Union Pacific (NYSE:UNP)
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A closely watched lawsuit seeking class-action status against the top U.S. freight railroads for allegedly colluding to inflate fuel surcharges by billions of dollars is set to proceed with seven small shippers as named plaintiffs.
Stephen Neuwirth, an attorney for the plaintiffs, said it is unlikely that additional named shippers will be added to the suit by a Dec. 31 deadline.
"We have a group of plaintiffs that is representative of the class," said Neuwirth, a partner at Quinn Emanuel Urquhart Oliver & Hedges, which has been appointed one of two co-lead counsels for the shippers.
If the suit is certified as a class action, any shipper during the period of the allegations would be a member of the class and potentially eligible for damages.
The top four U.S. freight railroads--Union Pacific Corp. (UNP), Burlington Northern Santa Fe Corp. (BNI), CSX Corp. (CSX) and Norfolk Southern Corp. (NSC)--are defendants in the case. The railroads, which have been unsuccessful in efforts to get the case dismissed, have vehemently denied the allegations.
The American Chemistry Council, a trade organization that includes many companies that ship products by rail, has claimed that the top four railroads and Kansas City Southern (KSU) overcharged shippers by $6.4 billion through fuel surcharges between 2003 and early 2007.
"We believe this is a multi-billion-dollar case," Neuwirth said, although he noted that the lawsuit hasn't asked for any specific damage amount yet.
The shippers have until March 18 to file a motion seeking class-action status, followed by a hearing on the class certification, likely in September. The case is being handled by Judge Paul Friedman in the U.S. District Court for the District of Columbia.
Investors have been taking a closer look at U.S. freight railroads recently, after Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB) announced plans in early November to buy the portion of Burlington Northern that it doesn't already own, marking Buffett's largest acquisition.
Burlington Northern and some of the other railroads named in the lawsuit by shippers reiterated their positions this week that the complaint is without merit.
"Simply stated, BNSF did not conspire to fix prices on anything," said Suann Lundsberg, a spokeswoman for Burlington Northern Santa Fe.
The shippers that have signed on to the lawsuit as named plaintiffs include Dust Pro Inc.; U.S. Magnesium LLC; Dakota Granite Co.; Strates Shows Inc.; Donnelly Commodities Inc.; Nyrstar NV; and Carter Distributing Co.
-By Bob Sechler, Dow Jones Newswires; 512-394-0285; email@example.com