Furlong v. United States

132 Fed. Cl. 630, 2017 U.S. Claims LEXIS 715, 2017 WL 2628163

Opinion

Rails-to-Trails; Class Action; RCFC .23(e); Final Approval of Settlement Agreement

OPINION AND ORDER

SWEENEY, Judge

Before the court is the parties’ request, pursuant to Rule 23(e) of the Rules of the United States Court of Federal Claims (“RCFC”), for final approval of the proposed settlement agreement in this Rails-to-Trails class action. Upon review of the proposed settlement agreement, and for the reasons stated below, the court grants the parties’ request.

I. BACKGROUND

In this case, plaintiffs contend that they own real property adjacent to a 9.14-mile rail corridor in Albany County, New York. They assert that until July 8, 2003, the Delaware and Hudson Railway Company, Inc., d/b/a Canadian Pacific Railway Company, and its predecessors held easements for railroad purposes that crossed their land. According to plaintiffs, defendant United States authorized the conversion of the railroad rights-of-way into a recreational trail pursuant to the National Trails System Act, 16 U.S.C. § 1247(d) (2000), conduct that resulted in a taking in violation of the Just Compensation Clause of the Fifth Amendment to the United States Constitution.

On March 4, 2013, upon agreement of the parties, another judge of this court certified the matter as an opt-in class action, and adopted the parties’ proposed schedule for providing notice to-putative class members and preparing a claims book. Following participation in alternative dispute resolution proceedings, the parties reached a provisional settlement agreement on December 16, 2015. The proposed settlement agreement provides for payment of damages for the alleged taking of the 271 class members’ property rights, interest from the date of the alleged taking, and attorneys’ fees and costs under section 304(c) of the Uniform Relocation Assistance and Real Property Acquisition Policies Act (“URA”), 42 U.S.C. § 4654(c) (2012). The proposed settlement agreement was subsequently approvéd by the Surface Transportation Board and the United States Department of Justice.

On February 24,2017, class counsel moved this court for (1) preliminary approval of the proposed settlement agreement, (2) approval of the notice to class members regarding the proposed settlement agreement, and (3) the setting of a public fairness hearing. Class counsel filed the settlement agreement with the court on March 6, 2017. See generally Settlement Agreement, ECF No. 160-1. Following a status conference and the submission of an updated proposed notice, the court, on April 18, 2017, granted preliminary approval, approved the notice to class members, and set a public fairness hearing. See generally Furlong v. United States, 131 Fed.Cl. 548 (Fed. Cl. 2017). On June 1,2017, class counsel notified the court that it had received “explicit approvals” for 225 out of 271 claims, 1 and no objections or comments “per taining to the proposed settlement amounts.” Notice, June 1, 2017, ECF No. 157. Nine additional class members submitted responses, all indicating approval, after the deadline but before the fairness hearing. Notice, June 14, 2017, ECF No. 159. The fairness hearing was conducted on June 13, 2017, and no class members participated. 2

II. PROPOSED CLASS ACTION SETTLEMENT AGREEMENT

Plaintiffs described the proposed settlement in their motion for preliminary approval. See Pis.’ Mot. 6-7, ECF No. 144-1. To determine property values, each party hired experts to appraise representative properties according to the Uniform Standards of Professional Appraisal Practice and the Uniform Appraisal Standards for Federal Land Acquisitions. Id. at 3. These experts determined the value of the remaining easements allegedly' taken by the government by making adjustments to the representative properties. Id. at 4. The parties then exchanged expert reports and participated in successful alternative dispute resolution proceedings. Id. Under the terms of the proposed settlement, defendant will pay $13,988,929.28 plus additional interest as follows:

• $6,489,084.21 in just compensation, with awards for individual class members ranging from $1,300.00 to $440,662.00;

• $5,795,743,34 in interest through April 7, 2017;

• additional interest at 3.74 percent, compounded annually, after April 7, 2017, through the date of payment;

