

    16               THE COURT:   Well, when they call you,   you could tell

    17    them that.

    18               MR. HARPER:   But, Your Honor --

    19               THE COURT:   That's your claim.

    20               MR. HARPER:   -- 500,000 -- and we welcome the phone

    21    calls.   And we've received many phone calls because of other

    22    23(d)  notices and we welcome those,   and we've learned a lot of

    23    information because of that.    And we continue to welcome

    24    those.

    25               THE COURT:   I know, but why do you think -- well,


JAD                                                                       26

     1    finish your answer.

     2               MR. HARPER:   I was just going to say the point being

     3    -- and this is why I was getting into the substance of the

     4    notice.   If the notice -- the government agrees that there is

     5    not challengeable information,   the information is not

     6    contestable,  then there's no reason you can't include it in a

     7    23(d).   They didn't contest it and the question here is is it

     8    an abuse of discretion for the District Court to issue out a

     9    23(d)  notice and the government never challenged it on those

    10    grounds.

    11               THE COURT:   If you don't have a --

    12               THE COURT:   Let me ask you about that.    How would

    13    they challenge it if there was no hearing there?

    14               MR. HARPER:   Your Honor,  they could have challenged

    15    it in their brief.    Their brief challenges the notice on many,

    16    many different counts,   Your Honor.   It says that it's -- it

    17    was wrong in timing,   that it should -- they made substance-

    18    based challenges to the language utilized in our proposed

    19    notice.   And even though our proposed notice talked about the

    20    fact that the information was unreliable,    they never once in

    21    their entire brief said,   !IHold on, Your Honor;  don't send out

    22    that notice because that information that you're saying

    23    regarding the unreliability is inaccurate.!I    They never

    24    challenged that part of it.

    25               They did make other substantive-based challenges to


JAD                                                                       27

     1    the notice --

     2               THE COURT:   Don't they argue here that the

     3    information the District Court relied on for that is stale?

     4               MR. HARPER:   Yes, Your Honor.

     5               THE COURT:   Well, so they do -- they do argue that.

     6               MR. HARPER:   They don't argue that in the District

     7    Court.

     8               THE COURT:   No, they argue it here.

     9               MR. HARPER:   They do argue here that it is -- that

    10    the finding of unreliability is inaccurate in the Court of

    11    Appeals,  but they've already waived that,   as Ned Charter in

    12    this Court's 2002 decision makes clear,    this applies with

    13    special force -- waiver rules apply with special force in

    14    fact-based assessments because you deprive the District Court

    15    of the ability to weigh the evidence.     As Judge Silverman

    16    earlier noted,  this Court does not normally make findings of

    17    fact.   You don't want the entire record on appeal;    all the

    18    vagaries of all the evidence to weigh in this Court.      That's

    19    what the District Court's job is.

    20               THE COURT:   Do you think there should have been an

    21    evidentiary hearing that would have gone on for another 60

    22    days,  120 days as to whether the information is reliable or

    23    not reliable?

    24               MR. HARPER:   Your Honor,  it wouldn't have required a

    25    hearing like that.    First, the government never challenged it


JAD                                                                        28

     1    below.

     2               THE COURT:   Suppose the government said,   !IHey, wait

     3    a minute.   We think the information is reliable;    at least it

     4    hasn't been determined to be unreliable yet.!I    Now,  should

     5    there be a separate hearing to -- not the accounting,     but a

     6    separate hearing associated with the notice to determine

     7    whether the information is reliable?

     8               MR. HARPER:   Based on the record evidence,   I do not

     9    think the Court would have had to have a separate hearing.

    10               THE COURT:   (Indiscernible)  they could rely on the

    11    accumulated   (indiscernible)  of the last nine years.

    12               MR. HARPER:   That's not what he relied on for this

    13    order,  Your Honor.   That was explaining the reason why that

    14    this notice should go out.     It wasn't explaining why this

    15    order and why information was unreliable.     The reason the

    16    information is unreliable is,   as Judge Tatel points out,   they

    17    have admitted it time and time again in their 2003 report.       On

    18    the --

    19               THE COURT:   No,  no, all they've admitted is that an

    20    accounting will produce more reliable figuring,     more reliable

    21    data.   And that's always true of any accounting.

    22               MR. HARPER:   That's inaccurate,  Your Honor,  with due

    23    respect.

    24               THE COURT:   What?

    25               MR. HARPER:   I said this is actually not what the


JAD                                                                         29

     1    record indicates.     What the record indicates,   for example, is

     2    that Mr.  Paul Homan testified at trial.     He was the special

     3    trustee.   !IDo you believe that these systems are reliable?!I

     4    !IAbsolutely not.!I   !IDo you think that the data on these

     5    systems has integrity?!I     !INo.!I I don't think you can get

     6    clearer than that.     Our brief is filled with items like this.

     7               THE COURT:    Same as the District Judge made such a

     8    finding?

     9               MR. HARPER:    Well, the District Court --

    10               THE COURT:    Has the District Court made a finding

    11    that the data on the Interior Department computers with

    12    respect to Indians is unreliable?

    13               MR. HARPER:    The District Court has talked about the

    14    data as having -- lacking integrity,     but Your Honor --

    15               THE COURT:    No, no, no.   Has the District Court made

    16    that ultimate finding?

    17               MR. HARPER:    No, because it was never --

    18               THE COURT:    I didn't think so.

    19               MR. HARPER:    May I complete my answer?

    20               THE COURT:    But you want to -- go ahead,   counsel.

    21               MR. HARPER:    Your Honor,  all I was going to say is

    22    the District Court never reached that question because it was

    23    admitted.

    24               THE COURT:    Well,  I think that's an overstatement.

    25               MR. HARPER:    Your Honor,  they never challenged it


JAD                                                                        30

     1    below.   They have never,  until this appeal,  ever suggested

     2    that their information is reliable.     There are -- there is a

     3    substantial amount of evidence -- the Griffin report

     4    provides --

     5               THE COURT:   Well, you know there's a difference

     6    between stating your information is reliable and your

     7    information is unreliable.    There's a gap between where you

     8    don't know for sure.

     9               MR. HARPER:   I --

    10               THE COURT:   That's what I assume the accounting

    11    purpose is.

    12               MR. HARPER:   And I agree.   Without the accounting,

    13    it's clear that there's no check on it.     But,  even with --

    14    with respect to -- even if you take aside the accounting

    15    issue,  the -- John Miller,  the deputy special trustee said

    16    this; !IThe database is plagued by missing records,    unreliable

    17    information,  and severe security deficiencies and unverifiable

    18    audit trials.!I  That's their senior official.    Another one,

    19    !Iserious issues with quality of data and the integrity of the

    20    data.!I

    21               They talked about -- in the fiduciary compliance

    22    plan, Your Honor,   they talk about the fact that their -- their

    23    ownership databases are not !Isynchronized!I.   Do you know what

    24    that means?   There's two databases;   the Land Record

    25    Information System and the Integrated Resource Management


JAD                                                                        31

     1    System.   They both contain ownership information for the same

     2    plot of land and they reflect different owners.      Dominick

     3    Nessy   (phonetic sp.) explained at trial what that means is one

     4    has beneficial ownership and one has actual ownership.      The

     5    actual owner does not get paid in leases;    the beneficial owner

     6    does --

     7               THE COURT:   But counsel -- counsel,   after a year-

     8    and-a-half looking into the intelligence information in the

     9    United States in different agencies,    I can assure you that

    10    this is not a unique problem to Interior.

