No. 09-

IN THE

of the

ELOUISE PEPION COBELL, ETAL., INDIVIDUALLY ANDON BEHALF OF A CLASS OF ALL PAST AND PRESENT

INDIVIDUAL INDIAN TRUST BENEFICIARIES,

PETITIONERS,

KENNETH LEE SALAZAR,SECRETARY OF THE INTERIOR, ET AL.,

RESPONDENTS.

ON PETITION FOR A WRIT OF CERTIORARI TO THEUNITED STATES COURT OF APPEALS FOR THE

DISTRICT OF COL UMBIA CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

KEITH M. HARPERKILPATRICK STOCKTON LLPSuite 900607 14th Street, NWWashington, DC 20005-2018202-508-5800

DENNIS M. GINGOLD

Counsel of Record607 14th Street, N.W.9th FloorWashington, D.C. 20005202-824-1448

WILLIAM E. DORRISELLIOTT LEVITASKILPATRICK STOCKTON LLP1100 Peachtree StreetSuite 2800Atlanta, GA 30309404-815-6500

DAVID C. SMITHADAM H. CHARNESRICHARD D. DIETZKILPATRICK STOCKTON LLP1001 West Fourth StreetWinston-Salem, NC 27101336-607-7300

Counsel for Petitioners

Blank Page

QUESTION PRESENTED

For more than a century, the United States hasexercised complete control over individual Indian land andnatural resources, holding the income generatedtherefrom in trust for individual Indians in IndividualIndian Money ("IIM") trust accounts. Today, the IIM trustholds hundreds of billions of dollars in assets on behalf ofindividual Indians, but as a result of generations ofmismanagement and lack of oversight, the United Statesgovernment does not know the correct balances forhundreds of thousands of trust accounts. The 1994 IndianTrust Management Reform Act, Pub. L. No. 103-412, 108Stat. 4239 (1994), reaffirmed the federal government’s pre-existing fiduciary duty to provide a complete historicalaccounting of "all funds" held in trust for the benefit ofindividual Indians. However, the court of appeals held that,despite the Trust Reform Act, and despite this Court’sprecedent applying traditional trust law principles to theIIM trust, the government need only conduct "the bestaccounting possible, in a reasonable time, with the moneythat Congress is willing to appropriate," and that theaccounting itself need only address "low-hanging fruit."The question presented is:

Whether the court of appeals erred in holding--contrary to the plain language of the Indian TrustManagement Reform Act, this Court’s precedent, and adecision of the Eighth Circuit--that respondents need notconduct an accurate and complete fiduciary accounting of"all funds" in the IIM trust, but instead may substantiallylimit the accounting duty to one that can be discharged"in a reasonable time, with the money that Congress iswilling to appropriate."

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PARTIES TO THE PROCEEDING

The following were the parties to the proceedingsbefore the United States Court of Appeals for theDistrict of Columbia Circuit:

1. Elouise Pepion Cobell

2. Penny Cleghorn

3. Thomas Maulson

4. James Louis LaRose

Members of a class defined by the District Courtto include all past and present Indians (includingall original allottees, their heirs, and individualIndian successors-in-interest, includingexecutors and personal representatives) onwhose behalf, as Trust beneficiaries, Trustaccounts are, have been, should be, or shouldhave been established and maintained by theUnited States government to hold revenuesgenerated by the Individual Indian Trust

6. Kenneth Lee Salazar, Secretary, Department ofthe Interior, in his official capacity

Larry EchoHawk, Assistant Secretary of theDepartment of the Interior for Indian Affairs,in his official capacity

8. Timothy Geithner, Secretary, Department of theTreasury, in his official capacity

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TABLE OF CONTENTS

Page

QUESTION PRESENTED ..................i

PARTIES TO THE PROCEEDING ..........ii

TABLE OF CONTENTS ....................iii

TABLE OF APPENDICES ..................v

TABLE OF CITED AUTHORITIES .........vi

OPINIONS BELOW ........................1

STATUTORY PROVISION INVOLVED ......2

JURISDICTION ........................... 2

STATEMENT .............................. 2

A. History of the Individual Indian Trust ..4

B. The Indian Trust Management ReformAct .................................. 6

C. Scope of the Trust Accounting .........7

Contents

REASONS FOR GRANTING THE PETITION

THE COURT OF APPEALS’ DECISIONIS CONTRARY TO MITCHELL IIAND OTHER PRECEDENT OF THISCOURT AND CONFLICTS WITH THEDECISION OF THE EIGHTH CIRCUITCONCERNING THE GOVERNMENT’SINDIAN TRUST OBLIGATIONS ......

II. THE COURT OF APPEALS’ DECISIONIS CONTRARY TO THE PLAINLANGUAGE OF THE TRUST REFORMACT. .................................

III. THE COURT OF APPEALS’ DECISIONRAISES SERIOUS CONSTITUTIONALCONCERNS .........................

CONCLUSION .............................

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17

21

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TABLE OF APPENDICES

Appendix A -- Opinion Of The United StatesCourt Of Appeals For The District Of ColumbiaCircuit Decided July 24, 2009 ..............

