Western Shoshone Identifiable Group v. United States

In the United States Court of Federal Claims

No. 06-896L

Filed: June 13, 2019

* * * * * * * * * * * * * * * *

THE WESTERN SHOSHONE *

IDENTIFIABLE GROUP, represented *

by the YOMBA SHOSHONE TRIBE, *

a federally recognized Indian Tribe, *

et al., * Tribal Trust Funds; 25 U.S.C.

Plaintiffs, * § 162a; Breach of Fiduciary

v. * Duty; Duty to Prudently

* Invest.

UNITED STATES, *

*

Defendant. *

*

* * * * * * * * * * * * * * * *

Kelli J. Keegan, Barnhouse Keegan Solimon & West LLP, Los Ranchos de

Albuquerque, NM, for plaintiffs. Of counsel were Randolph Barnhouse and Michelle

Miano, Barnhouse Keegan Solimon & West LLP, Los Ranchos de Albuquerque, NM, and

Steven D. Gordon, Holland & Knight, LLP, Washington, D.C.

Joshua P. Wilson, Trial Attorney, Natural Resources Section, Environment

& Natural Resources Division, United States Department of Justice, Washington, D.C.,

for defendant. With him were Peter K. Dykema and Trent Crable, Natural Resources

Section, Environment & Natural Resources Division, and Joseph H. Hunt, Assistant

Attorney General, Civil Division, Department of Justice. Of counsel were Anthony P.

Hoang, Natural Resources Section, Environment & Natural Resources Division, United

States Department of Justice, Washington, D.C., Michael Bianco and Joshua

Edelstein, Office of the Solicitor, United States Department of the Interior, Washington,

D.C., and Thomas Kearns and Rebecca Saltiel, Office of the Chief Counsel, United

States Department of the Treasury, Washington, D.C.

OPINION

In this Native American tribal trust fund case, three tribal plaintiffs and three

individual plaintiffs have sued defendant, the United States, for allegedly mismanaging

plaintiffs’ three tribal trust funds, received as a result of three separate cases before the

Indian Claims Commission (ICC) and its successors for the government’s taking of the

plaintiffs’ ancestral lands in Nevada and California without just compensation, over a

thirty-three-year period. Plaintiffs seek to recover $216,386,589.83 in damages for the

government’s alleged mismanagement of the largest of the tribal trust funds, the 326-K

Fund, and $1,592,822.43 in damages for the government’s alleged mismanagement of

the two smaller tribal trust funds, the 326-A-1 and 326-A-3 Funds. The three tribal plaintiffs

are the Yomba Shoshone Tribe, Timbisha Shoshone Tribe, and the Duckwater Shoshone

Tribe, three of the federally recognized Western Shoshone Tribes and three of the

members of the Western Shoshone Identifiable Group. The three individual plaintiffs are

Maurice Frank-Churchill, an enrolled member of the Yomba Shoshone Tribe, Jerry Millet,

an enrolled member of the Duckwater Shoshone Tribe, and Virginia Sanchez, also an

enrolled member of the Duckwater Shoshone Tribe. Plaintiffs allege that defendant

“imprudently” invested their tribal trust funds in securities that were too short-term,

resulting in less than maximum returns. It is not disputed by the parties that defendant

was the trustee of the funds at issue, and was responsible for the administration,

management, and investment of the funds at issue from the time the funds were

appropriated for deposit in the trust accounts for the benefit of the Western Shoshone

Identifiable Group until the time the funds were distributed to plaintiffs. Defendant asserts

that based on the facts and circumstances at the time, plaintiffs’ tribal trust funds were

prudently invested, as evidenced in part by the 6.8% average annual return of plaintiffs’

largest tribal trust fund.

The events leading up to this case, and this case, once filed, have a long history.

The case in this court was filed in 2006 and originally assigned to a Judge other than the

undersigned. On August 26, 2015, this case was transferred to the undersigned after the

original presiding Judge had issued two Opinions in this case, one dismissing defendant’s

motion to dismiss and one denying defendant’s motion for reconsideration. See W.

Shoshone Identifiable Grp. v. United States, No. 06-896L, 2008 WL 9697144 (Fed. Cl.

Oct. 31, 2008); see also W. Shoshone Identifiable Grp. v. United States, No. 06-896L,

2009 WL 9389765 (Fed. Cl. Nov. 24, 2009). After the issuance of two Opinions, there

were settlement discussions and settlement attempts before the case was reassigned to

the undersigned. Upon being assigned the above-captioned case in 2015, the

undersigned pressed the parties to initiate and intensify efforts on pretrial proceedings

and to get ready for trial, earlier settlement efforts having failed. Thereafter, the court held

a five-day trial in Washington, D.C. This Opinion only addresses the issues of liability and

whether the government breached its fiduciary duty to plaintiffs when investing the tribal

trust funds. The facts described below are a brief summary of important, pertinent events

taken from the extensive record before the court and the joint stipulations submitted by

the parties which are relevant to deciding issues of liability in this case. By no means are

the below facts an event-by-event description of everything that happened over the thirty-

three-year period at issue.

FINDINGS OF FACT

I. Origin of plaintiffs’ tribal trust funds

Plaintiffs are the beneficial owners of three tribal trust funds stemming from three

separate judgment awards. The first judgment occurred on August 15, 1977, when the

ICC awarded $26,145,189.89 to the Western Shoshone Identifiable Group in Docket 326-

2

K for the taking of ancestral land located in modern day Nevada and California. Unlike

the plaintiffs’ awards in its second case before the ICC, docket number 326-A-1,

discussed below, in which the plaintiffs were awarded a judgment, plus interest, based

on the record before the court and the parties’ revised joint stipulations of fact in the

above-captioned case, plaintiffs were not awarded any interest for the award of the

$26,145,189.89 in the 326-K Fund case. Both parties appealed the ICC’s August 15, 1977

award of $26,145,189.89, which was subsequently affirmed by the United States Court

of Claims1 on February 21, 1979. See Temoak Band of W. Shoshone Indians, Nevada

v. United States, 219 Ct. Cl. 346, 361, 593 F.2d 994, 1002, cert. denied, 444 U.S. 973

(1979). On December 19, 1979, the ICC’s award of $26,145,189.89 was deposited into a

tribal trust fund account in the United States Treasury under account number JA9334697.

The parties in the above-captioned case refer to this tribal trust fund as the “326-K Fund,”

and it is the largest of the three tribal trust funds at issue.

The second judgment occurred on December 3, 1991, when the United States

Claims Court2 entered a judgment in Western Shoshone Identifiable Group v. United

States, Docket Number 326-A-1, in the amount of $823,752.64 in favor of the Western

Shoshone Identifiable Group. See Te-Moak Bands of Western Shoshone Indians of

Nevada, et al. v. United States, United States Claims Court, Docket No. 326-A-1,

Judgment (Dec. 3, 1991). The award of $823,752.64 was comprised of $815,209.67,

together with interest of $8,542.97. See id. On March 25, 1992, the second judgment

award of $823,752.64 was deposited into trust in the United States Treasury under

account number JA9087691. The parties refer to this tribal trust fund as the “326-A-1

Fund.”

The third judgment occurred a little more than three years later, on June 16, 1995,

when the United States Court of Federal Claims entered a judgment in Docket Number

326-A-3, in the amount of $29,396.60, in favor of the Western Shoshone Identifiable

Group. See Te-Moak Bands of Western Shoshone Indians of Nevada, v. United States,

United States Court of Federal Claims, Docket No. 326-A-3, Judgment (June 16, 1995).

According to the final judgment entered on the 326-A-3 docket, which was introduced at

trial as a joint exhibit, the 326-A-3 award did not appear to include interest. On September

1 The United States Court of Claims is the predecessor court to the United States Court

of Appeals for the Federal Circuit and the United States Court of Federal Claims, the court

on which the undersigned presides over the above-captioned case. See Shields v. United

States, 136 Fed. Cl. 37, 48 (2018) (stating that the “United States Court of Claims (‘Court

of Claims’), [is] the predecessor court to the Federal Circuit”); see also Health Republic

Ins. Co. v. United States, 129 Fed. Cl. 757, 769 (2017) (noting that the “United States

Court of Claims (‘Court of Claims’), [is] a predecessor of this court and the United States

Court of Appeals for the Federal Circuit”); Geiger v. United States, 3 Cl. Ct. 647, 650

(1983) (noting that the United States Court of Claims is “this court’s predecessor”).

2 The United States Claims Court was renamed the United States Court of Federal Claims

in 1992. See Federal Courts Administration Act of 1992, Pub. L. No. 102-572, § 902, 106

Stat. 4506, 4516 (1992).

3

15, 1995, the award of $29,396.60 was deposited into trust in the United States Treasury

under account number JA1009693. The parties refer to this tribal trust fund as the “326-

A-3 Fund.” The account number and type, and the sources of the three funds are

displayed below:

ACCOUNT NO. & TYPE SOURCE OF FUND

INITIAL AWARD OF $26,145,189.89 ON 12/19/1979,

JA9334697 WESTERN SHOSHONE JUDGMENT FUNDS

ICC DOCKET 326-K

INITIAL AWARD OF $823,752.64 ON 3/25/1992,

JA9087691 WESTERN SHOSHONE JOINT JUDGMENT FUNDS

ICC DOCKET 326-A-1

INTEREST CLAIM OF $29,369.60 ON 9/15/1995,

JA9087691 WESTERN SHOSHONE JOINT JUDGMENT FUNDS

ICC DOCKET 326-A-3

II. Investment of tribal trust funds

a. 25 U.S.C. § 162(a)

The parties have stipulated that “Tribal Trust Funds” are tribal monies, including

judgment awards, revenues, and other payments made to Indian tribes, which are

required by law to be deposited in the United States Treasury and historically to be

managed by the United States Department of the Interior. The parties also have stipulated

to an abbreviated summary of the relevant history to the above-captioned case, some of

which is described below. Some historical highlights for the purpose of providing some

context follow. In 1880, the Department of the Interior was authorized to deposit tribal

trust funds in the United States Treasury to earn a simple interest rate of four percent per

year whenever it determined that such a course of action was in the best interest of an

Indian tribe. In 1918, the Department of the Interior was permitted to deposit tribal trust

funds into any public-debt obligations of the United States and into any notes, bonds, or

other obligations that were unconditionally guaranteed as to both principal and interest,

when the Department of the Interior determined doing so was in the best interests of an

Indian tribe. In 1938, Congress passed the Act of June 24, 1938, ch. 648, § 1, 52 Stat.

1037, currently contained at 25 U.S.C. § 162a (2018), the statute at issue regarding

plaintiffs’ allegations of breach of trust in the above-captioned case, which codified the

authority of the Secretary of the Department of the Interior to invest tribal trust funds. 3

According to Subsection (a) of 25 U.S.C. § 162a:

3 The Secretary of the Interior has had and continues to have the authority pursuant to 25

U.S.C. § 161 (2018) and 25 U.S.C. § 161a (2018) to deposit tribal trust funds in the United

States Department of Treasury in lieu of investing tribal trust funds in securities allowed

under 25 U.S.C. § 162a. See 25 U.S.C. §§ 161, 161a. The plaintiffs in the above-

captioned case, however, do not allege that defendant breached a duty regarding the

investment of the three funds at issue in the United States Treasury pursuant to 25 U.S.C.

4

The Secretary of the Interior is hereby authorized in his discretion, and

under such rules and regulations as he may prescribe, to withdraw from the

United States Treasury and to deposit in banks to be selected by him the

common or community funds of any Indian tribe which are, or may hereafter

be, held in trust by the United States and on which the United States is not

obligated by law to pay interest at higher rates than can be procured from

the banks. The said Secretary is also authorized, under such rules and

regulations as he may prescribe, to withdraw from the United States

Treasury and to deposit in banks to be selected by him the funds held in

trust by the United States for the benefit of individual Indians . . . .

25 U.S.C. § 162a(a).

Subsection (a) of 25 U.S.C. § 162a further provides that:

[T]he Secretary of the Interior, if he deems it advisable and for the best

interest of the Indians, may invest the trust funds of any tribe or individual

Indian in any public-debt obligations of the United States and in any bonds,

notes, or other obligations which are unconditionally guaranteed as to both

interest and principal by the United States.

25 U.S.C. § 162a(a). As both parties noted during trial, Subsection (a) of 25 U.S.C.

§ 162a limits the government’s investment of tribal trust funds to fixed-income securities

backed by the full faith and credit of the United States, including bonds issued by federal

agencies, the United States Department of Treasury (Treasury securities), mortgage-

backed securities, and certificate of deposits (CDs). Moreover, both parties agree that

Subsection (a) of 25 U.S.C. § 162a would not allow the government to invest in stocks or

foreign-issued bonds. The parties do not contest that the government invested any of

plaintiffs’ three tribal trust funds in investments prohibited by law, nor do the parties

contest that the government misappropriated or stole any of the plaintiffs’ tribal trust

funds. The contention in the above-captioned case is whether the government prudently

invested the plaintiffs’ three tribal trust funds in government-approved securities.

According to plaintiffs, “[t]he issue is whether the government invested prudently.”

Plaintiffs challenge the government’s investment of their three tribal trust funds among

securities which were permissible at the time under the investment statute at 25 U.S.C.

§ 162(a). According to plaintiffs, the government did not prudently invest their three tribal

trust funds, but instead consistently under-invested the three funds in too short-term

securities. Defendant argued to the contrary.

Because Subsection (a) of 25 U.S.C. § 162a only allows the government to invest

tribal trust funds in government-backed securities, both parties agree that the government

faces virtually no credit risk when investing tribal trust funds, i.e., a risk that the fixed-

§ 161 or 25 U.S.C. § 161a, nor that defendant retained plaintiffs’ three tribal trust funds in

the United States Treasury instead of investing the funds.

5

income security4 issuer will default on the security. Both parties also agree that the

primary risk that the government faced when investing plaintiffs’ tribal trust funds was

“interest rate risk,” the risk that interest rates will change over the life of a fixed-income

security. As both parties agree, the risk that interest rates will fluctuate is greater for fixed-

income securities that have a longer-term maturity.5 Defendant’s liability expert, Dr. Laura

Starks, explained in her expert liability report, “if interest rates increase, bond prices fall.

That risk is greater for longer-maturity investments.” Similarly, plaintiffs’ rebuttal expert,

Dr. Michael Goldstein, explained in his rebuttal expert report that, “longer-term

investments” “[t]raditionally” experience higher-yields than shorter-term investments to

reflect the “interest rate risk that the holder is taking (i.e., when rates change).” In addition,

as plaintiffs’ counsel noted during her opening statement at trial, “[a]ll of the experts agree

that longer maturities normally offer larger average returns than shorter term maturities,

but their value does fluctuate with changes in the interest rate, which can result in either

capital gains or capital losses if they are sold before maturity.” Thus, as the parties agree,

if a bond-holder had to sell a bond prior to maturity, and interest rates increased from the

time the bond-holder purchased the bond, the bond-holder will likely experience a loss on

the principal of the bond because the bond’s value has decreased. Conversely, if a bond-

holder had to sell a bond before maturity, and interest rates decreased since the time of

purchase, the bond-holder would likely experience a gain on the principal of the bond

because the bond’s value has increased. If the bond-holder holds the bond to maturity,

any change in interest rates would not affect the bond’s principal value. Interest rate risk,

thus, becomes relevant when an investor decides to sell a bond before maturity. The

4 At trial and in their expert reports, both parties’ liability and damages experts referred

interchangeably to “fixed-income securities” and “bonds” when discussing general

investment principals. Therefore, for purposes of this Opinion, this court interchangeably

shall refer to fixed-income securities and bonds, as used by the parties, when

summarizing the parties’ positions regarding general investment principals.

5 As both parties’ liability experts indicated at trial, the definition of a “longer-term” security

versus a “shorter-term” security varies somewhat throughout the investment industry.

According to the trial testimony of plaintiffs’ liability expert, Mr. Kevin Nunes, “ultra-short-

term” securities have maturities of one year or less, “short-term” securities have maturities

between one and five years, “intermediate-term” securities have maturities greater than

five and less than ten years, and “long-term” securities have maturities between ten and

thirty years. Contrastingly, defendant’s liability expert, Dr. Laura Starks, testified at trial,

“[p]eople define” the terms “short-term,” “intermediate term,” and “long term” differently

and that during her career, she has “actually seen these definitions change over time.”

