This Week in the Ninth: Igra’s ‘Two-Step’ Collusion and Class Actions – Litigation, Mediation and Arbitration
This Week: Ninth Circuit Details Indian Gaming Regulation Act’s “Two-Step Determination” Regarding New Casino’s Effects on Tribal Lands and Clarifies When a Post-Certification Class Action Settlement Agreement Is Unfair and Collusive .
INDIAN KALISPEL TRIBE VIEW INTERIOR DEPARTMENT
Court finds Home Secretary may approve Indian tribe’s request for an off-reserve casino under India’s Gaming Regulation Act, even though the new casino would negatively impact another neighboring tribe , provided that this impact is offset by benefits the entire surrounding community. He also believes that the secretary’s decision to grant the Spokane Tribe’s claim in this case did not violate the Administrative Procedure Act.
Sign: Judges Berzon, Christen and Bade, with Judge Christen writing the opinion
Climax: “A demonstration that the extra play may be detrimental to some members of the surrounding community, including an Indian tribe, does not dictate the outcome of the secretary’s two-step determination.”
Background: In 2001, the Spokane Tribe applied to the Home Office for a permit under the Indian Gaming Regulation Act (IGRA) to allow them to open a casino in Airway Heights, WA. The neighboring Kalispel Indian tribe opposed the proposed casino, as it would be located just two miles from their Northern Quest Resort and Casino. According to Kalispel, competition with the new Spokane casino would reduce the income the tribe made from Northern Quest, severely compromising its ability to pay debts and provide for its members. In 2015, the Minister of the Interior granted the permit to the Spokane tribe. As required by the IGRA, the secretariat’s decision concluded that the new casino 1) “would be in the best interests of the [Spokane] tribe “and 2)” would not be detrimental to the surrounding community “.
The Kalispel Tribe sued the Home Secretary in federal court in 2017, alleging that the decision to grant the Spokane Tribe permit – and in particular the secretary’s “two-step determination” that the casino proposed ” would not be detrimental to the surrounding community. “- violated the IGRA and the Law on Administrative Procedure. The Spokane Tribe intervened in the case and both parties have requested summary judgment. The district court dismissed Kalispel’s claims and granted summary judgment in favor of the secretary and Spokane.
Result: The Ninth Circuit upheld the district court’s ruling, confirming the approval of the secretary of the new Spokane Tribe casino.
Kalispel argued that “any to the detriment of a neighboring Indian tribe “prevented the secretary from concluding that a new casino” would not be detrimental to the surrounding community. “The court disagreed, finding that the benefits to certain segments of the community may outweigh the damage to other members of the community. The court noted that the regulations of the Office of Indian Affairs defining the” surrounding community “understood more than neighboring Indian tribes, and he felt that” demanding a full alignment of interests in the surrounding community “” would frustrate Congress’ goal of adopting the IGRA “one entity.
could be severe enough to cause a net detriment to the community, “[a] showing that the extra play may be detrimental to some members of the surrounding community. . . does not dictate the outcome of the secretary’s two-step determination. “
The court also dismissed Kalispel’s claim that the secretary had not sufficiently considered the threat to the tribe and offered “implausible explanations which were inconsistent with the record.” Rather, the secretary’s formal decision repeatedly referred to the possible loss of income for the Kalispel tribe – she had just found out that they were outweighed by the benefits to the rest of the community. And although Kalispel submitted two private reports in support of its predicted economic damage, the secretary sided with the Home Office’s own studies of the situation, which predicted the Kalispel tribe’s income would rebound. after the opening of the new casino. Particularly in light of the deference accorded to predictive judgments in an agency’s area of expertise, the court held that while Kalispel’s alleged injuries were “real and recognizable harm”, the two-step determination of the secretary was not arbitrary and capricious under the APA.
BRISENO V. HENDERSON
The Court extends its precedent by In litigation over the product liability of the Bluetooth headset at post-certificationclass action settlement agreements, believing that such agreements are subject to scrutiny for injustice and collusion.
The panel: Justices Owens, Lee and Ezra (WD Tex.), With Judge Lee writing the opinion
Climax: “While the courts should not casually guess at the class settlements negotiated by the parties, neither should they give them the green light, simply because the parties profess their dubious agreement to be ‘okay, d ‘okay, okay’. We’re rescinding the district court’s approval of the collective settlement because the deal raises a squadron of red flags fluttering in the wind and begging for further consideration. “
Background: The plaintiffs in this case filed a class action lawsuit against ConAgra, alleging that its brand of Wesson oil as “100% natural” was misleading (since it contained ingredients from genetically modified organisms) and that the plaintiffs overpaid for the product because of it. misleading label. The district court granted collective certification under rule 23 (b) (3). Soon after, the parties reached a settlement agreement. The agreement contained a so-called “free navigation” clause, under which ConAgra undertook not to challenge the $ 6.75 million in legal fees for the lawyers of the group, and a “kicker” clause. , stipulating that any reduction in the amount of attorneys’ fees would go to ConAgra rather than increasing the price of the class. And although the parties said the settlement was worth $ 100 million, ConAgra actually only paid $ 8 million, of which seven-eighths went to class counsel. A member of collective law professor Todd Henderson objected to the settlement, but the district court nonetheless accepted the deal. Henderson appealed.
Result: The Ninth Circuit reversed. The Court ruled that its standard for assessing the fairness of pre-certification collective settlement agreements, set out in the 2020 In litigation over the product liability of the Bluetooth headsetcase, also applies to post-certification settlement agreements. The Court noted that Rule 23 (e) (2), which requires courts to ensure that collective settlements are “just, reasonable and adequate”, makes no distinction between pre-certification and post-certification settlement. -certification. And although the inducement for class counsel to come to an agreement with the defendant “reaches its peak before the certification of the group”, even after certification, “the class attorney is still incited to conspire with the defendant.” while the defendant has every reason to only care about the total payment, not the allocation of funds between the class and class counsel. In light of these inducements and the broad wording of Rule 23 (e) (2), the Court held that a close examination of the Bluetoothtest also applies to post-certification regulations.
Application Bluetooth, the Court concluded that this settlement agreement “contains the three red flags of potential collusion against which we warned in
Bluetooth“: the lawyer receives a disproportionate amount from the settlement; a clear navigation provision; and a referral clause. Although the Court clarified that these” red flags “are not in itself unfair and may simply “be part of a good deal”, district courts “must deal with them where they appear.” . . . to ensure that the parties did not come to an agreement at the expense of the members of the group ”. Accordingly, he referred the case back to the district court for further proceedings.
The court also found that the injunction included in the settlement agreement was “virtually worthless” and that the district court had committed a reversible error “in even placing” some value “on the remedy. The injunction in question prohibited ConAgra from marketing Wesson’s oil as “100% natural”. But not only had ConAgra already stopped this practice long before the settlement agreement was concluded, ConAgra no longer even owned Wesson Oil. “ConAgra,” the court commented, “basically agreed not to do something it doesn’t have the authority to do”. The promise was illusory, and therefore the injunction was “practically worthless”.
Finally, the court disagreed with Henderson that the district court had improperly shifted the burden of proving that the settlement was unfair to him. The Court reaffirmed that “Rule 23 (e) (2) presumes that a class action settlement is invalid” and that the application of the opposing presumption is a reversible error, but found that District Court no. had not made this mistake here (despite a wording suggesting otherwise).
Due to the generality of this update, the information provided here may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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