Surviving to win: Sarah Vogel's Coleman v. Block lawsuit rocked agriculture
Sarah Vogel, one of North Dakota's most noted agricultural lawyers and politicians, has written "The FARMER'S LAWYER: The North Dakota nine and the fight to save the family farm." It is a personal and career memoir of the Coleman v. Block lawsuit, a national class action suit against the U.S. Department of Agriculture's Farmers Home Administration, in the teeth of the farm credit crisis of the 1980s.
Editor’s Note: This is the third of a three-part story by Mikkel Pates, Agweek staff writer, about Sarah Vogel’s new book -- THE FARMER’S LAWYER: The North Dakota nine and the Fight to Save the Family Farm. In part I, Agweek looked at Sarah Vogel’s family heritage of fighting for farmers , and a rising farm credit crisis in the 1970s and 1980s. In Part II, we look at her return to the state , a single mother in her own financial troubles, fighting for broke farmers with the U.S. Department of Agriculture’s Farmers Home Administration. In Part III, Vogel concludes the gripping legal wranglings and entwined tragedies of the farm crisis, and the meaning and lasting impacts of the suit.
FARGO, North Dakota — By summer 1982, lawyer Sarah Vogel had about 20 potential named plaintiffs in what would become Coleman v. Block, a national class action lawsuit that would stop Farmers Home Administration foreclosures for several years.
In her new book, "The FARMER'S LAWYER: The Dakota Nine and the Fight to Save the Family Farm," Vogel described her deep farm advocacy roots, but also her inexperience. But she was convinced that to win a court case she first had to lose a series of administrative appeals for farmers being foreclosed by the FmHA. They had to have “exhausted” their administrative remedies.
Her central argument was that FmHA denied borrowers a “fair chance to appeal.” Instead, they’d offered “meetings,” with officials who made the initial decisions.
To win in court, she believed she must “not seek any type of monetary damages.” Instead, she’d ask the judge for an injunction to simply stop foreclosures. She had to fend off friendly fire from some impatient leaders of the Family Farm Legal Assistance Project, a group through she had applied for a grant to help pay for the lawsuit. Its president, Monty Haugen, wanted to withhold the $15,000 in the grant and hire a different attorney.
After Thanksgiving 1982 Vogel traveled to Atlanta, Georgia, to work on a separate lawsuit — Kjeldahl v. Block — to force the USDA to release $600 million in economic emergency loans that Congress had authorized. The plaintiffs prevailed, but it didn’t turn into immediate money Vogel could live on.
Vogel was working for broke farmers who couldn't pay her. Faced with her own foreclosure on a Bismarck home, and another on a condo in the Washington, D.C., area, Vogel accepted an offer from her father in Grand Forks, North Dakota, to come and work in her firm. He forgave a $10,000 loan and paid her $1,500 every other week. Finally, she and her Andrew young son would can health insurance.
The lead plaintiff for the lawsuit would be Dwight Coleman. Coleman, of Dunseith, North Dakota, farmed on the border of the Turtle Mountain Indian Reservation. Coleman borrowed $120,000 to buy a 480-acre farm in 1979 and another $100,000 for cattle and machinery. In 1980, the barn burned down, killing heifers and calves, and later in the year 400 acres of durum wheat were buried under 2 feet of snow.
FmHA urged Coleman to liquidate only 18 months after he bought the farm. They told him an appeal would be “wasting my time,” because the appeals board would be the same as the foreclosure board.
Inexperienced in courtroom cases (let alone federal court) Vogel was happy when the American Civil Liberties Union ACLU offered to be co-counsel. Her father, Robert, experienced in federal court, and a former justice of the North Dakota Supreme Court, would also be at her side.
Before Vogel filed the case, Rodney Webb, North Dakota's U.S. Attorney, asked to meet with her. A native of Grafton, North Dakota, who had been appointed by President Ronald Reagan, Webb met with her over lunch on Feb. 3, 1983, at Bonzer’s Sandwich Pub in Grand Forks.
Said Webb “I hear you’re planning a lawsuit,” Webb said. Webb asked what it would take to resolve the issue.
