CHARLES F. LETTOW, Judge.
This rails-to-trails class action comes before the court upon the parties' settlement of the class members' claims and after notice to the class and a fairness hearing regarding the settlement. The class of plaintiffs consists of thirty-six claimants who allege that the federal government took their property without providing just compensation. Am. Compl. ¶¶ 3-17, ECF No. 13; Joint Status Report (Sept. 4, 2013) ¶ 2, ECF No. 15. The class members' properties were subject to an easement for rail purposes held by the Mississippi and Skuna Valley Railroad, LLC ("the Skuna Valley Railroad"), which applied to the Surface Transportation Board ("STB") for an abandonment of rail use. Mississippi & Skuna Valley R.R., LLC — Abandonment Exemption — in Yalobusha & Calhoun Cntys., Miss., Docket No. AB 1089X, 2011 WL 5325144 (S.T.B. Nov. 7, 2011). The STB issued a Notice of Interim Trail Use ("NITU") in 2012, pursuant to Section 208 of the National Trails System Act Amendments of 1983, Pub. L. No. 98-11, § 208, 97 Stat. 42, 48 (codified at 16 U.S.C. § 1247(d)), authorizing a recreational trail on the portions of plaintiffs' properties previously encumbered by the railroad-purposes easements. Am. Compl. ¶¶ 3-4, 12-17; Joint Compromise Settlement Agreement Between Pls. and United States ("Settlement Agreement") at 1, ECF No. 52-2. Plaintiffs, Arthur P. Bailey, Jr., Cathy Bailey, Mavis A. Goldman, and Jasmine J. Roberson, filed suit in this court as representatives of a class of landowners alleging a taking of their property by the federal government without just compensation, in contravention of the Fifth Amendment. See generally Am. Compl. Plaintiffs requested certification of the class, Am. Compl. ¶¶ 19-24, which the court granted on January 23, 2013. ECF No. 11.
After engaging in settlement negotiations, plaintiffs and the government jointly submitted a settlement agreement on June 6, 2016. See Joint Mot. for Preliminary Approval of Settlement, Approval of Notice to Class Members Regarding Proposed Class Action Settlement, and Request to Set Date for Public Hearing under RCFC 23(e) ("Joint Mot."), ECF No. 52. The agreement provides the amount of just compensation for the class members, plus interest from the date of the taking. Settlement Agreement at 3. Additionally, the parties agreed to the amount of statutory attorneys' fees and litigation costs for class counsel, pursuant to the Uniform Relocation Assistance and Real Property Acquisition Policies Act ("Uniform Relocation Act"), 42 U.S.C. § 4654(c). Id.
This class action relates to a 21-mile rail line, formerly operated by the Skuna Valley Railroad, extending from milepost 0.0 to milepost 21.0 in Yalobusha and Calhoun Counties, Mississippi. Am. Compl. ¶ 3; Settlement Agreement ¶ 1. Plaintiffs allege that the railroad formerly owned an easement for the purpose of the rail line and that such easement lay across plaintiffs' properties. Am. Compl. ¶¶ 3-4.
On January 20, 2012, the STB issued a NITU that authorized a recreational trail along the abandoned rail line. Settlement Agreement at 1. In accord with the NITU, the railroad transferred its interest in the rail line to the Mississippi & Skuna Valley Rails-to-Trails Recreation District, resulting in an easement for the latter to use the abandoned rail line for trail development. Id. at 1-2. Plaintiffs allege that, but for the STB decision, they "would have the exclusive right to physical ownership, possession and use of their property free of any easement for recreational trail use or future railroad use." Am. Compl. ¶ 13. Thus, plaintiffs filed suit in this court on the ground that the NITU resulted in a taking of plaintiffs' property by the government without just compensation. Am. Compl. ¶ 14. Plaintiffs requested a money judgment representing the fair market value of the property taken on the date the NITU was issued, as well as severance damages, delay damages, interest, and attorneys' fees and costs. Am. Compl. at 4.
In aid of settlement discussions, the parties selected joint real estate appraisers to independently provide a reckoning of the fair market value of the property allegedly taken. Hr'g Tr. 5:19 to 6:20 (Sept. 26, 2016).
Subsequently, the parties came to a resolution of plaintiffs' claims and agreed to a proposed settlement that provides for the payment of principal, interest, and statutory attorneys' fees and costs. Joint Mot. at 2-5. The agreement results in a total settlement award of $622,374.12, which includes $324,928.65 in principal for the value of the land allegedly taken, $57,445.47 in interest calculated at an annual rate of 3.55%,
Additionally, the settlement agreement states that one class member's claim is dismissed without compensation. Settlement Agreement ¶ 4. That owner's property touches the rail corridor only at a point and does not extend into the corridor itself. Hr'g Tr. 8:3-9:2.
