EAST PALESTINE — The five residents appealing the $600 million class action settlement between Norfolk Southern and impacted community members in the wake of the 2023 train derailment and subsequent chemical release will be required to post an $850,000 appeal bond, Judge Benita Pearson ruled Thursday in Youngstown’s District Court.

“Within 14 days of entry of this Order, appellants Rev. Joseph Sheely, Zsuzsa Troyan, Tamara Freeze, Sharon Lynch, and Carly Tunno shall each contribute $170,000 towards a total bond of $850,000 to be posted with the Clerk of Court to protect the interests of the class and ensure payment of costs on appeal,” Perason ruled. ” The appeal bond shall be the responsibility of all appellants. If any appellant withdraws their appeal, the remaining appellants are responsible for the entire bond amount.”

Tennessee-based attorney David Graham argued on behalf of the five appealing residents (the appellants) that ordering a bond of nearly $1 million would force his clients to abandon their appeal as they were in no position to afford such a sum before the derailment much less after suffering financial hardships as a direct cause of it.

Pearson dismissed the notion that an appeal bond was a “barrier” to the appellants in pursuing their rights to appeal her final approval of the landmark settlement granted in September. She noted that it is the appellant’s burden to demonstrate that a bond would constitute a barrier to appeal.

“An appeal bond, in this case, is a guardrail, not a barrier. Despite having been made aware of the possibility of an appeal bond, appellants proceeded,” she wrote. “That alone belies their argument that an appeal bond would be a barrier. Thus ‘appellants’ financial ability to post a bond’ factor does not detract from the imposition of an appeal bond in the requested amount. Rather, the court finds an appeal bond in the amount requested is an appropriate response to the costly circumstances the appeals trigger.”

The bulk of the appeal bond — $825,000 — is the amount Kroll Settlement Administration maintains an appeal would generate for the New York firm processing the 55,000 claims made against the settlement. According to final approval documents, without any appeal, Kroll stands to pocket up to $20 million for doing so.

While many residents celebrated the order for an appeal bond in hopes the ruling would quash the appellants’ appeal efforts and lead to faster distribution of the direct funds which could be held up for two years while the appeal process plays out, others questioned the amount of Kroll’s additional fees due to an appeal. The announcement of the bond requirement caused a flurry of social media posts from residents, ranging from relief to indignation — as many are still awaiting payment for personal injury payments that were not subject to appeal and were initially promised to be paid out within 30 days of final approval. Most of that anger has been leveled at Kroll and a payout process that has proved to be much slower than what was lauded by class co-counsel. Kroll has also come under fire from residents’ who say they have had to re-file paperwork and re-visit the claim center on Rebecca Street in East Palestine numerous times. Some who have received their payments report their awards were much lower than what they were told they would receive by Kroll employees at the claim center.

Aside from the $825,000 of additional fees to Kroll, Pearson’s ruling signed off on $25,000 that class co-counsel estimated “in taxable expense for the appeal.” Those expenses include docket fees and printing and copying costs during the appeal writing and oral argument stages.

In her ruling Pearson notes that the “court awarded only 3% of the settlement fund for costs” for the co-counsel and that “costs are already anticipated to be more than the 3% awarded. The appeal costs increase the likelihood of that overage.” That percentage, though small on paper, calculated to $18 million dollars. Coupled with the legal fees of 27% (or $162 million) of the $600 million settlement, the attorneys who brokered the deal on behalf of the residents were awarded $180 million for their work.

In applying the “quick pay” condition in the final approval, the attorney fees were released into an escrow account for immediate distribution to class counsel within 14 days of final approval. The residents’ share was not immediately released as disclosed in Pearson’s ruling on Thursday in which she wrote that “Norfolk Southern Corporation and Norfolk Southern Railway Company are not required to make their final payment of $285 million under the terms of the settlement until after all appellate rights are exhausted.”

Graham noted that fact when arguing against an appeal bond earlier this month.

“If class counsel were truly concerned with the effect of possible appeal, they should have insisted on immediate payment of settlement funds to class members, or that Norfolk Southern pay interest on the settlement monies (or deposit the lump Settlement sum in an interest bearing account),” he wrote in his response to the motion requesting the appeal bond.

Meanwhile, how the legal fees were divided and distributed led to another appeal of the final approval. T. Michael Morgan of Morgan & Morgan – one of the attorneys who helped reach the settlement — filed an appeal with the Court in Sixth Circuit. He appealed after his motion to pause the payment of the legal fees was denied by Pearson. That motion called into question the method of the legal fees distribution and claimed that Morgan & Morgan was unaware that the attorneys would be paid before residents. No motion requesting Morgan — or his firm that recorded an annual revenue of $2 billion in 2023 — to post an appeal bond has been made.

Pearson’s ruling on Thursday also clarified Sheely’s appeal status – as conflicting statements have been made by Sheely himself publicly and in court documents, suggesting he did want to appeal the settlement.

Co-counsel asked the Court of Appeals for a show cause order against Sheely “to explain why that appeal should not be dismissed” given his statements that he wished not to appeal.

In response to that show cause order, Sheely made it clear that it was his intention to continue with his appeal.

“After prayerful reflection and careful consideration, I have reconsidered my position regarding this matter and I have decided to proceed with an appeal and hereby authorize and instruct my attorney, David M. Graham, to file and pursue the appeal on my behalf,” he declared.

In reply, co-counsel withdrew the request for a show cause order.

selverd@mojonews.com