Reparations by Stealth

Class action lawsuits by Indigenous litigants meet no resistance from Canada’s federal government, resulting in tens of billions in payouts.

By Thomas Flanagan, AMER CONSERVATIVE

Paying reparations to designated racial and ethnic groups for historical injustice is a hotly debated issue in contemporary public policy. Appointed commissions in the state of California and the city of San Francisco have produced proposals for payments to African Americans, even though slavery was never a legal institution in California. The San Francisco committee proposed giving a grant of $5 million to each qualifying black resident, plus a guaranteed annual income of $97,000 for the next 250 years. While this proposal, which would bankrupt the city, is unlikely to be approved, it shows how high the stakes in the reparations debate have become.

In Canada, where people of African descent are a small minority, debates over reparations are focused on other ethnic groups. The Mulroney (Conservative) government authorized payments to Japanese Canadians because of their relocation in World War II. The Harper (also Conservative) government offered compensation to Chinese Canadians for the head tax on immigrants, though few were left alive to receive it. The biggest issue of reparations in Canada going forward will concern Indigenous Canadians: Métis, Inuit, and above all First Nations (Indians).

American scholar Alfred Brophy has itemized the main elements that usually make up a reparations package: apologies, truth commissions, civil rights legislation, community building, and payments to individuals. Canada has adopted all these several times over as Indigenous policies. The distinctive Canadian contribution is a reparations payments strategy driven by the judicial process, chiefly through class actions. Crucially, the policy of the federal executive government since 2015 has been to put up only token opposition to Indigenous claims before proceeding to negotiate a settlement. The legal process proposes, the executive government disposes.

Superficially, the Canadian practice appears to seek compensation for damages for individuals, but the government’s unwillingness to contest these claims, at least since 2015, has turned them into a kind of de facto reparations. Claims are made in virtue of alleged historical mistreatment under this or that federal program. When the claims are not contested, and no proof is sought of actual damages, they become the equivalent of reparations—but never discussed in the legislature or ratified by public opinion. In effect, Canada is enacting reparations by stealth.

Indian Residential Schools (IRS) had enjoyed a relatively favorable image in Canadian public opinion until 1990, when Manitoba chief Phil Fontaine was interviewed about physical and sexual abuse that he claimed to have suffered at an IRS. Similar complaints then started to come forward from many directions. Historians wrote influential books criticizing the system, while the Report of the Royal Commission on Aboriginal Peoples devoted a chapter to the topic. The churches that had run the schools with government funding delivered public apologies, as did the minister of Indian Affairs.

By the turn of the century, the courts were swamped with IRS litigation, both class actions and individual claims for compensation. At the normal pace of the judicial process, it would have taken decades to resolve all the claims. The churches were afraid of being bankrupted and were begging the federal government for a solution. Protracted negotiations between federal representatives and the Assembly of First Nations resulted in the Indian Residential Schools Settlement Agreement, signed by Prime Minister Paul Martin in late November 2005, on the eve of his government’s defeat in the House of Commons.

The Conservative Party of Canada, led by Stephen Harper, won the next election and formed a minority government in January 2006. It would now be up to the Conservatives to implement the agreement, even though they had had no role in negotiating it. Prime Minister Harper decided to accept the IRS Settlement negotiated by Paul Martin’s government and to implement it as written, but not to go beyond the four corners of the text. Despite some warnings from the civil service, Harper and his advisors hoped that implementation of the agreement, combined with a fulsome apology from the prime minister, would mark the end of an era and the beginning of reconciliation.

The agreement was exceedingly generous. There was a “Common Experience Payment” of $10,000 for the first year spent in an IRS, plus $3,000 for each additional year. No demonstration of harm or loss to the individual claimant would be required, only evidence of enrollment. This was a way of handling a multitude of small claims with relative dispatch, but it bolstered the misconception that the IRS were horrible places in which everyone suffered. There was also an Independent Assessment Process for claims of physical and sexual abuse, with the amount of compensation proportional to the severity of the purported abuse. Evidence was required that the claimant and alleged abuser had been at the same school at the same time, but there was no cross examination or weighing of conflicting testimonies.

Payments to individuals totaled almost $5 billion. Additional expenditures on advocacy, commemoration, and legal fees, plus the number of employment hours invested in negotiation, administration, and adjudication, would bring the true cost to well over that. (In evaluating this and all other Canadian dollar amounts, American readers should remember that the gross domestic product of the United States is more than ten times larger than that of Canada.  Whereas $5 billion may seem like a rounding error in the United States, it is “real money” in Canada.) At the time, it was the largest class action settlement in Canadian history.

Yet it proved to be the beginning rather than the end of demands for Indigenous reparations.

