Four Railroads Face Class Action Price Fixing Lawsuit

A lawsuit brought on by eight shippers accusing the top four U.S. railroads of colluding to set fuel surcharges gained class action status on Thursday. 

The lawsuit accuses BNSF Railway, Union Pacific Railroad, Norfolk Southern Railway and CSX Transportation of conspiring to fix, raise, maintain or stabilize prices from mid-2003 until 2008. The shippers also allege the railroads “moved in uniform lockstep to fix prices for the fuel surcharges, which bore no direct relationship to their actual fuel cost increases,” according to a statement.

Lead co-counsel Stephen Neuwirth declined to say how much the shippers allege they were overcharged, because the sum calculated through a study remains sealed. U.S. District of Columbia Judge Paul Freidman bestowed class certification of the lawsuit brought by Olin., US Magnesium, Dust Pro, Carter Distribution, Dakota Granite, Donnelly Commodities, Nyrstar Taylor Chemicals and Strates Shows. 

“The case is a reflection of the market power of the railroads and how they abused it in this instance,” said Neuwirth, of Quinn Emanuel Urquhart & Sullivan LLP.
 
UP spokesman Tom Lange said the railroad was still reviewing the ruling and expects to appeal the class action certification. He added that the class action certification rulling doesn't suggest that in the eyes of the court the carriers did anything wrong. 

"As we have said since these lawsuits were first filed in 2007, Union Pacific denies the plaintiffs’ allegations and intends to continue to defend vigorously against the plaintiffs’ unfounded claims and looks forward to presenting facts showing that our independent fuel surcharge programs did not violate any antitrust laws," Lange said. 

CSX spokesman Gary Sease said the railroad's fuel surcharges "have always fully complied with the law, and we will continue to vigorously defend this litigation." CSX attorneys are reviewing the carrier's legal option and will soon decide on whether to appeal the ruling.

The American Chemistry Council, a shipper association, says railroads overcharged customers roughly $6.4 billion in fuel surchages from 2003 to early 2007.

The shippers are “pleased that lawmakers and regulators in the federal government are now considering taking concrete steps to curb the monopoly that was created in the railroad freight industry after deregulation more than 30 years ago,” Neuwirth said. "This litigation is an essential component of that public policy effort to rein in these abuses.”
 
Contact Mark Szakonyi at mszakonyi@joc.com. Follow him on Twitter @szakonyi_joc.