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On Friday, CSX Corp. announced that a federal court issued an order preliminarily approving a settlement in a civil suit filed by CSX shareholder Deborah Donoghue.

She seeks to recover "short-swing" profits under Section 16(b) of the Securities Exchange Act of 1934 alleged to have been realized by defendants The Children's Investment Fund L.L.P. (TCI) and 3G Capital Partners L.P. in connection with their CSX stock purchases and sales. CSX is party to the suit in name only, the Class I said.

In the suit, Donoghue claims the hedge funds or their principals purchased large numbers of shares and derivatives equivalent to CSX shares within six months of their prior sales, and at lower prices. The suit also alleges TCI and 3G formed a group to “exert influence over or gain control of CSX” and beneficially owned, directly or through derivatives, more than 10 percent of the Class I’s common stock.

The parties filed the settlement with the court on Dec. 16. The court will hold a hearing on March 5 to determine whether to issue a final order approving the settlement. If the court OKs the agreement, CSX will receive $10 million from TCI and $1 million from 3G Capital Partners, and the defendants and related parties will be released from claims.

Last year, TCI and 3G engaged a proxy fight with CSX and won four seats on the Class I’s board.