In the most closely watched rail industry litigation in the country, the U.S. District Court for the District of Columbia has denied class certification in the railroads’ fuel surcharge antitrust litigation.

The long awaited decision comes in In re Rail Freight Fuel Surcharge Antitrust Litigation, MDL 1869. This case, now a decade old, has been to the D.C. Circuit once on class certification and was remanded. Following a week-long second hearing, a decision on class certification had been pending for a year.

The fundamental allegation in the case is that the defendants, the four largest railroads in the United States, conspired to set fuel surcharges that were stated as a percentage of the base rate each assesses its customers. In denying class certification, the court found that plaintiffs failed to meet Rule 23’s requirement that questions of law or fact common to the class members predominate over questions affecting only individual members.

The court’s two-and-a-half-page Order cited three main deficiencies in the damages regression model proffered by Plaintiffs’ lead expert. Presumably, any of these three would pose an independent basis for denying class treatment.

First, the court found that much of the traffic the expert analyzed was intermodal traffic. It is uncontroverted that, during the class period, the vast preponderance of that traffic moved under fuel surcharge formulas that were independently established before the alleged conspiracy. Hence, that traffic could not be affected by the alleged agreement among the defendants. Yet this data made up a significant portion of the data incorporated into the expert’s regression analysis.

Second, the expert’s damages model found “overcharges” with respect to shippers whose fuel surcharge arrangements during the class period were actually negotiated with the defendants before the alleged conspiracy. The Court of Appeals, in its review of the first class certification decision in the case, cautioned against economic models that found injury where there could be none.

Third, the putative class contained too many members who simply were not injured, and who could not be identified by any methodology. Accordingly, Plaintiffs’ counsel could not satisfy the “all or virtually all” standard for predominance under Rule 23.

The court has given the parties until November 10 to meet and confer and to advise the court how they wish to proceed. At that time, Plaintiffs’ counsel is to advise the court if they have sought review by the D.C. Circuit.

Much of the evidence submitted in the class certification portion of the case has been designated confidential and subject to a protective order. To honor the legitimate concerns of parties about proprietary information becoming public, the court’s no doubt lengthy and detailed opinion will remain under seal until November 10, when the parties are to notify the court of appropriate redactions to protect legitimate confidentiality concerns.