In the United States Court of Federal Claims
No. 09-103L
(Filed: January 26, 2018)
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DANIEL and KATHY HAGGART, et al., ) Rails-to-trails takings case; fairness of
For Themselves and As Representatives ) settlement of class action; RCFC 23(e)
of a Class of Similarly Situated Persons, )
)
Plaintiffs, )
)
v. )
)
UNITED STATES, )
)
Defendant. )
)
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Thomas S. Stewart, Stewart Wald & McCulley LLC, Kansas City, Missouri, for plaintiffs
Daniel Haggart and Kathy Haggart, et al. With him on the briefs were Elizabeth G. McCulley,
Stewart Wald & McCulley LLC, Kansas City, Missouri, Steven M. Wald and Michael J. Smith,
Stewart Wald & McCulley LLC, St. Louis, Missouri, and J. Robert Sears, Baker Sterchi Cowden
& Rice, LLC, St. Louis, Missouri.
Lucinda J. Bach, Trial Attorney, Natural Resources Section, Environment & Natural
Resources Division, United States Department of Justice, Washington, D.C., for defendant.
With her on the briefs were Jeffrey H. Wood, Acting Assistant Attorney General, Environment
& Natural Resources Division, and Tyler L. Burgess and Sarah Izfar, Trial Attorneys, Natural
Resources Section, Environment & Natural Resources Division, United States Department of
Justice, Washington, D.C.
David C. Frederick, Kellogg, Hansen, Todd, Figel & Frederick, PLLC, Washington,
D.C., for plaintiffs Gordon A. Woodley and Denise L. Woodley. With him on the briefs were
Joanna T. Zhang, Kellogg, Hansen, Todd, Figel & Frederick, PLLC, Washington, D.C., and
Gordon A. Woodley, Woodley Law, Kirkland, Washington.
Michael R. Scott, Hillis Clark Martin & Peterson P.S., Seattle, Washington for plaintiff
Cleveland Square, LLC and twenty-five others. With him on the briefs was Mary Crego
Peterson, Hillis Clark Martin & Peterson P.S., Seattle, Washington.
Richard B. Sanders, Goodstein Law Group PLLC, Tacoma, Washington for plaintiffs
Faramarz Ghoddoussi and Westpoint Properties, LLC.
OPINION AND ORDER
LETTOW, Judge.
This rails-to-trails takings class action is once again before the court for approval of a
settlement pursuant to Rule 23(e) of the Rules of the Court of Federal Claims (“RCFC”). After
extensive proceedings in this court and an appeal to, and remand from, the Federal Circuit, 253
class members again seek approval and enforcement of their settlement agreement entered in
2014 with the government. 1 The government, in a volte face, now opposes the previously
executed settlement and raises a number of objections to approval of the settlement.
BACKGROUND
This action concerns land previously held as a right-of-way by Burlington Northern and
Santa Fe Railway Company in the State of Washington. That right-of-way was converted into a
recreational trail pursuant to Section 208 of the National Trails System Act Amendments of
1983, Pub. L. No. 98-11, § 208, 97 Stat. 42, 48 (codified in relevant part at 16 U.S.C. §
1247(d)). 2 In February 2009, plaintiffs filed a complaint alleging that this conversion constituted
a taking of their property without just compensation. Compl. ¶¶ 14, 18. A class of 521
members, owning 659 parcels of land, was initially certified, Hr’g Tr. 129:5-6 (Dec. 18, 2017);
see also Haggart I, 89 Fed. Cl. at 530-31, 3 and then split into six subclasses. See Haggart II,
104 Fed. Cl. 484, 487. The court then ruled on cross-motions for summary judgment, finding
“the government liable to certain class members within Subclass Two and Categories A through
D of Subclass Four” while also granting “the government summary judgment as to class
claimants in Subclass Four, Category E.” Haggart VI, 131 Fed. Cl. at 631 (citing Haggart III,
108 Fed. Cl. at 70). In all other respects, summary judgment was denied: The court reserved
some questions of ownership for trial, did not address liability for Subclasses One, Three, Five,
or Six, and did not address issues of valuation. See Haggart III, 108 Fed. Cl. at 70.
