SALT LAKE CITY — A heated, nearly two decades long lawsuit over Utah's management of a trust fund for Navajos in San Juan County has come to a bittersweet end.
A federal judged approved a $33 million settlement in the case Tuesday, but some tribal members say it doesn't come close to repairing harm done to their community over the years.
"I guess this the best we can get out of it," said Harrison Johnson, who had sought as much as $200 million. "It's OK."
Johnson was among eight people who filed a class-action lawsuit on behalf of San Juan County's 8,000 Navajos in 1992. The case, Pelt v. Utah, challenged the state's management of a trust fund the federal government created in 1933. The state was appointed to manage the fund.
Money for the trust came from oil found on Navajo land, and 37.5 percent of the royalties were supposed to be deposited into the fund for the health, education and welfare of Navajos in the county. The remainder goes to tribal headquarters in Window Rock, Ariz. The lawsuit alleged Utah had mismanaged the fund, did not keep proper records and lost money or spent it incorrectly.
"It hurt the whole San Juan County," Johnson said. "They feel they've been cheated with their own money."
The lawsuit alleged that Utah did not handle the fund correctly from 1959 through 1992. Money started flowing to the trust in 1957. A federal judge ruled that although the state could account for how it spent the money, it was still responsible for all trust funds, even after money had been sent to entities designed to improve general well-being and create jobs for Navajos.
The nonprofit Utah Navajo Development Council was created to provide health care, education and general welfare. The for-profit Utah Navajo Industries was charged with starting businesses, employing Navajos and developing managerial skills. Bad investments, poor decisions (including a failed puppet-making company), misappropriation and fraud doomed both entities and squandered millions of dollars.
A University of Utah finance professor determined in 1992 that if the money had been managed properly, the fund should have had $100 million. Instead, it had about $9 million.
The settlement approved by U.S. District Judge Tena Campbell ended 18 years of litigation, the last 18 months of which were spent in mediation overseen by U.S. Court of Appeals Senior Judge William Canby.
"It was an atypical mediation process," Phil Lott, assistant Utah attorney general, said in court. "There was significant movement on both sides."
The parties reached a tentative agreement in January, and the Utah Legislature and Gov. Gary Herbert signed off on it. Approval in federal court was the final step in the process. The state does not admit wrongdoing in the settlement, but it does acknowledge that errors and problems with the trust stretch back 50 years.
Salt Lake attorney Brian Barnard, who represented the plaintiffs, said the case dragged on because the state "recognized it had liability and simply fought tooth and nail" until 2008, when it "ran out of defenses."
Both sides agreed that the "grueling, expensive, time-consuming" litigation as Campbell described it would have gone on much longer without an agreement.
According to the settlement, the state will pay out $33 million over the next three years, including $7 million in attorney fees. Campbell noted that attorney fees account for 21 percent of the total amount, about 12 percent less than usual.
"This is a really important day for the Navajos and San Juan County," said Marie S. Holiday, who served as a trust fund board member for 10 years. Though she said she doesn't think the settlement is fair, "I'm happy that they did the best they could."
How the trust fund will be managed in the future is unclear. It currently lacks a trustee, and the state no longer wants that role. "So, it's in limbo," Barnard said.
Johnson said the Navajos in San Juan County should control the fund. "We want to handle it," he said.
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