• $1,299,060.20 for attorneys’ fees under the URA; and

• $405,041.53 for reimbursement of costs and expenses under the URA

Id. at 6-7; Settlement Agreement ¶¶ 3-4 & Ex. A

III. APPROVAL OF SETTLEMENT AGREEMENT

Court approval is necessary for settlement of a class action. RCFC 23(e). Such approval can only be granted “after a hearing and on finding that [the proposed settlement] is fair, reasonable, and adequate.” RCFC 23(e)(2); accord Haggart v. Woodley, 809 F.3d 1336, 1348-49 (Fed. Cir. 2016), cert. denied. — U.S. -, 136 S.Ct. 2509, 195 L.Ed.2d 840. “In implementing RCFC 23(e), courts typically review the proposed settlement for a preliminary fairness evaluation and direct notice of the [proposed] settlement to be provided to the class, and then grant final approval of the proposed settlement following notice to the class and a fairness hearing.” Lambert v. United States, 124 Fed.Cl. 675, 677 (2015) (citing Barnes v. United States, 89 Fed.Cl. 668, 670 (2009)). The court may not alter the terms of the proposed settlement agreement, nor decide the merits of the case, nor resolve unsettled issues; it may only accept or reject the proposed settlement agreement in its entirety. Greenwood v. United States, 131 Fed.Cl. 231, 238 (2017).

While there is “no definitive list of factors that the court must apply in considering a class action settlement,” the following factors are “instructive” in evaluating whether a settlement agreement is “fair, reasonable, and adequate”:

1. The relative strengths of plaintiffs’ case compared to the proposed settlement;

2. The recommendation of the counsel for the class regarding the proposed settlement, taking into account the adequacy of class counsel’s representation of the class;

3. The 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 provision for attorneys’ 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,

Id. (relying in part on Sabo v. United States, 102 Fed.Cl. 619, 627 (2011)). The court has “considerable discretion” with respect to the weight it assigns to each factor based on the factual context of the case, and “settlement is always favored.” Raulerson v. United States, 108 Fed.Cl. 675, 677 (2013).

Consistent with its determination at the preliminary approval stage, the court does not find any collusive activity, preferential treatment, or other deficiencies in the proposed settlement agreement. The court further finds that counsel for both parties are aptly experienced and have engaged in voluminous discovery, a thorough appraisal process to determine the fair market value of the class members’ property interests allegedly taken, and extensive settlement negotiations indicating no preferential treatment or other deficiencies. See, e.g., Dauphin Island Prop. Owners Ass’n v. United States, 90 Fed.Cl. 95, 107 (2009) (approving a settlement that was “achieved through good-faith, non-collusive negotiation” (internal quotation marks omitted)). Thus, factors one and two weigh in favor of approving the proposed settlement agreement.

Following a notice that was sufficient to ‘“provide all necessary information for any class member to become fully apprised and make any relevant decisions,’ ” Furlong, 131 Fed.Cl. at 550-51 (quoting Haggart, 809 F.3d at 1349), class counsel received the explicit approval of approximately eighty-six percent of the class, and did not receive any objections. 3 A small number of objectors relative to the size of the class weighs strongly in favor of approval, Dauphin, 90 Fed.Cl. at 104, and here there are none. Also, the silence of the remaining class members can reasonably be construed as consent, 4 see id. at 105, and settlement agreements with lower explicit approval rates have been approved by other judges of this court in Rails-to-Trails cases, see, e.g., Greenwood, 131 Fed.Cl. at 238 (seventy-five percent); Bailey v. United States, 128 Fed.Cl. 550, 563 (2016) (seventy-two percent). Thus, the third factor weighs in favor of approving the proposed settlement agreement.