Starting in April of 2013, the parties engaged in extensive mediation with Senior Judge
John Weise, eventually reaching a settlement in February 2014. See generally Joint Mot. for
Approval of S[e]ttlement and of Notice to Class Members and Request to Set Date for Public
Hearing, ECF No. 161. Of the 521 claimants and their 659 parcels of land, the settlement would
1
This case has been the subject of seven reported decisions, including six from this court
and another from the court of appeals. See Haggart v. United States, 89 Fed. Cl. 523 (2009)
(“Haggart I”); Haggart v. United States, 104 Fed. Cl. 484 (2012) (“Haggart II”); Haggart v.
United States, 108 Fed. Cl. 70 (2012) (“Haggart III”); Haggart v. United States, 116 Fed. Cl.
131 (2014) (“Haggart IV”), vacated and remanded sub nom. Haggart v. Woodley, 809 F.3d 1336
(Fed. Cir. 2016) (“Haggart V”); Haggart v. United States, 131 Fed. Cl. 628 (2017) (“Haggart
VI”); Haggart v. United States, 133 Fed. Cl. 568 (2017) (“Haggart VII”).
The pertinent Notices of Interim Trail Use were issued by the Surface Transportation
2
Board on October 27, 2008 and November 25, 2008. See Haggart I, 89 Fed. Cl. at 529.
3
Various hearings have been held over the course of this case, including two fairness
hearings. All citations to the hearing transcript in this opinion refer to the fairness hearing held in
Seattle, Washington on December 18, 2017.
2
dismiss the claims of 268 class members and their corresponding 343 parcels, without
compensation, and then pay $110 million to the remaining 253 class members as just
compensation for the alleged taking of their 316 parcels, plus interest, attorneys’ fees, and
litigation costs. See id.; Hr’g Tr. 131:10-14; Ex. M; 4 see also Joint Compromise Settlement
Agreement between Pls. and the United States (“Settlement Agreement” or “Agreement”), ECF
No. 161-2 & Exs. A, B; Hr’g Tr. 129:5-10; Exs. K, L, M. The court held a fairness hearing in
March 2014, approved the settlement, and entered final judgment. See generally Haggart IV,
116 Fed. Cl. 131. In so doing, the court awarded attorneys’ fees to class counsel through a
common fund. Id. at 148-49.
An appeal of this court’s final judgment was sought by Mr. and Mrs. Woodley as class
members. See generally Haggart V, 809 F.3d 1336. Although receiving just compensation
under the settlement, the Woodleys challenged the court’s approval of the settlement on the
ground that class counsel had not provided information in written form (oral explanations had
been provided) that would enable class members to cross-check calculations of the settlement
amount to be received by them individually. See id. at 1343, 1348. They also challenged the
award of attorneys’ fees based on a common fund. See id. at 1343, 1351-59. In the appeal, the
government abandoned the position it had taken at the fairness hearing and supported the
Woodleys, but it did not itself file an appeal or raise any additional issues on appeal. See id. at
1343; Haggart VI, 131 Fed. Cl. at 631. The Federal Circuit vacated the approval of the
Settlement Agreement on the ground that sufficient information in written, as contrasted to oral,
form had not been provided to enable the Woodleys and class members generally to
comparatively calculate their individual awards, and reversed this court’s award of attorneys’
fees under the common-fund doctrine. Haggart V, 809 F.3d at 1351, 1359. The case was
remanded for further action by this court. Id. at 1359.
To rectify the deficiency of written notice to the class, the court ordered access to
documentary materials and re-opened discovery, ensuring that class members received “all the
discovery [they could] possibly . . . want.” See Haggart VI, 131 Fed. Cl. at 632. Of particular
interest to the Woodleys were three spreadsheets: a summary spreadsheet “that showed
appraisals side-by-side,” and “two other spreadsheets that had been used in the mediation
process.” Id. All three had not previously been made available electronically; that was rectified
during discovery. Id.
Neither in the court of appeals nor initially before this court on remand did the parties
consider that the Settlement Agreement itself had been set aside, vacated, or altered, except
potentially as to the allocation of individual amounts. See Haggart VI, 131 Fed. Cl. at 641. 5 The
4
At the fairness hearing, one electronic compilation of documents made available to class
members (Ex. F) and five documentary exhibits (Exs. K, L, M, N, and O) were admitted into the
record. Those exhibits will be cited by letter designation without reference to the transcript of
the fairness hearing held on December 18, 2017. One documentary exhibit was provided for the
record earlier, and is appended to at Class Counsel’s Mot. for Approval of the Settlement and of
Notice to Class Members and Request to Set a Date for Public Hearing, Ex. D, ECF No. 299-4.
