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In re Rail Freight Fuel Surcharge Antitrust Litig. - MDL No. 1869

United States Court of Appeals for the District of Columbia Circuit

September 28, 2018, Argued; August 16, 2019, Decided; August 30, 2019, Reissued

No. 18-7010

Opinion

 [*620]  Katsas, Circuit Judge: This case involves a putative class of over 16,000 shippers allegedly harmed by a price-fixing conspiracy among the nation's largest freight railroads. The district court denied class certification because the plaintiffs' regression analysis—their evidence for proving causation, injury, [**2]  and damages on a class-wide basis—measured negative damages for over 2,000 members of the proposed class. Based on that consideration, we affirm.

This appeal arises out of eighteen antitrust actions consolidated by the Multidistrict Litigation Panel. The defendants are the four largest freight railroads in the United States: BNSF Railway Company; CSX Transportation, Inc.; Norfolk Southern Railway Company; and Union Pacific Railroad Company. The plaintiffs, who are their customers, allege that the railroads conspired to fix rate-based fuel surcharges. Railroads impose fuel surcharges—additional charges above the base shipping price—when the price of fuel rises above a certain trigger price. Rate-based surcharges are calculated as a percentage of the base shipping price.

Following consolidation, the action was divided into one case involving direct purchasers and another involving indirect purchasers. All plaintiffs alleged that the railroads violated section 1 of the Sherman Act, 15 U.S.C. § 1, by conspiring to fix prices. The direct purchasers sought treble damages under section 4 of the Clayton Act, 15 U.S.C. § 15, and the district court held that they stated a claim, In re Rail Freight Surcharge Antitrust Litig., 587 F. Supp. 2d 27 (D.D.C. 2008). The indirect purchasers sought injunctive relief under section 16 [**3]  of the Clayton Act, 15 U.S.C. § 26, and raised various state-law claims. The district court held that the state claims were preempted by federal law, but it declined to dismiss the federal claims. In re Rail Freight Surcharge Antitrust Litig., 593 F. Supp. 2d 29  [*621]  (D.D.C. 2008), aff'd, Fayus Enters. v. BNSF Ry. Co., 602 F.3d 444, 390 U.S. App. D.C. 213 (D.C. Cir. 2010).

The eight named plaintiffs in the direct-purchaser case—Carter Distributing Company; Dakota Granite Company; Donnelly Commodities, Inc.; Dust Pro, Inc.; Nyrstar Taylor Chemicals, Inc.; Olin Corporation; Strates Shows, Inc.; and US Magnesium LLC—moved to certify a class under Federal Rule of Civil Procedure 23(b)(3). The proposed class consisted of all shippers who paid rate-based fuel surcharges for unregulated services purchased from the defendants between July 1, 2003 and December 31, 2008. To show that causation, injury, and damages could be proved on a class-wide basis, the plaintiffs invoked two regression models constructed by their economist, Dr. Gordon Rausser. The "common factor model" identified seven variables said to determine the price of the defendants' services, including fuel surcharges. The "damages model," controlling for those variables, sought to isolate price increases attributable to the alleged conspiracy. The railroads criticized these models on various grounds, including that they measured damages for shipments made under legacy contracts fixed before any conspiracy allegedly began.

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934 F.3d 619 *; 2019 U.S. App. LEXIS 26371 **; 2019-2 Trade Cas. (CCH) P80,879; 104 Fed. R. Serv. 3d (Callaghan) 638

IN RE: RAIL FREIGHT FUEL SURCHARGE ANTITRUST LITIGATION - MDL NO. 1869, DAKOTA GRANITE COMPANY, ON BEHALF OF ITSELF AND ALL OTHERS SIMILARLY SITUATED, ET AL., APPELLANTS v. BNSF RAILWAY COMPANY, ET AL., APPELLEES

Prior History:  [**1] Appeal from the United States District Court for the District of Columbia. (No. 1:07-mc-00489).

In re Rail Freight Fuel Surcharge Antitrust Litig., 292 F. Supp. 3d 14, 2017 U.S. Dist. LEXIS 187401 (D.D.C., Oct. 10, 2017)

Disposition: Affirmed.

CORE TERMS

district court, predominance, shippers, damages, class member, uninjured, causation, class certification, reliability, class-wide, railroads, fuel, conspiracy, surcharges, proposed class, plaintiffs', regression, measured, alleged conspiracy, certification, de minimis, purchasers, Freight, contest, merits, models, no injury, questions, generic, parties

Antitrust & Trade Law, Business & Corporate Compliance, Antitrust, Civil Procedure, Remedies, Damages, Class Actions, Prerequisites for Class Action, Predominance, Special Proceedings, Appellate Review, Appeals, Appellate Jurisdiction, Interlocutory Orders, Certification of Classes, Judicial Officers, Judges, Discretionary Powers, Commonality, Judgments, Summary Judgment, Motions for Summary Judgment, Clayton Act, Claims, Standards of Review, Abuse of Discretion, Standards of Review