Opposition Brief — Keith Mandan, Petitioner v. Sonny Perdue, Secretary of Agriculture, et al.

Nos. 17-807 and 17-897

In the Supreme Court of the United States

DONIVON CRAIG TINGLE, PETITIONER

v.

SONNY PERDUE, SECRETARY OF AGRICULTURE, ET AL.

KEITH MANDAN, PETITIONER

v.

SONNY PERDUE, SECRETARY OF AGRICULTURE, ET AL.

ON PETITIONS FOR WRITS OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENT IN OPPOSITION

NOEL J. FRANCISCO

Solicitor General

Counsel of Record

CHAD A. READLER

Acting Assistant Attorney

General

CHARLES W. SCARBOROUGH

CARLEEN M. ZUBRZYCKI

Attorneys

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTIONS PRESENTED

1. Whether the court of appeals erred in declining to

adjudicate the merits of a challenge that a cy pres provision in a class-action settlement agreement involving

the federal government violated the Constitution’s

Appropriations Clause, Art. I, § 9, Cl. 7, based on the

court’s determination that the challenge had been

waived or, at a minimum, forfeited.

2. Whether the district court abused its discretion in

approving a modification of a previously approved classaction settlement agreement based on the court’s findings that the modification was fair, reasonable, and

adequate and that it was not the product of collusion

among the parties.

(I)

TABLE OF CONTENTS

Page

Opinions below .............................................................................. 1

Jurisdiction .................................................................................... 2

Statement ...................................................................................... 2

Argument..................................................................................... 12

Conclusion ................................................................................... 25

TABLE OF AUTHORITIES

Cases:

Commodity Futures Trading Comm’n v. Schor,

478 U.S. 833 (1986).............................................................. 20

Curtis Publ’g Co. v. Butts, 388 U.S. 130 (1967) ............ 17, 19

Expressions Hair Design v. Schneiderman,

137 S. Ct. 1144 (2017) ......................................................... 18

Freytag v. Commissioner, 501 U.S. 868 (1991) .................. 20

Keepseagle v. Veneman, No. 99-3119,

2001 WL 34676944 (D.D.C. Dec. 12, 2001) ..................... 2, 3

Office of Pers. Mgmt. v. Richmond,

496 U.S. 414 (1990).............................................................. 20

Smallwood v. Sessions, No. 17-5070

(D.C. Cir. July 27, 2017) ....................................................... 9

United States v. Johnston, 268 U.S. 220 (1925).................. 18

United States v. Olano, 507 U.S. 725 (1993) ....................... 15

Wellness Int’l Network Ltd. v. Sharif,

135 S. Ct. 1932 (2015) ......................................................... 20

Wood v. Milyard, 566 U.S. 463 (2012) ................................. 15

Yakus v. United States, 321 U.S. 414 (1944) ................. 17, 19

(III)

IV

Constitution, statutes, and rules:

Page

U.S. Const.:

Art. I, § 9, Cl. 7 (Appropriations Clause) ............. passim

Art. III .............................................................................. 20

Equal Credit Opportunity Act, 15 U.S.C. 1691

et seq. ...................................................................................... 2

28 U.S.C. 2414 .................................................................. 14, 21

31 U.S.C. 1304 ............................................................ 10, 11, 21

31 U.S.C. 1304(a) ................................................................... 14

Fed. R. Civ. P.:

Rule 23 ................................................................................ 2

Rule 23(b)(2) ...................................................................... 2

Rule 23(b)(3) ...................................................................... 3

Rule 23(e) ........................................................................... 5

Rule 60(b)(5) ...................................................................... 5

Miscellaneous:

The Attorney General’s Role as Chief Litigator for

the United States, 6 Op. O.L.C. 47 (1982) ........................ 14

In the Supreme Court of the United States

No. 17-807

DONIVON CRAIG TINGLE, PETITIONER

v.

SONNY PERDUE, SECRETARY OF AGRICULTURE, ET AL.

No. 17-897

KEITH MANDAN, PETITIONER

v.

SONNY PERDUE, SECRETARY OF AGRICULTURE, ET AL.

ON PETITIONS FOR WRITS OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE FEDERAL RESPONDENT

IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App.

1a-80a 1) is reported at 856 F.3d 1039. The relevant

memorandum opinion of the district court (Pet. App.

83a-107a) is not published in the Federal Supplement

but is available at 2016 WL 9455764.

“Pet. App.” refers to the appendix to the petition for a writ of

certiorari in No. 17-897.

1

(1)

2

JURISDICTION

The judgment of the court of appeals was entered on

May 16, 2017. Petitions for rehearing were denied on

September 20, 2017 (Pet. App. 110a-111a). The petition

for a writ of certiorari in No. 17-807 was filed on December 1, 2017. The petition for a writ of certiorari in

No. 17-897 was filed on December 19, 2017. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

1. a. In 1999, more than 200 Native American farmers and ranchers brought this suit against the United

States Department of Agriculture (USDA) on behalf of

a putative class. Pet. App. 4a. They alleged that USDA

had discriminated against Native Americans who applied for credit and other benefits under various federal

programs, and that it had failed to investigate complaints

of discrimination, in violation of the Equal Credit Opportunity Act, 15 U.S.C. 1691 et seq., and other statutes.

