Class-Action Status Granted in Fuel-Surcharge Case Against Railroads

   By Bob Sechler 
 

The four top U.S. railroads have lost a key round in a long-running legal battle, after a federal judge on Thursday granted class-action status in a lawsuit alleging they colluded to inflate fuel surcharges paid by shippers by billions of dollars.

The railroads--Union Pacific Corp. (UNP), CSX Corp. (CSX), Norfolk Southern Corp. (NSC) and Burlington Northern Santa Fe--have vehemently denied the allegations but previously have been unsuccessful in getting the case dismissed.

CSX spokesman Gary Sease said CSX attorneys are reviewing Thursday's class-action decision by U.S. District Judge Paul L. Friedman and will "decide promptly" on whether to appeal it.

Regardless, "CSX's fuel surcharge practices have always fully complied with the law, and we will continue to vigorously defend this litigation," he said.

Stephen Neuwirth, an attorney for the plaintiffs, called the ruling "a very, very important victory in the case and a real vindication" for the shippers who filed it.

"The railroads illegally conspired to develop and implement this fuel surcharge program," said Neuwirth, of Quinn Emanuel Urquhart & Sullivan LLP. "This is a very important step towards enabling the victims of this conspiracy to be compensated."

Neuwirth declined to estimate the potential damages in the case, saying an expert study submitted by the plaintiffs remains under seal.

But the American Chemistry Council, a trade group that includes many companies that ship products by rail, previously has contended that the top four railroads and Kansas City Southern (KSU) overcharged shippers by $6.4 billion through fuel surcharges between 2003 and early 2007.

Named plaintiffs in the case include eight shippers, but Thursday's class-action ruling means any shipper that purchased unregulated freight transportation services from one of the defendant railroads from July 1, 2003, through 2008 is a member of it.

-Write to Bob Sechler at [e-mail]