UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

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__________________________ ) In re BLACK FARMERS ) Misc. No. 08

- 0511 (PLF) DISCRIMINATION LITIGATION )

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__________________________ )

MEMORANDUM OPINION AND ORDER
This matter is before the Court on an appeal [Dkt. No. 505] by the Black B elt Justice Center (“BBJC”) of C lass C ounsel’s second review recommendation to deny the BBJC’s
Phase I cy pres application. The BBJC asks the Court to set aside the second review
recommendation of Lead Class Counsel and to authorize full cy pres Phase I grant funding to the BBJC in the amount of $400,000.

The BBJC’s Phase I cy pres application was first denied on January 10, 2 018,
when the Court issued a Memorandum Opinion (“Mem. Op.”) [Dkt. No. 501] and Order [Dkt. No. 500] granting L ead C lass C ounsel’s motion [Dkt. No. 496] to designate cy pres beneficiaries and to approve partial distribution of cy pres funds pursuant to the S ettlement A greement. The Court’s Memorandum Opinion and Order approved Class C ounsel’s proposal to distribute $4,108,000 to twenty

- five non

- profit organizations selected as Phase I grantees under Section
V.E.1 3 (b) of the S ettlement A greement. See Me m. Op. at 1. In its Memorandum Opinion, the Court explained that it had received an informal objection to Class C ounsel’s proposal from the BBJC, an organization that C lass C ounsel did not recommend receive funding as part of Phase I.
See id . at 1

- 2. Th e Court r eiterated its confidence in C la ss C ounsel’s vetting process and, u pon finding C lass C ounsel’s recommendations reasonable, the Court concluded that it would not unde rtake a de novo review of Class Counsel’s determinations. It granted C lass C ounsel’s2

motion to designate the beneficiaries recommended by C lass C ounsel as the Phase I grantees

. See id . at 2. In the same Memorandum Opinion, the Court nevertheless directed C lass C ounsel

t o undertake a second review of the BBJC’s application to det ermine whether it might be eligible
for Phase I funding despite Class C ounsel’s initial recommendation. See Mem. Op. at 2. After

c onducting a second review of the BBJC’s application for Phase I cy pres f u nding, C lass C ounsel confirmed its original findin gs: (1) the BBJC is ineligible under the terms of the Settlement Agreement to receive Phase I cy pres funds because it is primarily a “legal services entity” and (2) “even if the [BBJC] were eligible to receive Phase I cy pres funds, the particular program proposal by the [BBJC] is no t a program that . . . should receive Phase I cy pres funds.” See Response of Class Counsel to January 10, 2018 Order [Dkt. No. 504].

Following Class C ounsel’s second review, the BBJC filed an a ppeal (“BBJC Appeal”) [Dkt. No. 505] of C lass C ounsel’s second revie w recommendation , alleging that C lass
C ounsel “failed to adequately explain to the Court why the [BBJC] falls beyond the scope of Cy Pres I funding

. ” See BBJC Appeal at 1. The Court subs equently ordered [Dkt. No. 506] C lass
C ounsel and the government to respond to the BBJC’s appeal. Class C ounsel filed its response (“Class Counsel Response to BBJC Appeal ”) o n April 13, 2018 [Dkt. No. 507]; the G overnment submitted a response (“Gov. Response”) on April 27, 2018 [ Dkt. No. 508] ; and the BBJC file d
its reply (“BBJC Reply”) on May 17, 2018 [Dkt. No. 509]. The BBJC has asked the Court to set aside Class Counsel’s second review recommendation and authorize full funding for the BBJC ’s proposed project under Phase I of the cy pres funds disbursement. See BBJC Appeal at 7.

The Court has already ruled that it would enforce the cy pres provis ion of the Settlement Agreement as modified. See Apr il 8, 2016 Me m orandum Opinion & Order (“Apr. 8,3

2016 Mem. Op. & Order”) [Dkt. No. 458]; s ee also Klier v. Elf Atochem N. Am. , Inc. , 658 F.3d 468, 475

- 76 (9th Cir. 2011) (“[W]hile the settlement agreement must gain the approval of the district judge, once approved its terms must be followed by the court and the parties alike. The district judge must abide the provisions of the settlement agreement, reading it to effectuate the goals of the litigation.”). In relevant part, Section V.E.13 of the amended Settlement Agreement provides that:
Clas s Counsel may . . . move the Court to designate ‘Cy Pres

Beneficiaries’ and propose an allocation of the available cy pres funds among such proposed Cy Pres Beneficiaries. A Cy Pres Beneficiary must be

. . . (b) a tax

- exempt non

- profit organization, other than a law firm, legal services entity, or educational institution, that is providing agricultural, business assistance, or advocacy services, including assistance under Pigford and the Consolidated Case, to African American farmers . . .

