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Law360 (March 15, 2021, 12:56 PM EDT ) The state of Oregon has reached a settlement agreement in a lawsuit over its decision to set aside $62 million of federal CARES Act money for Black residents and Black-owned businesses, saying it will set aside a separate $3.5 million for a proposed class of non-Black fund applicants.
In a motion for preliminary approval Friday, the parties said their proposed agreement includes a class of more than 1,200 individuals, businesses and nonprofits that applied to the fund, known as the Oregon Cares Fund for Black Relief and Resiliency, before Dec. 8 and did not indicate they were Black, a Black-owned business, or a Black-focused organization.
The $3.5 million will not come from the fund at issue in the suit, which was created when the Oregon Emergency Board allocated $62 million of federal Coronavirus Aid, Relief, and Economic Security Act money to the state's Department of Administrative Services for Black residents and Black-owned organizations.
Great Northern, an Eastern Oregon-based logging company, first filed suit in October, claiming the fund's race-conscious approach was not permissible. Bradley Benbrook of Benbrook Law Group PC, counsel for Great Northern, said in a statement Friday that he is pleased with the settlement.
"More than 1,200 individuals and businesses applied to the program who didn't identify as Black or Black-owned and were therefore ineligible to receive a grant," Benbrook said in the statement. "If the court approves the settlement, however, those applications will be considered without regard to race."
Great Northern had said the harm it experienced due to the coronavirus pandemic should have qualified it to compete in any government-aid program for affected businesses, but that the state violated the equal protection clause of the Fourteenth Amendment and federal anti-discrimination law by distributing benefits on the basis of race.
Oregon Gov. Kate Brown said in a statement Friday that while the lawsuit held up the distribution of about $9 million remaining in the fund, the parties would ask the court to immediately release $5.3 million to Black-identifying and Black-owned applicants, under the proposed settlement. And the remainder of the fund would be released for those applicants if the court approves the class-action settlement, Brown indicated.
She said the fund, which was set up with Oregon nonprofit The Contingent and the Black United Fund of Oregon, had distributed more than $50 million as of Friday.
"As a state, we have a duty to aid those in need, particularly Oregonians who suffer from systemic racism and are disproportionately impacted by COVID-19," Brown said in Friday's statement. "The Oregon Cares Fund has been an enormous success, and has provided urgent relief to Black Oregonians, Black-led nonprofits, and Black-owned businesses, which are less likely to have access to federal aid."
According to the proposed settlement, class members will be paid "in the full amount that their applications support." Great Northern will receive $45,000 — $20,000 of which would be a service award.
Great Northern's counsel requested about $136,000 in attorney fees and no more than $50,000 in other costs.
Amanda T. Gamblin of Schwabe Williamson & Wyatt PC, counsel for The Contingent, said via email that if approved, the settlement would be a victory for Oregon's Black community.
"It's been my honor to work with my client and Oregon's Black leaders to take one step closer to ensuring that Oregon's discriminatory past does not continue into our future," Gamblin said.
Great Northern is represented by Bradley Benbrook and Stephen M. Duvernay of Benbrook Law Group PC, Jonathan F. Mitchell of Mitchell Law PLLC and James L. Buchal of Murphy & Buchal LLP.
The Contingent is represented by Amanda T. Gamblin and Nika F. Aldrich of Schwabe Williamson & Wyatt PC.
Black United Fund Inc. is represented by Lindsey H. Hughes and Hillary A. Taylor of Keating Jones Hughes PC.
The state is represented by Clifford S. Davidson, Kelly H. Dove, Alexix G. Terríquez and Alysha Green of Snell & Wilmer LLP, and Fay Stetz-Waters and Sheila H. Potter of the Oregon Department of Justice.
The case is Great Northern Resources Inc. v. Coba et al., case number 3:20-cv-01866, in the U.S. District Court for the District of Oregon.
--Editing by Marygrace Murphy.
Correction: An earlier version of this story included the wrong counsel information for a party. The error has been corrected.
For a reprint of this article, please contact reprints@law360.com.
