Derailment settlement town hall held

COLUMBIANA, Ohio — Seth Katz, one of the attorneys who brokered last week’s class-action principle agreement with Norfolk Southern, told residents during a town hall meeting at the Columbiana Theater on Monday, that the next step in the process is to file a motion to convince the U.S. District Court in Youngstown that the $600 million settlement is “fair, reasonable and adequate.”

Katz, along with Mikal Watts of East Palestine Justice, spent most of the hour-long informational session, trying to convince residents of the same thing.

“Your job is to look at the evidence and decide what you want to do. My job is to not sugar coat the evidence,” Watts said. “We found what we found. The liability evidence is really strong. One of the strongest liability cases we’ve ever seen. The damages evidence with respect to personal injury for most of you is not strong. It makes the best recovery achievable for property damage, a loss of value of your real estate, the cost to clean up versus recovering a bunch of money for a potential cancer that may or may not come.”

Watts explained that in order to collect for personal injury, causation must be proved. In legal terms, causation is the relationship of cause and effect between one event and the result. In a personal injury case, a plaintiff must establish causation.

In other words, it’s not enough to show that the defendant was negligent. While many believe they have suffered adverse health due to last year’s train derailment and intentional chemical release, Watts said proving it is not as easy.

Residents must show that medical symptoms correspond with derailment-related contamination. Reported or documented symptoms matter little if environmental testing does not show the probability of chemical exposure. Yes, the train derailed. Yes, chemicals were released. Yes, those chemicals polluted the environment and damaged personal property. Did those chemicals poison residents? That question is not so cut and dry.

“We know what chemicals got released. We know what they were. We know what cars they were in. We know how much got released. And we know it, in effect, created dioxin which is not a good thing,” Watts said. “But that’s not enough to win a lawsuit in an environmental tort case. You have to show that not only that it got released, but through air modeling and soil sampling that it actually ended up in the particular properties where the plaintiffs were. You have to show the level of that together with the epidemiology to be able to prove some causation for the injuries that were alleged. That is a different kettle of fish than saying my property has been damaged or my property value has gone down because of all the negative press and because of the pollution we know was here.”

Watts did not disclose the results of what was described as extensive testing — those results will eventually be made public through legal proceedings and discovery — but he did reveal that the results showed “prevalent” contaminants at or near the derailment site. Residents who lived or worked within 10 miles of “ground zero” are considered to be Class 1 and have the strongest claims based on loss of enjoyment of their properties, emotional distress, loss of property value, lost wages and the potential cost of future medical care. Claimants that fall into that class will be entitled to a bigger piece of the settlement based on a set formula.

“There has been misreporting that you just take the $600 million and divide it by the number of people that live in the 20-mile radius and that couldn’t be further from the truth. There are claim forms that have to be submitted with different criteria that is still being finalized but proximity to the derailment site will be one of the most important factors in all this,” Katz said. “That means people who live, work and were there closer to the derailment site will be awarded more money then someone who was at the 20th mile. That’s just the way the process is going to work and it is designed to be streamlined.”

Class 2 claimants are considered to be residents or employees within 10 to 20 miles of the derailment where contamination was found to be “less prevalent” but still allows claims based on the same criteria as Class 1.

The criteria will include location/distance from the derailment site, household composition (number of adults and children), length of time displaced or located, time missed from work, out-of-pocket expenses and derailment-related benefits already received. It was also explained that any prior assistance received from any source will be deducted from funds awarded through the claim process. If prior assistance exceeds the award, the award will then be placed back into the settlement fund to be distributed back into the community.

Class 3 is for business owners within 20 miles. Business owners must show a loss of revenue in 2023 compared to what was reflected in 2022 tax documents.

As for areas outside of the 20-mile radius, Watts said contamination was “virtually non-existent” that far away which means the chance of success of claims from individuals in those locations is “virtually non-existent” as well.

