A class action lawsuit has been filed on behalf of those who purchased or acquired Norfolk Southern Corporation (“NSC”) (NYSE: NSC) common stock between October 28, 2020 and March 3, 2023, both dates inclusive (the “Class Period”).
mon stock between July 29, 2020 and April 27, 2022, both dates inclusive (the “Class Period”).
For several years leading up to the beginning of the Class Period, NSC took a number of measures which put profits and executive compensation over safety. For example, in October 2018, NSC adopted “Precision Scheduled Railroading” or “PSR” which was purportedly aimed at producing better service at a lower cost. In actuality, the company sought to increase revenues by cutting operating costs including reducing staff, running fewer, heavier, faster trains and optimizing the company’s networks in order to increase efficiency. NSC also began tying executive compensation to achieving PSR goals. For example, in 2021, multiple NSC executives received millions of dollars in cash bonuses for reducing costs by achieving “record performance for train length and weight.” Industry critics have warned that this type of compensation system incentivizes executives to cut costs at the expense of safety and also leads to longer and more dangerous trains which “have greater damage done, greater, larger pileups, fires and so on.” At the same time, NSC and its lobbyists played a key role in defeating an Obama-era safety rule that was used following a number of oil train accidents, including the “ECP Brake Rule” which was ultimately repealed in 2018.
On February 3, 2023, a Norfolk Southern Railway Company freight train derailed 38 railcars in East Palestine, Ohio, leaving behind what the Associated Press called “a mangled and charred mass of boxcars and flames.” The derailed equipment included 11 tank cars carrying hazardous materials that subsequently ignited, fueling fires that damaged an additional 12 non-derailed railcars.
On February 6, 2023, responders engaged in a controlled detonation and burn of the vinyl chloride, spewing massive volumes of chemicals into the vicinity. The chemicals released from the derailment entered the air and water of the surrounding residential areas, the closest of which were only 1,000 feet from the site of the accident. Following this news, the price of NSC stock fell on February 6, 2023, closing at $246.46 per share – down $5.66 per share from its closing price of $252.12 per share on Friday, February 3, 2023.
Then, on February 8, 2023, after lifting a previously issued evacuation order, Ohio Governor Mike DeWine stated that NSC was “the one[] who created the problem. It’s their liability. They’re the ones who ought to pay for it.” Following their return, numerous residents reported hazardous air quality and other health and environmental concerns. In response, the price of NSC stock fell on February 9, 2023, closing at $238.98 per share – down $7.64 per share from its closing price of $246.62 per share on February 8, 2023. Thereafter, NSC’s stock price continued to drop in response to several other reports and public officials who spoke out about NSC’s liability for all of the harm and damage it had caused.
On March 4, 2023, another NSC freight train derailed near Springfield, Ohio. Finally, on March 6, 2023, NSC announced a 6-part plan to improve operational safety that included, among other things, adding about 200 temperature sensors along its tracks, reviewing the temperature levels that set off alarms for train crews, and adding more acoustic sensors that analyze vibrations for potential problems. Following this news, the price of NSC stock fell again on March 6 and March 7, 2023, closing at $215.18 per share – down $13.21 per share from its closing price of $228.39 on Friday, March 3, 2023. …...more
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