In the wake of the IRS Settlement, other groups began pursuing class actions to obtain compensation for alleged historical grievances, but they did not have much success while the Conservatives were in power. Things changed dramatically when the Liberals under Justin Trudeau won the national election of October 19, 2015.  Trudeau promptly appointed Jodi Wilson-Raybould as Minister of Justice, the first status Indian ever to hold that position.

That appointment marked an immediate change in the litigation strategy of the Department of Justice, although Minister Wilson-Raybould did not formalize the new approach until January 11, 2019, when she issued the Attorney General of Canada’s Directive on Civil Litigation Involving Indigenous Peoples. A main theme of her 20 “Litigation Guidelines” is that, in cases of Indigenous rights, the Department of Justice should do everything possible to avoid litigation in favor of other ways of resolving disputes, such as negotiation. Guideline 4 states:

Counsel’s primary goal must be to resolve the issues, using the court process as a last resort and in the narrowest way possible. This is consistent with a counsel’s ongoing obligation to consider means of avoiding or resolving litigation throughout a file’s lifespan. Counsel must engage in these efforts early and often, ensuring that all reasonable avenues for narrowing the issues and settling the dispute are explored.

Wilson-Raybould’s practice directive is still in force, even though she has been gone from the Justice portfolio since 2019.

The first sign of a shift came with a negotiated settlement of the Newfoundland and Labrador Residential Schools class action, which had begun in 2007 and finally reached the courtroom in September 2015. In November 2015, only three weeks after taking office, the new Liberal government discontinued its legal defence and asked for negotiations. In 2016, a settlement was reached that provided $50 million to those who had attended five boarding schools in Newfoundland and Labrador, plus additional money for “healing and commemoration.” The settlement, though small in comparison to the IRS settlement of 2006, clearly signalled a new receptivity to Indigenous claims about abuse in education.

Much bigger was the Federal Indian Day Schools Settlement, announced in March 2019. About 700 day schools had been funded by the federal government between 1863 and 2000, in every province and territory. It is estimated that 200,000 students may have attended them at one time or another, in comparison to an estimated 150,000 who ever attended residential schools (in evaluating these numbers, remember that some children attended both types of schools at different times). The settlement provided base compensation of $10,000 for all who had attended a day school, topped off by an additional $50,000 to $200,000 for claims of physical and sexual abuse. As with the IRS agreement, evidence of attendance was required, but claims of abuse were not to be cross-examined and did not require corroboration.

It has been reported that $1.47 billion was set aside for compensating individuals and that 178,161 claims had been filed as of January 3, 2023. This would yield an average payment of about $82,000, with much variation depending on claims of abuse. There was also an appropriation of $200 million to an independent corporation for healing, commemoration, and perpetuation of language and culture. An additional provision not seen in previous settlements was that compensation could be paid to the estate of claimants who died on or after July 31, 2007.

Residential schools were criticized because they took children away from their families and placed them in congregate settings where they allegedly had to endure malnutrition and disease, physical and sexual abuse from staff and older students, and loss of language and culture. Now compensation was being paid to students who, like most other Canadian children, continued to live at home while they attended school. It was beginning to look as if all formal education for First Nations children would be considered abusive.

Next to come was a settlement of the day scholars class action, announced in 2021. Day scholars were Indian children who continued to live at home while attending an IRS, thus not sleeping overnight in dormitories. This was possible because many residential schools were located on Indian reserves, so children who were near the school could continue to live with their parents, while children from farther away would board at the school.

According to the settlement agreement, day scholars will receive $10,000 apiece, without further provision for physical or sexual abuse. Somewhat like the day school settlement, payments can also be made to descendants of claimants who passed away after May 30, 2005. The exact number of claimants is not known yet, but it has been estimated to be 15,000 or more, yielding a minimum payout total of $150 million. As with earlier settlements, there was a provision for $50 million to be paid to a Day Scholars Revitalization Fund for the usual purposes.

At the very end of 2022 came a negotiated settlement to the Indian Boarding Homes Class Action. This was for Indian students whose expenses had been paid by the federal government to attend public schools in town. While in town, they lived with local families, hence the name “boarding home students.” It is estimated that perhaps 40,000 Indian students were involved between 1951 and 1992. The program was created when the federal government started to close IRS after 1950, leaving many children without easy access to any type of Indian school, especially in the higher grades. The settlement, whose total has no cap, provides for a $10,000 base payment plus an additional payment of $10,000 to $200,000 for abuse, which can include physical or sexual abuse in the homes as well as racial discrimination from teachers or other students in the town schools. The law firm carrying the class action estimates that the total value of the payout will be about $2.2 billion in individual payments, plus $50 million for a foundation.

