25-739 Ohio Carpenters Pension Fund v. Norfolk Southern Corp.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 27th day of February, two thousand twenty-six.
PRESENT: DENNIS JACOBS, BARRINGTON D. PARKER, ALISON J. NATHAN, Circuit Judges. _____________________________________
In Re Norfolk Southern Corporation Bond/Note Securities Litigation 23-cv-4068 (LAK) _____________________________________
Ohio Carpenters’ Pension Fund, Individually and on Behalf of All Others Similarly Situated, City Of Pontiac Reestablished General Employees’ Retirement System, Individually and on Behalf of All Others Similarly Situated, Lead-Plaintiffs-Appellants.
v. No. 25-739
Norfolk Southern Corporation, Alan H. Shaw, James A. Squires, Mark R. George, Clyde H. Allison, Jr., Thomas D. Bell, Jr., Mitchell E. Daniels, Jr., Marcela E. Donadio, John C. Huffard, Christopher T. Jones, Thomas C. Kelleher, Steven F. Leer, Michael D. Lockhart, AKA Mikey Rtn, Amy E. Miles, Claude Mongeau, Jennifer F. Scanlon, John R. Thompson, BofA Securities, Inc., Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC, Capital One Securities, Inc., Fifth Third Securities, Inc., MUFG Securities Americas Inc., PNC Capital Markets LLC, Siebert Williams Shank & Co., LLC, SMBC Nikko Securities America, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co., LLC, U.S. Bancorp Investments, Inc.,
Defendants-Appellees. *
_____________________________________
FOR LEAD-PLAINTIFFS-APPELLANTS: ALFRED L. FATALE III, Jessica N. Goudreault, and Charles J. Stiene, Labaton Keller Sucharow LLP, New York, NY.
* The Clerk of the Court is respectfully directed to amend the caption.
2 FOR DEFENDANTS-APPELLEES: MICHAEL G. BONGIORNO, Tamar Kaplan-Marans, and Trena M. Riley, Wilmer Cutler Pickering Hale and Dorr LLP, New York, NY, Denise Tsai, Sofie C. Brooks, and Elizabeth Bedrick, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA.
Appeal from a judgment of the United States District Court for the Southern
District of New York (Kaplan, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is
AFFIRMED.
Lead-Plaintiffs-Appellants in this putative class action appeal from a
February 27, 2025 judgment of the United States District Court for the Southern
District of New York (Kaplan, J.) dismissing their complaint against Norfolk
Southern Corporation (Norfolk Southern), 16 of its officers, and the underwriters
of seven senior notes it issued. Plaintiffs allege that Norfolk Southern
misrepresented the safety of its operations, hiding its adoption of measures that
led to the 2023 crash of a train carrying hazardous materials in East Palestine, Ohio.
In support, they point to seven allegedly misleading statements in the offering
3 materials for the notes. The district court held that four of the statements were
inactionable puffery and that the remaining three were not sufficiently alleged to
be false. We agree, and therefore affirm.
We assume the parties’ familiarity with the underlying facts, procedural
history, and issues on appeal, to which we refer only as necessary to explain our
decision. We review the district court’s decision de novo, accepting the
complaint’s factual allegations as true and drawing all reasonable inferences in
Plaintiffs’ favor. See Krys v. Pigott, 749 F.3d 117, 128 (2d Cir. 2014).
* * *
Section 11 of the Securities Act of 1933 “prohibits materially misleading
statements or omissions in registration statements filed with the SEC.” In re
Morgan Stanley Info. Fund Sec. Litig., 592 F.3d 347, 358 (2d Cir. 2010) (citing 15 U.S.C.
§ 77k(a)). To state a claim under Section 11, a plaintiff must allege that “(1) she
purchased a registered security, either directly from the issuer or in the
aftermarket following the offering; (2) the defendant participated in the offering
in a manner sufficient to give rise to liability under section 11; and (3) the
registration statement ‘contained an untrue statement of a material fact or omitted
4 to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.’” Id. at 358–59 (quoting 15 U.S.C. § 77k(a)).
Plaintiffs’ case hinges on two issues: “(1) the existence of either a misstatement or
an unlawful omission; and (2) materiality.” Id. at 360.
We agree with the district court that four of the alleged statements are not
material, because they are “too general to cause a reasonable investor to rely upon
them.” ECA, Loc. 134 IBEW Joint Pension Tr. of Chi. v. JP Morgan Chase Co., 553
F.3d 187, 206 (2d Cir. 2009). Defendants claimed that their business model was
“designed to assure . . . safe, efficient, and reliable” operations, that “[s]afety is a
way of life at Norfolk Southern,” that “[w]e remain committed to protecting our
employees and providing excellent . . . service,” and that safety is “part of who we
are” and “core to our business strategy.” Appellants’ Br. at 8-9 (alteration
adopted). Such statements were “merely generalizations regarding [Norfolk
Southern’s] business practices.” ECA, 553 F.3d at 206. They “did not, and could
not, amount to a guarantee that its choices would prevent failures in its risk
management practices.” Id. Plaintiffs argue that Norfolk Southern’s statements
about safety should be held to a higher standard because its safety practices were
5 unusually important in light of its common-carrier obligation to transport
hazardous materials. But that conflates the importance of a statement with its
materiality. Id. Plaintiffs also note that Norfolk Southern’s competitors have
made similar statements, but that fact only further illustrates that “[n]o investor
would take such statements seriously in assessing a potential investment[.]”
