Joyce Loudner v. United States , 108 F.3d 896 ( 1997 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
_____________
No. 95-3795SD
_____________
Joyce Loudner; Paul Harrison; *
Ambrose McBride; Chauncey Long *
Crow; Della Lytle; Hilda Long *
Crow; Lisa Redwing; Horace *
Gilbert Slow; Dorothy Slow; *
Darlene Fallis Jones; Lyle *
Medicine Crow; Ramona Estes; *
Fay Jandreau; and * On Appeal from the United
Norman V. Taylor, * States District Court
* for the District of
Appellants, * South Dakota.
*
v. *
*
*
United States of America and *
Bruce Babbitt, *
*
Appellees. *
___________
Submitted: October 23, 1996
Filed: March 13, 1997
___________
Before RICHARD S. ARNOLD, Chief Judge, FLOYD R. GIBSON and MORRIS
SHEPPARD ARNOLD, Circuit Judges.
___________
RICHARD S. ARNOLD, Chief Judge.
Plaintiffs seek to claim their share of a judgment fund
created by Congress to satisfy the federal government's obligations
to the descendants of the Sisseton-Wahpeton Sioux Tribe. The
District Court held that their claims are barred by the six-year
statute of limitations in 28 U.S.C. § 2401(a) and dismissed their
complaint for want of subject-matter jurisdiction under Federal
Rule of Civil Procedure 12(b)(1). Because the plaintiff's claims
did not accrue until they had reason to know of the existence of
the judgment fund and how it would be distributed, we hold that
their claims are not time-barred, reverse the decision of the
District Court, and remand for further proceedings.
I.
In the mid-nineteenth century the United States took almost 30
million acres of land from the Sisseton-Wahpeton Sioux Tribe
pursuant to treaties, the terms of which the government never
satisfied. During the Civil War, the military put down a Sioux
uprising in Minnesota and forced the dispersal of the Sioux bands,
a majority of whom formed three successor tribes. A large number
of the dispersed Sioux affiliated with other tribes. More than a
century later, the government settled a class action brought by the
three successor tribes of the Sisseton-Wahpetons. In 1968,
Congress appropriated money to satisfy the judgment, and then, in
1972, enacted a plan to distribute what was then a $6,000,000
judgment fund.
It is important to have in mind the precise terms of the
statute that provides for the distribution of this fund. We
therefore set out the statute in full at this point. The relevant
provisions are §§ 201, 202, and 305 of the Act of October 25, 1972,
Pub. L. No. 92-555, 86 Stat. 1169, 1170. These provisions are now
codified as 25 U.S.C. §§ 1300d-3, 1300d-4, and 1300d-9. They read
as follows:
§ 1300d-3. Upper Council Sioux; membership rolls;
applications for enrollment; finality of
determinations
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(a) The Devils Lake Sioux Tribe of North Dakota,
and the Sisseton and Wahpeton Sioux Tribe of South
Dakota, shall bring current their membership rolls of
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October 25, 1972. The Assiniboine and Sioux Tribes of
the Fort Peck Reservation, Montana, shall prepare rolls
of their members who are lineal descendants of the
Sisseton and Wahpeton Mississippi Sioux Tribe, who were
born on or prior to and are living on October 25, 1972,
and who are entitled to enrollment on their respective
membership rolls in accordance with the applicable rules
and regulations of the tribe or group involved, using
available records and rolls at the local agency and area
offices, and any other available records and rolls.
Applications for enrollment must be filed with each group
named in this section and such rolls shall be subject to
approval of the Secretary of the Interior. The
Secretary's determination on all applications for
enrollment shall be final.
(b) The Secretary of the Interior shall prepare a
roll of the lineal descendants of the Sisseton and
Wahpeton Mississippi Sioux Tribe who were born on or
prior to and are living on October 25, 1972, whose names
or the name of a lineal ancestor appears on any available
records and rolls acceptable to the Secretary, and who
are not members of any of the organized groups listed in
subsection (a) of this section. Applications for
enrollment must be filed with the Area Director, Bureau
of Indian Affairs, Aberdeen, South Dakota. The
Secretary's determination on all applications for
enrollment shall be final.
