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Dick v. Sprint Communications Company L.P.

United States District Court, W.D. Kentucky, Louisville Division

January 30, 2014

MARY PATRICIA DICK and GARY L. EKERS, for themselves and all others similarlysituated, Plaintiffs,
v.
SPRINT COMMUNICATIONS COMPANY L.P. and QWEST COMMUNICATIONS COMPANY, LLC, Defendants.

MEMORANDUM OPINION

THOMAS B. RUSSELL, Senior District Judge.

This matter is before the Court on the Joint Motion for Final Approval of Class-Action Settlement and Motion for Attorney Fees and Expenses to Settlement Class Counsel and Incentive Awards to Class Representatives. (Docket No. 31.) The Court has reviewed the motions and has considered all relevant objections filed with the Court. In addition, on June 18, 2013, the Court conducted a Fairness Hearing on the proposed settlement.

Pursuant to Fed.R.Civ.P. 23(e), and for the reasons set forth below, the Court finds that Class Counsel provided notice of the settlement to all potential Class Members in a reasonable manner; that the objections lack merit; and the Settlement Agreement is fair, reasonable, and adequate; and that the plan of allocation is fair.

BACKGROUND

The named Plaintiffs in this matter, Mary Patricia Dick and Gary L. Ekers, assert that the Defendant telecommunications companies buried fiber-optic cable and installed related equipment within railroad rights of way upon land owned by themselves or other class members. The Defendants are Sprint Communications Company LP ("Sprint") and Qwest Communications Company, LLC ("Qwest"). According to Plaintiffs, Defendants neither sought their permission nor paid them compensation for such use. (Docket No. 1 at 2.) Dick and Ekers filed this action in their individual capacity and on behalf of all others similarly situated.

The parties entered into a Kentucky Class Settlement Agreement ("the Settlement Agreement") as of November 15, 2012.[1] They then filed a joint motion, pursuant to Fed.R.Civ.P. 23(b) and (e), to certify the settlement class, preliminarily approve the Kentucky settlement agreement, and approve the manner of notice to the class. (Docket No. 21.)

The Settlement Agreement commits the Defendants to pay up to $1, 457, 000 in cash compensation, $565, 000 in attorneys' fees and expenses, and approximately $337, 000 toward an allocated share of administrative costs. To receive compensation, Class Members must: (1) submit a claim form and copy of a deed or certificate of title for their property; (2) execute a release of claims form; and (3) execute a telecommunications system easement deed. The compensation to be paid is determined for each Class Member's property at the rate of $0.64 per linear foot. Compensation is also allocated between Class Members who have owned the same property at different times in proportion to the length of each Class Member's period of ownership.

The Settlement Agreement further provides that the Claims Administrator, Rust Consulting, Inc., will determine an initial deposit amount that each Defendant must make into the Settlement Account and that the Claims Administrator will thereafter direct each Defendant to provide sufficient ongoing funding of the settlement account to pay out qualifying claims. The difference between any amount contributed to the Settlement Account and the total paid out on Class Members' claims is to be refunded to that Defendant. The Settlement Agreement also provides for an incentive award of $1, 300 to each of the two named Class Representatives to compensate them for their services.

In its order of December 21, 2012 ("the Preliminary Approval Order"), the Court preliminarily approved the Settlement Agreement per the parties' motion (Docket No. 21) pursuant to Fed.R.Civ.P. 23(b) and (e). The Court certified this matter as a class action for settlement purposes on behalf of the following class:

[A] class under the Settlement Agreement (the "Settlement Class"), defined as follows:
a class comprising all Persons who own or who claim to own, for any period of time during a Compensation Period, any Covered Property, provided, that "Settlement Class" or "Class" does not include: (1) Right-of-Way Providers and their predecessors, successors, parents, subsidiaries, and affiliates, past or present; (2) federal, state, and local government entities; (3) Native American nations and tribes; or (4) any Person who files a valid and timely exclusion on or before the Opt-Out Deadline.

