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Blood on the Tracks By Alison Frankel 06-03-2002 It all seems so simple here on the back edge of George Clark's 170 acres in Westfield, Ind., where a line of stubby trees marks the old railroad right-of-way. Clark is a farmer, corn and soybeans, working land that has been in his family since 1832. Clark respects his past. He still has the lambskin deed, signed by Andrew Jackson, that granted the farm to his grandmother's family generations ago, and he still lives in the family farmhouse, built in 1878. The railroad has been a part of Clark family history since 1868, when the Chicago and Indiana Air Line acquired the right to run across the farm. The Air Line was eventually taken over by the Monon Railroad, linking the stretch of track along the Clark farm to a true Indiana institution. In its prime, the Monon, affectionately known as "The Hoosier Line," carried Union troops during the Civil War, supplied an engine to pull Abraham Lincoln's funeral train, and hauled tons of the Indiana limestone that was used to build the Empire State Building, the Pentagon and the Washington Monument. The Clarks remembered the railroad mostly for a horrific grade-crossing accident that killed four family members, three of them children, in 1941, a year before George Clark was born. For most of his life, Clark thought about the railroad only when he had to fight with its officials to get trees cleared and fencing along the right-of-way fixed, especially after 1978, when CSX Corp., which had bought the old Monon routes, abandoned the line and pulled up the track. Then one day in the early '90s, Clark saw a bulldozer chewing up the old right-of-way adjoining his cornfield, followed by a truck carrying a reel of cable. He ran to find out what was going on and saw workmen burying the cable along the abandoned railroad line. Clark didn't know what was going on, but figured that whatever it was, it had to be legal. The railroad had always acted as if it owned the land, and Clark had no reason to think it didn't -- at least not until he talked to his good friend Nels Ackerson. Ackerson had grown up on a dairy farm four or five miles from the Clark place. He and Clark go all the way back to grade school, when their parents would bring them to meetings of the Indiana Farm Bureau and the boys would see what kind of mischief they could get into. In college Ackerson was the president of the Future Farmers of America, but somewhere around his junior year he decided he didn't want to be a farmer after all. So when he finished at Purdue in 1967, he went off to Harvard, graduating with a law degree and a master's in public policy in 1971. Ackerson practiced in Indianapolis for a while, spent some time in Washington, D.C., working for the Senate Judiciary Committee, and then came back to Indiana to run for Congress. After he lost in the general election to the Republican incumbent, he went to Egypt to set up a Cairo office for Sidley & Austin (now Sidley Austin Brown & Wood). By 1992 he had returned to Washington, given up his Sidley & Austin partnership, and started his own firm. Ackerson is the kind of man neighbors come to with their problems. For years -- even when he was in Egypt -- he had been hearing from old friends about disputes with railroads. As railroads that had run through the Indiana farmland pulled up track, some of them were demanding that property owners pay for the right to farm the abandoned rights-of-way that crossed their land. Ackerson had researched a bunch of the old deeds and had concluded that the land belonged to the adjoining property owners. Going to court to prove it would be expensive, though, so at first Ackerson told people just to ignore the railroads' demands and go ahead and farm the land. In 1992, however, after some family friends told him they'd been hit up for $500 to buy back right-of-way land, he'd heard enough. Ackerson filed a class action against Penn Central Railroad. "I thought I'd be clearing title, getting people [who had paid for right-of-way land] repaid. I thought the case might be worth a few hundred thousand, maybe a million or more on a statewide basis," Ackerson says. On one of Ackerson's visits home in 1992, Clark told him about the mysterious truck that had cruised along the back edge of his field. Ackerson checked Clark's deed and concluded that the right-of-way land was his friend's, not the railroad's. The railroad had no right to grant access to the abandoned right-of-way to whomever was laying cable. Since the track that had run alongside Clark's farm had belonged to CSX, not Penn Central, Ackerson filed a second class action, Clark v. CSX Transportation Inc. "It seemed like a simple thing," says Clark, standing in the April stubble of his cornfield, leaning on a sign warning him not to damage the fiber-optic cable buried nearby. In June the corn that grows in the