Page

la

Appendix B -- Opinion Of The United StatesDistrict Court For The District Of ColumbiaDated August 7, 2008 .....................18a

Appendix C -- Opinion Of The United StatesDistrict Court For The District Of ColumbiaDated January 30, 2008 ...................85a

TABLE OF CITED AUTHORITIES

Page

Cases:

Bravo v. Sauter,727 So. 2d 1103 (F1. Ct. App. 1999) .........13

Bryan v. Itasca County,

426 U.S. 373 (1976) .......................20

Clark v. Martinez,543 U.S. 371 (2005) .......................22

Cobell v. Babbitt (Cobell V),91 F. Supp. 2d 1 (D.D.C. 1999) ..............7

Cobell v. Kempthorne (Cobell XX),532 E Supp. 2d 37 (D.D.C. 2008) .........1, 3, 6, 7

Cobell v. Kempthorne (Cobell XXI),569 F. Supp. 2d 223 (D.D.C. 2008) ..........1, 7

Cobell v. Norton (Cobell V/),240 F.3d 1081 (D.C. Cir. 2001) ............passim

Cobell v. Salazar (Cobell XXII),573 F.3d 808 (D.C. Cir. 2009) .............passim

Corporation Audit Co. v. Cafritz,156 F.2d 839 (D.C. Cir. 1946) ...............14

Cox v. Cox,

357 N.W.2d 304 (Iowa 1984) ................13

vii

Cited A uthorities

Page

Engelsmann v. Holekamp,402 S.W.2d 382 (Mo. 1966) .................13

Hodges v. Snyder,261 U.S. 600 (1923) .......................22

Loretto v. Teleprompter Manhattan CATV Corp.,458 U.S. 419 (1982) .......................21

Loudner v. United States,108 E3d 896 (8th Cir. 1997) ...........4, 9, 15, 16

McCullough v. Virginia,172 U.S. 102 (1898) .......................22

Mitchell v. United States (Mitchell II),463 U.S. 206 (1983) .....................passim

NLRB v. Amax Coal Co.,453 U.S. 322 (1981) ......................19, 20

Pueblo of San Ildefonso v. United States,35 Fed. C1. 777 (1996) ......................12

Rainbolt v. Johnson,669 E2d 767 (D.C. Cir. 1981) ...............14

Reardon v. Riggs Nat7 Bank,677 A.2d 1032 (D.C. 1996) ..................13

viii

Cited Authorities

Page

General Allotment Act of 1887, ch. 119,24 Stat. 388 (1887) ........................4

28 U.S.C. § 1254 (2008) ......................2

28 U.S.C. § 1292 (2008) ......................7

Seminole Nation v. United States,316 U.S. 286 (1942) .......................5, 15

Shannon v. Frost Nat’l Bank of San Antonio,533 S.W.2d 389 (Tex. Ct. App. 1976) .........13

Shriners Hosp. for Crippled Children v. Robbins,450 So. 2d 798 (Ala. 1984) ..................13

United States v. White Mountain Apache Tribe,537 U.S. 465 (2003) .......................12

White Mountain Apache Tribe of Arizonav. United States, 26 C1. Ct. 446 (1992) .......12

Statutes:

The Indian Trust Management Reform Act,Pub. L. No. 103-412, 108 Stat. 4239 (1994) .. passim

Cited A uthorities

Page

Other Authorities:

THE AMERICAN HERITAGE DICTIONARY 94(2d College ed. 1985) ......................18

76 AM. JUR. 2D TRUSTS § 371 (2009) ............9, 13

BLACK’S LAW DICTIONARY 19 (7th ed. 1999) ..... 13

GEORGE G. BOGERT,THE LAW OF TRUSTS AND TRUSTEES § 962 (1962)

.................................... 9, 12-13, 19

BUREAU OF MUNICIPAL RESEARCH, 63RD CONG.,REPORT TO THE JOINT COMMISSION TO INVESTIGATEINDIAN AFFAIRS: BUSINESS AND ACCOUNTINGMETHODS EMPLOYED IN THE ADMINISTRATION OFTHE OFFICE OF INDIAN AFFAIRS 2 (Comm. Print1915) ....................................

1A CJS ACCOUNTING § 1 (2007) ................ 13

1A CJS ACCOUNTING § 44 (2007) ............... 19

MISPLACED TRUST: THE BUREAU OF INDIANAFFAIRS’ MISMANAGEMENT OF THE INDIAN TRUSTFUND, H.R. Rep. No. 102-499 (1992) ...... 5, 19-20

RESTATEMENT (THIRD) OF TRUSTS § 73 (2007) ....9, 14

RESTATEMENT (THIRD) OF TRUSTS § 83 (2007) .... 19

UNIFORM TRUST CODE § 412, 7A U.L.A. 507-08(2006) .................................... 9, 14

1

PETITION FOR A WRIT OF CERTIORARI

Petitioners, plaintiffs Elouise Pepion Cobell, et al.,on behalf of themselves and a certified class of allpast and present Individual Indian Money trustbeneficiaries, respectfully petition for a writ of certiorarito review the judgment of the United States Court ofAppeals for the District of Columbia Circuit in this case.1

OPINIONS BELOW

The opinion of the court of appeals (App., infra, 1a-17a) is reported at 573 F.3d 808. The opinions of thedistrict court (App., infra, 18a-84a and 85a-242a) arereported at 569 E Supp. 2d 223 and 532 F. Supp. 2d 37.