Pet. App. 4a-5a; see Keepseagle v. Veneman, No. 99-3119,

2001 WL 34676944, at *1 (D.D.C. Dec. 12, 2001).

In 2001, after finding that the requirements of Federal Rule of Civil Procedure 23 were satisfied, the district court certified a class consisting of

[a]ll Native-American farmers and ranchers, who

(1) farmed or ranched between January 1, 1981 and

November 24, 1999; (2) applied to the USDA for participation in a farm program during that time period;

and (3) filed a discrimination complaint with the

USDA individually or through a representative during the time period.

Keepseagle, 2001 WL 34676944, at *6; see id. at *6-*14.

The court certified the class under Rule 23(b)(2), which

governs declaratory and injunctive relief. Id. at *12-*14.

3

It reserved judgment on whether certification of a class

seeking monetary relief under Rule 23(b)(3) would also

be appropriate, but the court noted that it “maintain[ed]

the power to revisit the definition of the class at any

point” and that, if the plaintiffs subsequently showed

that certification of a Rule 23(b)(3) class was appropriate, the court “w[ould] consider its certification at that

time.” Id. at *14; see Pet. App. 4a-5a.

b. In 2010, after more than a decade of discovery and

negotiation, the parties reached a proposed settlement

agreement. Pet. App. 5a. The proposed settlement provided for various forms of programmatic relief, including

(inter alia) requirements that USDA collect and evaluate data on its Farm Loan Program and that it enhance

its services and education for Native American farmers

and ranchers. Ibid. The proposed settlement also provided for monetary relief to class members, through certification of a Rule 23(b)(3) class. Id. at 5a-6a. It required

the United States to establish a $680 million fund from

which class members could seek compensation. Id. at 6a.

Individual class members could pursue relief through an

administrative claims process, along one of two mutually

exclusive avenues. Ibid. Claimants who presented “substantial evidence” that they met certain criteria could

obtain $50,000 plus certain tax relief. Ibid. (citation omitted). Alternatively, claimants could seek to recover their

actual damages, up to $250,000, by meeting a higher evidentiary standard. Ibid.; see C.A. App. 392-423. Class

members also could elect to opt out of the settlement

agreement, Pet. App. 5a-6a, and four individuals did so,

see D. Ct. Doc. 607, at 1 (Apr. 29, 2011).

When the proposed settlement agreement was negotiated, substantial uncertainty and disagreement existed

about the number of potential claimants, and thus the

4

appropriate size of the fund to pay individual claims.

See C.A. App. 909-911. In light of that uncertainty, the

proposed settlement agreement provided that, if the

$680 million fund proved insufficient to pay all claims,

then successful claimants’ damage awards would be

reduced on a pro rata basis. Id. at 419-420. Conversely,

in the event that there were funds remaining after the

completion of the claims process, the agreement contained a cy pres provision, which directed that any

remaining funds would be distributed in equal shares to

nonprofit organizations (excluding law firms, legalservices entities, or educational institutions) that

served Native American farmers. Id. at 393, 422-423.

The proposed settlement agreement provided that class

counsel would designate (subject to the court’s approval)

organizations that met those criteria to receive funds.

Id. at 393; Pet. App. 6a. It also contained a provision

permitting modification of the settlement’s terms, but

“only with the written agreement of the Parties and

with the approval of the District Court, upon such notice

to the Class, if any, as the District Court may require.”

Pet. App. 6a (citation omitted).

c. The district court received objections to the proposed settlement. Pet. App. 7a. Of 35 objection letters,

three addressed the cy pres provision; two of those suggested particular organizations or goals to which any

remaining funds should be directed, and a third opposed

any cy pres distribution to beneficiaries as designated

by class counsel. Ibid. Neither the petitioner in No.

17-807 (Donivon Tingle) nor the petitioner in No. 17-897

(Keith Mandan) submitted any objection. Ibid.

In April 2011, after considering the objections submitted and conducting a fairness hearing, the district

court approved the settlement. Pet. App. 7a. The court

5

found that the settlement’s terms were fair, reasonable,

and adequate and satisfied Federal Rule of Civil Procedure 23(e). Ibid. It entered a final order and judgment

that dismissed the case with prejudice, but the court

“retain[ed] continuing jurisdiction for a period of five

years” thereafter to oversee compliance with the settlement’s provisions. C.A. App. 593. No appeal from the

court’s order was taken. Pet. App. 7a.

2. a. Over the following two years, the administrative claims process proceeded. Pet. App. 8a. Although

more than 3600 individuals submitted successful claims,

when negotiating the settlement, the parties had anticipated a much higher number would do so. See id. at

8a-9a. As a result, at the conclusion of the administrative claims process, approximately $380 million of the

fund had not been distributed. Id. at 8a.

