Houston Chronicle

Railroads’ defense in suit suffers a loss

- By Josh Funk

OMAHA, Neb. — A federal judge has ruled that the details of conversati­ons between the nation’s four largest railroads should be included in lawsuits challengin­g billions of dollars of charges they imposed in the past.

The ruling Friday undercuts one of the defenses that Union Pacific, BNSF, CSX and Norfolk Southern had offered in dozens of lawsuits that major companies filed last year questionin­g the way railroads set rates. The lawsuits say the railroads conspired to boost prices starting in 2003 by imposing coordinate­d fuel surcharges and pocketing billions of dollars in profits.

The price-fixing allegation­s have been winding their way through U.S. courts for more than a decade since several companies first filed similar lawsuits in 2007. The cases are moving forward individual­ly after an appellate judge ruled last year that the case didn’t qualify for class-action status for as many as 16,000 shippers affected by the rates.

The companies that filed the lawsuits — which include carmakers such as Hyundai, manufactur­ers such as Campbell Soup and power companies — say the railroads had meetings, phone calls and email communicat­ions through which they embarked on the conspiracy to apply the fuel surcharges to all traffic to generate profits.

One of the plaintiffs’ attorneys, Stephen Neuwirth, said he’s glad the details of those conversati­ons can be presented at trial. “That evidence establishe­s that for at least five years, the railroads violated U.S. law by coordinati­ng fuel surcharges as a way to raise rail freight prices,” Neuwirth said.

In the lawsuits, the railroads have argued that their fuel surcharges were legal and were simply designed to recover the skyrocketi­ng cost of fuel at the time.

The railroads had also argued that an obscure law that allows railroads to discuss rates on shipments that cross multiple railroads should have protected their conversati­ons about rates, but the judge rejected that argument Friday.

CSX spokeswoma­n Cindy Schild said the railroad, based in Jacksonvil­le, Fla., believes the price-fixing allegation­s are unfounded. She said it will continue to defend its surcharges because they were developed legally.

Union Pacific, based in Omaha, Neb., plans to continue “vigorously defending itself against the allegation­s in these lawsuits,” spokeswoma­n Elizabeth Graham said.

Norfolk Southern, based in Norfolk, Va., and BNSF, headquarte­red in Fort Worth, declined to comment on the lawsuits.

Although the companies are individual entities, they are legally allowed to work together to some degree to ensure the continuity of the nation’s railroad network.

 ?? Associated Press file photo ?? Dozens of lawsuits against the four largest U.S. railroads question the way they set rates.
Associated Press file photo Dozens of lawsuits against the four largest U.S. railroads question the way they set rates.

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