On May 7, 1984, a settlement was reached between a group of American veterans of the Vietnam War and seven American companies responsible for the production and sale of Agent Orange, a highly toxic herbicide used by the US military. The veterans, who had formed a class-action suit, held the seven companies liable for the physical injuries they and their children suffered as a result of exposure to Agent Orange in Vietnam.

The 1984 compromise set up a victims' compensation fund funded by the seven companies, providing $170 million for veterans and the families of veterans who died as a result of exposure to Agent Orange, and a further $45 million to finance services to help veterans and the children of veterans with after-effects of exposure.

On August 26, 1986, the Second Circuit Court of Appeals suspended the implementation of the compensation plan pending a final decision on an appeal lodged by the Agent Orange Plaintiffs' Management Committee (AOPMC). The AOPMC objected to the funding of social assistance services via a non-profit foundation, arguing that the compensation fund should only compensate veterans who suffered physical injury as a direct result of exposure to Agent Orange.

On April 21, 1987, in nine separate opinions, the Second Circuit Court of Appeals overturned the decision to create the non-profit foundation. In its decision, the Court of Appeals noted, among other things, that the creation of such a foundation would be equivalent to granting a very broad delegation of judicial power to a private entity, whereas the management of funds for compensation purposes falls within the remit of the politically neutral District Courts. The Compensation Fund, on the other hand, remains in place. Following this decision, victims were able to start receiving compensation.