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NOTE: A few unintended error's and omissions are in this transcript and will be corrected later!

Oral Orgument heard before the United States Courts of Appeals for the District of Columbia

No. 06-5092

Monday, December 11, 2006

Washington D.C.

The above-entitled matter came on for Oral argument, pursuant to notice.

Before:

CIRCUIT JUDGE TATEL AND KAVANAUGH AND SENIOR CIRCUIT JUDGE WILLIAMS

APPEARANCES:

ON BEHALF OF APPELLANT:
               DENNIS G. CHAPPABITTY, ESQ.

ON BEHALF OF APPELLEE:
               JOHN E. ARBAB. ESQ.

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PROCEEDINGS

THE CLERK: Case number 06-5092, Oranna Bumgarner Felter, et al., versus Dirk Kempthorne, Secretary of the Interior, et al. Mr. Chappabitty for the Appellant and Mr. Arbab for the Appellee.

THE COURT: Just hold on a minute until we get the courtroom cleared. You may proceed. Counsel.

MR. CHAPPABITTY: May it please the Court, I'm Dennis Chappabitty, the attorney for the appellants in the case of Felter versus Kempthorne. I urge the Court to take a very strong look at the historical matters that we laid out in the opening brief.

We take a look at first the Ute Partition Act that was enacted in August of 1954. If you take a look at that fine dividing line that separates the event from proir events into which my clients obtained vested property rights, very noticeable and very recognized in what was called the share and share alike agreement.

The share and share alike agreement was not a small pot of money. It amounted to $32 million Dollars. And prior to the time that my clients were terminated from their status as federally recognized Indians, they had a vested right to that property.

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THE COURT: Can I ask you --

MR. CHAPPABITTY: And one of our counts in the complaint dealing with cause of action number eight, sought to request a remedy of an accounting to fine out if there were other valuable pieces of property --

THE COURT: Can I ask you one question, just to interrupt you there?

MR CHAPPABITTY: Yes, sir.

THE COURT: Paragraph six of your complaint stated that for over 40 years plaintiff had repeated requested that defendants comply with their legal and moral obligation and redress the breaches of trust herein. And the question, of course, in this case is whether you are out of time in bringing the case, given that it's more than 40 years old. Can you give us the explanation for why the suit was brought at this time and why we can entertain it?

MR. CHAPPABITTY: Judge Kavanaugh, what we did is we focused not on the implementation, correction, not on the actual termination that I represent, but we looked at the cases that have been filed, and I believe there are over 22 cases in those years. Now, those cases have looked at the administration of the Ute Partition Act. They've looked at various aspects of its implementation.

We sought to take a different approach, and after months of researching and looking at those cases, we decided

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that a case build around prior existing rights had never been filed by any of the plaintiff in this long line of cases.

Now, if we bring it up to date, we have the case of Cobell that has come out of this court. And that case, in fact, entrails an act of Congress that was passed in 2003. And we believe that as far as cause of action for an accounting, that that act of Congress covers the field very plainly and simply by its language, and that at least cause H should continue to exist and go forward.

Now, we've also done some research in furtherance of your question, judge, and we also found out that there had not been an accounting, or we alleged that there had not been an accounting even done in the entire history of this entire situation from 1954 on. The consistent approach of the United States government has been, you lost your identity as an Indian back then, so we own you nothing. Well, we sat back and said, well, what happens to that duty to account for prior existing property and rights and various settlement claims that my clients had vested before the implementation of the Ute Partition Act.

Now, in plain terms, what they had before was taken from them by virtue of their being stripped of their Indian status. And the U.S. government has used that very effectively to stop any further inquiries into an accounting to determine whether or not there should have been items that existed in

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their ownership prior to 1954, to determine whether or not those are wrongfully taken and have never been accounted, and they lost that property.

THE COURT: The appropriations bill 108 that you are referring to refers to losses to or mismanagement of trust, mismanage of trust funds. So is it, I take it, it is your theory then that the trust relationship survived the termination?

MR. CHAPPABITTY: Judge, there is contention on that point. I wouldn't concede that.

THE COURT: Wouldn't concede what?

MR. CHAPPABITTY: I wouldn't concede that the trust relationship stopped or was terminated. The other causes of action, the other seven causes of action we've laid out various legal theories that allege that because of the faulty implementation and the failure of the United States government, the Secretary of Interior, to account for what's preexisting Ute Partition Act properties, that indeed the implementation causes the entire act to fail. That is regarding the other seven causes of action. However it's --

THE COURT: Yes. I'm sorry.

