Minerals Council , Legal

10th Circuit upholds scope of accounting by lower court in Fletcher case

The 10th Circuit Court of Appeals has upheld the Northern District Court’s ruling in the case Fletcher v. United States. The U.S. government will account for the headright shares of the Osage Mineral Estate dating back to 2002.  

The last surviving plaintiff in the case, William Fletcher, and his attorney Jason Aamodt of Dallas L.D. Strimple of Indian and Environmental Law Group, PLLC, appealed to the 10th Circuit over the scope of the accounting. They argue the scope of accounting outlined by the District Court should be amended to begin from 1906 and not 2002 and that it should be more detailed to include the prices of oil at the time of sale. The 10th Circuit ruled that the District Court could fashion the accounting at their discretion and it had done so without abuse.

“We were disappointed that the 10th Circuit didn’t order an expansion of the accounting, but I understand what the Circuit was saying. Basically, get your accounting the District Court has ordered and see what it says, and if at that time there appears there are deficiencies at that process, then you can take it up at that point,” Aamodt said. “It didn’t say the scope was incorrect or correct, it just said [the District Court] had broad discretion … now we’ll see what the United States can provide.”

The District Court granted the U.S. government an extension of time to conduct the accounting. It is due to the plaintiffs in September.

Fletcher first filed the case in 2002, along with plaintiffs Juanita West, Cora Jean Jech, Betty Woody and Charles Pratt, who have all since passed. Fletcher filed a third amended complaint in 2010. The complaint alleged the U.S. government was “improperly distributing royalties to non-Osage tribal members, which diluted the royalties for the Osage tribal members – the rightful headright owners,” according to the ruling.

Fletcher asked for an accounting of the headright interests and the District Court denied the request. They appealed and the 10th Circuit ruled an accounting was due to the plaintiffs and that the District Court would outline the scope of accounting.

The scope of accounting ordered by the District Court reads:

-       The accounting will run from the first quarter of 2002 until the last available quarter.

-       It will be divided and organized either by month or by quarter.

-       It will state the date and dollar amount of each receipt and distribution.

-       It will briefly identify and describe the source of each trust receipt (i.e., the name of the payer/lessee and the contract number for the oil and/or gas lease on which the payment is made).

-       It will state the name of the individual or organization to whom each trust distribution was made.

-       It will state the headright interest that each beneficiary possessed at the time of distribution for headright distributions.

-       It will state the amount of interest income generated from the tribal trust account and the date on which such interest was credited to the account.

The 10th Circuit noted that the District Court’s formula for how much recovery the plaintiffs would receive for their misdistribution theory would be small and would only increase a single “headright holder’s royalty distribution by $3.58 per quarter, or a little less than $15.00 per year.”

However, the plaintiffs have repeatedly stated in court proceedings that the accounting they are seeking is “merely a means to later sue for misdistribution,” according to the 10th Circuit ruling.

“What the really interesting thing to remember is, is that to my knowledge, this is the first time the U.S. accounts to a group of Indians for the management of a trust fund. They didn’t do it in Cobell, the [Osage Nation’s] trust case, or on any case I’ve seen or been a part of,” Aamodt said. “Even if it’s for a limited time frame and a limited scope, I think that’s going to be very helpful and informative to see what that accounting should ultimately look like.”

Fletcher v. United States is a class action lawsuit that represents approximately 6,000 Native American shareholders. Aamodt said the majority are Osage shareholders but there are quite a few from neighboring tribes, such as the Ponca Tribe and the Cherokee Nation.

Osage reaction

Osage tribal members and headright holders discussed the 10th Circuit ruling on Facebook, with notable Osage attorneys Wilson Pipestem and Gene Dennison weighing in. Pipestem called the ruling “unfavorable” and Dennison called it “dangerous litigation” and that it shouldn’t be pursued.

When pressed by fellow Osages, both men were not forthcoming with their opinions, but Dennison eluded to another post made by a headright holder that if the courts could figure out a way to remove headrights from headright holders, then they could figure out how to remove headrights from Osages.

 

Pipestem also asked for Fletcher’s legal counsel to update the Osage shareholders on the status of the case. The legal counsel includes Aamodt, David Jorgenson and Mark Waller of Waller, Jorgenson, Warzynski, PLLC; G. Steven Stidham of Levinson, Smith & Huffman in Tulsa; Amanda Proctor of Shield Law Group, PLLC in Jenks, Okla.

 

Aamodt said those comments are misinformation.

“First, the litigation seeks an accounting, not a stripping of anybody’s headright interests. So, to an extent of saying it’s dangerous, they’re simply misinformed about what the case is about. Second, to the extent someone might urge in the future that a person is not entitled under the law to hold an interest, it’s never dangerous to apply the application and enforcement of law,” Aamodt said. “For example, if this was Civil Rights litigation, and [someone said] one shouldn’t seek to enforce a person’s civil rights because [the courts] could justify taking away everyone’s civil rights? It’s a ridiculous argument.”

 

[Editor's Note: This story was updated on May 24, 2017.]