Posted on September 14, 2004

Harvesting the Fruits of Liberal Guilt

John Perazzo,, Aug. 28

Last week in our nation’s capital, a group of sixty black farmers held a rally outside the US Department of Agriculture (USDA) headquarters. Their complaint was that the agency had not yet issued many of the checks owed to those farmers who won judgments in a 1997 class-action lawsuit alleging that racial discrimination pervades the USDA’s farm-loan program. In April 1999, the government and the plaintiffs entered into a consent decree in which the USDA acknowledged no wrongdoing, but authorized compensation — to the tune of $50,000 apiece — for blacks claiming to have been unfairly denied loans during periods when they had either farmed or tried to farm.

On their face, the numbers simply don’t support the notion that black farmers have been disproportionately denied such loans. Indeed, African Americans constitute fewer than 1 percent of our nation’s farmers, but over 3 percent of all USDA farm-loan recipients. In the lawsuit, the vast majority of the plaintiffs had no verifiable records of ever having filed discrimination complaints with the USDA. To get around this inconvenient fact, the court accepted, as ample evidence, declarations by non-family members that a given claimant had indeed filed either an oral or written complaint at some time in the past; no corroboration from the USDA was required. If no such testimony was available, it was sufficient for a claimant to produce a copy of some correspondence he had sent, to any local or federal official, declaring that he had suffered discrimination at the hands of the USDA. Of course, it was impossible to verify the authenticity of any such correspondence. Nor was there any requirement that the USDA even possess some record of having received it; the claimant’s assertion that he had mailed it was deemed evidence enough.

As Accuracy in Media chairman Reed Irvine wrote at the time, “Any black who is willing to write a back-dated letter or can persuade a non-family member to lie for him can join the class [of plaintiffs]. Under the consent decree, the statement of any complainant is accepted as true unless [the] USDA has documents to refute it.” Since the USDA keeps records of rejected loan applications for only a few years, it had no evidence to disprove claims of such rejections that allegedly had occurred prior to 1995. Moreover, there was a two-year federal statute of limitations on discrimination complaints — which had already expired for most of the claimants. But the Congressional Black Caucus drafted legislation waiving the statute and authorizing the court to consider claims — most of them unverifiable — dating back to as early as 1981.

Once the consent decree was approved, the plaintiffs’ attorneys shifted the gravy train into high gear, publicly asserting that any African American who joined the class of plaintiffs stood a good chance of winning a $50,000 settlement. When the USDA spent lavishly on print and television ads publicizing the terms of the settlement, more than 25,000 plaintiffs jumped aboard the suit — fully ten times more than the attorneys had originally expected. Sixty percent of those plaintiffs won their cases, resulting in government payouts of hundreds of millions of dollars — all from the pockets of American taxpayers.

As generally occurs when easy money is put up for grabs, many examples of outright fraud soon reared their ugly heads. In some cases, spouses who had jointly and unsuccessfully applied for a loan registered separately in the class-action suit, seeking to be compensated twice for a single alleged act of discrimination. In similar attempts to maximize their returns, some prospective claimants tried to certify their young children as participants in the suit. It is notable that all claimants had the option of either pursuing a $50,000 settlement under the relatively easy terms heretofore described, or pursuing a much larger amount in arbitration hearings that based their verdicts on a preponderance of the evidence — a higher standard of proof than was required by the first option. The fact that fewer than 1 percent of the plaintiffs chose this second option speaks volumes about the legitimacy they honestly believed their claims held.

In modern America, it has become commonplace for the accused to settle discrimination suits in preference to mounting an all-out legal defense, even against groundless charges — because such a defense can be so costly, both monetarily and in terms of public relations. Potential charges of racism are enough to frighten most companies and agencies into quick and quiet settlements. Several recent lawsuits against Flagstar Companies, the parent corporation of Denny’s restaurants, offer striking parallels to the USDA case. In one of those suits, six black plaintiffs alleged that a Denny’s employee had deliberately made them wait for service while he attended to a group of later-arriving white customers. Flagstar capitulated, settling this and a prior, similar suit for a combined $54 million. The five-dozen or so primary plaintiffs from these two cases were awarded between $15,000 and $35,000 apiece. The remaining money was then divided among all blacks in the country who were willing to charge that they had ever received poor service at a Denny’s restaurant. When black publications ran full-page ads publicizing the availability of Flagstar’s money, the response was overwhelming. Attorneys for the plaintiffs set up telephone hotlines which, for four months, took applications from thousands of people hoping to cash in.

Trumped-up charges of racism have become big business in this country. “Racist” has become the most fearsome epithet that can be hurled at any private or public entity. People will go to almost any lengths to avoid being smeared with that label. And it is that very fear that keeps demagogues and racial opportunists in business.