1. On December 7, 2009, petitioners and respondentsexecuted a settlement agreement that, inter alia, settles allclaims asserted in this action. The settlement is expresslyconditioned on two conditions precedent--enactment byCongress of certain legislation specified in the agreement andfinal approval of the settlement by the district court pursuantto Rule 23 of the Federal Rules of Civil Procedure. See http://www.cobellsettlement.com/docs/2009.12.07 SettlementAgreement.pdf. Neither condition precedent can occur beforepetitioners’ deadline for filing this petition. Petitioners intendto file a motion asking this Court to hold this petition inabeyance pending satisfaction vel non of the two conditionsprecedent.

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STATUTORY PROVISION INVOLVED

The Indian Trust Management Reform Act ("TrustReform Act"), Pub. L. No. 103-412, 108 Stat. 4239 (1994)(codified in pertinent part at 25 U.S.C. § 4011(a)),provides, in relevant part, that "[t]he Secretary [of theInterior] shall account for the daily and annual balanceof all funds held in trust by the United States for thebenefit of an Indian tribe or an individual Indian whichare deposited or invested pursuant to section 162a ofthis title."

JURISDICTION

The court of appeals entered its judgment on July24, 2009. On October 14, 2009, Justice Stevens extendedpetitioners’ deadline to file this petition until December21, 2009. The jurisdiction of this Court is invoked under28 U.S.C. § 1254(1).

STATEMENT

Petitioners are a certified class of individual Indianswhose land and related natural resources have been heldin trust by the United States for more than a century,and who sued in equity to enforce their rights as trustbeneficiaries. This litigation has lasted more than 13years and has resulted in more than eighty publishedopinions of the lower courts. During this action’s lengthyhistory, both the district court and the court of appealsrepeatedly have held that the United States is in breachof its trust obligations and has grossly mismanagedbillions of dollars held in Individual Indian Money("IIM") trust accounts. The lower courts also found, and

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the defendants have admitted, that, as a result ofdecades of mismanagement and lack of oversight, theUnited States government does not know the correctbalances for hundreds of thousands of trust accountsmand does not even know how many IIM beneficiariesexist. The parties to this action have spent much of thelast decade litigating the proper scope of the trustaccounting required by this Court’s precedent and theTrust Reform Act, a federal statute passed in 1994confirming respondents’ obligation to undertake acomplete and accurate historical accounting of "allfunds" in IIM trust accounts.

In 2008, the district court held that, given thedeplorable condition of IIM trust records, and theresources available to the Interior Department, a fullhistorical accounting was impossible. See Cobell v.Kempthorne (Cobell XX), 532 E Supp. 2d 37, 39, 103(D.D.C. 2008). On appeal, the court of appeals rejectedthe district court’s finding of legal impossibility. But thecourt also held that the United States is responsibleonly for "the best accounting possible, in a reasonabletime, with the money that Congress is willing toappropriate." Cobell v. Salazar (Cobell XXII), 573 F.3d808, 813 (D.C. Cir. 2009). As a result of that holding, thegovernment is responsible only for whatever accountingit chooses to pay for, and Indian beneficiaries will neverknow what happened to billions of dollars of their assetsthat the United States purportedly held in trust forthem subject to the most exacting fiduciary standards.The court of appeals’ holding turns traditional,controlling trust law on its head, and is akin to givingthe fox sole discretion to determine the security featuresof the henhouse.

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Because the court of appeals’ holding is inconsistentwith the mandate of the Trust Reform Act, with thisCourt’s precedent, with D.C. Circuit precedent, and withthe decision of the Eight Circuit in Loudner v. UnitedStates, 108 E3d 896 (8th Cir. 1997), and because of theoverriding importance of the legal issues presented tothousands of Native Americans, who are among thepoorest and most vulnerable American citizens and towhom the United States owes the highest overridingenforceable fiduciary duties, this case warrants theCourt’s review.

A. History of the Individual Indian Trust

In the late nineteenth century, the federalgovernment adopted a policy of assimilation for NativeAmericans. To further that policy, the governmentdivided certain reservation land into individually ownedparcels and allotted those parcels to individual Indians.See Cobell v. Norton (Cobell VI), 240 E3d 1081, 1087(D.C. Cir. 2001); General Allotment Act of 1887, ch. 119,24 Stat. 388 (1887), codified as amended at 25 U.S.C.§ 331 (2008) et seq.

The United States seized legal title to the allottedlands for the benefit of the individual Indians and, astrustee, exercised complete control over those lands andtheir resources, including oil, natural gas, coal, timber,and other valuable resources. See Cobell VI, 240 F.3d at1087. Although purportedly entitled to their individualland allotments, trust beneficiaries could not sell or leasetheir land without government approval. Id. Thegovernment justified its trusteeship, in part, on a federalpolicy that deemed Native Americans "incompetent,"

due principally to their race. By assuming the role oftrustee of Indian property, the United States "chargeditself with moral obligations of the highest responsibilityand trust." Seminole Nation v. United States, 316 U.S.286, 297 (1942). The federal government also becamebound by the same common law trust principles thatgovern all trustees. See Mitchell v. United States(Mitchell II), 463 U.S. 206, 225 (1983).