After an authorized representative of the United States Attorney General approved the terms of the parties' tentative settlement agreement, see Joint Status Report (May 9, 2016), ECF No. 51, the parties filed a joint motion seeking preliminary court approval of the settlement agreement and the proposed notice to be provided to class members. Joint Mot. The court preliminarily approved the agreement and notice for the purpose of allowing the class members to receive notice of the proposed settlement. Order of June 29, 2016, ECF No. 53. In response to the court-approved notice, see Notice of Proposed Final Settlement of Class Action against the United States ("Notice of Settlement"), ECF No. 52-1, twenty-six of the thirty-six claimants affirmatively approved the agreement, and no claimants objected. See Class Members' Response; Hr'g Tr. 13:20-25.
The court is obliged to evaluate the fairness of the settlement agreement pursuant to Rules 23(e) and (h) of the Rules of the Court of Federal Claims ("RCFC").
Under RCFC 23(e), the court must provide its approval before "a certified class may be settled, voluntarily dismissed, or compromised." The rule specifies:
RCFC 23(e)(1)-(5) (alteration in original).
Here, the notice and hearing requirements have been met. The issue for the court is whether the settlement agreement is "fair, reasonable, and adequate" under RCFC 23(e)(2). In addressing this issue, the court must look to the procedural and substantive fairness of the agreement. See Christensen v. United States, 65 Fed. Cl. 625, 629 (2005) (citing Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424-25 (1968); D'Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001); Weinberger v. Kendrick, 698 F.2d 61, 73-74 (2d Cir. 1982) (Friendly, J.)). Procedural fairness depends on whether the parties engaged in "arms-length negotiations" in reaching an agreement, and whether plaintiffs' class counsel conducted the necessary discovery to effectively represent the interests of the class. Id. (citations and internal quotations omitted). Substantive fairness, which is the court's primary concern, relates to the terms of the settlement agreement. Id. The court evaluates the terms of the agreement in conjunction with the likely risks and rewards of litigation. See Geneva Rock Prods., Inc. v. United States, 119 Fed. Cl. 581, 589 (2015) (citing Weinberger, 698 F.2d at 73-74; Christensen, 65 Fed. Cl. at 629), appeal filed, No. 15-5078 (Fed. Cir.). There is no definitive list of factors that the court must apply in determining the substantive fairness of a settlement agreement, but many courts have considered the following factors:
Dauphin Island Prop. Owners Ass'n v. United States, 90 Fed. Cl. 95, 102-03 (2009) (citing cases). In evaluating these factors, the court must consider "the interest in encouraging settlements, particularly in class actions, which are often complex, drawn out proceedings demanding a large share of finite judicial resources." Christensen, 65 Fed. Cl. at 629 (citations omitted).
Here, there is no evidence or indication that the settlement agreement was procedurally unfair. The parties agreed to a joint appraiser, provided the joint appraiser with necessary information, and had the opportunity to raise questions and separately review the appraisal reports. Joint Mot. at 2. The parties represented that the joint appraiser addressed all questions and concerns in a satisfactory manner. Id. As a result, the parties reached a settlement agreement through an arms-length negotiation. Id. at 2-3; see Settlement Agreement. Further, the parties kept the court informed of their progress by filing seventeen joint status reports between September 4, 2013 and May 9, 2016. See ECF Nos. 15, 20, 26, 28, 32-33, 35-38, 40, 43, 47-51. The parties demonstrated a continuous and consistent effort in "resolving this case without the need for further litigation," indicating that the parties conducted settlement negotiations diligently and without collusion. See, e.g., Joint Status Report (Feb. 19, 2014), ECF No. 26. The court also finds that class counsel acted as a zealous and effective advocate for the class members. Class counsel kept class members informed, promptly identified a joint appraiser, engaged in a thorough appraisal process, performed site visits, and participated in settlement discussions with the government continuously and in good faith. See, e.g., Joint Status Report (Sept. 4, 2013), ECF No. 15; Joint Status Report (Oct. 31, 2013), ECF No. 20; Joint Status Report (Feb. 19, 2014), ECF No. 26; Joint Status Report (April 7, 2014), ECF No. 28; Joint Mot. at 2-3; Notice of Settlement.
