Thomas v. United States
121 Fed. Cl. 524
Fed. Cl.2015Background
- Opt-in class action under the Rails-to-Trails/railbanking statute alleging a taking of reversionary interests in a CSX rail corridor in Shelby County, Tennessee; plaintiffs obtained liability at summary judgment for the remaining class members.
- Parties used a joint expert appraiser (across-the-fence appraisal) to value claims and negotiated a global settlement covering 79 plaintiffs (81 tracts).
- Settlement provides $5,097,501.55 total: $3,269,725.80 principal, $1,309,197.25 prejudgment interest, plus $518,578.50 in URA-based attorneys’ fees and $27,641.61 in costs.
- Class counsel sought to treat the recovery as a common fund and recover a 35% contingency fee on principal and interest (approximately $1.6M); the government objected, arguing counsel should be limited to URA fees.
- Court gave preliminary approval, provided notice, received no class objections, held a fairness hearing, and ultimately found the settlement fair, URA fees reasonable, and the contingency-fee award lawful and substantively reasonable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the class settlement is fair, reasonable, adequate | Settlement results from joint appraisal, equitable distribution across class, plaintiffs and reps approve | No substantive objection to settlement terms (government focused on fee issue) | Approved: settlement is fair, reasonable, adequate; no collusion or preferential treatment |
| Whether class counsel may recover a contingency fee via common-fund doctrine | Plaintiffs were given notice when opting in and accepted that counsel could seek 35%; comparable Rails-to-Trails cases allow common-fund fees | Government: no common fund because opt-in class members each consented; counsel should be limited to URA statutory fees; alternatively request lodestar review | Approved: common-fund recovery lawful here; contingency fee permitted given notice and approvals |
| Whether the requested 35% contingency fee is reasonable | 35% on principal and interest is within ranges in similar cases; counsel expended ~1,800 hours over six years and achieved favorable result | Government asked for lodestar cross-check or reduction; contended total fee may be excessive | Approved: 35% is substantively reasonable considering complexity, duration, quality, and precedents |
| Whether further lodestar methodology is required for fee review | Counsel: percentage-of-fund approach is acceptable; lodestar not required for common-fund award | Government: asks for lodestar analysis to verify reasonableness | Denied as necessary: court may use flexible factors instead of strict lodestar; lodestar not required here |
Key Cases Cited
- Barnes v. United States, 89 Fed. Cl. 668 (discussion of preliminary fairness review for class settlements)
- Moore v. United States, 63 Fed. Cl. 781 (allowing percentage fees despite availability of statutory fees)
- Adams v. United States, 107 Fed. Cl. 74 (limitations on court altering settlements)
- Evans v. Jeff D., 475 U.S. 717 (courts may not alter settlements or decide merits when approving settlements)
- Nat’l Treasury Emps. Union v. United States, 54 Fed. Cl. 791 (procedural considerations for class settlement approval)
- Knight v. United States, 982 F.2d 1573 (common-fund doctrine justification)
- Gisbrecht v. Barnhart, 535 U.S. 789 (statutory fee availability does not preclude contingency recovery)
- Venegas v. Mitchell, 495 U.S. 82 (recognizing contingency recovery when statutory fee exists)
- Staton v. Boeing Co., 327 F.3d 938 (percentage awards as acceptable method for class fees)
- Haggart v. United States, 116 Fed. Cl. 131 (Court of Federal Claims precedent on contingent fees in similar opt-in cases)
- Raulerson v. United States, 108 Fed. Cl. 675 (Court of Federal Claims application of common-fund doctrine)
- Voth v. United States, 108 Fed. Cl. 105 (approving contingency percentages in rails-to-trails context)