In Re Norfolk Southern Corporation Bond/Note Securities Litigation

Background

Ohio Carpenters Pension Fund and City of Pontiac Reestablished General Employees Retirement System sued Norfolk Southern Corporation, several Norfolk Southern officers and directors, and the underwriters of certain Norfolk Southern senior-note offerings. They asserted claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933. The complaint alleged that offering materials for senior notes offered between August 18, 2020, and January 26, 2023, described Norfolk Southern’s focus on safety and environmental protection but failed to disclose safety risks related to its Precision Scheduled Railroading strategy. According to the complaint, those risks became public after a Norfolk Southern train derailed in East Palestine, Ohio, on February 3, 2023, and the senior notes’ price fell.

The plaintiffs moved under the Private Securities Litigation Reform Act to be appointed lead plaintiffs and to have Labaton Sucharow LLP appointed lead counsel. Their motion was unopposed, and no competing lead-plaintiff motion was filed.

Lead-plaintiff appointment

The court applied the Act’s procedure for selecting the plaintiff most capable of representing the proposed class. It found that the plaintiffs satisfied the procedural requirement because they filed the complaint and timely moved for appointment after notice was published. The court also found that they appeared to have the largest financial interest: they reported combined losses of $239,804.11 from transactions in the senior notes, and no other plaintiff claimed a larger interest.

For the preliminary Rule 23 analysis required at this stage, the court found that the plaintiffs had made the necessary showing of typicality and adequacy. Their claims arose from the same alleged offering-material statements and omissions as the claims of other proposed class members. The court also found no apparent conflict between the plaintiffs and the proposed class, and it credited the experience of their chosen law firm. It further concluded that appointing the two plaintiffs jointly would best serve the proposed class and that there was no proof they could not adequately represent it or were subject to unique defenses.

Lead counsel and disposition

The court found Labaton Sucharow appropriate to serve as lead counsel because of its experience litigating shareholder class actions. It therefore granted the plaintiffs’ motion to be appointed lead plaintiffs and granted their motion to appoint Labaton Sucharow as lead counsel. In the conclusion, the court stated that Ohio Carpenters and Pontiac General were appointed lead plaintiffs and Labaton Sucharow was appointed lead counsel. The court denied as moot the plaintiffs’ request for oral argument. It also directed the parties to meet and confer and file a proposed schedule addressing the next complaint, defendants’ response, and any briefing on potential motions to dismiss.

This order addressed leadership and counsel for the proposed class; it did not decide the underlying Securities Act claims or certify the class.