Nestle enters spat over fuel surcharges

KANSAS CITY — Nestle SA has joined a bevy of food manufacturers such as Campbell Soup Co. and Conagra Brands Inc. and numerous other companies claiming four Class 1 railroads conspired to set fuel surcharges to the detriment of shippers, according to a recent court filing.

Nestle Purina Petcare Co. filed the complaint June 2 in the US District Court for the District of Columbia, alleging the railroads “engaged in an extraordinary series of meetings, phone calls and email communications through which they embarked on a conspiracy,” according to a Bloomberg Law report. The surcharges were passed on “under the guise of a fuel cost recovery program” for industrial companies that bought the railroads’ transportation services, the complaint said. Prior to the alleged conspiracy, the railroads competed on rates tied to fuel recovery costs, with the competition benefiting customers, according to Nestle.

In addition to food, beverage and consumer packaged goods manufacturers, more than 200 plaintiffs include agribusiness, utility, energy, mining, mineral, chemical, plastics, steel, construction materials, paper, pulp, packaging, waste management, recycling and logistics companies, automakers, and others.

The lawsuits claim that four Class 1 railroads — BNSF Railway Co., CSX Transportation, Norfolk Southern Railway Co. and Union Pacific Railroad — have coordinated fuel surcharge programs “as a means to impose supra-competitive total price increases on their shipping customers,” and “conspired to impose rail fuel surcharges that far exceeded any of (their) fuel costs,” according to a report in Transport Topics.

The US District Court for the District of Columbia on Feb. 19 ruled in the plaintiffs’ favor on multi-district litigation for the shippers who allege that the four railroads conspired to fix fuel surcharges since 2003. Judge Paul L. Friedman denied the railroads’ motion in In re Rail Freight Fuel Surcharge Antitrust Litigation (Case No. 07-0489) to “exclude evidence of any discussion or agreement between or among rail carriers that concerned interline movements, and to enforce the statutory bar on inferring a conspiracy from specified evidence.”

Background from Railway Age on the long-running case indicates Oxbow Chemicals is pursuing one action (Oxbow Carbon & Minerals, et al., v. Union Pacific Railroad Co., et al.) and numerous other shippers, originally part of a class-action case not including OxBow alleged the same antitrust violations before another court in a “multi-district litigation” after the class-action was not certified by an appellate court in 2019. The shippers attempting class action remain individual plaintiffs in multiple district courts. Litigation has been ongoing since 2007.

The railroads have denied any conspiracy, claiming the plaintiffs improperly inferred a conspiracy based on similar action taken by each carrier concerning certain traffic.

The US Department of Transportation’s Surface Transportation Board discontinued proceedings on fuel surcharges in August 2019 because it could not reach consensus on the issue, according to trade reports.

Source link