Despite the government’s trust obligations, thehistory of the IIM trust is replete with the loss,dissipation, theft, waste, and wrongful withholding oftrust funds. As early as 1914, it was reported toCongress that "[t]he Government itself owes millions ofdollars for Indian moneys which it has converted to itsown use." BUREAU OF MUNICIPAL RESEARCH, 63RD CONG.,

REPORT TO THE JOINT COMMISSION TO INVESTIGATE INDIAN

AFFAIRS: BUSINESS AND ACCOUNTING METHODS EMPLOYED

IN THE ADMINISTRATION OF THE OFFICE OF INDIAN AFFAIRS

2 (Comm. Print 1915). These misappropriationscontinued into modern times. In Cobell VI, the court ofappeals noted that "[t]he General Accounting Office,Interior Department Inspector General, and Office ofManagement and Budget, among others, have allcondemned the mismanagement of the IIM trustaccounts over the past twenty years." Cobell VI, 240 E3dat 1089 (citing various government reports); see alsoMISPLACED TRUST: THE BUREAU OF INDIAN AFFAIRS’

MISMANAGEMENT OF THE INDIAN TRUST FUND, H.R. Rep.No. 102-499 (1992).

As a result of the government’s mismanagement andcontinuous failure to perform its enforceable duties astrustee, "[t]he federal government does not know the

precise number of IIM trust accounts that it is toadminister and protect." Cobell VI, 240 F.3d at 1089.Moreover, "[n]ot only does the Interior Department notknow the proper number of accounts, it does not knowthe proper balances for each IIM account, nor doesInterior have sufficient records to determine the valueof IIM accounts." Id.

Further compounding these problems, the full scopeof the government’s mismanagement remained hiddenfrom the individual Indian beneficiaries because, as amatter of policy, beneficiaries were not provided withany trust account statements and "[n]o real accounting,historical or otherwise, has ever been done of the IIMtrust." Cobell XX, 532 F. Supp. 2d at 43.

B. The Indian Trust Management Reform Act

A century of complaints by Indians, and concerns ofCongress about pervasive mismanagement of the trust,led to passage of the Trust Reform Act. The TrustReform Act was the culmination of "many years ofcongressional frustration over Interior’s handling of theIIM trust." Cobell XX, 532 F. Supp. 2d at 41. It confirmedand codified the government’s pre-existing duty toprovide a full accounting to IIM trust beneficiaries.Cobell VI, 240 F.3d at 1090.

Petitioners brought this class action in 1996, afterthe government failed to begin the accounting requiredboth by the Trust Reform Act and the government’sfiduciary duty as trustee. In 1999, the district courtfound the Departments of the Interior and Treasury inviolation of the Trust Reform Act and in breach of their

trust obligations to petitioners. See Cobell v. Babbitt(Cobell V), 91 F. Supp. 2d 1, 58 (D.D.C. 1999). The districtcourt granted declaratory relief, ordered the InteriorDepartment "to provide plaintiffs an accurateaccounting of all money in the IIM trust," and laid out ageneral plan for compliance. Id. The court of appealsaffirmed the district court’s order. Cobell VI, 240 E3dat 1110.

C. Scope of the Trust Accounting

Over the last eight years, the central issue in thisaction has been the scope of the accounting required bythe Trust Reform Act and the common law trustprinciples applicable to the IIM trust. In 2008, thedistrict court held that it is "clear that.., the requiredaccounting is an impossible task," and that "theDepartment of the Interior has not--and cannot--remedy the breach of its fiduciary duty to account forthe IIM trust." Cobell XX, 532 F. Supp. 2d at 39, 103.Based on that decision, and in the absence of anaccounting, the district court conducted an evidentiaryhearing to determine the equitable award of restitutionnecessary to remedy the government’s breach of trust.Following that hearing, the district court ordered theUnited States to pay petitioners $455.6 million inrestitution for IIM trust funds improperly withheld.See Cobell v. Kempthorne (Cobell XXI), 569 F. Supp. 2d223 (D.D.C. 2008). The district court then certified itsdecisions in Cobell XX and Cobetl XXI for petitioners’immediate interlocutory appeal under 28 U.S.C.§ 1292(b). Petitioners timely appealed the decision inCobell XXI and the government cross-appealed.

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On appeal, the court of appeals rejected the districtcourt’s finding of impossibility and held that theDepartment of the Interior must provide an accounting.See Cobell XXII, 573 F.3d at 812. However, in asubstantial departure from this Court’s bindingprecedent and the language of the Trust Reform Act, athree-judge panel of the court of appeals repudiated thelaw of this case, including its prior holding in Cobell VIthat the government must account for "all funds" as wellas all other items of the trust, and, instead, relieved thegovernment of traditional accounting duties, holdingthat the government now must undertake only "the bestaccounting possible, in a reasonable time, with themoney that Congress is willing to appropriate." CobellXXII, 573 F.3d at 813. The court of appeals alsoinstructed that the government need only "concentrateon picking the low-hanging fruit." Id. at 815. Thus, underthe new holding of the court of appeals, the UnitedStates is free to avoid its fiduciary trust duties,confirmed by Congress in 1994 in the Trust Reform Act,to account for billions of dollars in mismanaged Indiantrust assets by declining to pay for an accounting whosehigh cost is solely attributable to the government’shistorical breaches of trust, including the destruction,loss, and corruption of essential trust documents.

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REASONS FOR GRANTING THE PETITION

The court of appeals’ decision is erroneous in threekey respects and warrants review by the Court.