According to Dr. Starks’ trial testimony, “short-term investments is -- typically, to me, that

would be a year or less, maybe a little over a year,” and whether securities with a maturity

of “two years” should be considered short-term would be “debatable.” Dr. Starks testified

at trial that “intermediate term” would be “primarily three to five years,” and that “[t]here

are others that extend intermediate to longer term.” Dr. Starks also testified that “long

term” would “typically” include securities with maturities of “ten years or more.” Dr. Starks

testified that securities with a maturity between five to ten years “don’t have a real

definition,” and that “[t]o me, it’s between what’s clearly intermediate and what’s clearly

long term.”

6

interest rate risk facing the government when investing plaintiffs’ three tribal trust funds

will be discussed in more detail below.

Subsection (d) of 25 U.S.C. § 162a, another provision of the statute relevant to

plaintiffs’ allegation of fund mismanagement, provides that:

The Secretary’s proper discharge of the trust responsibilities of the United

States shall include (but are not limited to) the following:

(1) Providing adequate systems for accounting for and

reporting trust fund balances.

(2) Providing adequate controls over receipts and

disbursements.

(3) Providing periodic, timely reconciliations to assure the

accuracy of accounts.

(4) Determining accurate cash balances.

(5) Preparing and supplying account holders with periodic

statements of their account performance and with balances of

their account which shall be available on a daily basis.

(6) Establishing consistent, written policies and procedures for

trust fund management and accounting.

(7) Providing adequate staffing, supervision, and training for

trust fund management and accounting.

(8) Appropriately managing the natural resources located

within the boundaries of Indian reservations and trust lands.

25 U.S.C. § 162a(d).

b. The Department of the Interior’s investment policies and procedures

In 1966, the Bureau of Indian Affairs (BIA), the office within the Department of the

Interior which was delegated the task of investment tribal trust funds, began a formal

investment program and published an investment policy statement. The 1966 policy

statement, in pertinent part, stated that “[p]repatory to undertaking any investment

program with surplus trust funds, a tribe necessarily would have to make a careful

analysis of its current and future cash needs” to cover “at least two six-months periods.”

The 1966 policy also stated that “[e]ach Area Office is requested to review the amount of

tribal trust funds each tribe in the respective Areas has on deposit in the Treasury,” and

that “[w]herever it appears that the amount is in excess of foreseeable cash needs of the

tribe, discussions should be held with the tribal council and its wishes regarding

investment of the funds ascertained.” The 1966 policy statement also noted that

“[g]overnment-backed securities, while basically safe, can result in losses unless held to

maturity.”

In 1973, Congress passed the Indian Tribal Judgment Funds Use and Distribution

Act, Pub. L. No. 93-134, 87 Stat. 466 (1973) (Use and Distribution Act of 1973), which

7

established a process for distributing judgment awards to Indian tribes. Pursuant to the

Use and Distribution Act of 1973, the Secretary of Interior had 180 days from “after the

appropriation of funds to pay a judgment of the Indian Claims Commission or the Court

of Claims to any Indian tribe,” and to “prepare and submit to Congress a plan for the use

or distribution of such funds.” Use and Distribution Act of 1973, Section 2(A). When

preparing the distribution plan, the Secretary was required to consider any distribution

plan proposed by the tribes. See id. at Section 3(A)(1). The Secretary of Interior also was

required to hold a “hearing or record” with the tribes to obtain their input regarding the

distribution plan. See id. at Section 3(A)(2). The Secretary of Interior could request a 90-

day extension of the 180-day timeline for submitting a proposed plan for the distribution

of a judgment award to an Indian tribe, and such request was “subject to the approval of

both the Senate and the House of Representatives committees on Interior and Insular

Affairs.” See id. at Section 2(B). The Secretary of Interior’s plan submitted to Congress

would become effective after 60 days, absent Congressional disapproval of the plan.

Upon the plan becoming effective, the Use and Distribution Act of 1973 required that the

Secretary of Interior “take immediate action to implement the plan for the use or

distribution of such judgment funds.” See id. at Section 5(A). If the Secretary of Interior

did not submit a proposal within 180 days of the date of the appropriation of the particular

judgment award, and no 90-day extension was granted, then the Secretary of Interior

would have to submit proposed legislation to Congress in order for the funds to be used

or distributed.

The Secretary of the Interior did not submit a distribution proposal within the

required 180 days for the three funds at issue and no 90-day extension was granted.

Thus, pursuant to the Use and Distribution Act of 1973, Congress would be required to

pass legislation authorizing the distribution of the 326-K and 326-A Funds. As explained

in more detail below, over the years, various members of Congress introduced bills for

distributing the three tribal trust funds at issue, each of which did not pass. Distribution

legislation was finally passed in 2004, and the 326-K Fund was fully distributed in 2012.

The principal of the 326-A Funds was never to be distributed and is currently held in trust

as a permanent education trust fund, with the interest of the 326-A-1 and 326-A-3 Funds

to be used as educational grants for qualifying members of the Western Shoshone tribes.

In 1974, the BIA Acting Deputy Commissioner of Indian Affairs sent BIA’s updated

investment policy in a memorandum to the Area Directors of the BIA based in different

geographical regions in the United States and in charge of overseeing the investment of

various tribal accounts from tribes in their particular regions, which stated:

Area and agency offices should work very closely with the tribes to

determine the cash needs and ascertain if trust funds are available for

investment. When a decision has been made that surplus funds are

available for investment, arrangements should be made immediately with

the Branch of Investments, Albuquerque, to invest the funds.

8

The 1974 policy memorandum also stated:

Investments can be made for a period of one day or for as much as 25 years

or longer. Therefore, all funds except the funds for immediate needs can be

invested to provide a greater income to the tribe. The maturity dates can be

arranged to coincide with the needs for the funds. If requested, the funds

are returned to the U.S. Treasury at maturity and are available immediately

for expenditure through the normal procedures for the advance of funds to

the tribe.

It is the policy of the Bureau of Indian Affairs to maximize returns on all

tribal, as well as individual, trust funds. This comports with the recent

decision in Manchester Band of Pomo Indians v. United States, 363 F.

Supp. 1238 (N.D. California 1973).

Each Area Director has the responsibility for determining if surplus funds

are available for investment purposes and notifying the Branch of

Investments, Albuquerque, to take the necessary action to invest the funds.

(underline in original).

Subsequently, the BIA included a policy statement as part of the BIA’s “REPORT

OF INVESTMENT OF INDIAN TRUST FUNDS FOR FISCAL YEARS 1986 and 1987,”

which was introduced as a joint exhibit at trial. (capitalization in original). Although titled

a “REPORT,” the document contained two separate sections which discussed the BIA’s

investment policy. (capitalization in original). The first, titled “AUTHORITY,” stated:

Our basic authority is contained in 25 USC 162a [sic], which is specific for

Tribal and individual trust funds, and PL 98-146 which authorizes the

investment of collections from irrigation and power projects. The Bureau

can invest in certificates of deposit with banks and savings and loans which

are insured by FDIC [Federal Deposit Insurance Corporation] or FSLIC

[Federal Savings and Loan Insurance Corporation], or in banks which have

pledged collateral securities guaranteed as to both principal and interest by

the U.S. Government. Most of the purchased CD’s are for periods of less

than 1 year, although 1, 2 and 3 year CD’s have been purchased on

occasion. Investments can also be made through purchases of public debt

obligations of the United States (Treasury issues) or other obligations which

are guaranteed as to both principal and interest by the U.S. Government.

(capitalization and emphasis in original). The second section, titled “INVESTMENT

POLICIES AND INSTRUCTIONS,” stated:

Although BIA is the Trustee for Indian funds, an ideal investment

relationship is one in which Tribes participate fully by providing well thought-

out investment policies and instructions based on realistic cash flow

9

projections which are based on complete tribal budgets. It is possible,

through knowing the amounts required and when disbursements are

necessary, to plan the timing of investment maturities to maximize interest

rates and earnings and also have the funds available when needed.

(capitalization and emphasis in original). The parties agree that throughout the 1980s and

until the early 1990s, the BIA had a program in which it pooled approximately 70% to 80%

of tribal trust funds managed by the Department of the Interior into short-term jumbo CDs

in banks nationwide, which had a maturity of one year or less. Plaintiffs’ liability expert,

Mr. Nunes, testified at trial that during the 1980s, the BIA had a “blanket kind of approach

to all Indian funds that we saw,” which was to invest tribal trust funds in “very short term

and almost entirely in their CD program.” Defendant’s liability expert, Dr. Starks, similarly

testified at trial that:

[I]n the 1980s, the primary investments were into certificate of deposits, and

the -- the Government had this unique CD program in which they pooled the

money from a lot of different tribes and invested it in bank CDs all over the

country, and because of the pooling, they were able to buy very large CDs.

According to the trial testimony of defendant’s liability expert, Dr. Starks, the

general maturities of the BIA’s CD investments “were usually one year or less.” By pooling

tribal trust funds, as Dr. Starks testified at trial, the BIA was able to achieve higher returns

while ensuring that the tribal trust funds remained protected against any bank failures. Dr.

Starks also testified at trial that the returns on the CDs were generally comparable to two-

to three-year Treasury bonds.

Also, in 1983, 1984, and 1989, the Department of the Interior consulted with

various private investment firms and received three investment proposals from outside

firms with recommendations on how to improve the Department of the Interior’s

investment of its tribal trust funds. BIA received (1) a joint proposal from the American

Indian National Bank (AINB) and Lehman Management Company (Lehman), (2) Security

Pacific National Bank (Security Pacific), and (3) PricewaterhouseCoopers (PWC).6 None

of the firms proposed specific investment strategies for any particular tribal trust fund,

including the tribal trust funds at issue in the above-captioned case, but instead

recommended general investment strategies for tribes which had immediate cash flow

needs and for tribes which had longer-term investment horizons. The Department of the

Interior ultimately did not adopt those particular suggestions.

PWC submitted the first, and most in-depth investment proposal, to the

government on December 24, 1983. According to PWC, it conducted “an in-depth review

6 The court notes that although the parties refer to the December 24, 1983 investment

proposal as the “PWC investment proposal,” at the time of the proposal, the company’s

name was “Price Waterhouse.” For consistency, and to follow the lead of the parties, the

court refers to the December 24, 1983 investment proposal as the PWC investment

proposal and refers to the company as PWC.

10

of the management of Indian trust funds,” which consisted of the government’s various

tribal trust funds, “individual Indian monies” (IIM) accounts, “Indian Monies Proceeds of

Labor” accounts, “Contributions,” and the “Alaska Native Escrow Fund. Plaintiffs’ 326-K

Fund was one of various tribal trust funds the government held in trust during the 1980s.

PWC reviewed the BIA’s investment of “Indian trust funds” between 1976 and 1983. The

PWC proposal stated that “there is no evidence that outside money managers would have

improved on the investment performance during the period 1976-1983,” but that moving

forward, “we [PWC] recommend that the Bureau [of Indian Affairs] engage an outside

investment advisor.”

PWC’s December 24, 1983 proposal stated:

In assessing the overall performance of the funds in recent years, we have

found that the BIA Branch of Investments has achieved excellent

investment results relative to other managed portfolios operating under

similar investment authorizations. These recent successes are primarily

attributable to a strategy of investing in short-term assets in the face of

volatile interest rates and to the discovery of federal subsidies implicit in the

pricing of FDIC and FSLIC insured CD’s.

However, as the volatility of interest rates declines, yields will begin to reflect

the relative risks associated with the maturity and underlying credit

characterizing security investments. Further, the subsidies associated with

fdic and fslic securities are under consideration by bank regulators and may

not be available in the future.

(capitalization in original). The PWC investment proposal also noted that the “[w]hile the

BIA investment strategy has worked well in the past, the unusual market conditions of the

recent past,” i.e., that the yield curve for bonds was inverted such that short-term

securities had out-performed longer-term securities for the “last decade,” 1973 to 1983,

“may not continue.” PWC also stated that “there is no guarantee that the current strategy

of investing primarily in highly liquid short-term assets will achieve the same investment

performance relative to other strategies if the capital markets return to traditional pricing

behavior,” which is what the BIA did and achieved for the 326-K Fund from its deposit into

the Treasury on December 19, 1979 until December 24, 1983, the date of the PWC’s

proposal. According to the PWC investment proposal, unlike the “unusual” inverted yield

curve between 1973 and 1983, “[u]nder the traditional yield curve,” meaning that longer-

term investments out-perform shorter-term investments, “investors who assume the risks

associated with long-term securities, are rewarded more than investors who place their

funds in shorter term issues.”

Although PWC concluded that the BIA’s management of the Indian trust funds

between 1976 and 1983 was “excellent,” PWC noted that its “[m]easurement of actual

portfolio performance” of the Indian trust fund “was confounded by an absence of data”

and that PWC had to make various assumptions when analyzing the BIA’s investment

performance during this time. The PWC investment proposal noted that:

11

The current BIA accounting system does not produce periodic reports of

total returns (interest accrued each period plus changes in market value)

for the Indian trust fund portfolios. In order to analyze the performance of

the portfolio, we estimated total portfolio returns based on published returns

earned on the following generic categories of securities comprising the

Indian trust fund portfolios:

o Insured or collateralized Certificate of Deposit (6 months to

maturity)

o Treasury Securities (5 months to maturity)

o U.S. Government Agency Securities (7.1 years to maturity)

The PWC investment proposal stated that “[t]he asset allocation among” the three generic

securities listed above for its analysis of the government’s investment of Indian trust funds

“was assumed to be the actual asset allocation for the IIM portfolio as of August 1983,” a

different type of account than the tribal trust funds at issue in this case.

The PWC investment proposal also provided “numerous recommendations by

which the BIA can adjust to the changing investment environment and provide enhanced

services to the beneficiaries of the trust funds,” which included the recommendation that

BIA “[d]evelop and implement an ongoing process which will assist tribes and individuals

to formulate investment objectives.” The PWC investment proposal recommended to the

BIA a portfolio investment strategy of “passive diversification,” i.e., “[i]nvestment in

securities representing a variety of market sectors, and maturities where such

investments are held to maturity,” in order “to achieve the trust fund investment objectives

as the capital markets begin to reflect the more traditional risk/return relationships.” PWC

included five sample portfolios to illustrate that by using the passive diversification

strategy, “a portfolio of securities can be chosen that will perform better than any single

security in the portfolio.” PWC also explained in its investment report that of the five

sample portfolios, three were “dominant,” meaning that these three portfolios earned the

greatest return for the least risk. The first dominant portfolio was comprised of “10% T-

bills, 30% C.D.’s” and “30% Intermediates, 30% Long Term” and had an “Expected

Return” of 11.20%.7 The second dominant portfolio was comprised of “5% T-bills,” “50%

C.D.’s,” and “25% Intermediates, 20% Long Term,” and had an “Expected Return” of

“10.92%.” The third dominant portfolio was comprised of “20% T-bills, 40% C.D.’s” and

“40% Intermediates,” and had an “Expected Return” of “10.40%.”

Of the non-dominant portfolios, the first was comprised of “22% T-bills, 70% C.D.’s”

and “8% Intermediates,” and had an “Expected Return” of “10.02%.” The second was

comprised of “22% T-bills, 70% C.D.’s” and “8% Intermediates,” and had an “Expected

Return” of “9.90%” The three dominant portfolios, which were expected to experience the

7The PWC investment proposal did not define what constitutes an “Intermediate” security

and what constitutes a “Long-term” security. The PWC investment proposal, however,

noted that “[t]wo-, three-, and five-year notes” were not considered “Long-term bonds.”

12

highest rate of returns from PWC’s five sample portfolios, contained the highest

combination of long-term and intermediate-term securities.

The PWC investment proposal also noted that because the five portfolios

assumed that a typical yield curve, i.e., when longer-term investments out-perform

shorter-term investments, “observed during the period of 1926-1973 would prevail, it is

not surprising that the dominant portfolios (earning the greatest return for least risk)

contained a substantially larger proportion of longer-term securities than we have

observed in the BIA portfolios.”

