Norfolk Southern settles derailment suit for $600M
Norfolk Southern has agreed to pay $600 million in a class-action lawsuit settlement related to a fiery train derailment in February 2023 in East Palestine, Ohio.
The company said the agreement, if approved by the court, will resolve all class action claims within a 20-mile radius from the derailment and, for those residents who choose to participate, personal injury claims within a 10-mile radius from the derailment.
About 50 cars of the freight train — which had roughly 150 cars and three locomotives — derailed on the outskirts of East Palestine, near the Pennsylvania state line, with some cars transporting hazardous materials. An evacuation covered 1,500 to 2,000 of the town’s approximately 4,800 to 4,900 residents.
Norfolk Southern said Tuesday that individuals and businesses will be able to use compensation from the settlement in any manner they see fit to address potential adverse impacts from the derailment, which could include health care needs, property restoration and compensation for any net business loss. Individuals within 10 miles of the derailment may, at their discretion, choose to receive additional compensation for any past, current, or future personal injury from the derailment.
The company said that the settlement doesn’t include or constitute any admission of liability, wrongdoing or fault.
The settlement is expected to be submitted for preliminary approval to the U.S. District Court for the Northern District of Ohio later in April 2024. Payments to class members under the settlement
could begin by the end of the year, subject to final court approval.
Norfolk Southern has already spent more than $1.1 billion on its response to the derailment, including more than $104 million in direct aid to East Palestine and its residents. Partly because Norfolk Southern is paying for the cleanup, President Joe Biden has never declared a disaster in East Palestine, which is a sore point for many residents. The railroad has promised to create a fund to help pay for the long-term health needs of the community, but that hasn’t happened yet.
The plaintiffs’ attorneys said the deal is the result of a year of intense investigation of the derailment, and should provide meaningful relief to residents.
“This resolution comes shortly after the one-year anniversary
of the disaster and will provide substantial compensation to all affected residents, property owners, employees and businesses residing, owning or otherwise having a legal interest in property, working, owning or operating a business for damages resulting from the derailment and release of chemicals,” they said.
The railroad also announced preliminary first-quarter earnings of 23 cents per share Tuesday to reflect the impact of the settlement.
Railroad CEO Alan Shaw, who is fighting for his job against an activist investor who wants to overhaul the railroad’s operations, said Norfolk Southern is “becoming a more productive and efficient railroad. There is still more work to be done to achieve industry-competitive margins.”