Finally comes the Band Reparations Class Action Settlement, announced in early 2023. This was originally part of the day scholars class action but was sundered because it presented different and more difficult issues. The claimants in this instance are not individuals but 325 Indian bands (First Nations), about half the First Nations in Canada. The settlement provides $2.8 billion for a 20-year trust fund, independent of government management, that will pay for programs and services benefitting the participant bands. The theory behind the award is the novel claim that First Nations suffered as communities because of the loss of language and culture suffered by all the Indian children who received formal education in whatever form. In this claim, harm to individuals is totally abandoned as a cause of action. There are no individual payments at all, just one large collective payment.

The Band Reparations settlement may indicate the path of future litigation. The former chief who initiated the case said that “it was about time” Canada stepped aside and let First Nations themselves decide how to overcome the harms caused by IRS. In context, this was praise for transferring public money to First Nations, letting them decide how to spend it with no accountability measures imposed.

What I have called the “education explosion” has resulted in compensation for practically all First Nations children who received formal education of any type. There is still a pending issue with Métis children, but I will let this pass here, because “Métis” is not a recognized legal category in the United States. Suffice it to say that education litigation is far from over.

First Nations people with other grievances soon saw the potential of the class action model. The first achievement was the Sixties Scoop Settlement, announced in November 2017. It provided $750 million in payments to Indian children, now adults, who had been “adopted out” (i.e., adopted by non-Indigenous parents) between 1959 and 1991. As of January 2023, 20,992 claims had been approved out of 34,785 received. After all claims are dealt with, the payout is expected to be about $25,000 apiece. There was also provision for payment to the estates of deceased claimants, an appropriation of $50 million for a commemorative foundation, and payment of $75 million in legal fees.

Adoption of native children became much more frequent in Canada after a 1951 amendment to the Indian Act gave provincial welfare agencies the authority to operate on Indian reserves.  Before this, neglected and abused children, as well as orphans, had often been sent to IRS, which acted as de facto orphanages. Provincial authorities moved in just as the federal government started closing IRS. The result was widespread out-adoption of Indian children for whom provincial social workers could not find Indian homes that they deemed suitable. Ironically, compensation is now being paid to neglected and abused children whose lives may well have been saved by being adopted out.

Further afield, negotiated settlements for two class actions involving drinkable water on Indian reserves were announced on July 30, 2021. Clean water on reserves has long been a point of grievance for First Nations, with several ameliorative programs announced over the years. According to a news report, this settlement “includes $1.5 billion in compensation for individuals deprived of clean drinking water; $6 billion to upgrade water infrastructure to help settle ongoing water issues; and the creation of a $400 million First Nation Economic and Cultural Restoration Fund.” Eligibility both for First Nations and for individuals requires a drinking water advisory that lasted at least one year between November 20, 1995, and June 20, 2021. The deadline for filing claims is March 7, 2024, so at this stage it is not clear how many individuals and First Nations will share the proceeds or in what proportions.

One note of caution is required in understanding the settlement. The $6 billion “to upgrade water infrastructure” is a promise to increase federal budgetary expenditures but does not entail cash transfers to individuals or to First Nations, nor is the timetable clear. Is it really “new money”? It may not be quite the same as the collective awards included in the settlements previously discussed.

The same qualification applies to the astonishingly large foster care settlement announced in early 2022 and upgraded in 2023. This will provide $23.3 billion in individual compensation to First Nations children (and their parents or other caregivers) taken from Indian reserves into foster care between 1991 and the present. Compensation is now being offered to the abusers as well as the abused! There will be another $20 billion for improvement of child welfare services on reserves over the next five years. As in the foster care settlement, this second tranche is a promise to spend more money on programs rather than a distribution of cash to individuals and organizations.

This settlement was unique not only in size but in its legal format. It was a response to a human rights complaint originally lodged in 2007 rather than a class action (though two class actions later emerged in parallel to the original complaint). The theory of the complaint was that the federal First Nations Child and Family Welfare program, which came into effect in 1991, was underfunded and poorly organized in comparison to provincial programs. Therefore, anyone affected by it suffered a deprivation of human rights under the Canadian Human Rights Act and is entitled to compensation. Crucially, compensation was to be paid for the deprivation of human rights, not for harm suffered. This almost magical legal maneuver turned the Human Rights Tribunal into a reviewer of the adequacy of government policy and funding.

The original human rights complaint did not specify an amount of damages, but the cost of a positive verdict was thought to be in the range of $6 to 8 billion. The figure of $40 billion emerged at a later date after the federal government decided to settle and brought in former senator and judge Murray Sinclair to lead the negotiations. Agreement between the parties was reached during the Covid pandemic when the Canadian federal government, like its American counterpart, was running gargantuan deficits, so the previously unthinkable total of $40 billion did not loom so large in comparison to other governmental expenditures. Only time will tell whether this settlement, now increased to $43.3 billion, was an exception or will prove to be a model for future agreements.