AINB and Lehman submitted their joint investment proposal to the government on

October 30, 1984 and “jointly” proposed “to organize, manage, and administer a mutual

fund to serve as an alternative investment vehicle for the American Indian Tribal Trust

Funds.” Unlike PWC, AINB and Lehman did not present a review of the BIA’s past

investment of the Indian trust fund in its joint investment proposal, nor commented on

whether the BIA had obtained “excellent” investment results in the past. AINB and

Lehman proposed that the Department of the Interior’s tribal trust funds, depending on

the cash flow needs of a particular tribe, be invested in one of two portfolios. The first

proposed portfolio was a money market portfolio “invested in money market instruments

with maturities not exceeding one year.” The second proposed portfolio was “an

intermediate-term portfolio invested in obligations with maturities not to exceed five years.

Such maturities typically have higher yields than money market instruments.”

Security Pacific discussed its investment recommendations with the government

during an investment meeting in San Diego, California from December 7-8, 1989, and its

recommendations were memorialized in a BIA memorandum dated January 17, 1990.

The BIA memorandum did not discuss whether Security Pacific had conducted a review

of the BIA’s past investment of the Indian trust fund in its investment proposal, nor did the

BIA memorandum comment on whether Security Pacific believed that the BIA’s

investment of the Indian trust fund was “excellent,” as PWC had concluded in its

investment proposal. Security Pacific recommended that the BIA pool together and invest

the largest twenty-five tribal trust funds as follows: 48% of the funds in short-term

securities, 38% of the funds in intermediate-term securities, and 14% of the funds in long-

term securities.8 Security Pacific recommended that the BIA pool together and invest the

remaining tribal trust funds as follows: 61% in short-term securities, 29% in intermediate-

term securities, and 10% in long-term securities.

The BIA memorandum memorializing Security Pacific’s investment

recommendations did not state whether plaintiffs’ 326-K Fund was one of the tribal trust

funds considered by Security Pacific. According to the trial testimony of defendant’s

damages expert, Justin Mclean, plaintiffs’ 326-K Fund would have been among one of

the largest twenty-five tribal trust funds pooled together and invested in Security Pacific’s

proposed portfolio. The 326-A-1 and 326-A-3 Funds, the other two trust funds at issue in

8 The Security Pacific proposal did not define what maturities would constitute a “short-

term” security, an “intermediate” security, or a “long-term” security.

13

this case, were not yet in existence at the time that Security Pacific made its

recommendations to the BIA.

In 1990, the Office of Trust Funds Management was established within the BIA at

the Department of the Interior. The Office of Trust Funds Management consolidated the

accounting and investment functions managing and governing tribal trust funds. As both

parties’ liability experts testified during trial in the above-captioned case, during the early

1990s, the Department of the Interior transitioned from its program of pooling together

and investing tribal trust funds in short-term jumbo CDs to primarily investing tribal trust

funds into other securities with varying maturities, such as agency and Treasury

securities. Plaintiffs’ liability expert, Mr. Nunes, testified at trial that around the early

1990s, the BIA made “a wholesale transition away from the CD program, which ultimately

went away completely, and monies now were being invested in agency securities,

mortgage-backeds, callable bonds, and things like that.” Defendant’s liability expert, Dr.

Starks, testified at trial that “[a]fter about [19]91,” the BIA made a “programmatic” switch

from investing tribal trust funds in jumbo CDs into “agency securities in particular and a

little bit longer term U.S. Treasuries.”

The Department of the Interior’s shift from CDs was reflected in the October 1,

1992 edition of the Office of Trust Funds Management’s quarterly journal “TRUST,”

introduced at trial in the above-captioned by both parties as a joint exhibit. (capitalization

in original). According to the October 1, 1992 journal, the Branch of Investments Chief at

the Department of the Interior, Fred Kellerup, “got OTFM [Office of Trust Funds

Management] on the right road four years ago [in 1988] when the trust funds investment

portfolio began its transformation from CD’s to government securities.” Mr. Kellerup

provided the following advice to tribes in the October 1, 1992 journal: “Stay away from the

long bond. There’s no need for tribes to invest beyond 15 years. You’re too far out if

interest rates turn around. Shorten up on the maturity. Even if you have cash flow needs,

go for the three-to-seven year government securities. Avoid the one-year CDs.”

(emphasis in original).

Also, during the early 1990s, Congress investigated BIA’s management and

investment of the Indian trust fund, comprised of tribal trust funds, such as the three tribal

trust funds at issue in the above-captioned case, and the IIM trust fund. The

Congressional Committee on Government Operations published the results of the

investigation in an April 1, 1992 report, titled “MISPLACED TRUST: THE BUREAU OF

INDIAN AFFAIRS’ MISMANAGEMENT OF THE INDIAN TRUST FUND,” (1992

Congressional Report) introduced at trial in the above-captioned case by both parties as

a joint exhibit. (capitalization in original). The 1992 Congressional Report explained that

the IIM trust fund is “a deposit fund, usually not voluntary, for individual participants and

tribes.” The Department of the Interior’s investment of the IIM trust fund is not at issue in

the above-captioned case. The 1992 Congressional Report also explained that as of April

1, 1992, “the BIA is responsible for managing and investing almost $2 billion in tribal and

individual Indian funds.”

14

The 1992 Congressional Report summarized the BIA’s duty to Indian tribes as a

“fiduciary duty to ‘maximize the trust income by prudent investment.’” (quoting Cheyenne-

Arapaho Tribes v. United States, 206 Ct. Cl. 340, 348, 512 F.2d 1390, 1394 (1975)

(Cheyenne-Arapaho)). The 1992 Congressional Report explained that “[t]his

responsibility requires the Government to stay well-informed about the rates of return and

investment opportunities and to intelligently choose from among authorized investment

opportunities to obtain the highest rate of return to make the trust funds productive.” The

1992 Congressional Report noted that “the Bureau’s fiduciary responsibilities are not

dissimilar to the duties performed by many private trustees” and that:

To fulfill these important obligations it is necessary for the agency to fully

understand both its fiduciary duties and the financial marketplace. Stated

simply these fundamental assignments are: To accurately account to the

beneficiary; to make accounts productive for the beneficiaries; and to

maximize the trust income through prudent investment. To successfully

perform these tasks, the Bureau of Indian Affairs, as any fiduciary, must

conduct itself as a sophisticated investor, a smart shopper, and a highly

diligent and resourceful manager.

Upon review of the BIA’s investment of Indian trust fund, the 1992 Congressional

Report found that the BIA had “longstanding financial management problems in its

administration of the Indian trust fund,” primarily due to a failure to “accurately account

for trust fund moneys.” The 1992 Congressional Report explained that:

Indeed, it [BIA] cannot even provide accountholders with meaningful

periodic statements on their account balances. It cannot consistently and

prudently invest trust funds and pay interest to accountholders. It does not

have consistent written policies or procedures that cover all of its trust fund

accounting practices. Under the management of the Bureau of Indian

Affairs, the Indian trust fund is equivalent to a bank that doesn’t know how

much money it has.

Notably, the plaintiffs in the above-captioned case do not allege that defendant breached

its fiduciary duty by failing to keep accurate records of the plaintiffs’ tribal trust funds or

that the defendant failed to provide plaintiffs with periodic account statements. Plaintiffs,

instead, argued that the defendant invested their three tribal trust funds in too short-term

securities, and, thus, did not maximize the investment return on their tribal trust funds.

Subsequently, Congress passed the American Indian Trust Fund Management

Reform Act, Pub. L. No. 103-412, 108 Stat. 4239 (1994) (1994 Trust Fund Management

Reform Act), which created the Office of the Special Trustee for American Indians (Office

of the Special Trustee) within the Department of the Interior, to be headed by the Special

Trustee. See 1994 Trust Fund Management Reform Act, codified at 25 U.S.C. § 4001 et

seq. According to the 1994 Trust Fund Management Reform Act, the Special Trustee was

to “ensure proper and efficient discharge of the Secretary[] [of the Interior’s] trust

15

responsibilities to Indian tribes and individual Indians.” 25 U.S.C. § 4043(a)(1) (1994).

The 1994 Trust Fund Management Reform Act also recognized that

[t]he Special Trustee shall ensure that the Bureau [of Indian Affairs]

establishes appropriate policies and procedures, and develops necessary

systems, that will allow it-- (i) properly to account for and invest, as well as

maximize, in a manner consistent with the statutory restrictions imposed on

the Secretary’s investment options, the return on the investment of all trust

fund monies . . . .

Id. at § 4043(b)(2)(B) (1994).

The 1994 Trust Fund Management Reform Act also established a nine-member

Advisory Board to assist and advise the Special Trustee with implementation of the 1994

Trust Fund Management Reform Act. In 1996, the Office of the Special Trustee, a

separate office within the Department of the Interior, took over the responsibility of

managing tribal trust funds from the BIA. As the parties jointly stipulate to, on September

11, 1996, the Special Trustee appointed the “OTFM Management Board” to establish an

operating policy to ensure that tribal trust funds were maintained in a proper and prudent

mix and maturity distribution, “represent sound extensions of credit, and are appropriate

assets with regard to legal requirements and needs of the Indian beneficiaries involved.”

(internal quotation marks omitted). The OTFM Management Board, as both parties further

jointly stipulate to in the above-captioned case, became known in April 2005 as the Office

of the Special Trustee Investment Management Committee, and was sometimes referred

to as the “Portfolio Review Committee,” according to the trial testimony of defendant’s

fact witness, Mr. Robert Winter.

Mr. Winter also testified at trial that the Portfolio Review Committee is “a group of

senior officials that are well versed in all of the management functions in OST [Office of

the Special Trustee], that meet with the investment group to review specifics about

investments for all tribal trust funds annually.” Mr. Winter also testified that he became a

member of the Portfolio Review Committee in 2001 and was still a member of the

committee at the time of trial in the above-captioned case. As Mr. Winter explained, the

Portfolio Review Committee would review the account objectives for each tribal trust fund

and whether the tribal trust fund was invested in accordance with the agency’s policies.

According to Mr. Winter’s trial testimony, if the Portfolio Review Committee disagreed with

a particular investment manager’s investment strategy for a specific fund, the Portfolio

Review Committee had the authority to direct the investment manager to change the

investment strategy. With regard to plaintiffs’ 326-K Fund, Mr. Winter noted:

You know, each year this account came up we made sure that we asked

what further information do you have or, you know, certainly knowing

amongst ourselves, we definitely got news of, you know, pending

legislation, legislation that’s been introduced, you know, the possibilities of

16

that legislation passing. So this was definitely a time period[9] when there

were bills being introduced which caused us to, you know, limit it to -- not

limit it to, but to make those maturities around two years.

On February 7, 1997, the Office of the Special Trustee sent a memorandum, which

was introduced by both parties in the above-captioned case as a joint trial exhibit, titled

“OTFM POLICY MEMORANDUM NO. POL97-002” to the Office of Trust Funds

Management Division’s Chiefs, Area Trust Accountants, and Agency Personnel, which

discussed the Office of the Special Trustee’s “Investment Policy” (1997 Office of the

Special Trustee Policy). (capitalization in original). The 1997 Office of the Special Trustee

Policy established “the criteria by which OTFM will manage the Tribal, Individual Indian

Monies, and Special Funds entrusted to it for investment.” Pursuant to the 1997 Office of

the Special Trustee Policy, the “investment activities of OTFM will be conducted to

achieve” three primary objectives. The first objective was “Quality” of the investment

portfolio, which included the “safety of principal, minimization of market risk and overall

risk diversification.” (capitalization and emphasis in original). The second objective was

having some “Liquidity” of investments, meaning that “an adequate percentage of the

portfolio should be maintained in liquid, short-term investments that could be converted

to cash, if necessary, in order to meet the tribal disbursement requirements.”

(capitalization and emphasis in original). The last objective was the “Rate of Return” of

the portfolio. (capitalization and emphasis in original). According to the 1997 Office of the

Special Trustee Policy,

[o]f major importance in all of the OTFM managed portfolios is an

acceptable rate of return over the long term without compromising the other

stated objectives of quality and liquidity. The specific portfolios should be

structured to achieve at least a market-average rate of return throughout

economic cycles, taking into account the specific tribe’s risk constraints and

the cash flow requirements dictated by its use and distribution plans and/or

budget forecasts. Whenever possible, and consistent with risk limitations as

defined herein and prudent investment principles, investment officers shall

seek to augment returns above the market average rate of return.

At trial, defendant’s fact witness, Mr. Winter, explained his understanding of the

1997 Office of the Special Trustee Policy’s Rate of Return objective and his involvement

in reviewing and updating the Office of the Special Trustee’s policies throughout the late

2000s. Mr. Winter testified that he began working at the Office of the Special Trustee in

1998 and that between “2007 and 2011,” he “headed up the Office of Trust Services”

which oversaw the “Office of Trust Funds Investments.” The Office of Trust Funds

Investments, according to Mr. Winter, is “essentially the investing shop at the Office of

the Special Trustee.” Mr. Winter also testified that during his time at the Office of Trust

Services, he was responsible for “developing investment policy and reviewing and

9According to Mr. Winter’s trial testimony, the “time period” referenced was the early

2000s, when Mr. Winter jointed the Portfolio Review Committee and when Congress

began to once again introduce bills for the distribution of plaintiffs’ three tribal trust funds.

17

amending investment policy” for the Office of the Special Trustee, and also to “review the

past policies of the Office of the Special Trustee and even those of its predecessor, the

BIA.” Mr. Winter testified that his understanding of the Rate of Return objective “simply

refers to, in conjunction with ensuring the quality is there and that the cash flows have

been identified and that there will be adequate liquidity within the portfolio, that we should

structure the remainder of the portfolio in such a manner as to achieve above-average

market rates.” Mr. Winter also testified that in order to obtain “above-average market

rates,” as required by the Rate of Return objective contained within the 1997 Office of the

Special Trustee Policy, it was his understanding that “we need to do adequate analysis

of the cash flows in order to ensure that we obtain the highest rates for the maturities that

we select in order to maintain those proper flows.” Mr. Winter testified that the cash flow

analysis differs with respect to different tribal accounts. Mr. Winter testified that regarding

a cash flow analysis for a judgment fund, “where it’s 100 percent per capita payout,” like

plaintiffs’ 326-K Fund at issue in the above-captioned case, “then really all you need to

know is the distribution date.” When asked by defendant’s counsel at trial what the effect

of an uncertain timeline for the distribution of a particular judgment fund would have on

the Office of the Special Trustee’s cash flow analysis, Mr. Winter responded that, “[w]ell,

we certainly try to obtain the most accurate data we can about a particular distribution

date if there’s not one already stated, and, you know, we try to base our maturity schedule

on the earliest available date that that fund might be paid out.”

The 1997 Office of the Special Trustee Policy also listed “ACCEPTABLE

PORTFOLIO INVESTMENTS AND PRACTICES,” which explained, among other

practices, the Office of the Special Trustee’s “‘Holding’ versus ‘Trading’” practice.

(capitalization and emphasis in original). According to the section of the 1997 Office of

the Special Trustee Policy discussing “Holding versus Trading,”

OTFM intends to manage its Indian trust portfolios in a manner that protects

the integrity of the primary function of the portfolio, which is to provide

maximum income for the tribes while conforming to prescribed statutory

limitations and prudent fiduciary investment principles.

Because OTFM has a small number of investment managers responsible

for the investment management of over 1450 separate portfolios, OTFM will

purchase securities with the intent to hold each security until maturity, while

realizing that sales can and may occur prior to maturity form some of the

following reasons:

1. When account review presents obvious opportunity for

portfolio enhancement from the reinvestment of sales

proceeds into comparable maturities thereby improving

yield or quality without adversely affecting overall quality,

mix or maturity of the investment portfolio.

2. The need to improve or increase portfolio liquidity.

3. The need to invest the proceeds of a security maturing

within one year because of an interest-rate scenario that

18

would be detrimental to the performance of the portfolio if

held to maturity before investing, i.e., a rapidly falling

interest rate period.

4. A reduced credit rating of the issuing Agency renders the

security to be of less than acceptable quality to remain in

the portfolio.

The 1997 Office of the Special Trustee’s “Holding versus Trading” section also

noted that “[i]nfrequent investment portfolio restructuring carried out in conjunction with a

prudent overall risk-management plan that does not result in a pattern of gains being

taken and losses deferred will generally be viewed as an acceptable practice within the

context of an investment portfolio.” According to the trial testimony of defendant’s fact

witness, Mr. Winter, the 1997 Office of the Special Trustee’s “Holding versus Trading”

practice meant that,

that we need to purchase securities with the intent and ability to hold to

maturity; and that, secondly, we’re permitted infrequent investment

restructuring if the market conditions present themselves as such, but we

can’t be doing so by establishing a pattern of buying and selling, reaping

gains and losses on any sort of frequency.

