Landowners Defeat the Fiber-Optics Companies in the Seventh Circuit

The United States Court of Appeals for the Seventh Circuit handed down its decision on Oct. 19, 2004, rejecting the attempted settlement. This means that our cases and all of the other cases in the country can go forward. The key point in the decision was that the Smith representatives could not possibly serve as adequate representatives of landowners in Tennessee and Kansas, for several reasons. First, the Court noted that the Smith representatives were “disarmed” because their case was not certified as a class action, while the Tennessee and Kansas cases were certified as class actions and were on the “eve of trial” when Judge Andersen in Chicago issued his injunction purporting to shut the cases down. Second, the Court noted that the Tennessee class members have already established liability for the taking of their property, specifically noting the first decision of the Tennessee Supreme Court in Buhl v. Sprint. The Smith representatives, in contrast, have established nothing. The Court also noted that the Tennessee landowners have estimated compensatory damages at approximately ten times greater than the upper limit of the attempted settlement, and have already established that punitive damages may be available for trespass to their property, specifically referencing the second decision of the Tennessee Supreme Court in Meighan v. Sprint.

The Court also correctly noted the “troubled history” of the attempted settlement. The Court noted that the settling parties (the Smith representatives and the fiber optics companies) had announced that a nationwide settlement in which all similar claims against Sprint and four other companies which had not yet even been named as defendants was “in the works” in Chicago. Then the Court noted that the representative plaintiffs in other cases around the country “got wind of the deal” and intervened in order to object. The Court then noted that the settling parties, “apparently not pleased with how things were going in the Windy City” had “migrated” to another Court in Oregon where after one hearing the Court, in a decision that “hit the nail squarely on its head,” dismissed the case on the grounds of “judge shopping.” The Court noted that the settling parties had then returned to Chicago for “another stab at making their deal stick.”

The decision was not unanimous. One judge dissented, arguing that the decision might lead to increased charges for telephone service. You could make a similar argument that the hamburger industry could reduce the cost of hamburgers by stealing cows. The dissent also argued that the Smith representatives, instead of being “disarmed” were in fact in possession of “the fabled weapons of mass destruction,” referring to fact that the Tennessee and Kansas cases were certified as class actions, and were on the eve of trial, and that the Tennessee cases might receive as much as 3,000 percent more than is being offered in the settlement. According to the dissent, the Smith representatives could “constantly wield the threat of disorderly recourse to state litigation,” which could result in “expensive and lengthy chaos in the various states that the fiber-optics cable has traversed.”

The only problem with this argument is that it overlooks the fact that, whereas in Tennessee we may have the “fabled weapons of mass destruction”, the Smith representatives do not have them, and for that reason, as stated by the majority, they could not possibly be adequate representatives of the class members in Tennessee and Kansas. That explains why the Smith representatives would settle for practically nothing and would give away a 100-foot wide floating easement in the process.

Finally, the dissent argued that “[r]ealistically, these landowners were not going to build a retirement cottage lying three feet below the railroad tracks on their property.” That may be a true statement, but it is also true, and more to the point, that the executives at the fiber-optics companies have built retirement cottages of their own by stealing land that belongs to landowners in Tennessee and elsewhere and that they should be required to pay the fair value of what they have taken and should pay a fair amount of punitive damages as punishment and as deterrence to themselves and all others who may come along in the future.

At this point, it is possible, although unlikely, that the defendants would come back and negotiate a settlement that is fair and reasonable. But more likely, we will simply come home and get our cases ready for trial.