5
The Federal Circuit’s disposition and mandate necessarily contemplated that an
adjustment might have to be made to the attachment to the Settlement Agreement that allocated
the overall settlement amount to individual class members, and in any event class members’
3
Federal Circuit did not address the specific terms of the Settlement Agreement. Id. On remand,
however, the government further changed its position and filed multiple motions for
reconsideration, all seeking invalidation of the Settlement Agreement. See generally The United
States’ Mot. for Reconsideration of Certain Rulings on the Parties’ Cross[-]Mots. for Summary
Judgment and Mem. in Support Thereof, ECF No. 244; The United States’ Mot. for Recons. of
May 4, 2017 Order (ECF No. 275) Granting Pls.’ Mot. to Enforce Settlement Agreement and
Mem. in Support Thereof, ECF No. 291. First, the government asked the court to reconsider
determinations made in Haggart III. See Haggart VI, 131 Fed. Cl. at 633. The government
argued “that the vast majority of class members own no property interest in the railroad corridor
and are entitled to nothing,” Haggart VII, 133 Fed. Cl. at 572 (internal brackets and ellipses
omitted), relying on a decision by the United States District Court for the Western District of
Washington in Kaseburg v. Port of Seattle, an indirectly related case. 6 This court denied the
government’s motion, determining that the Kaseburg “decision [did] not affect the Settlement
Agreement at issue in this case.” Haggart VI, 131 Fed. Cl. at 643. Second, the government
sought “to negate the unconditional, comprehensive Settlement Agreement that the government
executed with the class.” Haggart VII, 133 Fed. Cl. at 572. That motion was also denied
because the court determined that the “Settlement Agreement was and remains a binding and
enforceable contract.” Id. (quoting Haggart VI, 131 Fed. Cl. at 643).
After the parties’ remand-oriented motions practice had abated, on August 11, 2017,
plaintiffs filed a motion for approval of the settlement. See generally Class Counsel’s Mot. for
Approval of the Settlement and of Notice to Class Members and Request to Set a Date for Public
Hearing, ECF No. 299. The government responded in opposition, objecting to the Settlement
Agreement on the grounds it had raised in its prior post-remand motions. See generally United
States’ Resp. and Obj. to Class Counsel’s Mot. for Approval of the Settlement and of Notice to
Class Members and Request to Set a Date for Public Hearing (“Def.’s Resp.”), ECF No. 310. On
September 25, 2017, the court issued a revised draft notice, proposing changes to the draft notice
that had been submitted by class counsel. See generally Order of Sept. 25, 2017, ECF No. 319.
The court’s draft was issued in advance of a hearing held on October 20, 2017, at which further
revisions and objections to the notice were considered. After incorporating additional changes
suggested by the parties to the proffered notice and addressing the objections raised by the
government at that hearing, the court preliminarily approved the settlement, scheduled a fairness
hearing, prescribed the notice to be issued to the class, and ordered class counsel to provide
notice of both the settlement and the fairness hearing to class members. See Order of Oct. 27,
2017, ECF No. 329; Amended Order of Oct. 30, 2017 (“Notice”), ECF No. 330. The fairness
hearing was held on December 18, 2017 in Seattle, Washington, to enable as many class
members as possible to attend and participate in the proceedings.
ultimate compensation amounts would change due to the reversal of the award of common-fund
attorneys’ fees. See Haggart VI, 131 Fed. Cl. at 641 & n.10.
6
See Kaseburg v. Port of Seattle, No. C14-784 JCC, 2015 WL 6449305 (W.D. Wash.
Oct. 23, 2015) (“Kaseburg I”); Kaseburg v. Port of Seattle, No. C14-0784 JCC, 2016 WL
4440959 (W.D. Wash. Aug. 23, 2016) (“Kaseburg II”), appeal filed, No. 16-35768 (9th Cir.
Sept. 23, 2016).
4
All comments submitted by class members have been reviewed, the testimony of class
members at the fairness hearing has been received, and the issue of approval has been fully
briefed and argued and is ready for disposition.
