Railroad Conspiracy Case Has Picked Up Steam

WASHINGTON (CN) - A group of mining companies can advance an antitrust suit against two railroad companies over allegedly exorbitant freight rates, a federal judge ruled.

Six subsidiaries of the Oxbow Group are behind the complaint, which accuses Union Pacific Railroad Co. and BNSF Railway Co. of fixing competitive prices through a fuel surcharge and dividing the markets between themselves.

Though U.S. District Judge Paul Friedman dismissed the original complaint, he found Tuesday that the substantial revisions to the allegations cured the earlier errors.

Along with the conspiracy not-to-compete and the fuel surcharge conspiracy claims, Oxbow also alleges that the two railroad companies' conspiring gave Union Pacific a monopoly in at least one region.

The price-fixing allegations are virtually identical to a class action the same court, filed by direct and indirect purchasers of rail-freight transportation services, and the defendants wanted Friedman to dismiss any claims in Oxbow's suit that exceeded the other action.

Though Friedman dismissed Oxbow Midwest Calcining LLC and Terror Creek LLC from a breach of contract charge on the suit, he otherwise kept the suit intact Tuesday.

The defendants argued that because the Oxbow plaintiffs failed to specify to whom they paid fuel surcharges, their case cannot move forward.

Friedman concluded, however, that this issue is not yet ripe because the defendants are jointly and severally liable for any injury suffered by the plaintiffs.

The defendants further attacked the strength of the plaintiffs' conspiracy claims, and whether the market in which the conspiracy is alleged is a market in which the plaintiffs participate.

Under the legal standard of taking the plaintiff's claims as fact, Friedman ruled that Oxbow has made a sufficient case that the defendants conspired in a way that impacted the market and the plaintiffs specifically.

"Oxbow has sufficiently alleged the existence of a conspiracy, overt acts done in furtherance of that conspiracy, and an appreciable effect on interstate commerce," Friedman wrote.

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