Business

This Boise company says the nations 4 largest railroads violated antitrust law

The Amalgamated Sugar Co., the Boise-based company that makes sugar for food producers and consumers has sued the nation’s four largest railroads, accusing them of inflating shipping costs after conspiring to impose fuel surcharges.

Amalgamated sued on Monday, accusing Union Pacific Railroad Co., Burlington Northern Santa Fe, CXS and Norfolk Southern of violating federal antitrust law.

“We believe the claims are meritless and plan to vigorously defend ourselves in court,” Kristen South, a Union Pacific spokeswoman, said in an email.

The lawsuit claims the rail companies coordinated the establishment of fuel surcharges that brought in billions of dollars above the companies’ fuel costs between 2003 and March 2007.

That followed years of reduced profits for rail companies. From 1985 to 2004, rail rates, adjusted for inflation, declined every year but one.

“In 2003, the four largest United States-based Class I railroads engaged in an extraordinary series of meetings, phone calls, and email communications through which they embarked on a conspiracy — under the guise of a fuel cost recovery program — to apply and enforce rail fuel surcharges across their customers in order to generate profits,” attorneys for Amalgamated wrote. “Prior to conspiring, Defendants operated as businesses should: They actively competed against each other over rates generally and with respect to fuel recovery mechanisms to the benefit of their customers.”

Price-fixing allegations against the four railroads have been wending their way through the federal courts for years, with several companies filing similar lawsuits in 2007. Attorneys then sought class-action status on behalf of 16,000 shippers, but earlier this year a federal appellate judge said the cases would have to be brought individually or broken down into groups of similar shippers with similar situations. The deadline for filing those individual cases was Monday.

Amalgamated’s lawsuit, filed in U.S. District Court in Boise, cited a series of in-person meetings, phone calls and emails between the companies’ CEOs and top sales and marketing executives beginning in spring 2003.

In March 2003, CSX reportedly imposed a fuel surcharge that was matched two weeks later by Union Pacific, which owns the tracks that follow the Snake River across southern Idaho, including Ada and Canyon counties. The other two companies later followed suit.

Amalgamated Sugar claimed the companies already had a provision in their contracts with shippers to recover added fuel costs. The lawsuit cites an independent study commissioned by the American Chemistry Council and Consumers United for Rail Equity that found that the railroads’ surcharge exceeded costs by more than $6 billion.

The complaint says the four rail carriers control 90 percent of all rail shipments in the United States. The industry, through bankruptcies and consolidations, has shrunk from 35 big, or Class 1, freight railroads in 1980 to seven today.

The lawsuit is one of 25 filed across the country this week for the same alleged conduct and the only one filed in Idaho. Other plaintiffs include Hyundai, Kia, Campbell Soup Co., Alcoa and Phillips 66.

Amy Casas, a spokeswoman for Burlington Northern Santa Fe, said the company is reviewing the filings.

“These allegations are not new and we have strongly denied these accusations for well over a decade,” Casas said by email.

Norfolk Southern said in an email it “does not comment on ongoing litigation.”

A representative for CSX did not reply to a request for comment.

The lawsuit was filed by Raymond Powers and Portia Rauer of the Boise firm Powers Farley and Stephen Neuwirth and Sami Rashid of Quinn Emanuel Urquhart & Sullivan in New York City. The Quinn Emanuel firm is involved in all of the lawsuits.

Amalgamated, founded in 1897, is the second-largest sugar beet processor in the United States and markets sugar to consumers under the White Satin brand. It contracts with farmers for 180,000 acres of sugar beets in Idaho, Oregon and Washington. It is controlled by the Snake River Sugar Co., a cooperative of more than 750 sugar beet farmers in those three states.

Amalgamated operates processing plants in Nampa, Paul and Twin Falls. The Nampa factory, off Interstate 84, processes 12,000 tons of sugar beets per day and granulates 1,000 tons of sugar. The plant in Paul, north of Burley, processes 17,000 tons of beets a day. The one in Twin Falls processes 6,800 tons.

The Associated Press contributed.

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Reporter John Sowell has worked for the Statesman since 2013. He covers business and growth issues. He grew up in Emmett and graduated from the University of Oregon.If you like seeing stories like this, please consider supporting our work with a digital subscription to the Idaho Statesman.
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