Investors’ Suit Against Norfolk Southern Presses Ahead

Robbins Geller Defeats Company’s Bid to Defeat Fraud Suit

On March 24, 2024, Robbins Geller Rudman & Dowd LLP defeated a motion to dismiss brought by Norfolk Southern Corporation, one of the largest freight railroad operators in the United States, and certain former executives. In 2023, one of Norfolk Southern’s trains, carrying cars loaded with hazardous materials, derailed in East Palestine, Ohio, ultimately resulting in a detonation that released toxic chemicals into the surrounding community and environment.

Pursuing securities fraud claims, investors alleged that Norfolk Southern had publicly and repeatedly affirmed safety would remain a top priority as it implemented a new strategy to increase its operational efficiency. In truth, however, defendants had systematically dismantled safety measures because, as Norfolk Southern’s former CEO later admitted, the company was focused “solely on profits.” The East Palestine catastrophe exposed to the market the company’s alleged pattern of neglecting safety, despite public statements to the contrary, and investors in the company suffered harm.

The company filed a bid to dismiss the investors’ lawsuit before the Honorable Steven D. Grimberg of the United States District Court for the Northern District of Georgia. In a comprehensive 38-page opinion, the court denied Norfolk Southern’s motion in its entirety. The court’s ruling notes the “heightened importance of safety” to investors where, as here, companies “operate[] in an industry fraught with danger.” The court further credited the “not only strong, but overwhelming” allegations that Norfolk Southern had knowingly misled investors as to the safety of its operations. 

This victory for investors comes on the heels of the dismissal of a different case in the United States District Court for the Southern District of New York. In distinguishing the two cases, Judge Grimberg determined, among other things, that “[plaintiffs here] appear to have made arguments that the plaintiffs in [the Southern District of New York] did not.” 

Jason C. Davis, a partner and counsel for investors in the case, told Bloomberg Law: “We’re pleased with the court’s ruling and look forward to moving the case towards jury trial and, ultimately, securing a recovery for injured investors.”

The case is proceeding under the leadership of Akademikernes Pensionskasse and Ironworkers Locals 40, 361 & 417 Union Annuity, Pension and Topping Out Funds, who are serving as lead plaintiffs in this action and representing the investor class. Robbins Geller brought the suit together with co-counsel Kessler Topaz Meltzer & Check LLP.

Robbins Geller attorneys Jason C. Davis, Ashley M. Price, and Jack Abbey Gephart are litigating the case.

To read more in Bloomberg Law, click here: https://news.bloomberglaw.com/securities-law/norfolk-must-battle-lawsuit-after-ohio-derailment-stock-drops. 

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Bucks County Employees Retirement System v. Norfolk Southern Corporation, No. 1:23-cv-04175 (N.D. Ga.).