According to Mr. Winter, the 1997 Office of the Special Trustee Policy was the “first formal

policy adopted by the Office of the Special Trustee.” Mr. Winter testified at trial that the

Office of the Special Trustee issued amendments to the 1997 Office of the Special

Trustee Policy in 1999, 2000, and 2005, but that these policy amendments, apart from

extending the maturity limits of certain government-backed securities from an “average

life” of ten to fifteen years, were not “material” changes to the 1997 Office of the Special

Trust Policy. Moreover, Mr. Winter testified that the 2005 policy amendment was the

policy in place up until the distribution of the 326-K Fund.

III. The investment market for bonds from the early 1950s to 2013

The parties agree that between the early 1950s up until 1979, the beginning of the

period at issue in the above-captioned case, interest rates on bonds steadily increased,

and that there was an inverted “yield curve.” A “yield curve” displays the relationship

between a bond’s yield and maturity. An inverted yield curve occurs when shorter-term

securities are experiencing higher yields than longer-term securities. For example,

according to Exhibit 6 to defendant’s damages expert report by Dr. Alexander, beginning

around 1958, the 5-year Treasury bond achieved higher returns than the 7-year Treasury

bond or the 20-year Treasury bond, and such was the case until 1979. Plaintiffs did not

contest the accuracy of Exhibit 6 to defendant’s damages expert report.

From December 1979 until 1981, the first three years of the period at issue in the

above-captioned case, interest rates on bonds continued to increase and the yield curve

remained inverted. As defendant’s liability expert, Dr. Starks, testified at trial, the “peak of

interest rates from between 1950 and 2012” occurred in September 1981. Following the

19

September 1981 interest rate peak until September 2013, the end of the period at issue,

the parties agree that the interest rates generally decreased and that bond prices steadily

increased. The parties also agree that following the September 1981 interest rate peak,

but for a few short-lived periods, the yield curve was upward sloping until 2013, the end

of the investment period at issue. An upward sloping yield curve means that longer-term

securities experience higher returns than shorter-term securities.

The parties agree that, the despite the inverted yield curve between the 1950s and

1981, the yield curve for fixed-income securities is typically upward sloping. Plaintiffs’

expert report by Rocky Hill Advisors noted that a “2007 study of the past 80 years found

that in 72 of those years (90% of the time) the yield curve was upward sloping and that,

on average over all of those years, long-term Treasury bonds[10] tended to yield about 1-

1/2% more than short-term Treasury bills.” Defendant did not contest the validity of the

2007 study cited to by plaintiffs in their liability expert report. Plaintiffs’ Rocky Hill Advisors’

expert report also noted:

Generally, the longer the maturity of a fixed-income investment, the higher

will be its coupon interest rate (the contract rate of interest) and potential

return. This is because investors perceive higher risk the further out in time

an investment extends, thus they demand higher returns to compensate for

the additional risk. Although there are periods where this relationship inverts

(that is, interest rates on shorter-term investments exceed those on longer-

term investments), the frequency and duration of such events is de minimis

when compared to the norm.

(footnote omitted). Defendant’s damages expert report, prepared by Dr. Gordon

Alexander, similarly noted that the yield curve is normally upward sloping, stating that

“[g]iven the fact that the yield curve is generally upward sloping, the practical result of this

observation would be to invest primarily in long maturities when monies are expected to

remain invested for longer periods.”

Plaintiffs’ expert report by Rocky Hill Advisors provided a hypothetical which

illustrated that longer-term investments generally would have out-performed shorter-term

investments during the thirty-three-year period at issue in this case. According plaintiffs’

expert report by Rocky Hill Advisors, if an investor were to have invested $1,000.00 in

three separate portfolios beginning in December 1, 1979, the starting month of the

relevant time period in the above-captioned case, and have left that $1,000.00 fully

invested through September 30, 2013, the end date of the relevant period in this case,

the portfolio with the longest-term securities would have achieved the highest rate return.

The three portfolios from the hypothetical are as follows:

10Plaintiffs’ liability expert report does not define what maturities of Treasury securities

would be considered “long-term Treasury bonds.”

20

• Portfolio 1 in a short-term (i.e., an average maturity of about 3 years)

basket of Treasury securities represented by the Barclays 1-5 Year U.S.

Treasury Index;

• Portfolio 2 in an intermediate-term (i.e., an average maturity of about 7.5

years) basket of Treasury securities represented by the Barclays U.S.

Treasury Index; and

• Portfolio 3 in a long-term (i.e., an average maturity of 20+ years) basket of

Treasury securities represented by the Barclays Long-Term U.S. Treasury

Index.

According to the hypothetical, the $1,000.00 in Portfolio 1, the short-term portfolio, would

have grown to $10,154.94 by September 30, 2013. The $1,000.00 in Portfolio 2, the

intermediate-term portfolio, would have grown to $13,720.07 by September 30, 2013. The

$1,000.00 in Portfolio 3, the long-term portfolio, would have grown to $20,868.30 by

September 30, 2013.

Defendant’s damages expert report by Dr. Alexander referred to a hypothetical

similar to the hypothetical included in plaintiffs’ expert report by Rocky Hill Advisors.

Defendant’s damages expert report looked at three $1,000.00 portfolios from 1979 to

2013. The first portfolio was invested in 5-year Treasury bonds, the second portfolio was

invested in 7-year Treasury bonds, and the third portfolio was invested in 20-year

Treasury bonds. The $1,000.00 invested in 5-year Treasury bonds grew the least, to

approximately $14,000.00. The $1,000.00 invested in 7-year Treasury bonds grew to

approximately $15,500.00. The $1,000.00 invested in the 20-year Treasury bonds grew

the most, to approximately $21,000.00.

Additionally, plaintiffs’ rebuttal expert witness, Dr. Goldstein, illustrated in his

rebuttal expert report that, with regard to the 326-K Fund, a “simple buy-and-hold strategy

that invested” plaintiffs’ 326-K Fund “in 10-year U.S. Treasuries,” from 1979, when the

326-K Fund was deposited into the United States Treasury, through 2004, when

Congress passed the distribution plan legislation for plaintiffs’ tribal trust funds, and “then

rolling [the 326-K Fund] into 1-year U.S. Treasuries,” from 2005 until 2013, the end of the

period at issue, the government would have experienced higher returns than what it

actually achieved. According to Dr. Goldstein’s calculations, “had the BIA simply followed

a mechanical strategy of investing in 10-year U.S. Treasuries, it would have ended the

period with an additional $72 million above what it did under its chosen strategy.” Dr.

Goldstein did the same exercise “with 20-year U.S. Treasuries” and “[u]nder this simple

strategy, the WSIG [Western Shoshone Identifiable Group] account would have held an

additional $179 million.” Dr. Goldstein noted in his report that “I stress that these are not

damages estimates, which I have not been asked to provide. The figures are just a clear

way to illustrate the benefits of locking in typically higher long-term rates over the relevant

period.”

21

IV. The Department of the Interior’s investment of the 326-K Fund

The period at issue regarding the government’s investment of the 326-K Fund was

from December 19, 1979, the date on which the ICC’s initial award payment of

$26,145.189.89 was deposited into the United States Treasury, until September 30, 2013,

the last date for which the Trust Account Database (TAD), the government’s electronic

account database, reported account information for the 326-K Fund. According to the trial

testimony of plaintiffs’ liability expert, Mr. Nunes, the TAD is “a compilation of several sub-

databases that include information regarding the different accounting systems the

Government had and the coding that they used to identify, you know, what a transaction

was. It includes from 1972 -- from July 1, 1972, forward” a “compendium of all the

transactions that went through an account, and then there’s a lot of descriptive and other

data that’s in there as well.” Mr. Nunes also testified at trial that the government provided

plaintiffs with access to the TAD for plaintiffs’ three tribal trust funds for the period at issue,

December 1979 through September 2013. Both of the parties’ liability experts relied on

the TAD when re-constructing the investment performance of plaintiffs’ 326-K Fund

between December 1979 and September 2013 in their respective liability expert reports

and damages expert reports. Both parties do not contest the data reflected in the TAD for

the 326-K, 326-A-1, and 326-A-3 Funds.

The initial amount of the 326-K Fund, when deposited in the United States

Treasury on December 19, 1979, was $26,145,189.89. Before the first distribution

payment of the 326-K Fund was issued in 2011 to 3,187 individuals, the 326-K Fund

balance had grown to approximately $183,794,000.00. According to defendant’s opening

statement at trial, between December 1979 until the first distribution of the 326-K Fund in

2011, the 326-K Fund experienced an average annual return of 6.8%, the accuracy of

which plaintiffs did not contest. The final distribution payments of the 326-K Fund were

made on September 29, 2012 and October 2, 2012. As of September 2013, the last date

for which data was available regarding the government’s investment of the 326-K Fund,

a residual amount of approximately $36,000.00 remained in trust by the government.

Plaintiffs’ counsel explained at the trial closing argument that plaintiffs are not seeking to

recover the residual amount of $36,000.00 in the above-captioned case. Plaintiffs’

counsel did not clarify why $36,000.00 remained in the government’s account. Plaintiffs’

counsel at closing argument stated that a potential reason for the residual amount left in

trust with the government was because “maybe you haven’t identified a recipient or

there’s been some glitch, something like that.”

As previously indicated, the parties primarily disagree as to whether the

government invested the 326-K Fund in too short-term securities, and, thus, potentially

did not maximize the returns for the 326-K Fund. Plaintiffs do not allege that the

government misappropriated funds from the plaintiffs or that the government invested the

326-K Fund in securities prohibited by law or regulation.

22

The maturity structure of the 326-K Fund

In their liability expert reports, and at trial, both parties discussed the “average

weighted maturity” of the 326-K Fund. According to the trial testimony of defendant’s

liability expert, Dr. Starks, the “average weighted maturity” is based on the maturity of all

the securities in which the 326-K Fund was invested in at a given time. Dr. Starks testified

that the maturity is then viewed as a “weighted average” based on the “value” that the

securities “are in their portfolio, so that if you have an investment that’s very short term

and is, you know, 50 percent of the portfolio, then it’s going to be lower overall and vice

versa.” Plaintiffs argued that the average weighted maturity of the 326-K Fund throughout

the thirty-three-year period at issue was too short- term, and, therefore, the 326-K Fund

was imprudently invested. Defendant argued to the contrary.

At trial, the parties discussed three different methods for analyzing the average

weighted maturity of the 326-K Fund. The first method calculated the average weighted

maturity of the 326-K Fund based on the securities’ stated years to maturity. For example,

a ten-year bond has a stated ten-year maturity. The second method calculated the

average weighted maturity of the 326-K Fund based on the securities’ “years to call,”

which uses the call date of callable securities in which the government invested the 326-

K Fund. According to the trial testimony of plaintiffs’ liability expert, Mr. Nunes, a callable

security is a security for which the issuer retains the right to call the security back before

maturity by a specific “call” date. Therefore, if an issuer exercises its right call back a ten-

year callable bond after five years following its issuance, then the ten-year bond’s maturity

would be five years. The parties’ liability experts agreed in their respective expert reports

that the government began to invest the 326-K Fund in callable securities beginning in

the early 1990s. According to the trial testimony of plaintiffs’ liability expert, Mr. Nunes,

approximately 85% of the callable securities in which the 326-K Fund was invested were

called back, which defendant did not contest. Even though only approximately 85% of the

callable securities chosen by the government for the 326-K Fund were called back, both

of the parties’ liability experts appear to use the call dates for all callable securities in

which the government invested the 326-K Fund when calculating the average weighted

maturity based on years to call.

The third method discussed by the parties based the average weighted maturity of

the 326-K Fund on the call dates of the callable securities and made an adjustment for

the prepayment of mortgage-backed securities. Mortgage-backed securities, as

explained in plaintiffs’ rebuttal expert report by Dr. Goldstein,

are asset backed securities backed by mortgages and include pass-through

securities (such as those from GNMA [Government National Mortgage

Association], FNMA [Federal National Mortgage Association], and FHLMC

[Federal Home Loan Mortgage Corporation]) and Collateralized Mortgage

Obligations (“CMOs”). Pass-through securities such as those from GNMA,

FNMA, and FHLMC differ from normal bonds in that the principal value of

the bond is amortized and thus paid off over time, rather than just at the

time of maturity, so that each payment over the life of the mortgage-backed

23

security contains some principal repayment. As such, the stated maturity of

pass-through securities is not representative of the expected, or average,

life of the investment. Some mortgage-backed securities, such as CMOs,

are often also divided into tranches, each with a different level of risk. Higher

tranches (such as tranche A) have their principal paid back first, whereas

later tranches have to wait longer hence have a longer expected life.

(footnotes omitted). According to plaintiffs’ rebuttal expert report, “in the 1990s,” the

government invested the 326-K Fund “into mortgage backed securities where the average

or expected life is notably shorter than the stated maturity. As a result, the actual weighted

maturity of the fund,” even “after considering the impact of callable bonds,” would be

“overstated” if not adjusted for the pre-payment of various mortgage-backed securities.

Similar to plaintiffs’ rebuttal expert report regarding the government’s use of mortgage-

backed securities, defendant’s liability expert, Dr. Starks, testified at trial that the

government began investing in mortgage-backed securities during the early 1990s, and

that, “what’s important about mortgage-backed securities is, especially in a falling interest

rate environment, people refinance their homes, and so -- so you -- you usually don’t get

the maturity you think you’re going to get because it can be paid off early.”

Although the parties discussed the pre-payment mortgage issue, neither party

presented at trial, or, in their expert reports, an accurate and complete calculation of the

average weighted maturity of the 326-K Fund taking into account the pre-payment issue.

Defendant’s liability expert, Dr. Starks, presented at trial her attempt to account for the

pre-payment issue in defendant’s Demonstrative Exhibit 10,11 a line graph depicting the

326-K Fund’s average weighted maturity based on (1) the stated maturity, (2) years to

call, and (3) years to call with an adjustment for the pre-payment issue. Dr. Starks,

however, admitted at trial that her attempt was not the most accurate because she “throws

out the mortgage-backed securities because of the prepayment issue” from her

calculations, and, thus, undercalculates the average weighted maturity of the 326-K Fund.

Plaintiffs did not present at trial any calculation of the average weighted maturity of the

326-K Fund which accounted for the pre-payment issue.

When analyzing the average weighted maturity of the 326-K Fund, the court will

rely on the average weighted maturity based on the years to call. This method, as both

parties agreed, more accurately depicts the maturity structure of the 326-K Fund than the

average weighted maturity based on the stated years of maturity. As plaintiffs’ counsel

noted at closing argument, “Dr. Starks [defendant’s liability expert] and Mr. Nunes

[plaintiffs’ liability expert] agree[]” that “the stated years to maturity was not as accurate

when you’re dealing with callable bonds, because it was more accurate to use the call

date.” Dr. Starks, defendant’s liability expert, testified at trial that only considering the

stated years to maturity of the 326-K Fund would make the 326-K Fund maturity structure

appear a “little too long,” because the government had invested in callable bonds that

were called back before maturity. Mr. Nunes, plaintiffs’ liability expert, similarly testified at

11 Both parties’ counsel used various demonstrative exhibits throughout trial, which were

all introduced and accepted into the trial record.

24

trial that relying only on the stated years to maturity when calculating the average

weighted maturity of the 326-K Fund, “actually makes the portfolio look like it has a longer

structure than it actually does” because “almost entirely” all of the government’s callable

bonds were called back. The court is aware that the average weighted maturity based

only on years to call does not take into account the pre-payment of the mortgage-backed

securities. The record before the court, however, does not contain an accurate depiction

of the weighted average maturity, taking into account the pre-payment issue of mortgage-

backed-securities for the 326-K Fund, and the actual calculations to analyze the

performance of the 326-K Fund, taking into account the pre-payment issue, remain

somewhat elusive and speculative.

According to both parties’ liability expert reports, which relied on the government’s

data from the TAD, beginning in December 1979 to approximately December 1991, the

average weighted maturity years to call of the 326-K Fund never exceeded two years,

and during most of this period, the average weighted maturity was one year or less.