shadow of the trees along the old right-of-way will be two feet lower than the rest of Clark's crops, but he can't cut down the trees, even though they're on his property, for fear of damaging the buried wire, which, of course, is also on his property. "I thought it would be, you file your papers, you exercise your rights, you claim your land," Clark continues. "Boy, was that a misnomer." The litigation that grew from Clark's case has become a sprawling, nationwide mess, the embodiment of both the power and the limitations of the modern class action. Nels Ackerson eventually discovered that all over America in the 1980s and early '90s, people who lived on property adjoining railroad tracks were seeing exactly what his friend had witnessed: work crews laying fiber-optic cable along railroad rights-of-way. To construct the technology of the 21st century -- the coast-to-coast fiber-optic networks that are the backbone of the Internet -- the telecommunications industry had appropriated the 19th- century methods of its telephone and telegraph ancestors, building along railroad rights-of-way. And like those ancestors, telecoms didn't overly concern themselves with the legalities of who actually owned those rights-of-way. They paid the railroads and brought out the bulldozers, all too often overlooking a fundamental American right -- the right to control your own land -- with little fear of consequence. Ackerson and a few other plaintiffs' lawyers believed that class actions were the only means of correcting the imbalance of power between the small farmers and the big telecoms. That's why, after all, class actions exist -- to give large numbers of people with small damages but identical claims a chance in court. Ackerson's theory of the right-of-way litigation, however, stretched the limits of the traditional class action. In the dozens of suits he and his co-counsel filed across the country, he lumped together landowners who had all variety of property rights. Ackerson argued that they should be treated as a class because they'd all suffered the same wrong at the hands of the telecoms, which had not troubled themselves with individual variations in landowners' rights when they were misappropriating their property. Some courts agreed. In one notable case, Ackerson won for landowners an average of $45,000 per mile in a settlement with AT&T Corp. Other judges, though, accepted the arguments of the telecom defendants. Last summer, in the telecom industry's most decisive victory, Judge Richard Posner of the 7th U.S. Circuit Court of Appeals called the fiber-optic cable litigation "a nightmare of a class action." Five of the biggest telecom defendants presumed to cut this Gordian knot of litigation, announcing last fall that they'd reached a $260 million, once-and-for-all, nationwide settlement of all the right-of-way class actions. The deal -- which has been described as the third-biggest property transfer in American history, behind only the Louisiana Purchase and Seward's Folly -- calls for landowners to surrender broad rights along railroad corridors, permitting the telecoms not only to lay cable but also to build whatever facilities they need to maintain their fiber-optic networks. In exchange, the telecoms would pay 60 cents a foot on average to thousands of people who might otherwise get nothing; the proposed deal sweeps away all the property rights complications and permits claims from everyone who owns land adjacent to a railroad right-of- way on which one of the defendants had laid cable. The sweeping settlement had one big problem, though: The telecoms didn't make their deal with Ackerson but with a group of plaintiffs' lawyers led by Samuel Heins of Minneapolis' Heins Mills & Olson. Heins, a relative latecomer to the right-of-way litigation, says his deal is a significant victory for the landowners. Ackerson and his allies, who insist the compensation is "grossly inadequate" for the damages landowners have suffered and the rights they will surrender, claim that Heins sold out landowners for $44 million in fees. Over the next few months federal district court judge Ann Aiken will hold hearings on the proposed settlement in Oregon. They will be bitter -- the skirmishes leading up to the hearings have all been ugly -- and, if Ackerson succeeds in blocking the settlement or if he persuades enough property owners to opt out of the deal, the litigation could become more chaotic than ever. Last fall, in the midst of a futile attempt to bring Ackerson and Heins together, Chicago federal district court judge Wayne Anderson wondered aloud, "Is the American judicial system incapable of dealing with this particular problem?" Can the American ingenuity that bested the prairies, conquered the mountains, and bound the nation together with railroad tracks, telegraph wires, and fiber-optic cable settle the right-of-way litigation justly -- or have we finally