Sutton v. United States
120 Fed. Cl. 526
Fed. Cl.2015Background
- Plaintiffs: 37 landowners (41 parcels) in Yolo County, CA, alleged a Fifth Amendment taking when the rail corridor was converted to interim trail use under 16 U.S.C. § 1247(d); alleged taking began Jan. 25, 2005.
- Procedural posture: Complaint filed Jan. 30, 2009; court granted plaintiffs summary judgment on liability Oct. 18, 2012; parties negotiated a classwide settlement and sought court approval under RCFC 23(e).
- Settlement terms: Joint appraisal established fair market value principal of $1,493,858; prejudgment interest (computed using Moody’s AAA rates, compounded) of $912,884 as of Dec. 31, 2014 (interest continues to accrue); URA attorney-fee reimbursement $509,128; litigation costs $35,919; total agreed payment $2,951,791 (as of Dec. 31, 2014).
- Fee dispute: Class counsel sought a common-fund contingency fee equal to 35% of principal and interest (35% of $2,406,742 = $842,360) to be paid from the class fund, effectively converting the URA fee payment into class recovery; the government argued the common-fund doctrine should not apply and alternatively asked for a lodestar check.
- Notice and reaction: Court-approved notice informed opt-in plaintiffs of the fee structure at the outset; all class members returned notices indicating no objection to settlement or counsel’s proposed fee; the government continued to oppose the contingency arrangement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the proposed class settlement is fair, reasonable, and adequate | Settlement provides individualized fair-market-value payments determined by a joint appraisal, includes prejudgment interest and URA fees; class reps approve | No substantive objection to settlement terms (government only objected to fee structure) | Approved: settlement found fair, reasonable, adequate; no collusion or preferential treatment |
| Whether class counsel may recover a common-fund contingency fee in an opt-in rails-to-trails case where URA fees are available | Opt-in plaintiffs were on notice and consented; common-fund doctrine applies to prevent unjust enrichment and is appropriate here | Government: no common fund created because class members opted in and statutory URA fees are available; contingent fee should be limited to URA amount or vetted by lodestar | Approved: court finds contingency/common-fund recovery lawful in this context and consistent with CFC precedents |
| Whether a 35% contingency fee (35% of principal + interest) is substantively reasonable | 35% is within range used in similar rails-to-trails cases; counsel logged ~1500+ hours, case complexity and risk justify the fee | Government urged lodestar review or reduction; cited pending Federal Circuit review in Haggart | Approved: 35% (≈ $842,360) is reasonable given duration, risk, quality, and comparable awards |
| Whether court must perform a lodestar cross-check before approving the contingency fee | Class counsel: not required; reasonableness judged under equitable/common-fund factors | Government: urged lodestar analysis to ensure reasonableness | Held: lodestar cross-check not required here; court may use equitable factors and discretionary methodologies to evaluate reasonableness |
Key Cases Cited
- Barnes v. United States, 89 Fed. Cl. 668 (discussing preliminary fairness review under Rule 23(e))
- Moore v. United States, 63 Fed. Cl. 781 (approving contingency/common-fund recovery and deferring to Attorney General on URA awards)
- Haggart v. United States, 116 Fed. Cl. 131 (addressing common-fund issue; noted as pending before Federal Circuit)
- Knight v. United States, 982 F.2d 1573 (Fed. Cir. 1993) (explaining equitable basis for common-fund fee recovery)
- Gisbrecht v. Barnhart, 535 U.S. 789 (permitting contingency fee recovery even where statutory fees payable)
- Venegas v. Mitchell, 495 U.S. 82 (recognizing contingency fee arrangements in the presence of statutory fee provisions)
- Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) (standards for percentage-of-recovery awards in class actions)
- Camden I Condo. Ass'n v. Dunkle, 946 F.2d 768 (11th Cir. 1991) (factors for assessing percentage awards)