The parties attributed the difference between the

number of claims anticipated and the number submitted

to different causes, see C.A. App. 1114 n.3, but they

worked together to find a resolution, Pet. App. 8a. The

parties initially negotiated a supplemental agreement

under which, rather than immediately distributing the

unclaimed funds in equal shares to nonprofit organizations that had assisted Native American farmers in the

past, most of the unclaimed funds instead would be paid

into a trust that would be distributed over 20 years to

nonprofit organizations that had served or would serve

Native American farmers. See ibid.; D. Ct. Doc. 709-1,

at 1-2 (Sept. 24, 2014). In September 2014, class representatives accordingly filed a motion to modify the settlement agreement under the agreement’s modification

provision and Federal Rule of Civil Procedure 60(b)(5).

Ibid.

6

The lead named plaintiff, Marilyn Keepseagle, opposed

the proposed modification. Pet. App. 8a. With the district court’s approval, she and her husband retained

separate counsel and filed their own motion to modify

the original settlement. Ibid.; see C.A. App. 1121-1123;

D. Ct. Doc. 779-1 (May 19, 2015). The Keepseagles proposed instead a pro rata distribution of all remaining

funds to the claimants who had already submitted successful claims. Pet. App. 8a.

In June 2015, after receiving briefing on the competing motions to modify the settlement agreement, the

district court held a hearing. C.A. App. 1123-1126.

Many other class members testified at the hearing in

support of the Keepseagles’ proposal. Pet. App. 9a. Neither Tingle nor Mandan testified. Ibid. In July 2015,

the district court denied both motions to modify the settlement agreement and directed the parties to resume

negotiations. Ibid.; C.A. App. 1098-1167.

b. The parties (including the Keepseagles) accordingly engaged in extensive additional negotiations. In

December 2015, class counsel, USDA, and the Keepseagles reached a compromise that struck a balance between

class counsel’s and the Keepseagles’ prior proposals.

Pet. App. 9a. That compromise, reflected in a proposed

Addendum to the original settlement agreement, provided that class members who had successfully pursued claims would receive additional compensation (an

$18,500 direct payment plus a $2775 payment made to the

Internal Revenue Service on the class member’s behalf ). Pet. App. 9a; C.A. App. 1170. It further provided

that the funds still remaining after that distribution—

approximately $300 million—would be distributed to

nonprofit organizations that serve Native American

farmers: $38 million would be distributed promptly to

7

nonprofit organizations proposed by class counsel and

approved by the district court, and the remainder (estimated to be $265 million) would be placed in a trust to

be distributed to nonprofit organizations over 20 years.

Pet. App. 9a-10a; C.A. App. 1177-1188. A wide range of

nonprofit organizations would be potentially eligible to

receive grants from the trust under the Addendum, and

the funds could be used “to fund the provision of business assistance, agricultural education, technical support, and advocacy services to Native American farmers

and ranchers to support and promote their continued engagement in agriculture.” C.A. App. 1178. The Addendum provided that class counsel would select (subject to

the court’s approval) the initial members of the board of

trustees and the executive director for the new trust

and that the trustees could appoint any replacements.

Id. at 1170, 1183, 1186.

The plaintiffs filed an unopposed motion to modify

the settlement agreement to incorporate the Addendum

into the original settlement agreement. Pet. App. 9a;

see D. Ct. Doc. 824-1 (Dec. 14, 2015). At the district

court’s direction, class counsel provided written notice

of the proposed modification to the class. Pet. App. 10a.

The court received and reviewed written comments from

class members and, in February 2016, it held another

hearing, at which many class members testified. Ibid.

“Many class members expressed their support for

the proposed Addendum, but many did not.” Pet. App.

92a. Class members who disagreed with the Addendum

generally argued either that all of the funds should be

distributed to successful claimants, or that the claims

process should be reopened to allow unsuccessful claimants to submit new claims. Ibid. As relevant here, petitioner Mandan argued that all of the remaining funds

8

should have been distributed solely to the successful

claimants and that the settlement could not be modified

without his consent. C.A. App. 1197-1199; Pet. App.

10a-11a; D. Ct. Doc. 860, at 1-6 (Feb. 18, 2016). Mandan

also testified at the hearing. Pet. App. 10a-11a. Petitioner Tingle submitted a letter asserting that the provision requiring distribution of the remaining funds to

third parties “was inappropriate at the time the settlement agreement was contrived and [was] inappropriate

still,” that the agreement could not be modified without

his consent, and that the negotiated addendum was the

product of corruption. C.A. App. 1201-1202. Neither

Mandan nor Tingle argued that the cy pres distribution

violated the Appropriations Clause of the Constitution,

Art. I, § 9, Cl. 7.

At the February 2016 hearing, the district court

asked Mandan’s counsel about a separate suit he had

filed on behalf of a different class member (William

Smallwood, Jr.). Pet. App. 11a. The complaint in Smallwod’s suit alleged that the cy pres distribution was unlawful because (inter alia) it violated the Appropriations

Clause of the Constitution, Art. I, § 9, Cl. 7, which provides that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by

Law,” ibid. See Compl. ¶¶ 55-61, 71-78, Smallwood v.

Vilsack, No. 16-cv-161 (D.D.C. Feb. 1, 2016); Pet. App.

11a. Counsel had initially designated Smallwood’s suit

as a related proceeding, but it had been reassigned to

another district judge. Pet. App. 11a. The court in this

case asked Mandan’s counsel whether Smallwood’s challenges to the legality of the cy pres provision should be

heard as part of this litigation, but counsel declined, and

9

“[t]hereafter counsel never raised, briefed, or otherwise

pressed any legal challenges to” the cy pres award. Ibid. 2

c. In April 2016, the district court approved the Addendum’s modification of the settlement agreement.