managed to outsmart ourselves? In the beginning there was confusion. When the railroads marched across the country in the 19th century, they acquired the land they needed to build tracks in one of three ways: condemnation by eminent domain, private deals with landowners, or federal land grants. Sometimes railroads got the land itself, sometimes a broad easement to use the land however they wanted, sometimes a more limited right-of-way to use the land only for railroad purposes. Land agents roaming the routes and making deals with property owners often used standard forms, but the exact terms of their deals, documented in the spidery handwriting of the 1800s, could vary widely. Even out West, where Congress encouraged railroad construction with federal land grants between about 1850 and 1875, the rights of landowners whose property adjoined the railroads weren't uniform. "On one mile of track," says Burlington Northern Railroad counsel Thomas Stewart, a partner in Kansas City, Mo.'s Lathrop & Gage, "you might have 20 adjacent landowners and 10 different decisions on rights." The law, in other words, is a morass. And this despite a century of litigation. Since the 1890s, the nation's courts have tried to figure out the depth of the railroads' powers along their rights-of- way. Ackerson contends that the settled law is actually quite simple: When railroads acquired right-of-way easements, whether through condemnation or private conveyance, they acquired only the right to use the surface of the land. Any additional rights, including the right to dig into the land, plaintiffs say, remained with the property owners. Even in the case of federal land grants, Ackerson says, the railroads' rights were limited. Before 1871 Congress made outright land grants to the railroads, giving them parcels of property adjoining railroad routes. But Ackerson and his allies have maintained, with enough success to defeat at least one summary judgment motion, that Congress didn't intend to give the railroads all rights to the corridors of land beneath their tracks -- along those corridors, they maintain, the railroads received only a right-of-way. "When the railroads say, 'They gave us this land,' they're wrong," says Ackerson co-counsel Patrick McCarthy of Minneapolis' Zelle, Hofmann, Voelbel, Mason & Gette. "The important thing was the easement." Bosh, say the railroads and the telecoms. When Congress gave land to the railroads, they contend, those grants included the corridors beneath rail tracks. Moreover, they say, even when railroads were granted only rights-of-way, those easements usually gave the railroads rights to use the corridors "for railroad purposes" -- three little words that have been used to justify hundreds of thousands of miles of wire. As long ago as the 1860s, shrewd railroad businessmen recognized that their cleared and graded rights-of-way were good for more than railroad track, and began selling access to their rights-of-way to telegraph, and then telephone, companies. Their reasoning: Railroads used telegraphs and telephones, so those wires served a railroad purpose. Case law echoes back to the 1880s, when a group of Maryland landowners sued to enjoin American Telegraph & Telephone from constructing a telegraph line on a right-of-way across their land. (They prevailed.) Both sides in the fiber-optic litigation say that the courts have reached consensus on the scope of railroad rights. Predictably, both sides claim that the consensus supports their position, and both can rattle off, with the utmost certitude, strings of cases that they say prove it. Whatever the inconsistencies in the law, telecommunications companies like Sprint Corp. and MCI Communications Corp. needed to use railroad rights-of-way in the 1980s as they raced to switch their long-distance service from lines above ground to buried fiber-optic cables. The competition to lay coast-to-coast cable was intense, and, according to evidence developed in the fiber-optic litigation, the telecom companies concluded that buying access to railroad rights-of- way was often the quickest and cheapest way to get the cable into the ground, regardless of problems with landowners' rights. In 1983 an affiliate of the Association of American Railroads commissioned a study on the use of railroad rights-of-way for fiber-optic cable. "The utilities that have used railroad rights-of-way in the past, and the [long-distance carriers] that are negotiating for them now, seem in the main not to have concerned themselves very much with infirmities of title," the report concluded. "So far the pattern has been one of acceptance [of risk]. MCI is frank to say they need the routes. GTE [Corp.], which acquired some [Southern Pacific Railroad] rights of way as part of its acquisition of [Sprint], conducted no independent title search of its own." (The telecoms contend that the report, which does not state their