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Landowners in a class action against a telecommunications company that lays fiber-optic cables on railroad rights of way have settled the suit with an unusual form of compensation: The landowners will get some cash up front and also a 10 percent to 15 percent cut of future profits from the company’s earnings on the cable. The suit covers about 2,500 miles along nine railroad corridors in 16 Eastern, Southern and Midwestern states, including Ohio, Georgia, Illinois and Virginia. It will compensate about 20,000 landowners in cash at $6,000 a mile, for a total of about $15 million. Uhl v. Thoroughbred Technology and Telecommunications Inc., No. 1IP00-1232-C B/S. (S.D. Ind.). With the addition of the future profits, the settlement could be worth more than $100 million, according to Washington, D.C., plaintiffs’ lawyer Nels Ackerson. “I think it is the fairest way to settle this kind of dispute because it does allow the landowners to benefit from the highest and best use of the land,” said Ackerson of D.C.’s Ackerson Group. DEFINING EASEMENTS The suit was brought after Norfolk Southern Railway Co.’s subsidiary, Thoroughbred Technology and Telecommunications Inc. (known as “T-Cubed”), announced plans to install fiber-optic cables alongside rail lines. The plaintiffs argued that the railroad company has a right-of-way through easements and licenses, but that it is limited to use for railroad purposes only. In that case, T-Cubed did not have the right to install cable without compensating the landowners. T-Cubed denies the plaintiffs’ allegations and maintains that the decision to settle was a business one, made to avoid the cost and risk of litigation. The additional compensation is based on T-Cube’s plans to build the fiber-optic lines with 12 conduits full of fiber-optic cable along the railroad tracks. Those conduits are estimated to be marketed at about $30,000 per mile, per conduit. The plaintiffs will get 10 percent of the lease price of the fourth through the seventh conduits built, and 15 percent of the lease price of any conduits beyond those. The settlement provides for a minimum valuation of the conduits at $30,000 per mile if the profits do not exceed that. Based on the minimum, if all 12 conduits are built, the per-mile compensation will be about $40,000, said Ackerson. The landowners will form a corporation that will hold and develop the non-cash compensation. Such compensation includes the profits on the conduits. It also includes strands of fiber and the option to purchase one of the 12 conduits. “By consolidating their interests, they can benefit much more significantly in the business use of their land,” Ackerson said. A spokeswoman for Norfolk Southern declined to put a total value on the settlement but confirmed Ackerson’s estimates. “The real value remains to be seen,” said Susan Bland. “It is $40,500 a mile if all conditions are met.” Like their clients’ profits, the plaintiffs’ lawyers’ total fees are tied to the future profitability of the fiber-optic lines. Ackerson’s group will receive 25 percent of the cash settlement, about $5 million on top of T-Cubed’s compensation to the landowners. In addition, the lawyers will get 25 percent of the future profits of the class. SLEW OF SETTLEMENTS This is the first known settlement of a dispute over fiber-optic cable installations on active railroad lines, said Ackerson, who has organized his practice around suits against railroads and fiber-optic cable companies on behalf of landowners. He has about 30 more pending. This case, which received preliminary approval last fall and will complete class notification by next month, is one of a slew that Ackerson’s group of networked law firms have settled recently. On Feb. 26, he and co-counsel settled suits with AT&T Corp. in Ohio, Connecticut and Maine covering 60 miles of corridor lines at $45,000 per mile. In re AT& T Fiber Optic Cable Installation Litigation, No. IP99-C-9313-H/G (S.D. Ind.). And on Feb. 16, Indiana landowners settled a case with Penn Central Railroad covering more than 700 miles of abandoned railroad right-of-ways. That suit is also based on a $5,280-per-mile calculation and other compensation, such as the granting of a quiet title, valued at $2,500 per class member. Firestone v. American Premier Underwriters and U.S. Railroad Vest Corp., No. 06C01-9912-CP-379 (Cir. Ct., Boone County, Ind.). Ackerson estimated that there are more than 10,000 landowners in the Penn Central suit, and he put the total value of compensation at between $3 million and $10 million, depending on the number of claims.

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