First, the decision is contrary to precedent from thisCourt governing the United States’ fiduciary obligationsowed to Indian trusts. As the Court held in Mitchell v.United States (Mitchell II), 463 U.S. 206 (1983), and itsprogeny, when the United States holds in trust propertybelonging to Indians, the obligations of the United Statesare governed by traditional common law trust principles.See id. at 225. Those common law trust principles requiretrustees to account for all trust assets and disbursements.See GEORGE G. BOGERT, THE LAW OF TRUSTS AND TRUSTEES §

962 (1962); 76 AM. Jua. 2D TRUSTS § 371 (2009). While acourt in equity may limit an accounting based on a findingof impossibility or impracticability, no common law trustprinciple excuses a trustee from its accounting obligationswhere, as here, the trustee has egregiously breached itstrust duties and declines to pay the costs of the accounting.See RESTATEMENT (THIRD) OF TRUSTS § 73 (2007); UNIFORM

TRUST CODE § 412, 7A U.L.A. 507-08 (2006). Because thecourt of appeals’ holding on the scope of the requiredaccounting is inconsistent with common law trust principlesand duties, the decision is contrary to Mitchell II.

The decision also conflicts with Loudner v. UnitedStates, 108 E3d 896 (Sth Cir. 1997), where the Eight Circuitexpressly held that "the government may not avoid its trustduties on the grounds that the budget and staff of theDepartment of Interior are inadequate" and that "theUnited States may not evade the law simply by failing toappropriate enough money to comply with it." Id. at 903n.7.

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Second, the court of appeals’ decision is contrary tothe Trust Reform Act, which provides, in relevant part,that "[t]he Secretary [of the Interior] shall account for thedaily and annual balance of all funds held in trust by theUnited States for the benefit of an Indian tribe or anindividual Indian which are deposited or invested pursuantto section 162a of this title." 25 U.S.C. § 4011(a) (emphasisadded). "[A]ll funds" means all funds; the Trust ReformAct’s mandate is clear and unambiguous. The decision ofthe court of appeals, however, permits the United Statesto limit the scope of its accounting obligations based on"the money that Congress is willing to appropriate." CobellXXII, 573 E3d at 813. Cobell VI confirmed that whenCongress enacted the Trust Reform Act, it understoodthe meaning of an "accounting" under common law trustprinciples and understood that decades of grossmismanagement and lack of oversight meant the requiredaccounting would be complex and costly. Had Congressintended for that accounting to be limited to the trustassets for which an accounting could be accomplishedthrough currently available funds (or, as the court ofappeals described it, the "low-hanging fruit"), Congresswould have said so in the Trust Reform Act. In the absenceof such statutory language, the Department of the Interiorremains obligated to conduct a full and accurateaccounting, as that term is understood in trust law, "of allfunds held in trust by the United States," regardless ofwhether Congress in a given year appropriates funding toaccomplish that task.

Third, the limited accounting set out by the court ofappeals necessarily would ignore funds that the court ofappeals already has held were wrongly escheated to Indiantribes or improperly spent by the government, on theground that accounting for those funds is too difficult orcostly. This result creates potential constitutional

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challenges under the Takings Clause and the vested rightsdoctrine of the Due Process Clause. Because a completehistorical accounting of all IIM trust assets avoids theseconstitutional challenges, the court of appeals erred byconstruing the government’s trust obligations in amanner that raises constitutional concerns.

THE COURT OF APPEALS’ DECISION ISCONTRARY TO MITCHELL H AND OTHERPRECEDENT OF THIS COURT AND CONFLICTSWITH THE DECISION OF THE EIGHTHCIRCUIT CONCERNING THE GOVERNMENT’SINDIAN TRUST OBLIGATIONS.

In Mitchell II, the Court considered the federalgovernment’s obligations when it takes Indian land andholds that land for the benefit of individual Indians. 463U.S. at 225. Early in the twentieth century, the UnitedStates divided the entire Quinault Reservation,representing 200,000 acres of coastal pacific property,into individual allotments and held the land and theincome from its natural resources in trust for theindividual Indians living in the region. Id. at 208-09. In1971, thousands of Indians holding the individualallotments sued the United States based on "pervasivewaste and mismanagement" of the trust assets. Id. at210. The government argued that there was nosubstantive right to seek damages from the UnitedStates for mismanagement of individual Indian trusts.

This Court held that "a fiduciary relationshipnecessarily arises when the Government assumes suchelaborate control over forests and property belongingto Indians. All of the necessary elements of a common-law trust are present: a trustee (the United States), abeneficiary (the Indian allottees), and a trust corpus

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(Indian timber, lands, and funds)." Id. at 225. The Courtthen applied common law trust principles to determinethe scope of the government’s trust obligations and theremedies available to Indians in the event of a breachof trust. See id. (citing various secondary sources ontrust law). The Court held that "[i]t is well establishedthat a trustee is accountable in damages for breach oftrust." Id. at 226. The Court remanded the action for adetermination of liability and damages for breach oftrust.

Later decisions of the Court, citing Mitchell II,confirm that federal courts must apply traditional trustlaw principles to the government’s management ofIndian trusts. See United States v. White MountainApache Tribe, 537 U.S. 465, 475 (2003). Relying on theCourt’s holdings, numerous lower courts haverecognized the federal government’s duty to provide anaccounting for Indian trust funds under common lawtrust principles. See, e.g., Pueblo of San Ildefonso v.United States, 35 Fed. C1. 777, 788 (1996) ("When a trustrelationship between the government and Indiansexists" the United States "is under a duty to keep andrender clear and accurate accounts with respect toadministration of the trust."); White Mountain ApacheTribe of Arizona v. United States, 26 C1. Ct. 446, 448(1992) ("The obligation of a trustee to provide anaccounting is a fundamental principle governing thesubject of trust administration.").

