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Rail shippers applaud federal appeals court ruling on alleged price fixing

‘Opinion will greatly assist the shippers in making their antitrust case’

A federal appeals court issued a decision this week on alleged price fixing that occurred in the early 2000s. (Photo: Jim Allen/FreightWaves)

Attorneys representing shippers in litigation involving four Class I railroads praised a federal appeals court decision this week that clarified what evidence can be submitted in two cases involving alleged price fixing in the early 2000s. 

Stephen Neuwirth, an attorney with Quinn Emanuel Urqhuart & Sullivan, said in a statement that the “opinion will greatly assist the shippers in making their antitrust case against the railroads.” 

Dozens of global companies representing chemical, automotive and energy interests, among others, have been embroiled in litigation for well over a decade with Union Pacific (NYSE: UNP), BNSF (NYSE: BRK.B), Norfolk Southern (NYSE: NSC) and CSX (NASDAQ: CSX) over allegations that the four railroads conspired to fix the fuel surcharges levied on customers while determining interline traffic rates. These actions, said to have occurred between 2003 and 2008, violated antitrust laws, the shippers contend. Shippers have also alleged that the fuel surcharges and a fuel cost recovery program were efforts to generate additional revenue.

But the four railroads argue that their discussions among themselves about interline rates are exempt from antitrust laws, according to a provision in the U.S. Code. The existing laws enable the railroads to collaborate with one another about their shared interline traffic.

The three-judge panel with the U.S. Court of Appeals for the District of Columbia Circuit decided Tuesday to affirm part of a previous decision by U.S. District Court Judge Paul A. Friedman, while sending back to Friedman other parts in order to reconsider the evidence in light of the appeals court’s decision.

Tuesday’s decision clarified which discussions from the railroads could be included and which can be excluded in two concurrent lawsuits, with the railroads bearing the burden to show why a discussion should be excluded.

The appeals court decision, written by Judge Harry T. Edwards, affirms the railroads’ argument that certain internal documents can be inadmissible. Documents about interline movements that include fleeting references to single-line movements can be excluded from the court record.

General discussions or agreements regarding shared interline traffic may also be excluded, so long as the discussions satisfy statute requirements and the courts can identify the movements at issue as the carriers’ shared interline traffic, the decision said. 

Shippers overall were pleased with the outcome, saying the appeals court “largely affirmed” the lower court’s opinion. 

“The court rejected the railroads’ sweeping argument that this evidentiary exclusion extends to their discussion of anything with any ‘practical bearing’ on their shared interline traffic. … Instead, the court read the statute as narrowly limited to discussions or agreements about ‘the participating rail carriers’ shared interline traffic,’ meaning that the rail shippers will be free to introduce evidence of the railroads’ discussions or agreements about coordinating fuel surcharges on their ‘single-line traffic’ or their ‘freight traffic generally,’” Neuwirth said.

Both proceedings, one before Friedman and the other before Judge Beryl A. Howell with the U.S. District Court in the District of Columbia, still need to undergo summary judgment before heading toward trial. 

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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.