STANDARDS FOR DECISION
RCFC 23(e) states that a certified class action “may be settled . . . only with the court’s
approval” and specifies the requisite procedures for a proposed settlement:
(1) The court must direct notice in a reasonable manner to all class members who
would be bound by the proposal.
(2) If the proposal would bind class members, the court may approve it only after
a hearing and on finding that it is fair, reasonable, and adequate.
(3) The parties seeking approval must file a statement identifying any agreement
made in connection with the proposal.
(4) [Not used.]
(5) Any class member may object to the proposal if it requires court approval
under this subdivision (e); the objection may be withdrawn only with the
court’s approval.
RCFC 23(e)(1)-(5). 7 The court directed that notice be mailed to all class members and has held a
fairness hearing, in accord with RCFC 23(e)(1) and (2), respectively. Disclosure of separate
agreements was made in accord with RCFC 23(e)(3). The only remaining inquiry for the court is
whether the Settlement Agreement is “fair, reasonable, and adequate.” RCFC 23(e)(2).
When determining the fairness, reasonableness, and adequacy of a class settlement, “two
areas of inquiries are paramount:” substantive and procedural fairness. See Christensen v.
United States, 65 Fed. Cl. 625, 629 (2005). Of the two, “[t]he primary concern is the substantive
terms of the settlement” and basic to any inquiry into substantive fairness is whether the terms of
the settlement reasonably reflect “the likely rewards of litigation.” Id. (internal ellipse omitted)
(quoting Weinberger v. Kedrick, 698 F.2d 61, 73-74 (2d Cir. 1982) (Friendly, J.) (in turn,
quoting Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390
U.S. 414, 424-25 (1968))). Because the court’s ability to “examin[e] . . . the settlement’s
substantive terms” is “necessarily limited,” “attention [is] also . . . paid to” procedural fairness,
including “the negotiating process by which the settlement was reached.” Id. (quoting
Weinberger, 698 F.2d at 73-74). Procedural fairness depends on whether the settlement resulted
from an arms-length negotiation and whether class counsel effectively represented the class by
possessing adequate experience and ability and by engaging in sufficient discovery. Id.
Substantive fairness is a case-by-case inquiry with no definitive list of factors a court must apply,
but many courts have considered some combination of the following:
(1) The relative strengths of plaintiffs’ case in comparison to the proposed settlement, which
necessarily take into account:
7
Rule 23 of the Fed. R. Civ. P. is substantially similar to RCFC 23, and decisions by
federal courts applying Fed. R. Civ. P. 23 are persuasive in this court. See Haggart I, 89 Fed. Cl.
at 529 (citing Barnes v. United States, 68 Fed. Cl. 492, 494 & n.1 (2005)).
5
(a)
the complexity, expense, and likely duration of the litigation;
(b)
the risks of establishing liability;
(c)
the risks of establishing damages;
(d)
the risks of maintaining the class action through trial;
(e)
the reasonableness of the settlement fund in light of the best possible
recovery;
(f) the reasonableness of the settlement fund to a possible recovery in light of all the
attendant risks of litigation;
(g) the stage of the proceedings and the amount of discovery completed; and
[(h) the ability of the defendants to withstand a greater judgment.] 8
(2) The recommendation of class counsel, 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.
Dauphin Island Prop. Owners Ass’n v. United States, 90 Fed. Cl. 95, 102-03 (2009) (citing
cases) (considering also fairness of attorneys’ fees); see also Raulerson v. United States, 108
Fed. Cl. 675, 677 (2013) (same); Voth Oil Co. v. United States, 108 Fed. Cl. 98, 103 (2012)
(same). Courts analyze these factors in light of “‘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 (quoting Mayfield v. Barr,
985 F.2d 1090, 1092 (D.C. Cir. 1993)).
ANALYSIS
I. PROCEDURAL AND SUBSTANTIVE FAIRNESS OF THE SETTLEMENT
AGREEMENT
As in Haggart IV, “[t]here is no evidence that the negotiating process was procedurally
unfair.” 116 Fed. Cl. at 140. There the court determined that “[b]oth parties represent[ed] that
negotiations were at arms-length,” each party obtained their own appraisal, “[a] compromise
between diverging appraisal amounts was achieved through [impartial] mediation,” and “[c]lass
counsel has extensive experience litigating rails-to-trails cases in this court[] and . . . possessed
the requisite experience to be effective counsel.” Id. Nothing in the intervening years has
occurred to alter the court’s assessment of the negotiations in this case.
