On Thursday, U.S. District Judge Paul Friedman of the District of Columbia court certified a class to eight shipping companies in a consolidated case where the plaintiffs alleged that they were “subjected to an endless string of rate increases” between 2003 and 2008. The plaintiffs have also alleged that major U.S. freight railroads had conspired to increase shipping costs by ‘fixing' fuel surcharges, thus generating billions of dollars in extra revenue. Now, the plaintiffs can move ahead as a class.
The evidence claiming overcharging is under seal in the matter. However, a separate study by the American Chemistry Council found that taken together, the surcharges imposed by the defendants on shippers exceeded their fuel cost increases by $6.4 billion between 2003 and 2007.
The eight plaintiffs include both small business and big ones. Companies like Olin Corp, an ammunition and industrial bleach manufacturer, U.S. Magnesium, and Dakota Granite Co are in the list of plaintiffs.
Though other defendants declined to make any comment on the class-action, CSX issued a statement saying its fuel surcharge practices “have always fully complied with the law.” Union Pacific, too denied the allegations and said that the claims were unfounded. Union Pacific spokesman Tom Lange said, “While the court decided the case may continue as a class action, the court did not find the plaintiff's allegations true.” Union Pacific has said it is going to appeal the decision.
Of course, the court also cannot find at a preliminary stage that the allegations of the plaintiffs are untrue, but that there is prima facie evidence to hold a commonality in cause of action to grant class status . The real allegation of the plaintiffs is that the surcharges did not have any direct relationship to the actual increases in railroad fuel costs. The purpose of surcharges is to recoup costs, not to increase profit.
The case is In Re. Freight Surcharge Anti-Trust Litigation, U.S. District Court, District of Columbia, no. 1:07-mc-00489.
