Opinion
CIVIL ACTION Nos. 02-1628, 02-1629, SECTION E/4.
June 6, 2003.
RULING ON MOTIONS
The following motions were heard at oral argument on May 14, 2003: (1) plaintiffs' (collectively, "Williams") motion to review the Magistrate Judge's discovery ruling (R.D. #22); (2) defendant's ("BellSouth") objections to the Magistrate Judge's discovery ruling (R.D. #23); and (3) defendant's motion to bifurcate liability and damages and stay discovery of profits as to damages (R.D. #24). The matters were taken under advisement.
FACTS AND PROCEDURAL BACKGROUND
The undisputed facts are straight forward. In 1953, the plaintiffs' predecessors in title granted a state highway right-of-way for six miles across land they owned in Tangipahoa Parish, between Hammond and LaPlace, to the Louisiana Department of Transportation and Development ("DOTD") solely for the construction, maintenance and operation of a state highway. A prior right-of-way grant dates to 1923. Sometime in 1991, BellSouth obtained from DOTD a permit to lay fiber optic cables within a 5' wide portion of DOTD's highway right-of-way, and proceeded to lay the cables in the right-of-way. BellSouth did not contact the plaintiff's to secure permission to use their property, nor did it institute expropriation proceedings to secure a servitude on the property, as it is entitled to do by law.
On May 3, 2001, plaintiffs discovered that BellSouth had placed the fiber optic cables on their property. They contacted BellSouth by certified mail on three occasions asking that BellSouth contact the property owners to reach an agreement as to compensation for the use of the property. BellSouth did not respond. On May 1, 2002, plaintiffs filed suit in the 21st Judicial District Court of Tangipahoa Parish. The lawsuit alleges that BellSouth's use of the property is an "unlawful and continuing trespass upon petitioner's lands", and prays for an injunction prohibiting BellSouth from its continued unauthorized use of the land and requiring BellSouth to remove its cables and restore the land, and for damages for BellSouth's "unlawful entry, use, disturbance of and damage to petitioner's property and property rights" at BellSouth's costs, and for attorney's fees.
BellSouth responded by removing the lawsuits to federal court based on diversity jurisdiction, and on July 15, 2002, filed and answer and counterclaim. The answer raises two defenses that are pertinent here: (1) that plaintiffs' claims are barred by prescription pursuant to LSA-R.S. 19:14; and (2) that BellSouth has a lawful and valid right to place its equipment within the [DOTD] right of way. BellSouth's counterclaim asserts that its equipment has been on plaintiffs' property for over 10 years, and plaintiffs should have known about it because it is marked throughout the entire length of plaintiffs property. BellSouth's Counterclaim seeks a declaratory judgment that it has acquired a servitude pursuant to Louisiana law and has a right to place the additional equipment within the servitude, or alternatively, to expropriate a 5' wide servitude. At some point after it filed the answer and counterclaim, BellSouth placed additional fiber optic cables on the property over the property owners' objections.
Williams filed a supplemental and amended petition alleging that BellSouth's action "is a further bad faith and malicious trespass upon the property and property rights" of Williams, entitling Williams to an injunction and additional damages. Rathborne's position is that a supplemental petition alleging that BellSouth's trespass is in bad faith is unnecessary because that allegation is implicit in its original complaint.
Plaintiffs filed a "Notice of FRPC 30(b)(6) Deposition" requesting discovery of fourteen subject matters. BellSouth moved for a protective order and to modify the deposition subpoena, objecting to discovery of the following matters:
(4) Uses made and markets served by such installations and revenues derived by BellSouth therefrom;
(7) Right-of-way acquisition or expropriation activities and practices of BellSouth along the corridor;
(9) Current and future uses and/or expansion of the BellSouth facilities presently in place;
(11) Practices and policies of BellSouth in right-of-way acquisition, expropriation or installation of fiber optic lines without landowner permission within and along state roads and highways;
(13) Cost-benefit-return on investment considerations of BellSouth in the installation of the fiber optic lines and facilities in 1991 and 2002.
BellSouth further objected to Williams' requests for production in three areas: maps or records reflecting the BellSouth lines, etc., that connect to its lines placed on plaintiffs' land; all documents including financial analyses and economic reports that were considered by BellSouth in connection with the decision to place the cables on plaintiffs' property; and all documents, reports, analyses, etc., provided to shareholders by BellSouth between 1985 and 2003.
