Petition of United States ex rel. The Smithsonian Institution

          MEMORANDUM OPINION ADOPTING REPORT & RECOMMENDATION OF THE MAGISTRATE JUDGE

          KETANJI BROWN JACKSON UNITED STATES DISTRICT JUDGE.

         On December 30, 2013, the United States, acting on behalf of the Smithsonian Institution (“the Smithsonian”), filed a petition in this Court to modify restrictions on a charitable gift that Dr. Carl J. Drake gave the Smithsonian in 1965. (See Pet. for Modification of a Restricted Endowment Fund and Restricted Gift (“Pet.”), ECF No. 1, at 1, 3.)^[1] Dr. Drake was a former professor of Zoology and Entomology at Iowa State College who bequeathed a sizable and valuable collection of insect specimens to the Smithsonian (the “Drake Collection”), as well as almost all of his financial estate (see id. at ¶¶ 9-12, 15, 16, 18); the latter was placed in a trust fund known as “the Drake Foundation” (see Id. ¶ 18). In its petition, the United States invokes the trust law doctrines of equitable deviation and cy pres, and requests modification of three existing restrictions on the Drake Collection and Drake Foundation: (1) the requirement that the museum use Drake Foundation funds only to acquire additional specimens of the suborder of insect known as Hemiptera-Heteroptera; (2) the requirement that the Smithsonian keep the Drake Collection separate and apart from other Hemiptera-Heteroptera specimens housed at the Smithsonian; and (3) the requirement that the Smithsonian not loan out Hemiptera-Heteroptera specimens from the Drake Collection. (See Pet. ¶¶ 33-46; see also Id. ¶¶ 15, 19 (laying out restrictions).)^[2]

         Before this Court at present is the United States' petition and its motion for summary judgment concerning its request to modify the restrictions on Dr. Drake's bequest. (See Pet; Mot. for Summ. J., ECF No. 3; see also Mot. to Supp. Summ. J. Record, ECF No. 5.) On July 17, 2018, this Court referred this matter to a Magistrate Judge for full case management, and the Clerk's Office randomly assigned the case to Magistrate Judge G. Michael Harvey. (See Min. Order of July 17, 2018; Min. Entry of July 17, 2018.) On July 10, 2019, Magistrate Judge Harvey issued a 42-page Report and Recommendation (“R&R”) that recommends that this Court grant the United States' petition and motion for summary judgment, in part. (See R&R, ECF No. 9.)^[3]

         In the R&R, Magistrate Judge Harvey thoughtfully and extensively reviews the United States' request to modify certain restrictions governing the Smithsonian's use of the Drake Collection and Drake Foundation funds and carefully considers whether or not this Court should grant the petition. (See generally R&R.) In particular, the R&R first addresses three threshold issues: the source of the Court's jurisdiction over a case that “involves determining the extent of the Smithsonian's obligation to comply with the conditions of Dr. Drake's will” (id. at 17); the applicability of the Uniform Trust Code and District of Columbia trust law (see id. at 19-21); and the appropriateness of the United States' request to proceed ex parte (see id. at 21-25). Magistrate Judge Harvey rightly concludes that, because the Smithsonian seeks to proceed under section 55 of Title 20 of the United States Code, see 20 U.S.C. § 55 (provision of the Smithsonian charter authorizing the acceptance of money and other property by gift or bequest), the Court has federal question jurisdiction under section 1331 of Title 28 of the United States Code (see Id. at 17), and that this matter constitutes a justiciable case or controversy “because the United States seeks to do something it is currently barred from doing” (id. at 18). The R&R also correctly determines that the Uniform Trust Code is applicable; that Dr. Drake's will should be interpreted according to D.C. trust law; and that it is appropriate for the United States to proceed with its petition ex parte. (See id. at 19-25.)