    11               MR. HARPER:   Your Honor,  it is a unique circumstance

    12    in the trust.    Because there is no way you can properly manage

    13    a trust if you have different people owning the same plot of

    14    land.   That's just not possible.    And that is one of many of

    15    the problems with respect to the unreliability of data.

    16               Again, the record is absolutely clear on this point.

    17    Unreliability throughout their information systems.      They

    18    never challenged that in the District Court.      It is not --

    19    this -- the question --

    20               THE COURT:   Of course,  if the notice is

    21    inappropriate,   it doesn't matter whether they challenge it.

    22    They certainly challenged the notice.     If the notice is

    23    inappropriate under Rule 23,   that's the end of the game,   isn't

    24    it?

    25               MR. HARPER:   Well, but Your Honor the two are tied,


JAD

                                                                           32

     1    and they're this way.    That the government concedes that if

     2    the information that is provided -- for example -- for

     3    example,  if the information said that the Cobell VI panel held

     4    that you breached -- that the government breached its trust

     5    responsibilities,   I don't think that they seriously argued

     6    that that is outside the ambit of 23 (d)

     7               THE COURT:   Well,  I don't think they would.   But

     8    we'll see what they say.

     9               MR. HARPER:   Well --

    10               THE COURT:   In response.

    11               MR. HARPER:   I -- to close,  Your Honor --

    12               THE COURT:   Well,  we're not going to close yet.

    13               MR. HARPER:   Your prerogative.

    14               THE COURT:   Yeah.  You said earlier in response to

    15    one of my questions,   you started talking about waiver.    Are

    16    you referring to these points you make in your brief at around

    17    page 15?   Are these the waiver arguments you're talking about?

    18               MR. HARPER:   We make two waiver arguments,   Your

    19    Honor.   The first waiver argument we make is that they never

    20    challenged below -- they never challenged that this falls

    21    outside the ambit of 23(d).    That's the first --

    22               THE COURT:   Here's what your brief says.    Your brief

    23    says,  !IAs the District Court determined,  Interior has conceded

    24    the Court's authority to enter this order pursuant to Rule

    25    23(d) !   That's what you say,  right?


JAD                                                                        33

     1               MR. HARPER:   That's correct.

     2               THE COURT:   Here's what the District Court said.

     3    !hlnterior has previously conceded this Court's authority to

     4    restrict Interior's communications with Indian beneficiaries.!I

     5    It doesn't say anything at all about conceding the authority

     6    of this order under Rule 23.

     7               MR. HARPER:   But, in fact,  Your Honor,  if you look

     8    at the brief of the government --

     9               THE COURT:   I'm referring to your statement in your

    10    brief and the District Court language you cite,     which doesn't

    11    support the concession you say.

    12               MR. HARPER:   Your Honor,  the point we're trying to

    13    make,  and maybe --

    14               THE COURT:   Well, let's stick with this for a

    15    minute.   I mean, you've argued waiver here.

    16               MR. HARPER:   Yes.

    17               THE COURT:   But the District Court decision does not

    18    support your argument that they've conceded that the Court has

    19    authority under 23(d)   to issue this order.   Do you agree with

    20    that,  having heard the sentence?

    21               MR. HARPER:   I agree that the District Court did not

    22    expressly make that holding.

    23               THE COURT:   The District Court didn't do it

    24    implicitly.   It said -- the only thing it said was that they

    25    had the authority to restrict Interior's communications with


JAD                                                                        34

     1    the parties;  not to enter this order under 23 (d)

     2               MR. HARPER:   Your Honor,  whether the District Court

     3    in fact made -- I will concede that the District Court --

     4               THE COURT:   While we're talking about statements

     5    about concession in your brief --

     6               MR. HARPER:   Sure.

     7               THE COURT:   -- here's another one.    !IThe government

     8    urged the District Court to accept as undisputed fact that

     9    Indian trust data is wholly unreliable!I,   right?

    10               MR. HARPER:   That is correct,  Your Honor.

    11               THE COURT:   The undisputed fact that the government

    12    agreed to was that plaintiffs had said that;    not that it was

    13    true.

    14               MR. HARPER:   But, Your Honor --

    15               THE COURT:   Look at 802 -- Joint Appendix 802.

    16    That's all it is.

    17               MR. HARPER:   Your Honor,  the entire import of that

    18    quotation is not that plaintiff said it.     The import of the

    19    quotation is that it,   in fact, reflected a true statement.

    20    And in their reply brief --

    21               THE COURT:   Counsel, counsel you're gilding the lily

    22    and you did that throughout your brief.     We noticed it,  too.

    23               MR. HARPER:   Your Honor,  well to the extent that you

    24    believe we gilded the lily,   we apologize,  but that was not the

    25    intent of our brief.


JAD                                                                        35

     1               THE COURT:   But you -- in your brief you accuse the

     2    government of all sorts of vicious things,    misrepresentations,

     3    etcetera.   That's a misrepresentation of your own.     And I

     4    wonder at the tenor of the briefs that you filed and the

     5    accusations in your brief of the government's behavior.       It

     6    struck me as excessive and almost bordering on unprofessional.

     7               MR. HARPER:   Your Honor,  if I can address that

     8    point,  because I think that there is a reason why we set that

     9    out in the manner that we did.    And we don't relish the

    10    opportunity to do that.

    11               But the fact is,  for example,  the government argued

    12    in their motion to remove the Judge,    to reassign the case,

    13    they argued the Court ought to be -- the District Court Judge

    14    ought to be removed for no other reason than that he relied on

    15    !hinapposite precedent!I like Brown v.  Board of Education and

    16    other cases of that ilk.

    17               In Cobell  VI, this Court cited Brown v.   Board of

    18    Education --

    19               THE COURT:   Wait, wait,  wait, counsel.   You're

    20    completely off the subject.    We were both asking you about

    21    your claims that there were waivers.     That's all.

    22               MR. HARPER:   I thought the question was the tenor of

    23    my argument.   I apologize,  Your Honor.

    24               THE COURT:   In fairness,  Judge Tatel,  I did broaden

    25    the point and I shouldn't have broadened the point to refer to


JAD                                                                        36

     1    the adjectives you use in your brief in describing the

     2    government,  which seemed to me excessive.    I'm not talking

     3    about the Judge.    I'm talking about your accusations about

     4    your opponent.

     5               MR. HARPER:   I understand,  Your Honor.   And I was

     6    trying to explain to you how the reasons --

     7               THE COURT:   But why don't you go back to Judge

     8    Tatel,  who is going step by step through your brief,    pointing

     9    out the misrepresentations you make.

    10               MR. HARPER:   With respect to the representation on

    11    the -- in the summary judgment motion,    they act that -- they

    12    asked that that point be accepted as a matter of fact in the

    13    summary judgment,   Your Honor.

    14               THE COURT:   I think if you look at it,   you'll see

    15    that they -- what they state is that that's plaintiff's

    16    position.

    17               MR. HARPER:   Well, again Your Honor,   we didn't

    18    intend to --

    19               THE COURT:   Okay.

    20               MR. HARPER:   -- suggest that that was --

    21               THE COURT:   Yeah, but that's what it says.    I just

    22    had one other question.    You said with some degree of

    23    certainty earlier in your argument that there's no doubt that

    24    this order is permissible under Rule 23(d)?

    25               MR. HARPER:   Yes.


JAD

                                                                           37

21

22

23

24

25

order?

