You Can't Verify The Trust, Supreme Court Tells Apache Nation

By Andrew Cohen

The United States Supreme Court Monday once again stuck it to Native American litigants. In a 7-1 opinion (Justice Elena Kagan recused), the Court sided with the U.S. government and against the Jicarilla Apache Nation in a fiduciary-duties case brought by the Nation to determine whether and to what extent federal officials mismanaged the tribe's money. The decision was hardly sweeping-- it involved a discovery dispute and the application of the attorney-client privilege-- but it's still worth a closer look.

The Nation sued the feds in 2002 asserting that the government breached its fiduciary duty to properly manage funds generated from the culling of timber, gravel and oil and gas resources from the Tribe's land in Northeastern New Mexico. As all plaintiffs do, the Nation sought through discovery access to government documents that its lawyers thought might help establish that federal officials "failed to maximize returns on trust funds, invested too heavily in short-term maturities, and failed to pool its trust funds with other tribal trusts."

For six years, the Tribe and the government futzed around in "alternative dispute resolution" trying to reach a settlement. During this time, the feds turned over thousands of relevant documents to Tribal attorneys but failed to produce 226 documents which government officials said were protected by the "attorney-client privilege, the work-product privilege, or the deliberative-process privilege." The tribe went to court seeking to compel the production of those documents, arguing that its interests fell under a widely-acknowleged exception to the general rule that such documents may lawfully be protected from disclosure.

The Court of Federal Claims, which handles disputes between Indian tribes and the government, sided mainly with the Nation. Here's how Justice Samuel Alito described how the lower court handled the matter:



The CFC held that communications relating to the management of trust funds  fall within a "fiduciary exception" to the attorney-client privilege. Under  that exception, which courts have applied in the context of common-law trusts,  a trustee who obtains legal advice related to the execution of fiduciary  obligations is precluded from asserting the attorney-client privilege against  beneficiaries of the trust. The CFC concluded that the trust  relationship between the United States  and the Indian tribes is sufficiently analogous to a common-law trust  relationship that the exception should apply. Accordingly, the CFC held,the  United States may not shield from the Tribe communications with attorneys  relating to trust matters.

The government appealed this ruling to the Federal Circuit Court. That court, too, sided with the Apache Nation. But not the Supreme Court. Because the government is not a "private trustee," Justice Alito wrote," it is not bound by the "exception" to the discovery rules, especially in the absence of any statutory language indicating that this should be so. We're not going to bend over backward to help the Nation, the Court's majority said Monday, unless Congress tells us we have to. The documents get to stay sealed, to the great detriment of the Apache Nation as it continues to pursue its mismanagement claims nine years after first bringing them.

Two unsettling themes emerge from Justice Alito's opinion. First, he reminds us that the "trust" relationship between the federal government and our nation's Indian Tribes is less about "trust" and more about the exercise of our sovereign authority over a vanquished people. "The control over the Indian tribes that has been exercised by the United States pursuant to the trust relationship--forcing the division of tribal lands, restraining alienation--does not correspond to the fiduciary duties of a common law trustee," he wrote in Footnote 8 of the decision. "Rather, the trust relationship has been altered and administered as an instrument of federal policy "

Second, by highlighting the conflicting interests between the government and the Nation in these trustee cases, Justice Alito undercuts the entire statutory and administrative framework that bears the government's relationship with the Apache Nation and other Indian tribes. "While one purpose of the Indian trust relationship is to benefit the tribes, the Government has its own independent interest in the implementation of federal Indian policy," Justice Alito wrote. "For that reason, when the Government seeks legal advice related to the administration of tribal trusts, it establishes an attorney-client relationship related to its sovereign interest in the execution of federal law."

In other words, the law may call the government a "trustee" over Indian tribes and may require the feds from time to time to undertake certain fiduciary obligations on behalf of the various Nations. But when push comes to shove, the law only rarely is going to force the feds to do something they don't want to do in the first place for reasons of their own. Where, as here, a Tribe comes to court looking for monetary damages, well, you get a 7-1 ruling from the Court that transcends traditional ideological lines.

Justices Ruth Bader Ginsburg and Stephen Breyer joined in the judgment but thought that the majority opinion went too far in diminishing the import of common law principles in Indian trust cases. But the fact that they signed on to Justice Alito's ruling at all indicates how little chance the Nation ever had in this case. It was left to Justice Sonia Sotomayor, as the sole dissenter, to speak up for the tribe. And she started off with a bang:



The Court's decision to the contrary rests on false factual  and legal premises and deprives the Nation and other Indian tribes of highly  relevant evidence in scores of pending cases seeking relief for the  Government's alleged mismanagement of  their trust funds. But perhaps more  troubling is the majority's disregard of our settled precedent that  looks to common-law trust principles to define the scope of the Government's  fiduciary obligations to Indian tribes. Indeed, aspects of the majority's  opinion suggest that common-law  principles have little or no relevance in the Indian trust context, a position  this Court rejected long ago.
 

Although today's holding pertains only to a narrow evidentiary  issue, I fear the upshot of the  majority's opinion may well be a further dilution of the Government's fiduciary obligations that will  have broader negative repercussions for  the relationship between the United States and Indian tribes.

Justice Sotomayor's perception of the existing relationship between the federal government and Native American tribes is far less Machievellian (and perhaps far less realistic) than the majority's view. In Justice Sotomayor's view, "when the government seeks legal advice from a government attorney on matters relating to the management of the Nation's trust funds, the 'real client' of that advice for purposes of the fiduciary exception is the Nation, not the government."

Even if you have never been a trustee, or a beneficiary for that matter, that argument makes a whole lot of sense. But then again sense and sensibility have rarely been a driving force in the nation's treatment of the Apaches or any other Indian nation.

This article available online at:

http://www.theatlantic.com/national/archive/2011/06/you-cant-verify-the-trust-supreme-court-tells-apache-nation/240359/