         Magistrate Judge Harvey next considers the merits of the United States' petition. The R&R finds that regulatory changes and institutional challenges have rendered impracticable the condition that the Smithsonian use the Drake Foundation funds only to purchase Hemiptera-Heteroptera. (See id. at 30-31.) Therefore, it recommends applying cy pres to modify the conditions on the Smithsonian's use of funds from the Drake Foundation. (See id. at 28-31.) Turning to the United States' proposals for alternate uses of Drake Foundation Funds, the R&R then recommends that this Court allow the funds to be used to support scientific research into the Hemiptera-Hoptera and to maintain the entire Smithsonian Hemiptera-Hopetera collection. (See id. at 31-36.) However, Magistrate Judge Harvey concludes that a modification that permits Drake Foundation funds to be used “‘to purchase cabinets, drawers, and other standard entomological museum supplies, '” as the petition requests, is too far removed from Dr. Drake's intended use of the money from his estate. (Id. at 36 (quoting Pet. at 3).)

         Regarding the specimens of the Drake Collection, the R&R finds that “modifying the requirement to maintain the Drake Collection separate from the rest of the Smithsonian's Hemiptera-Heteroptera [collection] is warranted because the requirement is wasteful[, ]” given the museum's limited storage space and modern museum practice. (Id. at 38-39.) But the R&R recommends denying the United States' request to allow the Smithsonian to loan out specimens from the Drake Collection, because the United States “has not introduced any evidence” that this restriction “is impossible, impracticable, or wasteful.” (Id. at 40.)

         Finally, Magistrate Judge Harvey's R&R specifically alerts the United States of the requirement that any objections to his findings and conclusions must be filed in writing within 14 days. (See Id. at 42.) The R&R further informs the United States that any objections “must specifically identify the portion of the report and/or recommendation to which objection is made, and the basis for such objections.” (Id.) It also advises “that failure to file timely objections to the findings and recommendations set forth in this report may waive [the] right of appeal from an order of the District Court that adopts such findings and recommendation.” (Id.)

         After Magistrate Judge Harvey issued the R&R summarized above, the United States filed a notice that it did not object to Magistrate Judge Harvey's conclusions, but requested that this Court deny its request to permit the Smithsonian to lend out specimens from the Drake Collection without prejudice. (See Notice of No. Objection to the Mag. J.'s Proposed Findings & Recommendations, ECF No. 10, at 1.) This Court concludes that Magistrate Judge Harvey has thoroughly considered the issues raised in this action and has made reasonable findings and recommendations that comport with the evidence presented, and the Court will grant the United States' request.

         Consequently, and especially in light of the fact that the United States does not object to the R&R's recommendations, this Court will ADOPT the attached R&R's findings and conclusions in full. The Court will also GRANT IN PART and DENY IN PART the United States' motion for summary judgment. The motion will be granted insofar as the Smithsonian will be permitted to use funds from the Drake Foundation to support scientific research into Hemiptera-Heteroptera and to curate and maintain the Smithsonian's entire Hemiptera-Heteroptera collection. The Smithsonian will also be permitted to integrate the Drake Collection into its other collection of Hemiptera-Heteroptera specimens, rather than keeping the Drake Collection separate. The summary judgment motion is denied insofar as the Smithsonian will not be permitted to use Drake Foundation funds to purchase cabinets, drawers, and other supplies to house the Smithsonian's Hemiptera-Heteroptera collection, nor will the Smithsonian be allowed to lend out specimens from the Drake Collection. The Court's denial of the Smithsonian's petition with respect to loans of Drake Collection specimens is without prejudice.

         A separate Order consistent with this Memorandum Opinion will follow.

         APPENDIX A

         Civil Action No. 1:13-mc-1454 (KBJ/GMH)

         REPORT AND RECOMMENDATION

         This case is about death, bugs, and trust law. Specifically, at his death in 1965, renowned entomologist Dr. Carl J. Drake gave to the Smithsonian Institution (“the Smithsonian”) his extensive collection of Hemiptera-Heteroptera, a suborder of insects known as “true bugs.” Dr. Drake also gave to the Smithsonian the residue of his estate, which was valued at approximately $250, 000 in the 1960s and is now worth more than $4 million. Dr. Drake's will included a number of restrictions. It required the Smithsonian to maintain the specimens in Dr. Drake's collection apart from its other Hemiptera-Heteroptera holdings and not to loan them out. It also required the Smithsonian to spend funds from Dr. Drake's residuary gift only on acquiring additional Hemiptera-Heteroptera specimens. Because it believes complying with these restrictions is now impracticable or wasteful, the United States has filed a petition on behalf of the Smithsonian seeking relief from them under the trust law doctrines of cy pres and equitable deviation.