§ 1300d-4. Apportionment of funds
(a) Basis of apportionment
After deducting the amount authorized in section
1300d of this title, the funds derived from the judgment
awarded in Indian Claims Commission docket numbered 142
and the one-half remaining from the amount awarded in
docket numbered 359, plus accrued interest, shall be
apportioned on the basis of reservation residence and
other residence shown on the 1909 McLaughlin annuity
roll, as follows:
Tribe or group Percentage
Devils Lake Sioux of North Dakota ------------- 21.6892
Sisseton-Wahpeton Sioux of South Dakota ------- 42.9730
Assiniboine and Sioux Tribe of the Fort Peck
Reservation, Montana --------------------- 10.3153
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All other Sisseton and Wahpeton Sioux --------- 25.0225
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* * * * * * * *
(c) Per capita distribution to enrollees
The fund allocated to all other Sisseton and
Wahpeton Sioux, . . . shall be distributed per capita to
the persons enrolled on the roll prepared by the
Secretary pursuant to section 1300d-3(b) of this title.
§ 1300d-9. Rules and regulations
The Secretary of the Interior is authorized to
prescribe rules and regulations to carry out the
provisions of this subchapter, including the
establishment of deadlines.
Certain aspects of this plan of distribution need to be kept
in mind. The fund was to be divided into four parts, three of
which were to go to three named organized tribes, or their members:
the Devils Lake Sioux Tribe of North Dakota, the Sisseton and
Wahpeton Sioux Tribe of South Dakota, and the Assiniboine and Sioux
Tribes of the Fort Peck Reservation, Montana. Each of these three
tribes was given the responsibility to prepare membership rolls.
The remainder of the fund, some 25.0225 per cent., was to go to
"the lineal descendants of the Sisseton and Wahpeton Mississippi
Sioux Tribe who were born on or prior to and are living on
October 25, 1972, whose names or the name of a lineal ancestor
appears on any available record and rolls acceptable to the
Secretary, and who are not members of any of the organized groups
listed," § 1300d-3(b), as receiving the first three shares. The
plaintiffs in this case claim that they are members of this last
group, and that they have received nothing. In the case of this
last group, the responsibility of preparing a roll of eligible
persons is placed on the Secretary of the Interior, not on any
tribe. The statute further provides, however, that applications
for enrollment must be filed with the area director of the Bureau
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of Indian Affairs in Aberdeen, South Dakota, and that the Secretary
is authorized to prescribe rules and regulations to carry out the
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statute, "including the establishment of deadlines." Section
1300d-9.
The Secretary in fact did issue regulations on May 25, 1973.
38 Fed. Reg. 13737, codified at 25 C.F.R. § 41.1 (1973), and now
recodified at 25 C.F.R. § 61.4(s)(1995). The regulations
established a deadline of November 1, 1973, a period of about five
months, for persons claiming to be eligible lineal descendants to
file their applications.
The plaintiffs in this case did not file an application by the
deadline fixed in the regulation. The Secretary took various steps
to notify possibly interested persons. These steps will be
detailed later in this opinion.
Many of the plaintiffs in this case live on the Crow Creek
Indian Reservation at Fort Thompson, South Dakota. They claim to
be lineal descendants of the Sisseton-Wahpeton Sioux Tribe, but say
that they knew nothing about the fund until late 1994, when a
representative of the Bureau of Indian Affairs told them about it
at a meeting on the Crow Creek Reservation. (There may be other
persons similarly situated. The named plaintiffs brought this suit
on behalf of themselves and others similarly situated.) Whether
the plaintiffs actually are eligible lineal descendants, and
whether any of them, individually, had actual knowledge of the fund
earlier than they claim, are questions of fact yet to be
determined. The government's defense of limitations is based upon
its general assertion that it long ago took reasonable steps to
notify interested persons that they needed to file an application
and, in fact, a number of people have so filed. The Secretary has
found, prior to the filing of this case, that each of 1,969 lineal
descendants is eligible to receive a $746.00 share of the fund.
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See Sisseton-Wahpeton Sioux Tribe v. United States, 90 F.3d 351,
355 (9th Cir.) (per curiam), cert. denied, 117 S. Ct. 516 (1996)
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(unsuccessful attempt of the three named tribes to invalidate
altogether the share of the non-member lineal descendants).
After learning of the fund's existence at the meeting we have
described, the plaintiffs brought this case. They claim that the
procedures used by the Secretary to notify eligible descendants
were legally deficient and amounted to a breach of the government's
fiduciary duty as trustee. The basis of our jurisdiction is the
"Little" Tucker Act, 28 U.S.C. § 1346(a)(2), under which the United
States has waived sovereign immunity with respect to civil actions
founded upon any Act of Congress or any regulation of an executive
department. The jurisdiction of the district courts (as
distinguished from the United States Court of Federal Claims) under
this statute is limited to claims not exceeding $10,000.00, and
each of the plaintiffs alleges that his or her individual claim is
less than this amount.