The sole procedural defect in the prior approval of the Settlement Agreement, as
determined on appeal, was inadequate provision to the class of written documentation, as
contrasted to oral explanations, of the calculations that were made on the basis of appraisals of
representative parcels. See Haggart V, 809 F.3d at 1351. That defect has been cured. See
Haggart VII, 133 Fed. Cl. at 575-76. Class counsel made the pertinent documentary materials
available by electronic and other means. See Ex. F. The court also re-opened discovery to
8
This factor carries little weight in a case such as this one where the defendant is the
federal government. The government in theory is understood to be able to “always withstand
greater judgment because of Congress’s unlimited ability to tax.” Berkley v. United States, 59
Fed. Cl. 675, 713 (2004) (internal citations omitted).
6
ensure that all parties “had the opportunity to seek any and all relevant documents,” and
particularly to “obtain access to the spreadsheets” that were used in the settlement mediation to
develop the terms of the Settlement Agreement. Haggart VII, 133 Fed. Cl. at 575. All three
“spreadsheets are available on class counsel’s website for any class member to review,” and the
government had “attached [them] to its motion for reconsideration, making them a matter of
public record.” Id. at 575-76. In light of this curative action, the court is once again persuaded
that this settlement is procedurally fair.
Likewise, the Settlement Agreement is substantively fair. The court previously
determined that the “terms of the [S]ettlement [A]greement reasonably reflect the strengths of
the plaintiffs’ case in comparison to the proposed settlement,” and nothing has occurred to alter
that determination. See Haggart IV, 116 Fed. Cl. at 140-41. At the first fairness hearing in this
case, held in Washington, D.C., only three class members participated in the proceedings, and of
the three, two objected. Id. at 138. At this juncture, all of the class members support the
settlement. In response to the renewed notice to the class members, no objections were filed, and
226 of the 253 class members specifically agreed and consented to their individual allocation
amounts under the Settlement Agreement. See generally Notice of Compliance Concerning
Class Members’ Responses to Class Action Settlement Notice, ECF No. 333. Additionally, 58
class members appeared or were represented at the second fairness hearing in Seattle,
Washington—and all who spoke voiced strong support for the settlement. See Hr’g Tr. 7:4 to
10:8, 13:6 to 14:20, 21:7-21, 75:7-19; Hr’g Tr. 77:1 to 82:4, 122:17 to 127:22.
II. THE GOVERNMENT’S OBJECTIONS TO THE SETTLEMENT
AGREEMEMT
The government has raised numerous objections to the fairness of the Settlement
Agreement. These objections are ultimately unconvincing, whether considered individually or
taken together.
A. Objection to Any Modification of the Settlement Agreement
Three members of the class were included in the Settlement Agreement but own property
just outside the area designated in the Notices of Interim Trail Use that gave rise to the takings
claims. See Hr’g Tr. 57:17-23. These class members appear to have been included by a mistake
in maps prepared by a jointly retained consultant. Hr’g Tr. 58:13-15, 130:9-13. Class counsel
proposed an amendment of the settlement to eliminate the three class members on grounds that
their inclusion was derived from a mutual mistake. Hr’g Tr. 58:15-25. The government objects
to any modification to the settlement, claiming that a modified agreement would cease to be
binding upon the government and would require a return to negotiations. See Def.’s Resp. at 1;
Notice at 4. The court simply cannot satisfy this objection in a way that is fair to the rest of the
class. Overturning the entire Settlement Agreement to rectify an admitted mutual mistake by the
parties would be grossly unfair to the class. So, while the mistaken inclusion of the three class
members is unfortunate, the court will not make any changes to the Agreement but will retain the
three class members in the group to receive awards. Hr’g Tr. 130:18 to 131:2.
7
B. Objection to Separate Agreements
The government objects to the fairness of the Settlement Agreement due to three separate
agreements entered between class counsel and four class members: the Woodleys, Faramarz
Ghoddoussi, Westpoint Properties, LLC, and Annop Chaipatanapong. See Hr’g Tr. 101:13 to
103:5. Pursuant to the agreements, these class members will receive money from class counsel
in connection with their acceptance of the Settlement Agreement. Hr’g Tr. 17:8 to 20:4, 105:14
to 107:25, 119:13 to 120:4, Exs. I, O, and Class Counsel’s Mot. for Approval of Settlement, Ex.