MR. CHAPPABITTY: Yes.

THE COURT: There was language in your brief that suggested that this is, amoung other things, a constitutional challenge to the '54 act.

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MR. CHAPPABITTY: No, judge. That's a point that we have not asserted. We are not looking at, targeting the exact '54 act. We are looking at the corpus of the properties that were owned by my clients, or allegedly owned by them prior to the Ute Partition Act being implemented. We are not looking at what Congress did or didn't do after 1954.

We're only saying that one second before August 27th, 1954, my clients had certain existing property rights as Native Americans with a federally recognized status. At the moment the clock struck midnight, the United states has been very effective in saying, well, you no longer are Indian, therefore, we are not going to account for you for potentially million and millions of dollars.

THE COURT: As you described that, it suggests that in 1954 a duty to account for the closing of the trust arose. Would that be right?

MR. CHAPPABITTY: That's correct, judge.

THE COURT: How does that fit within the language of 108-108?

MR. CHAPPABITTY: Judge, we contend that the language of 108-108 is very simple in its tone, and very simple in the law. It just simply says that including any claim and litigation pending on the date of the enactment of this act.

THE COURT: Yes, but before that it says, the

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statute of limitations shall not commence to run on any claim. Now, at least if you and I, our minds are meeting, the cause of action arose, I guess perhaps it would be a reasonable time after the exact moment, midnight on a particular day in 1954, when the duty to account arose and within a reasonable time for the Interior to fullfill that obligation. But at that point, the cause of action for an accounting would arise, would it not?

MR. CHAPPABITTY: Yes, it would. Under the typical --

The COURT: So the statute of limitations would have commenced several, many decades before 108-108 was adoped.

MR. CHAPPABITTY: Judge, what we are looking at here is the exception to the general rule. And I believe that is the essence of the nominee case, that even though the beneficiary hasn't filed an action for accounting within the six-year time limit, that doesn't give any reason for them to say, oh, I didn't know about it.

There is the ingredient of the federal trustee in this situation, the trustee who consistently said, Ben, you're not a Native American, therefore, I have no duty to own you. We believe that --

THE COURT: Well, that wouldn't respond, I mean, that would be a lawless response to a claim by your clients that they were entitled to an accounting at the termination of

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the trust.

MR. CHAPPABITTY: Judge, I--

THE COURT: Purported trust, since you resist the thought that the trust, purported termination.

MR. CHAPPABITTY: Yes, and I concede -- yes. I concede that that rationale is very valid in certain circumstances. We're looking at what has developed in the long line of Cobell cases, those cases spawned by the Cobell and decisions before this Circuit Court.

We're looking at Congress, not so much as looking at this specifically in regards to the terminated Utes and saying, oh, you lost back in '54. We're looking at those terminated Utes as being members of a tribe and individual Indians back in 1954, as well as other numerous groups of tribes and Indians who have a similar problem with lack of an accounting.

We believe that the act of Congress, public law 108-108 simply leveled the field and brought within the scope a broad range of general causes of action and accounting that may or may not be filed.

THE COURT: Just to be clear what the scope of the argument is, I take it that, suppose there was a particular Indian, the beneficiary of a trust in 1890, and the trust was terminated on the Indian's death with purported delivery of assets to his heirs. I'm not sure whether the trust ever

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worked that way. But let's suppose such a case. Then your reading of 108-108 is that cause of action on behalf of those heirs was revived by 108-108.

MR. CHAPPABITTY: Yes, that's what we would hold the statute means. Very simply, the language is very clear, very precise. It covers a broad area, and it could conceivably bring within a claim that even went to the past injury 100 years ago. Thank you, Judge.

THE COURT: Thank you.

MR. CHAPPABITTY: I have two minutes for rebuttal.

THE COURT: Yes.

ORAL ARGUMENT OF JOHN E. ARBAB, ESQ.
ON BEHALF OF THE APPELLEE

MR. ARBAB: May it please the Court, John Arbab for the Appellees. As I understand Mr. Chappabitty's presentation this morning, he seems to concede that his client's interest in the $32 million dollar judgement vested some three years before the passage of the Ute Partition Act, that is in 1951.

If the trust was terminated at that time, or at least if the cause of action vested at that time, it's certainly well outside the six-year statute of limitation period that's provided for it in section 2401(a).

