When the nation’s largest railroad companies had to choose one law firm to represent them in an appeal that could have significant implications for their industry, Union Pacific Corp., Burlington Northern Santa Fe, CSX Corp. and Norfolk Southern Corp. turned to Sidley.
The matter at hand involved a mammoth class action, In re: Rail Freight Fuel Surcharge Antitrust Litigation, involving thousands of businesses that shipped products via freight rail. Those businesses had persuaded the district court last summer to allow their price-fixing lawsuit to proceed as a class action, which had the effect of elevating the potential damages to eye-catching levels that exceeded the companies’ cumulative adjusted net income for the years in question. The railroads opted to appeal.
A victorious result
In a significant victory for Sidley’s clients, the D.C. Circuit on August 9, vacated the district court's earlier class certification. Citing a U.S. Supreme Court decision from March, Comcast Corp. v. Behrend, which raised the standard for certifying a class in cases seeking money damages, a three-judge panel threw out the lower-court decision. The unanimous opinion said the lower court had used a flawed model for determining potential harm to shippers.
To those watching, the D.C. Circuit decision resolved any doubt about whether Comcast is a landmark decision. “Comcast was a game-changer,” said Carter G. Phillips, a partner in Sidley’s Appellate practice who argued the appeal for the rail companies. “Our clients believed that decision was pivotal in making class certification much harder to justify, and the D.C. Circuit panel obviously agreed."
Preparation for the successful appeal involved considerable collaboration within multiple practices at the firm, as well as with outside counsel. Phillips worked in tandem with Joseph Guerra, a partner in the firm’s Appellate practice, and Kathleen Mueller, counsel in the Appellate group, who assisted with the briefing. The three coordinated with lawyers at eight outside law firms that represent the railroads in the district court proceedings.
Others who assisted with preparation of the appellate argument include Bill Blumenthal, a partner in the Antitrust practice, and Rick Beckner, a Litigation partner, provided invaluable knowledge of antitrust law and regression analysis.
“This was truly a team effort,” Phillips said. “We are gratified that the D.C. Circuit saw both the defects in the shippers’ damages model and the legal error of the district court’s reasoning.”