Fletcher v. United States ( 2020 )

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT February 14, 2020
_________________________________
Christopher M. Wolpert
Clerk of Court
WILLIAM S. FLETCHER, individually
and on behalf of all others similarly
situated; TARA DAMRON, individually
and on behalf of all others similarly
situated,
Plaintiffs - Appellants,
No. 19-5023
v. (D.C. No. 4:02-CV-00427-GKF-JFJ)
(N.D. Okla.)
THE UNITED STATES OF AMERICA;
DEPARTMENT OF INTERIOR; DAVID
BERNHARDT, in his official capacity as
Acting Secretary of the U.S. Department of
the Interior; BUREAU OF INDIAN
AFFAIRS; TARA KATUK MACLEAN
SWEENEY, in her official capacity as
Assistant Secretary for Indian Affairs,
Defendants - Appellees.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before HARTZ, BALDOCK, and EID, Circuit Judges.
_________________________________
After fifteen years of litigation and three appeals to this Court, Plaintiffs
obtained an order in the district court requiring the Government to provide an
accounting of distributions from the Osage Mineral Estate. Although the district court
*
This order and judgment is not binding precedent, except under the doctrines of law
of the case, res judicata, and collateral estoppel. It may be cited, however, for its
persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
determined Plaintiffs were the prevailing parties, the court denied Plaintiffs’ motion
for attorney fees under the Equal Access to Justice Act (“EAJA”) because (1) Plaintiffs
had not “incurred” attorney fees, and (2) the Government’s position was substantially
justified. This appeal follows. Exercising jurisdiction under 28 U.S.C. § 1291, we
affirm.
***
In 1872, Congress established a reservation for the Osage Tribe in what is now
Osage County, Oklahoma. In the early 1900s, deposits of oil, gas, coal, and other
minerals were found on the reservation. In light of this discovery, Congress enacted
the Osage Allotment Act of 1906, which placed the reservation’s mineral estate in a
trust for the Osage Tribe with the Government as the trustee. The Act charged the
Secretary of the Interior with distributing royalties to Osage tribal members whose
names were recorded on an official roll. These royalty interests are known as
headrights. Initially, Osage tribal members transferred their headrights to people
outside the Osage Tribe, but Congress later amended the Act to prohibit that practice.
The Act also requires the Secretary of the Interior to provide an accounting for the
daily and annual balance of all funds held in the trust. 25 U.S.C. § 4011(a).
Plaintiffs are a certified class of Osage tribal members who own headrights.
Plaintiffs initiated this suit in 2002 and alleged: (1) the Government violated Plaintiffs’
right to political association and participation in the Osage government; (2) the
Government breached its trust responsibilities under the Osage Allotment Act by (a)
eliminating Plaintiffs’ right to participate or vote in Osage tribal elections and (b)
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allowing headrights to be alienated to persons who are not members of the Osage Tribe;
(3) the Government’s failure to manage the tribe’s assets, coupled with the alienation
of headrights to persons who are not Osage Indians, constituted a Fifth Amendment
taking; and (4) the Government’s actions with respect to Osage Tribal elections
constituted illegal agency action. Notably, Plaintiffs did not seek an accounting at that
time. The Government moved to dismiss the complaint for failure to join the Osage
Tribal Council, an indispensable party. The district court granted the motion and
dismissed the case.
Plaintiffs abandoned their voting rights claims on appeal and pursued only the
breach of trust and takings claims. Because the district court did not address whether
the Osage Tribal Council was an indispensable party as to those claims, we remanded
for further proceedings. In April 2006, on remand from this Court, Plaintiffs filed their
first amended complaint. Therein, Plaintiffs alleged: (1) the Government breached its
statutory trust responsibilities by (a) wrongfully distributing royalty payments to
persons who are not Osage Indians and (b) failing to account for trust funds; (2) the
Government’s failure to properly manage the tribe’s trust account and funds, coupled
with the distribution of royalties to persons who are not Osage Indians, constituted a
Fifth Amendment taking; and (3) the Government’s administrative actions, or failures
to act, were not in accordance with the law and were contrary to Plaintiffs’ property
rights.
Thereafter, the Government moved to dismiss Plaintiffs’ first amended
complaint for (1) failure to join other necessary and indispensable parties, including
3
the Osage Nation and non-Osage headright owners, and (2) failure to challenge a
specific agency action within the applicable statute of limitations. The district court
granted the motion in part and ordered Plaintiffs to file a second amended complaint
adding all non-Osage headright owners and identifying the challenged agency actions
or inactions. Following the court’s order, Plaintiffs filed a second amended complaint
joining approximately 1,700 non-Osage headright owners. Plaintiffs failed, however,
to identify the challenged agency action or inaction. As a result, the court directed
Plaintiffs to file a third amended complaint.
