Fager v. CenturyLink Commc'ns, LLC., 15-2109

Decision Date29 August 2016
Docket NumberNo. 15-2109,15-2109
Citation854 F.3d 1167
CourtU.S. Court of Appeals — Tenth Circuit
Parties Dale FAGER, Jr.; Michele D. Fager; Gunter–Miller Enterprises, Ltd., for themselves and all others similarly situated, Plaintiffs–Appellees, v. CENTURYLINK COMMUNICATIONS, LLC.; Level 3 Communications, LLC; WilTel Communications, LLC, Defendants–Appellees. James Ziegler, Objector–Appellant.

Steven Sugarman, Cerrillos, New Mexico, for Appellant.

Christopher J. Koenigs, Sherman & Howard, L.L.C., Denver, Colorado (Daniel J. Millea, and Eric E. Caugh, Zelle, Hoffman, Voelbel & Mason, LLP, Minneapolis, Minnesota, Kathleen C. Kauffman, Acerkson Kauffman Fex, PC, Washington, D.C., Michael B. Carroll, Sherman & Howard L.L.C. Denver, Colorado, Joseph Jones, Fraser Stryker PC LLO, Omaha, Nebraska, and Eric R. Burris, Brownstein Hyatt Farber Schreck, LLP, Albuquerque, New Mexico, with him on the brief) for Appellees.

Before HARTZ, BALDOCK, and McHUGH, Circuit Judges.

HARTZ, Circuit Judge.

James Ziegler appeals the district court's final approval of a class-action settlement agreement to resolve landowner claims against telecommunications companies for their installation of fiber-optic cable underneath railroad rights-of-way. He contends that class members did not receive adequate notice of the settlement and the settlement is unfair. We have jurisdiction under 28 U.S.C. § 1291 and affirm.

I. BACKGROUND

In the 1980s, telecommunications companies sought to create a nationwide network of fiber-optic cable. See In re WorldCom, Inc. , 347 B.R. 123, 132 (Bankr. S.D.N.Y. 2006). Because railroad lines offered an existing grid with a limited number of owners, cable companies purchased from the railroads the right to lay cable within their rights-of-way. See id. Beginning in the 1990s, however, some who owned the land subject to the rights-of-way began to challenge the right to enter and install cable on the land, suing the telecommunications companies on various theories, including trespass. See id .

Property owners sought to proceed through nationwide class litigation but the patchwork nature of railroad property rights and differences in state property law demanded caution. The rights-of-way were created by a variety of means and a variety of actors. The railroads obtained some through public land grants, see Isaacs v. Sprint Corp. , 261 F.3d 679, 680–81 (7th Cir. 2001), some through the exercise of the power of eminent domain, see id. ; Forwood v. Delmarva Power & Light Co. , No. CIV. A. 10948, 1998 WL 136572, at *4 (Del. Ch. Mar. 16, 1998), and some through agreements with private landowners, see Jeffery M. Heftman, Railroad Right-of-Way Easements, Utility Apportionments, and Shifting Technological Realities , 2002 U. Ill. L. Rev. 1401, 1406–07 (2002). And the scope of the rights varied from one property to another. Some interests "did not include a right to use the right-of-way for non-railroad purposes" or may have lapsed altogether. Cascade Corp. v. Sprint Commc'ns Co., L.P. , 845 F.Supp.2d 328, 329 (D. Me. 2012) ; see Uhl v. Thoroughbred Tech. & Telecomms., Inc. , 309 F.3d 978, 987 (7th Cir. 2002) (the right-of-way may have lapsed, may have been limited to railroad purposes, or may have been broad enough to allow a conveyance to telecommunications companies). Thus, whether a railroad had the right to sell access to a cable company hinged upon analysis of "different conveyances by and to different parties made at different times over a period of more than a century (railroading began in the United States in the 1830s) in 48 different states (plus the District of Columbia) which have different laws regarding the scope of easements, ... whose application involves intricate legal and factual issues...." Isaacs , 261 F.3d at 682. Courts therefore repeatedly rebuffed attempts to certify what they saw as a "nightmare of a class action." Id. ; see Smith v. Sprint Commc'ns Co., L.P. , 387 F.3d 612, 615 (7th Cir. 2004) (reversing certification of nationwide settlement class); Cascade , 845 F.Supp.2d at 330 (listing failed certification efforts). But see Fisher v. Virginia Elec. & Power Co. , 217 F.R.D. 201, 214–15 (E.D. Va. 2003) (certification appropriate in fiber-optic class action because easements obtained by one company in two states involved only limited variations in law and terms of easement).

