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USDA Settlement Fails Black Farmers

Obstruction of Justice: USDA Settlement Fails Black Farmers

July 20, 2004

Denials and Delays Prevail

The current state of play in the settlement presents a far different picture than the predictable, efficient process envisioned by the Court. Instead of predictable results and shortened process, the settlement has yielded a remarkably high rate of rejection for farmers who chose Track A and a contentious, protracted proceeding for those who elected Track B.

"It was common knowledge that certain white farmers got better treatment. Everyone knew that the white farmers were getting loans while we weren't. They were not far from us, just down the road, and it was just generally known that they were getting money from FSA but we weren't."

—Calvin King, Lunenburg County, VA farmer

Overall, of the nearly 100,000 farmers who came forward with racial discrimination complaints, 9 out of 10 were denied any recovery from the settlement. As a result, instead of the $2.3 billion, USDA only provided $650 million in direct payments to farmers. The outcome of the settlement suggests that the farmers who had the best chance at achieving justice were the 230 who opted out of the settlement.

The settlement looks quite different than originally expected. Prior to advertising the lawsuit to reach potential class members, the farmers' attorneys had predicted that the class would number 2,000. This estimation was far from accurate, largely because USDA kept such poor records of civil rights complaints. There are now 22,354 farmers who have been accepted into the settlement class, 22,181 in Track A and 173 in Track B (Pigford Monitor 2004). There are even more, some 73,747 farmers, who sought entry into the settlement through a late-claims process (Pigford Arbitrator 2004, at 2-3).

African American farmers have faced high rates of denial in both tracks. Of the 22,181 farmers assigned to Track A, 8,562 or 40 percent, have been denied (Pigford Monitor 2004). As for Track B, of the 173 eligible farmers, 18 farmers, a mere 10 percent, have prevailed after a hearing (Pigford Monitor 2004a). Sixty-eight settled with USDA prior to obtaining a decision. Thirty-nine farmers had their cases dismissed without a hearing. Another 22 lost after a hearing.

According to the Office of the Monitor, 190 Track A farmers (Pigford Monitor 2004) and 23 Track B farmers are still awaiting decisions, 20 of whom have not yet had even an initial hearing (Pigford Monitor 2004a), over 5 years after the Consent Decree was entered.

Table. Denials and delays in Track B Outcomes

Farmer Status* Number of Farmers
Total Number of Farmers in Track B 173**
Farmers Who Won After Hearing 18
Farmers Who Were Dismissed 61
        - Dismissed Prior to Hearing 39
        - Dismissed After Hearing 22
Farmers Awaiting Initial Hearing 20
Farmers Awaiting Arbitrator Decision 3
Farmers Receiving Negotiated Settlement Compensation Prior to Hearing 68

*The Farmer Status information is based on information received from the Office of the Monitor on June 11, 2004.

**This Total Number of Farmers in Track B figure is based on the Pigford Monitor Report of July 12, 2004.

Lack of Notice Prevents 72,000 Farmers from Joining Settlement

When thousands of farmers came forward with claims of discrimination after the settlement-imposed deadline, it became evident that notice of the settlement was insufficient to reach the majority of potential class members. Farmers had difficulty meeting deadlines in all aspects of the settlement, largely due to the failure of their lawyers to comply with the required timelines and communicate with the farmers. The Court admonished the farmers' lawyers for their failure to meet deadlines, even going so far as to state at one point that their representation "border[ed] on legal malpractice" (Pigford 2002, at 922).

The farmers' lawyers were responsible for providing adequate notice to all putative class members. The flood of late claims indicates that the notice failed to reach thousands of farmers with claims against USDA. The Court-approved late claims process provided for entry into the settlement process upon demonstrating extraordinary circumstances that prevented the farmer from meeting the original deadline. Acceptable reasons for late filings included natural disasters and being homebound (Pigford Arbitrator 2001, at 4), but not lack of notice of the settlement.

A flood of farmers, numbering 73,747, sought late entry into the settlement process (Pigford Arbitrator 2004, at 2-3). Of this 73,747, 65,947 farmers filed their applications on time (Pigford Arbitrator 2004, at 2-3). The overwhelming majority of the farmers who did apply on time, some 63,816 farmers, were ultimately denied entry into the settlement (Pigford Arbitrator 2004). Their claims were never heard on the merits, and they will never again have a chance to seek relief for their discrimination complaints.

