Hynek v. Mci World Communications, Inc.

• Decision Date: 20 May 2002
• Docket Number: No. 3:00cv758AS.,3:00cv758AS.
• Citation: 202 F.Supp.2d 831
• Parties: Stanley J. HYNEK, Kelley Farms, Inc., Evelyn Kelley, Richard Kelley, and Mark Mrozinski, on behalf of themselves and all others similarly situated, Plaintiffs, v. MCI WORLD COMMUNICATIONS, INC., MCI Worldcom Network Services, Inc., Williams Communications Group, Norfolk Southern Railway Company, Consolidated Rail Corporation, and Pennsylvania Lines LLC, Defendants.
• Court: U.S. District Court — Northern District of Indiana

Page 831

202 F.Supp.2d 831

Stanley J. HYNEK, Kelley Farms, Inc., Evelyn Kelley, Richard Kelley, and Mark Mrozinski, on behalf of themselves and all others similarly situated, Plaintiffs, v. MCI WORLD COMMUNICATIONS, INC., MCI Worldcom Network Services, Inc., Williams Communications Group, Norfolk Southern Railway Company, Consolidated Rail Corporation, and Pennsylvania Lines LLC, Defendants.

No. 3:00cv758AS.

United States District Court, N.D. Indiana. South Bend Division.

May 20, 2002.

Irwin Lewin, Eric Pavlack, Scott Gilchrist, Indianapolis, IN, for Petitioner.

George E. Purdy, Alan S. Townsend, V. Samuel Laurin III, Indianapolis, IN, for Respondent.

MEMORANDUM AND ORDER

ALLEN SHARP, District Judge.

This matter is before the court on the Defendants', Norfolk Southern Railway Company, Consolidated Rail Corporation, and Pennsylvania Lines, LLC (collectively, "Railroad Defendants"), motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. This court has jurisdiction over the instant action pursuant to 28 U.S.C. §§ 1332; 1441.

I. BRIEF BACKGROUND

This action involves a dispute over the burying and construction of fiber optic cable lines beneath a railroad corridor in northern Indiana. Specifically, the dispute centers around the property interests retained by the various Railroad Defendants in this action and whether they retain the right to transfer those interests via a license to a third party licensee without having to compensate the adjacent landowners for that license. The Plaintiffs, (collectively referred to as "Adjacent Landowners"), consist of various private individuals who own property adjacent to the railroad corridor. The Defendants are comprised of two groups. The first group consists of the Railroad Defendants, the authors of the instant motion before the court. The Railroad Defendants allege that their various ownership rights in the railroad corridor range from fee simple to an easement. However, for purposes of this motion it is assumed that the Railroad Defendants' ownership interests are mere easements. The second group of defendants consists of various communications companies involved in the burying and construction of fiber optic cable line. This group of defendants is not a part of the motion currently before the court. It is the Railroad Defendants assertion that, as a matter of law, railroad companies in Indiana holding right-of-way easements for railroad purposes have the legal right to license the use of their railroad corridor for the purpose of installing fiber optic communication lines without being required to seek permission from or compensate the holders of the fee simple interest in the railroad corridor.

II. JURISDICTION

The court begins with a brief word about the proper invocation of subject matter jurisdiction in this matter. Here there is no dispute that complete diversity exists with respect to the parties in this case. However, pursuant to Isaacs v. Sprint Corporation, 261 F.3d 679 (7th Cir.2001), this court requested that all parties submit supplemental memoranda to ensure that the amount in controversy requirement under 28 U.S.C. § 1332 was properly met. Both the Plaintiffs and the Defendants concede that the value of the matter in controversy exceeds $75,000 with respect to the claims of each named Plaintiff. The Plaintiffs seek various forms of damages including compensatory damages, restitution, punitive damage and injunctive relief, the amounts of which greatly exceed the amount in controversy requirement.

Furthermore, the Defendants cite to the negative economic impact that would result if the Plaintiffs were granted injunctive relief. See Del Vecchio v. Conseco, Inc., 230 F.3d 974, 977 (7th Cir.2000). Specifically, the Railroad Defendants contend that the loss of future licensing payments and the cost of removing the fiber optic cable from the railroad corridor alone would easily meet the jurisdictional amount. Therefore, the court finds that subject matter jurisdiction in this case has been properly invoked.

