Court Opinion

ID: 5126566
Source: CourtListenerOpinion
Date Created: 2021-11-17 14:01:59.350487+00
Date Added: 2024-06-11T08:22:57.271276
License: Public Domain

In the United States Court of Federal Claims
                                           No. 13-396 L
                                   (Filed: November 16, 2021)

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                                    *
WILLIAM E. BARLOW, et al.,          *
                                    *
                   Plaintiffs,      *
                                    *
       v.                           *
                                    *
THE UNITED STATES,                  *
                                    *
                   Defendant.       *
                                    *
 * * * * * * * * * * * * * * * * ** *

                         MEMORANDUM OPINION AND ORDER

SOMERS, Judge

        Before the Court in this rails-to-trails case is the parties’ proffered settlement agreement
pursuant to Rule 23 of the Rules of the United States Court of Federal Claims (“RCFC”).
Plaintiffs in this class action are Illinois landowners who allege that the United States, as the
result of a Notice of Interim Trail Use issued by the Surface Transportation Board on November
13, 2008, effected a taking without just compensation of their reversionary interest in certain real
property underlying a railroad line owned by the Union Pacific Railroad Company.

        Following class certification and the Court’s September 1, 2015, Memorandum Opinion
and Order granting-in-part and denying-in-part the parties’ cross-motions for partial summary
judgment, ECF No. 47, Plaintiffs moved to form several subclasses and for entry of final
judgment with respect to certain plaintiffs. On February 4, 2016, the Court granted-in-part
Plaintiffs’ motion for certification of subclasses and for entry of judgment pursuant to RCFC
23(c)(5) and RCFC 54 and created a subclass comprised of 12 Plaintiffs associated with 14
parcels of property who engaged in settlement discussions (“Subclass A”) and a subclass
comprised of the remaining Plaintiffs in this class action (“Subclass B”). ECF No. 63.

        After notice to Subclass A members and a fairness hearing, on October 10, 2019, the
Court approved a settlement for Subclass A members negotiated by the parties. See ECF No.
119. As to Subclass B members, on November 13, 2020, the Court issued an opinion on the
parties’ cross-motions for summary judgment. ECF No. 141. In that opinion, the Court granted
Plaintiffs’ motion for summary judgment as to liability with respect to parcel Nos. 28 and 61. Id.
Additionally, the Court determined that neither party carried their burden with regard to parcel
Nos. 84 and 85. ECF Nos. 141, 147. The Court granted summary judgment on liability in favor
of the government on the remaining parcels owned by members of Subclass B.

        The parties, on July 9, 2021, jointly filed a motion for approval of notice to the settling
Subclass B members regarding a proposed settlement and requested that the Court set a date for a
public fairness hearing under RCFC 23(e). ECF No. 153. On August 3, 2021, the Court
preliminarily approved the parties’ proposed settlement and scheduled a fairness hearing for
October 20, 2021. ECF No. 155. At the fairness hearing, the parties discussed their negotiated
settlement and the Court assessed whether to grant final approval of the proposed settlement
agreement. For the reasons discussed below, the Court approves the settlement agreement
negotiated by the parties.

                                         BACKGROUND

         In this rails-to-trails case, Plaintiffs allege that the government has taken their real
property situated along an abandoned railroad line located in Fulton and Peoria Counties,
Illinois. ECF No. 65 (3rd Am. Compl.) at ¶¶ 2-5. Plaintiffs commenced this action on June 13,
2013. On October 3, 2014, the Court issued an order certifying this matter as a class action
pursuant to RCFC 23. ECF No. 24. The certified class in this case includes all persons owning
an interest in lands located along the railroad line between milepost 461.5 in Fulton County,
Illinois, and milepost 486.2 in Peoria County, Illinois. Id.

        On September 1, 2015, the Court issued a Memorandum Opinion and Order, which
granted-in-part and denied-in-part the parties’ cross-motions for partial summary judgment on
the issue of whether Plaintiffs held a fee simple interest in the right of way at issue on the date of
the alleged taking. ECF No. 47. In that opinion, the Court held that:

       1. Plaintiffs did not hold a fee simple interest with respect to certain parcels that were: (a)
       conveyed by “right-of-way” agreements (parcels 23, 37, 51, 55, 57, 58, 59, 74, 80, 83, 91,
       98 and 102); (b) conveyed by “for railroad purposes” agreements (parcels 44 and 47); and
       (c) without a conveying instrument (parcels 33, 87 and 90); and

       2. Certain Plaintiffs held a fee simple interest with respect to two parcels that the
       government acknowledges were held by Plaintiffs in fee simple at the time of the alleged
       takings (parcel 29 and the Illinois Route 116 parcel).