MR.  HARPER:

THE COURT:

MR.  HARPER:

THE COURT:

           MR. HARPER:

support this order.

           THE COURT:

District Court cited,

authority,  !Ito impose

parties.!I  That's the

           MR. HARPER:

           THE COURT:

order?

 I think that the language of 23(d)    does


No,  I'm talking about the language the

which is that the District Court has

conditions on the representative

only quote in his decision that I saw.

 Well --

Do you think that that supports this

          THE COURT:   What is your view about what the

District Court relied on?   He didn't cite any particular

provision in 23(d),  did he?

 He cited some language in 23,   but --

Right.

 -- he did not cite specific --

Do you think that language supports this

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

          MR. HARPER:   I think that this is a condition that

is imposed on the parties in --

          THE COURT:   But that's not what the language says.

It says the Court allows to impose conditions !bon the

representative parties!I.  You're the representative party,    not

the Interior Department.

          MR. HARPER:   Your Honor,  with respect to the -- that

may be the fact that we are the representative parties.


JAD

                                                                           38

     1               THE COURT:    So, where does the authority come from

     2    under 23(d)?

     3               MR. HARPER:    23(d) (2) is a non-exhaustive list of

     4    when notices can be provided in order to protect class

     5    members.

     6               THE COURT:    But it's all for -- it's all -- it's not

     7    to protect class members.      It's all designed to advise them of

     8    the steps in the litigation.      It's to advise them of the

     9    process.

    10               MR. HARPER:    But it's --

    11               THE COURT:    It's not to protect them.

    12               MR. HARPER:    It also plainly provides,   Your Honor,

    13    that it is to protect the members of the class.       Notice is to

    14    protect the members of the class,     and it's considered a non-

    15    exhaustive list as set forth in the advisory committee notes

    16    to Rule 23(d) (2) .  And we think that this,   therefore,  falls

    17    comfortably within that ambit.

    18               THE COURT:    Yeah, you did.   You quoted for the

    19    protection of the members of the class,     right?

    20               MR. HARPER:    Correct.

    21               THE COURT:    That's what you quoted.    But you

    22    completely left off the last part of that provision of 23,

    23    which says,   !bof any step in the action or of the proposed

    24    extent of the judgment or the opportunity of members to

    25

signify whether they wish representation.!I    It's all to advise


JAD                                                                        39

     1    them of steps -- it's to protect them by advising them of

     2    steps in the litigation.    Not to enter preliminary relief.

     3               MR. HARPER:   Your Honor,  the case law has provided

     4    that the -- including Gulf Oil that the duty and the

     5    responsibility and the powers of the District Court under Rule

     6    23(d)  are extraordinarily broad.    They're broad and it's

     7    flexible to protect members of the class.     That is the rule --

     8               THE COURT:   Every case you cite -- In Re School

     9    Asbestos,  all the rest -- the required notice,    simply advise

    10    the parties of the status of the class action; who the parties

    11    were.   Every one of the cases are procedural.     There isn't one

    12    of these cases you cited where the District Court used 23 to

    13    order substantive relief.    Preliminary substantive relief.

    14               MR. HARPER:   Well, Your Honor,  we don't believe this

    15    is preliminary substantive relief.     We believe that this

    16    provides information,   Your Honor,  to the members --

    17               THE COURT:   Right, okay.

    18               MR. HARPER:   -- of the class.

    19               THE COURT:   May I just -- may I just then continue

    20    on and make references to your brief,    which I think are

    21    excessive?   Page 38 you say in this appeal trustee delegates

    22    have abandoned misrepresentations they made to this Court in

    23    procuring the vacature of the March 15th!   2004 preliminary

    24    injunction in Cobell XIII.    On Page 42 you say trustee

    25    delegates compound the misrepresentation they made to this


JAD                                                                        40

     1    Court in their motion to stay the injunction by asserting

     2    falsely that an internet disconnection would frustrate the

     3    ability of MMS to receive process and disburse over $500

     4    million.   On Page 46 you refer,   again trustee delegates argue

     5    dishonestly that the injunction would have a particularly

     6    harsh impact on services to Indians.

     7               One can disagree with your opponent in a litigation

     8    without using such language.

     9               MR. HARPER:   I --

    10               THE COURT:   I found it sort of shocking and

    11    stunning.   I wondered whether this had become more than

    12    litigation,  but rather the moral equivalent of war.

    13               MR. HARPER:   Well, Your Honor,  I'd like to address

    14    -- it's difficult for me to address that brief because that

    15    was the IT security brief,   so I apologize for that.    I'm just

    16    not as prepared on that as I am for this argument.

    17               But let me say something generally about our

    18    briefs --

    19               (Discussion off the record.)

    20               THE COURT:   This is the brief in the -- you're

    21    right,  this is the brief from the disconnect case.     You're

    22    right.

    23               MR. HARPER:   So, I'm sorry that I can't address --

    24               THE COURT:   But I'm not sure that I don't find

    25    similar language in the disconnect,    but it just pervades the


JAD                                                                        41

     1    -- you know,  we have so many pieces of litigation,    it pervades

     2    the entire litigation and I'm enormously troubled by it.

     3               MR. HARPER:   Well, Your Honor,  I think that that's

     4    because there has been a pattern -- and unfortunately,     there

     5    has been a pattern and practice by some on the government side

     6    to attempt to undermine this litigation.     And we're going to

     7    certainly talk about that further --

     8               THE COURT:   I think they're trying to win their

     9    case.   That isn't the same.

    10               MR. HARPER:   It does, Your Honor,  but part of this

    11    case is reforming a system that has been broken for a hundred

    12    years that victimizes a certain group of people.

    13               THE COURT:   I don't think -- I don't think you

    14    enhance your position by making misrepresentations that Judge

    15    Tatel referred to in your case or in the other case making

    16    accusations against counsel.

    17               MR. HARPER:   Well, I would -- I'd just like to say

    18    with respect to the accusations,    you could look at them on the

    19    merits.   For example,  the government argues in their brief to

    20    remove the District Court Judge,    they assert that he should be

    21    removed for following inapposite precedent like Brown v.     Board

    22    of Education.

    23               THE COURT:   I don't think we've gotten to that,   have

    24    we?

    25               THE COURT:   No, that's the next issue.


JAD                                                                        42

     1               THE COURT:   That's the next issue.

     2               MR. HARPER:   Well, I'm giving it as an example --

     3               THE COURT:   Yeah, counsel,  I think your time is up.

     4    Let's -- did counsel have any -- I think he had some time

     5    left,  right?  Four minutes.   Go ahead.

     6               MR. HARPER:   Thank you,  Your Honors.

     7                 ORAL ARGUMENT OF PETER D.  KEISLER,  ESQ.

     8                       ON BEHALF OF THE APPELLANTS

     9               MR. KEISLER:   Of course it's a scarlet letter,   Judge

    10    Silverman.   It's a scarlet letter in two respects.     Like

    11    Hester Prynne,  we have to bear the message of our own

    12    condemnation and like Hester Prynne it's pervasive.      She wears

    13    it everywhere she goes.    It affects every interaction she has

    14    with anyone in town.    And it's because the scarlet letter --

    15    that's why they want it,   Your Honor,  instead of a normal Rule

    16    23 notice.   And to seek and obtain a scarlet letter injunction

    17    and then say it's unappealable,   with respect to the language

    18    Mr. Harper quoted that it must grant some of the relief

    19    ultimately sought in litigation,    if that were true,  the IT

    20    injunction we just talked about wouldn't be appealable,

    21    because,  of course,  the ultimate relief in this litigation is

    22    a shut-down of the IT system.

