$380M in Unclaimed Keepseagle Settlement Funds Sought by Class

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A plaintiff has urged a D.C. federal court to certify a Class of thousands of Native American ranchers and farmers in a class action lawsuit challenging the distribution of $380 million in unclaimed funds from a racial discrimination settlement with the U.S. Department of Agriculture.

On Feb. 1, William H. Smallwood Jr. filed the class action lawsuit against U.S. Attorney General Loretta Lynch and U.S. Agriculture Secretary Tom Vilsack on behalf of himself and more than 3,600 claimants who were part of the USDA settlement. Last week, he asked the court for Class certification.

The USDA settlement resolved a class action lawsuit (Marilyn Keepseagle v. Tom Vilsack) that was filed in 1999 over the USDA’s allegedly discriminatory practices against Native American ranchers and farmers in administering direct loan and loan servicing program. The plaintiffs sought monetary and equitable relief under the Equal Credit Opportunity Act.

In 2010, a settlement was reached in the Keepseagle class action lawsuit. Under the terms of the class action settlement, claimants were able to choose between Track A payments of $50,000 or Track B payments of up to $250,000. “Both were far below the actual damages suffered by Keepseagle claimants, many of whom lost land that had been held by their families for generations,” Smallwood says in his motion seeking certification of the class action lawsuit.

Of the $680 million Total Compensation Fund established by the Keepseagle class action settlement, more than $380 million was left undistributed, Smallwood alleges.

“Using the Settlement Agreement’s cy pres provisions, Defendants unlawfully agreed to gift these undistributed settlement monies originating from the Judgment Fund as a windfall to corporations and others who were not Keepseagle class members, had no standing, and had no claim against the United States,” Smallwood states.

According to Smallwood, the Dec. 27, 2011 deadline to file claims for the Keepseagle settlement was 180 days after the effective date of the class action settlement, meaning that Class Members who filed claims were unaware of the outcome of the claims process until after the class action lawsuit had been dismissed and their chance to appeal the case had already passed. “In fact, the case was dismissed and over before any Keepseagle claimant received any payment,” Smallwood states.

Smallwood’s class action lawsuit seeks the distribution of $380 million in unclaimed funds to the Class Members whose claims were previously approved and paid from the Keepseagle settlement.

In July, a federal judge rejected proposals about how to distribute the unclaimed funds, stating he was unable to modify the settlement terms without consensus among the parties. More information about the status of the Keepseagle class action settlement is available at www.IndianFarmClass.com.

Smallwood is represented by William A. Sherman, Reed D. Rubinstein and James W. Morrison of Dinsmore & Shohl LLP.

The Keepseagle Settlement Fund Distribution Class Action Lawsuit is Smallwood v. Lynch, et al., Case No. 1:16-cv-00161, in the U.S. District Court for the District of Columbia.