Pet. App. 83a-107a. The court rejected arguments by

objecting class members that the Addendum was improperly reached in contravention of the original settlement’s

modification provision. Id. at 93a-99a. The court then

reviewed the “terms of the proposed Addendum and

f [ound] that those terms are fair, reasonable, and adequate, and not the product of collusion between the parties.” Id. at 103a; see id. at 103a-105a.

3. Petitioners each filed separate appeals, which

were consolidated, and the court of appeals affirmed.

Pet. App. 1a-80a.

a. The court of appeals held that the district court

did not abuse its discretion in approving the modification of the original settlement agreement set forth in

the Addendum based on the district court’s finding that

the modification was “fair, reasonable, and adequate.”

Pet. App. 16a; see id. at 16a-21a. The court of appeals

observed that the district court had “conducted an

impressive and thorough review of the proposed addendum,” had held a lengthy hearing at which more than

30 class members testified, and had “concluded that the

proposed addendum was a fair compromise.” Id. at 17a.

After reviewing the terms of the modification, the court

of appeals determined that it “ha[d] no good reason to

Smallwood’s separate suit accordingly proceeded separately,

before a different district judge, and in January 2017 the district

court in that case dismissed the suit for lack of standing. Pet. App.

11a. Smallwood appealed, but he subsequently voluntarily dismissed his appeal. See Smallwood v. Sessions, No. 17-5070 (D.C.

Cir. July 27, 2017) (granting stipulated voluntary dismissal).

2

10

second-guess the District Court’s conclusion that, in

providing both supplemental payments and reforming

the cy-près process, the negotiated compromise fairly

balances the parties’ competing positions.” Id. at 18a.

The court of appeals found “no merit” in petitioner

Mandan’s challenges to the district court’s findings and

conclusion. Id. at 19a; see id. at 18a-21a.

On appeal, Mandan also “advance[d], for the first

time in this case, constitutional and statutory challenges to the Settlement Agreement’s cy-près provision,” arguing that it is inconsistent with the Constitution’s Appropriations Clause and that the provision is

not authorized by the statute that governs the Judgment Fund, 31 U.S.C. 1304. Pet. App. 24a. The court of

appeals did not address the merits of that argument,

however, because it concluded that it had been waived

or, alternatively, forfeited. Id. at 22a-31a. The court

explained that neither Mandan nor any other class

member had objected to the legality of the cy pres provision when the original settlement agreement was proposed and approved or when plaintiffs first proposed to

modify the cy pres distribution several years later. Id.

at 22a. The court further explained that, when the Addendum was proposed, Mandan not only failed to assert any

constitutional objection to the cy pres provision, but

(through counsel) “Mandan explicitly waived his claims.”

Id. at 26a; see id. at 22a-24a. In the alternative, the

court determined that Mandan had “forfeited” those

challenges “because he never raised his claims with the

District Court in the first instance,” despite multiple

opportunities. Id. at 26a-27a. The court of appeals

declined to overlook that forfeiture. Id. at 28a-30a.

The court of appeals also rejected petitioner Tingle’s

separate arguments that class counsel had a conflict of

11

interest and that the class representatives breached

their fiduciary duty in negotiating the Addendum. Pet.

App. 31a-32a. The court explained that “Tingle offer[ed]

no evidence in support of his allegations,” and “[n]othing

in the record support[ed]” his various assertions that

class counsel improperly offered trustee positions or

incentive awards to class representatives to skew the

outcome. Id. at 32a.

b. Judge Wilkins joined the court of appeals’ opinion

and also filed a concurring opinion, principally responding to a dissenting opinion filed by Judge Brown. Pet.

App. 33a-36a. Judge Wilkins opined that the district

court’s fairness finding could be overturned only for

“clear error,” which had not been shown. Id. at 33a. He

further disagreed with the dissent’s view that the court

should reach the merits of Mandan’s constitutional and

statutory challenges to the cy pres provision, opining

that the rule that courts may overlook forfeiture of

arguments in “extraordinary circumstances” is inapplicable to waived arguments and that in any event Mandan had not met that test. Id. at 35a; see id. at 34a-36a.

c. Judge Brown dissented. Pet. App. 37a-80a. In

her view, the court of appeals should have reached the

merits of Mandan’s arguments that the cy pres provision violates the Appropriations Clause and the Judgment Fund statute, 31 U.S.C. 1304, both because “this

case presents ‘exceptional circumstances’ ” and because

in her view Mandan’s arguments “raise[d] structural,

jurisdictional limitations on judicial power that cannot

be waived.” Pet. App. 41-42a; see id. at 41a-66a.

On the merits, Judge Brown opined that cy pres provisions in settlement agreements with the federal government violate the Appropriations Clause because

Congress has not, in the Judgment Fund statute or any

12

other federal statute, appropriated funds for the purpose of paying cy pres awards. Pet. App. 66a-74a. She

concluded that the funds remaining from the original

settlement award that were not distributed in the administrative claims process should therefore be returned to

the U.S. Treasury. Id. at 74a-77a.