Class 1 claimants can also opt in to the “voluntary personal injury program.” That option is only open to individuals within the first 10 miles of ground zero for personal injuries (adverse health impacts from the derailment) — suffered in the past, present or future. Opting in means forever releasing Norfolk Southern of all personal injury claims related to the derailment. That will allow for additional compensation based on, among other things, location to the derailment, duration of health symptoms, medical treatment sought or received and any formal diagnosis given. Symptoms reported have been wide-ranging — from persistent nosebleeds and rashes to respiratory and digestive ailments to cognitive issues and seizure-like episodes. No provision was included in the settlement requiring Norfolk Southern to monitor public health ä now or in the future.

“The court dismissed the claim for medical monitoring (against Norfolk Southern) but the payments for medical monitoring are included in this component of the settlement,” Katz said. “If you get an award in the settlement that falls into this bucket, you can use the money for whatever you want, but the claims that are being asserted against Norfolk Southern are being released. That means they are going to pay this money and that’s it.”

Residents can choose to not take part in the “voluntary personal injury program” but continue with claims for property damage under the class-action settlement. That will reserve an individual’s right to sue for personal injury if they choose to do so in the future. Watts referred to it as “having your cake and eating it too.”

Katz said that participating in “voluntary personal injury program” as part of the class action suit has advantages for those seeking compensation for personal injury and said it was beneficial for those who need money now. Individuals can opt-in to the personal injury program even if they have not yet experienced symptoms or sought treatment. The personal injury component presumes that individuals within the 10 miles were exposed to toxins at some level and are thus are eligible for additional compensation

“The level of proof is well, well, well below what you would need to prove in a lawsuit — the liability, damages, causation,” Katz said. “We don’t have to do that here and you will not have to do that as well as part of the claim form … There was a group of class representatives who participated in the litigation, who sat through depositions, had their lives turned upside down and collected documents so that not everybody had to.”

That litigation process spanned 14 months. The first lawsuit, which was later consolidated with 30 others to create the class action, was filed on Feb. 7, 2023 — just days following the derailment and one day after the vent-and-burn. The settlement amount was proposed by mediator Layn Phillips — a former United States Attorney, former United States District Judge and founder of a dispute resolution firm which focuses on the mediation of complex disputes. Both parties agreed to Phillips’ proposal on April 9. The same day, the agreement was disclosed when Norfolk Southern, a publicly-traded company, filed a Form 8-K with the Securities and Exchange Committee — a requirement to announce major events relevant to company shareholders.

“We negotiated back and forth. The bottom line is this gentleman made a mediator’s proposal of $600 million and at that point it was up to the parties to decide to recommend that to their clients,” Watts said. “The leadership of the plaintiffs had to decide if this was something we think we should recommend to the plaintiffs at large, and the attorneys representing Norfolk Southern had to recommend it to the board of directors who had to approve it.”

Judge Bentita Pearson will next either accept or reject the principal settlement. If she accepts it, the court will give preliminary approval. Once that is received, the claim process can begin, and residents impacted can decide whether to participate or not. Once the claim process is complete — all of the packets and paperwork collected — awards will be determined and checks could be sent out as early as December.

Watts also explained that a provision in current proposed legislation, introduced as the Tax Relief for American Families and Workers Act of 2024, that would make derailment-related assistance tax exempt at the federal level could also be applied to any settlement awarded. U.S. Sen. Sherrod Brown, D-Ohio, has been advocating for the bill since January. Brown had pushed to get the legislation enacted before the start of the filing season on Jan. 29 after it passed the U.S. House of Representatives by a vote of 357-70, but it is yet to make it to the Senate floor. Last week, Brown continued to push for East Palestine derailment tax relief, calling on the Secretary of the Treasury Janet Yellen and the Internal Revenue Service Director Danny Werfel to declare the derailment “a catastrophic event.” Under Section 139 of the IRS tax code certain payments to individuals may be excluded from income if they were to pay or reimburse expenses incurred as a result of a “qualified disaster.” Derailment assistance has already been made tax exempt at the state and village levels.

The potential federal tax exemption means more money in the pockets of those impacted by the disaster who choose to make a settlement claim. Whether that settlement — the largest ever paid out by a railroad — is a sufficient remedy, is up to each individual to decide.

“As with any settlement, people say ‘is that enough.’ I can tell you this is the largest railroad settlement in the history of the country by a factor of four, I think,” Watts said. “It’s unprecedented, but is it enough? That’s a decision you all are going to have to make.”


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