Id. at 21-22. In addition, the Court denied the parties’ cross-motions for partial summary
judgment with respect to a certain parcel that was acquired by condemnation (parcel 26). Id. at
22. The Court also held in abeyance the parties’ cross-motions for partial summary
judgment on the issue of whether a permanent or temporary taking has occurred with respect to
the two parcels found to be held by Plaintiffs in fee simple. Id.

        Plaintiffs moved to form several subclasses and for entry of final judgment with respect
to certain plaintiffs on January 20, 2016. ECF No. 61. On February 4, 2016, the Court granted-
in-part Plaintiffs’ motion and created a subclass comprised of 12 Plaintiffs associated with 14
parcels of property who engaged in settlement discussions (Subclass A) and a subclass

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comprised of the remaining Plaintiffs in this action (Subclass B). ECF No. 63. After notice and
a fairness hearing, the Court approved settlement of the claims of the members of Subclass A.
ECF Nos. 115, 119.

       As to the claims of the members of Subclass B, in an opinion dated November 13, 2020,
the Court addressed the parties’ cross-motions for summary judgment. In that opinion the Court:

       1. Granted Plaintiffs’ motion for partial summary judgment on liability with respect to
          Parcel Nos. 28 and 61;

       2. Granted the government’s cross-motion for summary judgment with respect to Parcel
          Nos. 21, 52, 75, 86, 92, 93, 94, 95 and 96 and denied Plaintiffs’ motion for partial
          summary judgment on liability with respect to such parcels;

       3. Granted the government’s cross-motion for summary judgment with respect to Parcel
          No. 50 and denied Plaintiffs’ motion for partial summary judgment on liability with
          respect to such parcel; and

       4. Denied both parties’ motions for partial summary judgment on liability with respect
          to Parcel Nos. 84 and 85.

ECF Nos. 141, 147. The settlement agreement approved by this opinion and order settles the
claims related to Parcels Nos. 28, 84, and 85. The claim related to Parcel No. 61 is not subject to
this settlement agreement and will be preserved for resolution after appeal of the remaining
Subclass B claims.

                                          DISCUSSION

A. Legal Standards

       The approval of settlement agreements in certified class actions is governed by
RCFC 23(e). RCFC 23(e) provides that, “[t]he claims . . . of a certified class may be settled . . .
only with the court’s approval,” and it also prescribes the requirements that must be satisfied for
approval. Specifically, RCFC 23(e) provides that:

   (1) The court must direct notice in a reasonable manner to all class members who would be
       bound by the proposal.

   (2) If the proposal would bind class members, the court may approve it only after a hearing
       and on finding that it is fair, reasonable, and adequate.

   (3) The parties seeking approval must file a statement identifying any agreement made in
       connection with the proposal.

   (4) [Not used.]

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   (5) Any class member may object to the proposal if it requires court approval under this
       subdivision (e); the objection may be withdrawn only with the court’s approval.

RCFC 23(e)(1)-(5).

B. Analysis

       In light of the aforementioned legal standards, the factual record, and counsels’
representations during the fairness hearing held on October 20, 2021, the Court concludes that
the proposed settlement is fair, reasonable, and adequate.

       1. Fair Notice Was Provided to the Settling Members of Subclass B

        As an initial matter, the Court finds that fair notice of the terms of the settlement
agreement was provided to all settling members of Subclass B. RCFC 23(e)(1)(B) provides that
the Court must “direct notice in a reasonable manner to all class members who would be bound
by the proposal.” RCFC 23(e)(1)(B). In accordance with RCFC 23(e)(1)(B), the Court directed
that notice regarding the terms of the proposed settlement be sent to settling Subclass B members
on August 9, 2021. ECF No. 155. The notice informed settling Subclass B members of their
right to object to the proposed settlement under RCFC 23(e)(5) and that a fairness hearing was
scheduled for October 20, 2021, to determine if the settlement agreement should be approved.
ECF Nos. 154, 156. During the fairness hearing, counsel for Plaintiffs represented that he had no
reason to believe that any settling member of Subclass B was unaware of the settlement or not
fully informed of the terms of the proposed settlement agreement. See generally Fairness
Hearing Tr.

        After notice of the proposed settlement was sent to all of the settling members of
Subclass B, counsel for Plaintiffs represented to the Court that no settling member expressed an
interest in attending the fairness hearing in person. Fairness Hearing Tr.; see also ECF No. 157
(“The parties report that none of the class members have stated they wish to appear at the
fairness hearing.”). Counsel for Plaintiffs also represented that the settling members of Subclass
B acknowledged receipt of the notice and affirmed approval of the settlement. Fairness Hearing
Tr. Therefore, based upon the factual record and the representations of counsel at the fairness
hearing, the Court concludes that fair notice has been provided to the settling members of
Subclass B regarding the terms of the proposed settlement.

