Corporations join antitrust class action against railroads

Posted on: May 22nd, 2013 by Steve Larson
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Fotolia TrainThe U.S. class action system often unites major corporations in opposition to what they view as its excesses.  But an antitrust case against the four largest railroad companies pits major businesses on both sides. 

A three-judge panel at the U.S. Court of Appeals for the District of Columbia Circuit heard arguments on May 17 over a district court judge’s decision in June to allow the case to move forward as a class action. If affirmed, the class would include some 30,000 shippers seeking billions of dollars for alleged overcharges for a period from July 1, 2003, to December 31, 2008, through the imposition of a uniform fuel surcharge.

 The defendants are well-known large companies: BNSF Railway Company, CSX Transportation Inc, Norfolk Southern Railway Company and Union Pacific Corporation.  But the group of eight named lead plaintiffs also includes a major company: Olin Corp, a chlorine and sodium hydroxide manufacturer based in Clayton, Missouri, near St. Louis, with shares traded on the New York Stock Exchange.

The other seven named plaintiffs are also companies but less well known and not publicly traded: Carter Distributing Company, Dakota Granite Company, Donnelly Commodities Incorporated, Dust Pro, Inc., Nyrstar Taylor Chemicals, Strates Shows Inc and US Magnesium.

Public companies such as Olin rarely serve as named plaintiffs in class action cases. When major corporations file antitrust lawsuits, they typically file them individually rather than as class actions.  But the railroad case is so massive and complicated that a class action was the best way to bring legal action, said lawyers for the plaintiffs.

Olin’s involvement may also be surprising given its history of involvement with conservative legal organizations that have been hostile to class actions. The John M. Olin Foundation, established by the former Olin president, provided grants to such organizations as the Federalist Society before the foundation officially disbanded in 2005.

Olin said in a statement that “participation in this class action lawsuit provides our company the greatest opportunity to recover the fuel surcharges that we believe were unjustly imposed upon us and many other shippers by the defendants.”  The case is also a rare dispute among businesses to draw interest from the U.S. Chamber of Commerce, which filed a brief in support of the defendants. In its brief, the Chamber argued that the district court judge wrongly certified the class without requiring that “classwide proof of injury to each individual member.”

The appeal is In re Rail Freight Fuel Surcharge Antitrust Litigation, U.S. Court of Appeals for District of Columbia Circuit, No. 12-7085.