Judge approves $9M settlement for Blackfeet telecomms customers who alleged discrimination

A federal judge has approved a $9 million class action settlement involving a nonprofit telecommunications co-op that will pay back millions in capital credits to several hundred tribal members of the former Browning Exchange who alleged discrimination when the company withheld the credits after a 2020 sale.

The final approval of the settlement on July 14 means that the five plaintiffs who sued 3 Rivers Telephone Cooperative, and around 1,800 members of the class in the settlement, are likely to receive their payouts from the settlement in the next few weeks, attorneys for the plaintiffs said, adding that it will be much-welcomed money for members of the Blackfeet Nation.

A U.S. District Court of Montana judge in February granted preliminary approval to the $9 million settlement reached between Fairfield-based 3 Rivers, the plaintiffs who were members of the Browning Exchange, and 1,863 class members who were also Browning Exchange customers.

The 3 Rivers co-op sold the Browning Exchange to Siyeh Communications on the last day of 2020. The lawsuit claimed that 3 Rivers and its board had unfairly discriminated against Native American members of the Browning Exchange by withholding payment of the capital credits from the exchange members when it sold the Browning Exchange.

The lawsuit also claimed that 3 Rivers had treated Native American customers of the telecommunications company differently than non-Native members – saying it was the company’s policy and practice to do so in violation of the Federal Communications Act, the Civil Rights Act of 1964 and the Montana Consumer Protection Act.

Four of the five plaintiffs in the case were enrolled members of the Blackfeet Tribe, while the fifth lives on the reservation but was not an enrolled member. All previously received telephone service from 3 Rivers and owned capital credits in the company but were no longer customers after the company sold the Browning Exchange.

The capital credits are allocated to customers of the co-op based on 3 Rivers’ annual earnings. The company said on its website the credits are allocated when it “makes a profit the money is returned to our members through capital credits” because it operates as a nonprofit.

According to the suit, when 3 Rivers sold the Browning Exchange, its board did not include the Browning Exchange members’ capital credits in the sale because Siyeh Communications said it could not afford the sale if they were included.

The suit says instead of retiring the approximately $8.8 million capital credits, the company retained them and planned to retire them instead during a period of 25 years and pay the credits out at that pace.

But attorneys Jeffrey Winter and Terryl Matt argued 3 Rivers had shown withholding capital credits and other patterns – including failing to upgrade Browning Exchange customers’ services from copper cables to fiber optic cables while most of 3 Rivers’ other exchanges had received the upgrades – demonstrated the company was discriminating against its Native American customers.

Nearly all of the Browning Exchange customers were Native American and had their home telephone and internet service run through decades-old infrastructure, according to the suit, which one of the plaintiffs told the Daily Montanan was extremely unreliable.

Further, the lead plaintiff in the case, former tribal chairman Harry Barnes, had been a member of the 3 Rivers board of trustees – the only Native American member of the board and the only representing Browning Exchange members – and had pushed for the capital credits to be retired and paid back to exchange members as part of the sale.

But the board voted to remove Barnes as a board member before the sale of the exchange, then voted afterward to retain the capital credits, according to the lawsuit. Winter and Matt argued that also violated the board’s bylaws.

“We felt very strongly that it was a matter of discrimination,” Winter said in an interview. “I don’t think they would have necessarily treated another exchange the same way as they did.”

Robert DeRosier, one of the named plaintiffs in the suit, said Barnes called him and asked him to join the lawsuit when it was first under consideration, which he quickly agreed to when learning the full capital credits would not be paid out in a lump sum but rather year after year.

“A lot of us couldn’t wait for that on their schedule. I mean, how many of our 3 Rivers subscribers would be dead and gone to the Great Here and After without getting what they were owed?” DeRosier said in an interview. “So, I gladly joined in that lawsuit.”

3 Rivers initially asked the judge to dismiss the case in its entirety, but the judge only agreed to dismiss some of the claims. But last September, the two sides met in a settlement conference in Butte, and the judge recommended a settlement that would later be approved by an independent fiduciary judge.

The settlement estimated the class members could recoup about 75% to 80% of the $8.3 million capital credit balance with 3 Rivers, which Winter and Matt said was more than the company would have originally had to pay out if it had done so when it sold the exchange.

After the preliminary settlement was reached in February, it had to go through a class-notice period, a fairness hearing to see if any class members objected to the settlement, and a comment period under the Class Action Fairness Act before it could be formally approved this month. But no federal or state official objected, clearing the way for the final approval of the settlement on July 14.

The order said 3 Rivers would have to deposit the full settlement payment into a fund by July 28 – the end of this week.

The judge awarded the attorneys for the class – Winter and Matt — $2.25 million to be paid out of the fund. They also awarded the lead plaintiff, Barnes, $50,000 and the other four named plaintiffs $5,000 each. The administrator of the claim and settlement fund was ordered to calculate the share distributed to the rest of the class, which will be paid out in coming weeks.

Don Serido, a spokesperson for 3 Rivers, said in a statement that it had agreed to retire and pay back the capital credits.

“As part of an agreement to resolve a class action lawsuit, 3 Rivers agreed to pay off capital credits, usually paid back over time per Montana cooperative law, of the former telephone members who were affected by the sale,” Serido said in a statement.

WINTER SAID in an interview that the settlement was a major victory for the Browning Exchange members, most of whom are Blackfeet tribal members, because state law gives co-ops “a lot of discretion” on how to handle capital credits and pay them back.

“That was kind of a key of our argument, that technically the law may say that this is OK, but aren’t you really hiding behind the letter of the law to accomplish something that really isn’t fair and appropriate and is discriminatory?” Winter said. “… 3 Rivers had the law on their side. Our argument was equitable; theirs was legal. And that’s tough. Given that situation especially, I think it was a really, really good outcome.”

DeRosier, one of the plaintiffs, said he believes the money will greatly benefit the reservation – especially elder members of the tribe who are on fixed incomes and whom he said made up most of the Browning Exchange users. He said he believes the money would have a three-fold benefit as it exchanges hands in the Blackfeet communities.

“That’s just what the community needs. People are broke. We need economic development here and anytime we can get that positive funding to come in here, that’s a good thing for us and our membership,” he said. “A lot of the older Blackfeet had that account, and they’re the ones that need it the most. So, I’m just ecstatic.”

Winter and Matt, the co-counsel on the case, both praised the plaintiffs and class members for stepping up against what they said were long odds. Winter said it was his first class-action case.

“We’re extremely grateful for the outcome,” Winter said. “We’re very proud of our class representatives and every class member. This has taken a lot of guts to put together and the class representatives stepped up and did what they felt was right, even though the odds were against them.”

Both said when it came time for possible class members to get in contact and join the class, there was an overwhelming response from the community that they plan to hear more about once the checks arrive in coming weeks.

“So, I think this was good; this was a good outcome for them, and I think most of the members are pretty happy,” Matt said.

DeRosier said while the reservation still needs significant telecommunications upgrades, he hopes that the tribal nation can become energy independent and provide members and residents with internet service in the long term.

Blair Miller is a Helena-based reporter. The Daily Montanan is a nonprofit newsroom. To read the article as originally published, click here.