Sharon Raulerson v. United States

In the United States Court of Federal Claims
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SHARON RAULERSON, et al., *
For themselves and as representatives * No. 10-193L
of a class of similarly situated persons, et al., *
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Plaintiffs, * (Filed: February 14, 2013)
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v. *
* Rails-to-trails class action; approval
THE UNITED STATES OF AMERICA, * of settlement and attorney‟s fees.
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Defendant. *
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Thomas S. Stewart and Elizabeth McCulley, Baker Sterchi Cowden & Rice, L.L.C., Kansas City,
MO, for plaintiffs.
Kristine S. Tardiff, United States Department of Justice, Environment & Natural Resources
Division, Concord, NH, with whom was Ignacia S. Moreno, Assistant Attorney General, for
defendant.
OPINION
MARGOLIS, Senior Judge.
This matter comes before the Court on the parties‟ Joint Proposed Settlement, filed
November 27, 2012, and Plaintiffs‟ Unopposed Motion for Court Approval of Fees and Proposed
Division of the Common Fund, filed November 28, 2012. The Court preliminarily approved the
settlement on December 6, 2012 and held a Fairness Hearing on the settlement and plaintiffs‟ fee
motion on January 17, 2013. The Court now finds that the settlement is fair, reasonable, and
adequate under RCFC 23(e)(2), and that Class Counsels‟ requested fees and costs are reasonable
under RCFC 23(h). Thus, it approves the settlement and grants plaintiffs‟ fee motion.
I. BACKGROUND
Plaintiff Sharon Raulerson filed this “rails-to-trails” class action on March 31, 2010,
claiming that defendant United States effected a taking of her and the other class members‟
property requiring just compensation under the Fifth Amendment of the United States
Constitution, when in May 2009, pursuant to 16 U.S.C. § 1247(d), the Surface Transportation
Board (“STB”) imposed an easement for a public recreational trail on their land, previously
encumbered by a railroad easement, in Beaufort County, South Carolina. The Court certified the
action as a class action on July 21, 2010, and the parties then engaged in discovery, settlement
negotiations, and a joint appraisal process to determine the class members‟ damages. On
November 27, 2012, the parties filed their Joint Proposed Settlement, under which defendant
agrees to pay the 260 member class $28,796,724.70 for the aggregate fair market value of the
property interest alleged taken, $3,019,688.84 for prejudgment interest, and $1,475,000.04 for
attorney‟s fees and $225,000 for costs under the Uniform Relocation Assistance and Real
Property Acquisition Policies Act (“URA”), 42 U.S.C. § 4654(c), for a total of $33,516,413.58.
On November 28, 2012, plaintiffs filed their separate fee motion. Class Counsel request
that the Court award them as fees, 33% of a $33,291,413.58 “common fund” consisting of all of
defendant‟s payments, except for the $225,000 for costs, which Class Counsel will also retain.
Under this approach, Class Counsels‟ total award is $10,986,166.48 in fees and $225,000 in
costs, leaving the class with $22,305,247.10. In support, Class Counsel state that they have
repeatedly advised each class member of their fee since the beginning of this litigation, that they
expended significant resources and assumed considerable risk in litigating this case, and that they
would not have taken this case on a contingency fee basis without the expectation that they
would receive 33% of the common fund if successful.
On December 6, 2012, the Court granted preliminary approval to the settlement and
approved a detailed notice advising the class members of the settlement and fee motion. Class
Counsel then served the notice on the class, and 259 of the 260 members affirmatively
consented, with no members objecting or requesting to speak at the Fairness Hearing.
(Transcript of January 17, 2013 Proceedings (“Transcript”) at 6-8.) On January 17, 2013, the
Court held a Fairness Hearing, at which no class members raised objections. The parties now
request that the Court grant the settlement final approval, and Class Counsel now request that the
Court grant plaintiffs‟ fee motion.
II. ANALYSIS
A. The Parties’ Settlement
Under RCFC 23(e)(2), the Court may only approve a class action settlement if it finds
that it is “fair, reasonable, and adequate.” In applying this standard, the Court must assess the
strengths and weaknesses of the parties‟ positions, but should not decide the merits of the case or
resolve unsettled legal questions. Dauphin Island Property Owners Association, Inc. v. United
States, 90 Fed. Cl. 95, 102 (2009). While there is no definitive list of factors that the Court must
apply, it has found the following six instructive:
1. The relative strengths of plaintiffs‟ case compared to the proposed settlement;
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2. The recommendation of class counsel, taking into account the adequacy of class
counsels‟ representation;
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 attorney‟s fees; and
6. The ability of the defendant to withstand greater judgment, taking into account
whether the defendant is a governmental actor or private entity.
Sabo v. United States, 102 Fed. Cl. 619, 626-627 (2011); Dauphin, 90 Fed. Cl. at 102-103. The
Court has considerable discretion as to what weight to afford each factor in the factual context of
the case before it, and settlement is always favored. Sabo, 102 Fed. Cl. at 627; Dauphin, 90 Fed.