D. The government argues that these separate agreements “call for payment of part of the
statutory attorneys’ fees to four class members, [and therefore] the agreements change a line item
in the settlement agreement[, i.e., the line “call[ing] for payment of part of the statutory
attorneys’ fees,”] and those are material changes.” Hr’g Tr. 112:19-22. Such changes, in the
government’s view, require that a new notice be sent to the rest of the class disclosing the
separate agreements. See Hr’g Tr. 111:9-14. The government mischaracterizes the nature of
these separate agreements. The agreements require that the additional compensation will come
“directly from class counsel” and not from the $110 million award. Hr’g Tr. 106:4-5; see, e.g.,
Exs. I, P, and Class Counsel’s Mot. for Approval of Settlement, Ex. D. As such, the separate
agreements have no effect on the allocation of specific awards to the class as set out in the
Settlement Agreement and have no effect on the payments the government will make.
Moreover, the class is well aware of the separate agreements. The separate agreement between
the Woodleys and class counsel was explicitly disclosed in the Notice issued to the class, see
Notice at 3, and the posture of Faramarz Ghoddoussi and Westpoint Properties LLC was also set
out in the Notice, see id. at 3-4. The separate agreements were also made part of the record of
the fairness hearing, and extensively addressed at the hearing. See Hr’g Tr. 17:8 to 20:4, 105:13
to 107:25, 119:13 to 120:4, Exs. I, O, and Class Counsel’s Mot. for Approval of Settlement, Ex.
D.
Because these separate agreements do not affect the terms of the Settlement Agreement
itself and have been fully disclosed and addressed extensively at the fairness hearing, the court
has considered them comprehensively and concludes that they do not render the Settlement
Agreement unfair.
C. Objection to Individual Contingency Fee Agreements
Many class members have entered contingent fee agreements with class counsel. See
Def.’s Resp. at 12. These agreements were entered on an individual basis, each class member
agreeing to pay class counsel 24% of that class member’s “gross settlement” award. See Hr’g
Tr. 108:10-23 (describing 24% contingent fee agreements entered into by three class members as
“consistent with other fee agreements that other class members have entered into”); Def.’s Resp.
at 14. These contingent fee agreements are private contracts that do not directly affect the
government’s payment of the settlement award.
The court has limited oversight over such contingent fee agreements because it reviews
contingent fee agreements only in the context of fairness to the class. See RCFC 23(g)(1)(C)-
(D), (h)(1)-(3)). Jurisdictionally, this court cannot enforce agreements between private parties.
See 28 U.S.C. 1491(a).
8
The government objects to the settlement’s fairness in light of the individual contingent
fee agreements. While acknowledging the limited role that the court has in reviewing the
contingent fee agreements, the government argues that such agreements should be subject to
“particularly close scrutiny” because they were entered into “long after the attorney-client
relationship commenced.” Def.’s Resp. at 15 (citing Jenkins v. McCoy, 882 F. Supp. 549, 555
(S.D. W.Va. 1995); Pete v. United Mine Workers of Am. Welfare & Ret. Fund of 1950, 517 F.2d
1275 (D.C. Cir. 1975) (additional citations omitted). This argument fails to take into
consideration the intervening effect of the Federal Circuit’s ruling in Haggart V. Before that
ruling, class counsel had entered into contingent fee agreements calling for 35% of the awarded
amounts, later voluntarily reduced to 30%, to be taken from the common fund. See Haggart IV,
116 Fed. Cl. at 138. In its ruling after the first fairness hearing, the court had reduced that
percentage to approximately 24%. Id. at 148 & nn.19, 20. That common fund fee award was
invalidated on appeal under the Uniform Relocation Assistance and Real Property Acquisition
Act (“Uniform Relocation Act”), 42 U.S.C. § 4654, the fee-shifting statute at issue. See Haggart
V, 809 F.3d at 1359. Because class counsel originally entered into contingent fee agreements
with class members at the initiation of the attorney-client relationship, and the new contingent
fee agreements call for a lesser percentage of participating class members’ awards, the history
and circumstances obviate some of the traditional concerns attendant to any revised or belatedly
entered contingent fee agreements. Additionally, class members voiced support for the extensive
work of class counsel on the case over a considerable period of time, without contemporaneous
compensation. See, e.g., Hr’g Tr. 77:25 to 78:2 (“I appreciate class counsel, all their hard work,
and the years they’ve put into this.”); Hr’g Tr. 78:20-24 ((“[M]y client as a member of the class
is very appreciative of class counsel, and we just want to echo the sentiment that’s already been
offered to the [c]ourt. They’ve worked remarkably hard in this whole process.”); Hr’g Tr. 81:6-8
(“[T]hese people are doing a great job. I think we’ve all been patient, and we’re just looking
forward to finality on this.”); Hr’g Tr. 123:11 to 124:4 (“[My client, a class member] has felt
fully informed of this whole proceeding. The information is readily available. Class counsel’s
made itself available at all times. If you send an email with a question, you’ll receive a response
literally within 15 minutes every single time. The class has felt extremely well advised
throughout the whole process . . . and that’s because of class counsel. . . . [T]he company[,a
class member,] feels completely comfortable with the contingency-fee agreements. . . . [T]hey’ve
incurred an immense amount of risk in bringing this matter and there’s absolutely no problem
with . . . the bargain that was struck with class counsel.”).