position, was created without input from them.) The railroads were happy to make deals with the telecoms -- Sprint, for instance, paid Chicago Pacific Corp. $10 million for fiber-optic rights along 1,200 miles of railroad right-of-way in 1984 -- particularly since, for the most part, the railroads refused to guarantee title to the land. Ackerson says that the industry practice, in fact, was for the railroads to demand and obtain indemnification from claims by landowners. AT&T began building its fiber-optic line from Philadelphia to Chicago in 1984. The telecom giant, like its competitors, was using railroad rights-of-way as it constructed a fiber-optic network, and its engineers and right-of-way specialists determined that the most efficient route across northern Ohio and Indiana was along Consolidated Rail Corp. and CSX corridors. AT&T contends that it struck a deal with the railroads based on the understanding that they held good title on much of the land and sufficient rights on the rest of it. According to the deposition testimony of a CSX witness, however, AT&T did not investigate Conrail or CSX's title, nor did it contact landowners along the route. It signed with the railroads and then dispatched work crews -- like the one encountered by George Clark on the back edge of his cornfield. Nels Ackerson filed his first fiber-optic class action, against AT&T, in state court in Indiana in 1996, first asking for statewide class certification, then for a nationwide class. Like all of the fiber-optic cable cases, this one was a motions practice quagmire -- both sides ventured deep into legal history to write removal, remand, summary judgment, class certification, and de- certification briefs. For help, Ackerson enlisted an old friend, Henry Price of Indianapolis' Price, Potter, Jackson & Mellowitz, and later Roger Johnson of Washington, D.C.'s Koonz, McKenney, Johnson, DePaolis & Lightfoot and John Massopust of Zelle, Hofmann. In 1998 Ackerson and his team succeeded in getting a nationwide class conditionally certified in state court. Soon thereafter, he and AT&T's lawyers reached their first settlement, of claims involving abandoned railroad lines in Indiana. B. H. "Buzz" Walling, Jr., an AT&T general attorney for litigation, says that it's important to distinguish between abandoned line -- like the track along George Clark's land -- and active track. "When the railroads are running trains, they have pretty much exclusive possession of the property. Landowners can't do anything with it," Walling says. "But once the active lines are abandoned ... under state law in Indiana, it reverts to the adjacent or underlying landowner." The settlement that AT&T and Ackerson reached would pay qualifying landowners along about 80 miles of abandoned line an average of $45,000 per mile, with wide variations in payments based on property values and corridor value. (George Clark received between $6,000 and $7,000.) "I stand by that settlement," says Walling, who oversaw the process of evaluating the worth of the land on which the cable was laid. "It's based on fact, on hard property appraisals." Ackerson had stumbled upon AT&T through the original Clark case against CSX, but the discovery he conducted in the AT&T class action changed his sense of what this litigation was worth. For one thing, Ackerson learned that AT&T was hardly the only telecom that had used railroad rights-of-way to lay fiber-optic cable. For another, the AT&T settlement, though it covered only 80 miles of abandoned line, confirmed that the then deep-pocketed telecoms knew they risked serious exposure. "Our cases originated with efforts to help neighbors with serious problems," says Ackerson. "We stuck with it because we were too stubborn to give up to bullies." Now, however, it was clear that, as Ackerson says, "there was an awful lot of money to be had." The telecoms, Ackerson discovered, had paid railroads along some routes as much as $100,000 per mile -- money, he contends, that should have gone to the landowners to whom the right-of- way land really belonged. And the telecoms, he says, were earning revenues along some of their fiber-optic cable lines of hundreds of thousands of dollars a day -- unjust enrichment, in Ackerson's theory of the litigation. "The value of these corridors is extraordinarily high," Ackerson says. "It certainly reaches the billions of dollars." So as Ackerson and his team negotiated with AT&T lawyers to settle cases involving fiber-optic cable laid along abandoned lines in states other than Indiana, they went after other telecom defendants in class actions around the country. They dominated the fiber-optic litigation in the mid 1990s. As far as Ackerson knew, only a few other plaintiffs lawyers were filing similar suits. There were the lawyers from Chicago's Susman & Watkins, who were suing telecoms that had laid cable along oil and gas pipeline rights-of-way; and there