Donnelly Commodities Inc. v. BNSF Ry. Co. (In re Rail Freight Fuel Surcharge Antitrust Litig. MDL No. 1869)
| Decision Date | 17 May 2022 |
| Docket Number | 21-7093,C/w 21-7095 |
| Citation | 34 F.4th 1 |
| Parties | IN RE: RAIL FREIGHT FUEL SURCHARGE ANTITRUST LITIGATION - MDL NO. 1869, Donnelly Commodities Incorporated, on Behalf of Itself and All Others Similarly Situated, et al., Appellees v. BNSF Railway Company, et al., Appellants |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Donald B. Verrilli, Jr. argued the cause for appellants. With him on the briefs were Benjamin J. Horwich, Glenn D. Pomerantz, Linda S. Stein, Kent A. Gardiner, Tara L. Reinhart, Saul P. Morgenstern, Matthew M. Collette, John M. Majoras, Kristen Lejnieks, and Tyrone R. Childress.
Kathryn D. Kirmayer and Sarah Yurasko were on the brief for amici curiae Association of American Railroads and American Short Line and Regional Railroad Association in support of appellants.
Kathleen M. Sullivan argued the cause for appellees. With her on the brief were Michael D. Hausfeld, Brian A. Ratner, Stephen R. Neuwirth, Sami H. Rashid, Meegan Hollywood, Eamon O=Kelly, Paul M. Donovan, and Shawn Raymond.
Bryan J. Leitch, Attorney, U.S. Department of Justice, argued the cause for amici curiae the United States and the Federal Trade Commission in support of appellees. With him on the brief were Daniel E. Haar and Robert B. Nicholson, Attorneys, Joel Marcus, Deputy General Counsel, Federal Trade Commission, and Mark S. Hegedus, Attorney.
John C. Sullivan was on the brief for amici curiae American Chemistry Council, et al. in support of appellees.
Before: Tatel* and Millett, Circuit Judges, and Edwards, Senior Circuit Judge.
This matter focuses on questions certified by the District Court for interlocutory review pursuant to 28 U.S.C. § 1292(b). In the underlying antitrust actions that gave rise to the certified questions, freight shippers ("Plaintiffs") allege that the nation's four largest freight railroads ("Defendants" or "Railroads") have violated the Sherman Act, 15 U.S.C. § 1, by "engag[ing] in a price-fixing conspiracy to coordinate their fuel surcharge programs as a means to impose supra-competitive total price increases on their shipping customers." In re Rail Freight Fuel Surcharge Antitrust Litig ., 520 F. Supp. 3d 1, 8 (D.D.C. 2021) (citation omitted). Before hearing summary judgment motions, the District Court considered Defendants’ motions to exclude certain evidence on which Plaintiffs rely. Defendants argued the challenged documents were inadmissible under 49 U.S.C. § 10706(a)(3)(B)(ii)(II) (" Section 10706") as evidence of the Railroads’ discussions or agreements concerning "interline" traffic.
Interline movements are shipments carried along two or more railroads’ tracks under a common arrangement. Section 10706 states that "[i]n any proceeding" in which rail carriers are alleged to have violated antitrust laws, conspiracy "may not be inferred from evidence that two or more rail carriers acted together with respect to an interline rate or related matter and that a party to such action took similar action with respect to a rate or related matter on another route or traffic." 49 U.S.C. § 10706(a)(3)(B)(ii). The statute tellingly provides that "evidence of a discussion or agreement between or among" rail carriers "shall not be admissible if the discussion or agreement ... concerned an interline movement of the rail carrier," and "would not, considered by itself, violate the [antitrust] laws." Id . § 10706(a)(3)(B)(ii)(II) (emphasis added).
The parties sharply disagreed over whether and how the rule of evidence under Section 10706 should be applied to the documents cited by Defendants in their motions to exclude evidence. As relevant here, the District Court held that "to be protected by the statute, an interline movement must be an identifiable movement or movements with identifiable circumstances, such as a specific shipper, specific shipments, and specific destinations," 520 F. Supp. 3d at 29; and it further held that a discussion or agreement does not "concern" interline movements if it could also be said to concern other types of rail freight movements, id . at 33. The District Court denied "[D]efendants’ motion for the exclusion of exhibits as a whole," id . at 34, and thus effectively denied full protection to the contested documents cited by Defendants. Instead, the District Court indicated that Defendants could "propose redactions to remove [from documents] discussions or agreements that concerned an interline movement of the rail carrier, and, where redaction is impracticable or not feasible, may request a suitable limiting instruction." Id .