The parties agree that the applicable statute of limitations
is 28 U.S.C. § 2401(a), which provides that "every civil action
commenced against the United States shall be barred unless the
complaint is filed within six years after the right of action first
accrues." The crucial question, then, is when the plaintiffs'
claim first accrued. The parties agree that "accrual," for this
purpose, occurs when the plaintiffs either knew, or in the exercise
of reasonable diligence should have known, that they had a claim.
The District Court found that the claim accrued in 1972, when
Congress enacted its plan for distributing the settlement funds.
It therefore held the action barred by limitations and dismissed
for lack of subject-matter jurisdiction. (Filing within the
applicable statute of limitations is treated as a condition
precedent to the government's waiver of sovereign immunity, and
cases in which the government has not waived its immunity are
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outside the subject-matter jurisdiction of the district courts.)1
The Court further found, as an aspect of its accrual analysis, that
the steps taken by the government to notify the plaintiff were
constitutionally adequate and not otherwise legally deficient.
This appeal followed.
II.
“[T]here is a presumption that absent explicit language to the
contrary, all funds held by the United States for Indian tribes are
held in trust.” Rogers v. United States, 697 F.2d 886, 890 (9th
Cir. 1983); see also United States v. Mitchell, 463 U.S. 206, 225
(1983). This obligation derives from “a humane and self imposed
policy which has found expression in many acts of Congress and
numerous decisions of [the Supreme] Court” under which the
Government “has charged itself with moral obligations of the
highest responsibility and trust” in carrying out its treaty
obligations with the Indian tribes. Seminole Nation v. United
States, 316 U.S. 286, 296-97 (1942)(footnote omitted). This
“trust relationship extends not only to Indian Tribes as
governmental units, but to tribal members living collectively or
individually, on or off the reservation.” Little Earth of United
1
Judge Fletcher has elegantly summarized these jurisdictional
rules in Sisseton-Wahpeton Sioux Tribe v. United States, 895 F.2d
588, 592 (9th Cir.), cert. denied, 498 U.S. 824 (1990):
The doctrine of sovereign immunity
precludes suit against the United States
without the consent of Congress; the terms of
its consent define the extent of the court's
jurisdiction. The applicable statute of
limitations is a term of consent. The
plaintiff's failure to sue within the period
of limitations is not simply a waivable
defense; it deprives the court of jurisdiction
to entertain the action.
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Tribes, Inc. v. HUD, 675 F. Supp. 497, 535 (D. Minn. 1987),
amended, 691 F. Supp. 1215 (D. Minn. 1988), aff’d, 878 F.2d 236
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(8th Cir. 1989), cert. denied, 494 U.S. 1078 (1990). In this case,
the government points to no statutory language relieving it of
these long-established obligations with respect to the lineal
descendants of the Sisseton-Wahpeton Sioux. Accordingly, the
government had the obligation to act as a trustee in its management
of the judgment fund, and we must judge its conduct “by the most
exacting fiduciary standards.” Seminole Nation, 316 U.S. at 297.
The fact that plaintiffs are beneficiaries of a trust does not
mean that they are exempt from the running of the statute of
limitations. See Menominee Tribe of Indians v. United States, 726
F.2d 718 (Fed. Cir.), cert. denied, 469 U.S. 826 (1984). The
statute of limitations begins to run when a trust beneficiary knows
or should know of the beneficiary’s claim against the trustee.
Nonetheless, because the beneficiary is entitled to rely upon the
good faith and expertise of the trustee, the beneficiary’s duty to
discover claims against the trustee is somewhat lessened.
Manchester Band of Pomo Indians v. United States, 363 F. Supp. 1238
(N.D. Cal. 1973). See Azalea Meats, Inc. v. Muscat, 386 F.2d 5, 9
(5th Cir. 1967) (footnote omitted) (“The presence of a fiduciary
relationship . . . bears heavily on the issue of due diligence.”).