On May 6, 2010, Plaintiffs filed their third amended complaint. Therein,
Plaintiffs alleged substantially the same claims presented in the first amended
complaint. As the district court summarized, each of the three claims for relief
contained two central elements: (1) that the Government had “improperly paid royalties
to non-Osage persons and entities”; and (2) that the Government had “failed to provide
a required accounting and audits.” Fletcher v. United States, No. 02-CV-427-GKF-
FHM, 2012 WL 1109090, at *4 (N.D. Okla. Mar. 31, 2012). Thus, the claims centered
around the Government’s misdistribution of royalties (the “misdistribution claims”)
and failure to account (the “accounting claims”).
Once joined in the third amended complaint, many of the non-Osage headright
owners filed motions to dismiss. The district court granted one of these motions filed
by non-Osage headright owner Ben T. Benedum. In doing so, the court rejected
Plaintiffs’ overarching legal argument that the Osage Allotment Act, in and of itself,
precludes non-Osage persons from receiving royalties from the Osage Mineral Estate.
4
The court recognized that “perhaps, after an accounting has been completed, plaintiffs
will be able to show that [Mr.] Benedum is not entitled to a headright interest.” But as
it stood, Plaintiffs were unable to allege Mr. Benedum’s headright interest was
obtained unlawfully. On that basis, the district court dismissed Mr. Benedum and the
remaining non-Osage headright owners from the litigation.
Thereafter, the Government filed its motion to dismiss. The Government argued
Plaintiffs’ misdistribution claims must be dismissed for: (1) failure to state a claim; (2)
lack of subject matter jurisdiction; and (3) failure to identify a specific final agency
action for judicial review. The district court agreed and dismissed the misdistribution
claims for the same reasons that it dismissed the non-Osage headright owners. That
is, the district court held Plaintiffs did not plead any specific facts supporting their
allegation that any headright was transferred illegally. Having already disclaimed the
general legal proposition that the Osage Allotment Act precludes non-Osage persons
from receiving royalties, the court held Plaintiffs’ misdistribution claims were purely
speculative and dismissed them without prejudice.
The Government further argued the accounting claims must be dismissed
because (1) there is no trust relationship between the Government and headright
owners and (2) the statutes upon which Plaintiffs premised their relief did not afford
them a right to an accounting. The district court rejected the argument that the
Government did not have a trust relationship with headright owners but held Plaintiffs
did not identify a statutory right to an accounting. Accordingly, the district court also
dismissed the accounting claims.
5
Plaintiffs appealed the dismissal of the accounting claims only—apparently
realizing they could not prevail on their misdistribution claims until after they received
an accounting. See Aplt. Opening Br. at 31–32. We reversed the district court’s order
and held Plaintiffs are entitled to an accounting under 25 U.S.C. §.4011(a). Fletcher
v. United States, 730 F.3d 1206, 1209 (10th Cir. 2013). On remand, the district court
ordered the Government to provide an accounting running from the first quarter of
2002. Plaintiffs then filed a Rule 59(e) motion to alter or amend the judgment
requesting (1) a more detailed accounting and (2) to expand the time frame of the
accounting back to 1906. The district court denied Plaintiffs’ request, and again,
Plaintiffs appealed. We affirmed the district court and acknowledged that “even if a
more detailed accounting might uncover additional evidence of misdistribution, the
increased expense to do so is not justified.” Fletcher v. United States, 854 F.3d 1201,
1207 (10th Cir. 2017).
Having reached the end of this fifteen-year litigation, Plaintiffs filed a motion
for attorney fees and costs under the EAJA. The district court awarded Plaintiffs costs
in the amount of $34,839.61. The district court declined to award fees, however,
because Plaintiffs did not incur any attorney fees, and even if they did, the
Government’s position was substantially justified. This appeal followed. Because we
agree that the Government’s position was substantially justified, we do not reach the
other issues presented on appeal.
***
6
Under the EAJA, “a court shall award to a prevailing party other than the United
States fees and expenses . . . incurred by that party . . . unless the court finds that the
position of the United States was substantially justified or that special circumstances
make an award unjust.” 28 U.S.C. § 2412(d)(1)(A). Relevant to our analysis is
whether the Government’s position was substantially justified.
