* Suit over rail fuel-surcharges will proceed
* Rail lines mull appeals; deny allegations
By John Crawley
WASHINGTON, June 21 A lawsuit alleging that
major U.S. freight railroads conspired to drive up shipping
costs by fixing fuel surcharges, generating billions of dollars
in extra revenue, can move forward as a class action case, a
judge ruled on Thursday.
U.S. District Judge Paul Friedman of the District of
Columbia court certified a consolidated case involving eight
shipping companies who claim they were "subjected to an endless
string of rate increases" between 2003-08.
They claim Union Pacific, Norfolk Southern,
CSX Transportation and Burlington Northern Santa Fe
Railway took advantage of a concentrated market, tight capacity
and coordinated pricing.
The four railroads control more than 90 percent of rail
shipments in the United States. They now must defend themselves
in a coordinated civil action by key customers.
"This harmed both the shippers and American consumers," said
Stephen Neuwirth, an attorney with co-lead counsel Quinn Emanuel
Urquhart & Sullivan.
Overcharge claims have been presented as evidence and are
under seal. But a study by the American Chemistry Council, an
industry trade group, found that surcharges imposed by all major
freight railroads exceeded their fuel cost increases by $6.4
billion between 2003-07.
Shippers using freight rail include major U.S. companies in
the automotive, chemical, agriculture and utility industries.
However, the eight plaintiffs in the class case comprise
large and small businesses, including Olin Corp, an
ammunition and industrial bleach manufacturer, Dakota Granite
Co, and U.S. Magnesium.
Norfolk Southern and BNSF declined comment on Friedman's
CSX said in a statement that its fuel surcharge practices
"have always fully complied with the law".
Union Pacific continued to deny the allegations and called
the claims unfounded.
"While the court decided that the case may continue as a
class action, the court did not find the plaintiffs' allegations
true," UP spokesman Tom Lange said.
Union Pacific said it expected to appeal. CSX said it was
reviewing the decision and would soon decide whether to appeal.
Plaintiffs contend that the surcharges had no direct
relationship to actual railroad fuel costs. Surcharges broadly
are designed to recoup costs, not boost the bottom line.
The lawsuits date to 2007 and coincide with so far
unsuccessful Democratic efforts in the U.S. Senate to strip
freight railroads of their antitrust exemption and overhaul the
way they are regulated.
Berkshire Hathaway Inc, whose controlling
shareholder is billionaire investor Warren Buffet, owns BNSF.