(Docket No. 28 at 2.)

The Court preliminarily approved the Kentucky Settlement Agreement, designated Mary Patricia Dick and Gary L. Ekers as Class Representatives, and appointed various Class Counsel and a Claims Administrator. Finally, the Court reviewed forms of notice submitted by the parties, approved their form, and approved the parties' plan for directing notice to the class members. The Court found that the proposed plan provided the best notice practicable under the circumstances and satisfied both Rule 23 and the requirements of due process. (Docket No. 28.)

On June 18, 2013, the Court held a hearing to determine whether the Settlement Agreement was fair, reasonable, and adequate and in the best interests of the Class ("the Fairness Hearing"). Prior to the Court's final fairness hearing in on June 18, 2013, Douglas J. Grothaus, one of 6, 537 Class Members who received Court Notice, objected to the proposed class action settlement and the award of attorneys' fees. (Docket No. 30.) Mr. Grothaus has also responded to the Plaintiffs' memorandum in support of their motions for approval. (Docket No. 36.)

The Court has now heard the statements of counsel for the Parties and of such persons as chose to appear at the Fairness Hearing. The Court has also considered the files, records, and proceedings in the Action, the benefits to the Class under the Settlement Agreement, the risks complexity, expense, and probable duration of further litigation, and the objection of Mr. Grothaus. This matter is now ripe for adjudication.

OBJECTIONS

Mr. Grothaus's objections to the Settlement have been timely filed with the Court and fall into eight general categories:

(1) Objection to the method of payment to current landowners. Mr. Grothaus primarily takes issue with the fact that the settlement does not provide direct, automatic payments to Class Members, instead requiring them to submit claim forms and other documentation in order to receive compensation. (Docket No. 30 at 3-10.)
(2) Objection to the claims procedure, which requires final approval before the claims process begins. Mr. Grothaus reasons that because the response rate for Class Members cannot be determined until after the settlement is approved, the Court cannot adequately assess the Settlement's fairness. (Docket No. 30 at 7-8.)
(3) Objection to the Settlement's required conveyance pursuant to Fed.R.Civ.P. 70. Mr. Grothaus argues that Fed.R.Civ.P. 70 does not provide authority to direct Class Members to grant property rights in the manner contemplated by the Settlement Agreement. (Docket No. 30 at 8-10.)
(4) Allegation that the Class Notice failed to use plain language and did not inform Class Members that unless they submit the requisite documents, they will grant the Settling Defendants a perpetual telecommunications easement in the railroad right of way. (Docket No. 30 at 10-11.)
(5) Complaints as to the adequacy of compensation to be paid to Class Members. (Docket No. 30 at 11-13.)
(6) Allegation that the Settlement Agreement unfairly reduces the Current Landowner's compensation benefit. (Docket No. 30 at 13.)
(7) Objection to the provision requiring Class Members to release their claims against parties who did not contribute to the Settlement. (Docket No. 30 at 14.)
(8) Objection to the requested attorney fee award. (Docket No. 30 at 14.)

Noting that "[o]nce preliminary approval has been granted, a class action settlement is presumptively reasonable, and an objective class member must overcome a heavy burden to prove that the settlement is unreasonable, " Levell v. Monsanto Research Corp., 191 F.R.D. 543, 550 (S.D. Ohio 2000) (citing Williams v. Vukovich, 720 F.2d 909, 921 (6th Cir. 1983)), the Court will address each of the objections in turn.

1. Objection to the method of payment to individual landowners.

As discussed above, the Settlement Agreement requires all class members to complete, sign, and submit a claim form to the Claims Administrator. (Settlement § X.A.2; see Ex. 1, Tab G (claim form).) Class members must also provide a deed or certificate of title that demonstrates that they own land adjacent to a right of way and that includes the land's legal description. (Settlement § II.B.1.) Class members who own property adjacent to covered rights of way and submit a qualified claim will receive $0.64 per foot. ( See Settlement Definition of "Kentucky Benefits.")

