Supply Chain News / Risk & Compliance / Ground

Federal Judge Certifies Rail Price Fixing Case

June 23, 2012
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Judge Paul L. Friedman certified a class in an ongoing Multi District Litigation (MDL) that includes all direct purchasers of rate-unregulated rail freight transport services and addresses fuel surcharges that were applied nationally from mid-2003 until 2008, according to Stephen Neuwirth of Quinn Emanuel Urquhart & Sullivan, one of the co-lead counsels for the eight shipping companies that are named plaintiffs in the MDL.

From mid-2003 to 2008, railroad freight shippers across the nation were subjected to an endless string of rate increases by railroads made possible by a concentrated market structure, tight capacity, and coordinated pricing, said Neuwirt. This harmed both the shippers and American consumers, who had to foot the bill for these excessive fuel surcharges, Neuwirt’s statement added.

The plaintiffs allege the railroads conspired to fix, raise, maintain, or stabilize prices of rail freight transportation services sold in the United States through use of rail fuel surcharges added to customers’ bills. The plaintiffs also contend that the railroads moved in uniform lockstep to fix prices for the fuel surcharges, which bore no direct relationship to their actual fuel cost increases. Because of this practice, the plaintiffs say, the railroads restrained competition in the market for unregulated rail freight transportation services and realized billions of dollars in excess revenues. Shippers include many of America’s largest corporations, most notably in the automotive, chemicals, agriculture and public utility industries.

The defendants are BNSF Railway, Union Pacific Railroad, Norfolk Southern Railway and CSX Transportation. Together, these four railroads control nearly 90 percent of railroad freight traffic in the U.S.

The original lawsuits in this MDL were filed in 2007. In that year, 18 similar lawsuits were combined into the consolidated MDL now being overseen by Judge Friedman.

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