         This case was referred to the undersigned for a Report and Recommendation. Pending before the Court are (1) the petition for modification of a restricted endowment fund and restricted gift and (2) a motion for summary judgment. After reviewing the entire record, ^[1] the undersigned recommends that the Court grant in part and deny in part the United States' motions.

         I. BACKGROUND

         A. Hemiptera-Heteroptera, the Smithsonian, and Dr. Drake's Will

         Hemiptera-Heteroptera is the scientific name for a suborder of insects also known as “true bugs.” ECF No. 5-1 at 2. The suborder includes all manner of bugs including cicadas, plant bugs, water bugs, stink bugs, and bed bugs.^[2] The fossil record and genetic testing suggest Hemiptera-Heteroptera emerged on this planet over 200 million years ago, sometime in the Triassic period.^[3]These creatures have persisted across millennia over a period that included several mass-extinction events on Earth.^[4] At least for Hemiptera-Heteroptera, it is true that “life finds a way.”^[5]

         In 1846, little more than 170 years ago-a flash in ecological terms-Congress established the Smithsonian “for the increase and diffusion of knowledge among men.” 20 U.S.C. § 41. Congress directed that the Smithsonian would serve as the federal government's central repository for “all objects of art and of foreign and curious research, and all objects of natural history, plants, and geological and mineralogical specimens belonging to the United States.” 20 U.S.C. § 50. Congress authorized the Board of Regents of the Smithsonian to obtain new “specimens in natural history, geology, or mineralogy” either by purchase or by donation. Id. Congress also authorized the Smithsonian to “receive money [and] other property by gift, bequest, or devise” so long as it uses these non-appropriated funds in a manner “best suited for the promotion of the purpose of the testator.” 20 U.S.C. §§ 55, 56.

         Not quite three decades after the establishment of the Smithsonian, in 1883, Carl J. Drake was born in Seneca County, Ohio. ECF No. 2-1 at 2. As a young man, Carl Drake studied at Heidelberg College for two years before graduating from Baldwin-Wallace College in Berea, Ohio. Id. He completed a master's degree at the Ohio State University and attained his Ph.D. from Syracuse University. Id. A professor of zoology and entomology, Dr. Drake taught at Syracuse for four years before moving to Ames, Iowa, where he taught at Iowa State University for twenty more. Id. Over the course of his academic career, Dr. Drake became world-renowned as an entomologist. Id. Dr. Drake traveled the world in service of his entomological research, and, after retiring from active teaching, he spent the last twenty or so years of his life working with the Smithsonian. Id. An avid collector of Hemiptera-Heteroptera specimens, Dr. Drake obtained over the course of his life an extensive private collection of that suborder of insects. ECF No. 3-2 at 2.

         In December 1956, when he was 73 years old, Dr. Drake signed a document titled “Agreement” and drafted and signed his will in Ames, Iowa. ECF No. 1-1 at 5; ECF No. 1-2 at 2.^[6] The agreement provided that Dr. Drake's collection of Hemiptera-Heteroptera (“the Drake Collection”) would “be presented to the Smithsonian Institution as a permanent deposit subject to the provision that he will exercise full control over the use and further development of this collection during his lifetime.” ECF No. 1-2 at 2. The agreement further stated that “unrestricted title” in the Drake Collection would vest “in the Smithsonian, subject to such provisions concerning use and further development of said collection as are provided in Dr. Drake's will, the provisions of this will being fully known to both parties.” Id. The agreement also stated that the Smithsonian would provide facilities for the storage of the Drake Collection and for Dr. Drake's “continued studies and use of the collection.” Id.

         Dr. Drake's will provided, in relevant part:

I hereby give, devise and bequeath to the Smithsonian Institute of Washington, D.C. my entire Hemiptera-Heteroptera collection, on condition, however, that the said collection shall be kept intact as a separate unit, and that the specimens therein shall not be loaned out or sold to other institutions or individuals. The entire collection, however, shall be available for scientific study by institutions or individuals accredited for that purpose by the Smithsonian Institute.

