(The Associated Press circulated the following article by Travis Reed on April 12.)
NEW YORK — A New York City lawyer is suing the board of directors for Union Pacific Corp., alleging the board members’ inability to follow safety regulations has cost the company – and, by extension, its shareholders – millions of dollars in lost profits, court settlements and government sanctions.
The lawsuit was filed in state court here because Union Pacific is chartered in Utah, even though its company headquarters are in Omaha, Neb.
In the April 5 filing, attorneys for David Jaroslawicz argue the board allowed ”extraordinary and continuing failures to maintain safe railroad conditions” in accordance with federal regulations.
Jaroslawicz, who estimated he owns 500 to 1,000 shares of stock valued at between $30,000 and $60,000, filed the lawsuit on behalf of Union Pacific Corp. and other shareholders seeking the repayment of more than more than $100 million in lawsuit settlement funds and structural changes to increase company oversight.
Among his allegations:
— The company paid $65 million to settle a class action lawsuit related to a train wreck in Louisiana, in addition to $38 million in remediation costs since 2000. A National Transportation Safety Board investigation into the accident, which caused the evacuation of 3,500 people, revealed numerous problems with train tracks at the site.
— Since at least 1998, the company has been cited by the Federal Railroad Administration for thousands of defects.
— A federal court in 2002 sanctioned the company after a manager ”secretly swapped suspect parts in a warning signal” at a railroad crossing that had been the site of a fatal Union Pacific wreck.
Several other courts have reached similar conclusions in deadly crash investigations.
Union Pacific spokesman John Bromley said the company had received the lawsuit, but declined any further comment.
Attempts by The Associated Press to individually reach the 12 directors listed in the filing were unsuccessful.
Jaroslawicz said Tuesday he wanted to ”keep the board of directors honest” and hold them accountable for failing to protect shareholders.
Their actions ”permitted Union Pacific, the railroad and their senior management to continuously engage in the imprudent, illegal or unsound business practices in the operations of the railroad and the company,” according to the complaint.
This type of a lawsuit is called ”derivative shareholder” litigation – because even though it’s only brought by one person, it seeks damages that could benefit the company’s entire group of shareholders if successful.
”The company should take a look at the directors and make sure they’re doing their job,” Jaroslawicz said.
Jaroslawicz said he’s filed a small handful of similar lawsuits on behalf of shareholders over the years.
He said he wasn’t certain if any additional complaints against Union Pacific had already been filed.