The Magistrate Judge entered an order prohibiting discovery as to items no. 7 11 regarding policies of right-of-way acquisition relating to properties in which the plaintiffs have no ownership interest, and allowed discovery of BellSouth's profits only after plaintiffs' filed suit on May 1, 2002.
ANALYSIS
Fed.R.Civ.P. 26(b) provides in pertinent part:
(1) In General. Parties may obtain discovery regarding any matter, not privileged, that is relevant to the claim or defense of any party, including by existence, description, nature, custody, condition, and location of any books, documents. . . . Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence . . .
BellSouth argues that even if Williams prevails on all of its claims it would not be entitled to BellSouth's profits as damages, so any discovery of BellSouth's profits is irrelevant and improper. It also argues that it does not generate, report or "capture" profit information according to its cable segments so that producing the profit numbers requested, and the production of documents requested, will be unduly burdensome.
Williams argues that it is entitled to discovery of BellSouth's profits from the date of BellSouth's initial trespass onto its property in 1991 because those profits provide a motive for the trespass, as well as for BellSouth's continued possession of the property and its 2002 enhancement of its equipment already on the property. Alternatively, Williams argues that under the Louisiana property law principles of accession, it is the owner of the fiber optic cables placed on its property without its consent, and is entitled to the profits derived from BellSouth's use of the cables for the operation of its business.
As support, plaintiffs cite Beachum v. Hardy Outdoor Advertising, Inc., 520 So.2d 1086 (La.App. 3rd Cir. 1987) (A billboard constructed on property without the owner's consent was an immovable, and under the accession articles, the property owner is the owner of that immovable and is entitled to any profits derived from that immovable.) Beachum, at 1087-88; La. C.C. art. 493. BellSouth argues that the Beachum case is distinguishable on its facts. It further argues that the accession articles do not apply because pursuant to paragraph (5) of LSA R.S. 48:381(A), ( see n. 5, infra) Williams cannot force it to remove its fiber optic cables.
The merits of the arguments notwithstanding, the issue again is whether plaintiffs are entitled to BellSouth's profits as damages. And again, a determination of that issue rests on whether BellSouth placement of its cables on plaintiffs' property was in good faith. The court will address that discovery issue in the context of its analysis of damages available for trespass, and will not engage in a separate analysis of the issue here.
Williams further argues that it is entitled to investigate BellSouth's policies and practices of right-of-way acquisition in Louisiana in general, and along the Hammond/LaPlace corridor in particular, to discover whether BellSouth's policy is to rely solely on a DOTD permit for placement of its cables along highway rights-of-way. Williams argues that if BellSouth has engaged in a pattern of deceit in its right-of-way acquisition policies and practices, that may rise to the level of fraud.
I. Williams' Complaint
Magistrate Judge relied on Corbello v. Iowa Production Co., 806 So.2d 32 (La.App. 3rd Cir. 12/26/01), affirmed on review, ___ So.2d. ___, 2003 WL 536727 (La. 2003), in determining that damages for bad faith trespass would be due only for acts occurring after Williams' complaint was filed. In Corbello, defendant Shell Oil Co. constructed an oil terminal on plaintiffs' land pursuant to a 1961 surface lease. After the lease expired in 1991, and after negotiations for a new lease broke down, plaintiffs sued Shell for trespass. The Supreme Court held that Shell was a bad faith trespasser only after plaintiffs filed suit because once the suit was filed, Shell knew that it had no right to remain on plaintiffs' land.
In this case, BellSouth has not claimed that it had a lease or a permit from the property owners for the use of their property. Instead, BellSouth claims that it had the right to use plaintiffs' property without their permission.
The Magistrate Judge's Order states that neither Williams nor Rathborne had alleged fraud or bad faith trespass in their original complaint. That is not quite accurate. Unlike an allegation of fraud, the court found no jurisprudence or rule that bad faith trespass must be pled with specificity. Whether a trespass is in good faith or bad faith is a determination of fact. See, e.g., Corbello, 2003 WL 536727, *20 (2003) (defendant knew it had no right to remain on plaintiff's property after plaintiff filed suit claiming a trespass); and Rosenthal-Brown Fur Co. v. Jones-Frere Fur Co., et al, 162 La. 403, 409, 110 So. 630, 632 (1926) (defendants knew that an injunction prohibited them from trapping the land prior to their engaging in their trapping activities.)