THE COURT: Well, what about public law 108-108?

MR. ARBAB: Your Honor, I would suggest that that statute goes -- well, first of all, I would maintain that the

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argument based on that provision has been waived, because it was not --

THE COURT: Well, assume it hasn't been waived.

THE COURT: Yes, assume it hasn't been waived for a moment.

MR. ARBAB: If it hasn't been waived, I would --

THE COURT: It's not jurisdictional. Right?

MR. ARBAB: No, its not.

THE COURT: Okay.

MR. ARBAB: That statute would address claims for, as the statute provides, claims concerning the losses to or mismanagement of trust funds. But here there is --

THE COURT: In some sense, perhaps a broad sense, that is exactly the claim, that assets were held in trust and sometime between 1954 and 1961, trust beneficiaries were shortchanged.

MR. ARBAB: I think that is premised on the gravamen of the complaint, which is that there was a wrongfull termination of Indian status.

THE COURT: Well, but I'm looking, the complaint is broader than that. Paragraph 104, by reason of defendant's breech of federal trust obligations and prematurely and unlawfully distributing the assets, and purportedly terminated. I mean, their allegations are that there was a trust relationship that was inappropriately terminated or

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maybe never terminated. Count eight, well, its mainly count seven, I mean, we have assume the truth of the allegations in the complaint.

MR. ARBAB: That's true, Your Honor.

THE COURT: And they talk about breeches of federal trust obligations, prematurely and unlawfully distributing the assets of these people. Right?

MR. ARBAB: Yes, Your Honor. I --

THE COURT: So doesn't that bring it under 108?

MR. ARBAB: I don't believe so.

THE COURT: Tell me why.

MR. ARBAB: The suit depends upon allegations of a wrongful termination of Indian status.

THE COURT: That's what they've alleged.

MR. ARBAB: Right. And in this case, the latest time at which that could have occurred, would have been 1961 with the--

THE COURT: No, but we're assuming that 108 applies.

MR. ARBAB: But 108-108 is not designed to revive claims or to preserve claims, the gravamen of which is the improper termination of federally recognized Indian status.

THE COURT: No, but they're alleging the unlawful termination of the trust arrangement, also.

MR. ARBAB: Yes, but that depends on trust, the trust, the termination of the trust and the termination of

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Indian status were events that occurred together at the latest in 1961 when the trust was terminated and the assets were disbursed. And that is the gravamen of the complaint here, that there was an improper termination of an Indian, recognized Indian status.

THE COURT: Which --

MR ARBAB: Which is not --

THE COURT: according to the complaint, inappropriately terminated the trust relationship, which does bring it under 108, doesn't it?

MR. ARBAB: I don't believe so.

THE COURT: I mean, whether it, I mean, 108 refers to trust, concerning loses to or mismanagement of trust funds. Now, the allegation of the complaint is that that's exactly what's happened here. Your answer is, well it occurred because of the termination of their recognition, and that's not covered by the statute. Right?

MR. ARBAB: Yes.

THE COURT: But the consequences of the termination, according to the complaint, to produce, to put it in the terms of 108-108, produce losses to or mismanagement of trust funds.

MR. ARBAB: Well, Your Honor, I would take the position that the statute does cover claims concerning the loses to or mismanagement of the trust funds. But --

THE COURT: And that's what, if you read the

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portions of the complaint I quoted you, that's exactly what they are alleging. Now, they may be wrong, I don't know, but based on the complaint, which we have to accept as true at this point, why doesn't it come under 108?

MR. ARBAB: The gravamen of the complaint here is, it turns on or is based on the improper or a wrongfull termination of Indian status, recognized Indian status. That is the springboard for the complaint in this case, and that is not covered by the language of PL 108-108.

The trust was terminated at the latest in 1961 when the Secretary of the Interior published the proclamation on August 27th, I believe, 1961.

THE COURT: Look at paragraph 57. In enacting the UPA, the U.S. Congress did not relieve the defendants from expecting or otherwise complying with substantive preexisting laws or statutes. Now, if, and that combined with the other provisions of the complaint alleged that these are funds or properties that were covered by the trust arrangement, the trust relationship.

MR. ARBAB: Yes, Your Honor.

The COURT: Yes. So just so I understand, your position is, government's position is that this 108-108 doesn't apply because regardless of the language of the complaint, the real focus is on the termination, and that's what this case is about?

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MR. ARBAB: Yes, Your Honor.

THE COURT: That's your argument?