. . . .

All of the rest, residue, and remainder of my estate, real or personal, of which I die seized or possessed, I give, devise and bequeath to the Smithsonian Institute of Washington, D.C. to be used and administered by the said institute, in a manner as follows:

A. Said assets, whether in cash or in securities shall be placed in a trust fund to be known as the Drake Foundation.

B. The Directors of the institute shall have full control of the management and investment of said funds.

C. The income from the said funds shall be used by the institute as follows:

a. For the purchase of specimens and collections of Hemiptera-Heteroptera to be added to my collection. I direct that the man in charge of the Hemiptera-Heteroptera shall determine and recommend the purchases to be made. During the first 10 years 50% of the income shall be used for that purpose and the balance added to the principal.

b. After the first 10 years, 75% of the income shall be used for that purpose and the balance added to the principal.

ECF No. 1-1 at 3-4.

         Early the next year, Dr. Drake moved to Washington, D.C. to accept an appointment as an Honorary Research Associate at the Smithsonian. ECF No. 1 at 3. Dr. Drake spent the next eight years working at the Smithsonian, until his death in 1965. Id. His will was then filed in probate court in Washington, D.C., along with an unsigned copy of the 1956 agreement. Id. By letter to the attorney for Dr. Drake's estate, the Smithsonian accepted all legacies specified in the will. ECF No. 1 at 5; ECF No. 1-3 at 2. The Smithsonian has since managed the funds from the proceeds of Dr. Drake's estate-valued at approximately $250, 000 in 1969-under the name “the Drake Foundation.” ECF No. 1 at 5; ECF No. 3-2 at 4. The Smithsonian has maintained the Drake Collection in Washington, D.C. since Dr. Drake's death. ECF No. 1 at 5.

         B. The Drake Collection

         The Drake Collection is kept within the Department of Entomology at the Smithsonian's National Museum of Natural History. ECF No. 3-2 at 3. The National Museum of Natural History is “a bureau of the Smithsonian.” Crowley v. Smithsonian Inst., 636 F.2d 738, 741 (D.C. Cir. 1980). Smithsonian employees use the collections at the Department of Entomology “for research and dissemination of knowledge, including scholarly papers, public exhibits, and responses to queries from other government agencies, the media, and the general public.” ECF No. 3-2 at 2. The Department of Entomology routinely hosts visiting researchers from around the world and also loans parts of its collections to qualified researchers domestically and internationally. Id. While in Dr. Drake's lifetime transporting insect specimens was difficult and routinely led to their destruction, advances in safe handling and transportation techniques have made insect lending commonplace today. Id. at 7-8. Additionally, entomological researchers for the U.S. Department of Agriculture and U.S. Department of Defense use the Department of Entomology's collections to research the ways insects affect agriculture and spread disease. Id. at 2. Since 1995, the Department of Entomology's Hemiptera-Heteroptera collection, including the Drake Collection, has been curated by Dr. Thomas J. Henry, a research entomologist for the U.S. Department of Agriculture. ECF No. 8-1 at 2. It is currently uncertain who will take over these responsibilities should Dr. Henry retire. Id.

         The Drake Collection is “broad” and “scientifically significant, ” comprising approximately 30% of the Smithsonian's total Hemiptera-Heteroptera collection, which is itself “one of the most scientifically valuable collections in the world in terms of its size and representation of species.” ECF No. 3-2 at 3, 7. Several decades ago, the Smithsonian integrated “a small part” of the Drake Collection consisting of specimens of Plant Bugs into the rest of the Department of Entomology's Hemiptera-Heteroptera Plant Bug collection, evidently “to facilitate a research project.” Id. at 8 n.2. The remainder of the Drake Collection is maintained as a separate unit, and the specimens in it are currently arranged separately from those of similar family, genus, and species in the rest of the Smithsonian's Hemiptera-Heteroptera collection. Id. at 8.