The common law duty of trustees to provide anaccurate accounting of trust assets and disbursementsis inherent in the nature of a trusteeship and is well-settled. See GEORGE G. BOGERT, THE LAW OF TRUSTS AND

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TRUSTEES § 962; 76 AM. JuR. 2D TRUSTS § 371 (2009);1A CJS ACCOUNTING § 1 (2007); BLACK’S LAW DICTIONARY19 (7th ed. 1999). As the court of appeals held in CobellVI, "[i]t is black-letter trust law that ’[a]n accountingnecessarily requires a full disclosure and description ofeach item of property constituting the corpus of the trustat its inception.’" 240 F.3d at 1103 (citing Engelsmannv. Holekamp, 402 S.W.2d 382, 391 (Mo. 1966)); see alsoBravo v. Sauter, 727 So. 2d 1103, 1107 (F1. Ct. App. 1999)(’~ trustee is under a strict duty to keep and render acomplete and accurate record and accounting as to itstrusteeship to the beneficiary"); Reardon v. Riggs Nat’lBank, 677 A.2d 1032, 1035 (D.C. 1996). "[T]he trustee’is under a duty to the beneficiary to give him upon hisrequest at reasonable times complete and accurateinformation as to the nature and amount of the trustproperty...’" Shriners Hosp. for Crippled Children v.Robbins, 450 So. 2d 798, 801 (Ala. 1984) ("The trusteesare also under a duty to furnish the beneficiary completeand accurate information as to the nature and amountof the trust property."); Cox v. Cox, 357 N.W.2d 304, 306(Iowa 1984) ("Because the trustee acts on his or herbehalf, the beneficiary is ’entitled to know what the trustproperty is and how the trustee has dealt with it.’"(citation omitted)); Shannon v. Frost Nat’l Bank qfSanAntonio, 533 S.W.2d 389, 393 (Tex. Ct. App. 1976) ("[I]tis well settled that a trustee owes a duty to give to thebeneficiary upon request complete and accurateinformation as to the administration of the trust."). Inaddition, where the trustee fails to give an accurateaccount, the benefit of the doubt is given to the

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beneficiary. See Rainbolt v. Johnson, 669 E2d 767, 769(D.C. Cir. 1981); Corporation Audit Co. v. Cafritz, 156E2d 839, 842 (D.C. Cir. 1946).

The strict limits on a trustee’s ability to evade trustduties are similarly well-settled. A court in equity mayexcuse a trustee from a trust obligation only upon afinding of impossibility or impracticability. SeeRESTATEMENT (THIRD) OF TRUSTS § 73; UNIFORM TRUST

CODE § 412. There is no common law trust principle thatexcuses a trustee from its accounting obligations simplybecause the trustee is unwilling to pay the costs of theaccounting--costs that have increased materially solelybecause of continuing breaches of trust.

Here, the court of appeals expressly rejected thedistrict court’s holding of impossibility. See Cobell XXII,573 E3d at 812. Nevertheless, the court of appeals held,without citation to any trust authorities, that the UnitedStates can avoid its accounting obligations by decliningto fund the accounting, in direct conflict with establishedtrust law principles. Id. at 813.

The court of appeals’ holding is particularlytroubling given this Court’s recognition of the specialfiduciary relationship between the United States andAmerican Indians. As this Court explained, the UnitedStates "has charged itself with moral obligations of thehighest responsibility and trust" vis-a-vis Indians, andits conduct "should therefore be judged by the most

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exacting fiduciary standards." Seminole Nation, 316U.S. at 297. The federal government’s exactingfiduciary obligations are, in part, a recognition that therelationship between the United States and AmericanIndians has long been one of tragedy and injustice.Many Indians are among the poorest and mostvulnerable people in this country, and the lack of qualityeducation and job opportunities compound societalproblems that resulted directly from the government’sshameful treatment of Indians in the past. For more thana century, Indians have looked to the court system toprotect their rights and remedy the injustices causedby past and continuing government misconduct. For thisreason, it is particularly important that this Courtcarefully consider rulings, like the court of appeals’decision below, that radically minimize the government’strust obligations to Indians. Simply put, if the court ofappeals’ decision stands, it will permit the United Statesto ignore the "exacting fiduciary standards" owed to theIndians by destroying critical trust records and decliningto fund its fiduciary duties, rendering the government’sspecial trust relationship with the Indians essentiallyhollow and meaningless.

At least one circuit has rejected the holding of CobellXXII for this very reason. See Loudner v. United States,108 F.3d 896 (8th Cir. 1997). In Loudner, linealdescendants of the Sisseton-Wahpeton Sioux Tribebrought a class action to recover from a fund held intrust by the United States to compensate tribalmembers for the government’s breaches of a treaty withthe tribe. Id. at 898-99. Although the claims weregoverned by a six year statute of limitations, theplaintiffs argued that the government breached its trust

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obligations to identify and notify all beneficiaries of thetrust, and as a result the plaintiffs only recently receivednotice of their potential claims against the fund. Id. at901. In response, the government argued that thebudget and staff of the Interior Department wereinadequate to comply with the strict common law dutyto notify beneficiaries of the trust. Id. at 903 n.7

The Eighth Circuit, citing Mitchell II, rejected thegovernment’s arguments. The court held that traditionalcommon law trust principles apply to the federalgovernment’s trust obligations to identify and notifyIndian beneficiaries. Id. at 901. The court further heldthat "the government may not avoid its trust duties onthe grounds that the budget and staff of the Departmentof Interior are inadequate .... [T]he United States maynot evade the law simply by failing to appropriateenough money to comply with it." Id. at 903 n.7.