Beginning in December 1991 until September 1993, the average weighted maturity years

to call increased, reaching a peak of a little less than ten years. Following this peak in

September 1993, until May 2002, the average weighted maturity years to call steadily

decreased, reaching a low of approximately less than one year in May 2002. Then, from

June 2002 until approximately early-2008, the average weighted maturity years to call

fluctuated between a less than one year and slightly more than two years. Beginning

around mid-2008 until December 2010, the average weighted maturity years to call

fluctuated, starting around two and a half years, increasing to almost three years, and

then dropping back down to approximately one year. Beginning in early-2011, when the

government began to distribute the 326-K Fund to qualifying members of Western

Shoshone tribes, the government effectively liquidated the 326-K Fund such that the

average weighted maturity years to call decreased to an all-time low of almost zero years

of maturity and flatlined at almost zero years of maturity until September 2013, the end of

the time period at issue.

As a visual aid of the 326-K Fund’s average maturity structure throughout the thirty-

three-year period at issue, defendant’s Demonstrative Exhibit 10, which was introduced

at trial during defendant’s direct examination of defendant’s liability expert, Dr. Starks,

and used by plaintiffs’ counsel during their cross-examination of Dr. Starks, is displayed

below. Defendant’s Demonstrative Exhibit 10 is titled “Maturity of WSJF [Western

Shoshone Judgment Funds]12 portfolio varies over time” and contains three separate

lines. The top most line, which was colored gray, displays the average weighted maturity

of the 326-K Fund based on the stated years to maturity. The middle line, which was

colored a light blue, depicts the average weighted maturity of the 326-K Fund, based on

the call dates of the securities, and is the line which the court looks to in this Opinion. The

12As the Western Shoshone Claims Distribution Act, Pub. L. No. 108-270, 118 Stat. 805

(2004) (the Claims Distribution Act of 2004), the act which created the distribution

mechanism for the three funds at issue, states, the “Western Shoshone Judgment Funds”

refers to the 326-K Fund. The “Western Shoshone Joint Judgment Funds” refers to the

326-A-1 and 326-A-3 Funds.

25

bottom line, which was colored dark blue, displays the average weighted maturity of the

326-K Fund, based on the call dates of the securities and which did not include any

mortgage-backed securities in order to account for the mortgage-backed security

prepayment issue. As previously discussed, defendant’s attempt to account for the pre-

payment issue in Demonstrative Exhibit 10 would distort the average weighted maturity

of the 326-K Fund and is not considered by this court. At trial, plaintiffs did not contest

Demonstrative Exhibit 10’s representation of the average weighted maturity of the 326-K

Fund based on the stated years to maturity, which was colored gray in Demonstrative

Exhibit 10, or the years to call, which was colored light blue in Demonstrative Exhibit 10.13

In addition, both parties agree that the years to call, the middle line, which was colored a

light blue, is a more accurate indicator than the years to maturity, the top line, which was

colored gray.14

13Plaintiffs contested Demonstrative Exhibit 10’s depiction of the average weighted

maturity of the 326-K Fund that was adjusted to account for the pre-payment issue, which

was colored dark blue.

14 Demonstrative Exhibit 10 displays only one line between December 1979 and

December 1991. This is because, as defendant’s liability expert, Dr. Starks, testified to at

trial, the 326-K Fund was not invested in any callable bond or mortgage-backed securities

during this time, and, therefore, the average weighted maturity of the fund was the same

whether one considered the years to maturity, the years to call, or whether there was any

adjustment made for the pre-payment of mortgages.

26

27

The types of securities in which the government invested the 326-K Fund

According to both parties’ liability expert reports, which relied on the government

data in the TAD, from 1979 to 1989, the government invested the 326-K Fund almost

solely in jumbo CDs, with a small portion of the 326-K Fund invested in agency, Treasury,

and “overnight” securities. According to the trial testimony of Mr. Winter, one of

defendant’s fact witnesses and director of Trust Operations at the Office of the Special

Trustee at the Department of the Interior, overnight securities are highly “liquid” “one-day”

securities that are invested and redeemed “the very next day.” In the early 1990s,

although the government continued to invest a portion of the 326-K Fund in CDs, the

government began investing the 326-K Fund in a combination of agency securities,

Treasury securities, mortgage-backed securities, and overnight securities. Some of the

securities selected by the government beginning in 1991 were callable securities.

Notably, by June of 1995, the government was no longer investing any of the 326-K Fund

in CDs. From June 1995 until July 2011, the government invested the 326-K Fund in a

mixture of agency securities, Treasury securities, mortgage-backed securities, non-

government securities, and overnight securities. Beginning in August 2011, the

government invested the 326-K Fund solely in overnight securities.

V. The Department of the Interior’s investment of the 326-A-1 and 326-A-3

Funds

The investment period at issue for the 326-A-1 Fund was from March 25, 1992,

when the judgment award of $823,752.64 was deposited into the United States Treasury,

until September 30, 2013. The investment period at issue for the 326-A-3 Fund was from

September 15, 1995, when the judgment award of $29,396.60 was deposited into the

United States Treasury, until September 30, 2013, the last date for which the TAD, the

government’s electronic account database, reported account information for the 326-A

Funds. The government did not co-mingle the 326-A-1 Fund with the 326-A-3 Fund and

kept them in separate investment accounts. As discussed in more detail below, defendant

did not present any evidence at trial regarding the 326-A-1 and 326-A-3 Funds because,

according to defendant, plaintiffs do not have standing to assert a breach of trust with

regard to the 326-A-1 and 326-A-3 Funds. Throughout trial and in post-trial briefing,

plaintiffs’ counsel, and plaintiffs’ experts, Mr. Nunes and Dr. Goldstein, referred to the

326-A-1 and 326-A-3 Funds together as the “326-A Funds.” Thus, for purposes of this

Opinion, the court will discuss the investment performance of the 326-A-1 and 326-A-3

Funds together. By September 30, 2013, according to the TAD, the balance of the 326-

A-1 and 326-A-3 Funds had grown to a total of $2,022,891.50.

The maturity structure of the 326-A-1 and 326-A-3 Funds

The only party to present evidence at trial regarding the maturity structure of the

326-A-1 and 326-A-3 Funds were plaintiffs, who based their maturity calculations from

data from the TAD. At trial, plaintiffs’ liability expert, Mr. Nunes, testified that, as with the

326-K Fund, the government called back approximately 85% of the callable bonds in

which the 326-A-1 and 326-A-3 Funds were invested. As with the 326-K Fund, Mr. Nunes

28

also testified at trial that the average weighted maturity of the 326-A Funds, based on the

years to call, more accurately displays the maturity structure of these two funds than the

average weighted maturity based on the stated years to maturity. For purpose of this

Opinion, when discussing the maturity structure of the 326-A-1 and 326-A-3 Funds, the

court, therefore, refers to the average weighted maturity years to call.15

Between the deposit dates for the 326-A-1 Fund, which occurred on March 25,

1992, and the 326-A-3 Fund, which occurred on September 15, 1995, and August 1999,

the average weighted maturity years to call for the 326-A-1 and 326-A-3 Funds was

approximately three years or less. Then, around September 1999, the average weighted

maturity years to call for the 326-A-1 and 326-A-3 Funds spiked to approximately six

years. The 1999 spike in maturity was relatively short-lived. The average weighted

maturity years to call of the 326-A Funds fluctuated between five and seven years until

September of 2001, when the average weighted maturity years to call for both A Funds

decreased to less than one year. For the next eight years, from October 2001 to February

2009, the average weighted maturity years to call for both A Funds did not exceed three

years. Around March 2009, the average weighted maturity years to call for the 326-A-1

and 326-A-3 Funds spiked to a high of approximately ten years and then immediately

began to decrease, reaching an average weighted maturity years to call of five years by

August 2009. Between September 2009 to February 2012, the average weighted maturity

years to call for the 326-A-1 and 326-A-3 Funds fluctuated between approximately five

and eight years. Around February 2012, the average weighted maturity years to call for

the 326-A-1 and 326-A-3 Funds, increased to fourteen years and began to decrease

around December 2012, reaching an average weighted maturity years to call of eleven

years. The average weighted maturity years to call for the 326-A-1 and 326-A-3 Funds

remained at approximately eleven years until September 2013, the end of the time period

in question.

As a visual aid of the 326-A-1 and 326-A-3 Funds’ maturity structure throughout

the twenty-one-year period at issue, plaintiffs’ Demonstrative Exhibit 14, introduced at

trial, is displayed below. Plaintiffs’ Demonstrative Exhibit 14 contains two separate lines.

The top line of the graph, which was colored blue, depicts the average weighted maturity

based on the stated years of maturity. The bottom line of the graph, which was colored

red, displays the average weighted maturity for the 326-A-1 and 326-A-3 Funds, taking

into account the call dates for the callable securities and is the line which the court looks

to in this Opinion. Defendant did not contest plaintiffs’ representation of the average

weighted maturity of the 326-A Funds contained in plaintiffs’ Demonstrative Exhibit 14.

15As with the 326-K Fund, the record before the court does not contain data regarding

the average weighted maturity of the 326-A Funds accounting for the pre-payment of

mortgage-backed securities.

29

30

The types of securities in which the government invested the 326-A-1 and 326-A-3 Funds

According to plaintiffs’ expert liability and damages report by Rocky Hill Advisors,

which relied on the TAD, beginning from August 1992, when the government began to

invest the 326-A-1 Fund, until March 1993, the government invested the entire 326-A-1

Fund in jumbo CDs. Around March 1993, the government began to diversify its

investment of the 326-A-1 Fund by decreasing its investment in jumbo CDs and

increasing its investment in agency securities. Then, from 1995, when the 326-A-3 Fund

was deposited into the United States Treasury, until 2011, the government invested both

the 326-A-1 and 326-A-3 Funds primarily in agency securities with a small portion of the

funds invested in overnight securities and Treasury securities. From 2012 until September

2013, the government invested the 326-A-1 and 326-A-3 Funds in a mix of agency

securities, mortgage-backed securities, and overnight securities.

VI. The distribution of the 326-K, 326-A-1 and 326-A-3 Funds

The following facts leading up to distribution of the funds at issue are relevant to

plaintiffs’ breach of trust claim. In 1973, even before the ICC entered its judgment in

Docket 326-K, the BIA was aware that the distribution of any potential judgment award to

the plaintiffs would require advance planning. According to a February 15, 1973 internal

memorandum, the BIA stated that:

[A]lthough the Western Shoshone case as of October 11, 1972 has only

reached the interlocutory stage, it is mandatory that planning begin now in

terms of the identification of beneficiaries, the disposition of the funds and

the dissemination of useful information to interested groups and individuals.

We are aware that the award of $26,154,600, subject to allowable offsets,

may be appealed by either or both parties, but we are in full agreement with

the Agency and the Western Shoshone Claims Committee that early

attention to this case is necessary if we hope to avoid the confusion and the

very time consuming problems encountered with the rather similar Northern

Paiute judgment.

Mr. Nunes, plaintiffs’ liability expert, testified at trial that the distribution of the Northern

Paiute judgment, which was referenced by the BIA in its February 15, 1973 internal

memorandum, had taken approximately sixteen years to execute.

Shortly following the deposit of the 326-K Fund into the United States Treasury,

the BIA put together a research memorandum about the Western Shoshone. According

to the research memorandum, dated March 11, 1980, there a was a significant element

of the Western Shoshone who, “[f]or many years,” opposed any monetary award in the

Western Shoshone Identifiable Group’s case on Docket No. 326-K, which was litigated

before the ICC regarding the Western Shoshone Identifiable Group’s claim for title to

aboriginal lands. This faction of Western Shoshone believed that their ancestral lands in

Nevada were never ceded over to the government or taken by the government. They,

therefore, believed that granting of the 326-K award “would deprive all Western Shoshone

31

of the land itself or at least jeopardize their claim to such land.” The March 11, 1980

research memorandum also recognized that “[t]he Western Shoshone entities were and

are extremely scattered,” and that “[i]t is not possible to describe the Western Shoshone

in terms of forming a tribe or group of organized tribes.” Nonetheless, the March 11, 1980

memorandum identified the following entities as the Western Shoshone beneficiaries of

the 326-K Fund located in Nevada:

1. Temoak Bands of Western Shoshone Indians (Elko, Battle Mountain,

South Fork and. Wells)

2. Shoshone-Paiute Tribes of the Duck Valley Reservation

3. Duckwater Shoshone Tribe of the Duckwater Reservation

4. Yomba Shoshone Tribe of the Yomba Reservation

5. Ely Indian Colony

6. Reno-Sparks Indian Colony

7. Paiute-Shoshone Tribe of the Fallen Reservation and Colony

8. Fort McDermitt Pauite and Shoshone Tribes of the Fort McDermitt Indian

Reservation

9. Walker River Pauite Tribe of the Walker River Reservation

10. Lovelock Paiute Tribe of the Lovelock Indian Colony

The March 11, 1980 memorandum also identified the following entities as the Western

Shoshone beneficiaries of the 326-K Fund located in California:

1. Owens Valley Paiute-Shoshone Band of Indians (Bishop, Big Pine, Fort

Independence and Lone Pine Reservations),

2. Death Valley Timbi-Sha Shoshone Band.

Despite the divisions of interests and different positions among the Western

Shoshone, the BIA attempted to work with the Western Shoshone to submit a distribution

plan to Congress for approval within the 180-day statutory timeline, as required under the

Use and Distribution Act of 1973. For example, on February 23, 1980, representatives

from the BIA and Western Shoshone individuals met in Elko, Nevada. At the meeting, the

“Western Shoshone Planning Committee” was officially formed to elicit distribution

proposals from the various tribal groups of the Western Shoshone. This committee

consisted of “about 10 [individuals]” from various tribal groups with the possibility of an

additional three individuals, two of whom would be from Californian Shoshone tribal

groups.

The BIA’s willingness to move forward with a distribution plan, however, was

temporarily slowed down by the August 25, 1980 Order granting an injunction in United

States v. Dann, Civil No. R-74-60, Order (D. Nev. Aug. 25, 1980) before the United States

District Court for the District of Nevada. In United States v. Dann, the United States had

sued Mary Dann and Carrie Dann, two sisters, who were members of an autonomous

band of the Western Shoshone, for trespass, alleging that the sisters, in grazing livestock

without a permit from the United States, were acting in violation of regulations issued by

the Secretary of the Interior. The sisters denied that they were trespassing, affirmatively

32

asserted their beneficial ownership of the land, and argued that their aboriginal title to the

land precluded the United States from requiring grazing permits. In United States v. Dann,

Judge Thompson found that the December 6, 1979 judgment in the ICC Docket 326-K

was the date that Western Shoshone’s title to the Nevada land was extinguished, as

opposed to July 1, 1872, the date to which both the Western Shoshone Identifiable Group

and the government had stipulated was the takings date of the Western Shoshone

Identifiable Group’s land before the ICC in Docket 326-K. Judge Thompson also enjoined

the Dann sisters from using the lands located in Nevada, which the sisters had alleged

belonged to them, as a basis to allow their livestock to graze upon, without first complying

with the requirements of the Taylor Grazing Act of 1934, Pub. L. 73-482. Steve Feraca, a

Tribal Services Specialist for the BIA, wrote in a memorandum to the Chief of the Division

of Tribal Government Services for the BIA, dated May 6, 1980:

In view of the [April 1980 district court] Thompson decision which cites a

new taking date, December 6, 1979, I said that I could not recommend that

a proposal for the funds be prepared until legal advice was forthcoming from

the Solicitor [of the Department of the Interior] and the Department of

Justice.

On May 23, 1980, BIA reviewed the April 25, 1980 Order issued in Dann and

decided to try to move forward with preparing a distribution plan. The BIA concluded that

the April 25, 1980 Dann Order “in no way affects the mandate of the 1973 Indian

Judgment Funds Act,” and that “[w]e appreciate that it is possible to meet the statutory

deadlines,” for submitting a distribution plan.

On June 20, 1980, the then Department of the Interior, Acting Deputy Assistant

Secretary for Indian Affairs, Ralph Reeser, made a formal request to the United States

Senate Select Committee on Indian Affairs for a 90-day extension of the 180-day period

to submit a distribution plan to Congress. According to Mr. Reeser’s letter, “the 180-day

period for the submittal of a Secretarial plan ended on June 16, 1980.”