The beneficiary’s duty to discover his or her claims against the
trust is further diminished when the beneficiary has no idea that
the trust even exists. One of the fundamental obligations of a
trustee is the identification and notification of trust
beneficiaries. See G. G. Bogert and G. T. Bogert, The Law of
Trusts and Trustees § 961, at 3 (rev. 2d ed. 1984)(“[T]he trustee
is under a duty to notify the beneficiary of the existence of the
trust . . . ”). See also Rogers v. United States, 697 F.2d 886,
890 (9th Cir. 1983). A beneficiary may reasonably expect that the
trustee will let the beneficiary know that he or she is a
beneficiary. When the beneficiary hears nothing about the trust
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from the trustee (or any other source), the beneficiary cannot be
expected to pursue a claim to the trust in a timely fashion. In
this case, the plaintiffs were wholly unaware that the trust
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existed. Moreover, they were not in possession of facts that would
naturally have led them to inquire about the existence of the
judgment fund, since neither they nor their tribal leaders were
participants in the original lawsuit. Because plaintiffs had no
reason to know of the existence of the judgment fund and,
consequently, of their possible claim to it, they have a strong
argument that the statute of limitations did not begin to run on
their claim until they received actual notice of the fund’s
existence in 1994.2
Though plaintiffs had no knowledge that should have prompted
them to pursue their claims against the fund, their claims still
might be time-barred if the government adequately performed its
duties as trustee. The government made some efforts to notify
beneficiaries of the fund of its existence. In addition to
publishing the regulations governing the fund’s distribution in the
2
The way that courts have historically applied the statute of
limitations to claims challenging so-called trust repudiations
provides support for our approach. Where the trustee repudiates
the trust by claiming to hold the trust corpus as the trustee’s
own, the cause of action does not accrue until the beneficiary “has
knowledge of the repudiation.” Sisseton-Wahpeton Sioux Tribe v.
United States, 895 F.2d 588, 593 (9th Cir.), cert. denied, 498 U.S.
824 (1990).
There is authority that where the trustee repudiates the
trust, the statute of limitations will apply “from the date when
the beneficiary . . . by the exercise of reasonable skill and
diligence could have learned of [the repudiation].” See Bogert,
supra, § 951, at 630-34. In all of the cases cited in support of
that proposition, however, the plaintiff/beneficiary was in
possession of some facts that would have put a reasonable person on
notice of the repudiation of the trust, and in none of them was the
beneficiary justifiably ignorant of the existence of the trust
itself, as is the case here. Cf. Manchester Band of Pomo Indians
v. United States, 363 F. Supp. 1238 (N.D. Cal. 1973) (since
government did not pay out income regularly to Band, a lack of
payments or information did not put Band on notice that government
was mismanaging funds).
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Federal Register, the government sent notification packets and news
releases to various Indian organizations and newspapers around the
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country. It also sent notice to the twelve area Bureau of Indian
Affairs offices as well as the agencies that serve the specific
tribes and asked the superintendents of those agencies to post the
notice. The government was able to locate one press release dated
two weeks before the application deadline. The government and
plaintiffs also unearthed three articles from newspapers
distributed in South Dakota about the fund, though the articles in
two of the newspapers appeared less than a week before the
application deadline.
While attempting to notify the beneficiaries of the existence
of the trust and how they could claim their share of it, the
government was in possession of a 1909 annuity pay-roll listing the
names of over 1900 Sisseton-Wahpeton Sioux. It is this list that
the government is now using to determine the eligibility of
applicants for a share of the judgment fund. Almost 300 of the
names on the list (14 per cent. of the total) were from the Crow
Creek or Lower Brule areas of South Dakota, the areas of South
Dakota where most of the plaintiffs live.3 As the plaintiffs
argue, “It would have been simple to . . . provide concentrated
notification procedures in those areas where the ancestors were
known to have resided. . . .” Appellants’ Reply Br. 15. Given the
high concentration of Sisseton-Wahpeton Sioux ancestors who lived
in the Crow Creek area of South Dakota in 1909, the government,
acting in its role as trustee, should at least have held a meeting
on the Crow Creek reservation to inform potential beneficiaries of
the fund’s existence and to explain the application procedure to
them. The government never held such a meeting for any of the
descendants of the Sisseton-Wahpeton Sioux. We cannot say that the
3
All of the plaintiffs are members of the Crow Creek Sioux
Tribe. See Appellants’ Br. 8.
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plaintiffs should have known of their interest in the fund because
a notice was at some point tacked to a bulletin board in the local
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reservation office.4 We think that notice by publication is
insufficient to begin the running of the statute of limitations
against a beneficiary who is unaware of the trust’s existence,
unless there is no reasonable alternative.5 Because the steps that
the government actually took were insufficient to put a reasonably
diligent beneficiary on notice of the trust’s existence, the
plaintiffs’ claims are not time-barred.6
III.
The fact that plaintiffs’ claims are not time-barred does not
automatically entitle them to their share of the fund. They still
must contend with the fact that the Secretary of the Interior
established an application deadline that plaintiffs failed to meet.
We note at the outset that it would seem somewhat anomalous to
excuse plaintiffs from the six-year statute of limitations but
allow the Secretary to bar their claims with a deadline that gave
beneficiaries approximately five months to apply for their share of
the fund. We hold that by providing an unreasonably short time
4
We also note that even if the statute of limitations bars
some plaintiffs’ claims, there may be beneficiaries in the group
who were young children or incompetent at the time of the original
application deadline. If so, the statute of limitations would not
bar their claims until three years after their disabilities were
lifted. 28 U.S.C. § 2401(a).