Top 10 States: Farmers seeking entry under court-mandated extension

State Rejected Granted Total
Mississippi 18,983 286 19,269
Alabama 14,268 294 14,562
Tennessee 4,642 24 4,666
North Carolina 2,448 1,012 3,460
Oklahoma 3,309 51 3,360
Georgia 3,228 81 3,309
Illinois 2,864 29 2,893
Louisiana 2,312 21 2,333
South Carolina 1,826 70 1,896
California 1,495 30 1,525

National Total 63,816 2,131 65,947

See data for all 50 states

Note: Data in this table is based upon information received from the Office of the Monitor on April 26, 2004.

USDA Pays DOJ Millions to Fight Farmers' Claims

USDA contracted with the United States Department of Justice (DOJ) to provide legal representation in the settlement. DOJ internal documents reveal that the Civil Division spent 56,000 hours of attorney and paralegal time challenging 129 farmers' claims. [Document: DOJ timesheets] This amounts to an average of 460 hours, or nearly 3 months of time, devoted to contesting each individual farmers' claim. Assuming an average salary of $60,000, if this amount of time was spent attacking the claims of all 22,000 farmers in the class, this represents a potential cost of $330 million to taxpayers. That is equivalent to the cost of providing Track A relief for 6,600 farmers.

Overall, USDA spent $12 million by 2002 for DOJ's assistance in disputing individual farmers' claims. [Document: USDA Expenses] These numbers are extraordinarily high for a settlement that was intended to provide a "virtually automatic" payment to farmers through an abbreviated procedure. Instead, it appears that African American farmers were treated as adversaries rather than as partners in a cooperative settlement.

Proceedings Lack Transparency and Accountability

Much of the transparency provided in traditional legal proceedings was lost in the Pigford matter because the case settled out of court. While the terms of the settlement agreement are public and the amounts of most settlement payments are public, details about the settlement proceedings are largely confidential.

Traditionally public documents such as transcripts of proceedings, motions of the parties and rulings of the decision-makers are not made available to the public. Farmers' attorneys have even faced difficulty in obtaining written rulings in their own cases. All attorneys who sign privacy agreements are entitled to obtain information in their farmer's case, however, because of the USDA's obstructive practices, information relating to white farmers may be omitted from the documents. This poses a serious problem, because proving the existence of a white farmer who received better treatment is vital to obtaining payment in both tracks. The farmers proceeding pro se, without legal representation, are not permitted to obtain any materials that include information on similarly situated white farmers (Pigford Monitor 2003). Without the accountability offered by transparent proceedings, plaintiffs are more vulnerable to inequities that may arise in the course of the proceedings.

Court Trial USDA Settlement
Public hearings Closed hearings
Right to discovery documents, court-enforced information sharing No discovery process
Right to appeal by neutral party No appeal, only request for re-examination by original decision-maker
Public transcripts, motion papers and court rulings Farmers' attorneys must specially request transcripts, USDA filings and rulings in their own case; without confidentiality agreements, farmers prohibited from seeing any documents; All farmers' attorneys must sign confidentiality agreements; pertinent information on case redacted by USDA
Publicly appointed or elected judges make decisions Private, for-profit companies employ judges-for-hire to make decisions on claims

USDA Conceals Key Data from Farmers

"[T]he thing I'm frustrated about...is the farmers...believed at the time of the settlement that most of them were going to get something...because we thought finding similarly situated white farmers wasn't going to be a problem. And then it turned out to be a problem."

— Judge Paul Friedman, 4/19/2001, Pigford Status Hearing

USDA constructed a major obstacle by refusing to provide African American farmers with information from its own files regarding "specifically identified, similarly situated white farmers" in their interactions with USDA. This was a key element required for relief in both tracks, and became the basis for denial of numerous claims.

USDA's practice of concealing this data left most farmers facing the task of obtaining information on similarly situated white farmers on their own. This meant tracking down a specific farmer in their county who applied for the same benefit program at the same time, with the same acreage, the same type of crop, the same credit history, and received a higher payment or better treatment than the African American farmer. This is a feat that even the most sophisticated lawyer would not be able to achieve based on public information alone. When farmers turned to USDA for information, USDA's lawyers often refused, relying on the fact that they had no obligation under the terms of the Consent Decree to release information on similarly situated white farmers to class members.

USDA repeatedly denied Freedom of Information Act (FOIA) requests from farmers. Thus, the African American farmers in the settlement would endeavor to obtain information using a piecemeal approach, which would provide some, but not all of the needed information. Typically, what would happen is a farmer would try to remember the names of neighboring white farmers who were farming when he/she had filed for benefits. This would provide the general pronunciation, but not necessarily the correct spelling of, the names of white farmers. Then, the farmer's attorney would run the name through public records, searching for property information such as deeds and USDA liens, which would fill in some of the information gaps. This process, however, was often inadequate, as state data systems are not uniform, and detailed information is not widely available through public avenues. Furthermore, this process is time-consuming, and often could not be accomplished within the abbreviated timeline provided by the settlement.

