Court Opinion

ID: 2794204
Source: CourtListenerOpinion
Date Created: 2015-04-16 12:01:29.111796+00
Date Added: 2024-06-11T12:18:25.304001
License: Public Domain

In the United States Court of Federal Claims
                                           No. 09-504L
                                      (Filed: April 15, 2015)

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                                                      *
HUNNESHAGEN FAMILY TRUST OF                           *       Rails-to-Trails Act Settlement; Class
JUNE 25, 1999, Individually, For Itself, and          *       Action Settlement; Approval of
As a Representative of a Class of Similarly           *       Settlement As Fair, Reasonable, and
Situated Persons,                                     *       Adequate; Rule 23(e).
                                                      *
               Plaintiffs,                            *
                                                      *
               v.                                     *
                                                      *
THE UNITED STATES,                                    *
                                                      *
               Defendant.                             *
                                                      *
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        J. Robert Sears and Steven M. Wald, 1010 Market Street, Suite 950, St. Louis, MO, 63102,
for Plaintiffs. Thomas S. Stewart and Elizabeth G. McCulley, 2400 Pershing Road, Suite 500,
Kansas City, MO 64108, for Plaintiffs.

       John C. Cruden and Alison D. Gardner, United States Department of Justice, Environment
and Natural Resources Division, P.O. Box 7611, Washington, D.C. 20044.
                      _________________________________________

          OPINION AND ORDER APPROVING SETTLEMENT AGREEMENT
                  __________________________________________

        This case arises from the federal Surface Transportation Board’s issuance of a Notice of
Interim Trail Use on a 17-mile long former railroad corridor running across Plaintiffs’ land near
Judson, Indiana and Monterey, Indiana. Plaintiffs allege that the Government’s action constituted
a taking of their property interests under the Fifth Amendment to the United States Constitution.
To resolve all claims in this case, the parties reached an agreement that will provide Plaintiffs with
the appraised fair market value of their property interests and pre-judgment interest on their claims.
Class counsel will receive attorneys’ fees and costs as authorized by the fee-shifting provision of
the Uniform Relocation Assistance and Real Property Acquisition Policies Act ("URA"). See 42
U.S.C. § 4654(c) (2012).1 The parties now ask the Court to approve this settlement.

1
         Generally, in the United States, each party to a lawsuit bears its own attorneys’ fees and
costs. See Bywaters v. United States, 670 F.3d 1221, 1226-27 (Fed. Cir. 2012). However, for
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       The Court gave preliminary approval to the settlement agreement on February 10, 2015,
and a fairness hearing was conducted on April 8, 2015, in Lafayette, Indiana. For the reasons
discussed below, the settlement of this class action is approved

                                           Background

Terms of Settlement Agreement

        The present action was filed on August 3, 2009, and on October 16, 2009, the Court granted
Plaintiffs’ motion for class certification and the parties’ joint proposed plan for providing notice
to the opt-in class and appointed Plaintiffs’ proposed class counsel. Beginning in 2012, the parties
entered into an appraisal and settlement process for resolving the claims in this case. The proposed
settlement agreement resolves the claims of all of the 55 named Plaintiffs and class members.

         As part of the proposed class settlement, the Government has agreed to pay 50 Plaintiffs
the fair market value of the property which they allege has been taken, based on the parties’ agreed-
upon appraisal of the properties.2 The agreed-upon fair market value of the Plaintiffs’ combined
property interests is $278,000. The Government has also agreed to pay pre-judgment interest of
$167,968.10, which has been calculated as 4.2% compounded annually based on an anticipated
payment date of May 15, 2015. Consistent with the fee-shifting provision of the URA, the
Government has agreed to pay $376,800 in attorneys’ fees and costs, consisting of attorneys’ fees
of $370,000 and $6,800 in litigation expenses. As noted above, these fees and costs are authorized

certain types of cases, Congress has enacted statutes that shift some of the burden of paying
attorneys’ fees and costs from a plaintiff to a defendant. Id. The fee-shifting provision of the URA
is one example. The URA states in relevant part:

       The court rendering a judgment for the plaintiff in a proceeding brought under
       section 1346(a)(2) or 1491 of Title 28, awarding compensation for the taking of
       property by a Federal agency, or the Attorney General effecting a settlement of any
       such proceeding, shall determine and award or allow to such plaintiff, as a part of
       such judgment or settlement, such sum as will in the opinion of the court or the
       Attorney General reimburse such plaintiff for his reasonable costs, disbursements,
       and expenses, including reasonable attorney, appraisal, and engineering fees,
       actually incurred because of such proceeding.

42 U.S.C. § 4654(c) (2012).
2
        On April 8, 2015, during the settlement fairness hearing, class counsel represented that the
settlement amounts had increased due to the parties’ inadvertent failure to include the value of part
of a parcel in their joint motion for preliminary approval of the settlement. The original amounts
were $275,611 in compensation for Plaintiffs and $166,524.66 in pre-judgment interest. The
amount of attorneys’ fees and costs was not altered.
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under the “fee-shifting” provision of the URA. 42 U.S.C. § 4654(c) (2012). Therefore, the total
settlement payment is $822,768.10. The parties have agreed and notified five Plaintiffs that they
are not entitled to compensation because they did not own property along the former railway
corridor at the time of the taking.

Notice of Settlement to Class Members and the Fairness Hearing

        On February 10, 2015, the Court gave preliminary approval to the proposed settlement
agreement, approved the parties’ joint proposed plan for providing notice to the class members of
the proposed settlement, with certain modifications, and scheduled a fairness hearing for April 8,
2015. The notice to the class members solicited written comments from the class members
regarding the proposed settlement agreement and also provided that there would be an opportunity
for any class member to speak at the hearing. Plaintiffs’ counsel indicated that they received 46
out of 50 responses, and no Plaintiff objected to the settlement. Two Plaintiffs provided comments
– one stated that he “would rather have the ground then [sic] this settlement” and that the “trail
program is only going to cause trouble and problems.” Another Plaintiff stated:

       Per discussion with J. Robert Sears – subject property remains with land owner.
       The easement that the rail road had was transferred to Indiana Trails. The same
       provisions remain, that if Indiana Trails no longer uses the trail, the use of the land
       returns to the land owner.

         The Court conducted a fairness hearing on April 8, 2015 at the United States District Court
for the Northern District of Indiana, Charles A. Halleck Federal Building, 230 North Fourth Street,
Lafayette, Indiana. During this hearing, the parties described the joint appraisal process, provided
their rationales as to why the settlement should be approved, and answered the Court’s questions.

                                             Discussion

        Under Rule 23(e) of the Rules of the United States Court of Federal Claims, the Court may
approve a proposed settlement “only after a hearing and on finding that it is fair, reasonable, and
adequate.” See Moore v. United States, 63 Fed. Cl. 781, 783 (2005) (citing In re General Motors
Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 55 F.3d 768, 785 (3rd Cir. 1995)). The Court
has discretion to accept or reject a proposed settlement, but it may not alter the proposed settlement,
nor may it decide the merits of the case or resolve unsettled legal questions. Adams v. United
States, 107 Fed. Cl. 74, 75-76 (2012) (citing Evans v. Jeff D., 475 U.S. 717, 726-27 (1986); Nat'l
Treasury Emps. Union v. United States, 54 Fed. Cl. 791, 797 (2002)).