5
For this reason and the reasons given by the District Court,
we also reject the government’s argument that under 44 U.S.C.
§ 1507 notice by publication in the Federal Register was sufficient
to notify beneficiaries of their share of the Fund.
6
Because we hold that the government failed to live up to its
trust obligations, we do not address the plaintiffs’ argument that
the government’s notice procedures did not satisfy constitutional
standards. We are inclined to agree with the District Court on
this point. But efforts that satisfy constitutional standards may
nonetheless violate the government’s fiduciary obligations. A
trustee must do more than simply comply with the Constitution.
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period to allow beneficiaries to apply for their share of the fund
and failing to provide beneficiaries with adequate notice, the
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Secretary acted contrary to his common-law obligations as trustee.
Accordingly, the Secretary’s deadline is invalid, and plaintiffs
should have the right to apply for their share of the fund.
As we discussed above, the Secretary’s minimal efforts to
notify beneficiaries of the existence of the trust corpus
demonstrate that he was not fulfilling his trust obligations when
he formulated the distribution plan.7 No meetings were held on
tribal reservations even though the new tribal identities of the
beneficiaries’ Sisseton-Wahpeton ancestors were a matter of
historical record. Even if the Secretary did not have a duty to
discover the identity of every lineal descendant and notify him or
her personally, he should have used the best means of notice
reasonably practicable to try to notify as many beneficiaries as
possible.
The Secretary makes much of the fact that there were 11,000
timely applications, 190 of which were from the Fort Thompson area
of South Dakota, where many of the named plaintiffs now live. The
fact that many managed to find out about the fund, however, is
irrelevant if many whom the Secretary could easily have notified
did not. The record contains the testimony of several plaintiffs
and the affidavit of another that they were living in the Crow
Creek/Lower Brule area in 1972 and had no notice of their
eligibility for a share of the fund. Seventy-four other people
signed a list saying that they believed themselves to be lineal
descendants of Sisseton-Wahpeton tribal members but received no
7
We agree with the plaintiffs that the government may not
avoid its trust duties on the grounds that the budget and staff of
the Department of Interior are inadequate. This circumstance may
well excuse any delay on the part of individual employees of the
Bureau of Indian Affairs. But the United States may not evade the
law simply by failing to appropriate enough money to comply with
it.
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notice of the availability of the fund until 1994. One witness
estimated that there were at least 500 descendants who would not
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receive their share of the fund under the Secretary’s distribution
scheme.
The Secretary purported to require that beneficiaries of the
fund send in their applications within five months of the
promulgation of the regulations establishing the deadline. This
deadline was unreasonably short, especially given the fact that the
lineal descendants of the Sisseton-Wahpetons who were not members
of the three successor tribes did not participate in the lawsuit
that led to the creation of the settlement fund and thus had no
special reason to follow the proceeding. They also did not have
tribal leaders who had reason to follow the proceeding and who
could therefore notify them of its outcome. Moreover, the
Secretary could not plausibly argue that this deadline was
necessary (or even reasonably calculated) to distribute the fund
quickly because to this day, more than 23 years later, the fund
remains undistributed.8
8
The Secretary may blame part of the delay (about ten years)
on the lawsuit filed by the successor tribes, as well as the
current lawsuit. According to the government, part of the time was
spent finishing the processing of applications for a different
judgment fund before the government could turn to the Sisseton-
Wahpeton fund. A BIA official who worked on distributing the
Sisseton-Wahpeton settlement indicated that the other judgment fund
delayed distribution by as much as five years. There was no reason
for the Secretary to establish a deadline before the government
even had people who had time to process the fund’s applications.
It is not a legitimate response, given the government’s trust
obligations, to say that the purpose of the deadline was to reduce
the number of applicants to a manageable level. As trustee, the
government has no interest in keeping people from applying for
their share of the fund. The only legitimate purpose of a deadline
in this context is to prevent applications from continuing to
trickle in after the Secretary is ready to distribute the fund.
Since the deadline set by the Secretary bore absolutely no
relationship to a realistic date of distribution, it was arbitrary.
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Accordingly, we hold that the distribution scheme adopted by
the Secretary was contrary to his common-law trust obligations and
that the deadline cannot serve to bar plaintiffs’ claims to the
fund.
IV.
We reverse the District Court’s determination that plaintiffs’
claims are barred by limitations, and also hold that the Secretary
may not use the 1973 deadline to bar the plaintiffs’ claims. We
remand to the District Court for proceedings consistent with this
opinion.
It is so ordered.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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