Legal

Federal Judge orders accounting to Osage headright holders in Fletcher case

Northern Oklahoma District Chief Judge Gregory Frizzell ordered the United States to account to Osage headright holders in the 13-year-old Fletcher case.

“This is historic,” said Jason Aamodt, lead attorney for William Fletcher. “This is the first time in a century the United States has been ordered to account to the members of the Osage tribe.”

The 27-page opinion and order was issued Dec. 30 by Frizzell and orders the United States to give an accounting of the Osage tribal trust account prior to its distribution to headright owners. The accounting is to go back to the first payment quarter of 2002 and span to the most recent payment quarter of this year.

The U.S. argued that the Osage tribal trust account is held in trust for the Osage Nation and that individual headright holders were not entitled to an accounting. Frizzell disagreed.

The Osage tribal trust account in the U.S. Treasury is where the royalty money from the Osage Mineral Estate is held before it is distributed to headright holders by direct check or transfers to Individual Indian Money (IIM) accounts.

William S. Fletcher, et al. v. The United States of America was first filed in 2002 over the tribal voting rights of non-headright holders. The case later evolved into an action against the government’s alleged wrongful distribution of Osage royalty income to non-Osages and its failure to account to headright owners, according to the order. The case has seen seven dismissals, three amended complaints, a first and second successful appeal to the U.S. 10th Circuit Court of Appeals and the Court of Appeals sent it back to Frizzell.

The Fletcher case was certified as a class-action lawsuit in 2014 and has more than 5,000 plaintiffs, all Osage headright holders.

Highest Posted Price

The U.S. also claimed the Fletcher plaintiffs could not request an accounting because of the Osage Trust Case settlement in 2011 for $380 million, also known as the Highest Posted Price case. The government said as part of that settlement agreement the Nation acted on behalf of the headright owners and waived all claims against the U.S. and any obligation to provide a historical accounting of the Osage tribal trust account, according to the order. Frizzell disagreed.

“The individual Osage headright owners were not a party to the settlement agreement at issue. Indeed, the Court of Federal Claims denied them the opportunity to intervene in the case,” Frizzell wrote. “Because the Osage Nation lacks authority to waive the plaintiffs’ individual accounting rights, they are not bound by the tribe’s settlement agreement with the federal government.”

Accounting Procedure

According to the order, Judge Frizzell understands the need for “completeness and transparency, on the one hand, and speed, practicality, and cost, on the other” when it comes to the accounting procedure. During its 13-year run, three of the original five plaintiffs in the Fletcher case have died: Betty Woody, Cora Jean Jech and most recently, Charles Pratt. William Fletcher is the remaining plaintiff.

“The plaintiffs’ stated purpose for seeking an accounting is to obtain information that will enable them to prove that the government has paid headright distributions to ineligible recipients and, in that way, improperly diminished their pro rata share,” Frizzell wrote in the opinion.

The Fletcher plaintiffs sought an accounting of both receipts and disbursements dating back to 1906 but Judge Frizzell said such an undertaking would more than likely be unsuccessful.

The accounting procedure of the Osage tribal trust account will go as follows:

1)   The accounting must run from the first quarter of 2002 until the last available quarter

2)   The accounting must be divided and organized either by month or by quarter

3)   The accounting must state the date and dollar amount of each receipt and distribution

4)   The accounting must briefly identify and describe the source of each trust receipt (i.e., the name of the payer/lessee and the contract number for the oil and/or gas lease on which the payment is made)

5)   The accounting must state the name of the individual or organization to whom each trust distribution was made

6)   For headright distributions, the accounting must state the headright interest that each beneficiary possessed at the time of distribution

7)   The accounting must state the amount of interest income generated from the tribal trust account and the date on which such interest was credited to the account

 

Frizzell also ordered a protective order on all materials, documents and data gathered associated with the accounting are to remain confidential.

“We felt this was a very good order and we plan to ask the judge to broaden the scope of the accounting,” Aamodt said.