Expert’s Conflict Threatens Railroad Antitrust Suit

(CN) - An expert's undisclosed business interest in the outcome of a freight price-fixing case against major railroads may upend class-certification briefing, a federal judge ruled.

Olin Corp. and seven other companies brought the action in Washington, D.C., against BNSF Railway Co., Union Pacific Railroad Co., CSX Transportation and Norfolk Southern Railway Co. Together, the defendants control more than 90 percent of rail-freight shipments in the United States.

The complaint accused the four railroads of conspiring at industry meetings to fix fuel surcharges as a percentage of overall transportation costs, rather than linking the charges to actual fuel prices, over a four-year period.

Customers spent billions because of the scheme, Olin and the others claimed.

U.S. District Judge Paul Friedman granted class certification in June 2012, but the D.C. Circuit overturned that ruling a year later based on the failure to scrutinize plaintiffs' evidence.

This year the parties learned that Gordon Rausser, an expert witness for the plaintiffs, may have undisclosed business interests implicating issues in this case. Rausser, a professor at the University of California at Berkeley, apparently kept these interests secret even from plaintiffs' counsel.

Rausser's potential conflict of interest led the court to postpone a hearing on the renewed bid for class certification.

Friedman will hear arguments today as to whether he should set aside all prior briefing and expert reports on class certification, a Wednesday order states.

"The court is deeply concerned that, in light of recently discovered evidence, issues relating to Dr. Rausser's credibility would predominate the class certification hearing and be a time-consuming distraction from resolving the ultimate issue of whether the class should be certified," the judge said.

It is possible that the plaintiffs will replace Rausser with a new economic expert.

"This alternative would require an entirely new expert or experts on plaintiffs' side, new economic analyses from defendants' experts, and briefing the class certification issues ab initio," Friedman said. "But it would avoid the side-show or trial-within-a-trial that plaintiffs' own filing suggests is virtually inevitable."

Friedman unsealed the transcripts of the two closed hearings, held Oct. 2 and Oct. 21, 2014, on Friday.

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