The Federal Court of Canada recently certified a new class action on behalf of all off-reserve Indigenous children (not just status Indians) taken into non-Indigenous care between 1992 and 2019. Unless the Crown vigorously defends this claim, the new class action has the potential for another very large settlement, because the number of Indigenous people living off reserve between 1992 and 2019, when Métis and Inuit are included, is certainly larger than the number of status Indians living on reserve.

All three government approaches since 1951 to protecting the welfare of Indian children have now been declared unacceptable—using IRS as de facto orphanages, adopting Indian children out to non-Indian families, and taking children into foster care. In the real world, there is a difficult situation which no government has resolved and probably no government can resolve through public policy alone: coping with the breakup of Indian families due to alcohol and drug abuse as well as welfare dependency, which makes the male breadwinner role largely superfluous and tends to deprive children of paternal support and supervision.

Another major class action not yet settled is the Indian Hospitals case. At one time the federal government operated at least twenty-nine Indian hospitals, established long before public health care became federally funded. Tuberculosis was a lethal plague among native people, and status Indians were not always welcome in local hospitals because they did not pay local taxes and could not afford to pay fees. Now it is claimed that patients in these hospitals received inferior care and were subjected to physical and sexual abuse. The lawsuit demands $1.1 billion in compensation for individuals, with the new wrinkle that compensation can also be paid to spouses or other family members negatively affected by the claimants’ allegedly inferior health care. The federal government has indicated willingness to settle, but a deal has not yet been finalized.

Other cases are still in the litigation pipeline, but this brief survey shows the potential for the Canadian judicial process to act as a vehicle for securing reparations far beyond the field of residential schools. Indeed, the future for such litigation seems unlimited if the Crown persists in settling almost every claim rather than using its resources for a vigorous defence.

The value of all these cases settled to date is roughly $38 billion in payments to individuals plus $32 billion in transfers to organizations, for a grand total of about $60 billion. In Canadian terms, this is “real money.” The total is bound to go much higher considering class actions already in the courts, others seeking certification, and others still only contemplated.

I will not here enter the debate about whether or to what extent reparations to Indigenous people in Canada are justified. I will limit myself to making some observations about using the legal process as a tool to provide reparations.

The record since 2006 is one of continual expansion of claims:

• To include new causes of action, moving from residential schools to other modes of education to other aspects of Indigenous health and welfare.
• To include new groups of claimants, going from status Indians with grievances to their family members and heirs to whole First Nations as collective entities to all Indigenous people.
• To raise the stakes, from about $5 billion in compensation for residential schools to $43.3 billion for foster care.
• To employ new legal processes, starting with class actions then moving on to human rights grievances.

Although these actions are styled as legal claims for damages, they are really critiques of public policy using the judicial system as a forum. In none of these actions have individual claimants been required to document harm they allegedly suffered as individuals. In other areas of law, the Crown is not liable for damages resulting from past public policy enacted in good faith, using the information available at the time. The Supreme Court of Canada said in the Marchi case (2021) that governments may be sued for damages arising from the operational implementation of policy but “core policy decisions” should be shielded from civil liability. This is classic separation of powers doctrine.

The litigation discussed here has dealt mainly with core policy issues—what is the appropriate structure for education, how should neglected and abused children be dealt with, how should health care be delivered to Indians, how should drinkable water be delivered on Indian reserves. If there were operational failures connected with the policies, those could have been addressed by documenting the harm caused to individuals rather than indicting the whole policy, but that did not happen. Canadian courts have been turned into a forum for making retrospective judgments about past policy rather than a venue for adjudicating harm done to individuals by mistakes in implementation.

Another departure from Canadian legal tradition can be found in the role played by the federal Department of Justice. Previously, the department guarded the public interest by vigorously defending claims. Since 2015, the Department of Justice has called for negotiations at an early opportunity in cases of historical grievance, thus preventing grave and novel issues from being heard in the Supreme Court or other appellate courts. This frustrates the development of the law. It also turns the federal government into a piñata, waiting for litigants to beat it and collect what falls out.

The current approach to negotiation of Indigenous claims amounts to collusion between claimants and the executive branch of the federal government, negotiating early settlements while cutting Parliament out of any meaningful role. In the British tradition of representative democracy, Parliament is supposed to have the power of the purse. But Parliament never had a chance to debate and approve Jodi Wilson-Raybould’s practice directive, which was drawn up by her legal advisers, then adopted by cabinet fiat. A settlement negotiated by the executive according to the Wilson-Raybould directive reaches Parliament as a virtual fait accompli. It is almost impossible for members to track expenditures because implementation of settlements extends over many years while claimants are being enumerated and compensated.