Moreover, the settlement is fair to the entire class because, as explained above, there was no preferential treatment, and further, the grouping of properties allows for “[t]he relief to each category of class members [to be] tailored to the specific circumstances of those members,” Sabo, 102 Fed.Cl. at 629. Thus, the fourth factor weighs in favor of approving the proposed settlement agreement.

In addition, consistent with binding precedent, the proposed settlement agreement provides for payment of attorneys’ fees pursuant to the URA rather than from settlement proceeds under the “common fund” doctrine. 5 See Haggart, 809 F.3d at 1359 (“The URA provides a reasonable fee and thus forecloses application of - the common fund doctrine.”)- Thus, the attorneys’ fees provision of the settlement agreement is fair, and therefore the fifth factor weighs in favor of approving the proposed settlement agreement.

Finally, defendant’s solvency has “little relevance” when, as here, the defendant is the federal government. Dauphin, 90 Fed.Cl. at 106. The federal government “can theoretically always withstand greater judgment,” but such burden would “ultimately fall to the taxpayers.” Hunneshagen Family Tr. of June 25, 1999 v. United States, 121 Fed.Cl. 51, 57 (2015) (internal quotation marks omitted). Therefore, these competing interests essentially cancel each other out, and the court gives this factor no weight.

In sum, factors one through five weigh in favor of approving the proposed settlement agreement, and the remaining factor is disregarded.

IV. CONCLUSION

The parties’ proposed settlement agreement is fair, reasonable, and adequate. Accordingly, the court APPROVES the proposed settlement agreement. The clerk is directed to enter judgment in favor of plaintiffs in the amount of $6,489,084.21 in principal and $5,795,743.34 in interest through April 7, 2017, apportioned as shown in the table accompanying the attached approved settlement agreement. Further interest shall be payable at a rate of 3.74 percent, compounded annually, beginning on April 8, 2017, through the date the judgment is paid. In addition, the clerk is directed to enter judgment in favor of plaintiffs in the amount of $1,704,101.73 for attorneys’ fees and costs pursuant to the URA.

IT IS SO ORDERED.

1 . Class counsel incorrectly described the explicit approval rate as "220 out of 272 claims. ''Notice, June 1, 2017. However, there were 225 approvals received prior to the response deadline, see id. at Ex. A, ECF No. 157-1, and there are 271 members of the class (some of which assert multiple claims), see Settlement Agreement Ex. A,

2 . One class member appeared at the hearing by telephone, but did not participate.

3 . Altogether, 235 class members submitted response forms prior to the fairness hearing. See generally Notice Ex. A, June 1, 2017; Notice Ex. B, June 14, 2017, ECF No. 159-1. Of these class members, 234 indicated approval of the proposed settlement, and one failed to indicate either approval or opposition. Two class members (both of whom indicated approval) included comments beyond mere payment instructions alluding to the length of the litigation; neither commenting class member addressed the amount of the settlement or otherwise suggested that the settlement is unfair, unreasonable, or inadequate.

4 . As in Dauphin, 90 Fed.Cl. at 105, class members were, prior to opting in to the class, made aware of the binding effect of an eventual class judgment, and were given ample opportunity to raise objections to the proposed settlement agreement prior to the fairness hearing.

5 . A private fee agreement between class counsel and a member of the plaintiff class, e.g., providing for attorneys' fees on a contingency basis, is beyond the jurisdiction of this court. See Hufford v. United States, 85 Fed.Cl. 607, 608 (2009) (explaining that the United States Court of Federal Claims “does not have subject matter jurisdiction to entertain controversies between private parties”). The parties agree that this court "does not possess jurisdiction to enforce private fee agreements, and that such issue is a private matter between Class Counsel and his clients.” Pis.' Mot. 5. Accordingly, class counsel “will separately and privately enforce the contingency fee agreements he has with his clients and then reimburse those class members their pro rata share of the URA attorneys’ fees settlement.” Id. This procedure was explained to class members in the notice of proposed settlement. See Approved Notice 5, ECF No. 155-1.