Trust case results in $2.79 million arbitration payment

Trust case results in $2.79 million arbitration payment
(Shutterstock) An arbitration tribunal ruled against Muscogee (Creek) Nation in a dispute with legal counsel that represented them in a trust case against the U.S. and ordered the Nation to pay them $2.79 million in damages.

Angel Ellis/Reporter

Payout ordered for a decade of legal work

OKMULGEE, Oklahoma — An appropriation totaling $2,792,718.81 was approved Oct. 17 in a Muscogee (Creek) Nation National Council Emergency Session.

The appropriation was to cover a ruling against MCN by a Commercial Arbitration Tribunal in a dispute between the tribe and legal counsel that represented the tribe in a 2006 land in trust case against the U.S.

Documents identified the legal counsel as Engstrom, Lipscomb & Lack, Gregory A. Yates, P.C., Girardi & Keese; and Mario Gonzalez Law.

The parties involved in the arbitration, both MCN and the legal entities, agreed to the rules of the hearings, which would be governed by AAA Comprehensive Arbitration Rules in place of any existence of relevant Muscogee commercial law.

The panel overseeing the arbitration ordered the claimants to produce their hours, rates, dates, and costs of representation to the tribe.

According to the evidence produced for the arbitration hearing, the tribe entered into an agreement for legal services with the claimants on Nov. 18, 2006.

‘This agreement was approved and authorized by Tribal Resolution TR-06-152,’ the document stated.

The fact-finding report stated MCN agreed to pay their counsel 25 percent of the gross proceeds in the event of a ruling in their favor against the U.S. and nothing in the event of a loss.

The claimants filed actions on behalf of MCN Dec. 2006, in the U.S. District Court for the District of Columbia and the United States Court of Federal Claims.

According to the fact-finding report, appeals were also made during this time on behalf of MCN to the Court of Appeal for the Federal Circuit and the U.S. Supreme Court.

The report states it was shortly after this stage that the business relationship between the parties began to break down. After the filings of these complaints, the courts granted stays of litigation to enable settlement negotiations between the U.S. and MCN.

The claimants stated they periodically reported to MCN in writing on the status of the proceedings. They claimed to have provided both in-person and telephone updates to the tribe.

‘MCN denies the claimants ever informed the Nation of the stays,’ the arbitration document stated.

The timeline indicates that after the stays were granted, the claimants enter into informal discovery with the U.S. government and secured material specific to MCN.

According to the Reuters legal blog, this process is conducted outside the official rules of civil procedure and most information provided is given voluntarily to a dispute resolution advocate.

An agreement was reached between the federal government and the claimants who were representing 15 other tribes in addition to MCN.

By Nov. 2010, the U.S. and MCN along with other tribes embarked on a lengthy mediation under the supervision of Retired Justice Daniel Weinstein.

‘Justice Weinstein supervised the exchanges of information, legal briefing, disclosures and discover, directed the order and method of exchanging damages and claim information,’ the document stated.

Claimants engaged consultants, experts, and produced a damages methodology economic model, which valued the historic losses and damages experienced by MCN and other tribes.

To pay for that work, the law firms advanced costs to pay for experts and consultants.

According to the U.S., the methodology resulted in an unusually high figure, and the method was rejected.

Deeming the methodology unreliable and conceptually inaccurate the U.S. proposed a new basis for calculations, which resulted in a lower proposed settlement.

The documents reflected that there was little communication between MCN and the claimants between the time of September 2008 and December 2011.

‘This gap reflected the fact that there was very little activity in the case and not much to report,’ the document stated.

It also stated that MCN made no inquiries about the status of the case during this period.

‘Several requests for guidance and information were directed to the Nation by the claimants that went unanswered,’ the document stated.

Ultimately the negotiations between the U.S. and the claimants produced an offer of $8,386,000, which was deemed as the last, final and best offer, from the U.S., to be paid to MCN.

According to the findings, the claimants presented this offer to MCN at a March 27, 2012 National Council Planning Session.

‘At the meeting, the National Council members expressed disappointment with the amount the U.S. government was offering. However, they did not reject the offer,’ the arbitration document stated.

Oct. 11, 2012 Claimant Leinbach warned MCN in a letter that the settlement was pending and failure to act might carry risks.

According to the fact-finding report, the claimants received no instructions from MCN for a year.

‘MCN supplied no new information to the claimants, nor did it supply instructions on whether to accept the offer, reject it, or make a counter-offer,’ the document stated.

On May 13, 2013, the U.S. Government sent a follow-up letter to the Nation summarizing again the settlement methodology on which the offer was based. They also agreed to keep the offer open until May 31, 2013.

In June 2013, the claimants received a notification from then MCN Attorney General Roger Wiley. The communications from Wiley lead Leibach to believe that the National Council had met but had not taken up the issue of the proposed settlement.

After this, Leinbach set about exploring the possibility of no longer representing the MCN.

Leinbach discussed the potential action with Wiley who informed him that the claimants would be replaced as representation for MCN moving forward.

Claimants sent a letter to then MCN Principal Chief George Tiger terminating the legal agreement and proposing a process to withdraw as representation.

When the communications went unanswered, the claimants reminded Tiger of their irrevocable lien for attorneys’ fees and asked for his signature acknowledging the agreement.

The document states MCN did not respond.

‘At that point, the relationship between Claimants and Muscogee had been souring since 2012,’ the document states.

MCN replaced the claimants with Native American Rights Fund attorney Melody McCoy in January 2014.

The documents state the claimants continued to act on behalf of the Nation after McCoy officially took over.

The last actions they reportedly took was a joint status report filed on July 25, 2013, and a few consultations and information exchange offers with the new counsel.

On Feb. 5, 2014, the claimants filed a notice of lien. Once the new counsel began representing MCN, further negotiations between the U.S. government and the tribe took place.

MCN opened negotiations with a sum of $8.2 million, which was slightly lower than the initial offer and the U.S. counter-offered $6 million.

They finally agreed on the same amount previously offered to the Nation in 2012.

‘On March 14, 2016, Mr. Leinbach reminded Ms. McCoy, Mr. Wiley, and all other attorneys in writing of the pending attorney fee and cost lien,’ the document stated.

On Sept. 23, 2016, a petition to establish lien was filed in the District Court. District Court Jude Thomas Hogan presided the case and overruled the MCN opposition to the petition based on sovereign immunity.

Hogan ordered the parties to resolve the matter through arbitration or mediation.

According to the records reviewed in arbitration, the claimants valued their 20,000 hours at $14,079, 000.

After reviewing the information and documents, the American Arbitration Association Commercial Arbitration Tribunal determined that the claimants would recover the sum of $2,090,000 in fees in addition to $79,717.12 in expenses the claimants incurred while representing the Nation.

Some of those figures included a rate of prejudgment interest for $162,649.26.

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