Court Certifies Class in Rail Freight Fuel Surcharge Antitrust Litigation

Transportation Update

Date: June 21, 2012

On June 21, 2012, the United States District Court for the District of Columbia issued an order (Order) certifying a class action against the four major Class I railroads – BNSF Railway Company, Union Pacific Railroad Company, CSX Transportation, Inc. and Norfolk Southern Railway Company – for recovery of damages suffered by shippers as a result of an alleged price-fixing conspiracy in violation of Section 1 of the Sherman Act, 15 U.S.C § 1.

In its Order, the court ruled that the plaintiffs in In re Rail Freight Fuel Surcharge Antitrust Litigation had satisfied the requirements for proceeding as a class action, and the court defined the class to include all entities or persons that had purchased freight transportation services directly from the railroads, as follows:

All entities or persons that at any time from July 1, 2003 until December 31, 2008 (the “Class Period”) purchased rate-unregulated rail freight transportation services directly from one or more of the Defendants, as to which Defendants assessed a stand-alone rail freight fuel surcharge applied as a percentage of the base rate for the freight transport (or where some or all of the fuel surcharge was included in the base rate through a method referred to as “rebasing”) (“Fuel Surcharge”).

Excluded from this Class definition are (a) Defendants, any subsidiaries or affiliates of Defendants, any of Defendants’ co-conspirators, whether or not named as a Defendant in the Complaint, and all federal governmental entities, and (b) all entities or persons that Paid a Fuel Surcharge directly to any of the Defendants solely pursuant to a railroad-shipper contract that was (i) entered into before July 1, 2003, and (ii) provided for a stand-alone Fuel Surcharge to be paid under a predetermined formula specifically set forth in the contract.

The court filed the opinion that accompanies the Order under seal and ordered the parties to confer and file a joint report by July 10, 2012 showing cause why the full opinion should not be made public without redactions. The opinion is expected to address the railroads’ principal defenses and provide additional guidance from the Court.

The court also granted the plaintiffs’ motion for an order directing the parties to meet and confer concerning scheduling. A scheduling decision is expected to include time frames for any party that wishes to opt out of the Class.

The court designated the eight named plaintiffs – Dust Pro, Inc.; Carter Distributing Company; Dakota Granite Company; Donnelly Commodities, Inc.; U.S. Magnesium LLC; Nyrstar Taylor Chemicals, Inc.; Olin Corporation; and Strates Shows, Inc. – as the class representatives. In addition, the court appointed Quinn Emanuel Urquhart & Sullivan, LLP and Hausfeld LLP as co-lead class counsel for the class.

While either the plaintiffs or the railroads may appeal the Order, the railroads are more likely to appeal. To appeal the Order, a petition for permission to appeal must be filed with the U.S. Court of Appeals for the District of Columbia within 14 days of the date of the Order. An appeal, however, does not stay proceedings unless the district judge or court of appeals so orders.

While the Order is not a ruling on the merits of the claims against the railroads, it has importance for all entities that purchased freight transportation services from the railroads in the class period and were subject to fuel surcharges included in the class definition. The clock is now ticking on the time in which to make a decision whether to remain in the class or opt out, although no deadline has yet been set for opting out. Any entity that shipped large volumes of goods on one or more of the defendants’ rail lines in the Class Period should consider seriously whether there are compelling reasons to opt out of the class and proceed against the railroads in a separate action. Thompson Hine’s Transportation practice group can provide guidance on weighing the pros and cons of opting out and on other matters related to this important litigation.

FOR MORE INFORMATION

For more information, please contact:

Karyn A. Booth
202.263.4108
Karyn.Booth@ThompsonHine.com

Sandra L. Brown
202.263.4101
Sandra.Brown@ThompsonHine.com

Thomas J. Collin
216.566.5509
Tom.Collin@ThompsonHine.com

Jeffrey O. Moreno
202.263.4107
Jeff.Moreno@ThompsonHine.com

David A. Wilson
202.263.4161
David.Wilson@ThompsonHine.com

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