was Donald Vowell in Tennessee, who'd been to the state supreme court twice in his long-running statewide class actions against Sprint and WorldCom Inc. Ackerson hadn't heard of a short-lived fiber-optic cable case that had been filed in Asheville, N.C., in 1995, but he was soon to hear about one of the lawyers who filed it. There is no George Clark at the beginning of Sam Heins' fiber-optic cable litigation story. Heins is a veteran class action plaintiffs' lawyer whose practice runs the gamut from securities class actions to price-fixing litigation to the occasional product liability mass tort case. In the early '90s, Heins was part of the Complex Litigation Group, a loose confederation of plaintiffs' lawyers who worked together on cases with nationwide class action prospects. The group was aware, Heins says, of ancient litigation against telegraph companies that had used railroad rights-of-way. As more and more telecoms used the same rights-of-way to lay underground cable, he says, the Complex Litigation Group became intrigued by the class action potential. Heins was part of the team that filed the group's first and only fiber-optic cable suit, Gasperson v. Sprint Communications Co., in federal court in North Carolina. Gasperson was a purported nationwide class action against Norfolk Southern Railway Co. and Sprint, based on the Racketeer Influenced and Corrupt Organizations act. The case was a failure. The RICO claim was dismissed on its merits, and statute of limitations problems erased the trespass count. "But we learned a lot," Heins says. "We concluded that these were very difficult cases, very lawyer-intensive. We thought it would be a very lawyerly challenge to figure it all out." By March 1998 the Complex Litigation Group had disbanded, but Heins assembled a new group of six plaintiffs' firms to talk about the fiber-optic litigation. "I proposed that we look at it, whack up assignments, see if it was worth it," he says. "We did research for all 48 [contiguous] states. We found some states where there were adverse judicial decisions, others where the law was good. We took innumerable trips to this, that, and the other jurisdiction to examine land conveyances, rather than grab somebody and sue it out willy-nilly." Heins says that his new confederation concluded that the telecoms had laid thousands of miles of cable on right-of-way land that the railroads didn't own, and that both the railroads and the telecoms knew it. Whether the litigation was viable as a class action was less clear, he says, because of the variation in landowners' rights. Nevertheless, in September 1998 the Heins group filed its first class action, Hudson v. Qwest Communications International, Inc., in state court in Indiana. That got Ackerson's attention. Ackerson says that he and Henry Price called one of Heins' cocounsel, Irwin Levin of Indianapolis' Cohen & Malad, whom they already knew. Levin suggested that they sit down with Heins to talk about the fiber-optic litigation. In late 1998 Ackerson, Price, Levin, and Heins met in Indianapolis. "Sam said to me they wanted to have litigation all over the U.S. He proposed to divide up the U.S. or join with me," Ackerson says. "I asked him what he brought to the table." Heins told Ackerson that he had the class action experience, and that he'd been researching these cases for years. But Ackerson and his team were already heavily invested in the litigation, and -- says Ackerson -- suspicious of Heins. "I told Sam I was happy to cooperate with people who shared our goals," Ackerson says. "I made it clear we were not interested in filing cases, settling quickly, and getting good attorney fees." Ackerson says he told Heins that if his group agreed to work with him, Ackerson would insist that Heins not settle any case without Ackerson's concurrence. Heins, who says he never proposed dividing up the United States with Ackerson, had subsequent talks with both Ackerson and one of his lieutenants, John Massopust, to no avail. "I thought it was better to be cooperative, to work together," he says. "[But] at the end of the day there was no agreement. [Ackerson] had an unrealistic and unjustified proprietary attitude about the lawsuits." For the next few years the Heins group and the Ackerson group traveled on parallel tracks. Heins filed 15 class actions against Sprint, MCI, and Qwest in state and federal courts, ending up with more fiber-optic cable suits against telecom defendants than Ackerson had. The Heins group began briefing class certification motions and defending against summary judgment motions. Heins says that he and his cocounsel have spent more than $1 million, reviewed tens of thousands of pages of deeds, documents, and maps, and deposed witnesses from the major telecom defendants. Ackerson, meanwhile, pressed on with his cases. He settled with Penn Central and CSX, for $6 million and $7 million, respectively. His