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Monday, April 29, 2013

Pigford

The New York Times on Friday ran a long and detailed story about, to put it simply, political- and profit-driven laxity and fraud in the payout of the settlement fund in the Pigford litigation alleging discrimination against black farmers in federal lending. The story is well worth reading. Once nice anecdote, among many (and yes, the story also provides real data), involves a speech given at a Baptist church in Little Rock by the head of something called the "Black Farmers and Agriculturalists Association," in which he boasts "that he and his four siblings had all collected awards, and his sister had acquired another $50,000 on behalf of their dead father." He concludes: "Let’s get the judge to go to work writing them checks! They have just opened the bank vault." 

Two observations. First, as the story notes, the political and moral pressure that led to the substantial and often nonsensical payouts in the black farmers' case is also influencing parallel litigation involving women, Hispanics, and Native Americans. Here's an excerpt about the latter category of litigation, in which the Obama administration began settlement negotations in 2009 despite the fair prospect of victory if it had proceeded to ligitation:

Only 4,400 people filed claims, with 3,600 winning compensation at a cost of roughly $300 million. That left $460 million unspent — of which roughly $400 million under the terms of the settlement must be given to nonprofit groups that aid Native American farmers.

Ross Racine, the director of the Intertribal Agricultural Council, based in Montana, said his organization, with an annual budget of just $1 million, is perhaps the biggest eligible group. But many others are lining up to share the windfall, he said.

“Everybody is looking at this money on the table and saying, ‘Give me some because I am a good guy,’ ” he said.

The remaining $60.8 million will go to the plaintiffs’ lawyers, led by the Washington firm Cohen, Milstein, Sellers & Toll. In court papers, the firm argued that the size of the payment was justified partly by the fact that the settlement nearly equaled the maximum estimate of economic damages. Joseph M. Sellers, the lead counsel, acknowledged the unspent amount was unexpectedly big. But “absent a court order,” he said, “we don’t intend to return it.”

Second, I was curious about how legal scholars had treated this settlement. It's not my area, but I would assume that problems with this litigation and the settlement fund were or should have been well-known by anyone working in the field. Certainly, given the vagueness of the proof requirements, the political pressure to settle generously, the incentives of plaintiffs' lawyers, and the common use of distributions of massive amounts of money to public-interest groups as part of the buyoff process, it would be no surprise to anyone that both individual fraud and what we might call public interest graft are possible side-effects of such settlements, and this should be especially interesting to those working on reparations issues. My search of the literature was less than scientific, but for the most part the discussions I found were either neutral or positive, with little or no acknowledgment made of these potential problems. Nor have I seen much on the legal blogs yet about this story. I trust that the Civil Procedure & Federal Courts Blog and the Native American Law Blog, among other obvious sites, will take note of the story.    

Posted by Paul Horwitz on April 29, 2013 at 10:16 AM in Paul Horwitz | Permalink

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I would be very interested in seeing responses to your second question. This story has been well-known to those who read the late Andrew Breitbart's stories on Pigford 2-3 years ago. At that time since the source of the allegations was on the right, the media discounted it and focused on calling Breitbart a racist to get him to shut up and make sure no one else listened to him (he did acknowledge that there was a core group of farmers who actually did face discrimination - it was the gravy train aspect of the settlement that offended him).

Posted by: Mark | Apr 30, 2013 9:28:09 AM

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