The complaints need only to contain a "short and plain statement of the claim showing that the pleader is entitled to relief", pursuant to Fed.R.Civ.P. 8(a). The original complaints expressly allege that the initial trespass was unlawful, unknown to and without permission of the property owners. That language is broad enough to include an allegation of bad faith within its scope. If Williams is entitled to discovery of BellSouth's profits at all, it is entitled to that discovery from the date of BellSouth's initial trespass in 1991.
II. BellSouth's Answer and Defenses
BellSouth's affirmative defenses specifically raise the issue of its "good faith". BellSouth asserts that plaintiffs' claims are barred by prescription, statute of limitations, latches, and LSA R.S. 19:14, because BellSouth equipment has been on the property for over 10 years, and has been clearly marked that entire time. Even accepting BellSouth's argument that the plaintiffs "acquiesced" in its presence on their property, applicable codal articles on prescription and LSA R.S. 19:14 still require a good faith belief on BellSouth's part that it had the authority to possess the property.
Williams and Rathborne each own thousands of acres of undeveloped forest and marsh land throughout South Louisiana.
"Acquisitive Prescription is a mode of acquiring ownership or other real rights by possession for a period of time." La. Civ. C. Art. 3446. La. Civ. C. Art. 742, Acquisitive Prescription, provides:
The laws for acquiring acquisitive prescription of immovable property apply to apparent servitudes. An apparent servitude may be acquired by peaceable and uninterrupted possession of the right for ten years in good faith and by just title; it may also be acquired by uninterrupted possession for thirty years without title or good faith.
According to comment (d) a possessor in good faith must honestly believe that he is entitled to the right he exercises as a servitude.
LSA R.S. 19:14, in the expropriation statutes, provides in pertinent part:
In the case where any corporation referred to in Section 2 of this Title [which includes BellSouth] has actually, in good faith believing it had the authority to do so, taken possession of privately owned immovable property of another and constructed facilities upon, under or over such property with the consent or acquiescence of the owner of the property, it will be presumed that the owner of the property has waived his right to receive just compensation prior to the taking, and he shall be entitled only to bring an action for judicial determination of whether the taking was for a public and necessary purpose and for just compensation . . . as of the time of the taking of the property, or right or interest therein . . .
BellSouth further asserts that it relied on its DOTD permit for the good faith belief that it had the right to use plaintiffs' property without notice to or compensation to the property owner. BellSouth supports its claim of good faith possession of plaintiffs' property by reference to its DOTD permit and invoking paragraph (5) of LSA R.S. 48:381. This particular paragraph was added to the statute by the Louisiana Legislature in July, 1997, over 6 years after BellSouth first laid its fiber optic lines on plaintiffs' property. Moreover, years of Louisiana jurisprudence confirm that while DOTD may have the authority to grant a third party a permit for the use of DOTD's highway servitude, the property owner retains the exclusive right to grant servitudes to third parties for other uses of its property even if that property is located within a DOTD right-of-way.
Title 48 authorizes and governs the DOTD. Part XVI, which includes section 381, regulates the utilities' use and occupancy of highways under the DOTD's purview. Section 381 provides in part as follows:
A. When not inconsistent with the purposes of state highways, the chief engineer may issue permits for the use and occupancy of the rights-of-way of state highways as follows:
(1) for the installation . . . of underground pipes,. . . .
(2) for the installation . . . of overhead cables. . . .
(3) for the erection . . . of structures crossing the highway. . . .
(4) for the erection . . . of structures for the shelter of waiting passengers. . . .
(5) If a permittee receives a permit or authorization from the department to locate facilities within highway rights-of-way, said permittee may locate in the highway right-of-way and not be displaced by any entity other than the department, whether the department's ownership is full or a servitude.
The remainder of section 381 regulates in detail the mechanics, construction standards and fees for granting of permits, and it should be read with R.S. 48:381.1 and 381.2, which regulate joint-use agreements and fees, and nonexclusive permits to be awarded "on a competitively neutral and nondiscriminatory basis." It is not clear that the property owner is included in the term "entity". Arguably, the phrase "any entity" refers to other third party permittees described in sections 381.1 and 381.2, not the property owner. It cannot be read as overriding state and federal constitutional guaranties of due process in taking of private property, nor LSA R.S. 19:1 et seq., the general governmental expropriation provisions, nor LSA R.S. 45:251 et seq., which govern expropriation of private property by governmental entities as well as certain "corporate" public utilities and common carriers, including BST. See also n. 6, infra.
