Antitrust Law Daily Evidentiary issue is certified for interlocutory appeal in rail freight price fixing litigation
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Wednesday, June 16, 2021

Evidentiary issue is certified for interlocutory appeal in rail freight price fixing litigation

By Nicole D. Prysby, J.D.

The extent to which evidence of interline-related communications under 49 U.S.C. section 10706(a)(3)(B)(ii) may be considered in rail freight price fixing litigation was certified for interlocutory appeal, after the court denied defendants’ motion to exclude the communications.

In a rail freight multidistrict price fixing litigation, an issue of interpretation of evidence of interline-related communications, under 49 U.S.C. section 10706(a)(3)(B)(ii), was certified for interlocutory appeal by the federal district court in the District of Columbia. In the action, purchasers of rail freight transportation services alleged that defendant railway companies engaged in a price-fixing conspiracy to coordinate their fuel surcharge programs. Defendants sought to exclude from consideration evidence of interline-related communications, pursuant to section 10706. The court denied defendants’ motion to exclude the communications and the defendants moved to certify the court’s order on the meaning of 49 U.S.C. section 10706(a)(3)(B)(ii) for interlocutory appeal. The court certified the order for interlocutory appeal, after finding that it involves controlling questions of law: the interpretation of the statutory term "interline movement" and the application of standard evidentiary principles in the context of Section 10706. There is a substantial ground for difference of opinion on the statutory interpretation, because the court’s opinion addressed an entire statute of first impression. And immediate appeal may materially advance the ultimate termination of this litigation, in that plaintiffs’ ability to establish a conspiracy and defendants’ ability to defend themselves turn on what evidence is admissible, and in what form, pursuant to Section 10706 (In re Rail Freight Fuel Surcharge Antitrust Litigation, June 15, 2021, Friedman, P.

Background. In this long-running multidistrict litigation, purchasers of rail freight transportation services alleged that defendant railway companies engaged in a price-fixing conspiracy to coordinate their fuel surcharge programs as a means to impose supracompetitive price increases on their shipping customers. For over a decade, the parties engaged in motions practice surrounding dismissal of the complaints and efforts to certify a class. In opposing class certification, defendants sought to exclude from consideration evidence of interline-related communications, under 49 U.S.C. section 10706(a)(3)(B)(ii). Section 10706 provides that "evidence of a discussion or agreement between or among" rail carriers may be inadmissible in an action alleging antitrust violations, "if the discussion or agreement . . . concerned an interline movement of the rail carrier, and the discussion or agreement would not, considered by itself, violate the [antitrust] laws." On February 19, 2021, the court issued an opinion interpreting Section 10706 and denying defendants’ motions to exclude interline-related communications. Defendants moved to certify the court’s order on the meaning of 49 U.S.C. section 10706(a)(3)(B)(ii) for interlocutory appeal.

The court certified the order for immediate appeal after determining that it involves a controlling question of law, that a substantial ground for difference of opinion concerning the ruling exists, and that an immediate appeal would materially advance the ultimate termination of the litigation. The defendants identified two questions of law: the interpretation of the statutory term "interline movement" and the application of standard evidentiary principles in the context of Section 10706 (i.e., whether the court could implement Section 10706 through redactions and limiting instructions). The court rejected the plaintiffs’ argument that these two questions are inextricably intertwined with the facts—while the court did discuss certain exhibits, it did so only after interpreting the statute. Defendants were not seeking to appeal the court’s rulings regarding specific documents, but sought review of the court’s interpretation of a statute that will govern future decisions concerning admissibility of evidence. The two issues are controlling in that the court’s ruling would require reversal if decided incorrectly. A reversal would not dictate the outcome of the case, but would radically affect the evidence available in the record for summary judgment.

There is a substantial ground for difference of opinion, because the court’s opinion addressed an entire statute of first impression. While there are no conflicting decisions, the arguments in favor of each position were not without merit. The court was skeptical of defendants’ argument that Section 10706 must be applied through wholesale admission or exclusion of items of evidence. Section 10706, however, the court stated, is an unusual statute that provides an explicit congressional instruction concerning the admissibility of certain types of evidence in antitrust cases targeting rail carriers. The statute does not mention redactions or limiting instructions, and could plausibly be read to refer to admission or exclusion of items of evidence in their entirety.

The court also concluded that immediate appeal may materially advance the ultimate termination of this litigation. It will provide certainty regarding the protections of Section 10706, which bear on issues at summary judgment and at trial, it is unlikely to delay immediately pending proceedings, and delaying appeal until after final judgment could lead to numerous and unnecessarily wasteful post-trial appeals on these same issues. The interpretation and application of Section 10706 is a central question in all the individual cases now pending. Plaintiffs’ ability to establish a conspiracy, and defendants’ ability to defend themselves against allegations of conspiratorial conduct, turned in no small measure on what evidence is admissible, and in what form, pursuant to Section 10706. The fact that multidistrict cases were involved did not, standing alone, justify interlocutory review. But the fact that the interpretation of Section 10706 will affect so many cases amplified the importance of obtaining clarity from the court of appeals.

The case is No. 1:11-cv-01049-PLF-GMH.

Attorneys: Aaron M. Sheanin (Robins Kaplan LLP) and Robert Silver (Boies Schiller & Flexner LLP) for Oxbow Carbon & Minerals LLC, Oxbow Mining, LLC, Oxbow Midwest Calcining LLC, Oxbow Calcining LLC and Terror Creek LLC. Aaron M. Healey (Jones Day) and Glenn D. Pomerantz (Munger Tolls & Olson, LLP) for Union Pacific Railroad Co. and BNSF Railway Co.

Companies: Oxbow Carbon & Minerals LLC; Oxbow Mining, LLC; Oxbow Midwest Calcining LLC; Oxbow Calcining LLC; Terror Creek LLC; Union Pacific Railroad Co.; BNSF Railway Co.

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