“We don’t want damages,” Vogel replied “We just want Farmers Home to give notice to farmers that they have the right to apply for a deferral if they are temporarily unable to pay due to circumstances beyond their control, and we want that notice to be given before, not after FmHA freezes access to their income or seizes money from their bank accounts. And, we want a hearing officer to hear the farmers’ appeals who wasn’t involved in the decision being appealed and who doesn’t work for the decision maker.”
"Is that all?" Webb responded, surprised. Webb left meeting saying he'd “make some calls” and see if some solution could be reached. But tragedy stepped in.
On Feb. 13, 1983, Gordon Kahl, a Wells County farmer, and cohorts killed two U.S. marshals and wounded four other law enforcement outside of Medina, North Dakota. Kahl was a member of the Posse Comitatus, a “racist, anti-Semitic extremist group,” that started in 1969 in Oregon by neo-Nazis. Kahl had spent eight months in Leavenworth for failing to pay federal income taxes and violated conditions of parole. He would go on the lam and die later in a shootout with authorities.
“I knew that Kahl used FmHA’s foreclosures and harsh tactics to recruit and radicalize farmers who were bewildered and desperate,” she writes in the book.
Only Van Sickle
Sarah’s father had urged her to file the case in Southwest Judicial District in Bismarck, so it could be heard before Judge Bruce Van Sickle, and not Judge Paul Benson in Fargo.
It would be a key decision.
Coleman v. Block was filed on Friday, March 11, 1983. The nine plaintiffs were financially troubled farmers in North Dakota and Montana. Defendants were Secretary of Agriculture John Block, Charles W. Shuman, national administrator of the FmHA and Ralph Leet, the FmHA’s state director, plus six district directors and five county supervisors. The agency had quotas for getting rid of 25% of its borrowers through foreclosure. Vogel asked for a preliminary injunction and asked for class action certification in part because 42% of the state’s FmHA cases were delinquent in paying off loans.
On April 5, 1983, Gary Annear, an assistant U.S. Attorney, asked for a “summary judgement” to dismiss the case. Alternatively, if the judge couldn’t throw the case out of court, Annear asked that the named defendants post “security,” to compensate FmHA if tis foreclosures and liquidations were delayed. The farmers in the case were “hopelessly delinquent, in over their heads, and bad managers,” Annear said.
He defiantly suggested the USDA shouldn’t be the defendant in the case.
“We (the FmHA) should be the plaintiff,” Annear declared.
On May 5, 1983, Van Sickle signed a preliminary injunction, certifying the class, and he enjoined the FmHA from proceeding with any “foreclosures, accelerations, or refusals to release income that had been planned for family living and farm operating expenses unless the FmHA first told farmers about the deferral and gave them personal notice of the right to apply for deferral.”
(In the midst of this, on June 3, 1983, fugitive Gordon Kahl died in a shootout with authorities in Arkansas, where he killed another law enforcement officer.)
Despite the preliminary injunction, Leet, interviewed by the Forum of Fargo-Moorhead, said his agency's policies wouldn’t immediately change until he got advice from lawyers. Further, Leet wrote that he intended to “reaccelerate every loan that had been de-accelerated by the order.” Leet would tell a Life magazine reporter, doing a profile story on Vogel, that she was wasting taxpayers’ money by delaying "the inevitable demise" of poorly managed farms.
Vogel asked Van Sickle to hold the agency in contempt of court, and asked for a permanent injunction. On Sept. 20, 1983, she filed a motion to make the case a national class action.
One key concept in the case was that FmHA borrowers contended that "receipt of family living and farm operating expenses” was a "property right" deserving of protection by the Constitution — and not a "mere expectation." She cited a case (United States v. Kimbell Foods, Inc.) which defined FmHA as a form of “social welfare” that was “primarily designed to assist farmers and businesses that cannot obtain funds from private lenders on reasonable terms.”
And that “welfare” ensures food, clothing, housing and medical care.
In court, Vogel called Ralph Leet as her first witness.
Significantly, Leet said the agency equated deferral with re-amortization, in which the overdue interest was rolled into principal and a new loan had been made with much higher interest — doubling the cost for the farmer.