4. Tingle and Mandan each filed petitions for rehearing. Pet. App. 110a-111a. In its response to the petitions, the government informed the court of appeals

that the Department of Justice had recently reexamined

its approach to settlement agreements that require payments to third parties, including the agreement in this

case and others. Gov’t C.A. Resp. to Pet. for Reh’g 1.

The government further explained that, on June 5, 2017,

the Attorney General had adopted a new policy prohibiting the Department in the future from entering settlement agreements that include cy pres provisions, subject to certain limited exceptions. Id. at 1-2, 11-12; see

Pet. App. 154a-155a. The Department stated that the

settlement in this case would not have been approved if

it was proposed under the new policy, and that “the

Department now views this settlement as regrettable.”

Gov’t C.A. Resp. to Pet. for Reh’g 2. The court of appeals

denied the petitions for rehearing, with no member of

the court requesting a vote. Pet. App. 110a-111a.

ARGUMENT

Petitioner Mandan contends (Pet. 14-24) that the district court erred in approving the Addendum modifying

the original settlement agreement because the cy pres

distribution violates the Appropriations Clause. The

court of appeals, however, appropriately declined to

reach that issue based on its determination that Mandan had either waived or forfeited that argument. Contrary to Mandan’s further contention (Pet. 24-34), the

13

court of appeals’ factbound application of principles of

waiver and forfeiture to the particular circumstances of

this case does not warrant further review. At a minimum, the dispositive threshold issues of waiver and forfeiture, and the absence of any ruling below on the merits of the constitutional question Mandan raises, render

this case an unsuitable vehicle to address that question.

For his part, petitioner Tingle contends (Pet. 9-32) that

the district court abused its discretion in approving the

Addendum’s modification of the cy pres distribution,

but that factbound contention similarly does not merit

this Court’s review.

Review of petitioners’ challenges to the cy pres provision here is additionally unwarranted in light of the

Department of Justice’s new policy, adopted by the

Attorney General in June 2017, providing that the

Department’s attorneys going forward may not enter

into a settlement agreement containing the type of cy

pres provision at issue here. Such provisions raise several serious policy concerns. First, taxpayer funds may

be directed to individuals or entities that lack claims

against the United States. Second, there is no guarantee that cy pres distributions will provide redress to

injured class members. Finally, cy pres distributions

can give rise to a public perception that the parties to

litigation have settled for an inflated amount to fund

such distributions.

The Department views these concerns as serious

and, in response, adopted a new policy that, with limited

exceptions, prohibits its attorneys from entering into

settlement agreements in the future that require payments to persons or entities that are not parties to the

dispute absent congressional appropriation. That new

policy will prevent the recurrence of circumstances like

14

those that led to the modified cy pres provision here, in

turn eliminating any need for this Court’s guidance

regarding the principles that would govern the legality

and administration of cy pres provisions in settlements

involving the federal government.

1. Petitioner Mandan argues (Pet. 14-24) that the

district court erred in approving the Addendum because

its cy pres provision violates the Appropriations Clause.

But the court of appeals appropriately did not reach or

resolve that issue because it concluded that Mandan had

either waived or forfeited that constitutional challenge.

That conclusion does not warrant review.

a. Mandan contends (Pet. 14-21) that cy pres provisions in settlements violate the Appropriations Clause

because Congress has not appropriated funds to make

such payments. The Judgment Fund statute provides

that “[n]ecessary amounts are appropriated to pay final

judgments, awards, compromise settlements, and interest and costs specified in the judgments or otherwise

authorized by law” when certain criteria are met.

31 U.S.C. 1304(a). Congress has further provided that,

“[e]xcept as otherwise provided by law, compromise

settlements of claims” by the Attorney General (or his

delegees) “shall be * * * paid in a manner similar to

judgments” pursuant to the permanent appropriation in

the Judgment Fund. 28 U.S.C. 2414. Courts have consistently held that the Attorney General is vested “with

virtually absolute discretion to determine whether to

compromise or abandon claims made in litigation.” The

Attorney General’s Role as Chief Litigator for the

United States, 6 Op. O.L.C. 47, 60 (1982) (collecting cases).

Mandan contends (Pet. 16-21) that those statutes do

not appropriate funds for the type of cy pres distribution at issue here. The court of appeals, however,

15

expressly “decline[d] to review” Mandan’s argument

because it determined that he had either “waived or forfeited” it. Pet. App. 25a. The court recognized the distinction between waiver and forfeiture, explaining that

waiver “is the ‘intentional relinquishment or abandonment of a known right,’ ” whereas forfeiture “ ‘is the failure to make the timely assertion of a right.’ ” Id. at 26a

(quoting United States v. Olano, 507 U.S. 725, 733

(1993)). Both the court and Judge Wilkins (in his concurring opinion) concluded that the distinction ultimately makes no difference here because “the result is

the same” under either rubric. Ibid.; see id. at 34a-36a.

