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Vinson & Elkins Secures Victory in Railroad Fuel Surcharge Antitrust Litigation

Vinson & Elkins Secures Victory in Railroad Fuel Surcharge Antitrust Litigation Background Image

Vinson & Elkins has secured a significant victory in the United States District Court for the District of Columbia on behalf of large shippers from the steel, power generation, chemicals and agriculture industries in ongoing antitrust litigation alleging that the four largest railroads in the United States conspired to fix prices by establishing rate-based fuel surcharges.

On February 19, 2021, the Court issued a decision denying a motion by defendants, Burlington Northern Santa Fe, CSX, Norfolk Southern and Union Pacific, seeking to exclude evidence that the railroads had agreed to and coordinated the adoption of these fuel surcharges based on an obscure statute, 49 U.S.C. § 10706, which protects railroads from antitrust liability when they agree on joint rates for interline movements.

Teaming with Slover & Loftus, a firm with decades of experience in the railroad industry, to develop arguments to oppose the motion, V&E took the lead in drafting a brief on the meaning of the statute and presented oral arguments on behalf of the plaintiffs. Firms representing other plaintiffs submitted briefs and oral arguments on other aspects of the statute. The Court also solicited views on the statute’s meaning from DOJ, which also presented oral arguments in the case, the FTC, the Department of Transportation and the Surface Transportation Board.

More than 40 years old, the statute had never been subject to judicial interpretation prior to this. If the defendants’ interpretation had been adopted, then railroads would be permitted to freely engage in price fixing as long as they also discussed some interline rates, which would undermine decades of efforts by Congress and regulators to subject railroads to competitive market forces. The denial of the motion means that the evidence at issue can be used to prove the railroads’ liability and eliminates one of the railroads’ principal defenses in the overarching litigation.

The underlying dispute dates back more than a decade, when several shippers that purchased rail freight services from one or more of the four railroads filed a class action alleging that the railroads had engaged in a price fixing conspiracy. After years of litigation, class certification was denied, so shippers had to bring their own claims for price fixing. V&E was not involved in the litigation at that time.

To date, approximately 100 other cases for more than 300 plaintiffs have been brought, and the cases have been consolidated in multidistrict litigation (MDL) in the District of Columbia. V&E partner Alden Atkins is one of only four liaison counsel leading this sizable litigation for the plaintiffs. Other members of the Liaison Committee are Stephen Neuwirth (Quinn Emmanuel), Michael Hausfeld (Hausfeld LLP) and William Blechmen (Kenny Nachwalter).

Led by Atkins, other key V&E team members on this motion include Craig Seebald, Lindsey Vaala, Crystal Stapley and Brittany Harwood.

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