Throughout the course of the settlement, some measures have addressed the problem, but only to a substantially limited degree. Class counsel attorneys, since they represent large numbers of African American farmers, have been able to engage in a limited information exchange based on data gleaned from USDA responses to Track A claims. Arbitrators in Track B cases have started requiring USDA lawyers to provide information on at least three of five white farmers specifically named by farmers in the class. Of course, this still left farmers with the problem of naming such farmers on the basis of non-USDA sources.

If the cases were being litigated in civil court, there would have been rooms full of information on white farmers obtained through discovery. In the absence of documentary discovery, however, cooperation of the USDA was the only option for most farmers in the lawsuit to obtain complete information. Such cooperation was withheld. Without the assistance of USDA, the farmers have found it nearly impossible to obtain enough evidence to prove their claims.

USDA Utilizes Hard-Nosed Tactics in Track B Cases

"When we were negotiating with Counsel for the Government for the consent settlement, had I had any inkling that each claim would be litigated almost as if it was a class action unto itself, I never would have agreed to it."

— J.L. Chestnut, Attorney for African American Farmers, 4/19/2001, Pigford Status Hearing [Excerpt | Full Document]

The Track B mechanism described in the Consent Decree is a procedural shell. It included some basic provisions and deadlines, but provided scarce guidance on procedure. The Court did not adopt the Federal Rules of Civil Procedure or any official set of procedural guidelines. The process essentially relied on an honors system—if both parties agreed to play fair, claimants would reap the benefits of a short, fair settlement procedure superior to the alternative of a civil trial. African American farmers in the settlement and their attorneys had no such luck.

"This same situation has happened to a lot of farmers. They [USDA] find discrimination but they won't pay. They'll fight each one to the end. They'll use taxpayer money to fight against you. The good old boy system is still in place, and working well."

—Linwood Brown, Brunswick County, VA farmer

Reports from the Office of the Monitor, which oversees all claims, note that claimants consistently complain about the "litigious nature of Track B arbitrations" (Pigford Monitor 2002, at 18). Judge Friedman even noted that USDA's conduct was not what was anticipated in the settlement, stating "I think that we all believed from the beginning...[that] the government wasn't going to file that many petitions." [Excerpt | Full Document] A petition is a challenge to a decision made in a settlement case. The USDA filed 672 challenges to decisions made in the settlements, engaging in a pattern of litigious handling of settlement claims (Pigford Facilitator 2003). During a status hearing, an attorney for the farmers expressed outrage at USDA's duplicity, "If I had known I was negotiating a situation whereby in Track B cases we would have these monumental struggles over discovery, lengthy Hornbook motions to dismiss, I never would have agreed to that." [Excerpt | Full Document]

Attorneys from large law firms in the Washington D.C. area took on a large number of Pigford cases on a pro bono basis to assist the farmers' original attorneys in processing claims. They expected a streamlined mediation process, not a trial. What they got was an elaborate motions practice, USDA appeals that repeatedly interrupted the cases, numerous evidentiary objections, delay, and aggressive litigation tactics—contentious litigation at its worst (Legal Times 2002). Attorneys found themselves spending hundreds of hours processing a single African American farmer's claim (Legal Times 2002, 2002a). The firms have devoted thousands of pro bono hours litigating this "settlement" Legal Times 2002a).

During the settlement, USDA adopted the position that farmers who missed any deadlines in their cases should face automatic rejection of their claims. In some cases, USDA lawyers would file numerous motions, causing delays in the arbitration process and missed deadlines. Once such deadlines had passed, USDA lawyers would file a motion to dismiss the case for failure to meet the deadlines.

The USDA asserted its strict deadline position in the case of Earl Kitchen, whose case was ultimately heard before Judge Friedman and then the Court of Appeals. USDA argued that the Arbitrator did not have the power to extend deadlines in settlement proceedings, thus, if a class member missed a deadline, his/her case ought to be summarily dismissed. Judge Friedman rejected this argument, finding that Arbitrators had discretion to extend deadlines (Pigford 2002a). Kitchen ultimately lost, when the Court of Appeals overruled this decision, holding that the Court can modify the deadlines only to the extent that it is justified by significantly changed circumstances (Pigford 2002).

Lawyers for the farmers also faced frivolous motions, or petitions, and hard-nosed litigation tactics at the hands of USDA's attorneys. Such tactics included agreeing to postponements then seeking dismissal for failure to prosecute. Another tactic was to seek recusal of the Arbitrator when faced with sanctions or adverse rulings. USDA has sought to overturn Arbitrator rulings in 12 of the 18 successful Track B farmers' cases (Pigford Monitor 2002, at 7).