The court of appeals determined that Mandan “explicitly waived his claims” when (through counsel) he “ ‘chose,

in no uncertain terms, to refrain from interposing any

challenge to the cy-près provision. ’ ” Pet. App. 26a

(quoting Wood v. Milyard, 566 U.S. 463, 474 (2012))

(brackets omitted). As the court explained, the district

court was aware that Mandan’s counsel had presented

such a challenge on behalf of a different client and class

member (Smallwood) in a separate case that counsel

had marked as “related,” and the district court “invited

[counsel] to raise whatever concerns he had” in this

proceeding. Ibid. The district court described Smallwood’s contentions—including an Appropriations Clause

challenge—and explained that, although the court had

initially determined the cases were not related, the

court was “interested in [counsel’s] views” on whether

it “should keep th[at] case and resolve it itself or not.”

C.A. App. 1224. As the court of appeals recounted, however, Mandan’s “counsel told the District Court Judge

that [Mandan] did not wish to pursue any challenges to

the cy-près provision.” Pet. App. 26a. Instead, counsel

explained that he had marked Smallwood’s case as

16

related “out of an abundance of caution,” because the

“allegations in that lawsuit potentially ha[d] a direct

impact on whether what is being proposed here can

actually be done lawfully.” C.A. App. 1272. But counsel

stated that he was “completely satisfied with where the

case s[at] at th[at] particular point,” with Smallwood’s

case assigned to a different judge. Ibid.

The court of appeals alternatively determined that,

at a minimum, Mandan forfeited any Appropriations

Clause challenge to the cy pres provision “because he

never raised his claims with the District Court in the

first instance.” Pet. App. 26a-27a; see id. at 26a-29a. As

the court of appeals explained, “Mandan d[id] not dispute” the fact “that his constitutional and statutory

claims could have been raised in 2011, when the District

Court approved the Settlement Agreement containing

the cy-près provision.” Id. at 27a. Yet he did not do so.

“Quite the contrary,” the court noted, “Mandan accepted

the settlement and received a payout from the administrative claims process.” Id. at 22a. Indeed, “at no time

during th[e] twelve-year period” between the commencement of the litigation and approval of the original settlement “did any party challenge the legality of ” that provision. Ibid. Nor did Mandan assert a constitutional

challenge to the cy pres provision in any of the proceedings concerning the various motions to modify the settlement. Id. at 22a, 27a-28a. Although he was “on notice

of the opportunity to put forward” such an argument,

Mandan “never pursued th[ose] claims.” Id. at 27a-28a.

The court of appeals acknowledged “that, in ‘exceptional circumstances,’ an appellate court may exercise

discretion” to overlook a party’s forfeiture and may consider an unpreserved (as opposed to waived) argument.

17

Pet. App. 31a (citation omitted). Exercising its discretion, however, the court held that, to the extent Mandan

had merely forfeited his Appropriations Clause argument (and not waived it), in these circumstances it

would be “entirely inappropriate” for the court of appeals

to consider that argument. Id. at 30a. The court

explained that deciding an issue that Mandan had multiple opportunities to raise (spread over several years)

but had failed to preserve would “pervert the adversary

process.” Id. at 28a. It also would “require[] [the court]

to engage in unduly weighty and cumbersome decisionmaking” to resolve “novel” theories that, “as far as [the

court] c[ould] discern, * * * ha[d] never been addressed

by any federal appellate court,” and to do so without

either “a decent record” or “the benefit of * * * a decision from the District Court.” Id. at 28a-30a. The court

concluded that “[t]he record in this case does not come

close to establishing exceptional circumstances that

would militate in favor of ” deciding Mandan’s constitutional argument despite his forfeiture. Id. at 31a.

In light of its conclusion that Mandan forfeited and

indeed waived his Appropriations Clause argument, the

court of appeals appropriately declined to consider that

argument. Pet. App. 28a (citing, inter alia, Curtis

Publ’g Co. v. Butts, 388 U.S. 130, 143 (1967) (plurality

opinion), and Yakus v. United States, 321 U.S. 414, 444

(1944)). The court’s determination that Mandan may

not pursue that argument on appeal provides a compelling reason to deny review. Unless that threshold

determination were overturned, that ruling would require affirming the court of appeals’ judgment and thus

eliminate any basis for addressing the merits of Mandan’s constitutional challenge. At a minimum, the court

of appeals’ conclusion that Mandan waived or forfeited

18

his argument and the absence of any decision below on

the merits of that argument make this case an unsuitable vehicle to consider it. Consistent with its ordinary

practice as “ ‘a court of review, not of first view,’ ” the

Court should “decline to consider those questions in the

first instance.” Expressions Hair Design v. Schneiderman, 137 S. Ct. 1144, 1151 (2017) (citation omitted).

b. Mandan contends (Pet. 24-34) that the court of appeals erred in concluding that he waived or forfeited his

Appropriations Clause challenge. That highly factbound

application of waiver and forfeiture principles to the

specific circumstances of this case does not independently merit this Court’s review. See United States

v. Johnston, 268 U.S. 220, 227 (1925) (“We do not grant

* * * certiorari to review evidence and discuss specific

facts.”). Mandan’s arguments, moreover, lack merit.