       There is no definitive list of factors that the Court must apply in considering a class action
settlement. Raulerson v. United States, 108 Fed. Cl. 675, 677 (2013). However, in determining
whether a settlement agreement is “fair, reasonable, and adequate,” courts have found the
following factors instructive: (1) the relative strengths of the plaintiffs’ case compared to the
proposed settlement; (2) the recommendation of counsel for the class regarding the proposed
settlement, taking into account the adequacy of class counsel’s representation of the class; (3) the

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reaction of the class members to the proposed settlement, taking into account the adequacy of
notice to the class members of the settlement terms; (4) the fairness of the settlement to the entire
class; (5) the fairness of the proposed attorney fees; and (6) the ability of the defendants to
withstand a greater judgment, taking into account whether the defendant is a governmental actor
or private entity. Sabo v. United States, 102 Fed. Cl. 619, 627 (2011). The Court has considerable
discretion as to what weight to afford each factor in the context of the case before it, and settlement
is always favored. Id. at 627. As set forth below, these factors militate in favor of approval. The
Court finds that that the joint proposed settlement is fair, reasonable, and adequate.

       The Relative Strength of Plaintiffs’ Case Compared to the Proposed Settlement

         In the instant case, the parties fully briefed cross-motions for summary judgment on
liability. Defendant also moved to certify questions of state law to the Indiana Supreme Court as
to whether railroad rights-of-way remained burdened by railroad easements pursuant to Indiana
Code and whether, under Indiana law, interim trail use is within the scope of a railroad’s easement.
As another Judge of this Court had recently submitted similar questions of state law to the Indiana
Supreme Court in an unrelated case, the Court stayed this action pending the Indiana Supreme
Court’s disposition of the certified questions. On March 23, 2012, the parties filed a joint notice
indicating that the Indiana Supreme Court had issued a decision upon the certified questions and
that the parties were open to exploring settlement. In the subsequent months, the parties reached
agreement on an appraisal process and a method of determining just compensation. Although in
June 2014, problems arose regarding the appraiser’s reports and the interpretation of specific
deeds, by September 2014, the parties represented that they had reached a tentative settlement on
all issues.

       As this case never reached a decision on summary judgment, this Court did not assess
independently the class members’ claims or the quantum. However, the parties benefited from the
Indiana Supreme Court’s response to the certified question and its ruling that public trail use was
not within the scope of easements acquired for the purpose of operating a rail line. See Howard v.
United States, 964 N.E.2d 779 (Ind. 2012).

        The settlement requires Defendant to pay a large majority of the class members the full
value of their damages as determined by the joint appraisal, as well as pre-judgment interest and
statutory attorney’s fees and costs. See Raulerson, 108 Fed. Cl. at 678. Both parties considered it
in their best interests to forego the risks of litigation and pursue a negotiated settlement after the
ruling of the Indiana Supreme Court. Based on the legal guidance provided by the Indiana Supreme
Court and the careful and well-documented appraisals, the Court is persuaded that the strength of
Plaintiffs’ case warranted this expenditure of taxpayer dollars in settlement.

      The Recommendations of Class Counsel, Taking Into Account the Adequacy of Class
Counsels’ Representation

        “[T]he professional judgment of plaintiff’s counsel is entitled to considerable weight in the
court’s determination of the overall adequacy of the settlement.” Dauphin Island Property Owners

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Association, Inc. v. United States, 90 Fed. Cl. 95, 104 (2009) (quoting Nat’l Treasury Emps.
Union, 54 Fed. Cl. at 797). Here, class counsel recommended settlement after effectively
advocating on behalf of the class for over four years, including overseeing an extensive joint
appraisal process. Additionally, class counsel capably represented their clients during this action
and presented a cogent and compelling argument supporting the proposed settlement at the fairness
hearing. Defendant’s counsel carefully scrutinized the settlement and was actively involved in
coordinating the appraisal process and conducted appropriate site visits. The recommendation of
class counsel was thus informed by Defendant’s counsel’s active participation in the settlement
process and by an in-depth analysis by an appraiser approved by Defendant. Thus, this factor
favors approval.

      The Reaction of the Class Members to the Proposed Settlement, Taking into Account
the Adequacy of the Notice to the Class Members of the Settlement Terms

         Pursuant to the Court’s preliminary approval, class counsel served class members with a
detailed notice of the settlement and a list of each Plaintiffs’ award or whether their claim would
be dismissed. No class members objected to the proposed settlement, with only two providing
comments. These comments do not contest the settlement, as one Plaintiff indicated that she
understood that Indiana Trails had an easement on her land and the other generally disagreed with
the rails-to-trails process. This lack of objection strongly favors approval. Dauphin, 90 Fed. Cl. at
104.

