Opinion
Case No. 99 C 3844
January 9, 2003
MEMORANDUM OPINION AND ORDER
This case is before the Court on the motion of intervenors M.A.S. Hallaba and Chem-Tronics, Inc. for an order compelling defendants to reform or clarify the pleadings. For the following reasons, the motion is denied.
BACKGROUND
This litigation arises because the defendant telecommunications companies installed fiber optic cable in railroad rights of way. The plaintiffs own land adjoining the railroad rights of way. The plaintiffs contend that defendants do not have the legal right to install their fiber optic cable in the railroad rights of way. A proposed settlement which purports to resolve fiber optic cable litigation nationwide has been negotiated between a proposed class of plaintiffs in this case and certain defendants.
Two of the intervenors, M.A.S. Hallaba, and Chem-Tronics ("intervenors"), have filed a motion for an order requiring defendants to reform or clarify the pleadings. In that motion, intervenors claim that, under the proposed settlement, the defendants are seeking affirmative relief in the form of a judgment awarding them vast and valuable land rights from all class members and barring future claims by the plaintiffs. Intervenors argue that the proposed settlement is problematic because the defendants have failed to provide pleadings which could form the legal basis for such a judgment. Thus, intervenors request that this Court enter an order compelling defendants to clarify, in the pleadings, the substantive basis for the entry of a judgment in favor of the defendants.
DISCUSSION
I. The Pleadings Support The Proposed Settlement
Intervenors first argue that the proposed settlement seeks relief which defendants could never obtain by a judgment in the lawsuit after trial. Intervenors claim that the pleadings do not provide a basis for the relief sought in the proposed settlement. We find that the pleadings do support the proposed settlement and provide a basis for the relief sought.
The proposed settlement contemplates that defendants will receive releases and an easement, of a specified type, for which class members will be paid an average of 75 cents per foot, before deduction of attorneys' fees and costs. Thus, pursuant to the proposed settlement, defendants will receive an easement, but plaintiffs will be compensated for it. Plaintiffs also will have the right to pursue claims against non-defendant telecommunications companies. Accordingly, the proposed settlement is well within the scope of the issues framed by the pleadings.
Moreover, a determination of the precise scope of the easement is premature at this point. Issues regarding the scope of the easement and the ramifications it will have on parties and non-parties alike will be fully explored and resolved when the Court rules on the motion for preliminary approval of the settlement.
II. Settlements Can Provide For Relief Outside Of The Pleadings
A settlement can include relief that would not flow from a judgment after trial if the parties agree to it. Intervenors acknowledge this point, but argue that class actions must be treated differently. Intervenors claim that class settlements can never provide relief outside the pleadings. We reject this notion because a class settlement can provide for the broad release of claims, including claims not stated in the complaint. See Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367, 375 (1996); Uhl v. Thoroughbred Technology and Telecommunications, Inc., 309 F.3d 978 (7th Cir. 2002). The requirement for judicial approval of the settlement provides the guarantee that the overall settlement, whatever its terms, is fair, just and equitable.
The Seventh Circuit recently upheld a class action settlement similar to the proposed settlement in the instant case. Uhl, 309 F.3d 978. In Uhl, property owners brought a class action complaint against a telecommunications company alleging slander of title and trespass after the company announced that it had the right to install conduits for fiber optic cables along railroad right of way corridors. Id. Under the terms of the Uhl settlement agreement, all class members would abandon any claims against the telecommunications company and transfer an easement to the company for the specific purpose of laying cable. Id. at 982. In exchange for the easement, the class members would receive varying compensation. Id. The Seventh Circuit upheld the District Court's certification of the settlement class and the approval of the settlement agreement. Id. at 988. Thus, Seventh Circuit approval exists for the granting of an easement even though that easement is not a claim stated in the complaint.
Moreover, in this case, class members can reject the terms of the proposed settlement by opting out of the settlement. Class settlements involving releases of individual claims are routinely approved and enforced if the class is given fair notice and an opportunity to opt out. See, e.g., Thompson v. Edward D. Jones Co., 992 F.2d 187, 191-92 (8th Cir. 1993); Grimes v. Vitalink Communications Corp., 17 F.3d 1553, 1563-64 (3d Cir. 1994).
Allowing for the broad release of related claims is in accord with the general policy in favor of the settlement of class litigation. Defendants would have little incentive to negotiate class settlements if they could not secure a broad release generally insulating themselves from further litigation by those who participate in the settlement. See, e.g., TBK Partners, Ltd. v. Western Union Corp., 675 F.2d 456, 460 (2d Cir. 1982); In re VMS Sec. Litig., 1993 WL 105423, at *2 (N.D. Ill. 1993). In the Seventh Circuit, the negotiation of a class settlement may properly result in a broadly drafted release. See, e.g., In re Brand Name Prescription Drugs Antitrust Litig., 1996 WL 167347, at *2 (N.D. Ill. Apr. 4, 1996) (approving of a release that extinguished Robinson-Patman Act and state law claims against released party, even though those claims were not alleged); Oswald v. McGarr, 620 F.2d 1190, 1198 (7th Cir. 1980) (settlement is a compromise and may include release of claims not before the court).
For these reasons, we find that the provisions of the proposed settlement could be upheld even if they went beyond the relief contemplated the pleadings.
III. The Proposed Settlement Does Not Wrongfully Compromise Future Tort Claims
Finally, we find that the proposed settlement does not involve a compromise of "future tort claims." The proposed settlement provides for the grant of an easement which will define defendants' rights in the future. If, in the future, defendants exercise their rights consistent with the easement, they will commit no tort, and there will be no "future tort" to compromise. If, in the future, some defendant should act inconsistently with the easement and, if that constitutes a tort to any class member, nothing in the settlement attempts to release such a tort. Class members will have rights to seek whatever remedies for that tort may exist, and they also have settlement enforcement rights. Thus, we find that "future torts" are not wrongfully compromised by the proposed settlement.
CONCLUSION
For the foregoing reasons, we deny the motion by intervenors M.A.S. Hallaba and Chem-tronics, Inc. for an order compelling defendants to reform or clarify the pleadings.