Norfolk Southern shareholders sue over Ohio derailment

By Jonathan Stempel

(Reuters) – Norfolk Southern Corp (NYSE:) shareholders have accused the railroad of defrauding them by prioritizing revenue over security previous to final month’s derailment of a prepare carrying hazardous chemical substances in East Palestine, Ohio.

In a lawsuit filed on Thursday in Columbus, Ohio, federal court docket, shareholders mentioned Norfolk Southern performed down the dangers of utilizing what is named “Precision Scheduled Railroading,” which depends on longer and heavier trains that require fewer staff.

Shareholders mentioned Norfolk Southern embraced a “tradition of elevated risk-taking” that left it susceptible to elevated prepare derailments, making its public statements concerning the security of its operations materially false or deceptive.

A Norfolk Southern spokesman declined to remark, saying the Atlanta-based firm doesn’t talk about pending litigation.

Different defendants embrace Chief Government Alan Shaw, his predecessor James Squires, and Chief Monetary Officer Mark George.

Norfolk Southern has confronted many lawsuits over the Feb. 3 derailment, together with circumstances introduced by native residents and Ohio’s legal professional normal.

The derailment launched greater than 1 million gallons of hazardous supplies and pollution into the setting, and the U.S. Environmental Safety Company has ordered Norfolk Southern to wash up the contamination and pay the prices.

Thursday’s lawsuit was filed by Pennsylvania’s Bucks County Staff Retirement System, and seeks damages for shareholders between Oct. 28, 2020 and March 3, 2023.

Norfolk Southern’s share worth fell 9.4% between the derailment and March 3, wiping out about $5.4 billion of market worth.

Six of the seven largest U.S. freight railroads use Precision Scheduled Railroading: Norfolk Southern, Canadian Nationwide, Canadian Pacific (NYSE:), CSX (NASDAQ:), Kansas Metropolis Southern (NYSE:) and Union Pacific (NYSE:).

The seventh railroad, BNSF, a part of Warren Buffett’s Berkshire Hathaway (NYSE:) Inc, doesn’t use it.

The case is Bucks County Staff Retirement System v Norfolk Southern Corp et al, U.S. District Courtroom, Southern District of Ohio, No. 23-00982.