Court Opinion

ID: 4348562
Source: CourtListenerOpinion
Date Created: 2018-12-07 21:00:57.467042+00
Date Added: 2024-06-11T14:21:32.874459
License: Public Domain

UNITED STATES DISTRICT COURT
                            FOR THE DISTRICT OF COLUMBIA

____________________________________
                                    )
In re BLACK FARMERS                 )               Misc. No. 08-0511 (PLF)
DISCRIMINATION LITIGATION           )
____________________________________)

                          MEMORANDUM OPINION AND ORDER

               This matter is before the Court on an appeal [Dkt. No. 505] by the Black Belt

Justice Center (“BBJC”) of Class Counsel’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, 2018,

when the Court issued a Memorandum Opinion (“Mem. Op.”) [Dkt. No. 501] and Order [Dkt.

No. 500] granting Lead Class Counsel’s motion [Dkt. No. 496] to designate cy pres beneficiaries

and to approve partial distribution of cy pres funds pursuant to the Settlement Agreement. The

Court’s Memorandum Opinion and Order approved Class Counsel’s proposal to distribute

$4,108,000 to twenty-five non-profit organizations selected as Phase I grantees under Section

V.E.13(b) of the Settlement Agreement. See Mem. Op. at 1. In its Memorandum Opinion, the

Court explained that it had received an informal objection to Class Counsel’s proposal from the

BBJC, an organization that Class Counsel did not recommend receive funding as part of Phase I.

See id. at 1-2. The Court reiterated its confidence in Class Counsel’s vetting process and, upon

finding Class Counsel’s recommendations reasonable, the Court concluded that it would not

undertake a de novo review of Class Counsel’s determinations. It granted Class Counsel’s
motion to designate the beneficiaries recommended by Class Counsel as the Phase I grantees.

See id. at 2.

                In the same Memorandum Opinion, the Court nevertheless directed Class Counsel

to undertake a second review of the BBJC’s application to determine whether it might be eligible

for Phase I funding despite Class Counsel’s initial recommendation. See Mem. Op. at 2. After

conducting a second review of the BBJC’s application for Phase I cy pres funding, Class Counsel

confirmed its original findings: (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 not 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 Counsel’s second review, the BBJC filed an appeal (“BBJC

Appeal”) [Dkt. No. 505] of Class Counsel’s second review recommendation, alleging that Class

Counsel “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 subsequently ordered [Dkt. No. 506] Class

Counsel and the government to respond to the BBJC’s appeal. Class Counsel filed its response

(“Class Counsel Response to BBJC Appeal”) on April 13, 2018 [Dkt. No. 507]; the Government

submitted a response (“Gov. Response”) on April 27, 2018 [Dkt. No. 508]; and the BBJC filed

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 provision of the

Settlement Agreement as modified. See April 8, 2016 Memorandum Opinion & Order (“Apr. 8,

                                                 2
2016 Mem. Op. & Order”) [Dkt. No. 458]; see 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:

                 Class 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 Class Counsel 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 court order 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 have 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 Further 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 other section that was designated as
“Section V.E.13” pursuant to the court order of August 27, 2013 [Dkt. No. 381] will continue to
be referenced as Section V.E.13, as well.
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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. The question before the Court now, therefore, is whether it should reverse Class

Counsel’s designation of some grant applicants as beneficiaries, while excluding others – and in

particular, its decision not to recommend the BBJC for Phase I cy pres funding.

               Class Counsel has determined that the BBJC is ineligible as a Phase I beneficiary

under the express terms of Section V.E.13 of the Settlement Agreement. Section V.E.13 of the

Settlement Agreement excludes “law firm[s], legal services entit[ies], or educational

institution[s]” from eligibility as Section V.E.13(b) cy pres beneficiaries. See April 7, 2014

Order at 2. Based on the information presented in the BBJC’s funding application and on its

website, Class Counsel 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

               Class Counsel further concluded that even if the BBJC were an eligible

institution, the BBJC’s proposed project was not suitable for funding because it did not match the

priorities that Class Counsel had identified for Phase I. See Class Counsel Response to BBJC

Appeal at 4. Specifically, with limited Phase I funds available, Class Counsel 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 Counsel also explained that it had recommended to applicants that “the

       2
                In its response, the government 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.
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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 that it

receive 100% of the project’s budget through Phase I funding. With respect to its due diligence

responsibilities, Class Counsel also expressed concerns about the financial capability of the

BBJC, 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 Class Counsel’s informational requests,

explaining that “[d]ue to financial hardships, the BBJC has never achieved an actualized fully

funded budget.” See id. at 6.

               Lastly, in reviewing Phase I applicants, Class Counsel 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 Counsel

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

individual capacities or on behalf of another non-profit 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 project should qualify for funding. First, the BBJC disputes

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Class Counsel’s determination that the BBJC is primarily a legal service entity. See BBJC

Appeal at 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 Class Counsel’s website, which explained that “organizations 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, IN RE BLACK FARMERS

DISCRIMINATION LITIGATION SETTLEMENT, 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-pillar 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 The BBJC explains that its project

proposal matches a description of advocacy services eligible for funding listed on Class

Counsel’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, IN RE BLACK FARMERS

       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.
                                                  6
DISCRIMINATION LITIGATION SETTLEMENT, https://www.blackfarmercase.com/cypres.aspx (last

visited Dec. 4, 2018)). The BBJC also contends that its inability to submit an annual operating

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 that Class Counsel

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 Class Counsel’s decision not to recommend the BBJC

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 appropriateness 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 Counsel has given adequate and

reasoned explanations for its decision to include the BBJC among the 13 organizations not

recommended for Phase I funding. See Class Counsel Response to BBJC Appeal at 4. Class

Counsel 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 Class Counsel’s website is not guaranteed to be

selected by Class Counsel as a beneficiary, nor does that fact obligate Class Counsel to so

decide. As Class Counsel 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 Settlement, the remainder to be awarded later in

Phase II. See id. at 4. Class Counsel was tasked with evaluating grant applications, and it

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decided not to recommend the BBJC as a grantee pursuant to criteria set forth 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 Class Counsel’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

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