Mr. Grothaus alleges that because the Current Landowners of the properties in question can be identified for purposes of Class Notice, a Claim Form should not be required in order to receive benefits. (Docket No. 30 at 3.) Rather, he urges the Court to require direct notice to each of the Current Landowners. (Docket No. 30 at 3.) Further, Mr. Grothaus contends that automatic payments are warranted, as all Class Members who do not opt out will be burdened with a compulsory easement. (Docket No. 30 at 4.) He alleges that requiring such paperwork serves only to deter potential Class Members who would otherwise benefit from the common recovery. (Docket No. 30 at 5.)

The Court declines to accept Mr. Grothaus's argument. Courts often uphold claims forms such as the one utilized here; it is certainly proper to require class members to submit information demonstrating that they are entitled to the relief at issue. In class action settlements, "[c]lass members must usually file claim forms providing details about their claims and other information needed to administer the settlement." Manual for Complex Litig. § 21.66 (4th ed. 2012). The claims process before the Court is not an unusual one.

2. Objection to the claims procedure.

Next, Mr. Grothaus objects to the settlement provision that requires the Court's final approval before the claims process begins. This, he reasons, prevents the Court from assessing the fairness of the Settlement because the response rate of Class Members cannot be determined until after the Settlement is finally approved. (Docket No. 30 at 7.)

However, Mr. Grothaus points to no cases that require a court to consider the claims rate before assessing whether a settlement is fair, reasonable, and adequate. Rather, the courts cited by Mr. Grothaus considered all available information regarding the reaction of absent class members. See In re Se. Milk Antitrust Litig., No. 2:08-MD-1000, 2012 WL 2236692 (E.D. Tenn. June 15, 2012); In re Packaged Ice Antitrust Litig., No. 08-MDL-01952, 2011 WL 6209188 (E.D. Mich. Dec. 13, 2011); Wade v. Kroger Co., No. 3:01-CV-699-R, 2008 WL 4999171 (W.D. Ky. Nov. 20, 2008). Here, of course, claims response data is unavailable. However, the Court has gauged the response of class members by considering the small number of opt-outs and objections. The Court concludes that this factor casts no doubt on the settlement's adequacy.

3. Objection to the settlement's required conveyance under Fed.R.Civ.P. 70.

In an effort to assure that any future claims against the Defendants are resolved, the Settlement causes all Current Landowners on whose property the Defendants have installed telecommunications facilities to convey an easement to the Defendants. The Settlement permits Defendants to record the easements, providing notice to subsequent purchasers. The Court's final approval order will also cause the Claims Administrator to convey an easement to the Settling Defendants on behalf of Class Members who do not execute deeds or file a claim. (Settlement § VIII.A.I. (i); see Ex. 1, Tab I (Claims Administrator easement deed).) The Court will also enter an easement deed that the Settling Defendants or Class Counsel may record. (Settlement § VIII.A.1. (k); see Ex. 1, Tab K (easement deed by court order).) These easements grant the Settling Defendants a perpetual easement in the right-of-way property for the presence of the telecommunications equipment at issue. ( See Ex. 1, Tab H at 1-2.)

Mr. Grothaus argues that Fed.R.Civ.P. 70 does not authorize the granting of property rights when doing so would be the effective equivalent of entering a judgment against every class member who does not opt out. Mr. Grothaus argues that these Orders would effectively enforce the judgment against Class Members who choose not to convey the deed in easement to the Settling Defendants, transforming the Class Members themselves into Defendants. (Docket No. 30 at 9.)

Rule 70 of the Federal Rules of Civil Procedure provides:

If a judgment requires a party to convey land, to deliver a deed or other document, or to perform any other specific act and the party fails to comply within the time specified, the court may order the act to be done - at the disobedient party's expense - by another person appointed by ...

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