    23               The language from the Third Circuit's decision in

    24    Hershey is what Judge Brown referred to,    to it must grant or

    25    protect some of the relief ultimately sought in this


JAD                                                                        43

     1    litigation.   And while we think both those injunctions are

     2    ill-designed and improper,    they are both -- have the purpose

     3    of protecting the ultimate relief in this litigation.

     4               With respect to waiver,    what Mr. Harper said is

     5    simply false.   What we said below in our filing was that this

     6    was improperly substantive relief in the guise of a notice

     7    under Rule 23 (d) .   We said it was improper to include in a

     8    Rule 23(d)  notice --

     9               (Break in recording.)

    10               MR. KEISLER:    -- exactly what we said;   the

    11    suggestion of a wavier is manufactured.

    12               You know,  beyond that,  most of what we've all been

    13    talking about has been in the hypothetical world in which the

    14    District Court understood and treated this as an injunction

    15    proceeding.   I think our case is ultimately fairly simple.

    16    There's no authority under Rule 23(d)     and the District Court

    17    didn't remotely do the things it would need to do to support

    18    an injunction.

    19               If the Court has no further questions?

    20               THE COURT:    No.

    21               THE COURT:    We see that one's yours,   too.

    22               MR. KEISLER:    Thank you,  Your Honor.   However

    23    inappropriate,  unfounded,   and poisonous to our relationship

    24    with Indian country the specific relief ordered here may be,

    25    it follows from and,    in our view,  pales in comparison to the


JAD                                                                        44

     1    broader indictment the District Court issued in this opinion

     2    against the Department of the Interior,     in which he

     3    characterized as a pathetic outpost of Anglo-centrism,     a

     4    morally and culturally oblivious hand-me-down of a

     5    disgracefully racist and imperialist government that should

     6    have been buried a century ago.     It still treats Indians as if

     7    they are somehow less than deserving of the respect that

     8    should be afforded all people in a society where everyone

     9    should be treated equal.

    10               And the indictment is not only institutional;    it's

    11    personal,  because the District Judge speculates that the

    12    people that serve at Interior may be evil people,     deriving

    13    their pleasure from inflicting harm on society's most

    14    vulnerable.   And those are,  as I'm sure the panel is aware,

    15    direct quotes.   They're not my paraphrases.

    16               Now, I think the Court knows how very rare it is

    17    that we request reassignment in a case.     We lose our share of

    18    cases and rulings every week in courts across the country.       We

    19    come under our share of strong criticism.     Sometimes we may

    20    think the criticism is unjustified,    but it is exceptionally

    21    rare for us to make the request that we make today;     and we do

    22    make this request today,   and we make it urgently because we

    23    think it is absolutely essential to restore the appearance of

    24    fairness in this proceeding.

    25               The District Court has issued the most --


JAD                                                                        45

     1               THE COURT:   Do you know -- do you know if any -- are

     2    there any cases where -- except for situations where a

     3    District Judge relies on extrajudicial information or behaves

     4    in a certain way out of court,   are there any situations where

     5    we've removed a District Judge because of something the

     6    District Judge said in an opinion?

     7               MR. KEISLER:   I don't have a citation from this

     8    Circuit,  but the case that comes to mind is the Third

     9    Circuit's decision in the Haines case --

    10               THE COURT:   No, but that's very different though,

    11    because in Haines,   that was all pretrial.   Here -- I mean,

    12    there was a question in the Haines case about whether the

    13    District Judge prejudged what he was about to hear.      This case

    14    we've got years and years of testimony in evidence.      It's very

    15    different.

    16               MR. KEISLER:   And according --

    17               THE COURT:   The reason I ask you the question is --

    18    I mean,  I take your point that the government has thought

    19    about this very,  very carefully.    But, we need to also,   it

    20    seems to me -- I mean,   if we -- don't we -- if we cross the

    21    line in this circuit and recuse a judge for something the

    22    judge wrote in an opinion,   aren't we opening up the

    23    possibility that we will get not lots of recusal motions,     but

    24    could significantly undermine the independence of the District

    25    Judges?


JAD                                                                        46

     1               MR. KEISLER:   Your Honor --

     2               THE COURT:   Isn't that a risk?

     3               MR. KEISLER:   -- there is -- you know,   any ruling

     4    you do will spark people trying to push the edges of it --

     5               THE COURT:   Right.

     6               MR. KEISLER:   -- of course.   There is no opinion out

     7    there -- we have not been able to find it,    plaintiffs have not

     8    been able to cite it -- that have language at the level and

     9    character and tone of this one.     If you look at cases where

    10    District Judges have been reassigned,    they haven't used

    11    language like this.    If you look at cases involving convicted

    12    criminals,  judges don't talk about litigants this way.

    13               THE COURT:   But that's because -- you know,   you're

    14    relying on -- you've got all these cases where -- the cases

    15    you rely on in your brief,   the cases like Wolf,   right, which

    16    -- where the question is can the District Court on remand set

    17    aside the District Court's previous views?     But I don't think

    18    that's your argument here.    You're arguing bias.    And Wolf

    19    itself says -- Wolf doesn't apply to bias situations.

    20               MR. KEISLER:   Your Honor,  we don't need --

    21               THE COURT:   Isn't that right?

    22               MR. KEISLER:   Not entirely,  Your Honor.   We don't

    23    need --

    24               THE COURT:   No?

    25               MR. KEISLER:   -- this Court to make a ruling that


JAD                                                                        47

     1    the District Court is biased.    The question is whether there's

     2    the appearance of --

     3               THE COURT:   The appearance of,  which isn't the Wolf

     4    line of cases.   Those are all cases --

     5               MR. KEISLER:   Excuse me,  but the second prong of

     6    Wolf is whether reassignment is necessary to preserve the

     7    appearance of justice in the case and that's --

     8               THE COURT:   Wolf says -- Wolf says its three factors

     9    apply,  except in the limited cases where personal bias

    10    requires recusal.

    11               MR. KEISLER:   And in those three factors,   the second

    12    factor is an appearance of justice factor,    and that is what we

    13    are asserting here.    And our position is that there can't be

    14    an appearance of fairness when a judge has leveled the most

    15    scathing,  deeply personal,  sweeping,  and unprecedented moral

    16    accusation against one of the parties without any foundation

    17    whatsoever in the record.    And I'd like to emphasize that

    18    point,  because that's quite critical.    There is no shred of

    19    evidence in this record that supports the District Court's

    20    accusations about Interior's motives;    the accusations of

    21    racism,  and I suppose the word is sadism,    and plaintiffs

    22    haven't cited any.

    23               The one cite they offer is very telling.     The cite

    24    the testimony of an historian.    An historian who testified

    25    that in the first part of the 20th century,    the Commissioner


JAD                                                                        48

     1    of Indian Affairs thought white people were superior to

     2    Indians.   If the judge had limited himself to an historical

     3    observation,  we wouldn't be here.    We wouldn't even disagree.

     4    But point after point,   again and again,  in each of the four

     5    occasions when he accused the Department of racism he made

     6    quite clear,  explicit,  he's talking about modern day Interior

     7    Department,   present day leaders,  how Interior still treats

     8    Indians.

     9         And the question is whether any litigant in the

    10    country --

    11               THE COURT:  Are you saying --

    12               MR. KEISLER:   -- could get a fair hearing from a

    13    judge who has subjected it to this kind of completely --

    14               THE COURT:  So,   if he had a -- so,  if had had made

    15    findings supporting those accusations in the present,     you

    16    wouldn't object?

