One of the precedents that’s been bouncing around in the Google Books space for most of the past year is Uhl v. Thoroughbred Technology and Telecommunications, Inc., 309 F.3d 978 (7th Cir. 2002). Michael Boni cited it at the spring Columbia conference, and it makes appearances in a number of the briefs responding to the initial proposed settlement. Uhl is a key case for the settling parties; they’ve pointed to it as a case that releases future claims, not merely past ones. Since so much of the Google Books settlement involves future claims, this is obviously an important point. Uhl turns out to be an interesting case in its own right, with some interesting parallels to the Google Books litigation.
The basic story is simple. T-Cubed wanted to install fiber-optic conduits along an old Norfolk Southern right-of-way. The property rights along railroad rights-of-way are in many cases highly ambiguous; those who granted easements to the railroad did so using various different forms of legal documents, some of which arguably might have given it the right to use the right-of-way for non-railroad purposes, and some of which arguably might not have. There were some 58,000 individual property owners affected, in at least nine states, and the records of those old grants are in many cases lost. (Sound familiar yet?)
T-Cubed claimed it had the necessary rights; Timothy Elzinga, one of the adjacent landowners, disagreed. But he didn’t sue. Instead, he entered into negotiations with T-Cubed for a structured settlement. The suit, the motion for class certification, and the proposed settlement were filed simultaneously. (Sound familiar yet?)
Under the proposed deal, the landowners would become shareholders in a new company, Class Corridor. It would collect money from T-Cubed based on its success in selling fiber to others, and, with a little bit of luck, pay out to the landowner-shareholders. In the other direction, the landowners would be required to grant easements to Class Corridor, which in turn would convey them to T-Cubed. (Sound familiar yet?)
Complicating matters, T-Cubed would lay fiber only along one side the tracks, but hadn’t yet chosen the side. It therefore promised to pay an additional $6,000 a mile to the landowners on the Cable Side, but nothing up front to the landowners on the Non-Cable Side. This created an obvious division within the class, which led to disputes about fairness to all subclasses. (Sound familiar yet?)
Now for the “future claims” angle. Here’s the case’s complete discussion of the issue:
This one, which Mason raised at oral argument, also goes to the court’s jurisdiction: she claims that the claims of the class members are non-justiciable at this stage of the proceedings. To resolve this justiciability argument, we must look at how the class is defined. If, as Mason argues, the class’s claims are future claims, largely hypothetical at this stage, then the claims may not be ripe. If that were true, we would have to vacate the order below and our analysis would end here.
The class in this case has some similarities to certain toxic tort cases, insofar as the eventual harm to the class members was uncertain at the time the complaint was filed and at the time of the settlement. But the similarity is not complete, and in the end it tends more to support the plaintiffs than to undermine them. In many toxic tort cases, uncertainties abound: which class members were exposed to the substance? who has suffered compensable injuries already? who may never suffer injuries? But if the risk itself is immediate, contingent claims based on that risk are justiciable and are routinely addressed both in toxic tort settlements and in bankruptcy proceedings. In this case, parts of the controversy are already unquestionably ripe: the class members’ titles have already been slandered, and T-Cubed will need to enter the property at least for purposes of its surveys. The only thing (important though it is) that is not known is whether any particular owner will be Cable Side or Non-Cable Side (or both). Furthermore, at the time of settlement, the slander claim was justiciable because some harm had already occurred. This is enough to permit the court to address the entire suit, including the claims for trespass and the injunction. On these facts, those claims are in no way hypothetical; their immediacy and their relation to the slander claim is enough to permit the court to address the entire controversy.
This is particularly true in light of the fact that we are addressing a settlement. The fact that each individual class member did not know the full extent of the burden she would suffer is unimportant. T-Cubed claimed rights to all of the property, and the settlement required all class members to provide T-Cubed with an easement. (citations omitted)
The specific issue before the court was jurisdiction: that is, did it have the power to hear class members’ claims at all? If you believe in slander of title, then the answer has to be “yes.” As soon as T-Cubed made its sweeping claim that it actually had the right to install the conduits, each of the 58,000 property owners could have individually sued it for a judgment that, no, it didn’t. At that point, the “risk” that T-Cubed would trespass (by surveying and laying the conduits) was “immediate,” since those were precisely the rights that T-Cubed already claimed to own.
I have a harder time seeing this case as saying anything about “future claims.” First, the conduct that T-Cubed was ultimately allowed to engage in was only the conduct it initially claimed it had a right to engage in. Thus, the settlement didn’t authorize anything in excess of what the plaintiffs were nominally suing to stop. Contrast the Google Books settlement 1.0, which would have authorized Google to make all sorts of uses it had never claimed a right to make and that weren’t mentioned in the complaint. To the extent that there is a question over whether the Authors Guild settlement releases all arise from a common “nexus of operative facts” as the causes of action alleged in the complaint, Uhl doesn’t provide useful guidance.
Second, the Uhl court never considered whether allowing T-Cubed to lay cable was problematic under Rule 23. Jurisdiction to hear the claims is a very different question than propriety of a settlement under Rule 23(e). You don’t need Uhl to establish that theres’s a live case or controversy between the Authors Guild plaintiffs and Google. Google’s actual scanning of millions of books and announced plans to scan many more are probably sufficient to create jurisdiction on a class-wide basis.
The Uhl decision does contain a Rule 23 discussion of whether the settlement is fair, reasonable, and adquate. That discussion, however, focuses on whether the class was internally conflicted (the Cable Side / Non-Cable Side issue) and whether the Class Corridor company offered sufficient compensation and was permissible as a structured settlement. The court’s conclusions that the settlement complied with Rule 23 do bear on the Authors Guild case: you can see a precedent for blessing the Registry in the court’s discussion of Class Corridor. But the court never considered the “future claims” issue as a Rule 23 question.
And third, even to the extent that the Uhl settlement involves future conduct, there’s a sense in which it doesn’t involve future claims based on that conduct. The plaintiffs were required to convey to T-Cubed a property right—an easement—that renders the issue of future claims irrelevant. Once T-Cubed has the easement, it can survey and lay cable to its heart’s content. The Google settlement, by way of contrast, is designed not to convey any property rights to Google or the Registry. It merely includes releases: promises not to sue Google based on various actions it may take.
Now, argubly, conveying a full-fledged easement posed an even greater burden on plaintiffs than simply giving T-Cubed permission. Or, arguably, property law simply reifies the permission into the easement, so that there is essentially no difference. But still, to property and intellectual property lawyers, the distinction between a transfer of a property interest and a mere license is a fundamental question of characterization. The settlement’s proponents have emphasized that it falls on the “license” side of the line (and thus doesn’t trigger the formalities or expropriation rules of the Copyright Act). That choice creates a potentially significant distinction between Uhl and Authors Guild.
My bottom line is that Uhl is a significant precedent in favor of the proposed settlement—but probably not on the class action issues at the center of the present controversy.