LSA R.S. 45:254 grants to BellSouth, as a "common carrier" and public utility, "the right of expropriation with authority to expropriate private property under the state expropriation laws for use in its common carrier pipe line business. . . ." A "pipe line" by definition includes "telephone and telegraph lines and other communication systems". LSA R.S. 45:251. TheBarrilleaux court confirmed that La. R.S. 45:254 does not authorize a public utility to construct and operate a pipeline within a highway right of way without expropriation proceedings or compensation to the landowner. See Barrilleaux v. NPC, Inc., 730 So.2d 1062, 1065-66 (La.App. 1st Cir.), writ denied, (May 28, 1999) ("It is reasonable to conclude that the legislature, in passing a statute, did not intend to abrogate any prior law relating to the same subject matter." (Citation omitted.)) This is not a new concept in Louisiana law. See, e.g., Kock v. Louisiana Power Light Co., 298 So.2d 124, 127 (La.App. 1st Cir.), writ refused, (La. 1974) (a holder of a servitude of use from the property owner cannot create a servitude in favor of third parties affecting property upon which it owns only a servitude.).
III. BellSouth's Profits as Damages
The essence of the dispute is whether plaintiffs may be entitled to BellSouth's profits as damages. Plaintiffs argue that if BellSouth's initial trespass was in bad faith, under Louisiana law, they are entitled to BellSouth's profits derived from that trespass as damages. They cite Corbello v. Iowa Production Co., 806 So.2d 32 (La.App. 3rd Cir. 12/26/01), affirmed on review, ___ So.2d. ___, 2003 WL 536727 (La. 2003) and Rosenthal-Brown Fur Co. v. Jones-Frere Fur Co., et al, 162 La. 403, 110 So. 630 (1926), in support of their argument.
BellSouth argues that the Corbello and Rosenthal decisions are not dispositive of the issue of damages for a bad faith trespass, and that those cases are distinguishable from this case. It argues that pursuant to Louisiana's unique Civilian law system, it is this court's obligation to avoid the common law principle of stare decisis, and to apply instead the "distinctly Civilian doctrine of jurisprudence constante." Songbyrd, Inc. v. Bearsville Records, Inc., 104 F.3d 773, (5th Cir. 1997). Thus, the rule in Louisiana is one of deference to a series of decisions, id., and that the Corbello and Rosenthal decisions may be considered persuasive, but not considered binding precedent. It suggests that this Court should look instead to the applicable Civil Code articles and Louisiana Revised Statutes, and arrive at its own interpretation and application of these primary sources of law to this case. That having been said, when its jurisdiction is based on diversity, "[a] federal court has a duty to determine state law as it believes the State's highest court would." Hulin v. Fibreboard Corporation, 178 F.3d 316, (5th Cir. 1999). This court concludes that the State's highest court has already spoken on the damages issue in Corbello and Rosenthal. The court finds those decisions persuasive.
BellSouth attempts to draw a bright line distinguishing "trespass" from "possession" in order to distinguish Corbello and Rosenthal from this case. It argues that the Williams' lawsuits allege only trespass, a tort under Louisiana law for which only compensatory damages are available, and that an award of its profits amounts to punitive damages allowed in Louisiana only by statute. BellSouth characterizes the damages awarded inCorbello and Rosenthal as arising in the context of a possessory relationship based on leases, not a bad faith trespass.
The line between trespass and possession is not at all bright. In Louisiana, "trespass" is defined as an unlawful physical invasion of the property of another. Williams v. City of Baton Rouge, 715 So.2d 15, 96-0675 (La.App. 1st Cir. 4/30/98), aff'd in pertinent part, amended in part, rev'd in part, 731 So.2d 240, 98-1981, 98-2024 (La. 4/13/99). A "continuing trespass" occurs where the defendant erects a structure or places an object upon another's land and fails to remove it.Id. (citation omitted). The trespass continues until the object is removed. Id. The Louisiana Civil Code defines "possession" as "the detention or enjoyment of a corporeal thing, movable or immovable, that one holds or exercises by himself or by another who keeps it in his name." La. C.C. art. 3421. "Corporeal possession" is "the exercise of physical acts of use, detention or enjoyment over a thing." La. C.C. art. 3425.