    17               MR. KEISLER:   If you have a racist before you in the

    18    court and there's documented record evidence that the person

    19    is a racist and there's a case-related reason in the opinion

    20    to refer to that evidence and make a finding,     then, of course,

    21    that would be okay.    But the reason reassignment --

    22               THE COURT:  Well,  suppose there was.    Suppose the

    23    District Judge thought there was evidence in the record that

    24    racism did,   in fact, animate the Interior Department's

    25    behavior today?   Would it be -- would you be arguing that


JAD                                                                        49

     1    there should be a reassignment if the District Judge made such

     2    a finding?

     3               MR. KEISLER:   Our argument would be weaker.     I could

     4    imagine instances in which language could be so excessive and

     5    reveal such a degree of antagonism that even if there were a

     6    record -- could be an issue,   but we don't face that here.

     7               THE COURT:   You mean,  even if there was a Title VII

     8    violation going right up and down the whole --

     9               MR. KEISLER:   It's not that you call someone a

    10    racist,  Your Honor;  it's that you make such a grave charge

    11    without any basis in the record.     It's the combination of the

    12    gravity of the charge and the complete absence of support that

    13    creates the situation in which the antagonism is so deep that

    14    no litigant in the country would believe it would get a fair

    15    hearing.

    16         And there are two aspects of this opinion that I'd

    17    particularly like to focus Your Honor's attention on.       First,

    18    the District Court says these aren't peripheral musings.      He

    19    describes the accusation of racism as the raw,     shocking,

    20    humiliating truth at the bottom of the case.      It is the prism

    21    through which he has announced this entire case should be

    22    understood.   That's not a finding of fact you can set aside.

    23    It's not a legal conclusion you can reverse.      It is his

    24    announcement of how he believes all the evidence in this case

    25    needs to be understood.    It's the lens through which he views


JAD                                                                        50

     1    it.

     2         And the only remedy for that -- the only way to get us

     3    out from under that lens,   because you could write an opinion

     4    saying you shouldn't say it,   you could write an opinion saying

     5    there's nothing in the record to support it,    you could write

     6    an opinion saying you disagree --

     7               THE COURT:   Let me -- let me read you a sentence

     8    from Lydicki   (phonetic sp.) and ask you why it isn't this

     9    case,  okay?

    10               MR. KEISLER:   Sure.

    11               THE COURT:   !IA judge who presides at a trial may,

    12    upon completion of the evidence,   be exceedingly ill-disposed

    13    towards the defendant who has been shown to be a thoroughly

    14    reprehensible person,   but the judge is not thereby recusable.!I

    15               MR. KEISLER:   Who has been shown to be,   Your Honor.

    16               THE COURT:   Yeah.

    17               MR. KEISLER:   Who has been shown to be.    We have not

    18    been shown to be the hand-me-down of a disgracefully racist

    19    and imperialist government.    Who has been shown to be is

    20    absolutely the critical language,    because the Court in Lydicki

    21    made clear that it wasn't saying that the grounds for recusal

    22    have to be limited to situations in which there was an

    23    extrajudicial source.    That was what the Court of Appeals had

    24    held.   And while the --

    25               THE COURT:   But how do you draw the line between


JAD                                                                        51

     1    this case and a case where a judge makes a finding that's

     2    clearly erroneous and is offensive,    but is not recusable?

     3               MR. KEISLER:   I think the combination --

     4               THE COURT:  And we have -- you know,    it's not

     5    unusual for a Court of Appeals to find District Court findings

     6    clearly erroneous,   and not supported by the evidence.

     7               MR. KEISLER:   If the --

     8               THE COURT:  It doesn't mean his statements are

     9    subject -- it doesn't mean he'd be recused.

    10               MR. KEISLER:   If the District Court had found that

    11    we signed a contract on a particular date and the Court held

    12    that there was no record of it in support of the fact that we

    13    had signed that contract,   there wouldn't be a recusal.    It's

    14    the gravity --

    15               THE COURT:  I'm just trying to understand where you

    16    -- where we draw the line --

    17               MR. KEISLER:   And --

    18               THE COURT:  -- to make this an unusual case.     Is it

    19    that -- is it that there's an accusation of racism?

    20               MR. KEISLER:   It is the gravity of the accusation

    21    combined with the utter absence of any support --

    22               THE COURT:  But,  you know --

    23               THE COURT:  Should we -- excuse me.     Should we take

    24    into account any prior litigation and the fact that this Court

    25    of Appeals has now reversed the District Judge a number of


JAD                                                                        52

     1    times?

     2               MR. KEISLER:   Well, I think it goes to the third

     3    factor of Wolf,  because what the Court has said is we balance

     4    against the concerns about fairness and the ability of the

     5    District Judge to put aside previously expressed views against

     6    some loss in efficiency.    This is not a case in which loss of

     7    efficiency is something that could possibly be feared.      We've

     8    had seven appeals that the government has brought since 2003.

     9    We've won all four of the ones that have been decided.      We've

    10    had to seek five stays.    They've been granted all the time.

    11               The whole effort to do an accounting has been

    12    stymied because for years we've had this mammoth $14 billion

    13    injunction that seemed immune from reversal of the Court that

    14    have displaced the normal conversation that ought to have

    15    taken place between Interior and Congress in order to develop

    16    a plan to proceed.

    17               This is not an instance in which there is a loss of

    18    efficiency problem and this is not an instance where we just

    19    have the end of the case about to happen;    one trial and one

    20    decision.   This case,  the District Court has said,   is going to

    21    stretch on to 2011 and beyond,   and it's constantly,   for that

    22    reason,  a series of interlocutory decisions;   only a few of

    23    which are appealable.    The vast majority of which,   in which

    24    people are ordered to show cause why they shouldn't be held in

    25    contempt of sanctioned,   we can't even bring up here because


JAD                                                                        53

     1    they,  unlike these cases today,   are not appealable.   So,

     2    there's absolutely a pressing urgency to make sure that

     3    there's fairness here.

     4               And I would also focus Your Honors attention on one

     5    other passage in this opinion,   which I think sometimes gets

     6    lost in comparison with all the other extraordinary things

     7    that are said,  which is that the judge in this case in this

     8    opinion has engaged in an explicit act of prejudgment about

     9    evidence that's not yet been presented.     At the very end of

    10    the decision in extolling the benefits of the notice order,      he

    11    says one benefit is that it will likely bring to light the

    12    wealth of evidence about Interior's mismanagement of the

    13    trust.

    14               He didn't say that if there is evidence out there

    15    that I haven't yet seen,   this notice order will bring it to

    16    light.   He said I'm convinced there's likely evidence out

    17    there that I haven't seen of issues of mismanagement which

    18    have not yet been presented to me.     That is an explicit act   of

    19    prejudgment.   It's wrong because it's a predisposition and

    20    we're entitled to an open,   fresh evaluation of evidence in the

    21    sixth year of a case,   in the seventh year of a case,   in the

    22    eighth year of a case as much as we are in the first year of

    23    the case.

    24         And it's wrong because when a judge publicly announces in

    25    a published opinion that it has this predisposition -- we're


JAD                                                                        54

     1    all human beings -- the judge acquires interest in vindicating

     2    the validity of this prediction.

