Oxbow Carbon & Minerals LLC v. Union Pac. R.R. Co.

• Decision Date: 24 February 2015
• Docket Number: Civil Action No. 11–1049 PLF
• Citation: 81 F.Supp.3d 1
• Parties: Oxbow Carbon & Minerals LLC, et al., Plaintiffs, v. Union Pacific Railroad Company, et al., Defendants.
• Court: U.S. District Court — District of Columbia

81 F.Supp.3d 1

Oxbow Carbon & Minerals LLC, et al., Plaintiffs

v.Union Pacific Railroad Company, et al., Defendants.

Civil Action No. 11–1049 PLF

United States District Court, District of Columbia.

Signed February 24, 2015

Merril Jay Hirsh, John Richard Gerstein, Troutman Sanders LLP, Washington, DC, Barry J. Brett, Daniel N. Anziska, Troutman Sanders LLP, Robert Silver, Boies, Schiller & Flexner LLP, New York, NY, David Boies, Boies Schiller & Flexner LLP, Armonk, NY, for Plaintiffs.

John M. Majoras, Jones Day, Columbus, OH, Kristen A. Lejnieks, Jones Day, Alan Mitchell Wiseman, Michael L. Rosenthal, Covington & Burling LLP, Richard Joseph Favretto, Mayer Brown LLP, Washington, DC, Carolyn A. Woodson, David G. Meyer, Tyrone R. Childress, Jones Day, Bradley S. Phillips, Henry Weissmann, Lindsay McCaskill, Munger, Tolles & Olson, LLP, Los Angeles, CA, for Defendants.

OPINION AND ORDER

PAUL L. FRIEDMAN, United States District Judge

This Court previously dismissed plaintiffs' complaint without prejudice for failure to state a claim. After plaintiffs filed a substantially revised amended complaint, defendants Union Pacific Railroad Company (“UP”) and BNSF Railway Company (“BNSF”) again have moved to dismiss for failure to state a claim and for lack of Article III standing. After carefully considering the arguments made by the parties in their papers and the oral arguments presented by counsel in court on January 8, 2015, the Court concludes that plaintiffs' amended complaint sufficiently states a claim on all counts and it therefore denies defendants' motions to dismiss.¹

I. BACKGROUND

The facts of this case are described in detail in this Court's February 26, 2013 Opinion granting defendants' prior motions to dismiss. Oxbow Carbon & Minerals LLC v. Union Pac. R.R. Co. (“Oxbow I”) , 926 F.Supp.2d 36, 39–40 (D.D.C.2013). They are summarized here as relevant.

Plaintiffs are five related companies (collectively referred to as “Oxbow”)—Oxbow Carbon & Minerals LLC, Oxbow Mining, LLC, Oxbow Midwest Calcining LLC, Oxbow Calcining LLC, and Terror Creek LLC—that mine, sell, and ship coal and petroleum coke.² They allege that UP and BNSF engaged in anticompetitive conduct, both in concert and, in the case of UP, independently, that harmed plaintiffs. In short, plaintiffs allege that defendants conspired to (1) fix prices above competitive levels through a uniform fuel surcharge and (2) allocate certain markets to each other, granting UP a monopoly in at least one region.³

Plaintiffs' original complaint was dismissed without prejudice for failure to state a claim. Oxbow I, 926 F.Supp.2d at 41–42. In Oxbow I, this Court held that (1) plaintiffs failed to allege sufficient facts under Section 1 of the Sherman Act regarding each Oxbow plaintiff's payment of the illegal fuel surcharges, id. at 42–44 ; (2) plaintiffs' allegations that UP and BNSF shared a monopoly could not support a Section 2 Sherman Act conspiracy claim, id. at 45–47 ; (3) even if the complaint was construed to allege a conspiracy to allocate an entire market to UP only, Oxbow had nevertheless failed to state a claim because Oxbow omitted basic information about the Section 2 conspiracy, id. at 46–47 ; and (4) the complaint failed to state a claim of monopolization or attempted monopolization against UP because allegations of “insufficient assistance in the provision of service to rivals” could not support such a claim. Id. at 48 (citing Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 410, 124 S.Ct. 872, 157 L.Ed.2d 823 (2004) ).

In response to the Court's Opinion, Oxbow filed a substantially amended complaint which brings claims under Section 1 and Section 2 of the Sherman Act. Count I, the fuel surcharge conspiracy claim, and Count II, the conspiracy not-to-compete claim, are brought under Section 1. Count III, which alleges both monopolization or attempted monopolization by UP and a conspiracy to monopolize by both defendants, is brought under Section 2. Counts II and III concern two specific markets for coal and petcoke, the Uinta Basin and the Powder River Basin. The final count, for breach of contract, is brought under state law. Oxbow alleges that UP breached the “Tolling Agreement,” an agreement to, among other things, toll the statute of limitations for Oxbow's claims while the parties negotiated a potential settlement for those claims that did not come to fruition.

