WASHINGTON, D.C. — After several years of discovery, briefing and oral arguments, a U.S. District Court judge granted class action certification to a lawsuit brought by a group of rail shippers against the nation’s four largest Class 1 freight rail carriers.

The suit, certified by District Judge Paul Friedman on June 21, alleges that defendants Union Pacific (UP), CSX, Inc., Burlington-Northern Santa Fe (BNSF) and Norfolk Southern (NS) conspired to fix and impose fuel surcharges on freight transported over U.S. rail lines from July 1, 2003-Dec. 31, 2008 – the “Class Period” defined by Friedman.

“These railroads are accused in a class action lawsuit of cheating on surcharges to the tune of billions of dollars in contracts to move freight,” said Robert Szabo, executive director and counsel for Consumers United for Rail Equity (CURE). “The railroads are in deep trouble on this case and are now trying to appeal the judge’s decision to keep the case moving forward.”

The eight shippers filing as plaintiffs contend the fuel surcharges applied by the defendants – which control around 90 percent of all U.S. freight rail movement – had no direct correlation to increases in fuel costs.

According to the court order issued by the U.S. District Court for the District of Columbia, the class is defined as all entities or persons who “purchased rate-unregulated rail freight transportation services directly from one or more of the Defendants, as to which Defendants assessed a standalone rail freight fuel surcharge applied as a percentage of the base rate for the freight transport (or where some or all of the fuel surcharge was included in the base rate through a method referred to as ‘rebasing.’)”

An attorney for the plaintiffs, Steven Neuwirth at Quinn Emmanuel Urquhart & Sullivan, issued a statement indicating Friedman’s certification of the class was indicative of the merit of the lawsuit.

“This harmed both the shippers and American consumers who had to foot the bill for these surcharges. (We) are pleased that lawmakers and regulators in the federal government are now considering taking concrete steps to curb the monopoly that was created in the railroad freight industry after deregulation more than 30 years ago,” he said.

The plaintiffs’ attorneys said the collusion to fix prices among the rail companies were violations of Section 1 of the Sherman Act and Section 4 of the Clayton Act. To support their allegations, the plaintiffs point to a meeting in 2003 attended by executives of each of the four railroads which led to sudden uniformity in pricing among the companies, of which two are East Coast-based and two are located on the West Coast.

The railroads motioned for a dismissal of the case, maintaining that price matching and “follow-the-leader pricing” do not violate antitrust laws. The District Court denied the railroads’ motion to dismiss, according to The Judicial View, a publication of court decision research and alerts.

Bloomberg News and the National Industrial Transportation League both reported the railroads have filed an appeal with the U.S. Court of Appeals for the District of Columbia to dismiss the case, citing the potential for a cumulative $10 billion or more in damages. In addition, the railroads argued the District Court incorrectly applied established legal standards in the case.

The railroads are gearing up for a prolonged fight against the allegations brought forth in the class, reported The Journal of Commerce. The publication quoted two unnamed spokespeople for BNSF and UP who rejected the allegations and vowed to vigorously defend the lawsuit.

“BNSF has not colluded or conspired in violation of any law,” a representative of the company said. “We will respond through the legal process after we have had an opportunity to fully review the complaint.”

The UP spokesperson said “(UP) has not violated the antitrust laws. Also, (UP) has not conspired with any other railroad to fix prices or reduce competition for rail transportation of any customer or commodity.”

The spokesperson labeled the lawsuit “a grab bag of accusations” that are similar to complaints heard by the Surface Transportation Board (STB), which is conducting its own proceedings on rail competition.

Szabo said the chair of the STB has indicated “something will be moving on the competition issue in the next couple of months.

“We’re really looking forward to that,” Szabo added. “We’re just a little bit closer to finally getting something done. We keep pushing.”