Thus, under Louisiana law, a continuing trespass is an adverse possession. The general rule is that a tort victim is entitled only to compensatory damages. However, Louisiana law provides for special damages to a property owner when a trespasser profits from the adverse possession of that property. These damages were applied to the defendant trespassers by the Louisiana Supreme Court in Rosenthal and Corbello.
The Louisiana Supreme Court in Corbello made no distinction between the two concepts. It concluded that Shell's continued possession of the premises after the expiration of its lease constituted trespass. Corbello, 2003 WL 536727, *20. Moreover, its continued possession was in bad faith after negotiations for a new lease broke down and plaintiffs filed suit against Shell.Id. The court measured the damages according to the Civil Code articles on ownership and possession, following the lead of its much earlier Rosenthal decision. Id.
In 1926, in the Rosenthal case, the Louisiana Supreme Court held that the defendants were joint trespassers because the illegal trapping operations were carried on for their joint benefit. Rosenthal, 162 La. at 412, 110 So. at 633. TheRosenthal court based its damage assessment on Civil Code article 502 (id. at 411, 633), now article 486 found in Title II of the Louisiana Civil Code, entitled "Ownership". Article 486 addresses the ownership of fruits as follows:
A possessor in good faith acquires the ownership of the fruits he has gathered. If he is evicted by the owner, he is entitled to reimbursement of expenses for fruits he was unable to gather.
A possessor in bad faith is bound to restore to the owner the fruits he has gathered, or their value, subject to his claim for reimbursement of expenses.
La. C.C. art. 486. Article 551 identifies two kinds of fruits, natural fruits and civil fruits. It defines natural fruits as "products of the earth or of animals." La. C. C. art. 551. "Civil fruits are revenues derived from a thing by operation of law or by reason of a juridical act, such as rentals, interest, and certain corporate distributions." Id.
BellSouth argues that because it removed nothing from plaintiffs' property, and its profits were derived solely from its operation of its telecommunications business (albeit on plaintiffs' property), articles 486 and 551 are not applicable to this case. It claims that the critical passage in Rosenthal is the Court's holding that a bad faith trespasser "must account to such owner for all of the fruits" of the trespasser's unlawful exercise of the owner's rights. BellSouth argues that the defendants' profits were considered "fruits" in Rosenthal and Corbello because they were derived from the removal of products or fruits from the land after termination of the defendants' right to possess the land — in Rosenthal, royalties from the trapping and removal of fur bearing animals "produced by" or "derived from" plaintiff's property, and inCorbello, Shell's profits derived from the removal of minerals from plaintiffs' property.
According to the argument, in those cases the defendants' profits awarded to plaintiffs as damages were actually thereturn of those fruits illegally removed or derived from plaintiffs' property. Twice in its memoranda, BellSouth makes the following statement:
To the contrary, BellSouth's profits are only "produced by" and "derived from" BellSouth's telecommunications business. The fiber optic cables that BellSouth has buried on plaintiffs' property pursuant to BellSouth's Louisiana DOTD permit generate revenues (and profits) because those cables transmit telecommunications to and from various points on BellSouth's vast network. To be sure, those cables must be placed somewhere for the network to operate. But the operation of BellSouth's network in no way "gather[s]" anything of value from plaintiffs' immovable property that is incorporated into BellSouth's telecommunications services.
Supplemental Memorandum in Support of Protective Order, p. 6; Memorandum in Support of Objections, pp. 11-12, (emphasis in originals).
BellSouth's analysis of Rosenthal and Corbello is incorrect. In Corbello, Shell's operation of its oil terminal on plaintiffs' property involved processing and storage of oil produced from other fields. Nothing was produced or derived from plaintiffs' property, other than Shell's profits from the operation of its business on that property after it knew it no longer had the right to be on the property. The Corbello court expressly approved of the Third Circuit's reliance on theRosenthal case for its analysis and damage award. Corbello, 2003 WL 536727, *20 ("We do not find that the court of appeal erred in relying on Rosenthal in deciding that plaintiffs are entitled to profits earned by Shell during the time Shell remained on the property in bad faith. . . .")
