July 29, 2020

The country's four largest railroad carriers cannot exclude everything but "direct" evidence of a fuel surcharge price-fixing conspiracy from private multidistrict litigation, the U.S. Department of Justice told a D.C. federal judge Tuesday.

Asked to weigh in on the first court consideration of Section 10706 of 49 U.S. Code since its 1980 enactment, the DOJ took a middle ground between BNSF Railway Co., Union Pacific Railroad Co., CSX Transportation Inc. and Norfolk Southern Railway Co., and the shippers suing them.

At issue is Section 10706's exclusion of evidence from antitrust cases against two or more rail carriers when the evidence relates to actions taken "with respect to an interline rate or related matter." The DOJ's conclusion was the law "excludes only evidence of lawful discussions and agreements among rail carriers, as well as resulting rates and other actions, which concern those carriers' shared interline traffic — conduct that does not directly eliminate competition among substitute routes."

That means that if U.S. District Judge Paul L. Friedman sides with the DOJ, the shippers will be able to present at least some evidence alleging a price-fixing conspiracy. But the DOJ's approach also doesn't go as far as shipper plaintiffs.

"Defendants urge too narrow a scope (focusing on discrete items of evidence in isolation), whereas plaintiffs look too broadly (focusing on allegations of an industry-wide conspiracy). The correct approach is to determine the scope of the pertinent discussion or agreement based on the evidentiary context of the interline communications at issue," the DOJ said after consulting with the Federal Trade Commission along with the Surface Transportation Board and the U.S. Department of Transportation.

The litigation dates to 2007 with a proposed class of direct purchasers accusing the rail companies of conspiring from 2003 to 2008 to fix rail fuel surcharges and refraining from competing against each other on those prices. They alleged that the scheme caused billions of dollars in damages. After an extensive pretrial process that included two appeals and the elimination of class certification, the case is chugging along toward trial, with expert discovery currently scheduled to close April 15, 2021.

The instant fight could help determine what evidence will ultimately be presented at trial. According to the DOJ, lawmakers made clear that Section 10706 nixes evidence only of "lawful discussions or agreements among rail carriers about interline traffic that they directly handle," with no exclusion of "circumstantial evidence where the context of the communication shows that carriers fixed rates for local or interline shipments in which they did not participate — and which potentially competed against service over their own lines."

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The plaintiffs are represented by Hausfeld LLP, Quinn Emanuel Urquhart & Sullivan LLP, Vinson & Elkins LLP, Thompson Hine LLP, Slover & Loftus LLP, Cohen Milstein Sellers & Toll PLLC, Boies Schiller Flexner LLP, German May PC, Nexsen Pruet LLC, Debevoise & Plimpton LLP, Sperling & Slater PC, Weil Gotshal & Manges LLP, Eimer Stahl LLP, Susman Godfrey LLP, Kenny Nachwalter PA, Cadwalader Wickersham & Taft LLP, Boulware Law LLC and Clyde & Co US LLP.

The complete article can be accessed here.