Although unable to certify a nationwide class, the parties continued negotiations. By 2007, with the help of a mediator, they agreed to terms on 46 separate statewide settlement agreements (excluded were Louisiana and Tennessee, represented by different class counsel, and Alaska and Hawaii). The parties sought approval of these agreements in the United States District Court for the District of Massachusetts. See Kingsborough v. Sprint Commc'ns Co., L.P. , 673 F.Supp.2d 24 (D. Mass. 2009). Under the proposed settlements, class members (unless they opted out) would receive compensation for each linear foot of affected property. See id. at 28. The amount received per foot would "vary greatly, based upon the parties' state-by-state analysis of the strengths and weaknesses of the claims and defenses at issue," arising from "the particularities of state laws with regard to the extent of the railroads' easements, whether continuing trespass is a viable claim, statutes of limitations, and applicable measures of damages." Id. In return, class members would release all claims against the telecommunications companies and against the railroads (who were not parties to the litigation), see id. at 29 ; and current landowners would "grant to the settling defendants and their successors, assigns, and licensees, a perpetual easement and right-of-way," id. at 28. To deal with class members who failed to provide easements, the district court would use Fed. R. Civ. P. 70 to authorize a claims administrator to execute and convey easements on behalf of those class members. See id. at 28–29. But the court refused to approve the settlements, holding that it lacked jurisdiction over claims concerning title to land outside Massachusetts. See id. at 35.

The parties therefore agreed to present each statewide agreement for approval in an action commenced in that state. Hence the case before us, which concerns a proposed statewide settlement agreement submitted to the United States District Court for the District of New Mexico. The New Mexico Defendants are CenturyLink Communications, LLC; Level 3 Communications, LLC; and WilTel Communications, LLC. The class comprises current and former owners of property underneath or adjacent to 631 miles of railroad right-of-way. As Ziegler's attorney stated in district court, most of the rights-of-way are useless to the class members:

Many landowners sort of look at the railroad right-of-way which is either adjacent to their land or transverses their land as sort of a no man's land. In almost every case, it is fenced on both sides. It's around 200 feet wide for most places in the state of New Mexico, and it is difficult to access. In Mr. Ziegler's case, there is a three-strand barbed wire fence on both sides of that easement that he needs to cross in order to find his way onto the easement. So a landowner might not be too concerned about what is going to be happening on that railroad right-of-way, but I can let the court know that a landowner is going to be very concerned about what happens on the ... land adjacent to the right-of-way.

Fairness Hr'g Tr. at 61:23–62:12, Aplee. Supp. App. at 19–20.

The complaint asserted damage claims for trespass, unjust enrichment, and slander of title, and sought a declaration that Defendants had no right to use the rights-of-way for nonrailroad purposes and an order that they remove the existing cable. The parties reached a settlement agreement under which class members who do not opt out and submit qualified claims would receive either $0.75 or $1.25 (depending on the history of the title) for each linear foot of affected property. In return, the class members (on behalf of themselves and their successors-in-interest) would consent to an injunction barring them, roughly speaking, from asserting against Defendants or the railroads any past, present, or future claims relating to the rights-of-way or the fiber-optic cable, as well as any related equipment and structures. Also, those who currently own affected land would convey to Defendants permanent easements extending no more than 10 feet on either side of the cable system that would allow the ongoing presence of the cable and related equipment but not the installation of large structures. In addition, the easements would create rights of access to the rights-of-way over the adjacent land. Those rights, however, are very circumscribed. Of the right-of-access provision the district court wrote:

It allows a Defendant to use the Grantor's property to access the right of way: [1] only to repair or maintain its cable; [2] only if the Grantor has an existing private road that provides access to the right of way (which will rarely be the case, and which means the Defendant cannot access any part of the Grantor's property other than such road); [3] only if access to the right of way from public or railroad roads is not reasonably practical (which again will rarely be the case); [4] only if the Defendant has made "commercially reasonable efforts to give prior notice to Grantor" of any use of the Grantor's road; and [5] only if the Defendant remains liable for any damage to Grantor's property.

Memorandum Opinion and Order (Order) at 13–14, Aplt. App., Vol. 3 at 577–78. As in Massachusetts, the settlement provided that the court would appoint the claims administrator under Rule 70 to convey easements on behalf of class members who did not themselves convey. These provisions protect Defendants from having to go through litigation every few years (or oftener) on new trespass allegations. See id. at 13 ("[T]he easements ... are a crucial component of the settlement. Without...

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