In its latest filing court filings, the law firm that is appealing last year’s $600 million settlement between residents and Norfolk Southern to remedy damages accused by the 2023 train derailment again took issue with the agreement’s provision that paid class counsel legal fees immediately while household payments of $70,000 are put on hold indefinitely through the appeal process.

“In a class settlement scenario, paying the lawyers before their clients is always a dubious proposition,” Aaron Herzig wrote on behalf of Morgan Morgan in a reply brief filed in Cincinnati’s Sixth District Court of Appeals last week. ” Indeed, the entire purpose of the lawsuit is to compensate the class — not the lawyers.”

Morgan & Morgan is appealing the distribution of the legal fees only, while four residents — Rev. Joseph Sheely, Zsuzsa Troyan, Tamara Freeze, Sharon Lynch and Carly Tunno — are appealing the final approval that was granted last September by Judge Pearson in Youngstown’s federal court.

Morgan & Morgan believes the $162 million in legal fees was split unfairly between the firms that worked on the deal, the biggest payout by a railroad in history, and accuses co-lead counsel (the five law firms put in charge of distributing the fees) of exploiting the quick pay provision, the term of the settlement that allowed the attorneys to receive their cut of $600 million within 14 days.

“In haste to pay the lawyers, quick pay allows class counsel to divide up huge portions of settlement money before a court has any chance to say anything to say about it. And for what benefit to the plaintiffs? None,” Herzig wrote. “[Co-lead counsel] authored a quick-pay provision to advantage themselves at the expense of any meaningful oversight … The district court’s purported ‘oversight’ was oversight in name only.”

According to the brief, co-lead counsel have not “revealed their fee calculations, and to this day, they still have not told any court what they paid each law firm.” As a result, Morgan & Morgan, insists there is no way to know whether any firm received inappropriate compensation.

Morgan & Morgan has criticized the quick-pay provision in nearly all appeal documents. T. Michael Morgan, who along with co-counsel lauded the settlement when campaigning for residents to opt in to it and spoke at village town halls in favor of the deal, filed a notice of appeal on Dec. 16. Co-lead counsel have argued that Morgan signed off on the settlement, knowing the quick pay provision was to be utilized and only took exception to it when his firm earned a lower cut of the legal fees than he was expecting.

In its latest filing, Morgan & Morgan maintains the quick pay provision is flawed in more ways than one.

“Quick-pay is as much to blame when it comes to the unanswered questions about the fee award, and [col-lead counsel]cannot employ a strategy of avoidance that keeps the spotlight off the dollars and cents,” Herzig argued. “Ultimately, the problem is that the [co-lead counsel] went out of their way to avoid ‘showing their work’ on the fee allocation — not Mr. Morgan’s attempts to get answers for himself, his co-counsel, and the people of East Palestine. This ‘trust, and do not verify’ paradigm should not be permissible, especially in tandem with [co-lead counsel’s] preference for ‘I get paid, you wait’ settlements.”

Herzig wrote “No money that might belong to class members should be at risk while a handful of objector appeals remain unresolved.”

Sheeley was the first class member to appeal the settlement, filing his notice to appeal on Sept. 27, 2024 — the day final approval was granted. Appeals by Zsuzsa Troyan, Tamara Freeze, Sharon Lynch and Carly Tunno followed on Oct. 8.

The fate of those appeals, which have been consolidated into one, await a decision from the Sixth Circuit regarding a reduction in or elimination of a $850,000 appeal bond the plaintiffs were ordered to pay in December.

Household payments of up to $70,000 remain on hold until that process runs out. In Ohio, that can take up to two years.

Meanwhile, distribution of the personal injury payments, which were not impacted by appeals, have proven to be sluggish at best. Nine months after final approval was granted, many of those who live within 10 miles of the derailment, still await payment of up to $25,000. Those payments were promised to be paid out within 30 days. On Wednesday, Kroll Administration was removed as the settlement administrator responsible for distributing those funds. Epiq is now handling the claims process.

selverd@mojonews.com