Norfolk Southern Corporation

This securities fraud class action arises out of Norfolk Southern’s materially false or misleading statements that the Company was committed to and investing in the safe operations of its railroads leading up to the February 3, 2023 catastrophic derailment of a Norfolk Southern train in East Palestine, Ohio, which caused significant environmental damage. 

On April 25, 2024, Lead Plaintiffs filed a 302-page complaint (“Complaint”) on behalf of a putative class of investors who purchased Norfolk Southern common stock, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 between October 28, 2020 and March 3, 2023 (the “Class Period”).

Norfolk Southern is an Atlanta, Georgia-based company that owns and operates one of the nation’s largest freight railroads. Norfolk Southern’s 19,100 route miles predominantly cover the East Coast and Midwest, rolling through hundreds of communities in 22 states and the District of Columbia.

In 2019, Norfolk Southern reengineered its company’s culture and operations strategy, adopting a strategy called Precision Scheduled Railroading (“PSR”), which mandates running fewer and longer trains to cut costs. Key to PSR is reducing a railroad’s operating ratio (“OR”), which measures the amount by which operating revenues exceed operating expenses. Seeking to reduce its OR, Norfolk Southern marginalized internal safety systems designed to prevent derailments and protect workers. At the same time, Norfolk Southern nearly doubled the length and tonnage of its trains, sidestepped federal railroad safety regulations, reduced the training available to employees, delayed critical train maintenance, and slashed its workforce, including positions that were essential to safe operations. The Complaint further alleges that, in the midst of these changes, Norfolk Southern repeatedly assured the public that it operated a safe railroad.

As alleged in the Complaint, as a result of the dramatic reductions in safety and training accompanying Norfolk Southern’s version of PSR, on February 3, 2023, a 149-car Norfolk Southern train derailed in East Palestine, Ohio, partially revealing that Norfolk Southern’s PSR implementation elevated profits over safety. The crash was particularly destructive as the train was carrying hazardous materials that posed a health and safety risk to East Palestine and beyond.

Following the derailment, the Complaint alleges that Norfolk Southern continued to make false or misleading statements regarding the threat the derailed train posed to East Palestine. The Complaint alleges that in order to clean up the hazardous materials and resume operations as quickly as possible, Norfolk Southern misrepresented the need to perform a controlled explosion of the derailed tank cars containing the hazardous and flammable chemical, vinyl chloride. Even though the Company knew with scientific certainty that the derailed cars containing vinyl chloride presented no further risk of combustion, Norfolk Southern falsely represented that the cars had to be deliberately detonated to protect the public. On February 6, 2023, Norfolk Southern ordered the detonation of those cars, sending a toxic plume of smoke into the air, polluting the communities along the border of Ohio and Pennsylvania. Norfolk Southern resumed train operations through East Palestine the following day.

The truth of the Company’s unsafe operations became further apparent as two more of its trains derailed within a month of the East Palestine derailment, and as government agencies held hearings uncovering the Company’s reckless practices, causing significant damages to Norfolk Southern’s investors.

Through the Complaint, Lead Plaintiffs seek to recover damages suffered by investors in Norfolk Southern during the Class Period.

In June, Defendants filed a motion to dismiss the Complaint.  The parties are currently engaged in briefing on that motion.

Read the Consolidated Complaint Here