       The Fairness of the Settlement to the Entire Class

        A settlement meets this factor if its relief is “uniformly available, yet simultaneously
tailored to distinct groups within the class.” Sabo, 102 Fed. Cl. at 629 (quoting Berkley v. United
States, 59 Fed. Cl. 675, 711 (2004)). This settlement is the culmination of arms-length negotiation
and appraisal. The parties retained a joint appraiser, who, pursuant to a set of instructions agreed
to by the parties, appraised representative parcels and extrapolated the values of each to similar
parcels within each represented group. The parties’ counsels also attended a site visit with the
appraiser. Each party separately viewed the appraisals and brought any questions or concerns to
the appraiser, who considered them and made adjustments if warranted. After reviewing the final
appraisal reports, the parties conducted arms-length negotiations.

        Except for the five claimants whose claims will be dismissed because the parties agree that
they do not have the requisite property interest in the former railway corridor, class members will
receive the fair market value of their individual property interests based on this common appraisal
process. The agreement does not single out or reward one class member over another. As such,
this process was both fair to the individual class members and the class as a whole. No Plaintiff
objected to the settlement agreement, indicating consent to the compensation determined by the
appraisal process.

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       The Fairness of the Provision for Attorney’s Fees

        Class counsel does not seek reimbursement of attorney’s fees and or costs from Plaintiffs
out of their compensation settlement award. The settlement’s attorney-fee provision must also be
reasonable. Dauphin, 90 Fed. Cl. at 106. Here, the Government agreed to pay $376,800 in
attorneys’ fees and costs, consisting of attorneys’ fees of $370,000 and $6,800 in litigation
expenses. As noted above, the URA provides, in Fifth Amendment cases such as this one, for the
reimbursement of plaintiffs for their “reasonable costs, disbursements, and expenses, including
reasonable attorney, appraisal, and engineering fees, actually incurred” during the litigation, as
approved by the Attorney General. 42 U.S.C. § 4654(c) (2012). In evaluating such awards, the
Attorney General’s opinion is entitled to deference, and the Court does not conduct the same in-
depth analysis as it would if it were rendering the award. Moore, 63 Fed. Cl. at 785 n.6.

       In this case, attorneys’ fees did not form the basis of any objection to the settlement
agreement. Taking into account the deference owed to the Attorney General in these
circumstances, the Court finds that the attorneys’ fees and costs provision in the settlement
agreement is fair and reasonable.

       Ability of Defendant to Withstand Greater Judgment

        Although the Government can “theoretically ‘always withstand greater judgment because
of Congresses’ ability to tax’ it would ultimately fall to the taxpayers to provide the necessary
funds.” Dauphin, 90 Fed. Cl. at 106 (quoting Berkley, 59 Fed. Cl. at 713). Therefore, as Defendant
is a governmental entity, the Court does not give this factor any weight.

                                            Conclusion

         For all of these reasons, the Court APPROVES the parties’ proposed settlement agreement
and finds that it is fair, reasonable, and adequate. The parties shall disburse payments as agreed in
the settlement and shall file a notice of compliance once payment is completed. The total judgment
in favor of Plaintiffs, pursuant to the parties’ settlement, is $822,768.10, consisting of $278,000
in principal, $167.968.10 in pre-judgment interest, and $376,800 in attorneys’ fees and costs
authorized under the fee-shifting provision of the URA. 42 U.S.C. § 4654(c) (2012). The Clerk
shall enter judgment accordingly. The Clerk shall also dismiss the claims of Plaintiffs Dorothy
Keller, Roberta Grapel, Scott and June Morrison, Roger Timmons, and Ronald A. White.

                                              s/Mary Ellen Coster Williams
                                              MARY ELLEN COSTER WILLIAMS
                                              Judge

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