JACKSONVILLE, Fla. – CSX Transportation says Berkshire & Eastern’s operation of Pan Am Southern, which began today, should moot the concerns that Norfolk Southern raised last month in a lawsuit alleging that CSX was hampering its access to New England.
NS asked a Delaware court for an expedited preliminary injunction that would bar CSX and Springfield Terminal, which was then the operator of Pan Am Southern, from “breaching the contractual safeguards that were put in place to allow for equal access and to maintain competitive balance” in New England.
Pan Am Southern is the 50/50 joint venture NS and Pan Am Railways formed in 2009 to improve the Class I’s access to New England. CSX became NS’s partner in Pan Am Southern last year through its acquisition of Pan Am Railways.
As a condition of the Surface Transportation Board’s approval of the acquisition, Genesee & Wyoming’s Berkshire & Eastern was designated neutral operator of the 414-mile Pan Am Southern, which consists of the former Boston & Maine main line between Mechanicville, N.Y., and Ayer, Mass., as well as Pan Am’s north-south trackage rights routes in the Connecticut River valley.
In its lawsuit, NS claims that CSX has “brazenly and repeatedly” violated key provisions of the operating agreement contract between the railroads. “This, in turn, has had a meaningful negative impact on the financial and service performance of Pan Am Southern … while at the same time hamstringing Norfolk Southern’s freight railroad access to New England markets,” NS said.
CSX, in a court filing last month, said the suit should never have been filed because NS’s claims — which CSX insists lack merit — must go to arbitration. “No emergency requires the Court to act in advance of any such arbitration. Expedition should be denied for four independently sufficient reasons,” CSX told the court.
For nearly a year NS and CSX discussed disagreements over certain operating agreements, yet NS never began the dispute resolution process, which is mandatory arbitration, CSX said.
NS also failed to show a threat of imminent harm or irreparable harm likely to occur before the appointment of an arbitrator, CSX told the court.
CSX also noted that NS since at least July 28 was aware that Berkshire & Eastern was scheduled to become neutral operator of the Pan Am Southern on Sept. 1. “That operational change will moot Norfolk’s claims, making any motion for a preliminary injunction pointless,” CSX told the court.
“Defendants suspect that Norfolk’s true purpose in filing this action was to generate press in advance of B&E’s appointment as the operator of the relevant PAS lines. Norfolk succeeded, at the cost of Defendants’ and the Court’s time and resources,” CSX said.
when will we expect norfolk southern running some of their own trains on the csx line over washington hill and through palmer ?
You don’t think NS knew the contract required arbitration? They filed the suit to get everyone’s attention in the world of public opinion. Even CSX said so….
“Defendants suspect that Norfolk’s true purpose in filing this action was to generate press in advance of B&E’s appointment as the operator of the relevant PAS lines. Norfolk succeeded, at the cost of Defendants’ and the Court’s time and resources,” CSX said.
Now the shareholders know that if NS loses business on the JV, the NS suits can blame CSX. In the corporate world we call that one big “CYA”.
NS needs to quit doing partnerships. If they want to grow, they need to do it themselves. They have been burned to many times.
The judgement shall indeed be that the case is moot. NS is always the crybaby in joint operations.
CAN’T WE JUST GET ALONG
Well, we got away with it as long as possible. Now let Berkshire sort out the precedents that we established before this transfer.