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Client Successes, News

Schnader Achieves Back-to-Back Appellate Victories for Railroads

08/31/2017

On August 28, the Third Circuit Court of Appeals affirmed the District Court of New Jersey in dismissing claims against Conrail, Norfolk Southern Railway, and CSX Transportation.  Schnader represented the railroads in the consolidated appeals.

After a train derailed in Paulsboro, NJ releasing vinyl chloride, numerous residents, first responders, etc. sued, seeking compensation for alleged physical injuries, ongoing medical monitoring, emotional distress caused by fear of cancer, and punitive damages.  The District Court held that certain of plaintiffs’ liability claims were preempted by federal law, that plaintiffs could not recover for fear of cancer, and that punitive damages were unavailable as a matter of law.  The court then granted summary judgment to the railroads in three of the cases.  In another case, the court held that it did not have subject matter jurisdiction because, based on “subsequent revelations,” plaintiffs could not meet the requisite amount in controversy requirement.

In its 23-page non-precedential opinion, the Court of Appeals (1) affirmed the District Court’s dismissal for lack of subject matter jurisdiction over the one case that the District Court had dismissed, agreeing with the court’s merits rulings; (2) dismissed two of the other appeals for lack of subject matter jurisdiction; and (3) dismissed the final case for lack of appellate jurisdiction.

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The next day, the Third Circuit Court of Appeals issued an opinion affirming a ruling from the U.S. District Court for the Western District of Pennsylvania in favor of Schnader’s clients Norfolk Southern Railway and Wheeling & Lake Erie Railway Company.

The case concerns the interpretation of a long term lease for 112 miles of rail track running through western Pennsylvania, West Virginia, and Ohio.  In 1962, Norfolk leased the track from the Pittsburgh & West Virginia Railroad (PWV) for a fixed $915,000/year and a 99-year term, renewable at Norfolk’s sole discretion.  As the years went on and a new chairman came to the helm at PWV, PWV sought to hold Norfolk and Wheeling in default under various of the lease provisions.

Norfolk and Wheeling filed suit in federal court, seeking a declaratory judgment that they were not in default under any of the lease terms PWV had invoked.  After extensive discovery, the District Court issued a 74-page opinion granting summary judgment to Norfolk and Wheeling.  The Court subsequently held a bench trial on a remaining fraud claim and found in Norfolk and Wheeling’s favor on that as well.

In its 25-page precedential opinion, the Court of Appeals affirmed the District Court in all respects.

Nancy Winkelman handled the Third Circuit appeal on behalf of the railroads in both cases, with trial counsel as co-counsel, and with her Schnader colleague Danielle Morrison assisting in the second.  The opinions can be found at the following links: In re: Paulsboro Derailment Cases and Norfolk Southern v. Pittsburgh & West Virginia Railroad.