A position is substantially justified if it has “a reasonable basis in both law and
fact.” Pierce v. Underwood, 487 U.S. 552, 565 (1988); see also Hackett v. Barnhart,
475 F.3d 1166, 1172 (10th Cir. 2007). Because substantial justification is a question
of reasonableness, the Government’s position can be justified even if it is not correct.
Madron v. Astrue, 646 F.3d 1255, 1257 (10th Cir. 2011). To determine whether the
government’s position was substantially justified, courts must look at the “totality of
the circumstances, as reflected in the record before the court.” United States v. Charles
Gyurman Land & Cattle Co., 836 F.2d 480, 485 (10th Cir. 1987). “While the parties’
postures on individual matters may be more or less justified,” courts are to treat the
case “as an inclusive whole, rather than atomized line-items.” Commissioner, I.N.S. v.
Jean, 496 U.S. 154, 161–62 (1990).
The government bears the burden of proof to show its position was substantially
justified. Hackett, 475 F.3d at 1172. We review the district court’s decision on
substantial justification for an abuse of discretion. Id. “An abuse of discretion occurs
when the district court bases its ruling on an erroneous conclusion of law or relies on
clearly erroneous fact findings.” Id. (quoting Kiowa Indian Tribe of Okla. v. Hoover,
150 F.3d 1163, 1165 (10th Cir. 1998)).
7
***
In this case, the district court conducted a thorough analysis of this fifteen-year
litigation and applied the above-mentioned law before concluding the Government’s
position, as a whole, was substantially justified. Finding no error of law or clearly
erroneous factual findings, we conclude the district court did not abuse its discretion
in so holding.
As the district court noted in its order, Plaintiffs’ claims can reasonably be
grouped into three distinct categories—(1) voting rights claims; (2) misdistribution
claims; and (3) accounting claims.1 Turning first to the voting rights claims, the district
found the Government’s position was substantially justified. We agree. The
Government moved to dismiss the voting rights claims for failure to join the Osage
Tribal Council, and the district court granted the motion. Plaintiffs did not appeal the
decision because, in the interim, Congress passed the Reaffirmation of Certain Rights
of the Osage Tribe, which afforded Plaintiffs the relief they were seeking. While
Plaintiffs ultimately obtained the relief they sought with respect to the voting rights
1
Plaintiffs suggest the district court inappropriately “atomized” the claims by
separating them into these three categories and then evaluating the Government’s
position on each. We are not persuaded. The district court analyzed the Government’s
position on each individual claim as a means of evaluating whether the Government’s
position was substantially justified overall, looking at the progression of the litigation
as well as the relative importance of the claims. This does not constitute a
misapplication of the law. Also, in so far as Plaintiffs are suggesting they could obtain
EAJA relief by treating the accounting claims as an action separate from the others,
this argument is undercut by the fact that Plaintiffs failed to comply with the district
court’s order “requiring the identification, attribution, and separation of attorneys’ fees
and costs in relation to the claim on which plaintiffs prevailed.”
8
claims, it was not through this litigation. In fact, Plaintiffs’ voting rights claims had
been unsuccessfully litigated in two prior cases. See Fletcher v. United States, 160 F.
App’x 792, 793 n.1 (10th Cir. 2005) (unpublished) (citing Fletcher v. United States,
116 F.3d 1315 (10th Cir. 1997) and Logan v. Andrus, 640 F.2d 269 (10th Cir. 1981)).
Thus, it seems reasonable the Government would continue to contest these claims. In
any event, the Government was substantially justified in moving to dismiss the claims
for failure to join an indispensable party.
With respect to the misdistribution claims, the district court found the
Government’s position was again substantially justified. And again, we agree.
Initially, the Government moved to dismiss the misdistribution claims for (1) failure
to join the Osage Nation and non-Osage headright owners and (2) failure to challenge
a specific agency action within the applicable statute of limitations. The Government
prevailed on its motion in part, and the district court ordered Plaintiffs to join all non-
Osage headright owners. The district court further ordered Plaintiffs to file an amended
complaint challenging a specific agency action. Plaintiffs’ second amended complaint
joined the non-Osage headright owners but again failed to identify the challenged
agency action. As a result, the district court ordered Plaintiffs to file a third amended
complaint.
Ultimately, the Government moved to dismiss the misdistribution claims in the
third amended complaint because Plaintiffs’ “overarching legal argument” that non-
Osage persons cannot receive royalties from the Osage Mineral Estate is incorrect as a
matter of law. The district court agreed and dismissed the misdistribution claims
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without prejudice. Plaintiffs argue they did not appeal this claim because they need an
accounting to successfully challenge any misdistribution. While Plaintiffs may well
re-litigate the misdistribution claims if the accounting shows the Government illegally
distributed royalties to non-Osage persons, what may come of this hypothetical
litigation is yet to be seen. In this action, however, the Government took a substantially
justified position and successfully challenged the legal basis for Plaintiffs’
misdistribution claims.