. Following any payment to a Subparagraph (a) Beneficiary, the Court shall designate the Subparagraph (b) Cy Pres Beneficiaries and determine how much of the available cy pres funds each such beneficiary shall receive.
See April 7, 2014 Order at 2 [Dkt. No. 405] ; September 3 , 2015 Memorandum Opinion & Order [Dkt. No. 430]

. 1 In initially deciding to enforce these terms, the Court ordered C lass C ounsel to “identify [] potential cy pres beneficiaries as contemplated by Section V.E.13, giving thought to how the process can (1) be as transparent as possible, and (2) involve the parties and the Court or

1 The Court notes that pursuant to the c ourt o rder issued on August 27, 2013, the quoted text should have been renumbered as “ Section V.E.14 ” of the Settlement Agreement, and separate text should have replaced this language as “ Section V.E.13. ” See Aug. 27, 2013 Order [Dkt. No. 381]. Despite this order , the parties and the Court h ave continued to reference the excerpted language as “ Section V .E.13. ” See , e.g. , April 8, 2016 Mem. Op. & Order [Dkt. No. 458]; Plaintiffs’ Motion to Fu r ther Modify Order and Judgement [Dkt. No. 485]. In an effort to avoid confusion and to remain consistent with the parties’ papers in this matter, see Motion to Designate Cy Pres Beneficiaries [Dkt. No. 496], the Court will continue to refer to the original Section V.E.13 of the Settlement Agreement [Dkt. No. 170

- 2] related to cy pres distribution , with its amended language, as “ Section V.E.13. ” The ot her section that was designated as
“ Section V.E.13 ” pursuant to the c ourt o rder of August 27, 2013 [Dkt. No. 381] will continue to be referenced as Section V.E.13, as well.4

its designated agents in assuring that the necessary due diligence is done with respect to the background and appropriateness of potential cy pres beneficiaries.” See Apr . 8, 2016 Mem. Op.
& Order. Th e question before the Court now, therefore, is whether it should reverse C lass
Co unsel’s designation of some grant applicants as beneficiaries, while excluding others

– and in particular, its decision not to recommend the BBJ C for Phase I cy pres funding.

C lass C ounsel has determined that the BBJC is ineligible as a Phase I beneficiary
under the express terms of Section V.E.13 of the Settlement Agre ement

. Section V.E.13 of the Settlement Agreement excludes “law firm[s], legal ser v ices entit[ies], or educational institution[s] ” from eligibility as Section V.E.13(b) cy pres bene ficiaries

. See April 7, 2014
Order at 2 . Based on the information presented in the BB J C ’s funding application and on its website, C lass C ounsel concluded that the “BBJC had failed to demonstrate that its principal purpose was something other than the provision of legal services.” See Class Counsel Response to BBJC Appeal at 3

. 2

C lass C ounsel further concluded that even if the BBJC were a n eligible institution, the BBJC’s proposed project was not suitable for funding because it did not match the priorities that C lass C ounsel had identified for Phase I. See Class Counsel Response to BBJC Appeal at 4

. Specifically, with limited Phase I fun ds available, C lass C ounsel aimed to “stabilize and/or grow the capacity of nonprofit organizations . . . rather than to fund new programs or initiatives.” See id

. at 4; see also Request for Proposal

– Grant Application Form, Ex. A at 21 [Dkt. No. 496

- 1]

. Class C ounsel also explained that it had recommended to applicants that “the

2 In its response, the g overnment explained that “[c]onsistent with the terms of the Settlement Agreement, the government plays no role in Class Counsel’s review of applications for designation as a cy pres beneficiary.” See Gov. Response at 2. The government nonetheless agreed that the BBJC’s “self

- identification as a ‘legal and advocacy nonprofit organization’ is a sufficient basis to conclude that the organization is ineligible for cy pres funds under the Settlement Agreement.” See id

.5

maximum funding request for project support [should] not exceed one

- third of the annual project budget or projected annual project (for a new project) per year for two years.” See Class Counsel Response to BBJC Appeal at 4 , 6 ; see also Request for Proposal

– Grant Application Form, Ex. A at 4 [Dkt. No. 496

- 1]

. The BBJC , however, proposed a new initiative and requested tha t it receive 100% of the project’s budget through Pha se I funding. With respect to its due diligence responsibilities, Class C ounsel also expressed concerns about the financial capability of the
BB J C , pointing to the fact that the BBJC had approximately $980 in total assets as of December 31, 2016 and earned approximately $26,670 in total income between January 1, 2015 and December 31, 2017. See Class Counsel Response to BBJC Appeal at 6. Class Counsel further
noted that the BBJC was unable to comply with C lass C ounsel’s informational requests, explai ning that “[d]ue to financial hardships, the BBJC has never achieved an actualized fully funded budget.” See id . at 6.

Lastly, i n reviewing Phase I applicants, C lass C ounsel considered “the historic work that applicant organizations had done in support of the Pigford and/or In re Black Farmers
Discrimination cases.” See Class Counsel Response to BBJC Appeal at 5. Class C ounsel concluded that “unlike virtually all of the other organizations applying for Phase I funding, [the BBJC] had no involvement in and provided no support for the Pigford case.” See id . at 6

- 7. Any work that the BBJC’s Executive Director, Tracy Lloyd McCurty, or its Deputy Director, Dania Davy, contributed to the In Re Black Farmers Discrimination cases was performed in their
in dividual capacit ies or on behalf of another non

- prof it organization, not in the course of their leadership of the BBJC. See id . at 7 ; see also BBJC Reply at 2

- 4

.

