United States Court of Appeals, District of Columbia Circuit
In re: Rail Freight Fuel Surcharge Antitrust Litigation MDL No. 1869
BNSF Railway Company, et al., Appellees Dakota Granite Company, on behalf of itself and all others similarly situated, et al., Appellants
September 28, 2018
from the United States District Court for the District of
Columbia (No. l:07-mc-00489)
Kathleen M. Sullivan argued the cause for appellants. With
her on the briefs were Stephen R. Neuwirth, Sami H. Rashid,
Michael D. Hausfeld, and Michael P. Lehmann.
G Phillips argued the cause for appellees. With him on the
brief were Joseph R. Guerra, Kathleen Moriarty Mueller, Saul
P. Morgenstern, Thomas A. Isaacson, John M. Nannes, Tara L.
Reinhart, J. Scott Ballenger, Veronica S. Lewis, Samuel M.
Sipe, Jr., Linda S. Stein, Andrew S. Tulumello, Lucas C.
Towns end, and Kent A. Gardiner.
Metlitsky and Warren D. Postman were on the brief for amicus
curiae Chamber of Commerce of the United States of America in
support of defendants-appellees.
Before: Garland, Chief Judge, and Rogers and Katsas, Circuit
KATSAS, CIRCUIT JUDGE 
case involves a putative class of over 16, 000 shippers
allegedly harmed by a price-fixing conspiracy among the
nation's largest freight railroads. The district court
denied class certification because the plaintiffs'
regression analysis-their evidence for proving causation,
injury, and damages on a class-wide basis- measured negative
damages for over 2, 000 members of the proposed class. Based
on that consideration, we affirm.
appeal arises out of eighteen antitrust actions consolidated
by the Multidistrict Litigation Panel. The defendants are the
four largest freight railroads in the United States: BNSF
Railway Company; CSX Transportation, Inc.; Norfolk Southern
Railway Company; and Union Pacific Railroad Company. The
plaintiffs, who are their customers, allege that the
railroads conspired to fix rate-based fuel surcharges.
Railroads impose fuel surcharges-additional charges above the
base shipping price-when the price of fuel rises above a
certain trigger price. Rate-based surcharges are calculated
as a percentage of the base shipping price.
consolidation, the action was divided into one case involving
direct purchasers and another involving indirect purchasers.
All plaintiffs alleged that the railroads violated section 1
of the Sherman Act, 15 U.S.C. § 1, by conspiring to fix
prices. The direct purchasers sought treble damages under
section 4 of the Clayton Act, 15 U.S.C. § 15, and the
district court held that they stated a claim, In re Rail
Freight Surcharge Antitrust Litig, 587 F.Supp.2d 27
(D.D.C. 2008). The indirect purchasers sought injunctive
relief under section 16 of the Clayton Act, 15 U.S.C. §
26, and raised various state-law claims. The district court
held that the state claims were preempted by federal law, but
it declined to dismiss the federal claims. In re Rail
Freight Surcharge Antitrust Litig., 593 F.Supp.2d 29
(D.D.C. 2008), aff'd, Fayus Enters, v. BNSF Ry.
Co., 602 F.3d 444 (D.C. Cir. 2010).
eight named plaintiffs in the direct-purchaser case- Carter
Distributing Company; Dakota Granite Company; Donnelly
Commodities, Inc.; Dust Pro, Inc.; Nyrstar Taylor Chemicals,
Inc.; Olin Corporation; Strates Shows, Inc.; and U.S.
Magnesium LLC-moved to certify a class under Federal Rule of
Civil Procedure 23(b)(3). The proposed class consisted of all
shippers who paid rate-based fuel surcharges for unregulated
services purchased from the defendants between July 1, 2003
and December 31, 2008. To show that causation, injury, and
damages could be proved on a class-wide basis, the plaintiffs
invoked two regression models constructed by their economist,
Dr. Gordon Rausser. The "common factor model"
identified seven variables said to determine the price of the
defendants' services, including fuel surcharges. The
"damages model," controlling for those variables,
sought to isolate price increases attributable to the alleged
conspiracy. The railroads criticized these models on various
grounds, including that they measured damages for shipments
made under legacy contracts fixed before any conspiracy
district court initially certified the class. It noted that
if individualized proof were necessary to establish causation
and injury, then the plaintiffs could not satisfy the Rule
23(b)(3) requirement that common questions predominate.
See In re Rail Freight Fuel Surcharge Antitrust
Litig., 287 F.R.D. 1, 43 (D.D.C. 2012). But the court
found Dr. Rausser's regression analysis to be
"plausible" and "workable," so it
concluded that causation, injury, and damages were
"susceptible to proof at trial through evidence common
to the class." Id. at 67. The court rejected
many different criticisms of the regression models, but it
did not specifically address the question of false positives
for legacy contracts.
interlocutory review, we vacated the certification order and
remanded for reconsideration in light of Comcast Corp. v.
Behrend,569 U.S. 27 (2013). In re Rail Freight
Surcharge Antitrust Litig.-MDL No. 1869, 725 F.3d244
(D.C. Cir. 2013) (Rail Freight I). We explained
that, for an antitrust class action, common questions
"cannot predominate where there exists no reliable means
of proving classwide injury in fact." Id. at
253. We expressed concern with the district court's
failure to address "the damages model's propensity
toward false positives," which left us with no way of
knowing whether "the overcharges the damages model
calculates for class members [are] any more accurate than the
obviously false estimates it produces for legacy
shippers." Id. at 254. ...