     3          If you look at the two factors in Wolf,   the appearance of

     4    justice,  the likelihood that a judge will be able to set aside

     5    previously expressed views,   it's hard to imagine any decision

     6    which could possibly present a clearer case,    and that's why

     7    when I said before you can't reverse this finding of fact or

     8    conclusion of law,  whatever you say short of assignment --

     9    reassignment by way of admonition,    it's not going to change

    10    the fact that any objective observer reading this opinion and

    11    whatever else you might write,    is going to recognize that the

    12    District Judge will still believe that the raw,     shocking,

    13    humiliating truth at the bottom of this case for which it must

    14    be perceived is his entirely unfounded accusation of racism

    15    against the Department.

    16               THE COURT:   Of course you remember what happened

    17    when we reassigned in the first Microsoft case.

    18               MR. KEISLER:   Um -- that's right,  and there's an

    19    out-of-the-frying-pan-and-into-the-fire possibility,     of

    20    course,  but, Your Honor,  because this opinion is such an

    21    outlyer,  we'll take our chances.

    22               THE COURT:   Anything else?

    23               MR. KEISLER:   Thank you.

    24               THE COURT:   Thank you.

    25                 ORAL ARGUMENT OF KEITH M.   HARPER, ESQ.


JAD                                                                        55

     1                        ON BEHALF OF THE APPELLEES

     2               MR. HARPER:   May it please the Court,   Your Honors,

     3    Keith Harper again for the plaintiffs.

     4         We believe that this reassignment motion of the

     5    government should be denied.    It is true that the words are

     6    troubling,  but they are troubling not because he uses harsh

     7    language,  not because he uses strong terms.    They are

     8    troubling because they aptly describe the conduct of the

     9    United States with respect to this litigation and with respect

    10    to how they have managed this trust.

    11               THE COURT:   Is there any evidence in the record that

    12    the racism of 150 years ago is animating the Department of

    13    Interior today?

    14               MR. HARPER:   I don't think the judge accused them of

    15    that racism,  Your Honor.   There's nothing in the opinion that

    16    actually accuses them of racism.     What he says is that they

    17    are treated as -- treated as less than deserving.      I think

    18    this is -- when you have -- for example,    in the no accounts

    19    receivable system,   you have a system where the management has

    20    been described by this Court as hopelessly inept,     egregious

    21    misconduct --

    22               THE COURT:   Wait, wait,  wait, wait.   Let's go back

    23    to Judge Silverman's question.     The judge says -- he accuses

    24    them of being !Imorally and culturally oblivious hand-me-downs

    25    of a disgracefully racist and imperialist government.      The


JAD

                                                                           56

          last pathetic outpost of the indifference in Anglo-

          centricism.

               Now,  that doesn't sound -- that sounds like he is

          accusing this -- the people in the Interior Department today

          of indifference and Anglo-centricism.     I don't think he's

          accusing them of,   you know, being pro-British here,   right?

          mean,  what do you think Anglo-centricism is in the context

          this case?

                     MR. HARPER:   I think that there's record evidence

          that show,  for example in the testimony of Mr.    Tex Hall, who

          talked about inability for the governmental -- government

          officials to understand what is going on in the --

                     THE COURT:   Okay --

                     MR. HARPER:   -- or, for individual Indians when,   for

          example --

                     THE COURT:   -- they may be -- they may be

          incompetent.   They may be competent and they may be -- and

          they may not understand it,   but is that the same as being a

          racist?

                     MR. HARPER:   I don't think he said racist,   though,

          Your Honor.   I think he said hand-me-down of a racist --

                     THE COURT:

                     MR. HARPER:

                     THE COURT:

                     MR. HARPER:

                                  What do you think that means?

                                   -- entity,  and that's clear.

                                  Well, what does Anglo-centrism refer to?

                                   I think Anglo-centrism refers to the

 I

of

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


JAD                                                                        57

     1    fact that they have not -- because of their own cultural

     2    framework,  do not understand how these things impact

     3    individual Indians on the ground;    how they suffer all the time

     4    because of the mismanagement that's going on.

     5               THE COURT:   Well, he could have said that.    !IAfter

     6    all these years,  our government still treats Indians as if

     7    they were somehow less than deserving!I.

     8               MR. HARPER:   Oh, I believe that is about the

     9    present,  Your Honor.

    10               THE COURT:   Well, that's what I'm saying.    You were

    11    saying this was all -- that they were just --

    12               MR. HARPER:   No, I said the racist charge was past.

    13    I didn't say all the charges were past.     Some of the charges

    14    are appropriately and aptly described present.      When he says

    15    treated as,  he means that individual Indians are treated as

    16    less.   How could that not be the case?    I mean,  the fact of

    17    the matter is is that we do not have the most basic functions

    18    with respect to our monies.    How are we not -- how are we

    19    treated as other trust beneficiaries,    for example?   How are we

    20    treated as others are treated when one entity manages their

    21    money?   We are treated as less than deserving of the normal

    22    rights attributed to all in this type of a situation.

    23               THE COURT:   Let me ask you a different kind of

    24    question,  which Judge Silverman alluded to in his question to

    25    government counsel.    You both -- both the parties spend a


JAD                                                                        58

     1    tremendous amount of time debating the words of this opinion

     2    and what they mean and whether they're supported by evidence.

     3    I'm curious about what you think about the fact -- how we

     4    should deal with the fact that since Cobell VI -- since Cobell

     5    VI this Court has reversed the District Judge five consecutive

     6    times.   All cases -- in all those cases it was relief granted

     7    for the plaintiffs and against the -- against the Interior --

     8    Cobell  VIII and XII,  In Re Brooks XIII and XVII -- and these

     9    reversals were for abuse of discretion,    shifting the burden --

    10    inappropriately shifting the burden to Interior,     acting more

    11    as a prosecutor,  under value of the burden on Interior,

    12    etcetera.

    13               What are we to make of that pattern;    five orders --

    14    four against Interior,   five orders reversed,  all for abuse of

    15    discretion and no orders that we've been able to see that are

    16    -- favor Interior?    What do we do with that -- that trend?

    17               MR. HARPER:   Well, there have been a number of

    18    orders that have been favorable to Interior that plaintiffs

    19    have not appealed,   and I'm not saying we had the ability to

    20    appeal.   There have been 80 published decisions in this

    21    matter.   And this is a very difficult case --

    22               THE COURT:   Can you give me some -- I was going to

    23    ask you that question.    You say in your brief that the

    24    District Court has ruled against the plaintiffs or limited

    25    their relief,  but you don't give any examples.


JAD                                                                        59

     1               MR. HARPER:   Sure.

     2               THE COURT:   Can you give me an example of a -- where

     3    -- of a request for significant relief --

     4               MR. HARPER:   Sure.

     5               THE COURT:   -- that the District Court's denied?

     6               MR. HARPER:   Yes, Your Honor.   In December 31st,

     7    2004,  for example,  the -- we filed a motion requesting a trial

     8    date in order to determine whether or not the defendants Ernst

     9    and Young Accounting was,    in fact, an accounting such that it

    10    met their -- the normal trust law definition.      Did it provide

    11    sufficient information to the beneficiary so the beneficiary

    12    could readily ascertain whether or not the trustee has carried

    13    out its fiduciary duties.

    14               The government vigorously objected to that and the

    15    Court denied our motion.     That was -- that was an issue of

    16    great significance because we believe that that would have

    17    demonstrated that the accounting that they did in the Ernst

    18    and Young report was nowhere near what is required by law.