group sat down with Walling and with AT&T's lawyers from Washington, D.C.'s Dickstein Shapiro Morin & Oshinsky to talk about a state-by-state nationwide settlement of active line cases against AT&T. Ackerson approached Thoroughbred Technology and Telecommunications Inc. (T-Cubed), the telecommunications subsidiary of Norfolk Southern Corp. when it announced plans to lay 2,500 miles of cable along railroad rights-of-way in 16 jurisdictions; before T-Cubed laid a foot of cable, Ackerson had negotiated a settlement worth at least $15 million in cash for property owners. Ackerson won what at the time seemed to be his biggest litigation victory a year ago, in a case against Sprint in federal court in East St. Louis, Ill. During the class certification briefing, Sprint's lawyers from Kansas City, Missouri's Morrison & Hecker (now Stinson Morrison Hecker) employed what has become the classic defense in the fiber-optic cable litigation, arguing that landowner rights vary too widely for the case to be treated as a class action. "To determine whether a plaintiff owns the underlying [land] requires an examination of each deed of conveyance affecting the plaintiff's property since the time the right-of-way was created," Sprint asserted. "Those chains of title generally reach back 100 to 150 years." The landowners weren't a class, in other words, but individual claimants, who needed to pursue their claims individually. Ackerson responded with what amounts to a precis of his vision of the litigation. "When it was appropriating their land to its own profit-making ends, Sprint treated these thousands of property owners as an undivided whole, for Sprint had neither the time nor the money to analyze each landowner's property interest and negotiate individually with each," he wrote. "Now, having reaped billions of dollars in benefits from this common course of conduct, Sprint has the arrogance to argue that this court cannot possibly treat the class members as a group, but instead must force each to bring his or her claim individually." On April 5, 2001, federal district judge Michael Reagan certified a nationwide class against Sprint -- the first certified fiber-optic cable class in federal court, and an apparent breakthrough in the litigation for Ackerson. By then, however, Sprint, MCI and Qwest were six months into negotiations of a settlement of all the fiber-optic cases around the country. Ackerson didn't know about the global deal, because the defendants' lawyers weren't talking to him. They were talking to Heins. Heins says that he first got a call from David Handzo of Jenner & Block, representing MCI, in September 2000. "He asked if I had an interest in a nationwide settlement," Heins says. "I said it might be possible. What I also said was that I wouldn't negotiate in a bidding situation with other counsel. If they negotiated with me, it would have to be exclusively with me." Handzo said that that was fine, according to Heins, except in the few instances in which courts had mandated settlement talks. Within a few months, J. Emmett Logan of Morrison & Hecker, representing Sprint, and John Daum of Los Angeles' O'Melveny & Myers, representing Qwest, joined the talks about a nationwide deal that would involve all of the major telecom defendants except AT&T. Why Heins instead of Ackerson? Heins says he presumes that it was a matter of business judgment, but that the defendants must have known that his group had done its homework. The defendants decline to comment beyond the public record: "The Heins Mills & Olson group included a number of prominent and experienced plaintiffs' class action firms," they asserted in a 2002 memo opposing Ackerson's attempt to intervene in the settlement. "Counsel for the defendants were of the unanimous opinion that no other group of plaintiffs' counsel matched the competence, integrity, and financial resources of the Heins Mills & Olson group." As Heins and the defense lawyers flew around the country for more than a dozen meetings in 2001, relations between Heins and Ackerson frayed. Heins' cocounsel, Irwin Levin, surfaced last summer as counsel to an objector to Ackerson's settlement with T-Cubed. The settlement, which was approved by federal district judge Sarah Evans Barker over Levin's objections, is unusual because T-Cubed has not yet laid cable -- in fact, it hasn't even made a decision about which side of the tracks it plans to lay cable on. Ackerson's deal will pay at least $15 million in cash to landowners on the side of the right-of-way where T-Cubed ends up placing its line. Landowners who own property on the noncable side of the right-of-way will receive an ownership interest in a newly established company called Class Corridor LLC, which can sell or lease access to its own right-of-way. Levin contends that because no one knows which side of the right-of-way the cable will end up on, the settlement fails to provide