Antitrust Law Daily Wrap Up, ANTITRUST—D.D.C.: Late filing of railroads’ expert declaration denied in freight surcharge case, (Oct 14, 2015)

By Linda O’Brien, J.D., LL.M.

The federal district court in Washington, D.C. has declined to reopen expert discovery and allow four defending freight railroads to file their expert’s declaration in an action by a group of shippers who paid allegedly inflated fuel surcharges as a result of a price fixing conspiracy (In re Rail Freight Fuel Surcharge Antitrust Litigation, October 9, 2015, Friedman, P.).

Four major freight railroads—BNSF Railway Co., CSX Transportation, Inc., Norfolk Southern Railway Co., and Union Pacific Railroad Co.—account for approximately 90 percent of all rail freight traffic. To offset fuel costs, the railroads would include fuel surcharges on the base rates they charged their customers.

A group of shippers filed a series of class actions suits against the railroads, claiming they paid inflated fuel surcharges as a result of a price fixing conspiracy. In August 2013, the district court’s grant of class certification was vacated by the U.S. Court of Appeals in Washington, D.C. The plaintiffs’ case for certification hinged on two regression models prepared by their expert to isolate the common determinants of the prices shippers paid to the defendants and to quantify, in percentage terms, the overcharges due to conspiratorial conduct, which the appellate court found defective. On remand, the district court reopened expert discovery until July 2014 for supplemental briefing. Before the court was the defendants’ motion for leave to late file an expert declaration.

The court found that the defendants failed to demonstrate good cause to permit the reopening of expert discovery to late file the expert’s declaration. The defendants contended that their expert was the lead investigator and author of certain portions of the study commissioned by the Surface Transportation Board and published in 2009. The plaintiffs’ experts cited the study as support of their use of a constant fuel coefficient in their regression models, which the defendant’s expert disputes.

The court noted that, although the class certification hearing or trial was not imminent, the plaintiffs’ expert first cited the study in May 2014 in a supplemental expert report. The defendants failed to offer an explanation for the delay in submitting the expert’s declaration regarding the study. They also failed to show that they were diligent in pursuing discovery within the established due dates or the need for the expert’s declaration was not foreseeable. The expert’s declaration would not be particularly relevant or helpful. Finally, the expert’s declaration at the late stage of the litigation would unfairly prejudice the plaintiffs and necessitate additional discovery.

The case is No. 07-0489.

Attorneys: Arthur N. Bailey, Jr. (Hausfeld LLP), Richard M. Hagstrom (Zelle, Hofmann, Voelbel & Mason LLP), and Scott W. Carlson (Heins, Mills & Olson, P.L.C.) for Dakota Granite Co., McIntyre Group, Ltd. Simon B. Paris (Saltz, Mongeluzzi, Barrett & Bendesky, P.C.) for GVL Pipe & Demolition, Inc. Lynn Lincoln Sarko (Keller Rohrback, LLP) for Ferraro Foods of North Carolina, LLC. Joe R. Whatley, Jr. (Whatley Drake & Kallas, LLC) for West Alabama Sand & Gravel, Inc. Andrew Santo Tulumello (Gibson, Dunn & Crutcher, L.L.P.), David G. Meyer (Jones Day), and Richard Joseph Favretto (Mayer Brown LLP) for BNSF Railway Co. Kent Alan Gardiner (Crowell & Moring, L.L.P.) and David G. Meyer (Jones Day) for CSX Transportation, Inc. Jennifer B. Patterson (Kaye Scholer, LLP) and John Murray Nannes (Skadden, Arps, Slate, Meagher & Flom, LLP) for Norfolk Southern Railway Co. Alan Mitchell Wiseman (Covington & Burling LLP) and James Scott Ballenger (Latham & Watkins LLP) for Union Pacific Railroad Co.

Companies: Dakota Granite Co.; McIntyre Group, Ltd.; GVL Pipe & Demolition, Inc.; Ferraro Foods of North Carolina, LLC; West Alabama Sand & Gravel, Inc.; BNSF Railway Co.; CSX Transportation, Inc.; Norfolk Southern Railway Co.; Union Pacific Railroad Co.

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