EAST PALESTINE — Oral arguments in the appeal of last year’s $600 million settlement between Norfolk Southern and residents impacted by the 2023 train derailment related to how the legal fees were determined and distributed will be heard Thursday in Cincinnati’s Sixth Circuit Court of Appeals.

T. Michael Morgan of Morgan & Morgan — one of the firms that helped broker the deal — appealed the fees portion of the settlement shortly after final approval was granted in September of 2024. Morgan initially lauded the settlement but soon took issue with how $180 million in legal fees was divided and paid out less than two weeks after the settlement was approved. Morgan’s complaint also said he was unaware the attorneys would be paid before residents – a provision known as “quick pay” that allows class counsel to receive payment for attorney fees and expenses immediately after a final settlement is approved.

The direct payment or property injury damages — households can receive upwards of $70,000 — are on hold while the appeal process plays out.

Attorney Aaron M. Herzig will represent appellant Morgan & Morgan during oral arguments set for noon on Thursday. Paul D. Clement will argue on behalf of the appellees and co-class counsel firms Burg Simpson Eldredge Hersh & Jardine, Grant & Eisenhoffer, Lieff Cabraser Heimann & Bernstein, LLP, Simmons Hanly Conroy and Zoll & Kranz.

In the other case appealing the settlement, the Sixth Circuit recently denied a motion filed by David Graham on behalf of residents Rev. Joseph Sheely, Zsuzsa Troyan, Tamara Freeze, Sharon Lynch, and Carly Tunno to have the $850,000 appeal bond reduced or reconsidered.

Judge Benita Pearson, who oversaw the settlement proceedings in Youngstown’s federal court and ordered the bond that requires each appealing resident to put up $170,000 toward the total bond. The $850,000 was based on the $825,000 extra-cost estimate from then settlement administrator Kroll and another $25,000 of added expenses projected by the lawyers who brokered the deal.

Kroll has since been removed as settlement administrator after class counsel alleged the New York-based firm had overpaid some claims and wrongfully rejected others.

Graham had questioned both the validity of the amount quoted by Kroll and the fairness of an appeal bond all together considering the financial difficulties that the derailment had already caused his clients. Pearson called it merely a “guardrail” while Graham called it a “roadblock.”

Graham had asked the appeal court to consider whether the district court abused its discretion by disregarding the Sixth Circuit’s March 21 order “expressly providing that appellants had time to move for an extension of time to appeal the setting of the bond.”

The March 21 order by the Sixth Circuit Court ruled against a motion that did not ask for a review of reduction in the appeal bond but rather a stay of Pearson’s bond order. Graham admitted mistakenly submitting the motion as a stay by accidentally choosing the wrong dropdown box when filing the motions electronically. That error left the Sixth Circuit’s panel with no choice but to rule on the motion as a stay which was denied but not before adding that the appealing residents “could still obtain review of the bond order by filing a direct appeal from that order.” Graham then filed a motion with Pearson for an extension (as the deadline to ask for a reduction bond had expired) but Pearson denied that on March 30.

Graham argued that Pearon’s refusal to grant an extension effectively disregarded the appeals court determination that a motion to review the bond was possible.

The Sixth Circuit disagreed.

“Reconsideration is not warranted if we did not misapprehend or overlook any point of law or fact,” the court wrote when denying the motion to reconsider the appeal bond on Oct. 8. “Objectors offer several sources to support their contention that we have jurisdiction to eliminate or reduce the appeal bond on appeal from the merits. None of these establishes that we made a mistake of law in our prior order. Objectors’ arguments that we can consider the appeal bond because it affects our jurisdiction likewise fail because the failure to pay an appeal bond is not jurisdictional.”

The motion to dismiss that was filed with the appeal court when the appealing residents failed to pay the appeal bond was referred to the merits panel — a panel of judges who will examine the record and decide the appeal. That can happen with or without oral argument.

While oral arguments have not been scheduled regarding the residents’ appeal, Clement, who also represents the appellees in that case recently submitted the dates he is available for oral arguments, suggesting that oral arguments will be heard.