the supreme court- mandated independent representation of classes with different interests. "It's not fair and reasonable to the people on the noncable side," insists Levin, who has appealed Barker's approval of the T-Cubed settlement to the 7th U.S. Circuit Court of Appeals. Ackerson and his cocounsel say that the Heins group is simply trying to stall their settlement to undermine Ackerson's position in the litigation. Levin says that that's nonsense. "The problem is, these lawyers think these cases are proprietary to them. We filed independent cases," he says. "If they think they're the only ones who can file cases, well, this is America. Anyone who's injured can file a case." Heins, meanwhile, was facing some serious obstacles in his negotiations. The telecom defendants, once stock market darlings, were losing market capitalization at a breathtaking rate. An enormous percentage of the fiber-optic cable they'd competed to lay -- over 90 percent, by some estimates -- wasn't even being used. Moreover, the 7th Circuit had issued a devastating ruling in Ackerson's nationwide class action against Sprint. In an August 2001 decision written by Posner, the appeals court reversed Judge Reagan's class certification order. "The case involves different conveyances by and to different parties made at different times over a period of more than a century ... in 48 different states (plus the District of Columbia) which have different laws regarding the scope of easements," Posner wrote. "This is a nightmare of a class action." Heins' goal in settlement talks, he says, was to get as much money to as many people as he could. Previous settlements in fiber-optic cable cases -- including Ackerson's -- had established rigorous claims processes, in which landowners had to prove their property rights along the rights-of-way. (AT&T, for instance, says that payouts on actual claims in the abandoned line settlement in Indiana have averaged $15,000 per mile, not $45,000; Ackerson says that roughly half of the eligible landowners filed claims.) In Heins' proposed deal, the process is simplified, so that payments would go to anyone who could demonstrate ownership of land adjoining a railroad right-of-way on which fiber-optic cable had been laid. In exchange, landowners would grant the telecoms broad easements along the railroad rights-of-way. The railroads themselves would be released from claims; they were indemnified by the telecoms, anyway. Heins says that he looked at previous settlements involving active track, as well as previous deals the telecoms had made with individual landowners, and determined that 75 cents per linear foot was a fair average valuation, with 60 cents going to property owners and 15 cents going to him and his cocounsel. (The per-foot valuation will be adjusted on a state-by-state basis, with property owners in states with favorable laws getting more.) With the up to $40 million the defendants agreed to pay to identify and notify class members and to administer the claims process, Heins puts the total value of the settlement at about $260 million. "The truth of the matter," he says, "is that this is a substantial settlement, seriously negotiated by serious lawyers." Heins says that the $45,000 per mile that Ackerson had gotten in the AT&T abandoned track case in Indiana is irrelevant to his deal, since landowners have much broader rights to abandoned track rights-of-way. (His settlement does include abandoned-track landowners, but people who live alongside active track predominate in the deal.) Heins notes that even Ackerson, in an affidavit in the T-Cubed case, had conceded that telecom right-of-way agents had had "substantial success" in obtaining easements from individual landowners when they offered only 50 cents or a dollar per foot. "This is a quarter-billion dollars!" Heins says. "This is an honest-to- God achievement, not a cheap sell. This is not coupons. This is not a class action disgrace. It's impossible to belittle this settlement." It was only by chance that Ackerson and the other plaintiffs' lawyers in the fiber-optic cable litigation heard about Heins' nationwide deal. Last fall a lawyer from Susman & Watkins, the Chicago firm that had branched from pipeline right-of-way cases into the railroad litigation, was in the courtroom of Chicago federal district judge Wayne Andersen for a motions call. When, in open court, Andersen asked for an update from Sprint's lawyers in a fiber-optic cable class action he was overseeing, Sprint's lawyers moved to amend the briefing schedule, telling the judge that several telecoms had almost finished negotiating a nationwide settlement with Heins. The Susman lawyer dashed back to his office and told William Gotfryd, a Susman lawyer working on fiber-optic litigation, what he'd heard. Gotfryd -- whose firm was engaged in court- ordered settlement talks with MCI in another fiber-optic cable case -- quickly