         According to the Smithsonian's entomologists, maintaining the Drake Collection separate from the rest of the Hemiptera-Heteroptera is inefficient and inconsistent with modern museum practice because specimens should be arranged taxonomically rather than by accession source. Id. Keeping Drake Collection specimens separate “doubles the number of trips to the collections that researchers have to make to retrieve specimens and to record biological data, such as the countries in which a species occurs.” Id. Over time, this arrangement makes research less efficient and causes “wasted effort [that] does not make sense.” Id. at 9. Additionally, keeping the Drake Collection specimens separate from the rest of the Smithsonian's Hemiptera-Heteroptera collection takes up approximately 20-25% more storage space than integrating the collections would, making inefficient use of the Department of Entomology's already scarce collection space. ECF No. 8-1 at 9-10. As of 2014, the Department expected to exhaust its collection space at the National Museum of Natural History by about 2024. ECF No. 3-2 at 9.

         Maintaining the collections separately also leads to inefficient upkeep of the specimens because “[c]uration of one collection . . . often necessarily neglects curation of the other.” ECF No. 8-1 at 10. For example, the Smithsonian has recently endeavored to integrate a collection of 95, 000 aquatic bug specimens purchased with Drake Foundation funds into the Drake Collection. Id. at 3, 10. This curation process involves relabeling existing Drake Collection specimens, updating their names, adding new species, and cataloging them in databases. Id. at 10. Yet, because the Drake Collection is maintained separately from the Smithsonian's broader Hemiptera-Heteroptera collection, all of this curation work will need to be replicated separately for the aquatic bugs not in the Drake Collection. Id. According to the Smithsonian, if the two collections were merged, “it would be much more efficient, and less wasteful, to curate all the Heteroptera holdings, Drake and non-Drake, in a single process.” Id.

         C. The Drake Foundation

         The Drake Foundation funds were valued at approximately $250, 000 in January 1969, some four years after Dr. Drake's death. ECF No. 3-2 at 4. The terms of Dr. Drake's will grant the Smithsonian “full control of the management and investment of said funds.” ECF No. 1-1 at 4. For the first ten years of the Drake Foundation's existence, the will required the Smithsonian to reinvest 50% of the income from the Drake Foundation into the fund's principal, and since 1979 has required the Smithsonian to reinvest 25% of the fund's annual income. Id. The will requires the Smithsonian to use the rest of the income from the funds “[f]or the purchase of specimens and collections of Hemiptera-Heteroptera to be added to [the Drake Collection], ” with the person “in charge of the Hemiptera-Heteroptera [to] determine and recommend the purchases to be made.” Id. The Smithsonian has used Drake Foundation funds to acquire new Hemiptera-Heteroptera specimens both by purchasing collections and by funding field collection. The amount of Drake Foundation funds the Smithsonian has spent each year has declined substantially since 2005, as illustrated in the table below:

Fiscal Year	Income Payout	Expenditures	Income Unspent	Percent of Income Payout Spent
2003	$93, 983.34	$205, 851.16	($111, 867.82)	219.03%
2004	$94, 993.77	$94, 001.94	$991.83	98.96%
2005	$96, 846.42	$102, 546.82	($5, 700.40)	105.89%
2006	$97, 043.25	$48, 358.32	$48, 684.93	49.83%
2007	$98, 244.17	$8, 382.42	$89, 861.75	8.53%
2008	$102, 789.96	$22, 052.12	$80, 737.84	21.45%
2009	$108, 273.28	$14, 662.40	$93, 610.88	13.54%
2010	$109, 804.96	$6, 643.67	$103, 161.29	6.05%
2011	$111, 233.95	$17, 246.03	$93, 987.92	15.50%
2012	$113, 280.58	$30, 166.89	$83, 113.69	26.63%
2013	$139, 406.69	$9, 922.30	$129, 484.39	7.12%
2014	$135, 896.18	$15, 789.62	$120, 106.56	11.62%
2015	$138, 539.90	$3, 622.01	$134, 917.89	2.61%
2016	$146, 477.59	$3, 870.34	$142, 607.25	2.64%
2017	$162, 886.19	$19, 471.66	$143, 414.53	11.95%
2018	$178, 367.63	$0.00	$178, 367.63	0.00%