ECA, 553 F.3d at 206.
Nor does it matter that Norfolk Southern was allegedly making its
operations less safe when it made the statements. The fact that “statements were
knowingly and verifiably false when made does not cure their generality, which
is what prevents them from rising to the level of materiality required to form the
basis for assessing a potential investment.” Ind. Pub. Ret. Sys. v. SAIC, Inc., 818
F.3d 85, 97–98 (2d Cir. 2016). The statements do not “specific[ally]” link safety
practices to Norfolk Southern’s “financial condition” or “clearly . . . distinguish
the company from other specified companies in the same industry,” concrete
details that we have suggested may give rise to a securities violation.
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25-739 Ohio Carpenters Pension Fund v. Norfolk Southern Corp.
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the 27th day of February, two thousand twenty-six.
PRESENT: DENNIS JACOBS, BARRINGTON D. PARKER, ALISON J. NATHAN, Circuit Judges. _____________________________________
In Re Norfolk Southern Corporation Bond/Note Securities Litigation 23-cv-4068 (LAK) _____________________________________
Ohio Carpenters’ Pension Fund, Individually and on Behalf of All Others Similarly Situated, City Of Pontiac Reestablished General Employees’ Retirement System, Individually and on Behalf of All Others Similarly Situated, Lead-Plaintiffs-Appellants.
v. No. 25-739
Norfolk Southern Corporation, Alan H. Shaw, James A. Squires, Mark R. George, Clyde H. Allison, Jr., Thomas D. Bell, Jr., Mitchell E. Daniels, Jr., Marcela E. Donadio, John C. Huffard, Christopher T. Jones, Thomas C. Kelleher, Steven F. Leer, Michael D. Lockhart, AKA Mikey Rtn, Amy E. Miles, Claude Mongeau, Jennifer F. Scanlon, John R. Thompson, BofA Securities, Inc., Morgan Stanley & Co. LLC, Wells Fargo Securities, LLC, Capital One Securities, Inc., Fifth Third Securities, Inc., MUFG Securities Americas Inc., PNC Capital Markets LLC, Siebert Williams Shank & Co., LLC, SMBC Nikko Securities America, Inc., Citigroup Global Markets Inc., Goldman Sachs & Co., LLC, U.S. Bancorp Investments, Inc.,
Defendants-Appellees. *
_____________________________________
FOR LEAD-PLAINTIFFS-APPELLANTS: ALFRED L. FATALE III, Jessica N. Goudreault, and Charles J. Stiene, Labaton Keller Sucharow LLP, New York, NY.
* The Clerk of the Court is respectfully directed to amend the caption.
2 FOR DEFENDANTS-APPELLEES: MICHAEL G. BONGIORNO, Tamar Kaplan-Marans, and Trena M. Riley, Wilmer Cutler Pickering Hale and Dorr LLP, New York, NY, Denise Tsai, Sofie C. Brooks, and Elizabeth Bedrick, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA.
Appeal from a judgment of the United States District Court for the Southern
District of New York (Kaplan, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
ADJUDGED, AND DECREED that the judgment of the district court is
AFFIRMED.
Lead-Plaintiffs-Appellants in this putative class action appeal from a
February 27, 2025 judgment of the United States District Court for the Southern
District of New York (Kaplan, J.) dismissing their complaint against Norfolk
Southern Corporation (Norfolk Southern), 16 of its officers, and the underwriters
of seven senior notes it issued. Plaintiffs allege that Norfolk Southern
misrepresented the safety of its operations, hiding its adoption of measures that
led to the 2023 crash of a train carrying hazardous materials in East Palestine, Ohio.
In support, they point to seven allegedly misleading statements in the offering
3 materials for the notes. The district court held that four of the statements were
inactionable puffery and that the remaining three were not sufficiently alleged to
be false. We agree, and therefore affirm.
We assume the parties’ familiarity with the underlying facts, procedural
history, and issues on appeal, to which we refer only as necessary to explain our
decision. We review the district court’s decision de novo, accepting the
complaint’s factual allegations as true and drawing all reasonable inferences in
Plaintiffs’ favor. See Krys v. Pigott, 749 F.3d 117, 128 (2d Cir. 2014).
* * *
Section 11 of the Securities Act of 1933 “prohibits materially misleading
statements or omissions in registration statements filed with the SEC.” In re
Morgan Stanley Info. Fund Sec. Litig., 592 F.3d 347, 358 (2d Cir. 2010) (citing 15 U.S.C.