On July 26, 1980, the BIA held a public hearing for Western Shoshone members

to discuss a potential distribution plan for the 326-K Fund. According to an August 1, 1980

article published in the Native Nevadan, 85 individuals testified or submitted written

statements at the July 26, 1980 public hearing regarding the distribution plan for the 326-

K Fund. According to the article, the majority of the individuals who testified were opposed

to immediate distribution of the funds. The article stated:

In Summary, the majority of people who testified wanted the award money

to be placed in an interest-bearing account until such times as the title issue

is legally resolved. Those who testified in favor of an immediate distribution

favored a 100 percent per capita distribution, with the 1/4 degree eligibility

requirement.

William Robert McConkie, the BIA official leading the July 26, 1980 public hearing

wrote a memorandum for his files, dated August 3, 1980, regarding his experience at the

33

public hearing. According to Mr. McConkie, there appeared to be disagreement among

those that testified regarding the distribution plan, but such disagreement was allegedly

staged by three lawyers representing certain Western Shoshone groups. Mr. McConkie

wrote:

Eighty persons testified. The hearing was adjourned at 5:30 p.m. The three

lawyers were quite disruptive during the proceedings. They each

represented essentially the same group. The Planning Committee had no

lawyer. It was the apparent purpose of the lawyers opposed to the

distribution to prevent the hearing, or secondarily to control the hearing and

have their people discuss the various Federal District Court suits which

dealt with obtaining the land rather than the judgment from the Court of

Claims. Mrs. Carrie Dan [sic] was escorted from the hall after about 6 or 7

minutes testimony by herself. She refused to limit her remarks and I directed

a tribal policeman to escort her into the lobby.

On August 4, 1980, Congress denied BIA’s requested 90-day extension to submit

a distribution proposal for the 326-K Fund. Senator John Melcher, Chairman of the Select

Committee on Indian Affairs, wrote to Ralph Reeser, Department of the Interior, Acting

Deputy Assistant Secretary for Indian Affairs, on August 4, 1980, noting that “[a]s a

general rule, such extensions are routinely granted upon Departmental request. However,

there are several factors which weigh against granting the extension in this case,”

including that “a significant number of Western Shoshone people oppose acceptance of

the award at this time,” and that,

[t]here is pending litigation in the case of U.S. v. Dann in the U.S. District

Court for the district of Nevada in which title to certain land and the date of

compensable taking are still in issue. The outcome of that case could clearly

have a strong bearing on the course of action the Congress, the Department

and the Western Shoshone people might wish to pursue.

(underline in original). Mr. Melcher concluded by noting that “I trust the Department will

submit appropriate legislation early in the 97th Congress.”

Following Congress’s denial of the BIA’s request for a 90-day extension on August

4, 1980, the BIA worked with the Western Shoshone to get a draft distribution plan ready

to submit to Congress. Although the BIA continued to work with the Western Shoshone,

the BIA was aware that actually submitting a plan to distribute the 326-K Fund to

Congress would likely have to await the outcome of the Dann sisters’ appeal of the August

25, 1980 District Court Order in United States v. Dann, in which Judge Thompson

established a takings date of the Western Shoshone’s Nevada land as December 7, 1979.

See United States v. Dann, Civil No. R-74-60, Order.

On December 30, 1980, Jay Suager, the Acting Director of the Office of Indian

Services at the BIA wrote to Senator Alan Cranston of California, stating:

34

[A] significant faction among the Western Shoshone people rejects the

award and is seeking title to the land. In particular, this faction is supporting

the continuance of litigation in United States v. Dann which pertains to

Western Shoshone land title issues. Probably, all interested parties will

have to await the outcome of the appeal in the Dann litigation.

The Secretary of the Interior, pursuant to direction of the Act of October 19,

1973, 87 Stat. 466, undertook, through the Commissioner of Indian Affairs,

to prepare a plan for the distribution of the judgment funds within 180 days

of the appropriation of those funds. Such plan was not completed. A request

for a 90-day extension . . . was denied by the Senate Select Committee on

Indian Affairs. Accordingly, under the 1973 Act authorizing legislation will

be necessary before there may be any distribution of the judgment funds.

That should present sufficient opportunity to address questions which may

be raised by United States v. Dann.

As of August 20, 1981, approximately one year after Congress denied the BIA’s

90-day extension, an internal government memorandum sent from Kenneth Payton, the

BIA Acting Deputy Assistant Secretary for Indian Affairs, to the BIA Phoenix Area Director,

stated:

Primarily due to the status of the Dann litigation, in which some Western

Shoshone people assert title to a vast portion of Nevada, the Senate Select

Committee on Indian Affairs denied an extension of the date for the

submittal of a Secretarial plan. The case is on appeal. If the plaintiffs’

assertions are denied, we will then propose legislation. The existence of the

Dann litigation, however, does not inhibit further discussion with the eligible

Western Shoshone entities on the programing potential of these funds. On

the contrary, such possibilities can be thoroughly examined and proposals

developed during this time. This subject was considered at previous general

Western Shoshone meetings and with the individual tribes prior to the

Hearing of Record of July 26, 1980.

On January 22, 1982, in an internal BIA memorandum sent from the BIA Deputy

Assistant Secretary for Indian Affairs to the BIA Phoenix Area Director, the BIA Deputy

Assistant Secretary stated that, “we should now begin working with the beneficiaries on

the development of the legislation which will be required in this instance.” The BIA Deputy

Assistant Secretary also stated in the January 22, 1982 memorandum:

To be kept in mind during this process is the fact that the actual introduction

of legislation may not be possible until the Dann litigation is completed.

However, this should not preclude beginning the process of working with

the tribes to clarify their desires with respect to programming and to initiate

appropriate planning with them providing such technical assistance as

requested and as resources permit.

35

The January 22, 1982 memorandum also amended the results of the BIA’s

research report, dated March 11, 1980, which had originally listed twelve beneficiary

groups for the 326-K Fund, reducing the number of beneficiaries of 326-K Fund to the

following four groups:

1. Te-Moak Bands of Western Shoshone Indians (which includes the Elko,

Battle Mountain, South Fork and Wells bands),

2. Duckwater Shoshone Tribe of the Duckwater Reservation,

3. Yomba Shoshone Tribe of the Yomba Reservation,

4. Ely Indian Colony.

The January 22, 1982 memorandum also stated that the “remaining beneficiaries consist

of all other persons of Western Shoshone ancestry, in their individual capacity, who

otherwise meet the criteria detailed in the March 11, 1980, Results of Research Report.”

On May 11, 1982, the BIA Phoenix Area Director held a meeting with leaders of

the Te-Moak Bands, Duckwater, Yomba, and Ely Indian Colony, the four recently

identified beneficiary groups of the 326-K Fund. Following the May 11, 1982 meeting,

Thomas Luebben, an attorney representing the Western Shoshone Identifiable Group,

wrote to the BIA Phoenix Area Office on May 25, 1982 “to confirm the understandings”

reached between the Phoenix Area Office and the Western Shoshone Tribal leaders,

which included, in relevant part, the leaders’ request for “[a] commitment from the BIA to

not begin compiling a descendancy roll in anticipation of distribution of the Western

Shoshone judgment.” Mr. Luebben’s May 25, 1982 letter also requested from the BIA:

A commitment from the BIA that the Interior Department will not attempt to

draft legislation to distribute the Western Shoshone judgment prior to an

actual written agreement between representatives of the United States and

a Western Shoshone negotiating team (including primarily representatives

of Western Shoshone tribal governments) on an appropriate draft of

proposed legislation to achieve an overall settlement of Western Shoshone

land claims and provide for distribution of the judgment funds.

On June 8, 1982, the BIA Phoenix Area Director responded to Mr. Luebben’s May

25, 1982 letter in writing, stating that with regard to the descendancy roll request, “[s]ince

we cannot develop any kind of roll for distribution purposes without an approved plan, we

have no problem agreeing to this.” With regard the draft legislation request, the BIA

Phoenix Area Director responded:

As far as draft legislation for the distribution of the Western Shoshone

judgment, we can decide our course of action within the Area, however, we

cannot make a commitment for the Central Office or the Department. We

expect any legislation developed would have the direct input of the affected

Tribes and individuals that have an interest in the award.

36

On May 19, 1983, the United States Court of Appeals for the Ninth Circuit reversed

the August 25, 1980 District Court Order in United States v. Dann and remanded the case

back to the District Court for further proceedings regarding “factual issues of whether

aboriginal title had been preserved to the date of trial and whether the Danns are entitled

to share in it.” United States v. Dann, 706 F.2d 919, 923 (9th Cir. 1983) (“We reverse the

judgment granting the injunction and remand for further proceedings.”), rev’d, 470 U.S.

39 (1985).

According to a July 28, 1983 internal BIA memorandum, “[s]ince the recent Federal

court decision regarding the Dann case is now widely known, the various entities that

have an interest in the Western Shoshone Land Claim have been actively pursuing their

individual interests.” The memorandum further stated:

The entities we [the BIA] are aware of are: 1. Te-moak Tribe of Western

Shoshone Indians. This groups appears to have a split as to what they want.

. . . 2. Western Shoshone Sacred Lands Association. . . . Their main

contention is that by the Treaty of Ruby Valley, [16] they never lost land title

to their aboriginal lands. The Dann decision [by the Ninth Circuit] appears

to support that premise. . . . 3. Tribal Chairmen Association. . . . I believe

they support land plus money concept. 4. Great Basin Western Shoshone

Descendants. . . . Their main interest is a per capita distribution and have

not really been supportive of the additional land issue. . . . 5. Western

Shoshone Land Federation. This is the newest entity to come upon the

scene, and purportedly represent all of the above entities as a unified

Shoshone group. Since I am not totally aware of what has been negotiated

out among themselves with all of the already described interests, I am

surmising that this group supports the per capita distribution, land return

and tribal program concepts. It is my understanding that it will be through

this group that negotiations with Federal officials to develop a

comprehensive legislative package relative to the Western Shoshone Land

Claim will be conducted.

16 On October 1, 1863, the United States entered into the Ruby Valley Treaty with the

“Western Bands of the Shoshone Nation of Indians,” which, according to the treaty, was

a “Treaty of Peace and Friendship” between the United States and the western bands of

Shoshone Indians. The Ruby Valley Treaty authorized non-Indians to cross the Shoshone

land located in Nevada on several already established traveled routes, such as train, mail,

and telegraph lines, without “molestation or injury” from the western bands of Shoshone

Indians. It also granted the United States the right to establish military posts in Shoshone

lands, and that such lands “may be explored and prospected for gold and silver, or other

minerals.” In exchange for the western bands of Shoshone Indians’ “inconvenience”

resulting from the use of the travel routes in their land by “white men,” the United States

agreed to compensate the western bands of the Shoshone Indians $5,000.00 per year

for twenty years, a total of $100,000.00.

37

Additionally, following the Ninth Circuit’s 1983 decision in United States v. Dann,

the BIA notified Congress that it could not submit proposed legislation at that time. The

Director of the Office of Indian Services at the BIA wrote to Congresswoman Barbara

Vucanovich, who was one of Nevada’s Congressional representatives at the time, noting:

For some time we and the Congress have been awaiting a Court of Appeals

decision in the Dann case, Carrie and Mary Dann having contended that

the Western Shoshone still retain aboriginal title to the Nevada portion of

the lands claimed. On May 19, 1983, the Court ruled that no evidence had

been presented by the Government establishing that aboriginal title had

been lost. We do not know whether this decision will be appealed to the

Supreme Court.[17] Meanwhile, the Western Shoshone people are

scheduling a series of general meetings in an effort to develop a proposal

that would incorporate the distribution of the funds and the utilization of the

subject lands. The situation has become, as a result of the decision,

extremely confused and under the circumstances we are most reluctant to

submit proposed legislation for only the monetary award.

17 The Dann case was appealed to the United States Supreme Court in 1985, which found

that the Western Shoshone peoples’ tribal title to their aboriginal land passed to the

government when the 326-K Fund was awarded to the Western Shoshones in the ICC

case, Docket No. 326-K, and placed into the United States Treasury in December 1979.

See United States v. Dann, 470 U.S. 39, 49-50 (1985). The Dann case returned to lower

courts for further proceedings regarding whether the Dann sisters had individual

aboriginal rights, as opposed to tribal rights, in the Nevada lands at issue. See id. at 50.

The Dann case was appealed once more to the United States Court of Appeals for the

Ninth Circuit in 1989, which ruled that the Dann sisters had limited individual title rights,

“restricted” to the land that they or their lineal ancestors actually occupied prior to

November 26, 1934, the date that the federal government withdrew the Nevada lands in

question from entry and settlement by the public. See United States v. Dann, 873 F.2d

1189, 1199, 1200-01 (9th Cir. 1989). Following the 1989 Ninth Circuit appeal, the Dann

sisters pursued their land claim in the late 1990s before the Organization of American

States’ Inter-American Commission on Human Rights, an international tribunal, which

found, on December 27, 2002, in favor of the Dann sisters’ claim for title to their Nevada

lands, and made the “RECOMMENDATION[]” that the sisters be “[p]rovide[d]” with “an

effective remedy, which includes adopting the legislative or other measures necessary to

ensure respect for the Danns’ right to property.” See Mary Dann and Carrie Dann v.

United States, Case 11.140, Inter-Am. Comm’n H.R., Report No. 75/02, 47 (2002)

(capitalization in original). The United States government, however, did not adopt the

Inter-American Commission on Human Right’s December 27, 2002 recommendation. On

July 7, 2004, Congress passed the Claims Distribution Act of 2004, which provided for a

monetary per-capita distribution of the 326-K Fund to qualifying Western Shoshone

members, but did not provide the Dann sisters or any other Western Shoshone members

with title to their ancestral lands.

38

Undoubtedly, considerable time will have elapsed before the Western

Shoshone people, the Secretary of the Interior and the Congress are able

to reach agreement in this complex matter.

Also, on December 15, 1983, the Assistant Secretary for Indian Affairs at the BIA wrote

Senator Mark Andrews, the Chairman of the United States Senate Select Committee on

Indian Affairs, noting that it was “premature and not in the best interest of either the tribes

or the government” to introduce proposed legislation. The Assistant Secretary for Indian

Affairs at the Department of the Interior also noted:

Presently, groups of Western Shoshone have been discussing proposed

legislation to secure both the monetary settlement and a portion of the lands

in Nevada. A particularly difficult problem exists with respect to any land

restoration approach due to the virtual absence of a successor tribe or tribes

representative of all the recommended beneficiaries. Consequently,

meaningful planning has not yet occurred.

In November of 1984, the BIA began negotiations with the “Western Shoshone

National Council,” regarding potential distribution legislation for the 326-K Fund. The

Western Shoshone National Council was comprised of various Western Shoshone tribal

governments and political organizations and was designated by the Western Shoshone

as the entity to represent the Western Shoshone in negotiations with the United States.

On May 20, 1985, the BIA received the Western Shoshone National Council’s

“PROPOSAL TO COMPLETE DATA GATHERING,” (Proposal) in which the Western

Shoshone National Council stated that they would need the next three years to prepare

for their negotiations with the BIA. (capitalization in original). The Proposal detailed the

various steps the Western Shoshone National Council would have to complete before

entering into negotiations. The steps included:

[E]stablish a data base for their land and land use; organize for negotiations,

determine general land control assignments, and determine general policy

for joint areas; develop preliminary policy for land use and preliminary land

development plans; and, enter into and complete negotiations with the

Federal government and define terms that can be incorporated into a

legislated agreement.

According to the “Work Schedule” included in the Proposal, the Western Shoshone

National Council stated that certain “Work Products,” such as “Historical Analysis,”

“Demographic Description of Population,” “Resources Inventory,” and “Land Interests,”

would be completed between one to three years, and that these work products would be

“needed for negotiations and development of agreement terms.” (capitalization in

original).

According to the BIA, by mid-1986, whatever negotiations had taken place

between the government and the Western Shoshone National Council came to a virtual

39

standstill. On June 30, 1986, the BIA sent the Western Shoshone National Council a

letter, stating that, “[a]fter over two years of negotiations, I am truly sorry that our

respective positions remain so far apart. . . . [T]he Department does not recognize any

valid legal claim to Western Shoshone tribal ancestral lands,” and “the Department

believes further negotiations at this time would be futile.” As of July 27, 1986, as

evidenced by a memorandum from the Assistant Secretary for Indian Affairs to the

Phoenix Area Office, negotiations between the government and the Western Shoshone

National Council were “not proceeding,” and the government “consider[ed] the

negotiations to have been suspended indefinitely.”