The government objects to the notice provided to the class regarding contingent fee
agreements, Hr’g Tr. 94:4 to 95:2, arguing that the notice to the class issued on October 30, 2017
“did[ not] provide the class with sufficient information to assess whether they thought the
contingent-fee agreements rendered the entire settlement unfair.” Hr’g Tr. 94:14-20. The
government asserted that the notice failed to include a warning about “potential ethical problems
with the[] agreements” or “anything about the windfall” to class counsel and “how [those
concerns] might affect the overall fairness of the overall settlement.” See Hr’g Tr. 95:17-24.
This argument is unpersuasive. As the court indicated at the fairness hearing, “the individual
class member settlement disclosure statement talks about [a class member’s] share of statutory
attorneys’ fees,” Hr’g Tr. 95:25 to 96:10, and contingent fees have been debated in this case
since 2014 and also specifically in the Notice sent to the class in October 2017. See Notice at 2,
4, 7-8. The terms of the individual contingency fee agreements entered do not affect the
distribution or amount of the settlement. The amount that any one class member would pay to
class counsel or other counsel under an individual agreement is a matter of private contract. To
9
be sure, the court must consider and has considered such agreements in determining the overall
fairness of the settlement, but the existence of these agreements was disclosed and was discussed
at length at the fairness hearing. Class members manifestly were well aware of the agreements.
The government further objects that the contingent fee agreements result in a windfall to
class counsel and are “simply a means of circumventing the Federal Circuit’s ruling” in Haggart
V. See Def.’s Resp. at 14. This objection mistates the Federal Circuit’s decision in Haggart V.
There, the appeals court held that application of the common-fund doctrine was inconsistent with
the Uniform Relocation Act in this case, but that ruling did not extend to any private fee
agreement, contingent or otherwise. See Haggart V, 809 F.3d at 1358-59. Indeed, to rule so
broadly would have run the risk of conflicting with the Supreme Court’s decision in Venegas v.
Mitchell, 495 U.S. 82 (1990). In Venegas, the Supreme Court stated that fee-shifting statutes,
like the Uniform Relocation Act, “control[] what the losing defendant must pay, not what the
prevailing plaintiff must pay his lawyer.” Venegas, 495 U.S. at 90. Further, “[w]hat a plaintiff
may be bound to pay and what an attorney is free to collect under a fee agreement are not
necessarily measured by the ‘reasonable attorney[s’] fee’ that a defendant must pay pursuant to a
court order” because “statutory awards of fees can coexist with private fee arrangements.” Id. at
88, 90. In short, although Venegas does not relieve this court of its duty to determine the
reasonableness of the 24% contingent fee agreements as they relate to the fairness of the
settlement, see Haggart IV, 116 Fed. Cl. at 144-45, Haggart V could not alter the Supreme
Court’s holding in Venegas that private agreements, including individual, member-by-member
arrangements, are consistent with fee-shifting statutes. Here, as to the reasonableness of
contingent fees, the court believes, as it did in Haggart IV, that a 24% contingent fee is
reasonable. See Haggart IV, 116 Fed. Cl. at 149 & n.20.