The court also finds the substantive terms of the proposed settlement agreement to be fair, reasonable, and adequate. In making this determination, the court first considers whether the terms of the agreement reflect the likely rewards of litigation. See Christensen, 65 Fed. Cl. at 629 (quoting Weinberger, 698 F.2d at 73 (in turn quoting Protective Committee for Indep. Stockholders of TMT Trailer Ferry, Inc., 390 U.S. at 424-25)). As discussed supra, the parties jointly conducted a detailed appraisal process that both parties found satisfactory. Both parties approved the final settlement agreement and class counsel endorsed the agreement as fair, reasonable, and adequate for the class members. See Joint Mot. at 2-3; Hr'g Tr. 11:21-25, 14:22-23; see also Raulerson v. United States, 108 Fed. Cl. 675, 678 (2013) ("[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.") (citations and internal quotations omitted). The tangible settlement also provides the class members with a faster and more certain benefit than trial would because it avoids the time, complexities, risks, and costs associated with a trial. See Sabo v. United States, 102 Fed. Cl. 619, 628 (2011).
Additionally, the court must assess the adequacy of the notice given to class members regarding the terms of the settlement agreement and evaluate the class members' responses to that notice. Dauphin Island, 90 Fed. Cl. at 103. Here, the notice of the proposed agreement provided a comprehensive and detailed explanation of the suit and settlement terms. See generally Notice of Settlement. Specifically, the notice outlined the events giving rise to the suit, the appraisal process utilized in valuing each class member's property, the total settlement amount, the amount of money apportioned to the individual class members receiving the notice, and the agreed amount of statutory attorneys' fees and costs. Id. at 1-2, 5. Further, the notice explained the class members' legal rights and options, and gave class members an opportunity to provide comments, attend the fairness hearing, and speak at the hearing. Id. at 3-4, 6-7. The court reviewed and approved the proposed notice before class counsel mailed it to the class members. Order of June 29, 2016, ECF No. 53. Twenty-six of the thirty-six class members responded to the notice of settlement and no class member objected. See Class Members' Response; Hr'g Tr. 13:20-25. Two of the class members provided comments, but only to express their support for the settlement. See Class Members' Response. Class support for the settlement "weighs . . . in favor of approval." Christensen, 65 Fed. Cl. at 630.
Further, the court must assess whether the settlement agreement is fair to the class as a whole. An agreement will be fair when it is "uniformly available" to the entire class while also "tailored to distinct groups within the class." Berkley v. United States, 59 Fed. Cl. 675, 711 (2004). Here, a joint appraiser independently evaluated the representative parcels affected and had access to the class members. Joint Mot. at 2. The joint appraiser grouped the non-appraised parcels with similar representative parcels that were appraised. Id. The parties then jointly agreed to extrapolate the values of the appraised parcels to similar non-appraised parcels. Id. After review of the final reports and extrapolations, the parties agreed to a settlement that provided relief to thirty-five of the thirty-six class members, based upon the value of each member's property. Id. at 2-3.
The court also finds that the $240,000 in statutory attorneys' fees and costs provided in the settlement agreement is a fair amount. The amount represents attorneys' fees and "reasonable costs and expenses that were incurred out-of-pocket by [c]lass [c]ounsel in this litigation." Joint Mot. at 5. Class counsel represented that the amount reflects more than 833 hours of work on the case through October 9, 2015, plus additional time spent on reaching a final settlement agreement. Hr'g Tr. 17:5-13. An authorized representative of the United States Attorney General approved the amount. Joint Mot. at 2; see also Hr'g Tr. 16:8-15. Additionally, the class members did not raise any objections or concerns after receiving notice of the amount. See Notice of Settlement at 1; Class Members' Response.
Under RCFC 23(h), the court "may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement." Here, as discussed supra, the court finds the proposed attorneys' fees and costs to be reasonable and fair. Thus, the court approves the proposed $240,000 in statutory attorneys' fees and costs.
For the reasons stated, approval of the parties' proposed settlement agreement is GRANTED. The total settlement award is $622,374.12, consisting of $324,928.65 in principal for the value of the land allegedly taken, $57,445.47 in interest calculated through September 20, 2016, $240,000 in statutory attorneys' fees and costs to be reimbursed to class counsel under the Uniform Relocation Act, and interest at the rate of 3.55% on $324,928.65 from September 21, 2016, compounded annually, until the judgment is paid.
Class counsel shall receive the settlement award, disburse payments as set forth in the settlement agreement, and file a notice of compliance with the court after all payments are completed. To account for the delay in payment after September 20, 2016, the total interest paid by the government shall increase under the same interest computational method as described in the settlement agreement, at an annual interest rate of 3.55% compounded annually, until the date that judgment is paid.
The claim of Annie Steen is dismissed, as the parties have agreed.
The clerk will enter judgment in accord with this disposition. Costs are encompassed in the settlement agreement.
It is so ORDERED.
