BNSF, Union Pacific, CSX Win Tactical Court Victory on Class

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By Eleanor Tyler

BNSF Railway Company, Union Pacific Railroad Company, CSX Transportation, Inc. and Norfolk Southern Railway Co. won a tactical victory in multidistrict litigation charging them with conspiring to rig rail freight rates through fuel surcharges.

U.S. District Court for the District of Columbia Judge Paul Friedman said that direct freight buyers don’t meet the requirements to sue as a class. Although the plaintiffs have “strong evidence of conspiracy and class wide injury,” Freidman said the plaintiffs’ statistical model for proving damages as a group is fatally flawed ( In re Rail Freight Fuel Surcharge Antitrust Litig. , D.D.C., No. 1869 Miscellaneous No. 07-0489 (PLF), 11/13/17 ).

The court’s denial of class certification isn’t a decision on the merits of the plaintiffs’ antitrust claims, but it means that each plaintiff must prove its individual claim and damages based on its own shipments. Friedman issued the ruling on Oct 10, but it was unsealed Nov. 14.

The plaintiffs have asked the U.S. Court of Appeals for the D.C. Circuit to review the decision, and Friedman has stayed the case until the higher court decides whether it will hear the appeal or Jan. 5, 2018, whichever comes first.

The plaintiffs allege that they bought rail freight services directly from one of the four railroad defendants between 2003 and 2008. They contend that the railroads agreed with each other to impose fuel surcharge rates that were much higher than actual fuel costs, pocketing the difference as profit. They brought at least 18 separate suits, which were consolidated together in a multidistrict action before Friedman, alleging price fixing in violation of U.S. federal antitrust law.

The case has been pending before Friedman for a decade and this is the second time the direct purchaser plaintiffs have sought class certification. In 2012, Friedman held that the plaintiffs can bring their claims as a class. On appeal, his ruling was overturned. Two rounds of additional briefing by the parties and a five-day hearing on class certification followed in the intervening years.

To contact the reporter on this story: Eleanor Tyler in Washington at etyler@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

For More Information

The court's opinion is at http://src.bna.com/uc1

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