OVERLAND PARK, KANSAS, U.S. — The Lansing Trade Group, its subsidiaries and parent company, The Andersons, are suing four U.S. railroads, claiming they acted collectively to increase transportation rates.
The suit, filed in the U.S. District Court for the District of Kansas on Feb. 1, names BNSF Railway Co., CSX Transportation, Inc., Norfolk Southern Railway Co. and Union Pacific Railway Co. as the defendants.
The railroads are accused of conspiring to apply and enforce a rail fuel surcharge on Lansing clients, which resulted in a rate increase that would have been difficult to achieve alone.
According to the lawsuit, the railroads in 2003 began engaging in a series of meetings, phone calls and email communications through which they embarked on a conspiracy to apply and enforce rail fuel surcharges (FSC) across their customers in order to generate profits. The railroads claimed the surcharges were part of a fuel cost recovery program, the lawsuit said.
“Defendants controlled about 90% of rail freight traffic in the United States during the relevant period,” the lawsuit said. “Defendants used ‘rate-based’ FSCs — i.e., surcharges that use a percentage applied to the base rate for a shipment — as a means to impose across-the-board rate increases on rail freight shipments, a result that would have been prohibitively difficult to achieve on a contract-by-contract basis. Throughout the conspiracy and despite customer pushback against defendants’ FSCs, defendants set aside their individual, economic self-interest to undercut one another and instead staunchly maintained their FSC program, pocketing billions of dollars in profits as a result.”
The lawsuit also referenced an independent 2007 study commissioned by the American Chemistry Council and Consumers United for Rail Equity (CURE) that found that the difference between the defendants’ FSC revenue and defendants’ publicly reported actual fuel costs during the period from 2003 through the first quarter of 2007 exceeded $6 billion.
The Lansing entities are seeking treble damages and attorney costs.
When asked for comment by World Grain, CSX said it will continue to defend itself against these cases “as its fuel surcharge practices were arrived at and applied lawfully.”
“This fuel surcharge litigation against the U.S. based Class I railroads has been ongoing for over 12 years,” a CSX spokesperson said in an e-mail to World Grain. “In 2017, a federal district court denied class certification, and last August, the decision was affirmed by the U.S. Court of Appeals for the D.C. Circuit. Since then, shippers have filed individual lawsuits making the same allegations that were in the original lawsuit.”
A Union Pacific spokesperson said the railroad believes the claims are meritless and “plan to vigorously defend ourselves in court.”
A BNSF spokesperson said the company is reviewing the filing and that the allegations are not new. "we have strongly denied these accusations for well over a decade,” BNSF said.
A Norfolk Southern spokesperson said the company does not comment on ongoing litigation.
A spokesperson for The Andersons said the company cannot comment on open lawsuits.