Mandan concedes (Pet. 25) that “no party challenged

the cy pres provisions on constitutional grounds at the

time of the original settlement approval or at the time

of class counsel’s first failed attempt to modify the

agreement.” He contends (Pet. 27), however, that he

raised this argument in objecting to the Addendum and

that the “district court specifically considered and

rejected [his] objection in its opinion approving the

Addendum without addressing waiver.” See Pet. 26

(citing Pet. App. 101a). That is incorrect. The district

court did briefly refer to Mandan’s “object[ion] to any

modification that allows for payment to ‘third parties

who have not suffered any injury and who have no

claims against the United States.’ ” Pet. App. 101a

(quoting D. Ct. Doc. 833, at 3 (Jan. 20, 2016)). But the

court did not describe that objection in constitutional

terms, ibid., and in its ensuing “findings” the court neither discussed nor decided any constitutional issue, id.

19

at 103a-105a. Mandan’s filing that the court quoted in

describing his argument likewise did not mention the

Appropriations Clause or the statutes on which he now

relies. D. Ct. Doc. 833, at 1-3. And the court of appeals

stated that it had no “decision from the District Court in

the first instance” on Mandan’s argument. Pet. App. 30a.

Mandan also disputes (Pet. 27) the court of appeals’

reading of his counsel’s exchange with the district court.

He argues (ibid.) that his counsel’s acquiescence in the

court’s decision not to treat Smallwood’s case as “related” under the local rules should not be construed as

waiving Mandan’s constitutional argument. But he offers

no sound reason to second-guess the court of appeals’

assessment that, in the specific context of that colloquy

and the posture of the case, Mandan’s counsel was fairly

understood as declining an invitation to present an

Appointments Clause argument that Mandan theretofore had not asserted but that another of counsel’s clients

had raised. In any event, regardless of whether that

colloquy and the local rules show that Mandan waived

his argument, he could not pursue the argument now

because, as the court of appeals held, he forfeited it.

Mandan alternatively argues that “the doctrines of

waiver and forfeiture are inapplicable” to his Appropriations Clause challenge. Pet. 28 (capitalization and

emphasis omitted); see Pet. 28-32. As the court of appeals explained, however, “constitutional objections” are

not categorically immune to “[t]he doctrines of waiver

and forfeiture.” Pet. App. 28a (citing Curtis Publ’g Co.,

388 U.S. at 143 (plurality opinion), and Yakus, 321 U.S.

at 444). Mandan argues instead that those doctrines do

not apply to “[ j]urisdictional constitutional challenges

concerning Article III courts” or to “Article III non-

20

jurisdictional, structural arguments.” Pet. 28, 31 (capitalization and emphasis omitted). But unlike the cases

on which he relies (Pet. 31-32), Mandan’s Appropriations Clause argument does not implicate the Article III

limits on federal courts’ power to decide cases and controversies; it concerns the lawfulness of the Executive’s

expenditure of funds purportedly beyond the scope of

the relevant statutory appropriation. Cf. Wellness Int’l

Network Ltd. v. Sharif, 135 S. Ct. 1932, 1942-1947 (2015)

(Article III challenge to bankruptcy court’s adjudication of particular type of claims); Commodity Futures

Trading Comm’n v. Schor, 478 U.S. 833, 848-858 (1986)

(Article III challenge to federal agency’s adjudication

of certain disputes). Mandan cites no decision of this

Court characterizing such an argument as implicating

federal jurisdiction and therefore as immune to principles of wavier and forfeiture. He points (Pet. 29) to

Office of Personnel Management v. Richmond, 496 U.S.

414 (1990), but the Court held there that the Appropriations Clause precludes a court from applying “the

equitable doctrine of estoppel” against the government

to award a party “a money remedy that Congress has

not authorized”—not that arguments under that Clause

are jurisdictional and not waivable. Id. at 426; see id. at

424-434.

Finally, Mandan contends (Pet. 32) that this Court

should exercise its own discretion to consider his “structural, constitutional challenge.” See Pet. 32-34. Although

the Court has the authority to consider such claims, in

the principal decision Mandan cites the Court made

clear that it exercises that power only in “rare cases.”

Freytag v. Commissioner, 501 U.S. 868, 879 (1991).

This is not such a case. It is not clear that Mandan’s

challenge is a “structural” one in the sense that Freytag

21

used that term. Although Mandan contends that the cy

pres provision is inconsistent with the Appropriations

Clause, at bottom the issue is whether payments pursuant to the cy pres provision are authorized by statute—

31 U.S.C. 1304 and 28 U.S.C. 2414—because the Appropriations Clause expressly permits payments from the

Treasury “in consequence of Appropriations made by

Law.” Art. I, § 9, Cl. 7. See Pet. App. 35a-36a (Wilkins,

J., concurring); 17-897 Pet. 15-21.

In any event, the court of appeals here acknowledged

its “discretion to address an issue that is subject to

forfeiture” but identified multiple reasons why considering Mandan’s unpreserved argument would be

inappropriate—including the argument’s novelty, his

numerous opportunities to raise it, and the absence of a

decision below or an adequate record. Pet. App. 31a

(emphasis omitted); see id. at 28a-31a; pp. 16-17, supra.

