EAST PALESTINE — While those impacted by last year’s Norfolk Southern train derailment are forced to wait for the appeals process to play out before receiving compensation from the $600 million settlement between the railroad and class action plaintiffs, it seems the lawyers who brokered the deal do not.

According to case documents filed in Youngstown’s U.S. District Court — a motion by firm Morgan & Morgan to pause the payment of legal fees during the appeal and an order from Judge Pearson denying that motion — the distribution of the attorneys’ $180 million chunk of the settlement is not impacted by appeals. T. Michael Morgan filed the injunction motion on Oct. 28 with Pearson ruling against it on Nov. 18.

In other words, while the residents could wait years to see any direct payments, the lawyers have likely already been paid.

“It has come to the attention of attorney Morgan that class counsel intend to make payments to attorneys (and indeed may have already done so), despite the appeal that is staying direct payments to clients,” Morgan’s motion argued. “This court should preserve the status quo and direct that counsel refrain from distributing fees before all appeals are resolved.”

Morgan’s motion also called into question the distribution of the legal fees — how much each firm would receive and who would decide such matters.

In her order denying the motion, Pearson referred to Section XIV of the settlement agreement which was submitted for preliminary approval on April 26. That section states that the legal fees or “Fee Award” were to be paid within 14 days of final approval by wiring the sum from the settlement fund into the escrow account. It also states that allocation of the $180 million was to be decided by class co-lead counsel — Seth A. Katz, M. Elizabeth Graham, and Jayne Conroy — and co-counsel would then distribute the determined amount to the 39 other firms that are entitled to a slice of the settlement pie. Morgan didn’t raise an objection to that plan at the time.

On the contrary, Pearson noted, he endorsed it, writing in her Nov. 18 ruling that “Clearly, the distribution method for the Fee Award is set forth in the Class Action Settlement Agreement, which was signed by attorney Morgan.”

Pearson also pushed back on Morgan’s claim that he was unaware the attorneys would be paid before residents. While Morgan wrote that had he known, he would have “objected to paying the attorneys while the process for paying class members remain stayed on appeal,” Pearson countered that Morgan was aware of that provision as the term “quick pay” was used in the settlement agreement. A quick-pay provision is a legal agreement that allows class counsel to receive payment for attorney fees and expenses immediately after a final settlement is approved.

In explaining her ruling, Pearson also shed light on just how quickly those calculations were made. According to the document, Morgan received an email on Oct. 7 — less than two weeks after final approval — from lead counsel stating that allocations had been finalized and requesting wire instructions to send Morgan & Morgan its portion of the legal fees.

Meanwhile, the majority of the class members who opted into the personal-injury component — open to those who lived or worked within 10 miles of the derailment and unlike the direct payments are not subject to appeals — are still waiting. Determination letters from Kroll Settlement Administration (the firm processing the claims) have been trickling out to residents. The letters provide the exact amount of the personal injury award (which could be as much as $25,000) that each class member will receive as well as instructions to set up direct-deposit to receive the funds.

Those payments, according to the settlement agreement, were supposed to begin with 30 days of final approval, but so far that process has been painfully slow. It’s been over two months since approval was granted and few residents have reported receiving letters with even fewer reporting that payment has been received.

The Morning Journal reached out to PR Rebuttal, the public relation firm handling media relations for plaintiff counsel last week, for a clarification as to when legal fees were paid as well answers to questions concerning the personal payment process. While those questions were ” forwarded to class counsel,” no response has been received.

A Facebook page set up by residents to share settlement updates reported that 5,000 letters were set to be mailed next week. The post cited a plaintiff attorney as the source of the report, though other posters provided conflicting information that was also attributed to class counsel in what appears to be a pattern of more questions than answers.

The status of the appeal as well as appeal procedure have also been fodder for online speculation.

Over 55,000 claims were made against the settlement, but five class members appealed the final approval ruling, bringing direct payments — which max out at $70,000 per household and are meant to compensate for property damage — to a halt.

In Ohio, an appeal can take several months to a year to be decided, potentially longer if the appellate court’s decision is appealed to the state Supreme Court.

Pearson is currently considering a motion to require the appellants — Zsuzsa Troyan, Tamara Freeze, Sharon Lynch, Carly Tunno and Joseph Sheely — to post an appeal bond of $850,000 as a financial guarantee to cover court costs if the appeal is lost. The bond also ensures that the defendant is not filing a frivolous appeal as the bond is forfeited if the appeal is lost.

If Pearson rules in favor of such a bond and it is not paid, the appeal will not automatically be dead in the water but stay the execution of the judgment could be, meaning direct payments could be disbursed while the appeal is pending. If payments are made and the appeal is won, the burden to recover money paid falls on the appellants. Failing to pay the bond if ordered could also result in complete dismissal of the appeal.

As for the attorney fees already paid out, if the settlement is modified or reversed on appeal, Section XI of the settlement agreement requires class counsel to return to Norfolk Southern within 14 days any and all attorneys’ fees along interest.

selverd@mojonews.com

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