MR. ARBAB: Yes, Your Honor. I believe that there are plenty of allegations in the complaint that bear out that construction of the suit.

THE COURT: And what do you think we should do with these other allegations that refer to the trust arrangement?

MR. ARBAB: Well, I think that those are claims that further demonstrate why the claim was untimely brought, because they are all relating to --

THE COURT: No, no. We're assuming that 108 applies.

MR. ARBAB: I think you have to interpret, you have to come to some interpretation of the complaint as a whole, and the gravamen of the complaint is that the trust status, that the federally recognized status of these particular group of Indians was improperly terminated.

THE COURT: That they are all premised on improper termination.

MR. ARBAB: Yes, Your Honor.

THE COURT: Your argument turns on a distinction between unlawful termination and mismanagement. Is that correct?

MR. ARBAB: I think that is a distinction that is borne out by the way the comlaint is drafted. Yes Your

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Honor.

THE COURT: Well no, I'm talking about as a general legal matter. Let's put aside the wording of the complaint. And I guess suppose a state creates a cause of action for mismanagement of a trust, and then the trustee simply repudiates the trust and says, I'll take the assets. The cause of action would, you think, clearly not, that claim would not be encompassed by the hypothetical statute?

MR. ABAB: I think it would depend on how the claim is drafted. If the claim, as in this case, turns on some improper termination of the status, them that would not be covered by the statute.

THE COURT: Well, terminating the status of a beneficiary as a beneficiary sounds like exactly that.

MR. ARBAB: Well, in a case such as you are hypothesizing, the two situations may be not distinguishable. But that isn't the situation that we have in this case.

THE COURT: You don't deny that there was a trust relationship between the government and this tribe before the termination, right?

MR. ARBAB: That's right.

THE COURT: And so if that act hadn't been passed, then this, you would concede, them, that this would be covered by 108?

MR. ARBAB: If there had not been the passage of a

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statute.

THE COURT: Of the termination act, right. Right?

MR. ARBAB: I think the case probably would be covered by 108-108 in that situation.

THE COURT: And since the ending of the trust relationship was triggered by the termination act, your point is that this is therefore a termination case, not a trust case?

MR. ARBAB: Yes, Your Honor,

THE COURT: Thank you.

MR. ARBAB: Thank you.

THE COURT: Does counsel have any time left? No? You can take two minutes.

MR. CHAPPABITTY: Thank you.

REBUTTAL ARGUMENT OF DENNIS G. CHAPPABITTY, ESQ.
ON BEHALF OF THE APPELLANT

MR. CHAPPABITTY: Yes, I would like to provide a very general comment in closing, and to borrow from a very relevant analogy attributed to Felix Cohen, A very preeminent federal Indian law expert in the fourties and fifties. And my originally terminated 490 Utes are the proverbial minor's canaries. And what happened here, those minor's canaries were not only humiliated and derogated in their human existence by

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being stripped by an act of Congress, but they also had a perfect theft committed against them. And that perfect theft involved preexisting, pre-UPA property and shares, settlement monies that were entrusted to them, and them in 1954 they lost that.

THE COURT: Do you know where these -- do you have any supicions about where these funds and properties are now, what they are worth?

MR. CHAPPABITTY: Judge, that is somewhat of a chicken and the egg question which is --

THE COURT: I realize you haven't had the accounting, but so you have any view?

MR. CHAPPABITTY: No, and we are seeking the accounting to determine that, and to determine the extent of what happened with those preexisting funds. And also I want to emphasize to the Court that the United States has been very effective in taking a very massive confusing historical situation and using it to its advantage.

In this situation, we look at the simplicity of public law 108-108 and look at what Congress intended to apply in terms of the historical accounting that the Bureau of Indian Affairs did or didn't do. And the Cobell case, very preeminently pointed out that yes, there have been problems. So Congress took this broad approach. And we contend that this action comes within that, at least as to cause of action

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number eight.

The other actions, we would urge the Court to look at them not in terms of attacking the Ute Partition Act, as much as looking at the historical recountment that we've laid out in the allegations. And take those items as favorable as the Court can to allow cause of action eight to continue.

THE COURT: Thank you.

MR. CHAPPABITTY: Thank you.

THE COURT: The case is submitted.

(RECESS.)

Click here to read the original Court transcript

Appeal Courts Decision of January 19, 2007

NOTE: A few unintended error's and omissions are in this transcript and will be corrected later!


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