In re Rail Freight Fuel Surcharge Antitrust Litig.

• Citation: 520 F.Supp.3d 1
• Decision Date: 19 February 2021
• Docket Number: Civil Action No. 11-1049 (PLF),Miscellaneous No. 07-0489 (PLF),MDL Docket No. 1869
• Parties: IN RE RAIL FREIGHT FUEL SURCHARGE ANTITRUST LITIGATION This document relates to: All Direct Purchaser Cases Oxbow Carbon & Minerals LLC, et al., Plaintiffs, v. Union Pacific Railroad Co., et al., Defendants.
• Court: U.S. District Court — District of Columbia

520 F.Supp.3d 1

IN RE RAIL FREIGHT FUEL SURCHARGE ANTITRUST LITIGATION

This document relates to: All Direct Purchaser Cases

Oxbow Carbon & Minerals LLC, et al., Plaintiffs,

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

MDL Docket No. 1869

Miscellaneous No. 07-0489 (PLF)

Civil Action No. 11-1049 (PLF)

United States District Court, District of Columbia.

Signed February 19, 2021

Greg A. Friedholm, Assistant US Attorney, Michelle L. Dineen Jerrett, Assistant US Attorney, United States Attorney's Office, Worcester, MA, for Plaintiff.

OPINION

PAUL L. FRIEDMAN, United States District Judge

Defendants in Rail Freight and defendants in Oxbow move pursuant to 49 U.S.C. § 10706 to exclude evidence of any discussion or agreement between or among rail carriers that concerned interline movements (and any rate or other action resulting from such discussion or agreement), and to enforce the statutory bar on inferring a conspiracy from specified evidence. Defendants’ Motion and Memorandum of Law Regarding the Interpretation and Application of 49 U.S.C. § 10706 [Dkt. No. 927];¹ see also Defendants’ Motion to Exclude Interline-Related Communications from Consideration for Class Certification or Any Other Purpose Prohibited by 49 U.S.C. § 10706 [Dkt. No. 417]. Plaintiffs in Oxbow and direct purchaser plaintiffs in Rail Freight oppose the motions. Plaintiffs’ Memorandum of Points and Authorities in Opposition to Defendants’ Motion Regarding the Interpretation and Application of 49 U.S.C. § 10706 [Dkt. No. 952]; see also Plaintiffs’ Memorandum in Opposition to Defendants’ Motion to Exclude Interline-Related Communications from Consideration for Class Certification or Any Other Purpose Prohibited by 49 U.S.C. § 10706 [Dkt. No. 438]. Upon consideration of the written submissions, the relevant case law, the oral arguments presented by counsel at a motions hearing on August 26, 2020, and relevant portions of the record in this case, the Court will deny defendants’ motions.²

I. FACTUAL AND PROCEDURAL HISTORY

The Court has previously recounted at length the factual and procedural history of the Rail Freight and Oxbow litigation. See In re Rail Freight Fuel Surcharge Antitrust Litig. ("Rail Freight I"), 587 F. Supp. 2d 27, 29-31 (D.D.C. 2008) ; In re Rail Freight Fuel Surcharge Antitrust Litig. ("Rail Freight II"), 593 F. Supp. 2d 29, 32, 34-35 (D.D.C. 2008), aff'd sub nom. Fayus Enters. v. BNSF Ry. Co., 602 F.3d 444, 445-46, 454 (D.C. Cir. 2010) ; In re Rail Freight Fuel Surcharge Antitrust Litig. ("Rail Freight III"), 287 F.R.D. 1, 10 (D.D.C. 2012), vacated sub nom. In re Rail Freight Fuel Surcharge Antitrust Litig. – MDL No. 1869, 725 F.3d 244 (D.C. Cir. 2013) ; In re Rail Freight Fuel Surcharge Antitrust Litig., ("Rail Freight IV"), 292 F. Supp. 3d 14, 33-38 (D.D.C. 2017), aff'd sub nom. In re Rail Freight Fuel Surcharge Antitrust Litig. – MDL No. 1869, 934 F.3d 619 (D.C. Cir. 2019) ; see also Oxbow Carbon & Minerals LLC v. Union Pac. R.R. Co. ("Oxbow I"), 926 F. Supp. 2d 36, 39-40 (D.D.C. 2013) ; Oxbow Carbon & Minerals LLC v. Union Pac. R.R. Co. ("Oxbow II"), 81 F. Supp. 3d 1, 5-6 (D.D.C. 2015). The Court therefore will limit its discussion here to the issues presented under 49 U.S.C. § 10706.

In Rail Freight, plaintiffs claim that defendants, BNSF Railway Company ("BNSF"), CSX Transportation, Inc. ("CSX" or "CSXT"), Norfolk Southern Railway Company ("NS"), and Union Pacific Railroad Company ("UP"), in violation of the Sherman Act, 15 U.S.C. § 1, "engaged 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." Rail Freight IV, 292 F. Supp. 3d. at 34.³ A rail fuel surcharge, as defined by the plaintiffs, " ‘is a separately-identified fee that is charged by the railroads for ... agreed-upon transportation [services], purportedly to compensate for increases in the cost of fuel.’ " Id. (quoting Second Consolidated Amended Class Action Complaint [Dkt. No. 324] ¶ 2). Plaintiffs allege that defendants conspired to impose rail fuel surcharges that far exceeded any of the defendants’ fuel costs. Rail Freight IV, 292 F. Supp. 3d. at 34. Similarly, in Oxbow, the plaintiffs allege that defendants UP and BNSF conspired to "fix prices above competitive levels through a uniform fuel surcharge." Oxbow II, 81 F. Supp. 3d at 5 (noting that plaintiffs also allege that defendants conspired to allocate certain markets to each other, granting UP a monopoly in at least one region).⁴