    19    So,  that was obviously a very significant decision.

    20               THE COURT:   Any other examples?

    21               MR. HARPER:   Pardon me?

    22               THE COURT:   Any other examples?

    23               MR. HARPER:   They -- that come to mind,   the Court

    24    has denied -- in 1998 the Court denied our relief requested

    25    regarding interim -- interim relief.     A number of times the


JAD                                                                        60

     1    Court has refused to grant our desired remedy.      For example,

     2    we wanted receivership imposed on the government in line with

     3    cases like Adams,   that -- so that because of the mismanagement

     4    was so severe,  the management so inept that the District Court

     5    was in a position,  we felt,  to impose a receivership.    The

     6    Court denied that request as well.

     7               THE COURT:   Counsel,  I want to turn to the language

     8    at page 50 of the government's brief in which they

     9    emphasize --

    10               MR. HARPER:   I'm sorry,  I'm having a little trouble

    11    hearing you.

    12               THE COURT:   I'm sorry,  is it my fault?

    13               MR. HARPER:   No --

    14               THE COURT:   The machine's come on.

    15               MR. HARPER:   -- it's the fan.

    16               THE COURT:   Oh, okay.   Go to page 50 of the

    17    government's brief,   in which they refer to the speculation the

    18    District Judge entered into concerning the Department of

    19    Interior's leadership.    !IAre they evil people,  deriving their

    20    pleasure from inflicting harm on society's most vulnerable?

    21    Are they apathetic people who cannot muster the necessary

    22    energy or emotion -- complicity in the gross negligent

    23    administration of the Indian trust.     Or maybe Interior's

    24    officials are cowardly people who dodge their responsibility.!I

    25               Evil?  Cowardly?   Wow.   Isn't that language almost


JAD                                                                        61

     1    -- isn't that language unprecedented,    number one?  And then to

     2    go on to say that the story is portrayed as a seamless --

     3    well,  no, that's the government's characterization.     The

     4    quotes are !Iscandalous deceptions,   dirty tricks,  and outright

     5    villainy,  the end of which is nowhere in sight.!I

     6               MR. HARPER:   Your Honor,  can I take those

     7    separately?   On the first -- on the first,   you didn't -- you

     8    continued that paragraph.    What the Court was doing is it was

     9    proposing what it called plausible hypothesis --

    10               THE COURT:   One of which is they're evil,   one of

    11    which is they're cowardly,   and one of which is they're

    12    apathetic.    I guess given that choice,  the Department of

    13    Interior would say we're apathetic.

    14               MR. HARPER:   What the Court did is set forth their

    15    conduct with respect to how they managed the trust and how

    16    they litigated the case.    He goes on to say,   !IPerhaps Interior

    17    as an institution is so badly broken that even the most well-

    18    intentioned initiatives are polluted and warped by the process

    19    of implementation.!I   And then he drops a footnote right after

    20    that and says,  !IThis hypothesis may be the most plausible,   as

    21    there is some evidence to substantiate it.!I

    22               THE COURT:   You mean they're so -- the fact that the

    23    District Judge entertains the hypothesis that the people he's

    24    dealing with are not evil,   as he suggests is one possibility,

    25    redeems his speculation?


JAD                                                                        62

     1               MR. HARPER:   No,  I think what he actually says is

     2    that is the most plausible explanation.

     3               THE COURT:   I see.  So it may not be that they're

     4    just flatly evil.

     5               MR. HARPER:   That -- in fact,  what I think footnote

     6    15 indicates is that the other hypothesis are likely

     7    inaccurate and what is likely accurate,    the most plausible,   as

     8    he puts in footnote 15,   is the final explanation;   that the

     9    institutions are just so badly broken.

    10               THE COURT:   What about counsel's last point with

    11    respect to the evidence that the District Judge is antipating

    12    will come forward through the notice?

    13               MR. HARPER:   Well, I think that there is a

    14    unquestioned record here of what this Court called

    15    malfeasance,  inept mismanagement,   egregious behavior,

    16    egregious breach of fiduciary duties.     There's obviously

    17    evidence out there of a breach.     This Court has already held

    18    there's been a breach.

    19          So, the fact that the District Court said that this will

    20    bring up more evidence is hardly saying that what he's going

    21    to do with that evidence; whether he's going to weigh that

    22    evidence to substantiate --

    23               THE COURT:   But if you assume -- if a District Judge

    24    assumes that there's evidence outside the record,     isn't that

    25    coming very close to exactly the problem in the first


JAD

                                                                           63

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

vividly.

evidence.

case?

MR.  HARPER:


THE COURT:

MR.  HARPER:

THE COURT:

Read a book


MR.  HARPER:

THE COURT:

Microsoft


case,  the

 No,  Your Honor.   In the first Microsoft


The District Judge read a book --

 Hard drive.

A hard drive;   yes.  I remember it

and relied on a book that wasn't record


 Correct.

But,  when a District Judge issues a

notice saying look,   I'm looking for certain evidence that I

expect to be out there,    isn't that very close to relying on

evidence outside the record?     Or, at least anticipating or

expecting bad evidence to come in?

           MR. HARPER:   He didn't say that it was necessarily

bad evidence.

           THE COURT:   No, it was evidence --

           MR. HARPER:   He said it was evidence that could be

utilized in the case.    Think about -- that's a completely

reasonable statement.    I mean,  the fact is is we've had an

ineptly managed trust for a hundred years.      There's been no

accounting for a hundred years.     This Court has called it

malfeasance.   We have had -- we have no accounts receivable

system,  Your Honor.   They don't know what monies are owed.

           THE COURT:   But what's --


JAD                                                                        64

     1               MR. HARPER:   There's not evidence --

     2               THE COURT:   -- what is different about this case is

     3    the District Judge's opinion refers to the moral quality of

     4    one of the parties to the case,    does he not?

     5               MR. HARPER:   And I think that that -- on that issue,

     6    whether or not that there has been villainy,     for example,

     7    whether there has been vindictiveness,    is all based on the

     8    record of the case.    We have retaliations in violation of

     9    retaliation orders.    We have filing of motions,   like the GAO

    10    accounting.   This is a very important one,   Your Honor.   The

    11    government filed a motion.    They were told by the General

    12    Accounting Office that this motion -- that the suggestions

    13    they were making in that motion that the General Accounting

    14    Office had accounted from 1920 to 1950 for individual Indian

    15    monies was inaccurate.    Nevertheless,  they go ahead and file a

    16    motion,  fail to turn over the documents that are against their

    17    motion,  even though they were subject to a discovery order,

    18    and then file a motion that is plainly at odds with the

    19    General Accounting Office's own statement about what they did.

    20    And,  further, they ask for summary judgment so that they

    21    wouldn't be required to once again,    in their view,  do an

    22    accounting from 1920 to 1950.

    23               I mean,  this is not a slight misstep.    This is --

    24    this is an attempt to undermine the litigation itself.      Mona

    25    Infield  (phonetic sp.),  the retaliation with respect to her.


JAD                                                                        65

     1    The government likes to throw all kinds of facts on it.      It's

     2    very simple.   Mona Infield was an employee,   was to be there

     3    for four additional years.    That was the deal that she was

     4    presented with.   As soon as she filed an affidavit that showed

     5    that the information was insecure and that the information

     6    lacked integrity,   they responded by rescinding that offer,

     7    sending her home,   and taking away all her trust reform duties.