The court of appeals’ decision here, which permitsthe United States to "evade the law simply by failing toappropriate enough money to comply with it," directlyconflicts with the Eighth Circuit’s holding. As a result,the nature and scope of the Interior Department’sfiduciary duty to preserve trust records and renderfuture Indian trust accountings will vary greatlydepending on the circuit in which the trust beneficiariesassert their claims. In light of the billions of dollarsin individual Indian assets held in trust and thelikelihood that future accounting disputes will arise, theCourt should establish a uniform standard for thefederal government’s fiduciary accounting duties underthe IIM trust.

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In sum, the court of appeals’ decision is contrary tothis Court’s binding precedent and conflicts with adecision of the Eighth Circuit addressing the precisequestion here. Moreover, the decision significantly altersthe fundamental fiduciary obligations of the UnitedStates to individual Indian trust beneficiaries and leavesthe whereabouts of billions of dollars in IIM trust assetsforever in doubt. Accordingly, the Court should grantthe petition for writ of certiorari and reverse the courtof appeals’ decision.

II. THE COURT OF APPEALS’ DECISION ISCONTRARY TO THE PLAIN LANGUAGE OFTHE TRUST REFORM ACT.

In 1994, Congress passed the Trust Reform Act.Among other provisions, the Act provides that theDepartment of the Interior "shall account for the dailyand annual balance of all funds held in trust by theUnited States for the benefit of an Indian tribe or anindividual Indian which are deposited or investedpursuant to section 162a of this title." 25 U.S.C. § 4011(a)(emphasis added). The court of appeals examined theTrust Reform Act’s language in detail in Cobell VI andconcluded that it "makes clear" that the InteriorSecretary owes IIM trust beneficiaries "a completehistorical accounting of trust fund assets." 240 E3d at1102.

In the Trust Reform Act, Congress expresslyrequired the Interior Department to account for "allfunds held in trust by the United States for the benefitof an Indian tribe or an individual Indian." 25 U.S.C.§ 4011(a) (emphasis added). "[A]ll funds" means all

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funds;2 the statutory language is clear and unambiguous,and the plain language of the Act unquestionablyrequires an accounting of each and every dollar in theIIM trust.3

The court of appeals plainly disregarded the clearlanguage of the Trust Reform Act. It held that theInterior Department could decline to account for manyIIM funds simply because the federal government doesnot want to pay for the accounting. See Cobell XXII,573 F.3d at 815. There is simply no basis whatsoever inthe Trust Reform Act for the exception invented by thecourt of appeals.

In addition, because Congress declined to spell outthe precise scope of the government’s accountingobligations, except to provide that the accounting mustencompass "[a]ll funds," the government’s fiduciaryduties are controlled by the common law of trusts.

2. "All" means "1. The total entity or extent of .... 2. Theentire or total number, amount or quantity .... 3. The utmostpossible of .... 4. Every." THE AMERICAN HERITAGE DICTIONARY94 (2d College ed. 1985).

3. See Cobell VI, 240 F.3d at 1102:

Section 102 of the 1994 Act makes clear that theInterior Secretary owes IIM trust beneficiaries anaccounting for ’all funds held in trust by the UnitedStates for the benefit of an Indian tribe or anindividual Indian which are deposited or investedpursuant to the Act of June 24, 1938.’ 25 U.S.C. §4011(a) (emphasis added). ’All funds’ means allfitnds, irrespective of when they were deposited (orat least so long as they were deposited after the Actof June 24, 1938).

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See NLRB v. Amax Coal Co., 453 U.S. 322, 329 (1981)."Where Congress uses terms that have accumulatedsettled meaning under either equity or the common law,a court must infer, unless the statute otherwise dictates,that Congress means to incorporate the establishedmeaning of these terms." Id. Moreover, when Congressuses those terms in the trust context, courts "must inferthat Congress intended to impose on trusteestraditional fiduciary duties unless Congress hasunequivocally expressed an intent to the contrary."Id. at 330.

As discussed above, a common law trust accountingrequires a complete and accurate accounting of all trustassets, not merely an accounting of those portions ofthe trust that can be performed with the money thetrustee unilaterally decides to spend. See RESTATEMENT(THIRD) OF TRUSTS § 83; 1A CJS ACCOUNTING § 44; GEORGEG. BOGERT, THE LAW OF TRUSTS AND TRUSTEES § 962. Thus,for the same reasons the court of appeals’ decision iscontrary to Mitchell II and its progeny, the decision alsois contrary to the plain language of the Trust ReformAct.