In light of the standstill in negotiations, on October 28, 1986, Senator Paul Laxalt,

Senator Chic Hecht, Congresswoman Vucanovich, and then Congressman Harry Reid,

of the Nevada Congressional delegation, wrote to the Secretary of Interior and noted

that, “[i]f the Shoshones do have a viable claim to private lands (approximately two million

acres), the Nevada Congressional delegation is concerned that the Shoshone land rights

question be resolved as quickly as possible without disruption of private titles.” The

Nevada Congressional delegation recognized that organizing a distribution for the 326-K

Fund had been complicated, stating that,

[t]he extent of continuing Western Shoshone land rights has been a

frustrating problem for the Western Shoshone Indians, private parties, and

governmental agencies for many years now. Although four negotiating

sessions between Western Shoshone National Council delegates and the

Department of the Interior have taken place over the last year, little progress

has been made toward a comprehensive solution.

The Nevada Congressional delegation’s October 28, 1986 communication also noted

that,

the United States Claims Court and the Senate Select Committee on Indian

Affairs agree that a comprehensive legislative solution will be necessary.

The present situation only promises to get worse. Once again, we urge the

Department to meet with the Western Shoshone National Council to find a

common basis for moving forward. While we realize that financial demands

upon the Department are heavy, we urge you to consider resolution of the

Shoshone controversy a priority, and to assist the Shoshones with

necessary funding.

As of mid-1987, Congress did not believe a final resolution to the Western

Shoshone judgment claim was “immediate.” According to a May 29, 1987 letter from

Senator Daniel Inouye, Chairman of the United States Senate Select Committee on

Indian Affairs to Senator Hecht and now Senator Reid, it appears that the Western

Shoshone National Council requested a Congressional hearing to discuss the Western

Shoshone judgment claims. Senator Inouye stated in his letter that “I do not believe that

a hearing will lead to any immediate solution to this problem,” but, that such a hearing

could at least establish “a basis for a fair resolution of this matter.”

40

There also was disagreement within the government as to how to proceed with

negotiations with the Western Shoshone National Council. The Chairman and Vice-

Chairman of the United States Senate Select Indian Committee on Indian Affairs believed

that future negotiations were dependent on the Western Shoshone National Council

receiving sufficient funding for their requested “study to develop an inventory of the

aboriginal lands and other natural resources which were subject of the 1863 Treaty of

Ruby Valley and the judgment of the Indian Claims Commission in Docket No. 326-K.”

According to a July 28, 1987 letter from the Chairman and Vice-Chairman of the United

States Senate Select Indian Committee on Indian Affairs to the Assistant Secretary of the

Interior, “[t]he project that the Western Shoshone National Council now proposes would

appear to be essential in order to establish a frame-work for future negotiations,” and “we

strongly urge that the Bureau of Indian Affairs join with ANA [Administration for Native

Americans] to assure sufficient funds are made available to complete this project in a

timely fashion.” The Assistant Secretary for Indian Affairs at the Department of the

Interior, however, disagreed with the Chairman and Vice-Chairman, and responded to the

letter on August 12, 1987, stating:

[T]he Western Shoshone have been compensated in the ‘usual practice’ for

the loss of their aboriginal title and there is no further legal claim against the

United States. Consequently, we do not perceive a need to survey their

entire historical use area as that matter was addressed at length in the

[Indian Claims] Commission and Court of Claims proceedings.

(brackets added).

As of August 1988, negotiations with the Western Shoshone National Council were

still suspended, with no known date for re-opening negotiations. According to an August

3, 1988 BIA Phoenix Area briefing paper prepared for the Secretary of Interior,

“negotiations have been suspended indefinitely” and “subsequent communication had not

changed the situation.”

Despite the lack of negotiations between the government and the Western

Shoshone National Council, on September 28, 1989, Congresswoman Vucanovich

proposed H.R. 3384, a distribution plan of the 326-K Fund. The Western Shoshone tribal

governments strongly objected to the introduction of the bill. The Te-Moak Tribe of

Western Shoshone Indians were “extremely angry” that H.R. 3384 was introduced without

“consultation with the Western Shoshone National Council and without the approval of

any of the nine Western Shoshone tribal governments.” H.R. 3384 also was opposed by

the staff at the Department of the Interior. According to an October 13, 1989 document

from the BIA Acting Phoenix Area Director to the Assistant Secretary of the Interior

commenting on H.R. 3384, “we [Phoenix Area Office] strongly recommend the proposal

be opposed by the Department.” According to the April 26, 1990 statement of Walter R.

Mills, Deputy to the BIA Assistant Secretary for Indian Affairs at Interior, before the United

States House of Representatives’ Congressional Committee on Interior and Insular

Affairs, Mr. Mills indicated, on behalf of the Department of the Interior, “[w]e strongly

oppose enactment of H.R. 3384” for several reasons. For example, according to Mr. Mills,

41

“[t]he timeframes cited in the bill for publication of regulations, the time allotted for

applications to enroll, and the time cited for the preparation of the Final Judgment Roll,

are unrealistically short.” According to H.R. 3384, as introduced, the Secretary of Interior

had one hundred and twenty days from the enactment of the Act to complete a proposed

judgment roll, sixty days from the disposition of appeals from individuals denied inclusion

on the judgment roll to publish the final judgment roll, and sixty days from publication of

the final roll to distribute the 326-K Fund on a per capita basis. The bill was not passed.

Thereafter, the Department of the Interior sent a letter, dated November 14, 1990,

to the Western Shoshone National Council, stating:

Our understanding is that the Nevada Congressional delegation and the

Senate Select Committee are willing to act on the distribution of the funds

in Docket 326-K and develop a settlement of outstanding land issues as

they relate to Western Shoshone lands. Neither the Department of the

Interior nor the Bureau of Indian Affairs have any immediate solutions to

these exceedingly complex issues. However, when a new Congress

convenes in January we certainly will be available to work with the Congress

in developing a resolution of these issues.

(capitalization in original).

On November 22, 1991, Congresswoman Vucanovich introduced a second bill,

H.R. 3897, to distribute the 326-K Fund. Denis Homer, the acting BIA director of Tribal

Services testified before Congress on behalf of the Department of the Interior, and stated

that the Department had concerns about the “tight timeframes specified in the legislation

[H.R. 3897] in which the Secretary is to fulfill certain administrative responsibilities,”

similar to the concerns the Department of the Interior had with H.R. 3384. Mr. Homer

stated that “[s]ome of these timeframes would be impossible to meet.” Mr. Homer

explained:

While the process of updating the tribal rolls may be completed in a

relatively short period of time, the overall technical process of bringing the

supplemental rolls into final form could take far longer than the timeframes

allotted in the bill. lf the supplemental roll is considered a lineal descendancy

roll, regulations necessary for its implementation will require considerable

time to formulate, approve, and publish. The 90-day timeframe in section 5

to develop regulations to implement the provisions of the legislation and the

11-month period to publish the final judgment roll provided in section 2(c)

do not provide adequate time to prepare a lineal descendancy roll in light of

Administrative Procedures Act requirements.

In 1992, H.R. 3897 was not voted out of committee. According to a June 19, 1992

letter from Congressman George Miller, Chairman of the United States House of

Representatives Committee on Interior and Insular Affairs, to Congresswoman

Vucanovich regarding H.R. 3897,

42

[i]n reviewing the record, there still appears to be a wide diversity of opinions

and suggested approaches regarding the distribution of the Docket

Funds[18] and resolution of other issues.

While I believe we are closer to a resolution of this issue than we were in

the 101st Congress, the Committee will not consider the measure until there

is more of a consensus among the tribal governments.

(capitalization in original).

By mid-1992, the government was attempting to re-open negotiations with the

Western Shoshone. According to a July 27, 1992 letter from the Department of the Interior

to the Chairman of the United States Senate Select Committee on Indian Affairs, the

Department of the Interior was contacting individuals to participate in an interagency

negotiating team to assist the Chairman “in the development of a legislative solution to

the claims of the Western Shoshone tribal governments against the United States.”

According to a June 22, 1992 letter from the Chairman of the United States Senate Select

Committee on Indian Affairs to the Department of the Interior, “[i]t appears that there is a

consensus growing among leaders of Shoshone tribal governments and other interested

parties toward a comprehensive solution to the Western Shoshone claims.” By June of

1993, the government was still working towards opening negotiations with the Western

Shoshone. According to a June 6, 1993 letter from Secretary of the Interior, Bill Babbitt,

to Senator Inouye, “we will be contacting representatives of the Western Shoshone Bands

for preliminary discussions in the near future.”

Also, during this time, certain governmental actors were not in favor of a 100% per

capita distribution of the funds, as was proposed in prior bills which had not been passed

by Congress. According to a January 7, 1994 letter from Congressman William

Richardson, Chairman of the United States House of Representatives Subcommittee of

Native American Affairs, which was part of the United States House of Representatives

Committee on Natural Resources, to Secretary Babbitt, “[t]he Subcommittee on Native

American Affairs generally would frown on any plan that does not include provisions for

tribal economic development and long range economic planning.” Further, Congressman

Richardson stated that, “I feel it is of paramount importance that the docket funds of the

Western Shoshone should not merely be divided up on a per capita basis and distributed.”

He also stated that “[i]n hearings before this Committee, Members have commented that

the Western Shoshone should be provided with some land base.” (capitalization in

original). On September 15, 1995, the 326-A-3 Funds, the last of plaintiffs’ three tribal

18The 326-A-1 Fund were deposited into the United States Treasury for investment by

the government on March 25, 1992. At the time that Congressman Miller wrote the June

19, 1992 letter, the Department of Interior was holding in trust the 326-K Fund and the

326-A-1 Fund. The 326-A-3 Fund, the third and last of the tribal trust funds at issue in this

case, was not deposited into the United States Treasury to be held in trust by the

Department of Interior until September 15, 1995.

43

trust funds, were deposited into the United States Treasury for investment by the

government.

In early 1997, consensus among the Te-Moak Bands of Western Shoshone

Indians, one of the four Western Shoshone tribes recognized by the BIA as a beneficiary

of the 326-K Fund in the BIA’s January 22, 1982 amended research report, began to

emerge. The Te-Moak Bands of Western Shoshone Indians was comprised of the Elko,

Battle Mountain, South Fork, and Wells bands. The other three Western Shoshone tribes

recognized by the BIA as beneficiaries of the 326-K Fund in the January 22, 1982

amended research report were the Duckwater Shoshone Tribe, the Yomba Shoshone

Tribe, and the Ely Indian Colony. According to a March 3, 1997 internal BIA

memorandum, the Te-Moak Tribal Council, the governing group for the Te-Moak Bands

of Western Shoshone Indians, was planning to “pursue 100% distribution to 1/4 degree

of Docket 326-K.” The March 3, 1997 BIA memorandum also noted that the Te-Moak

Tribal Council would pursue “a separate or companion proposal to seek restoration of

land in Western Shoshone country,” and that both proposals, “could run concurrently and

not necessarily have to be tied together.” The March 3, 1997 BIA memorandum also

discussed a March 1, 1997 meeting between the BIA and two hundred members of

Western Shoshone tribes. According to the March 3, 1997 BIA memorandum, after the

March 1, 1997 meeting was over, “several people came up to tell us [the BIA] that they

support the proposed Te-Moak plan but did not want to stand up in front of the audience

and express themselves.”

Also, according to a March 7, 1997 internal BIA memorandum from the

Superintendent of the Eastern Nevada Agency to the Phoenix Area Director, other

Western Shoshone tribes, apart from the Te-Moak Bands of Western Shoshone Indians,

would potentially be introducing to the BIA their own version of a potential distribution plan

for the 326-K Fund. According to the March 7, 1997 internal BIA memorandum:

The Te-Moak Tribe will be sending a copy of their plan to the other three

tribes named in the results of research. The purpose is to try and get the

four proposed plans submitted about the same time so resolution could be

achieved quickly. Duckwater has already presented their plan to the federal

negotiating team. Ely will be supporting the Te-Moak Plan. We do not know

what Yomba will do, rumors are they will parallel the Duckwater plan.

(capitalization in original). Despite the Te-Moak Tribal Council’s emerging consensus in

favor of a distribution plan for the 326-K Fund, the BIA was not optimistic that distribution

plan legislation would be passed by Congress for the 326-K Fund in the near-term. On

May 15, 1998, Donna Peterson, BIA Branch Chief of the Tribal Government Services sent

a memorandum to the BIA Phoenix Area Director, stating that the BIA did “not anticipate

a final distribution plan being presented to Congress by the end of this year.” Ms. Peterson

also noted that, “we do anticipate the development of a payment roll will be a tremendous

and expensive task once the distribution plan is approved. Both the Eastern and Western

Nevada Agencies have been very cognizant of this fact and are working along with the

tribes in maintaining current tribal rolls.” (capitalization in original).

44

Beginning in 1998, support from various Western Shoshone tribes in favor of a

monetary distribution of the 326-K Fund and the setting aside of the 326-A-1 and 326-A-

3 Funds as educational trust funds began to increase. In 1998, the BIA attended two

public hearings held by the Western Shoshone Steering Committee, a “group of individual

Western Shoshones that have organized to try and prepare a distribution plan,” for a vote

of approval a draft distribution proposal, in which the 326-K Fund would be fully distributed

on a 100% per capita basis and the 326-A-1 and 326-A-3 Funds would be placed into a

permanent education trust fund. The vote at the two meetings was that 1230 Western

Shoshones were in favor of the draft proposal, while 53 were against the proposal.

On December 1, 1998, the BIA Phoenix Area Director wrote to the Deputy

Commissioner for Indian Affairs at the BIA, noting that “an overwhelming majority of adult

Western Shoshones favor distribution.” In addition, according to a 1999 letter from Elko

Band representatives to Bruce Babbitt, the Secretary of Interior at that time, the Elko Band

representatives, co-chairmen of the Western Shoshone Claims Steering Committee, the

committee that voted in favor of a distribution plan at two public hearings in 1998, noted

that “at this point we feel it is both reasonable and prudent to move forward,” and “we

would be most appreciative of the Department of Interior’s assistance in promoting the

‘Western Shoshone Claims Distribution Act’[19] as the ‘Act’ enters and progresses through

the congressional process.” The Elko Band representatives also stated that they are the

“largest number (approx. 1500) of Western Shoshone enrollees,” and, therefore, wrote to

the Secretary “on behalf of the ‘majority’ of Western Shoshone people.” (emphasis in

original). Also, between February and March of 1999, the Fallon Paiute Shoshone Tribe,

“the second largest band of Shoshones in the state of Nevada,” numbering approximately

601 eligible Western Shoshone beneficiaries of the 326-K docket, the Elko Band Council,

the “largest Band of Western Shoshone in the State of Nevada,” and the Western

Shoshone of the Duck Valley Reservation, numbering “approximately 400 direct

descendants of eligible Western Shoshone who are possible beneficiaries of Docket 326-

K,” each passed resolutions in favor of Congress passing the Western Shoshone Claims

Distribution Act.

By June 7, 1999, the BIA was drafting proposed legislation as requested by various

groups of Western Shoshone. According to a June 7, 1999 email from Daisy West, a BIA

Tribal Relations Officer, to Pat Gerard, whose specific employment position is not

identified in the email, but who appears to be another BIA employee, Ms. West was

“working on the draft legislation for the Western Shoshone Judgment Funds” and

requested from Pat Gerard the “current balances” of plaintiffs’ three tribal trust funds.

During the early 2000s, Senator Reid, Senator John Ensign, and Congressman

James Gibbons, members of the Nevada Congressional delegation, introduced

legislation for the distribution of plaintiffs’ three tribal trust funds. On May 9, 2000, the

19 The “Western Shoshone Claims Distribution Act,” was the act that the Western

Shoshones voted in favor of during the two public hearings in 1998 and which proposed

to distribute the 326-K Fund on a 100% per capita basis to individuals of ¼ Western

Shoshone blood.

45

Assistant Secretary for Indian Affairs at the BIA submitted proposed draft legislation to

“‘authorize the Use and Distribution of the Western Shoshone Judgment Funds in Docket

Nos. 326-K, 326-A-1 and 326-A-3’” to the Speaker of the House. (capitalization in

original). The Assistant Secretary stated in the letter to the Speaker of the House:

Although the governing bodies of three of the four successor tribes, due to

the dynamics of tribal politics, have changed their position, or been silent

until recently concerning the legislative proposal for the use of these funds,

the individual Western Shoshone have been anxious for quite some time to

have these funds distributed.