Cl. at 102. As set forth below, the majority of these factors favor approval. Thus, the Court
finds that that the Joint Proposed Settlement is fair, reasonable, and adequate, and approves it
under RCFC 23(e)(2).
1. The Relative Strengths of Plaintiffs‟ Case Compared to the Proposed Settlement.
Because the parties proceeded to settlement negotiations without developing an extensive
record on the merits, the Court cannot assess the class members‟ likely recovery at trial.
However, the Court notes that all litigation carries risk, and that the settlement requires defendant
to pay all 260 class members the full value of their damages (as determined by joint appraisal),
as well as substantial prejudgment interest, and statutory attorney‟s fees and costs. Thus, this
factor favors approval.
2. The Recommendation 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, 90 Fed. Cl. at
104 (quoting National Treasury Employees Union v. United States, 54 Fed. Cl. 791, 797 (2002)).
Here, Class Counsel recommend settlement after effectively advocating on behalf of the class for
nearly four years by: (1) bringing suit initially on behalf of Sharon Raulerson; (2) successfully
moving the Court to certify the class; (3) enrolling the opt-in class members and rigorously
validating their claims, as evidenced by the fact that defendant did not challenge any class
member‟s title; (4) successfully moving the Court to order that the parties measure the class
members‟ damages by reference to each property‟s value in fee simple rather than encumbered
with a railroad easement; and (5) overseeing an extensive joint appraisal process. Additionally,
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the Court has at all times found Class Counsel to be experienced, knowledgeable, and capable.
Thus, this factor favors approval.
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.
The fact that only a small number of class members object to a proposed settlement
strongly favors approval. Dauphin, 90 Fed. Cl. at 104. Here, Class Counsel served a detailed
notice on the class, and 259 of the 260 members affirmatively consented, with no members
objecting. Thus, this factor favors approval.
4. 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)). Here, relief is available to all class members, and the joint
appraisers took each property‟s individual characteristics into account in determining damages.
Thus, this factor is met, and it favors approval.
5. The Fairness of the Provision for Attorney‟s Fees.
To meet this factor, the settlement‟s attorney‟s fees must be reasonable. Dauphin, 90
Fed. Cl. at 106. Here, the settlement provides for $1,475,000.04 in fees1 and $225,000 in costs
under the URA, 42 U.S.C. § 4654(c), which provides that when settling a takings claim, the
Attorney General shall determine and include reasonable attorney‟s fees.2 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 v. United States, 63
Fed. Cl. 781, 785 n.6 (2005). Thus, the Court need not calculate the URA award with
mathematical precision; it is enough that the award is a reasonable approximation of the amount
due under the statute. Id. at 785. Where the actual award is distinctively higher than the amount
that would have been due under the URA, this suggests that it might have unduly influenced the
1
The Court considers Class Counsels‟ request for fees in the amount of 33% of the common fund separately
below, see discussion infra Part II.B, as it is not part of plaintiffs‟ settlement agreement with defendant. See Moore
v. United States, 63 Fed. Cl. 781, 785-786 (2005).
2
42 U.S.C. § 4654(c) provides in full:
Claims against United States
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.
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other parts of the settlement; however, where the actual award is lower, it is generally
reasonable. See id.The “lodestar” figure is the lynchpin for calculating the fee part of the URA award, and is
derived by multiplying the hours reasonably expended in litigating the claim times the attorneys‟
reasonable hourly rates. Id. Here, Class Counsel state that if they had taken the case under an
hourly-rate billing arrangement, they would have already charged the class $2,500,000 in fees.
This amount approximates Class Counsels‟ lodestar fee, and since the actual URA award, even
with the $225,000 in costs, is significantly lower, it is unlikely to have unduly influenced the
settlement on the merits and is therefore reasonable. Thus, this factor favors approval.
6. The Ability of Defendant to Withstand Greater Judgment, Taking into Account Whether
Defendant is a Governmental Actor or Private Entity.
Although the government can “theoretically „always withstand greater judgment because
of Congress‟s 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). Thus, this factor has
little relevance here.
B. Plaintiffs’ Fee Motion
RCFC 23(h) allows the Court to award “reasonable” attorney‟s fees and nontaxable costs.
In doing so, the Court has in the past followed the common fund approach that Class Counsel
now advocate. Quimby v. United States, 107 Fed. Cl. 126, 132-135 (2012); Moore, 63 Fed. Cl.
at 785-790. For example, in Moore, class counsel requested that the Court award expenses and
40% of a common fund holding the rest of the recovery, which included damages, interest, and
the URA award. Moore, 63 Fed. Cl. at 786. The Court, finding that 40% was a relatively high
rate to apply to a common fund including statutory fees, instead awarded fees amounting to 34%
of the common fund, in addition to the expenses – thus adopting the very approach that Class
Counsel advocate here, except with a 34% fee in Moore. Id. at 789; but see Voth Oil Company v.