Mandan offers no sound reason why this Court should

reach a different conclusion. He argues (Pet. 33) that

the importance of safeguarding the public fisc against

the expenditure of funds not properly appropriated in

accordance with constitutional requirements warrants

considering his unpreserved challenge. Yet the relief

he requested below would not vindicate those interests;

he urged that the remaining funds be distributed to

claimants who had already received payments pursuant

to the agreement, not that they be returned to the U.S.

Treasury. See, e.g., Pet. App. 10a. Mandan also points

(Pet. 33) to the new policy adopted by the Attorney General prohibiting the Department of Justice’s attorneys

going forward from entering into settlement agreements that include cy pres provisions like the one in this

case, but as discussed below, that development provides

an additional, independently sufficient reason to deny

22

review. See pp. 23-24, infra. The Court should not decide in the first instance a constitutional question that

Mandan never properly presented below and that the

lower courts did not adjudicate.

2. Petitioner Tingle contends (Pet. 9-32) that the district court abused its discretion in approving the Addendum. He argues (ibid.) that cy pres distributions are

inappropriate in general and in these specific circumstances, and that the district court erred in finding that

the award here is fair, reasonable, and adequate and not

the product of collusion. The court of appeals rejected

those arguments, Pet. App. 16a-21a, 31a-32a, and its

highly factbound determinations do not warrant review.

The court of appeals described the “impressive and

thorough review” the district court had conducted and

the extensive process it had afforded. Pet. App. 17a; see

id. at 17a-18a. The court of appeals further summarized

the district court’s reasoning in concluding that the

Addendum here was fair, reasonable, and adequate. Id.

at 17a. It found “no good reason to second-guess the

District Court’s conclusion.” Id. at 18a. And it explained

that the cases from other circuits petitioners cited were

“plainly distinguishable” on their facts. Id. at 21a.

The court of appeals also considered and rejected

Tingle’s further arguments that class counsel had a conflict of interest, and that the class representatives

breached their fiduciary duties, in pursuing the adoption of the Addendum. Pet. App. 32a. Those arguments,

the court explained, lacked merit because “Tingle

offer[ed] no evidence in support of his allegations,” and

“[n]othing in the record” substantiated his accusations.

Ibid. Tingle’s disagreement with the court of appeals’

factbound assessment of the evidentiary record does

not warrant further review.

23

3. Review of petitioners’ challenges to the cy pres

provision in this case is unwarranted for the additional

reason that a new Department of Justice policy, adopted

in June 2017 while the case was pending in the court of

appeals, prohibits such provisions going forward.

As the government informed the court of appeals, in

a recent review of its approach to settlements, the Department identified several serious policy concerns that cy

pres awards in settlements involving the federal government can raise. Gov’t C.A. Resp. to Pet. for Reh’g

1-2, 10-11. Cy pres awards typically result in payment

of taxpayer funds to individuals who either do not have

or have not properly asserted claims against the United

States. Id. at 10. To be sure, such awards “in fact settle

claims against the United States * * * [by] the members of the class.” Pet. App. 36a (Wilkins, J., concurring); see also id. at 29a (majority opinion). But it is

nevertheless problematic for the government to enter

into a settlement where, after all the claimants who satisfy the settlement conditions have received their agreedupon compensation, remaining unclaimed funds will be

directed to third parties that have not demonstrated injury. Gov’t C.A. Resp. to Pet. for Reh’g 10. And although

a primary aim of cy pres awards is to ensure that injured class members who, for whatever reason, failed

successfully to submit a claim receive redress, there is

no guarantee that cy pres payments do so. Id. at 10-11.

Here, for example, the settlement and addendum identify a wide range of permissible recipients and expenditures. See ibid. Moreover, even when those concerns

are not manifest, cy pres provisions in settlements with

the government may give rise to a public perception

that the parties have settled for an inflated amount in

24

order to fund such distributions, and thereby undermine public trust in the administration of justice. See

id. at 11.

In light of these concerns, on June 5, 2017, the Attorney General issued a memorandum establishing a new

prospective policy addressing such settlements. See

Pet. App. 154a-155a. Under that policy, Department

attorneys going forward may not enter into settlement

agreements that “direct[] or provide[] for a payment or

loan” by the government “to any non-governmental person or entity that is not a party to the dispute,” including “cy pres agreements or provisions.” Id. at 155a.

The new policy is subject to three exceptions consistent

with its rationale: the new policy does not prohibit a

“lawful payment or loan that provides restitution to a

victim or that otherwise directly remedies the harm

that is sought to be redressed, including, for example,

harm to the environment or from official corruption”;

“payments for legal or other professional services

rendered in connection with the case”; or “payments

expressly authorized by statute, including restitution

and forfeiture.” Id. at 154a.

The Department’s new policy further diminishes the

need for review in this case because it effectively eliminates any ongoing practical importance that the challenges petitioners raise here might otherwise have in

future settlement agreements involving the government. The policy will prevent the recurrence of circumstances like those that led to the cy pres provision at

issue in this case. This development confirms that further review in this case is not warranted.

25

CONCLUSION

The petitions for writs of certiorari should be denied.

Respectfully submitted.

NOEL J. FRANCISCO

Solicitor General

CHAD A. READLER

Acting Assistant Attorney

General

CHARLES W. SCARBOROUGH

CARLEEN M. ZUBRZYCKI

Attorneys

FEBRUARY 2018