The court of appeals’ interpretation of the TrustReform Act also runs counter to the clear legislativeintent of the Act. When Congress passed the TrustReform Act, it did so with full knowledge of thedeplorable state of the IIM trust records and thedecades of continuous mismanagement and lack ofoversight. See Cobell VI, 240 E3d at 1089 (citing reportsfrom the General Accounting Office, InteriorDepartment Inspector General, and Office ofManagement and Budget); see also MISPLACED TRUST:

2O

THE BUREAU OF INDIAN AFFAIRS’ MISMANAGEMENT OF THE

INDIAN TRUST FUND, H.R. No. 102-449 (1992). Thus,Congress understood that the accounting likely wouldrequire substantial time and expense on the part of thefederal government. But Congress nonetheless choseto impose an unqualified statutory duty on the InteriorSecretary to conduct a full historical accounting of theIIM trust assets. See Cobell VI, 240 F.3d 1102. HadCongress intended to alter common law trust principlesand to limit the required accounting based on availablefunding, it would have said as much in the statute. SeeAmax Coal Co., 453 U.S. at 329. Moreover, "statutespassed for the benefit of dependent Indian[s]... are tobe liberally construed, doubtful expressions beingresolved in favor of the Indians." Bryan v. Itasca County,426 U.S. 373, 392 (1976) (citation omitted). Thus, anydoubt as to the intent of the statute must be resolved infavor of the complete accounting requested bypetitioners.

In sum, the Trust Reform Act mandates a fullhistorical accounting of"all funds" in the IIM Trust. Thedecision of the court of appeals, which permits theInterior Department to limit the nature and scope ofthe accounting simply by limiting the amount of moneyavailable to pay for it, is contrary to this clear statutorymandate. As discussed above, the court of appeals’decision will deprive five hundred thousand individualIndian trust beneficiaries of a remedy for the loss oftheir property and permit the United States to brushaside the loss of billions of dollars in IIM trust assets asa result of the government’s own malfeasance and grossnegligence. For this reason as well, the Court shouldgrant the petition and reverse the court of appeals.

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III. THE COURT OF APPEALS’ DECISION RAISESSERIOUS CONSTITUTIONAL CONCERNS.

The limited accounting set out by the court ofappeals necessarily would result in the taking ofindividual Indian trust assets by the United Stateswithout any compensation or procedural safeguards. Forexample, the court of appeals found that certain IIMtrust assets improperly had escheated to Indian tribes.See Cobell XXII, 573 E3d at 813. But the court’s opinionpermits the Department of the Interior to ignore thoseescheated funds if "the cost to account will exceed theamount recovered by class beneficiaries." Id. at 814.Likewise, the court of appeals recognized that thegovernment withdrew funds from the IIM trust for itsown use, and that there is no way to determine whatportion of those funds were appropriate administrativefees and what portion amounted to impropermisappropriation. But the court held that "[i]faccounting for [those funds] causes an enormousincrease in cost.., and only a small effect on the ultimatebalances, then the district court is free to approve ofInterior’s low-cost ways to avoid this." Id. at 814-15.

These holdings raise substantial constitutionalconcerns. First, the United States cannot retain or takeassets belonging to the individual Indian trustbeneficiaries, or convey those assets to others, withoutproviding compensation to the Indians under theTakings Clause. There is no de minimis exception tothe principle that the United States cannot take privateproperty without just compensation. See Loretto v.Teleprompter Manhattan CATV Corp., 458 U.S.419, 434-35, 436 (1982). But the effect of the court of

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appeals’ decision is to permit the United States topermanently deprive individual Indian trustbeneficiaries of assets of unquestioned value that at onetime were known and accountable by concluding that itlacks funding to account for those assets today. Thisresult violates the Due Process Clause and TakingsClause of the U.S. Constitution. Moreover, petitionershave a vested right to future accountings of their IIMtrust assets under Mitchell II but, under the decisionof the court of appeals, Congress could effectivelyeliminate that right by declining to appropriate sufficientfunds to carry out the accounting. This result similarlyviolates the vested rights doctrine of the Due ProcessClause. See McCullough v. Virginia, 172 U.S. 102, 123(1898); Hodges v. Snyder, 261 U.S. 600, 603 (1923).

In sum, if the decision of the court of appeals stands,it will not only deprive petitioners of their unqualifiedright to a complete historical accounting in this case,but also could result in future constitutional litigationover billions of dollars in past and future assets for whichthe Interior Department cannot adequately accountbecause of the lack of sufficient funding and continuingbreaches of trust. It is well-settled that courts shouldinterpret statutes to avoid raising these types of seriousconstitutional doubts. See, e.g., Clark v. Martinez, 543U.S. 371,381-382 (2005). An interpretation of the TrustReform Act that mandates a complete and accuratecommon law trust accounting avoids the constitutionalproblems described above. Accordingly, the Court shouldgrant the petition for writ of certiorari and interpretthe government’s trust accounting obligations in amanner that removes these constitutional concerns.

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CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

KEITH M. HARPERKILPATRICK STOCKTON LLPSuite 900607 14th Street, NWWashington, DC 20005-2018202-508-5800

DENNIS M. GINGOLD

Counsel of Record607 14th Street, N.W.9th FloorWashington, D.C. 20005202-824-1448

WILLIAM E. DORRIS

ELLIOTT LEVITAS

KILPATRICK STOCKTON LLP

1100 Peachtree StreetSuite 2800Atlanta, GA 30309404-815-6500

DAVID C. SMITH

ADAM H. CHARNESRICHARD D. DIETZ

KILPATRICK STOCKTON LLP

1001 West Fourth StreetWinston-Salem, NC 27101336-607-7300

Counsel for Petitioners

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