The Assistant Secretary also stated:

We are confident that the Western Shoshone want these funds distributed

as quickly as possible. We also believe that the best interests of the

Western Shoshone will not be served by providing additional time for

successor tribes to reach a consensus on the division and distribution of the

land claims funds in Docket 326-K.

On June 27, 2000, Senator Reid introduced S. 2795, Western Shoshone Claims

Distribution Act, which, however, did not pass during the 106th Congress. On September

6, 2001, Congressman Gibbons introduced H.R. 2851, Western Shoshone Claims

Distribution Act before the United States House of Representatives Committee on Natural

Resources, which, however, also did not pass. On November 14, 2002, Senator Reid

tried again and introduced S. 958, Western Shoshone Claims Distribution Act, which was

passed by the United States Senate, but later died before the United States House of

Representatives Committee on Natural Resources.

On April 29, 2003, the BIA Office of Trust Funds Management met to discuss the

investment performance of plaintiffs’ three tribal trust funds at issue in the above-

captioned case. The meeting was memorialized in a one-page document, dated April 29,

2003, which stated, in part, “[a]s the securities mature, reinvest the principal and interest

not to exceed two year [sic]. The tribes at some point in the future may settle and distribute

the funds.” The above document also stated under the “Comments” section:

The four successor Western Shoshone Tribes eligible to share in this award

include Te-Moak, Ely, Duckwater, and Yomba. Also tribes with a significant

number of tribal members of Western Shoshone descent eligible to share

in the distribution are Duck Valley, Fallon and Fort McDermitt. The proposed

use of Docket 326-K is 100% per capita distribution, however, at least one

of the successor tribes still opposes acceptance of the award for land sale.

The proposed use of Dockets 326-A-1 and 326-A-3 are principal restriction

of the award [sic], with income to be used for educational grants and other

forms of educational assistance to tribal members and descendants.

46

In 2003, Congressman Gibbons of Nevada introduced H.R. 884 in the United

States House of Representatives. Also, in 2003, Senator Reid and Senator Ensign of

Nevada introduced S. 618 in the United States Senate. Congress passed both H.R. 884

and S. 618, which were almost identical bills, and which became law on July 7, 2004,

when President George W. Bush signed the Claims Distribution Act of 2004. According

to the Claims Distribution Act of 2004, the 326-K Fund was to be paid out on a 100% per

capita distribution, whereas the 326-A-1 and 326-A-3 Funds were to be used as education

trust funds, from which individuals selected by the Western Shoshone Educational

Committee would receive educational grants. The principals of the 326-A-1 and 326-A-3

Funds were to be held in perpetual trust and the interest of those funds would be

distributed to selected individuals meeting certain eligibility criteria.

On May 19, 2005, the BIA published a proposed rule regarding the process for

individuals to enroll in the judgment roll, as required under the Claims Distribution Act of

2004. See Preparation of Rolls of Indians, 72 Fed. Reg. 9,836 (Mar. 5, 2007) (to be

codified at 25 C.F.R. pt. 61). The comment period for the proposed rule was open for 162

days, from May 19, 2005 to October 28, 2005. Id. Copies of the proposed rule were mailed

to approximately 2,300 individuals and the BIA held two public meetings for the purpose

of discussing the proposal. Id. The first meeting was held on August 20, 2005 in Elko,

Nevada, which approximately 500 individuals attended. Id. The second meeting was held

one week later, on August 27, 2005, in Reno, Nevada, which approximately 600

individuals attended. Id. The BIA also received written comments from 36 individuals

regarding the proposed rule. Id.

On October 25, 2005, the Office of Trust Funds Management at the BIA met again

to discuss the 326-K, 326-A-1, and 326-A-3 Funds, and documented the meeting, noting,

“JA.9087.691 Funds [326-A Funds] are invested in short, intermediate and long

securities. JA.9334.697 Receipt of award: as the securities mature, reinvest the principal

and interest not to exceed 2008 [i.e., not to exceed a maturity of three years]. Settlement

of docket 326-K is in the horizon.” (capitalization in original).

On February 12, 2007, approximately two and a half years after the enactment of

the Claims Distribution Act of 2004, Daisy West, BIA Chief, Division of Tribal Government

Services, wrote an email to Robert Craff, BIA Regional Trust Administrator within the

Western and Navajo Office of the Special Trustee for American Indians, and one of

defendant’s fact witness at trial, stating:

The final enrollment regulations are with Mike Olsen for his signature. Once

the regulations are signed they will be published in the Federal Register and

become effective 30 days after the date of publication. The first distribution

of funds will be in approximately 2 to 3 years when the application period

closes. At that time we will make a partial per capita to approximately 2,500

individuals. . . . The balance of Docket 326-K funds will be distributed in 6

to 10 years.

47

On March 5, 2007, a little less than three years after the Claims Distribution Act of

2004 was enacted, the BIA published the final rule that established the process for

enrolling in the judgment roll. The final rule establishing the judgment roll enrollment

process was codified at 25 C.F.R. § 61.4(k) (2007). See Preparation of Rolls of Indians,

72 Fed. Reg. 9,836 (Mar. 5, 2007) (to be codified at 25 C.F.R. pt. 61).

According to 25 C.F.R. § 61.4(k),

(1) Under section 3(b)(1) of the Act of July 7, 2004, Pub. L. 108–270, 118

Stat. 805, the Secretary will prepare a roll of all individuals who meet the

eligibility criteria established under the Act and who file timely applications

prior to a date that will be established by a notice published in the Federal

Register. The roll will be used as the basis for distributing the judgment

funds awarded by the Indian Claims Commission to the Western Shoshone

Identifiable Group of Indians in Docket No. 326–K. To be eligible a person

must:

(i) Have at least ¼ degree of Western Shoshone blood;

(ii) Be living on July 7, 2004;

(iii) Be a citizen of the United States; and

(iv) Not be certified by the Secretary to be eligible to receive a per

capita payment from any other judgment fund based on an aboriginal

land claim awarded by the Indian Claims Commission, the United

States Claims Court, or the United States Court of Federal Claims,

that was appropriated on or before July 7, 2004.

(2) Indian census rolls prepared by the Agents or Superintendents at

Carson or Western Shoshone Agencies between the years of 1885 and

1940, and other documents acceptable to the Secretary will be used in

establishing proof of eligibility of an individual to:

(i) Be listed on the judgment roll; and

(ii) Receive a per capita payment under the Western Shoshone

Claims Distribution Act.

(3) Application forms for enrollment must be mailed to Tribal Government

Services, BIA–Western Shoshone, Post Office Box 3838, Phoenix, Arizona

85030–3838.

(4) The application period will remain open until further notice.

25 C.F.R. § 61.4(k). An individual who was denied eligibility for enrollment in the judgment

roll could appeal the decision pursuant to the administrative appeal process set forth in

25 C.F.R. § 62. See 25 C.F.R. § 62.4 (2007) (“A person who is the subject of an adverse

enrollment action may file or have filed on his/her behalf an appeal.”).

48

On April 5, 2007, the BIA began to send applications to individuals to enroll in the

judgment roll. By October 5, 2007, ninety days after the BIA began to send out

applications, the BIA had received 5,265 applications. Approximately two years later,

according to the BIA’s September 30, 2009 progress report, BIA had received 2,819 more

applications, for a total of 8,084 applications received as of September 2009. The

progress report also stated that as of September 2009, 341 applications were reviewed

and determined to be ineligible. The BIA also stated in that same update that “[t]he final

deadline [for receiving applications] will be published in the Federal Register.”

On October 19, 2009, the BIA was in the process of establishing the Educational

Committee pursuant to section 4(a) of the Claims Distribution Act of 2004. The

Educational Committee was the group of Western Shoshone tribal leaders who would

select the winning individuals of educational grants to be paid from the interest earned on

the 326-A-1 and 326-A-3 Funds. According to the BIA’s October 19, 2009 update, “[f]ive

of the six groups have identified their representative and are providing the documentation

to confirm the appointments.” The update also stated that, “[o]nce the Educational

Committee is established, it will begin to develop the rules and procedures for approval

by the Secretary.”

On May 20, 2010, the BIA published the deadline for receiving applications for

eligibility in the Federal Register. The notice stated that “[a]pplications must be received

by close of business (5 p.m. Mountain Time) August 2, 2010.” Deadline for Submission

of Applications To Be Included on the Roll of Western Shoshone Identifiable Group of

Indians for Judgment Fund Distribution, 75 Fed. Reg. 28,280 (May 20, 2010). The BIA

also had sent by mail notice to potential applicants of the deadline for receiving

applications. Some individuals, however, did not receive notice by mail, and, therefore

the BIA extended the deadline for submitting applications for these individuals to

December 31, 2010.

According to a November 30, 2010 BIA progress report, introduced by both parties

as a joint exhibit at trial in the above-captioned case, the BIA had received 9,108

applications. Of these applications, 4,023 were determined eligible, 2,201 were

determined ineligible, and 2,576 were pending review. The BIA also stated that 308

appeals had been filed and that it had “begun the quality control review process for the

proposed partial payment targeted for February 2011.” On March 6, 2011, the first partial

distributions of the 326-K Fund were made to 3,187 individuals. The partial payment to

each individual was $22,013.00. On September 28, 2012, the BIA completed the final

judgment roll for the 326-K Fund, which contained a total of 5,415 individuals. Final

distributions from the 326-K Fund were made to eligible recipients via direct deposit to

individuals’ bank accounts on September 29, 2012, and via check on October 2, 2012.

The individuals who received an initial partial payment, received a second payment of

$13,124.93, for a total of $35,137.93. The individuals who did not receive an initial partial

payment received a one-time, final payment of $35,137.93.

49

COURT PROCEDURAL HISTORY

On December 26, 2006, plaintiff Yomba Shoshone Tribe, one of the Western

Shoshone tribes recognized by the Department of the Interior as a member of the Western

Shoshone Identifiable Group, filed a complaint in the United States Court of Federal

Claims against the United States, resulting in the above-captioned case. The complaint

alleged that the government’s “mismanagement of Plaintiff’s trust funds and other trust

assets in Defendants’ custody and control,” caused plaintiff “damages not sounding in

tort.” Since the filing of the complaint, more plaintiffs have joined the case and plaintiffs

have narrowed the time frame at issue in this case, seeking damages from December

1979, when the 326-K Fund was deposited into the United States Treasury, until

September 2013, the last month for which there is available data of the government’s

investment of three tribal trust funds at issue. On that same day, the case was assigned

to Judge Edward Damich. On February 22, 2007, he ordered a stay of the proceedings

in light of ongoing settlement discussions between the parties. On March 12, 2008, the

complaint was amended adding individual plaintiffs Maurice Frank-Churchill, Jerry Millet,

and Virginia Sanchez, on behalf of the Western Shoshone Identifiable Group.

On March 28, 2008, defendant filed a motion to dismiss plaintiffs’ amended

complaint, arguing that plaintiff Yomba Shoshone Tribe cannot state a claim for relief that

would entitle it to money damages for “inadequate interest earnings to the tribe,” because

“[t]he Tribe has no right to any part of the distribution or interest that was earned during

the time the funds reside[d] in Government accounts.” (emphasis in original). Defendant

argued that according to the Claims Distribution Act of 2004, “Congress expressly

contemplated and directed that the entire fund [the 326-K Fund] be distributed per capita”

on an individualized basis and not to any tribe. (emphasis in original). Defendant also

argued that the Claims Distribution Act of 2004 similarly required that any interest earned

on the 326-A-1 and 326-A-3 Funds be distributed not to any tribe but to “individual

Shoshone members” for “the specific purpose of education-related assistance.”

Defendant argued that, in the alternative, all of the other Western Shoshone tribes were

necessary parties under Rule 19(a) of the Rules for United States Court of Federal Claims

(RCFC) (2008) and indispensable parties under RCFC 19(b), requiring dismissal,

pursuant to RCFC 12(b)(7) (2008) and RCFC 19, for failure to join all of the other Western

Shoshone tribes as necessary parties.

On June 25, 2008, the complaint was amended for a second time, before Judge

Damich ruled on defendant’s March 28, 2008 motion to dismiss, adding tribal plaintiffs

Timbisha Shoshone Tribe and the Duckwater Shoshone Tribe, two additional Western

Shoshone Tribes recognized by the Department of the Interior as members of the

Western Shoshone Identifiable Group, bringing the total number of plaintiffs to six. The

six plaintiffs, according to the June 25, 2008 amended complaint, were (1) tribal plaintiff

Yomba Shoshone Tribe, (2) tribal plaintiff Timbisha Shoshone Tribe, (3) tribal plaintiff

Duckwater Shoshone Tribe, (4) individual plaintiff Maurice Frank-Churchill, (5) individual

plaintiff Jerry Millet, and (6) individual plaintiff Virginia Sanchez, the current six plaintiffs

at issue in the above-captioned case.

50

On October 31, 2008, Judge Damich issued an unreported Opinion denying

defendant’s motion to dismiss, the first of two Opinions he issued in this case. Judge

Damich rejected defendant’s March 28, 2008 argument that tribal plaintiff Yomba 20 had

no right to the distribution of the three tribal funds at issue because the funds were to be

distributed on an individualized basis, not a tribal basis. Judge Damich found that “all

three Tribal Plaintiffs—Yomba, Timbisha, and Duckwater (collectively ‘the Tribes’)—are

federally-recognized tribes with interests in the tribal trust funds of the Western Shoshone

Identifiable Group to which the Tribal Plaintiffs belong.” W. Shoshone Identifiable Grp. v.

United States, 2008 WL 9697144, at *1. Judge Damich explained that:

As owners of tribal trust funds, the Tribes have the right to pursue their

breach of trust claims against the Government for mismanagement of the

tribal trust funds. The pro rata distribution mechanism in the Distribution Act

is irrelevant because the Distribution Act does not divest the Tribes of any

ownership interest in the trust funds and because the Tribes are not, in this

case, challenging the distribution mechanism set forth in the Distribution

Act.

Id. Judge Damich then stated that defendant “failed to show that the other Western

Shoshone tribes are necessary parties, because, under 28 U.S.C. § 1505 (2006), any

tribe may represent the Western Shoshone without joinder,” and that defendant

failed to show that either complete relief could not be granted to the Western

Shoshone in the absence of all the Western Shoshone tribes or that any of

the parties to the litigation are subject to a substantial risk of incurring

double, multiple, or otherwise inconsistent obligations by reason of the

Tribes’ interest.

Id.

On August 7, 2009, defendant filed its motion for reconsideration of Judge

Damich’s Opinion denying its motion to dismiss. Defendant repeated its allegation that

the tribal plaintiffs were not the beneficial owners of the 326-K, 326-A-1 and 326-A-3

Funds and that the beneficial owners were “individuals” who qualified to receive a pro-

rata share of the 326-K Fund and an educational grant of the 326-A-1 and 326-A-3 Funds

under the Claims Distribution Act of 2004. Defendant also argued that the tribal plaintiffs

failed to establish the requisite money-mandating duty owed to them in order to sustain

their breach of trust claims.

20 At the time that defendant filed its motion to dismiss, tribal plaintiff Yomba was the only

tribal plaintiff involved in this case. As previously discussed, following the filing of

defendant’s motion to dismiss and before Judge Damich issued his Opinion on

defendant’s motion to dismiss, the plaintiffs amended their complaint for a second time,

adding two additional tribal plaintiffs, the Timbisha Shoshone Tribe and the Duckwater

Shoshone Tribe.

51

On November 24, 2009, Judge Damich denied defendant’s motion for

reconsideration in an unpublished Opinion. See W. Shoshone Identifiable Grp. v. United

States, 2009 WL 9389765, at *11. The court stated once again that the tribal plaintiffs are

the beneficial owners of the 326-K, 326-A-1 and 326-A-3 Funds. See id. at *6. The court

also explained that “insofar as the Tribal Plaintiffs are members of, and assert that they

are representatives of, the Western Shoshone Identifiable Group and are advancing its

claims under the Indian Tucker Act,” there was “no basis” for “Defendant’s argument that

the Tribal Plaintiffs do not have a money-mandating basis for jurisdiction in this Court or

otherwise lack standing to bring t

This text is long and has been trimmed here. Open the source document for the complete record.