NEW YORK — Norfolk Southern, already facing suits from the state of Ohio and a number of individuals and businesses over the East Palestine derailment, is now the target of multiple lawsuits from or on behalf of its stockholders.
At least three such lawsuits have now been filed.
Bragar Eagle & Squire, which describes itself as “a nationally recognized stockholder rights law firm,” was first to announce a class-action suit against the railroad over losses suffered by stockholders — essentially arguing that the railroad’s investor-driven Precision Scheduled Railroading strategy to reduce costs has proven to have negative consequences for investors.
According to a press release, the suit alleges that the railroad “made false and/or misleading statements and/or failed to disclose” that PSR “led to … a materially increased risk of future derailments” and “was part of a culture of increased risk-taking at the expense of reasonable safety precautions due to Norfolk Southern’s near-term focus solely on profits,” among other claims.
In response to an inquiry from Trains News Wire, Norfolk Southern said it cannot comment on pending litigation.
Bernstein Liebhard LLP announced today that it has filed a similar lawsuit, as did Bronstein, Gewirtz & Grossman, LLC, while Reuters reports a suit has been filed by Pennsylvania’s Bucks County Employees Retirement System against the railroad and other defendants including CEO Alan Shaw, former CEO James Squires, and Chief Financial Officer Mark George. It was unclear if the latter suit might be one of the three previously mentioned.
Several suits to be combined
In other legal news, the Youngstown Vindicator reports that the plaintiffs in 21 lawsuits filed against Norfolk Southern over the East Palestine derailment have agreed to consolidate their individual suits into one action.
Judge Benita Y. Pearson of U.S. District Court had asked the parties to consider consolidation on Feb. 8. One of 22 plaintiffs elected not to join; Norfolk Southern has agreed the consolidation was appropriate. Three attorneys have been appointed by Pearson to lead the consolidation and coordinate the cases.
— Updated at 7:35 p.m. and 8:35 p.m. CDT with information on additional shareholder lawsuits.
I’m not a lawyer, but I’ve never heard of this. They’re suing themselves. Stockholders own the company. Each stockholder has number of shares to vote on who sits on the BOD. If you don’t like who sits on the BOD (perhaps because your fews shares don’t carry much weight) then sell your stock and walk away.
Norfolk Southern would not be in so much legal trouble with deferred maintenance and infrastructure if it operated with the decipline and efficiency of predecessor Southern Railway System. Southern Railway had the greatest safety record. And it was the most profitable in the industry during the 20th century.
If they win the lawsuit NS could say “OK, no dividends for 10 years to pay for this “
I have asked this before and elsewhere.
Is current technology and engineering up to running the kind of trains that are being run? 20,000+ tonnes and 200+ cars. Draw bars and locomotives can only do so much. It’s like a Fiddled on the Roof, lean too far one way and off the roof you go, lean too far the other and off the roof you go in the other direction. Too much pull you risk breaking drawbars, stringlining derailments. Too much power on the back and cars get jacknifed together.
With the weights involved did anyone ever do engineering simulations to see where the stresses were?
I agree with James Shigley. This is the small stockholders who have little say in how things are run. I have stock in UP but not any power of stopping the stupidity they’ve displayed.
IMO a non-stockholder non-RR affiliated injured person should sue the major stockholders who have pushed the PSR nonsense as they are placing harm to the general public.
IMO any stockholder who influences safety items negatively should be able to be held liable criminally and financially. What congress is not exploring is the multiple ownerships of RRs by the same controlling stockholders.
Isn’t this like suing yourself if you slip & fall on your own icy sidewalk??
After the lawyers and law suits, Warren Buffett can buy it at a bankruptcy sale for pennies on the dollar.
This takes the cake! The very same investors who have so willingly gone along with PSR – who in fact sung its praises and championed its record stock prices and dividends, its staffing cuts and stock buybacks, its record low Operating Ratio and its super long trains – are now crying the blues that the monster that they in fact created, has come to haunt them. Well, this is just priceless! Ron Kaminkow, locomotive engineer, Organizer for Railroad Workers United
Yup, the lawyers are going to have a field day with the aftermath of the East Palestine, Ohio wreck, and per Mr. Lampman’s comment above, they will only benefit, not the stockholders.
One hopes Norfolk Southern has deep pockets and/or good insurance to deal with all of this. It’s going to be costly …..
DUH!!!!
Really!!!!!! So let me get this straight. The railroad is compelled by the stockholders which controls the board of directors on how the railroad should be ran, and it is being ran into the ground to appease those very people, now they’re pissed that the very methods they decreed eventually led to a derailment that ultimately is lowering their stock price and payouts!!!!! These people live in a hole filled with something other than reality that’s for sure. When you roll the dice and come up with craps the whole table loses…………
Hoping Norfolk Southern gets taken to the cleaners… for BILLIONS.
their disregard for public and employee safety speaks for itself. PSR is also driven by executives that get most compensation from stock. A billion dollar payout from a jury trial is exactly what is needed to focus executives on their primary responsibility of safety. Safety is always first, financial returns are secondary. Period.
Any money paid out will come from the railroads coffers. The execs won’t lose anything. If they are forced out you can bet they’ll land on their feet somewhere else.
only the lawyers will win, not stockholders.
I thought the stock market was always like a game of chance. You invest your money in stocks hoping they go up. If they don’t you lose your money. Are we now going to sue every company who’s stocks go down?
OK, I am really confused here. A nationally recognized stockholders rights law firm wants to sue the NS for investor driven PSR strategy? How in hell does this make any sense? Investors suing an investor strategy. Does this make sense to anyone?
Depends on which stockholders are suing. The vast majority of any stock listing is held by a few stockholders (usually funds) who control the message to the board. The majority by number of stockholders may oppose a policy but if a majority by number of shares supports it, it is likely to get followed.
Another lawyer trying to make a quick buck.
PSR “led to … a materially increased risk of future derailments”. Hard to prove!