EAST ST. LOUIS – Lloyd’s of London claims CSX Transportation intimidated and threatened witnesses to influence testimony at a $6 million trial about a storm that tossed locomotives like toys.
Lloyd’s counsel Robert Crowder of Los Angeles moved for sanctions and other appropriate relief in U.S. district court on June 1.
Crowder claims a demand for indemnity that CSX sent to Lloyd’s policyholder National Railway Equipment was a litigation threat in disguise.
He claims CSX ignored requests through counsel not to contact National Railway Equipment unilaterally.
District Judge Stephen McGlynn has set trial starting in October.
National Railway Equipment builds and rebuilds locomotives in Mount Vernon.
It placed four new ones on a train in 2018, for delivery to the port of Wilmington, North Carolina.
On Sept. 16, in Anson County, North Carolina, hurricane Florence poured so much water that tracks failed below the locomotives and they crashed into a ravine.
Lloyd’s paid National Railway Equipment $5,840,364 for the locomotives and $200,000 for expenses.
National Railway Equipment assigned its rights to Lloyd’s, which sued CSX in district court at Charlotte in 2019.
Local counsel Scottie Lee of Greensboro claimed Anson County officials predicted 15 to 20 inches of rain on Sept. 14.
He claimed authorities prepared for downed trees, power outages and flooding.
He claimed they specifically cautioned against driving through water.
He claimed CSX failed to heed warnings and basic common sense as it decided to drive a train directly into treacherous conditions.
He claimed the Wilmington port was closed and there was no reason that the train should have proceeded.
District Judge Robert Conrad transferred the complaint to Southern District of Illinois in 2020, finding the Interstate Commerce Act set venue at the point of origin.
McGlynn took the case upon joining the court.
CSX moved for summary judgment last year, claiming its shipping agreement limited liability for freight damage to $10,000 per locomotive.
CSX counsel Charles Swartwout of Belleville claimed National Railway Equipment knowingly accepted the limit as part of the terms and conditions of shipping.
He claimed it could have elected greater coverage but chose not to.
Lloyd’s moved for summary judgment too.
“CSX betrayed the crew,” Crowder wrote.
He claimed they were ordered to take the train through an active flash flood and refusing would have been insubordination.
He claimed they sustained injuries that ended their careers.
At a hearing in January, McGlynn said a limitation on liability requires a shipper’s absolute and deliberate choice before goods are shipped.
“Do you see a problem with the fact that party A and party B can agree?” McGlynn said.
“Party B, you give me a lower rate, we’ll stick party C with insuring your claim and not your own conduct.
“The railroad could be negligent, grossly negligent, could fail to transport the goods properly, but they don’t bear the risk.”
CSX counsel Daniel Wolff of Washington said CSX wasn’t thinking they’d stick it to the insurance company.
McGlynn said, “You’re limiting your liability in this case from $6 million to what, ten thousand a locomotive?...That’s sticking it to somebody.”
Crowder said no shipper would expect CSX to continue sending a train through a flash flood despite protests of its crew.
He said it amounted to intentional destruction of cargo.
McGlynn denied summary judgment to CSX in February, finding issues of facts regarding whether it perfected a limit on liability.
He ruled that Lloyd’s could pursue damages under the Interstate Commerce Act.
Wolff sent a letter to National Railway Equipment general counsel Hal Burgan on May 13, demanding indemnification if CSX is found liable.
He sought any amount exceeding the limit plus attorney fees.
He claimed National Railway Equipment exposed CSX to civil liability by settling its claim without CSX’s written consent.
Crowder attached the letter to his motion for sanctions.
In it, he claimed Burgan manages litigation risks and corporate testimony at trial.
He claimed CSX made the demand after discovery closed and right before National Railway Equipment would testify as star witness.
He claimed CSX had more than two dozen lawyers working on this case throughout its course.
“Now they effectively threaten to send the bill to NRE if NRE’s testimony at trial does not bear out their arguments,” he wrote.
He claimed they telegraphed a threat that if Lloyd’s wins on the merits, CSX would unleash the legal stable on National Railway Equipment.
He claimed the threat cast doubt over the legitimacy of testimony and tainted the entire proceeding.
McGlynn set a June 16 deadline for response from CSX.