The BBJC asserts that it is an eligible recipient under the terms of the Settlement Agreement and that its proposed proj ect should qualify for funding. First, the BBJC disputes6

Class Counsel’s determination that the BBJC is primarily a legal service entity. See BBJC Appeal a t 2. It explains that it has never received funding from the Legal Services Corporation,
and while it does “provide [] a range of legal services to African American farmers, landowners, and cooperatives, the nonprofit organization also provides a range of effective business assistance and advocacy services.” See id

. at 2

- 3. The BBJC further contends that it meets the
criteria described on C lass C ounsel’s website, which explain ed that “ o rganizations that provide eligible legal services/educational services as part of their work but are not law firms, legal service entities, or educational institutions may be eligible for Cy Pres Phase I grants.” See id

. at 3 (quoting Response No. 13 of the Frequently Asked Questions , I N RE B LACK F ARMERS
D ISCRIMINATION L ITIGATION S ETTLEMENT , https://www.blackfarmercase.com/cypres.aspx (last visited Dec. 4, 2018 ) ) ; see also BBJC Reply at 4

- 7.

Second , the BBJC maintains that the project proposal it submitted

– entitled “Dirt Rich: Preserving Black Family Land Initiative, a five

- pill ar approach to preserving Black

- owned farmlands and ensuring land access for next generation farmers ”

– complies with the cy pres project funding requirements

. See BBJC Appeal at 4

- 5

. 3 T he BBJC explains that its project proposal matches a description of advocacy services eligible for funding listed on C lass
C ounsel’s website, which “include, but are not limited to . . . legal service projects.” See id

. at 5 (quoting Response No. 9 of the Frequently Asked Questions , I N RE B LACK F ARMERS

3 The BBJC’s project proposal, “Dirt Rich: Preserving Black Family Land Initiative,” outlines a five

- pillar approach: “(1) pro bono curative legal services for farmers farming on heir property (i.e., probate, clearing title, land trusts and limited liability legal formations, etc.); (2) technical assistance for heir property landowners who aspire to farm on their family lands; (3) multi

- state community workshops and legal trainings (including curricula development); (4) advocacy regarding the efficacy of the Uniform Partition of Heirs Property Act as well as access to non

- extractive capital for farmers of heir property who desire to exercise their rights of first refusal; and (5) establishment of a multi

- state regenerative land stewardship database to connect landless next generation farmers with retiring elder farmers and/or absentee heir property landowners.” See BBJC Appeal at 5

- 6.7

D ISCRIMINATION L ITIGATION S ETTLEMENT , https://www.blackfarmercase.com/cypres.aspx (last visited Dec. 4, 2018))

. The BBJC also contends that its inability to submit an annual o perating budget can be attributed to funding cuts to historic federal agricultural programs that have caused financial hardship for “many African America

- led rural community

- based nonprofit organizations.” See BBJC Reply at 8. Moreover, the BBJC argues t hat C lass C ounsel selectively omitted financial information that shows that the BBJC received a large grant from a
different source in 2017 and failed to consider the BBJC’s alternative funding proposal that did not require 100% Phase I cy pres funding. See id . at 7.

The Court concludes that C lass C ounsel’s decision not to recommend the BBJ C
for Phase I cy pres funding is not unreasonable. The Court ’s role is to “assur[e] that the necessary due diligence is done with respect to the background and appro priateness of potential
cy pres beneficiaries, ” not to personally involve itself directly in the selection of cy pres beneficiaries. See Apr. 8, 2016 Mem. Op. & Order at 1. Class C ounsel has given adequate and reasoned explanations for its decision to in clude the BBJC among the 13 organizations not recommended for Phase I funding. See Class Counsel Response to BBJC Appeal at 4. Class
C ounsel has undertaken a careful review of the BBJC’s eligibility and project proposal

– not once, but twice

– and come to the same conclusion. An organization that meets the criteria
outlined in the Frequently Asked Questions on C lass C ounsel’s website is not g uaranteed to be selected by C lass C ounsel as a benefi ciary, nor does that fact obligate C lass C ounsel to so decide. As C lass C ounsel explains, 39 applicants applied for Phase I cy pres grants and only 26 received funding. See id . at 4. Phase I cy pres funding was limited to approximately $4 million of the $12 million cy pres funds available in this Settle ment, the remainder to be awarded later in
Phase II. See id

. at 4. Class C ounsel was tasked with evaluating gra nt applications, and it8

decided not to recommend the BBJC as a grantee pursuant to criteria set for th in the Settlement Agreement and in subsequent court orders and consistent with Class Counsel’s own reasonable
criteria used to prioritize the distribution of Phase I’s limited funds

. The Court defers to and
affirms C lass C ounsel’s determination to deny the BBJC Phase I cy pres funding

. Accordingly, it is hereby
ORDERED that the BBJC’s Appeal of Class Counsel’s Second Review
Recommendation [Dkt. No. 505] is DENIED.

SO ORDERED.

/s/ PAUL L. FRIEDMAN United States District Judge DATE: December 7, 2018