Free Lunch by David Cay Johnston Read Free Book Online Page A

heard how in 1987 the Federal Railroad Administration
had told CSX that its practices were unsafe. They heard how the company stuck to its cost-cutting policies anyway.
    Testimony showed that the National Transportation Safety Board findings, alarming as they were, had
missed much more damning facts. A panel of three Florida judges later wrote that the Orlon switch was defective and the cross
pin
    had been broken for at least seven months prior to
the derailment. The Orlon switch had been installed backwards ten years earlier, and part of the broken cross pin was buried under
several inches of [granite] ballast placed between the ties more than seven months prior to the derailment. The evidence further
shows that a proper inspection would have revealed the broken cross pin. In addition, there is evidence that CSX had actual
knowledge that the cross pin was defective because the record shows that CSX periodically greased a plate installed on the switch
with graphite to make the switch operate.
    What that meant was that for a full decade CSX
had escaped paying the cost of repairing the Orlon switch. Every day CSX trains loaded with freight, including toxic chemicals,
crossed the Orlon switch. So did Amtrak passengers, unaware they were riding over the equivalent of a bomb waiting to go
off.
    The jurors were incensed. They awarded the widow and her children $50 million in
damages, taking 1 percent of CSX’s net worth. The jurors also wrote a note on the verdict form: “It is hoped that CSX trainers will
emphasize [the] need to inspect both ends of cross pins.”
    Judge Arthur J. Franza upheld the
punitive damages award. He delivered a stinging rebuke of CSX. “The clear and convincing evidence shows that Silver Star No.
82’s tragic derailment was caused by willful, wanton negligence,” Judge Franza wrote, adding that he considered the railroad’s
conduct to be “borderline criminal.”
    â€œClearly,” the judge wrote, CSX “knew of the peril created
by its reductions and the company chose to proceed on its own course.”
    Then the appeals
began. Three Florida judges who took up CSX’s pleas for relief ruled against the railroad. The judges said that testimony by former
employees showed that “CSX knowingly endangered public safety.”
    The judges called CSX’s
conduct a “flagrant violation of the public trust…Keeping with the policy that punitive damages should punish and deter, a jury of
six reasonable persons concluded that $50 million would adequately communicate to this defendant that this type of reprehensible
conduct should not and would not be tolerated.”
    The appeals court approvingly quoted Judge
Franza, who ruled that while CSX saved more than $2 billion, “society paid with eight human lives…. The clear and convincing
evidence showed that the price of cost-cutting safety to turn over larger profits is too great of a price.”
    CSX then appealed to the Florida Supreme Court, saying that its conduct was reasonable. Further, any
damage should be based only on the value of the section of track near the crash site, not the company’s entire net worth. The
Florida Supreme Court rejected CSX’s claims.
    Finally the litigation came to an end in early
2002, more than a decade after Paul Palank’s death, when the United States Supreme Court said that it would not hear CSX’s
appeal.
    Angelica Palank said she felt that she had accomplished her goals. She had proven
that the crash on July 31, 1991, was not bad luck but the predictable result of deliberate misconduct that flowed from the top of the
company. After paying her lawyers and income taxes on the punitive damages, she donated the rest of the money to a foundation
in her husband’s memory. Today a few million dollars remain to finance grants for a cause her husband cared about deeply,
abused and neglected children in and around