UP and BNSF then filed motions to dismiss. Importantly, neither UP nor BNSF requests that this Court dismiss Count I of the amended complaint in its entirety, but rather only that it dismiss those claims that go beyond the allegations in In re Rail Freight Fuel Surcharge Antitrust Litig. (the “Rail Freight Action”), Misc. No. 07–0489(PLF), which this Court has already found sufficient under Rule 8 of the Federal Rules of Civil Procedure. See 587 F.Supp.2d 27 (D.D.C.2008) ; 593 F.Supp.2d 29 (D.D.C.2008), aff'd, 602 F.3d 444 (D.C.Cir.2010).

II. ARTICLE III STANDING

Defendants UP and BNSF move to dismiss the amended complaint for (1) lack of standing and (2) for failure to state a claim. The Court first addresses the threshold issue of standing, finding that plaintiffs have sufficiently alleged facts establishing standing on all counts, with the exception of certain plaintiffs' claims for breach of contract, Count IV. On that count, the Court dismisses two plaintiffs, Oxbow Midwest Calcining LLC and Terror Creek LLC, because they are not parties to the contract.

A. Legal Standard

Federal jurisdiction is limited under Article III of the Constitution to “Cases” and “Controversies.” Massachusetts v. EPA, 549 U.S. 497, 516, 127 S.Ct. 1438, 167 L.Ed.2d 248 (2007). The doctrine of standing flows directly from this limitation. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). That doctrine assures that “the litigant is entitled to have the court decide the merits of the dispute or of particular issues,” Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975), by demanding that he or she “possess a ‘direct stake in the outcome’ of the case.”Hollingsworth v. Perry, ––– U.S. ––––, 133 S.Ct. 2652, 2662, 186 L.Ed.2d 768 (2013) (quoting Arizonans for Official English v. Arizona, 520 U.S. 43, 64, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997) ).

To establish the requisite standing, each plaintiff must show, at an “irreducible constitutional minimum,” that (1) it has suffered an “injury in fact” through the “invasion of a ‘legally protected interest;’ ” (2) the injury is “fairly traceable” to the defendant's conduct; and (3) a favorable decision on the merits likely will redress the injury. Sprint Commc'ns Co. v. APCC Servs., Inc., 554 U.S. 269, 273–74, 128 S.Ct. 2531, 171 L.Ed.2d 424 (2008) (citing Lujan v. Defenders of Wildlife, 504 U.S. at 560–61, 112 S.Ct. 2130 ). In addition to an “injury in fact,” plaintiffs bringing federal antitrust claims also must show an “antitrust injury”—that is, “injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful.” Meijer, Inc. v. Biovail Corp., 533 F.3d 857, 862 (D.C.Cir.2008) (quoting Brunswick Corp. v. Pueblo Bowl–O–Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977) (emphasis omitted)).

B. Analysis

This Court previously dismissed plaintiffs' complaint, in part because “plaintiffs ha[d] not alleged adequate facts about their payment of surcharges to support an inference of injury” caused by the alleged fuel surcharge conspiracy, and because “each plaintiff must demonstrate that it has suffered injury in order to establish standing.” Oxbow I, 926 F.Supp.2d at 43. Specifically, the original complaint “fail[ed] to specifically allege that each entity paid a surcharge at all.” Id. The amended complaint corrects that deficiency by alleging that each plaintiff paid “fuel surcharges ... that they would not have paid in the absence of the conspiracy.” Am. Compl. ¶ 135.⁴ The amended complaint, however, neglects to state to whom plaintiffs Oxbow Mining, LLC, Oxbow Midwest Calcining LLC, Oxbow Calcining LLC, and Terror Creek LLC paid those surcharges.⁵

Defendants argue that this failure is fatal and that those four plaintiffs must be dismissed from Count I. Defendants, however, are jointly and severally liable under Section 1 for any injury suffered by plaintiffs. In re Uranium Antitrust Litig., 617 F.2d 1248, 1257 (7th Cir.1980). Plaintiffs therefore need not identify, at this stage, to which co-conspirator they paid fuel surcharges. See In re NASDAQ Market–Makers Antitrust Litig., 169 F.R.D. 493, 508 (S.D.N.Y.1996) (holding that “[b]ecause antitrust liability is joint and several, a Plaintiff injured by one Defendant as a result of the conspiracy has standing to represent a class of individuals injured by any of the Defendant's co-conspirators”) (citing Rios v. Marshall, 100 F.R.D. 395, 404 (S.D.N.Y.1983) ); In re Motor Fuel Temperature Sales Practices Litig., 271 F.R.D. 221, 230 (D.Kan.2010) (holding that, under a Kansas law imposing joint and several liability, “even if plaintiffs did not purchase motor fuel directly from some defendants, it appears that they would have standing to assert claims for civil conspiracy claims against them”). At this stage, plaintiffs “need not show more than general factual allegations laying out a good faith basis for how one or more of the defendants injured plaintiffs. Nor must each plaintiff allege facts against all defendants, nor each defendant's relationship with a plaintiff be explicitly identified.” Bodner v. Banque Paribas, 114 F.Supp.2d 117, 125 (E.D.N.Y.2000). Instead, plaintiffs need only allege, as they have in the amended complaint, that they suffered damages as a result of the conspiracy in which defendants participated. See Am. Compl. ¶¶ 8–13, 134–42. Plaintiffs therefore have established sufficient standing to bring their Count I claim for price-fixing under Section 1 of the...