United States, No. 04-1514, 2012 U.S. Claims LEXIS 1639, at *16 (December 20, 2012) (Class
counsel “may not receive both the full value of the statutory fee as well as the full value of their
contingent fee … [and this] principal … requires that [class] counsel cannot apply their
contingent fee to a „net award‟ that includes the attorneys‟ fees received from the government
based on the URA‟s „fee-shifting‟ provision.”)3
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In our case, Class Counsel are not requesting both the full value of the statutory fee and the full value of the
contingent fee; they are requesting the full value of the contingent fee, which includes 33% of the value of the
$1,475,000.04 statutory fee (or $486,750.01). Also, Voth involved a different attorney‟s fee arrangement, which
provided that class counsel would give the class members a “dollar-for-dollar credit” for any fees recovered. See id.
at *6-7.
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As with evaluating the settlement, there is no definitive list of factors that the Court must
apply in determining what percentage of the common fund is reasonable; however, the following
seven are instructive:
1. The quality of counsel;
2. The complexity and duration of the litigation;
3. The risk of nonrecovery;
4. The fee that likely would have been negotiated between private parties in similar
cases;
5. Any class members‟ objections to the settlement terms or fees requested by class
counsel;
6. The percentage applied in other class actions; and
7. The size of the award.
Quimby, 107 Fed. Cl. at 133; Moore, 63 Fed. Cl. at 787 (citing MANUAL FOR COMPLEX
LITIGATION (FOURTH) § 14.121). Again, the Court has considerable discretion in the factual
context of the case before it. Moore, 63 Fed. Cl. at 786. As set forth below, the majority of
these factors favor Class Counsels‟ requested fees. Thus, under these factors, and following
Moore, the Court finds that Class Counsels‟ requested fees and costs are reasonable and grants
Plaintiffs‟ Unopposed Motion for Court Approval of Fees and Proposed Division of the
Common Fund.
1. The Quality of Counsel.
As discussed above, the quality of Class Counsels‟ representation was more than
adequate. See discussion supra Part II.A.2. Thus, this factor favors Class Counsels‟ requested
fees.
2. The Complexity and Duration of the Litigation.
This litigation has lasted nearly three years and has involved 260 class members with
claims for approximately 300 separate properties; complex valuation issues, one of which
necessitated a Court ruling;4 and an aggregate alleged taking of $28,796,724.70. (Transcript at 4;
Pls.‟ Mot. for Fees at 6.) Thus, this factor favors Class Counsels‟ requested fees.
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See Raulerson v. United States, 99 Fed. Cl. 9 (2011).
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3. The Risk of Nonrecovery.
As discussed above, the Court does not have an adequate record to determine the risk of
nonrecovery. See discussion supra Part II.A.1. However, it notes that all litigation carries risk,
and that if plaintiffs had lost, Class Counsel would not have received any reimbursement for the
5,000 hours of labor and $225,000 in costs that they expended over the course of nearly four
years. (Pls.‟ Mot. for Fees at 12, 14.) Thus, this factor favors Class Counsels‟ requested fees.
4. The Fee that Likely Would Have Been Negotiated Between Private Parties in Similar
Cases.
The Court does not have an adequate record to determine what fee likely would have
been negotiated by other private parties, but notes that Class Counsels‟ 33% fee is in line with
the rates awarded in similar common fund cases. See discussion infra Part II.B.6. Thus, this
factor favors Class Counsels‟ requested fees.
5. Any Class Members‟ Objections to the Settlement Terms or Fees Requested by Class
Counsel.
As with the settlement, a nearly unanimous positive reaction to the fee request is highly
relevant. Quimby, 107 Fed. Cl. at 134. Here, Class Counsel served a detailed notice on the
class, and 259 of the 260 members affirmatively consented, with no members objecting. Thus,
this factor favors Class Counsels‟ requested fees.
6. The Percentage Applied in Other Class Actions.
Awards in other class action settlements with common funds typically range between
20% to 30% of the fund, with 50% being the upper limit. Moore, 63 Fed. Cl. at 787 (citing
National Treasury, 54 Fed. Cl. at 807; MANUAL FOR COMPLEX LITIGATION (FOURTH) § 14.121
n.488; 4 ALBA CONTE & HERBERT B. NEWBERG, NEWBERG ON CLASS ACTIONS § 14:6 (4th ed.
2002)); see also Quimby, 107 Fed. Cl. at 133 (finding 30% to be within the acceptable range).
As discussed above, Moore awarded 34% of a similar common fund. See discussion supra Part
II.B. Thus, Class Counsels‟ requested 33% rate is within the acceptable range, and this factor
favors Class Counsels‟ requested fees.
7. The Size of the Award.
Here, the size of the award, $10,986,166.48 in fees, and $225,000 in costs, is large, but so
is the class members‟ total recovery of $22,305,247.10. Thus, this factor neither favors nor
disfavors Class Counsels‟ requested fees.
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III. CONCLUSION
The Court approves the parties‟ Joint Proposed Settlement and grants Plaintiffs‟
Unopposed Motion for Court Approval of Fees and Proposed Division of the Common Fund.
The parties shall disburse payments as agreed in the settlement and outlined in the fee motion,
and shall file a notice of compliance once payment is complete. The Clerk shall enter judgment
accordingly.
s/ Lawrence S. Margolis
LAWRENCE S. MARGOLIS
Senior Judge, U.S. Court of Federal Claims
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