Legal Fees Awarded in Fiber-Optic Settlement

(CN) - A federal judge ordered Sprint, Qwest and others to pay more than $1.89 million in attorneys' fees as part of a $7 million settlement over claims that they illegally installed fiber-optic cables on hundreds of miles of railroad rights-of-way in Pennsylvania.

U.S. District Judge Arthur Schwab said the fees were "reasonable" in light of the more than $7 million settlement between landowners and the four telecommunications companies named in their 2012 federal class action.

The landowners accused Sprint, Qwest, Level 3 Communications and WilTel Communications of excavating their land and installing a fiber-optic cable system within railroad rights-of-way in Beaver County, Pa.

They claimed that over the last several decades, the companies competed to create a nationwide telecommunications network using the new technology "as quickly as possible, but faced the daunting task of laying cable across thousands of miles of land."

"To achieve both lower costs and extra speed in installing their telecommunications cable systems, defendants deliberately bypassed plaintiffs and members of the class on whose property defendants wanted to, and did, install their telecommunications cable systems," their complaint states.

The companies allegedly agreed to compensate several railroads across the country, including Union Pacific Railroad Co., BNSF Railway Co., and CSX Transportation Inc.

"Upon information and belief, defendants have paid millions of dollars to the railroads in exchange for purported licenses or easement agreements allowing defendants to use the railroad rights of way on or adjacent to property owned by plaintiffs and members of the class," the lawsuit states.

But landowners said the companies should have negotiated with and paid them instead of the railroads.

Last October, Schwab preliminarily approved the settlement for about 910 miles of rights of way throughout Pennsylvania, and notices were mailed to 21,285 current and former property owners on March 1.

He finally approved the settlement last week.

"The total attorneys' fees and expenses incurred by settlement class counsel in the decade-plus right-of-way litigation culminating in this settlement, excluding local counsel fees and expenses, were just over $60 million as of March 31, 2011; that number has since increased as settlement class counsel have performed substantial work in seeking approval of the settlements in courts around the country, and it will continue to do so until the settlements are fully administered," Schwab wrote. "The settling defendants in the right-of-way litigation have agreed to pay a total of $41.5 million in attorneys' fees and expenses in settlement of the 46 state actions (and the District of Columbia) nationwide." (Parentheses in original.)

Class counsel estimated that nearly $4.4 million in cash benefits are available for class members to claim, plus $802,000 in administrative costs and $1.89 million in attorneys' fees -- 26.8 percent of the fund -- bringing the total gross value of the settlement to more than $7 million, according to the order.

The fact that no class members objected to the $1.89 million award of fees and costs "further supports finding it reasonable," Schwab concluded.

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