moved to intervene in the case before Judge Andersen. He also alerted Ackerson, Don Vowell, and the other plaintiffs lawyers who weren't working with Heins. They quickly agreed to work together, and all moved to intervene in the Sprint case in Chicago. That set off a flurry of activity. Heins and Sprint lawyer J. Emmett Logan told Judge Andersen at a hearing on Oct. 9 that they had reached a nationwide settlement involving Sprint, MCI, Qwest and two smaller telecoms, Williams Communications, and Level 3 Communications Inc. Heins told the judge that they planned to move for preliminary approval of the settlement in November. But with Arthur Susman and Gotfryd speaking up for the other plaintiffs' lawyers, Andersen made it clear that he wanted Heins and the defendants to work out a deal they would support. "We all descended upon Judge Andersen," says Ackerson cocounsel Henry Price, who came to Chicago for several hearings over the next two months. "We wanted him to know the settlement was atrocious and should not be approved." Ackerson has described the settlement as "the biggest land grab since the 1800s." Judge Andersen, trying to encourage a settlement that the non-Heins group plaintiffs' lawyers would accept, was reduced to plaintiveness. "I don't think division among plaintiffs' attorneys per se ought to ... it wouldn't be right for that to be the dividing ... the reason for a case not to go forward," he said on Nov. 8. "If the defendants are willing to provide the clients with a reasonable settlement, then it seems to me the lawyers ought to be able to figure out a way to make it happen." Andersen also said, however, that he was reluctant to approve a contested settlement, particularly one that would be appealed to the same 7th Circuit court that had called the fiber-optic cable litigation a nightmare. Trying to regain control of the litigation, on Jan. 25 Ackerson and the rest of the plaintiffs' lawyers who opposed the Heins deal petitioned the panel for multidistrict litigation to consolidate all of the fiber-optic cable cases. They proposed that one of two judges get the cases, either Andersen or Judge David Hamilton in Indiana, who had overseen the AT&T settlements. A week later Heins wrote to Andersen, informing him that the plaintiffs no longer planned to seek approval of the settlement in his court. And on Jan. 31 Heins and the telecom defendants filed a motion for preliminary approval of their deal before Judge Aiken, in Oregon. Ackerson and his cocounsel cried judge-shopping. "This settlement proposal represents improper forum-shopping of the worst sort," they wrote in a motion to intervene in the Oregon case. "If countenanced through approval of the settlement, [it] would result in nothing less than the wholesale sellout of class members to the defendants." Heins calls the allegation "deeply offensive." He says that he and the defendants' lawyers decided to file in Oregon because Andersen had indicated that he didn't have time to deal with a contested settlement; Aiken, who has presided over one of Heins' fiber-optic class actions for more than a year, was willing to take on the settlement; and 9th U.S. Circuit Court of Appeals law was favorable to a nationwide class. "The kind of debased mudslinging [they're doing] is really regrettable," Heins says. "I thought Nels had more style than that." Ackerson says he's ready to make his case against the settlement to Aiken. "There is nothing more demeaning to our profession," he says, "than a lawyer who is willing to sacrifice his clients' interests to get a bigger fee." Back in Indiana, Vera Hinshaw, Sallie Peeler, and Barbara and Bill Thomsen laugh when they hear about the settlement that Heins is proposing. The four of them, like George Clark, live along a stretch of the abandoned Monon track. Their particular section of track was converted to a public trail, a battle they fought and lost when the city that wanted the trail paid them for an easement on the old right-of-way. They knew, however, that in the settlement they'd reached with the city, they retained the underground rights to the land. So last summer, when first the Thomsens and then Peeler found MCI workmen laying cable along the trail, they turned to Ackerson. He obtained a temporary injunction against MCI, but it was dissolved, and MCI went on to finish its line, leaving Hinshaw, Peeler, and the Thomsens sick and tired of work crews in their backyards. They say it's not the money -- whether it's 60 cents a foot or something far more generous. It's the right to control the land that they know is theirs. "It comes down to property rights, personal rights," says Bill Thomsen. "You've got to understand that money is of no value to us. One hundred and fifty bucks? This is [sic] my personal rights being violated. Sooner or later it has to stop." No, it seems, it doesn't.
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