Class Certification Denied in Rail Freight Surcharge Antitrust Litigation: Individual Claim Filing Deadline Set for September 30, 2019

Client Alert

On August 16, 2019, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit Court”) affirmed a decision by the U.S. District Court for the District of Columbia to deny class certification In re Rail Freight Surcharge Antitrust Litig., No. 18-7010 (D.C. Cir. August 16, 2019).  The case involved a putative class of over 16,000 rail shippers and alleged a price-fixing conspiracy amongst the four largest freight railroads in the United States: BNSF Railway Company; CSX Transportation, Inc.; Norfolk Southern Railway Company; and Union Pacific Railroad Company. The class plaintiffs alleged that the railroads violated Section 1 of the Sherman Act, 15 U.S.C. 1, by engaging in a conspiracy between 2003 and 2008 to fix the levels of fuel surcharges that were calculated as a percentage of the base transportation rate.  While the District Court found that the requirements for a class action case had not been met, it also found on two occasions that the factual record demonstrated the complained-of collusion between the railroads very likely did occur, a finding that exposes the carriers to liability in individually filed cases.  The amount of overcharges during the relevant time period is estimated in the billions of dollars.

Next Steps

On that subject, the result of the D.C. Circuit’s ruling is that the statute of limitations for rail shippers to seek relief for railroad fuel surcharge overcharges they paid between July 1, 2003 and December 31, 2008, which has been tolled pending the class action process, began to run on August 16, 2019.  Pursuant to the applicable procedural rules, rail shippers now have until September 30, 2019 to preserve their own antitrust claims by filing a formal complaint, either individually or with a group of similarly situated companies.   The deadline could be affected by further procedural actions at in the D.C. Circuit or D.C. Federal District court, but such actions appear to be unlikely.   This firm has been involved in the percentage of the rate fuel surcharge controversy from its inception in 2002, advising our shipper clients on their options as part of a class or pursuing their claims in a separate action.

Case Background

The class action case arose out of eighteen antitrust actions filed in the 2007-08 timeframe that were consolidated by the Federal Multidistrict Litigation Panel.   After the cases were consolidated, the action was divided into two cases, one case involving direct purchasers (shippers who directly paid the fuel surcharges) and another involving indirect purchasers. All plaintiffs alleged that the railroads violated Section 1 of the Sherman Act.  The eight named plaintiffs in the direct purchasers’ case, moved for class certification. The proposed class consisted of all shippers who paid rate-based fuel surcharges for unregulated services purchased from the railroads between July 1, 2003 and December 31, 2008.

While the District Court found there was strong evidence that the complained-of collusion and conspiracy actually did occur, it ultimately concluded that the case could not be tried as a class action under the applicable federal rules and case precedent, and the D.C. Circuit affirmed that conclusion.

What Does This Mean to Your Company?

If your company tendered shipments to railroads during the 2003-2008 period, or if it arranged for rail shipments by contracting with steamship lines or other parties, it was likely subject to the same unlawful price fixing of fuel surcharges.  If so, you have the opportunity to now file a complaint seeking recovery of the unlawful charges, and those awards would be trebled.

Our office is representing forwarders and shippers that have decided to seek recovery of these illicit charges.  If you would like more information about the process, let us know.

Whom to Contact for More Information

If you have any questions about this issue or desire additional information, please do not hesitate to contact our Rail Transportation Group: Tom Wilcox (twilcox@gkglaw.com); Ed Greenberg (egreenberg@gkglaw.com); David Monroe (dmonroe@gkglaw.com); or Brendan Collins (bcollins@gkglaw.com).