Thousands of landowners -- many of them farmers across America's heartland -- will enjoy a financial windfall for use of their property by one of the country's largest railroads.

Purchases of rights-of-way are nothing new, especially in connection with railway companies. And many a landowner has grudgingly submitted to development in right-of-way easements on their property. But what happens if a company uses the easement for something other than its intended purpose?

That question has been resolved in a settlement that could net hundreds of millions of dollars, including a portion of company profits, for plaintiffs in a class action suit against Thoroughbred Technology and Telecommunications Inc., also known as T-Cubed. The lawsuit also has opened a floodgate of potential litigation against other railroad companies using rights-of-ways for purposes other than transportation.

T-Cubed is a subsidiary of Norfolk Southern Railway Co., owner of the country's fourth-largest railroad system. The telecom firm last year announced plans to install fiber-optic cables alongside Norfolk's existing rail lines -- about 2,500 miles along nine rail routes in 16 states. Since it already had the right to lay track across this land, Norfolk saw no problem with its plans to install telecommunications equipment in the same area.

But the more than 50,000 affected landowners did not see it that way and demanded compensation. The plaintiffs contended that the railroad company's right-of-way easements could be used only for railroad purposes and not for a separate telecommunications business.

"This settlement will put real value into the hands of the people whose property is being used to construct the country's fiber optic backbone. Landowners will get cash and they will also participate for the first time in future profits from use of their land for fiber optic systems," said Nels Ackerson, a lawyer for the plaintiffs.

This is the first settlement in a class action suit over installation of fiber-optic cable over railways, but don't expect it to be the last. Several other railroad companies already have been slapped with summons of their own. In fact, Ackerson has initiated many of the other suits.

Meanwhile, the landowners in the T-Cubed case suddenly will realize windfall profits for the use of their real estate. T-Cubed will pay landowners up-front cash, in addition to a cut of future profits.

First, they will be awarded a guaranteed payment of $6,000 per mile for the first three conduits T-Cubed plans to install. Then, real estate owners will receive 7.5 percent or more of the revenue T-Cubed realizes from selling additional conduits beyond the first three. If all planned conduits are leased, the company says, cash compensation may exceed $30,000 per mile.

But wait, there's more. A new company has been formed specifically for the plaintiffs. They can own equity in Class Corridor, LLC, which will own telecom easements over the plaintiffs' land on the side of the track not being used by T-Cubed. It's a complicated arrangement, but could net thousands - or even millions - for real estate owners.

The settlement already has been approved by a federal judge. Final approval is expected on Aug. 21 after a fairness hearing.

For more articles by Lesley Hensell, please press here.

Published: June 6, 2001

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