In Rosenthal, the land actually belonged to one of the defendants whose predecessor in title had assigned the exclusive right to trap fur bearing animals on the land to the plaintiff. The defendant land owner then gave a permit to trap the land to the co-defendant, who proceeded to trap the land in violation of plaintiff's exclusive right to do so, and in violation of a prior injunction recognizing plaintiff's exclusive right. The Supreme Court expressly noted that the wild animals do not belong to the owner of the land, who cannot claim a right to wild animals trapped on his land by another. 162 La. 409, 110 So. 631. It concluded that the defendants' profits were:
"derived from the unlawful exercise of a right which belonged exclusively to plaintiff. These profits were the ill-gotten gains of their unlawful act, done to the manifest prejudice of plaintiff's right, and the least they should be called upon to do is to restore them."Id. at 411, 633 (emphasis added). The court continued:
The question whether a possessor be in good faith or in bad faith (legal or actual) is the sole factor in determining whether such possessor should or should not account for the fruits of his possession. But it is not a factor at all in determining what those fruits may be. Those fruits are the profits which the possessor has derived from his possession. If he is in good faith he has nothing to restore (R.C.C. 502); but even a possessor in bad faith is entitled to reimbursement for the expenses incurred in producing the fruits for which he must account to the owner. . . .Id. (Emphasis in original).
The Rosenthal court held that the term "fruits" is not limited to profits derived from the removal of products of the earth or animals. It includes within its scope profits derived from the unlawful exercise of a right belonging exclusively to another. This interpretation is supported by reference to the Revision Comments-1976 to Article 551, discussing natural fruits as follows:
(e) Article 545 of the Louisiana Civil Code of 1870 seems to establish three categories of fruits, namely, natural fruits, fruits of industry, and civil fruits. Actually, fruits of industry differ from natural fruits only in that they are the results of industry whereas natural fruits are the spontaneous product of the earth. Since the rules governing natural fruits and fruits of industry are the same, the two categories have been combined into one article. This article changes slightly the conceptual framework of the Louisiana Civil Code of 1870, but it does not change the law.
Black's Law Dictionary, Seventh Ed. (West 1999), defines "industry" as "[d]iligence in the performance of a task", or "[s]ystematic labor for some useful purpose; esp., work in manufacturing or production."
While BellSouth does not manufacture or produce tangible things, it does generate an enormous profit from its diligence in providing telecommunication services to its customers. It does so, in part, from the operation of its business on plaintiffs' property. A determination of whether BellSouth's initial trespass was in good faith or bad faith is material to both liability and damages. BellSouth's profits from its operation of its business on the Williams and Rathborne properties is discoverable because those profits may be motive for a bad faith trespass.
IV. BellSouth's Right-of-Way Acquisition Policies
BellSouth admits that its cables must be placed somewhere for the network to operate. Why and how did BellSouth select plaintiffs' property on which to bury its cables? Would placement in any location generate the same revenues and profits? There must be some measurable value to or revenue generated by the connector cables. If not, why have them at all, and why would BellSouth need to "enhance" the cables already in place? The most obvious and available cable routes are in the rights-of-way along state highways. How does BellSouth go about acquiring the necessary servitudes? What kind of attempts does it make to contact property owners to negotiate for a servitude or for expropriation proceedings?
Those cables obviously generate revenues (and profits) for BellSouth precisely because they are buried on plaintiffs' property. It is the location of plaintiffs' property that has value to BellSouth, and consequently, to the property owners. Williams argues that if it is BellSouth's policy to deliberately ignore the property owner's rights and to rely entirely on a permit from DOTD to lay its fiber optic cables in highway rights-of-way, and if BellSouth knew that this policy was in violation of the law, then BellSouth's actions may be fraudulent.
Williams points out that in 1999, it discovered that BellSouth had placed fiber optic cables within a highway right-of-way across about a one-half mile length of its property in St. Martin Parish. In that instance, BellSouth subsequently paid for and obtained a right-of-way from Williams. Plaintiffs are entitled to discovery as to BellSouth's right-of-way acquisition policies regarding other property in the Hammond/LaPlace corridor. For instance, did BellSouth notify and negotiate with other property owners along the state highway in corridor, and just overlook the plaintiffs? Or did BellSouth routinely fail to notify all property owners along the corridor as it placed its fiber optic cables along the DOTD highway right-of-way?