       2. The Settlement Agreement Is Procedurally Fair

        The Court similarly finds that the settlement agreement reached in this case is
procedurally fair. Procedural fairness requires that the settlement “resulted from ‘arms-length
negotiations and . . . [that] plaintiffs’ counsel . . . possessed the experience and ability, and have
engaged in the discovery, necessary to effective representation of the class’s interest.’” Courval
v. United States, 140 Fed. Cl. 133, 139 (2018) (quoting Christensen v. United States, 65 Fed. Cl.
625, 629 (2005)). In their joint motion for approval of notice to settling Subclass B members,
counsel for the parties represent that settlement negotiations were supported by reports from an
independent real estate appraiser that “helped to ensure the overall fairness of the settlement

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process.” ECF No. 153 at 10. Counsel for both parties also represent that they engaged in arms-
length negotiations over a long period of time and in a manner that gave no special preference to
any one class member. Id. at 9-10. During the settlement process, the parties filed joint status
reports apprising the Court of the parties’ progress toward settlement. See, e.g., ECF Nos. 143,
149, 150. Given this, the Court is satisfied that the ensuing settlement negotiation was conducted
in good faith, without collusion, and with an interest in ultimately resolving these claims by
settlement.

        The factual record before the Court also shows that class counsel acted as a zealous
advocate for the class members throughout the course of this litigation. The notice of proposed
settlement sent to the settling Subclass B members provided a detailed explanation of how each
class member’s individual settlement was calculated, the appraisal process, and the right to
object to the settlement. ECF No. 154. In addition, class counsel represented during the fairness
hearing that he had expressed a willingness to provide to any settling Subclass B member a copy
of the representative appraisal that applies to his or her claim upon request. See generally
Fairness Hearing Tr.; see also ECF No. 153 at 5-7.

         Thus, based upon the factual evidence presented by the parties, the Court is satisfied that
the negotiations that produced the settlement agreement “resulted from ‘arms-length negotiations
and . . . [that] plaintiffs’ counsel . . . possessed the experience and ability, and have engaged in
the discovery, necessary to effective representation of the class’s interest.’” Courval, 140 Fed.
Cl. at 139 (internal citations omitted).

       3. The Settlement Agreement is Substantively Fair

        The Court also concludes that the terms of the settlement agreement are substantively
fair. Substantive fairness requires the Court to consider the balance of the likely costs and
rewards of further litigation. Courval, 140 Fed. Cl. at 140. In their joint motion for approval of
notice to settling Subclass B members, counsel for the parties represent to the Court that the joint
appraiser conducted an independent appraisal of the representative properties that was sufficient
to support settlement negotiations. ECF No. 153 at 5. Class counsel represents that, prior to the
appraisal, counsel identified unique parcels and the legal or factual issues that should be
addressed in the appraisal process. Id. at 6. Counsel for the parties also represent that the
appraiser and the parties agreed to group similarly situated properties and that the appraiser
selected a representative sample from each category to appraise. Id. Counsel for the parties
further represent that, after the appraisal of the representative properties, they reviewed and
analyzed the appraiser’s valuation conclusions and that the parties had the opportunity to submit
questions or comments through counsel before approval of the final appraisal report. Id.

       Counsel for both parties also represent to the Court that they believe the proposed
settlement is fair, reasonable, and adequate. See generally Fairness Hearing Tr. Accordingly,
the Court concludes that the terms of the settlement agreement are substantively fair.

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                                         CONCLUSION

        For the foregoing reasons, the Court APPROVES the settlement agreement. There being
no just reason for delay, the Court directs the Clerk to enter judgment on just compensation,
pursuant to RCFC 54(b), in the total amount of $27,494.10. This amount consists of $16,576.00
in principal and $10,918.10 in interest through February 12, 2021, for settling Subclass B
members. Settling Subclass B members’ claims for attorneys’ fees and costs, pursuant to the
Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (“URA”),
are preserved. The judgment is payable to class counsel for distribution to the class according to
the terms of this Memorandum Opinion and Order and the parties’ settlement agreement.

        Moreover, either Plaintiffs or the parties jointly SHALL move for judgment on the
claims of the remaining members of Subclass B on or before December 17, 2021. Such motion
shall include a proposed order for entry of judgment that, inter alia, appropriately preserves the
claims related to parcel No. 61 and for attorneys’ fees and costs under the URA.

IT IS SO ORDERED.

                                                     s/ Zachary N. Somers
                                                     ZACHARY N. SOMERS
                                                     Judge

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