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Amid some backlash, lawyers defend $600 million settlement with Norfolk Southern

A Norfolk Southern train runs through East Palestine less than two weeks after a derailment on Feb. 3.
Oliver Morrison
90.5 WESA
A Norfolk Southern train runs through East Palestine less than two weeks after a derailment on Feb. 3, 2023.

As news of a $600 million preliminary settlement with Norfolk Southern railroad spread on Tuesday, the lawyers who negotiated the settlement on behalf of residents impacted by last year’s derailment in East Palestine, Ohio touted the fact that it was the largest derailment settlement of which they're aware.

The Feb. 3, 2023 derailment resulted in the widespread release of more than 1 million pounds of toxic chemicals, causing residents to be evacuated from their homes in the immediate aftermath. As the days turned into weeks and months, many residents said they had developed health symptoms as a result of the derailment. Businesses said their customers didn’t return, and residents selling their houses said they worried they would never be fully compensated.

The settlement announced on Tuesday is intended to cover all of those impacts. If accepted, it would avoid a trial that had been scheduled to start in November.

But some residents on Tuesday protested that even $600 million isn’t enough. Skeptics worried that there wouldn’t be enough funding left after all the lawyers' fees are taken out. And they wondered if it would cover future health conditions that develop later, such as cancer. And they said it was premature to settle if there are still unresolved issues in town.

Jess Conard, meanwhile, said she is less worried about receiving compensation than she is about sending a message to Norfolk Southern and other companies that they need to prevent disasters before they happen. Conard said that $600 million was still just one-fifth of the company’s annual revenue in 2023 and that the company would just factor the amount into its bottom line.

“Whatever it takes to get corporations to stop poisoning people, that's what needs to be done,” Conard said. “And in my opinion, it seems like the $600 million settlement is not going to do that.”

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Conard changed careers after the derailment: She had been a speech therapist but is now an environmental organizer for Beyond Plastics. Conard said she would be happy if everyone affected received $10 million, a number that she said would force companies to pay more attention to prevention. And she believes a penalty that large wouldn’t just help residents impacted in this derailment but would help to prevent future accidents as well.

“If you live near a rail line or you live near a pipeline or you live near the river where they’re transporting this on a cargo ship, this could happen in your community,” she said. “What do you want to see for your community?”

The specific amount each family would receive under the settlement is still unclear, so Conard and others don't yet know how her family would be compensated.

The lawyers in the case say they are working with a financial expert to develop a point system that would determine how much each person receives. The compensation will depend on how closely they were located to the derailment and the impacts they can cite. Businesses will have to show their losses in 2023 compared to other years. Anyone within 20 miles could potentially be part of the settlement, and those within 10 miles can show evidence that their health was impacted by the derailment.

Conard said her family would discuss what they would do once she learned more.

The lawyers’ defense

Lawyers who negotiated on behalf of the plaintiffs have been put on the defensive. They say the settlement is based on hundreds of hours of investigations, testing, interviews, and in the end, three days of negotiations with Norfolk Southern that were mediated by a former judge. The lawyers are awaiting the judge’s decision about whether to accept the settlement before reaching out to residents with more information. They said that no one will have to decide whether they support the settlement until they know what they would receive.

“I would ask for patience,” said Seth Katz, one of the lead lawyers, saying the lawyers needed more time to reach out to the community once the judge approves it.

Katz described the legal case as an uphill battle and called the settlement a “very very good” result. The lawyers said they have been consulting with a handful of residents who were deposed in the case, and those residents approved of the settlement.

In addition to its historic size, the lawyers said the settlement would provide residents with compensation much more quickly than is typical. Jayne Conroy, one of the lead lawyers in the class-action lawsuit against Norfolk Southern, said it took many years for people to receive compensation after the 1989 Exxon Valdez and the 2010 BP oil spills.

“We can be looking at five, six or seven years before anyone receives any money at all,” Conroy said. “So there's a significant advantage here, not only with the size of the settlement but with the speed of the settlement.”

Conroy believes that the settlement amount will have an impact on Norfolk Southern’s practices.

“We would like to think that $600 million would be enough to get the train company to change its practices,” she said.

But she also said that state and federal officials still have their own lawsuits pending to cover the environmental cleanup costs and the impact and the public nuisance. Those cases could result in additional penalties for the railroad.

Conroy said she believes the class-action settlement doesn't preclude residents from filing lawsuits later if they have evidence that the derailment caused harm in the future, such as a disease like cancer.

Mike Morgan, another lead lawyer in the case, said that unlike traditional class-action cases, residents have to opt in to the personal injury portion of the case. They can accept the settlement and invest that money so that it’s available to pay for future medical expenses. Or they can opt out, he said.

Morgan also emphasized that the process for proving personal injury will be more streamlined in the class-action settlement than it would be for people who filed their own, separate lawsuits.

M. Elizabeth Graham, another lead lawyer, said the lawyers structured the settlement this way because their experts didn’t believe the short-term risk of cancer was as high as initially thought.

“If there are individuals who unfortunately do get sick, it will be years from now,’ she said. “So the payment would cover those future expenses. And we're also going to be putting the community in touch with people who will help manage, if they are concerned, manage a portion of the money so that it is in trust for them and that it will grow. So if down the road something happens, they will have been compensated and have money for medical care.”

The settlement can apply to any residents who can show they were impacted, Conroy said: Even residents who have so far avoided finding a lawyer will be able to sign up. The lawyers are taking over the Family Assistance Center, which for the past year had been operated by Norfolk Southern, to dole out more than $20 million in immediate assistance to residents. Now residents will be able to go to the assistance center to get information about the settlement.

“We'll have the opportunity to speak to individuals and business owners and explain the process in detail one-on-one so that everyone appreciates what this settlement covers,Conroy said.

The court will take into account how much money residents have already received in compensation from Norfolk Southern, Conroy said. For example, she said, they may have already been reimbursed for the cost of staying in a hotel.

Some residents criticized the settlement for not requiring the company to admit wrongdoing. Instead, the legal filings allow Norfolk Southern to seek damages from four of the companies who owned the rail cars and their contents. An initial NTSB report showed that a bearing on one of the railcars that was not owned by Norfolk Southern was the likely cause of the accident.

Conroy said that the settlement amount itself was itself a kind of admission. “There's no court finding of responsibility on Norfolk Southern,” she said. “They are agreeing to take responsibility up to $600 million.

Some residents, in social media posts, raised concerns that the lawyers would receive 40% or more of the total settlement fee. Conroy said the judge in the case would decide the lawyers’ fees.

Conard worried that the settlement would require residents like her to sign a non-disclosure agreement that would prevent her from continuing to speak out about the disaster. But Conroy said that the company had not asked for disclosure agreements as part of the settlement terms.

Conroy expects that U.S. District Judge Benita Y. Pearson could approve the settlement by August or September, and payments to residents could begin before the end of the year.

“We don't believe she's going to sit on this. She's very active in this litigation and very concerned about the residents of East Palestine,” Conroy said. “So if that were to happen quickly, we fully anticipate payment by the end of 2024.”

There is a chance, however, that the railroad could still scuttle the agreement if it doesn’t get community support.

“Norfolk Southern may decide not to settle,” she said. "They have the ability to back out if it does not include enough people.”

Oliver Morrison is a general assignment reporter at WESA. He previously covered education, environment and health for PublicSource in Pittsburgh and, before that, breaking news and weekend features for the Wichita Eagle in Kansas.