Plaintiffs also note that on its website, BellSouth openly boasts about the enormous profit it has made in recent years, and the speed with which it laid literally millions of miles of fiber optic cables. Its competitive position is clearly based on the speed with which it expands its fiber optic network. Evidence of a practice or policy regarding right-of-way acquisitions for its installation of fiber optic lines along the Hammond/LaPlace corridor, including cost/benefit analyses of potential locations for the fiber optic lines, goes to BellSouth's scienter and to its claim of good faith.
V. BellSouth's motion to bifurcate the trial and stay discovery of its profits
Federal Rule of Civil Procedure 42(b) provides:
The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of any number of claims, cross-claims, counterclaims, third-party claims or issues, always preserving inviolate the right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by any statute of the United States.
The court has broad authority to try issues and claims separately under Rule 42(b). 8 Moore's Federal Practice, § 42:20[4][a] (Matthew Bender 3d ed.).
BellSouth argues that the issue of damages, thus the issue of its profits, is not relevant until after the court (1) rejects BellSouth's assertion that it has acquired a servitude under Louisiana law; (2) rejects BellSouth's contention that if it has not acquired a servitude over Williams' property, it is entitled to expropriate the property it needs for its cables, (3) decides that it committed a trespass on plaintiffs' land; and (4) that the trespass was in bad faith.
There is no dispute that BellSouth is entitled to expropriate the property it needs for its cables. See note 6, supra. Having used plaintiffs' property for 12 years, however, it has yet to do so. Nor does recognition of that right cure a trespass that initially occurred 12 years ago and has continued unabated. This court finds that a determination of each of the other issues requires a determination of whether BellSouth's use of plaintiffs' property was in bad faith. BellSouth's profits from its use of plaintiffs' property may be motive for a bad faith trespass.
Bellsouth further argues that production of the requested discovery would be an undue burden and expense to BellSouth. It produced an affidavit by Kathy Zimmerman, Infrastructure Planning Manager for the State of Louisiana for BellSouth, in which she testifies that the "placement" of fiber optic cables is based on considerations of "capacity, not revenue and/or profits"; that the cable at issue "is used as a connector between central office locations" and "does not transport telecommunications directed to a particular end-user"; and that BellSouth "does not capture in any report or document profits allocated to the operation of The Referenced Cable." These assertions are self-serving.
Like any for profit corporation, BellSouth must have a process, including cost/benefit analysis, to decide when, where, and at what cost it will invest in capital and infrastructure improvements. While it may not capture profits related to any particular segment of its cable network in any single report, it reports profits, revenues, expenditures, capital and infrastructure improvements, etc., to its stock holders and to various regulatory and other government agencies, not the least of which is the IRS and State Department of Revenue for tax purposes. Presumably, much of this information is routinely generated for planning, management and administration of limited geographic regions, be it statewide or for smaller regions, perhaps parishwide, or a group of contiguous parishes. Every invoice for BellSouth's services includes an account or telephone number which identifies its source location. Profits reported for larger areas can be broken down into smaller areas and numbers, and may be referenced to capacity and length of cable. If any of the information is proprietary, which it may well be, the court can accommodate BellSouth's privacy concerns.
The court concludes that it would neither be expeditious nor further judicial economy to bifurcate damages from liability for trial, or to stay discovery of BellSouth's profits until liability is decided. Rather, it would protract the litigation and require duplication of time, effort and expense for all parties. Moreover, it would prejudice plaintiffs' right to discover relevant evidence that may be admissible at trial.
Accordingly,
IT IS ORDERED that Williams' and Rathborne's Motion for Review of the Magistrate Judge's Order (R.D. #22) is GRANTED IN PART AND DENIED IN PART as follows: plaintiffs are entitled to (1) discovery of BellSouth's profits from the date of its initial entry onto Williams' and Rathborne's properties in 1991, and (2) discovery of BellSouth's right-of-way acquisition or expropriation activities and practices only along the Hammond/LaPlace corridor; and,
IT IS FURTHER ORDERED that BellSouth's Objections to the Magistrate Judge's Order (R.D. #23), and BellSouth's Motion for a Separate Trial and to Stay Discovery Regarding Certain Issues (R.D. #24) are DENIED.