     8               How is that anything but a casebook example of

     9    retaliation?   That fits squarely within this Court's

    10    precedents with respect -- like Raponi    (phonetic sp.)

    11    regarding what constitutes retaliation and it's plainly

    12    willful.

    13               Your Honor,  we're not talking about slight missteps

    14    here.   We're talking about egregious misconduct.     This Court

    15    noted such egregious misconduct in Cobell VI.      What you said

    16    about it is that -- is that their conduct with respect to the

    17    first contempt was egregious and it was made more severe -- it

    18    was compounded because of the simultaneous destruction of

    19    documents.

    20               Let me break that down a little bit.     During a

    21    contempt trial -- during a contempt trial for failing to

    22    produce documents and for failing to report on the failure to

    23    produce documents,   the government destroyed 162 boxes of

    24    documents.   And then failed to report it to the Court for

    25    three months.   And that wasn't the end of it.     The second


JAD                                                                        66

     1    contempt trial -- the government likes to paint that as some

     2    kind of complete reversal.     It wasn't.  This Court held that

     3    the second contempt should have been criminal because the

     4    District Court did not give coercive or compensatory

     5    sanctions,  and so,  therefore, it was functionally criminal.

     6               And then it did an analysis of whether or not the

     7    Secretary could have been held in criminal contempt.      Very --

     8               THE COURT:   I would point out that the District

     9    Judge didn't bother to consider the efforts made by the

    10    present -- the then leadership of the Department to try to

    11    solve the problem.

    12               MR. HARPER:   Your Honor,  this Court held that those

    13    -- that the reports that were made by this current

    14    administration -- this current were misleading.      You said,  !ITo

    15    be sure,  they are misleading.!I   That was the finding of this

    16    Court in Cobell VIII that reversed that contempt.      There was

    17    no doubt that they were misleading.

    18          Let me read,  if I could, the closing arguments -- from

    19    the closing arguments of Mr. Nagle,    lead counsel for the

    20    government in Cobell II -- I'm sorry,    the second contempt.   !INo

    21    one could have participated as counsel or witness or any other

    22    capacity or observe these proceedings without having a

    23    keen!I --

    24               THE COURT:   Cobell II was the one holding

    25    Secretaries Babbitt and Rubin in civil contempt?


JAD                                                                        67

     1               MR. HARPER:   I misspoke,  Your Honor.   I was saying

     2    the second contempt trial;   yes.   Cobell II -- I'm sorry,  the

     3    Cobell that I'm referring to is Cobell VII that was holding

     4    Secretary Norton --

     5               THE COURT:   It's a bipartisan contempt proceeding.

     6    Everybody's in contempt.    Democratic administrations and

     7    Republican administrations.

     8               MR. HARPER:   That has been the unfortunate record of

     9    the management of the trust.    But,  if I can continue,  Your

    10    Honor?   Basically,  no witness or any other person who observed

    11    these proceedings without having a keen insight and

    12    appreciation for the duration and the magnitude of the

    13    shortcomings in the trust reform efforts and the shortcomings

    14    in reporting on these efforts to the Court.     Hardly -- hardly

    15    the picture that they paint in their brief that Cobell VIII

    16    was somehow a complete endorsement of their conduct.

    17               This demonstrates by their own words that they had

    18    these severe shortcomings in how they reported to the Court.

    19    And it's in there.    Mr. Mahach recently testified -- the chief

    20    security officer in the IT security appeal that just occurred

    21    -- he testified that he still told only to report the

    22    positive.   2005.  At what point does that stop?     Of course the

    23    District Court is frustrated.    He's frustrated because we have

    24    conduct that is odious.    And it is morally reprehensible when

    25    you file a GAO motion like that.     Your Honor?


                                                                           68

                     THE COURT:   Why is all of this relevant to the order

          that was before him in this case?

                     MR. HARPER:   Your Honor,  I think it was relevant --

                     THE COURT:

                     MR. HARPER:

                     THE COURT:

          in this order -- and

          That's where all this

                     MR. HARPER:

                     THE COURT:

                     It's in the order requiring that the class be

                    that the materials might be inaccurate,    right?

                     MR. HARPER:   That's correct,  Your Honor.

                     THE COURT:   Okay.  And in it,  the District Court

          itself said that the relevant facts were all conceded;     there

          were no factual issues.    So, why was all this relevant in this

          case?   What role was it playing?

                     MR. HARPER:   The reason I think he felt the purpose

          of setting out this record is to inform -- answer the question

          why should we provide this notice?     I don't think it's

          necessary for -- he didn't need to make --

                     THE COURT:   But why is it -- why is it -- why does

          the accusation of the Anglo-centricism have anything to do

          with whether notice should be provided?

                     MR. HARPER:   I think he was painting a picture

                                  Do you understand my question?

                                   I do understand it.

                                  I mean,   the District Court actually said

                                 we're talking about the 23(b)    order.

                                  appears,  right?

                                   This is correct.

                                  Or,  23(d)  order.  That's where all this

JAD

appears.

notified

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


JAD                                                                        69

     1    regarding -- Your Honor,   regarding the context --

     2               THE COURT:   Well, isn't it just a very simple

     3    question.   Is the data sufficiently inaccurate to require

     4    notice?   It's just a factual question.    What difference does

     5    it make how anybody behaved in the past?

     6               MR. HARPER:   Actually,  Your Honor, that question was

     7    not before the Court.    That question was not before the Court

     8    because the government had waived it.

     9               THE COURT:   Well, I don't think you want to go back

    10    to that issue.

    11               MR. HARPER:   But the question that was before the

    12    Court is whether he should exercise his broad discretion under

    13    Rule 23(d)  to enter this type of order.    And by explanation of

    14    why he was doing it,   he was setting forth the record of the

    15    case to demonstrate that in this circumstance this kind of

    16    order is the most modest relief that he should enter because

    17    it has to inform the class members -- class-wide notice -- why

    18    are you telling them this?    He's saying that because of this

    19    odious record,  and it's this reprehensible conduct both in the

    20    litigation and how they managed the trust.

    21               THE COURT:   So, your basic position then is that all

    22    of these statements are supported by record evidence,     end of

    23    case,  right?

    24               MR. HARPER:   We have two points,  Your Honor.

    25    There's nothing extrajudicial and as you pointed out earlier,


JAD                                                                        70

     1    like he says that it have -- it essentially -- if it happens

     2    in the proceedings of the case,    even if it's harsh

     3    conclusions,  even if it's harsh words,   that is not sufficient

     4    for bias under 455(a)   and the Microsoft --

     5               THE COURT:   Yeah, but what about my second point?

     6               MR. HARPER:   Pardon me?

     7               THE COURT:   What about my question,  which is that I

     8    think it's your position is that all of these statements are

     9    supported by the record?

    10               MR. HARPER:   They are indeed,  Your Honor.

    11               THE COURT:   Now,  suppose we were to disagree with

    12    you about that?

    13               MR. HARPER:   Well, I think even if you were to

    14    disagree with us that all the record evidence -- that all the

    15    holdings,  all the findings that the Judge made --

    16               (Recording ends abruptly.)

    17

    18

    19

    20

    21

    22

    23

    24

    25


                           CERTIFICATE

          I certify that the foregoing is a correct

transcription of the electronic sound recording of the

proceedings in the above-entitled matter.


     Judith A.  Downey                         Date

   DEPOSITION SERVICES,  INC.