Finally, with respect to the accounting claims, the district court found that the
Government’s position on Plaintiffs’ right to an accounting was not substantially
justified. The Government’s position with respect to the scope of the accounting,
however, was substantially justified. We conclude the district court did not abuse its
discretion in so holding.
Even though Plaintiffs prevailed on the merits of their accounting claims,
Plaintiffs did not prevail on the scope of the accounting awarded. After we remanded
Plaintiffs’ accounting claims, the district court ordered the Government to provide an
accounting running from the first quarter of 2002. Plaintiffs filed a motion to alter or
amend the judgment and requested an accounting dating back to 1906. The district
court denied the motion, and Plaintiffs appealed. We affirmed and held “Plaintiffs are
not entitled to information that is unlikely to have a meaningful effect on their
beneficial interests.” Fletcher, 854 F.3d at 1207. As the district court concluded, the
Government’s position in this last portion of litigation was substantially justified.
10
In sum, the Government’s position was substantially justified with respect to the
voting rights claims, the misdistribution claims, and the scope of the accounting claims.
The Government’s position was not substantially justified with respect to the merits of
the accounting claims. As the district court acknowledged, however, we must put this
claim-by-claim analysis together to determine whether the Government’s position was
substantially justified under the totality of the circumstances. The district court found
that it was, and we agree.2
Under the abuse of discretion standard, Plaintiffs bear the burden of showing
the district court’s decision fell beyond “the bounds of the rationally available choices
. . . given the facts and applicable law in the case at hand.” Madron, 646 F.3d at 1257(quoting Valley Forge Ins. Co. v. Health Care Mgmt., 616 F.3d 1086, 1096 (10th Cir.
2010)). While Plaintiffs raise several alleged errors, none persuade us that the district
court abused its discretion in finding the Government’s position was substantially
2
In so holding, the district court found the accounting claims were “subordinate to and
in furtherance of the claim that the government had wrongfully distributed royalty
payments to persons who were not Osage Indians.” Fletcher v. United States, Case
No. 02-CV-427-GKF-JFJ, 2019 WL 763587, at *12 (N.D. Okla. Feb. 21, 2019). While
Plaintiffs contest this finding, it is not clearly erroneous. Both the second and third
amended complaints request an accounting to determine whether royalties have “been
distributed only to Osage Indians (and their heirs)” as required by the Osage Allotment
Act. Moreover, Plaintiffs maintained in multiple proceedings that the accounting
claims were merely a means to later sue for misdistribution. Fletcher, 854 F.3d at 1205
(noting that Plaintiffs “ultimately hope” to use the accounting “to prove that the
government has sent money to persons ineligible to receive headright shares”) (quoting
Fletcher, 730 F.3d at 1215). Given the considerable discretion we afford the district
court’s factual findings, the determination that the accounting claims were subordinate
to the misdistribution claims does not constitute reversible error.
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justified.3 Accordingly, the district court must be affirmed. Because the Government’s
position was substantially justified, we do not reach the other issues presented on
appeal.
***
For the reasons provided herein, the district court is AFFIRMED.
Entered for the Court
Bobby R. Baldock
Circuit Judge
3
In addition to Plaintiffs’ other arguments addressed herein, Plaintiffs make the
following claims of errors. First, Plaintiffs suggest the district court erred by failing
to consider the Government’s “underlying conduct.” In support, Plaintiffs argue the
Government had a clear duty to account prior to and throughout this litigation. Thus,
Plaintiffs suggest that the Government’s underlying conduct—its failure to account—
was not substantially justified. The Government’s position, however, can be
substantially justified even if it is ultimately wrong. Madron, 646 F.3d at 1257.
Accordingly, this argument is without merit. Next, Plaintiffs contend the district court
erred in concluding the Government’s position was substantially justified “based on
the more prominent claims,” i.e., the misdistribution claims. Plaintiffs’ argument
misses the mark. The district court first concluded the Government’s position was
substantially justified based on the totality of the circumstances. The district court
then used its “predominant claims” analysis as an alternative holding. Finally,
Plaintiffs argue the Government misrepresented facts to this Court and engaged in
duplicitous behavior with respect to the accounting claims. Thus, Plaintiffs argue the
Government’s position cannot be substantially justified. Upon an independent review,
we do not believe the Government misrepresented the facts or engaged in duplicitous
behavior, and therefore, this argument is without merit.
12