In 2008, defendants in Rail Freight moved to dismiss the claims of both putative classes. On November 7, 2008, the Court denied defendants’ motion regarding the direct purchaser plaintiffs, concluding that the direct purchasers had sufficiently alleged an agreement in restraint of trade. Rail Freight I, 587 F. Supp. 2d at 32. Shortly thereafter, on December 28, 2008, the Court denied in part and granted in part defendants’ motion regarding the indirect purchaser plaintiffs, concluding that the indirect purchasers’ state law claims were preempted and must be dismissed, but that the indirect purchasers’ federal antitrust claim for injunctive relief could proceed. Rail Freight II, 593 F. Supp. 2d at 32, 43. On appeal, the D.C. Circuit affirmed this Court's dismissal of the indirect purchasers’ state law claims. Fayus Enters. v. BNSF Ry. Co., 602 F.3d at 454.

On March 18, 2010, direct purchaser plaintiffs in Rail Freight moved for class certification. Pl. Class Cert. Mot. at 1. On September 8, 2010, defendants in Rail Freight filed a motion to exclude interline-related communications from consideration as part of the class certification process, and further, to exclude such communications from consideration for any other purpose prohibited by 49 U.S.C. § 10706. Def. Class Cert. Mot. at 1; Def. Memo. in Support Class Cert. Mot. at 1-28. On June 21, 2012, the Court granted plaintiffs’ motion for class certification without relying on any of the disputed evidence. Rail Freight III, 287 F.R.D. at 19-20, 74. The Court therefore concluded that it was not necessary, at that time, to rule on defendants’ Section 10706 motion. Id. Subsequently, the D.C. Circuit vacated this Court's decision granting class certification and remanded the case for further consideration. In re Rail Freight Fuel Surcharge Antitrust Litig. – MDL No. 1869, 725 F.3d at 255. On remand, this Court denied direct purchaser plaintiffs’ motion for class certification – again without relying on the disputed evidence; it therefore did not reach defendants’ Section 10706 motion. Rail Freight IV, 292 F. Supp. 3d at 50 n.5, 145. On appeal, the D.C. Circuit affirmed the denial of class certification. In re Rail Freight Fuel Surcharge Antitrust Litig. – MDL No. 1869, 934 F.3d at 627.

After class certification was denied, the absent putative former class members filed individual actions in district courts across the country to pursue the conspiracy claim that had been advanced by the putative class against defendants. Transfer Order at 1, In re Rail Freight Fuel Surcharge Antitrust Litig. (No. II), Miscellaneous No. 20-0008 (BAH), MDL No. 2952 (D.D.C.) [Dkt. No. 1]. Because of the significantly different procedural postures of these cases from those in MDL No. 1869, the Multidistrict Litigation Panel consolidated them into a separate MDL which it assigned to Chief Judge Howell – In re Rail Freight Fuel Surcharge Antitrust Litigation (No. II), Miscellaneous No. 20-0008 (BAH), MDL No. 2952 (D.D.C.). Transfer Order at 1-2. Since then, additional cases have been filed and transferred to MDL No. 2952.

In re Rail Freight Fuel Surcharge Antitrust Litig. (No. II), Miscellaneous No. 20-0008 (BAH), MDL No. 2952, 2020 WL 5016922, at *5 (D.D.C. Aug. 25, 2020). Aside from limited factual additions, the approximately ninety-three complaints in MDL No. 2952 generally repeat the claims made by the putative class members in MDL No. 1869. See id. at *5-6.

On December 19, 2019, this Court issued a memorandum opinion and order permitting the plaintiffs and the defendants in both Rail Freight and Oxbow and the plaintiffs in any related cases before Chief Judge Howell to file additional memoranda addressing defendants’ still-pending motions concerning Section 10706. Memorandum Opinion and Order [Dkt. No. 918] at 3. In addition, on March 16, 2020, the Court issued an order inviting the United States Department of Justice, the Federal Trade Commission, and the Surface Transportation Board to submit a statement of interest. Order [Dkt. No. 947] at 2. As a result of these two orders, additional memoranda were filed by (1) the defendants in Rail Freight and Oxbow ("the defendants"), see Def. Mot.; Def. Reply; Def. Supp.;⁵ (2) the plaintiffs in Rail Freight and Oxbow ("the plaintiffs"), see Pl. Opp.; Pl. Supp.;⁶ (3) the plaintiffs in In re Rail Freight Fuel Surcharge Antitrust Litigation (No. II), Miscellaneous No. 20-0008 (BAH), MDL No. 2952, 2020 WL 5016922 (D.D.C. Aug. 25, 2020) ("the new plaintiffs"), see New Pl. Opp.; Pl. Supp.;⁷ and (4) the United States Department of Justice, the Federal Trade Commission, and the Surface Transportation Board ("the government"), see Gov't SOI.

Defendants, plaintiffs, new plaintiffs, and the government take divergent positions on the interpretation of Section 10706(a)(3)(B)(ii), its application to the evidence, and the proper allocation of the burden of proof. See generally Def. Mot.; Pl. Opp.; New Pl. Opp.; Gov't SOI.

II. LEGAL FRAMEWORK

In resolving the relevant disputes, the Court is guided by the principle that "[i]t is for the court to define the statutory standard." McDermott Int'l, Inc. v. Wilander, 498 U.S. 337, 356, 111 S.Ct. 807, 112 L.Ed.2d 866 (1991). "[T]he function of the courts" is to "construe the language so as to give effect to the intent of Congress." United States v. Am. Trucking Ass'n, Inc., 310 U.S. 534, 542, 60 S.Ct. 1059, 84 L.Ed. 1345 (1940).

As always, the Court begins with the plain...