In sum, the court rejects the government’s objections to the contingent fee agreements
because the class members have been fully informed as to the agreements, as shown both by the
renewed notice to the class and in commentary at the fairness hearing. At the fairness hearing,
after discussion of the contingent fee agreements, many of the class members commented, noting
their approval of the fee arrangements and expressing their concern that class counsel has not
been paid despite eight years of work. See, e.g., Hr’g Tr. 125:1-5 (“I’ve been really impressed
by our counsel all through this. I think it’s very disingenuous to talk about the bulk big number
of their fee without also mentioning they’ve been working for eight years without
compensation.”). The sentiment among class members in attendance was not that class counsel
would be overpaid or that the class members were being treated unfairly, but rather that the
government was seeking to use the issue of contingent fee agreements to stall and work against
class members’ interests. See, e.g., Hr’g Tr. 124:8-23 (“I’m dismayed to hear a representative of
my government say that I’m so incompetent and unable to inform myself, that I need protection
. . . . And I feel honored to be represented by counsel at this table. And I don’t need every jot
and tittle to be publically displayed. I think it’s just an attempt at further dragging this
proceeding on. And frankly, I resent it.”), 125:6-13 (“And I also find it very disappointing that
representatives from my government and even [sic] display of incredible arrogance, that they
would spend their time talking about how they’re defending me and my right to be better
informed, when I feel I’ve been incredibly well informed at the same time that they’re delaying.
They’re certainly not looking out for my rights as they’re delaying this [further].”), 126:4-7 (“I,
too, am really ticked that the government is spending so much time and energy in delaying this
thing, and that’s the problem I think that people are really getting ticked off about this. There’s
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no sense to it.”), 127:6-8 (“I just think that [the government is] just dragging it on, and anyway,
that’s all I have to say.”).
D. Objection to Adjudicating Fairness and Statutory Fees Separately
The government also objects to any use of RCFC 54(b) to bifurcate the judgments in this
case, separating attorneys’ fee determinations from the approval of the Settlement Agreement.
The Uniform Relocation Act contemplates the joint resolution of the merits and fees and
expenses:
The court . . . 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 . . .
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). But “[w]hen an action presents more than one claim for relief,” Rule 54(b)
vests courts with discretion to “direct entry of a final judgment as to one or more . . . claims.”
RCFC 54(b). The court may do so only if it “expressly determines that there is no just reason for
delay.” Id. The government objects to bifurcation in this case because it “would like to appeal
the issue of attorneys’ fees, in particular, the issue of whether class counsel and other counsel are
entitled to additional attorneys’ fees in addition to the statutory fees set forth in the [S]ettlement
[A]greement” when it “appeal[s] the approval . . . of the [S]ettlement [A]greement.” Hr’g Tr.
136:5-12.
The court does not find any just reason for delay. The government has made evident that
it intends to appeal. See, e.g., Hr’g Tr. 135:3-5, 136:5-12. Efficiency therefore favors
addressing fees and merits separately because “attorneys’ fees will continue to accumulate
through the appeal,” which would then necessitate multiple, redundant proceedings. See Hr’g
Tr. 135:6-9. Moreover, class members have been waiting nine years for the resolution of this
case and deserve a decision on the merits without having to wait for the disposition of the
statutory attorneys’ fees. Therefore, the court will bifurcate the determination of fees from the
merits in this case.
CONCLUSION
For the reasons stated, Class Counsel’s Motion for Approval of the Settlement is
GRANTED. The clerk is directed to enter judgment in the total amount of $159,636,521.65,
consisting of $110,000,000 in principal and $49,636,521.65 in interest as of December 18, 2017,
for prevailing class members. Interest continues to accrue at the rate of 4.2%, compounding
annually from the dates of the taking, October 27, 2008 and November 25, 2008, until the date of
payment by the government. The judgment is payable to class counsel for distribution to the
class according to the terms of the Settlement Agreement and this opinion and order.
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Final judgment to this effect shall be entered under Rule 54(b) of the Rules of the Court
of Federal Claims because there is no just reason for delay. The clerk shall issue judgment in
accord with this disposition.
After all proceedings respecting this settlement have been completed and the court’s
judgment is final, the court will address attorneys’ fees and expenses under Section 304(c) of the
Uniform Relocation Act, 42 U.S.C. § 4654(c).
It is so ORDERED.
s/ Charles F. Lettow
Charles F. Lettow
Judge
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