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Cobell v. Norton

March 11, 2003


The opinion of the court was delivered by: Royce C. Lamberth United States District Judge


This matter comes before the Court on plaintiffs' motion for sanctions and a contempt finding pursuant to Rule 56(g) [1129-1], which was filed on February 15, 2002. Also before the Court is plaintiffs' consolidated motion for leave to amend the motion for sanctions [1326-1] and motion to amend [1326-2], which were filed on June 4, 2002. Upon consideration of plaintiffs' motions, defendants' opposition briefs thereto, plaintiffs' reply briefs, and the applicable law in this case, the Court finds that plaintiffs' motion for sanctions should be granted in part and denied in part, and that plaintiffs' motions for leave to amend and to amend should be denied.


On August 27, 1999, Gene L. Dodaro, principal assistant to the Comptroller General, sent a letter to John Berry, Assistant Interior Secretary - Policy Management and Budget (the "GAO Letter"). Dodaro noted that he was responding to Berry's letter of June 18, 1999 seeking the assistance of the General Accounting Office in evaluating a series of records that Berry believed "may contain Indian accounting records subject to disclosure in the Cobell litigation," specifically requesting any "historical information about the nature of any accounting regarding individual Indian accounts that was undertaken by GAO in the past, including the standards and procedures that GAO may have employed." GAO Letter at 1. In response, Dodaro explained that

no one currently employed at GAO participated in audits of the IIM accounts, which took place at various times from the 1920's through the 1950's. Given the number of years that have passed, we have no direct knowledge about the nature of any accounting regarding individual Indian accounts previously undertaken by GAO, or the standards or procedures used. Id.

Dodaro continued:

Over the past several weeks, GAO staff have had numerous telephone conversations with members of your staff and attorneys from the Justice Department, as well as a meeting with Treasury officials, to answer questions and share information. In response to questions, we have explained that our records do not establish that GAO conducted a "final" GAO comprehensive audit of IIM accounts, nor do they establish any regular practice of auditing IIM accounts. Id. at 2.

The letter contains the following handwritten notation on its first page: "Dee - p/s copies to all Cobell Team at DOI, BL et al. JB." *fn1

On September 19, 2000, defendants filed their third Phase II motion for partial summary judgment, relating to alleged settlement of accounts by the Treasury Department and General Accounting Office ("Third Motion"). Defendants stated:

Between 1817 and 1951, the Defendants were subject to and complied with several statutes that required the routine audit of all credits and disbursements of Indian disbursing agents who handled individual Indian monies. Because Defendants complied with the statutes defining their accounting obligations for the period 1817 to 1951, Plaintiffs are not now entitled to an accounting or reconciliation that requires the Defendants and this Court to revisit transactions settled in accordance with law. For these reasons and for the reasons set forth in the accompanying Memorandum, the Defendants move for summary judgment that neither the American Indian Trust Fund Management Reform Act of 1994 nor any other law requires Defendants to account today for transactions that occurred in individual Indian money accounts prior to 1951. Third Motion at 1.

Defendants' accompanying memorandum clarified the specific basis for these claims, arguing that

between 1817 and 1951, governing law required each disbursing agent to submit his accounts, including those relating to IIM accounts, for settlement. Settlement consisted of a double audit - one by the Indian Office in Washington D.C. and then by a second agency (the Department of the Treasury ("Treasury") until 1921 and the General Accounting Office ("GAO") between 1921 and 1951). This settlement process provided a regular and specific procedure for checking the accuracy of accounts maintained on behalf of individual Indians and was the only accounting or reconciliation required by law at the time. Mem. in Support of Third Motion at 1-2 (footnote omitted).

In support of their motion for partial summary judgment, defendants submitted an affidavit from Frank Sapienza, director of the Indian Trust Accounting Division of the General Services Administration ("the Sapienza Affidavit"), which defendants included as Exhibit 7 to the Third Motion. In the third paragraph of the affidavit, Sapienza summarizes his conclusions:

In general, I determined that . . . (3) from 1921 to 1951, three government agencies - the Indian Office (now the Bureau of Indian Affairs or BIA), the Treasury Department, and the GAO - each dealt separately with IIM accounts. All three agencies had separate accounting controls in place for ensuring that IIM accounts were properly processed and the balances were accurately stated. The Indian Office and the Treasury Department used internal control procedures to ensure the accuracy of the transactions they processed. The GAO later audited those same transactions to prove their accuracy and validity, and any exceptions were promptly resolved. Sapienza Aff. ¶ 3.

Based on the representations made in the Sapienza Affidavit and the memorandum accompanying the Third Motion, defendants moved for partial summary judgment, on the grounds that they were not required to submit an accounting that revisited any transactions that were subject to this "double auditing" process. Mem. in Support of Third Motion at 2. Plaintiffs filed a brief opposing the Third Motion on November 3, 2000. Part IV of the opposition brief and 41 pages of the evidentiary appendix submitted in conjunction with the opposition brief dealt exclusively with the claims asserted in the Sapienza Affidavit.

On February 1, 2002, defendants sought leave of the Court to withdraw the Third Motion from the record in this case. At the same time that they filed their opposition brief, plaintiffs moved for sanctions and a contempt finding under Rule 56(g) of the Federal Rules of Civil Procedure, asserting that defendants had submitted an affidavit in bad faith in connection with the Third Motion. On March 11, 2002, the Court ordered the Third Motion to be withdrawn ...

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