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NS settles Graniteville accident-related lawsuit

Yesterday, Norfolk Southern Corp. announced it reached a confidential settlement with textile firm Avondale Mills regarding the company's lawsuit stemming from the January 2005 train accident in Graniteville, S.C. The parties had been engaged in a trial for four weeks.

Avondale Mills sued NS for $420 million in damages, claiming that equipment at the company's Graniteville plant was covered with corrosive chemicals and that it would have cost more than the business was worth to clean buildings and replace machinery.

A portion of the settlement will not be reimbursed by insurance and will be recorded as a first quarter expense, NS said. Combined with other claims-related adjustments, the settlement will increase year-over-year operating expenses by $13 million and reduce quarterly earnings by 2 cents per diluted share, according to the railroad.

Nine people died in the NS train accident, which caused a tank car to rupture and spill chlorine. The National Transportation Safety Board in late 2005 determined the accident was caused by an NS crew that filed to return a mainline switch to its normal position after completing trackwork in the area.

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