§ 77k(a)). To state a claim under Section 11, a plaintiff must allege that “(1) she
purchased a registered security, either directly from the issuer or in the
aftermarket following the offering; (2) the defendant participated in the offering
in a manner sufficient to give rise to liability under section 11; and (3) the
registration statement ‘contained an untrue statement of a material fact or omitted
4 to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.’” Id. at 358–59 (quoting 15 U.S.C. § 77k(a)).
Plaintiffs’ case hinges on two issues: “(1) the existence of either a misstatement or
an unlawful omission; and (2) materiality.” Id. at 360.
We agree with the district court that four of the alleged statements are not
material, because they are “too general to cause a reasonable investor to rely upon
them.” ECA, Loc. 134 IBEW Joint Pension Tr. of Chi. v. JP Morgan Chase Co., 553
F.3d 187, 206 (2d Cir. 2009). Defendants claimed that their business model was
“designed to assure . . . safe, efficient, and reliable” operations, that “[s]afety is a
way of life at Norfolk Southern,” that “[w]e remain committed to protecting our
employees and providing excellent . . . service,” and that safety is “part of who we
are” and “core to our business strategy.” Appellants’ Br. at 8-9 (alteration
adopted). Such statements were “merely generalizations regarding [Norfolk
Southern’s] business practices.” ECA, 553 F.3d at 206. They “did not, and could
not, amount to a guarantee that its choices would prevent failures in its risk
management practices.” Id. Plaintiffs argue that Norfolk Southern’s statements
about safety should be held to a higher standard because its safety practices were
5 unusually important in light of its common-carrier obligation to transport
hazardous materials. But that conflates the importance of a statement with its
materiality. Id. Plaintiffs also note that Norfolk Southern’s competitors have
made similar statements, but that fact only further illustrates that “[n]o investor
would take such statements seriously in assessing a potential investment[.]”
ECA, 553 F.3d at 206.
Nor does it matter that Norfolk Southern was allegedly making its
operations less safe when it made the statements. The fact that “statements were
knowingly and verifiably false when made does not cure their generality, which
is what prevents them from rising to the level of materiality required to form the
basis for assessing a potential investment.” Ind. Pub. Ret. Sys. v. SAIC, Inc., 818
F.3d 85, 97–98 (2d Cir. 2016). The statements do not “specific[ally]” link safety
practices to Norfolk Southern’s “financial condition” or “clearly . . . distinguish
the company from other specified companies in the same industry,” concrete
details that we have suggested may give rise to a securities violation. See, e.g., id.
at 98.
We also agree with the district court that Plaintiffs failed to plead that the
6 remaining three statements were false. The first of those statements reads: “We
are dedicated to providing employees with a safe workplace and the knowledge
and tools they need to work safely and return home safely every day. Our
commitment to an injury-free workplace is illustrated by our ‘I am Coming Home’
safety message, which is featured prominently in our yards, shops, and facilities
and further reinforces the importance of working safely.” Appellants’ Br. at 8-9.
The first sentence of that statement is inactionable puffery for the reasons
explained above. The second sentence is sufficiently specific but not false—
Plaintiffs did not allege that Norfolk Southern failed to prominently display the “I
am Coming Home” message.
The next statement reads: “We provide a range of developmental programs,
opportunities, skills, and resources for our employees to work safely and be
successful in their careers. We provide hands-on training and simulation training
designed to improve training effectiveness and safety outcomes.” Id. at 9. But
Plaintiffs’ allegations center on staffing cuts, inadequate maintenance and
inspection of trains, overworked engineers, shoddy repairs, and a culture of
suppressing criticism. The complaint does briefly allege that Norfolk Southern’s
7 six-week training program was a “cram course” without adequate knowledge
testing procedures. Joint App’x at 58, 69. But that only confirms that a training
program did exist, as the statement conveys. The complaint does not allege that
the program lacked a “hands-on” component or “simulation training.” Cf.
Appellants’ Br. at 9. And the portion of Norfolk Southern’s statement
characterizing its training program as “designed to improve training effectiveness
and safety outcomes,” id., is again puffery.
The final statement reads: “Given the importance of safety among our
workforce and business, in 2020, our Board of Directors established a standing
Safety Committee that, among other duties, reviews, monitors, and evaluates our
compliance with our safety programs and practices.” Id. The complaint does
not allege that the Safety Committee did not exist or did not perform the listed
functions, and thus fails to plead falsity.
Other than the challenged statements, Plaintiffs point to nothing that would
have imposed on Defendants a freestanding duty to disclose more information
about Norfolk Southern’s safety practices. The mere fact that investors would
have benefitted from knowing that information does not suffice. See In re Time
8 Warner Inc. Sec. Litig., 9 F.3d 259, 267 (2d Cir. 1993) (“[A] corporation is not
required to disclose a fact merely because a reasonable investor would very much
like to know that fact.”). We therefore agree with the district court that Plaintiffs
have alleged no actionable falsehoods or omissions under the Securities Act.
Thus, the complaint was correctly dismissed.
We have considered Plaintiffs’ remaining arguments and find them to be
without merit. Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court