Lambert v. United States, 124 Fed. Cl. 675

Background

Rails-to-trails class action challenging conversion of a 6.26-mile CSX corridor in Shelby County, TN; plaintiffs allege a taking when corridor was railbanked and converted to a recreational trail.
Original class of ~100 landowners (107 parcels); court certified two opt-in subclasses; parties settled claims for Subclass I (4.15-mile segment).
Parties conducted a joint appraisal (eight representative parcel categories) to calculate fair market value and prejudgment interest for each parcel.
Settlement for Subclass I: $3,642,023.71 (principal $2,505,093.35; interest $1,136,930.36); plus URA reimbursement to plaintiffs for attorneys’ fees and costs ($256,862.10 and $20,875.71).
Class counsel sought a 35% contingency (common-fund) fee of total recovery ($1,274,708.30) instead of accepting URA statutory fees; government opposed or urged scrutiny.
Court held fairness hearing, considered class responses (majority approved; several objected to fee level), approved settlement, and reduced class counsel’s contingency fee to 30%, while preserving URA reimbursements to plaintiffs.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Subclass I settlement is fair, reasonable, and adequate	Settlement reflects joint appraisal, reasonable compensation plus interest; is result of informed negotiation	Government did not oppose fairness of settlement amounts for Subclass I	Approved: court found settlement fair, reasonable, and adequate and entered judgment for principal plus accrued interest and URA reimbursements
Whether class counsel may recover a contingency fee from the common fund (including interest) rather than only statutory URA fees	Counsel: common fund doctrine permits recovery of a percentage; plaintiffs either signed contingency agreements or received notice; Venegas/Gisbrecht support recovery despite statutory fee availability	Government: common-fund improper where compensation determined parcel-by-parcel and not all plaintiffs signed contingency agreements; urged lodestar cross-check	Approved: court held common-fund recovery lawful here because plaintiffs had notice/agreements and precedent permits it
Whether 35% contingency fee is reasonable	Counsel: 35% is within range in comparable cases and justified by result, complexity, and risk	Government and some class members: 35% excessive given URA fees and compared to effective rates in other rails-to-trails cases; requested lodestar cross-check	Modified: court reduced contingency from 35% to 30% (resulting effective fee ~22%) based on objections and comparison to prior cases
Whether URA attorneys’ fees and costs should be paid to plaintiffs or retained by class counsel	Class counsel initially sought both contingency on total recovery and litigation costs; notice described greater-of arrangement	Government argued URA controls fee shifting; objected to double recovery or excessive fees	Court held plaintiffs shall retain URA attorneys’ fees and costs; class counsel agreed not to keep URA fees; counsel cannot retain URA reimbursements and contingency on same amounts

Key Cases Cited

Barnes v. United States, 89 Fed. Cl. 668 (preliminary fairness review of class settlements)
Moore v. United States, 63 Fed. Cl. 781 (common-fund percentage method and fee reasonableness in rails-to-trails cases)
Adams v. United States, 107 Fed. Cl. 74 (court’s role in approving class settlements)
Evans v. Jeff D., 475 U.S. 717 (limitations on court altering settlement terms)
Nat’l Treasury Emps. Union v. United States, 54 Fed. Cl. 791 (class settlement procedures)
Venegas v. Mitchell, 495 U.S. 82 (contingency fees permissible even when statutory fees are available)
Gisbrecht v. Barnhart, 535 U.S. 789 (treatment of contingency fees alongside statutory fee provisions)
Knight v. United States, 982 F.2d 1573 (common fund doctrine described)
Thomas v. United States, 121 Fed. Cl. 524 (approval of contingency fee from common fund in rails-to-trails context)
Sutton v. United States, 120 Fed. Cl. 526 (similar approval and effective-fee comparison)
Haggart v. United States, 116 Fed. Cl. 131 (rails-to-trails fee decisions)
Raulerson v. United States, 108 Fed. Cl. 675 (class settlement and fee determinations)
Sabo v. United States, 102 Fed. Cl. 619 (factors for assessing fairness of settlement)
Camden I Condo. Ass’n v. Dunkle, 946 F.2d 768 (percentage-of-fund approach discussion)
Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261 (percentage-of-fund as appropriate method)