Russel and Anna Mae Folmer, grain, beef cattle and dairy farmers from Wing, North Dakota, were among the nine named client-couples in the class action suit. The Folmers had FmHA loans in the 1950s and paid them off in the 1970s. A former chairman of the Republican Party for Burleigh County, Folmer borrowed from FmHA again in 1978 to modernize their dairy. After three straight years of drought, they were delinquent to the FmHA, to the Bank of Steele and the Bank of North Dakota.
Jim Well, a new FmHA county supervisor as of March 1982, accused the Folmers of failing to turn over money from a cattle sale. The FmHA promissory notes included “acceleration clauses,” allowing lenders to speed up payments if the borrower was overdue or violated any terms of the agreement. Payments would be “immediately due.”
Vogel argued that Well incorrectly accused the Folmers of "converting" 51 head of cattle he said were secured to FmHA. Yes, the Folmers had sold cattle in April 1981, but the FmHA didn’t have a security agreement until May 1981. And he sold beef cattle in July 1981, but their agreement only covered dairy cattle.
FmHA’s "playbook for getting farmers to ‘voluntarily liquidate’ was to first take away the farmer’s means of earning a living by forcing a sale of livestock and machinery," and then — after the farmer was stripped of earning potential — to force the sale of the land.
As the case went through its hearings, farm-related tragedies unfolded. On Sept. 29, 1983, Rudolph (Rudy) Blythe, president of the Buffalo Ridge State Bank of Ruthton, Minnesota, and Deems (Toby) Thulin, loan officer, were ambushed and killed by a former farm borrower and his son.
Weeks later, on Oct. 17, 1983, Vogel argued in court for Coleman v. Block to be a national class action suit.
On Nov. 14, 1983, Van Sickle said the injunction that covered North Dakota definitely covered the national class. On Feb. 16, 1984, he made the injunction permanent.
Later, Van Sickle also awarded $179,382 in legal fees for plaintiffs, including $101,837 for Vogel and $4,680 for her father. USDA intended to appeal the compensation, but missed an appeal deadline. So Vogel finally got some compensation.
On Sept. 28, 1984, the Hollywood movie, “Country,” starring Jessica Lange, dramatized the struggles of farmers against the FmHA. Willie Nelson and friends organized the first Farm Aid concert on Sept. 22, 1985, an effort to advocate to for struggling farmers.
Van Sickle would count Coleman v. Block as one of his two most notable cases. (The other was the ARC case, in which he found that North Dakota’s system for caring for developmentally disabled violated their constitutional rights.)
Congress passed the Agricultural Credit Act in September 1987, extending protections to the Farm Credit Systems. It was enacted Jan. 6, 1988.
Among the protections, the law required FCS lenders to “restructure” a financially-stressed loan if the loan's restructured value would exceed its liquidated value. Some of that was already being done, voluntarily, in North Dakota. The protections remain in place today.
It is unclear how many farmers temporarily protected from foreclosure by Coleman v. Block would remain in farming, or for how long. Some farmers who were able to pay their bills without restructuring were bitter that others got loan write-downs.
In the postscript of her book, Vogel wrote about how most of the named plaintiffs continued to farm for a time or still own their farmland.
The case brought new directions for Vogel's career. She became an assistant North Dakota Attorney General and would go on to be elected North Dakota Agriculture Commissioner, beating an endorsed Republican, Keith Bjerke, and the unendorsed Republican incumbent, Kent Jones.
She was commissioner from 1989 to 1997. Not all of her policies worked, but she and former U.S. Sen. Kent Conrad, D-N.D., promoted “Marketplace” events that would encourage value-added agricultural cooperatives and entrepreneurship (pasta and bison, among them). She worked to help lift farmers’ spirits out of one of America's biggest farm crisis of the 20th century.
After politics, Vogel established a law firm in Bismarck that would focus on agricultural crop insurance and other issues. From 1999 to 2018 she was co-counsel for Keepseagle v. Vilsack, a national class action case on behalf of Native American farmers and ranchers that suffered credit discrimination from USDA. Keepseagle settled in 2012 for $790 million in damages and up to $80 million in loan forgiveness.
In an interview, Vogel said she hoped the book and story serve as a reminder and might “sow the seeds” for courage for supporting an agricultural system based on human needs and human values.