Railroad lawsuits against repair contractors charging ahead

Railroads claim that many recent derailments are the result of shoddy repairs

Transportation lawsuits are nothing new — just look at the multiple court battles that American Airlines has faced over the past couple of years. However, American railcar operators and railroads are becoming a regular court fixture as well, raising questions about rail safety.

According to the Wall Street Journal, railroads have outsourced much of its repair and maintenance work to outside contractors in recent years, but shoddy work from those contractors has resulted in more derailments and general hazards than ever before. As a result, the railroads are looking to fight back with litigation.

In one recent case, Union Pacific Corp. sued two rival repair services, Caterpillar Inc. subsidiary Progress Rail Services Corp. and Greenbrier Cos., over what Union Pacific says was inadequate repairs that caused several derailments. Both Progress Rail and Greenbrier are contesting the suit in court.

And Union Pacific is not alone. BNSF Railway Co. has sued Progress Rail as well in a very similar case, seeking damages for a December 2010 derailment that occurred near Jamestown, N.D.

Many of these railroads are looking to protect their own business interests in case one of these derailments causes more injury than just a train. Montreal, Maine & Atlantic Railroad Ltd. (MMA) declared bankruptcy on Aug. 7, 2013, following a derailment of an oil-packed train that ultimately killed 47 people. MMA faced multiple lawsuits related to the crash before bankruptcy.

According to the WSJ, railroads such as Union Pacific will likely take the stance in court that repair firms are the “gatekeeper” to the American railroad system, and thus hold responsibility for their work. In one 2012 federal court case related to two earlier derailments, Union Pacific lawyer Raymond Hasiak argued against Progress Rail, saying, “Everybody depends upon them to look at the axles and determine this is an axle that is appropriate to be put back into service.” He also added that “the safety of all the rails in North America [is] dependent upon this.”

Progress Rail, meanwhile, said in that case that any derailments shouldn’t be the company’s responsibility. All repairs, claimed company lawyer Michael Coyle, followed trade group mandates. “We do it exactly the way the American Association of Railroads…tells us how to do it,” Coyle said.

Progress Rail won that particular case in district court in Omaha, but Union Pacific has appealed. And if recent trends are any indication, this case won’t be the last time these two sides face off in a courtroom.

 

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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