III. STANDARD OF REVIEW

A motion to dismiss pursuant to Rule 12(b)(6) may only be granted when either: 1) the plaintiff fails to assert a legal theory that is cognizable as a matter of law; or 2) the plaintiff has failed to allege the appropriate facts under a recognized legal theory. Beanstalk Group, Inc. v. AM General Corp., 283 F.3d 856, 858 (7th Cir.2002)(Plaintiff's complaint dismissed because of its failure to state a claim as a matter of law); Smilecare Dental Group v. Delta Dental Plan of Cal., Inc., 88 F.3d 780, 783 (9th Cir.1996), cert. denied, 519 U.S. 1028, 117 S.Ct. 583, 136 L.Ed.2d 513 (1996). Here the Defendants are moving for dismissal upon the former. See Looper Maintenance Service Inc. v. City of Indianapolis, 197 F.3d 908 (7th Cir.1999) (A complaint should not be dismissed for failure to state a claim unless it appears that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.).

A pure question of law challenging the legal as opposed to the factual sufficiency of a complaint is a particularly prime candidate for disposition at the motion to dismiss level. Chudasama v. Mazda Motor Corp., 123 F.3d 1353, 1367 (11th Cir.1997); See also Marcuccilli v. Ken Corp., 766 N.E.2d 444 (Ind.Ct.App.2002) ("motion to dismiss for failure to state a claim upon which relief can be granted tests the legal sufficiency of a claim"). The Adjacent Landowners note that such a dismissal should not be granted "as long as it is possible to hypothesize facts, consistent with the complaint, that would make out a claim" citing Graehling v. Village of Lombard, Illinois, 58 F.3d 295, 297 (7th Cir. 1995). Furthermore, they suggest that such a deferential approach should be taken by the court in evaluating this case. However, they do not identify any facts that would allow them to recover if the position of the Railroad Defendants is correct on the rule of law regarding the scope of easements for railroad purposes nor do the identify any further discovery needed to address the legal arguments presented by the Railroad Defendants. Rather, the Adjacent Landowners apparently concede that the legal question as framed by the Railroad Defendants is dispositive of their claims and those facts in support of their claims alleged in the first amended complaint.¹

IV. DISCUSSION

The advent of modern day communication lines consisting of fiber optic cable has transformed the way information is disseminated. Like telephone and telegraph lines, fiber optic cable must be laid across great distances to reach the various end users of the communication lines. Again much like the telephone and telegraph lines installed in earlier years, railroad corridors provide an ideal site for the installation of the fiber optic cable because of the hundreds of miles of straight and level grade which comprise the railroad corridors. Not surprisingly, the use of such railroad corridors has brought about a multitude of litigation in numerous states concerning who has the right to allow the installation of the fiber optic cable and who should be compensated for allowing the installation and use of the cable. Currently, in the federal judicial system alone, there are thirty-one (31) actions pending in twenty different federal districts. See In re Telecommunications providers' Fiber Optic Installation Litigation, Judicial Panel on Multidistrict Litigation, Docket No. 1452, April 29, 2002. At this stage of this particular proceeding, the court has been presented with the issue of whether under Indiana law an easement for railroad purposes includes within that ownership interest the right to install, operate and maintain fiber optic cable line and to license those rights to others for a fiber optic cable line. The Railroad Defendants contend that as holder of an easement for railroad purposes, they have always enjoyed this right and need not compensate the adjacent servient landowners for such a license to the fiber optic cable companies. Alternatively, the Adjacent Landowners argue that the installation of the fiber optic cable constitutes an additional burden upon their grant of the easement to the Railroad Defendants and that they should be compensated accordingly.

Several courts have addressed this issue and those cases are instructive as to the scope of the easement and the framework for analysis of what additional uses can be utilized by the railroad for the easement. Therefore, as discussed below, the court will undergo an analysis of these decisions and apply Indiana law to the principles espoused by these decisions in attempting to define the legal rights accompanying an easement held for railroad purposes. Ultimately, however, a determination of the scope of a railroad's easement must be gleaned from an analysis of Indiana statutory and common law. Isaacs v. Sprint Corporation, 261 F.3d 679, 682 (7th Cir. 2001) (noting that each state has different laws regarding the scope of easements and laws that have changed over the period embracing the grant of property rights to railroads). The Indiana courts have not directly addressed this increasingly important legal issue. Not withstanding this fact, both parties contend that various Indiana cases and statutes resolve the issue in favor of their respective positions. The court will address the specific authorities cited by the parties in turn. However, in light of the fact that the Indiana courts have not yet addressed the precise legal issue presented, the court must analyze the general principles involved as discussed by other courts and legal commentators as it pertains to the issues presented in this case.

A. RAILROAD EASEMENTS IN GENERAL

The court begins with a general overview of the nature and extent of a railroad easement. "A railroad right-of-way is a very substantial thing. It is more than a mere right of passage. It is more...