Defendants then asked the District Court to certify its order for interlocutory appeal under 28 U.S.C. § 1292(b). The District Court agreed after finding that the "order involves a controlling question of law as to which there is substantial ground for difference of opinion and ... an immediate appeal from the order may materially advance the ultimate termination of the litigation." Id. ; see In re Rail Freight Fuel Surcharge Antitrust Litig. , 2021 WL 2433737, at *4-6 (D.D.C. June 15, 2021). This court, "in its discretion," permitted the appeal under § 1292(b).
In pressing for interlocutory review, Defendants focused on two aspects of the District Court's judgment: "(1) that the phrase ‘an interline movement’ in Section 10706 means that the statutory protections apply only to discussions or agreements about ‘identifiable ... movements with identifiable circumstances, such as a specific shipper, specific shipments, and specific destinations,’ and (2) that courts may implement the protections of Section 10706 through redactions and limiting instructions." 2021 WL 2433737, at *3 (omission in original) (internal quotation marks and citation omitted). In the opinion that follows below, we will focus on these two principal issues and related matters. Because we find that the District Court's interpretation of Section 10706 sometimes strays from the literal terms of the statute, we affirm in part and reverse in part. Accordingly, we vacate the District Court's order and remand for the court to reconsider the evidence at issue consistent with this court's interpretation of Section 10706.
Congress enacted the Section 10706 statutory rule of evidence as part of the Staggers Rail Act of 1980, Pub. L. No. 96-448, 94 Stat. 1895 ("Act"). The Act's "primary goal" "was to revitalize the railroad industry by reducing or eliminating regulatory burdens." Coal Exps. Ass'n of the U.S., Inc. v. United States , 745 F.2d 76, 80-81 (D.C. Cir. 1984). "[T]he underlying approach of the legislation was to move toward much greater reliance on market forces rather than regulation to govern rail carriage, but to temper that move with a policy of retaining regulation where the market would be insufficient to protect shippers and the public from abusive railroad practices." Id. at 81.
Rail freight traffic involves two types of movements: interline and single-line. Br. for the United States and the Federal Trade Commission ("FTC") as Amici Curiae in Support of Pls.-Appellees and Affirmance 1, 11. As explained above, interline movements are shipments carried along two or more railroads’ tracks under a common arrangement. Id. at 1. In contrast, single-line shipments are moved by one carrier on its own tracks. Id. Outside of their shared interline traffic, rail carriers generally compete with one another. See id .
"Facilitating interline traffic requires coordination among competing freight railroads over logistics and shipping rates." In re Rail Freight Fuel Surcharge Antitrust Litig.–MDL No. 1869 , 725 F.3d 244, 247 n.1 (D.C. Cir. 2013). Therefore, as noted above, Section 10706 provides that proof of a conspiracy "may not be inferred from evidence that two or more rail carriers acted together with respect to an interline rate or related matter and that a party to such action took similar action with respect to a rate or related matter on another route or traffic." 49 U.S.C. § 10706(a)(3)(B)(ii). In addition to the bar against impermissible inferences, Section 10706 also precludes the admission of evidence of certain discussions and agreements between rail carriers. In relevant part, this statutory rule of evidence states:
Defendants BNSF Railway Co. ("BNSF"), CSX Transportation, Inc., Norfolk Southern Railway Co., and Union Pacific Railroad Co. ("Union Pacific") account for the majority of rail freight traffic in the United States. In re Rail Freight Fuel Surcharge Antitrust Litig. , 725 F.3d at 247. Id. Each of the Defendants interlines traffic with the others. See id. ; Opening Br. of Appellants 4.
The instant actions concern Plaintiffs’ challenges to rate-based fuel surcharges that the Railroads imposed on shipments. In re Rail Freight Fuel Surcharge Antitrust Litig. , 725 F.3d at 247-48. As we have previously explained:
To continue reading
Request your trial