Watch Now

Feds: Railroads’ rate discussions can be evidence in price-fixing lawsuits

Federal agencies’ conclusion on what can be exempt from antitrust laws could bolster shippers’ arguments

Federal agencies have weighed in on what rail rate discussions can be included in an alleged price fixing case. (Photo: Jim Allen/FreightWaves)

Class I railroads’ discussions about setting local and interline rates can be included as evidence in dozens of shippers’ lawsuits over price fixing in the 2000s, various federal agencies have concluded.

Attorneys with the U.S. Department of Justice, speaking on behalf of itself, the Federal Trade Commission, the Surface Transportation Board and the U.S. Department of Transportation, determined that discussions or agreements by the Class I carriers on setting local or interline rates generally can be admissible in court proceedings, according to a Monday amicus brief in a proceeding before Judge Paul L. Friedman with the U.S. District Court for the District of Columbia. The discussions and agreements apply to both regulated and unregulated rail traffic cases.

The U.S. code that governs what rail-related discussions or agreements are exempt from U.S. antitrust laws does protect discussions or agreements that deal with interline traffic executed by rail carriers on a specific basis, the attorneys said. 

The court had asked the federal agencies to weigh in on the proceedings.

The federal agencies’ interpretation of U.S. laws could potentially benefit the dozens of shippers who have filed lawsuits against four U.S. Class I carriers: CSX (NASDAQ: CSX), Norfolk Southern (NYSE: NSC), Union Pacific (NYSE: UNP) and BNSF (NYSE: BRK).

The lawsuits allege that between 2003 and 2008, the railroads applied fuel surcharges on rail rates that weren’t related to fuel. The shippers argue that the purpose of the fuel surcharges and the fuel cost recovery program was to garner additional revenue.

Some shippers were concerned earlier this year that the railroads’ argument that certain discussions on interline rates are immune from antitrust liability could open the door to loosening antitrust laws.

But “Congress made clear before the statute’s enactment, and the executive branch confirmed soon afterwards, that [the U.S. Code] excludes only lawful discussions or agreements among rail carriers about interline traffic that they directly handle,” the attorneys said in the Monday filing. “Nothing in the statute or its history suggests that it bars circumstantial evidence where the context of the communication shows that carriers fixed rates for local or interline shipments in which they did not participate — and which potentially competed against service over their own lines.”

This and a similar proceeding have a joint hearing slated for Aug. 26. Over 90 lawsuits are part of the two proceedings, representing shippers and companies ranging from steel companies such as AK Steel and power companies such as Georgia Power, to food products producers such as Smucker and automakers such as Toyota.

Click here for more FreightWaves articles by Joanna Marsh.

Related articles:

Court rejects rail shippers’ class formation request; senators press for rail reform

Shippers hammer railroads with lawsuits over fuel surcharges

Railroads want price-fixing lawsuits at one venue

Shippers warn of antitrust ramifications

Joanna Marsh

Joanna is a Washington, DC-based writer covering the freight railroad industry. She has worked for Argus Media as a contributing reporter for Argus Rail Business and as a market reporter for Argus Coal Daily.