In re BLACK FARMERS DISCRIMINATION LITIGATION

Filing 519

MEMORANDUM OPINION AND ORDER denying the Black Belt Justice Center's appeal #505 of Class Counsel's second review recommendation. Signed by Judge Paul L. Friedman on December 7, 2018. (lcplf2)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
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In re BLACK FARMERS
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DISCRIMINATION LITIGATION
)
____________________________________)

Misc. No. 08-0511 (PLF)

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,

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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

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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
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
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.
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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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