On September 16, 2015, the parties in Ramah Navajo Chapter v. Jewell, the contract support cost (CSC) class action litigation against the Department of the Interior, filed a joint motion for preliminary approval of a proposed settlement agreement. Under the proposed settlement, which would settle claims by tribal contractors for unpaid CSC under the Indian Self-Determination and Education Assistance Act for fiscal years 1994 through 2013, the Department of the Interior would pay a total settlement amount of $940 million plus post-judgment interest. $4 million of that amount would be paid into a reserve account to pay costs associated with administering the settlement, and class counsel will request 8.5 percent of the settlement amount in attorneys’ fees (subject to approval by the court), plus reasonable costs, which are currently estimated at $1.5 million. The remaining amount would be divided among the class members as settlement payments.
The parties propose that the settlement distribution will be divided among the class members according to “Distribution Percentages” that have been assigned to each class member (and which are listed in an attachment to the filed proposed settlement), with a minimum floor of $8,000 per class member in each year for which the class member had a contract in place. The Distribution Percentages were determined on the basis of a statistical analysis of randomly selected contracts, which were analyzed to extrapolate an overall “CSC ratio” for each contract year comparing the amount of CSC that allegedly should have been paid to the amount that was actually paid. The CSC ratio for each year was then applied to the actual amounts paid to each class member in each year to yield underpayment estimates for each class member, which were then used to determine each class member’s initial proportional share of the settlement amount. The initial shares were adjusted to account for the $8,000 floor and for a 20 percent increase in the named Class Representatives’ shares, to yield the final Distribution Percentage listed in the appendix to the proposed settlement agreement.
Since the final net settlement amount is contingent on court approval and award of attorneys’ fees and costs, and is thus not currently known, the tables in the proposed settlement agreement do not list the specific dollar amounts that each tribal contractor would be entitled to receive under the settlement. Those amounts would ultimately be determined by applying the Distribution Percentage to the final net settlement amount when that amount is known. After the net settlement amount is paid out, any unused amounts remaining in the reserve account would also be paid to class members using the same distribution methodology.
The parties have asked the court not to permit class members to opt out of the settlement unless they have not previously had the opportunity to do so. Most class members were permitted to opt out at the time the class was certified and at the time new claims were added to the case. However, the parties have identified 74 tribes and tribal organizations that have not yet had any opportunity to opt out because they first entered into contracts with the Bureau of Indian Affairs after the last notice allowing class members to request exclusion from the class. Those tribes and tribal organizations are listed separately in the tables listing class member Distribution Percentages filed with the proposed settlement agreement.
The motion filed on September 16 asks the court to direct that notice of the proposed settlement be issued to class members, and to schedule a fairness hearing, after which the court may consider whether to issue final approval of the proposed settlement. If the court preliminarily approves the settlement and directs notice to class members, class members will be provided an opportunity to file any objections to the proposed settlement and will be permitted to appear at the fairness hearing to present those objections. A hearing on the motion for preliminary approval has been set for September 23, 2015, in Albuquerque, NM.
Please let us know if we may provide additional information regarding the proposed settlement.