Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-09-07023/USCOURTS-caDC-09-07023-0/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 9, 2010 Decided April 16, 2010

No. 09-7023

FAYUS ENTERPRISES, ON BEHALF OF ITSELF AND ALL OTHERS 

SIMILARLY SITUATED, ET AL.,

APPELLANTS

v.

BNSF RAILWAY COMPANY, ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:07-mc-00489-PLF-JMF)

Christopher Lovell argued the cause for appellants. With 

him on the briefs were Gary E. Mason, Jared B. Stamell, and 

Richard J. Schager, Jr.

Alan M. Wiseman argued the cause for appellees. With 

him on the brief were Thomas A. Isaacson, Peter A. Barile III, 

Tyrone R. Childress, David G. Meyer, John M. Nannes, Tara 

L. Reinhart, Saul P. Morgenstern, Richard J. Favretto, Robert 

M. Jenkins III, Gary A. Winters, Richard McMillan Jr., Kent 

Alan Gardiner, and Kathryn D. Kirmayer. Linda S. Stein

entered an appearance.

USCA Case #09-7023 Document #1240266 Filed: 04/16/2010 Page 1 of 21
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Before: ROGERS and TATEL, Circuit Judges, and 

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS.

WILLIAMS, Senior Circuit Judge: Plaintiff-appellants are 

firms that have indirectly purchased rail freight service from 

one or more of the defendant railroads. The traffic moves 

under railroad-shipper contracts that, pursuant to 49 U.S.C. 

§ 10709, are generally not subject to challenge before the 

Surface Transportation Board (“STB” or “Board”).1

 1

 49 U.S.C. § 10709(c)(1) (2006) (“A contract that is 

authorized by this section, and transportation under such contract, 

shall not be subject to this part, and may not be subsequently 

challenged before the Board or in any court on the grounds that 

such contract violates a provision of this part.”). Shippers not 

wishing to enter into contracts can ship pursuant to common carrier 

rates that railroads must provide on request pursuant to 49 U.S.C. 

§ 11101(b) (2006). The Board has authority to regulate the rates of 

common carrier traffic if the railroad has “market dominance” with 

respect to such traffic, id. §§ 10701(d), 10702(1), 10707, and to 

regulate the reasonableness of the railroad’s “rules and practices” 

regardless of market dominance, id. § 10702(2). The Board can 

also “exempt” “a person, class of persons, or a transaction or 

service” when it finds that application of the regulatory regime “(1) 

is not necessary to carry out the transportation policy of [49 U.S.C. 

§ 10101]; and (2) either—(A) the transaction or service is of limited 

scope; or (B) the application in whole or in part of the provision is 

not needed to protect shippers from the abuse of market power.” Id.

§ 10502(a). Plaintiffs originally sought to challenge both § 10709 

contract freight and § 10502(a) exempt freight, but they abandoned 

their claims involving § 10502(a) exempt freight in briefing before 

the district court and on appeal.

Plaintiffs

allege that since 2003 the railroads conspired to impose fuel 

surcharges on the freight in a way that raised the shipping

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rates above competitive levels. Plaintiffs seek a judicial 

remedy for contract traffic that would match—and extend—

the remedy that the Board gave common carrier traffic in Rail 

Fuel Surcharges, Ex Parte No. 661, 2007 WL 201205 (S.T.B. 

Jan. 25, 2007), but which it explicitly withheld from contract 

traffic, see id. at *10.

Plaintiffs’ antitrust allegations are part of at least eighteen 

separate class actions, consolidated before the district court, 

involving various putative classes of direct and indirect

purchasers of rail freight services. In re Rail Freight Fuel 

Surcharge Antitrust Litig., 593 F. Supp. 2d 29, 32 (D.D.C. 

2008). (The direct purchasers raise only federal antitrust 

claims, which are still pending before the district court. Id. at 

35-36.) The indirect purchasers sought injunctive relief for 

their antitrust claims under federal law; in addition, in order to 

secure damages precluded under federal law, see Illinois Brick 

Co. v. Illinois, 431 U.S. 720 (1977), they asserted various 

state law claims under theories of antitrust, consumer 

protection, unfair competition, and unjust enrichment and 

disgorgement of profits.

The district court dismissed the indirect purchasers’ state 

law claims as preempted by the Interstate Commerce 

Commission Termination Act of 1995, 49 U.S.C. §§ 701-727, 

10101-16106 (“ICCTA”).2

 2

 There are also two sections not codified at the citation above, 

namely, 11 U.S.C. § 1162 and 45 U.S.C. § 797l.

 In re Rail Freight Fuel Surcharge 

Antitrust Litig., 593 F. Supp. 2d at 40. In the district court’s 

view, “permit[ting] plaintiffs to pursue their state [law claims]

. . . would require the application of different state antitrust 

and consumer protection laws to decide what defendants’ fuel 

surcharges should have been—creating just the patchwork of 

railroad regulation that ICCTA sought to preempt.” Id. at 38. 

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The district court allowed the indirect purchaser plaintiffs to 

pursue their federal antitrust claim for injunctive relief, id. at 

43, a claim still pending along with that of the direct 

purchasers. At the request of the parties, the court entered a 

final judgment for defendants on the state law claims under 

Fed. R. Civ. P. 54(b), thereby enabling an immediate appeal 

that would otherwise have been impermissibly interlocutory. 

This appeal duly followed.

The statute’s express pre-emption clause obviously is the 

best available reflection of Congress’s intent on the subject. 

Sprietsma v. Mercury Marine, 537 U.S. 51, 62-63 (2002). 

The section reads as follows:

The jurisdiction of the Board over—

(1) transportation by rail carriers, and the remedies 

provided in this part with respect to rates, 

classifications, rules (including car service, 

interchange, and other operating rules), practices, 

routes, services, and facilities of such carriers; and

(2) the construction, acquisition, operation, abandonment, 

or discontinuance of spur, industrial, team, switching, 

or side tracks, or facilities, even if the tracks are 

located, or intended to be located, entirely in one 

State,

is exclusive. Except as otherwise provided in this part, 

the remedies provided under this part with respect to 

regulation of rail transportation are exclusive and preempt 

the remedies provided under Federal or State law.

49 U.S.C. § 10501(b) (2006). In this opinion, we will refer to 

the first sentence (ending with “is exclusive”) as the exclusive 

jurisdiction clause, and to the second sentence (beginning with 

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“Except as otherwise provided”) as the exclusive remedies 

clause.

* * *

In an argument that would, if it were sound, likely apply 

to all elements of their statutory analysis, plaintiffs invoke the 

following sentence uttered by the Board: “When Congress 

removed rail transportation contracts from the Board’s 

regulatory purview, it expressly stated that not only state 

contract laws but also federal and state antitrust laws would 

apply fully to those agreements.” Kan. City Power & Light 

Co. v. Union Pac. R.R. Co., No. 42095, 2007 WL 934378, at 

*3 (S.T.B. Mar. 26, 2007). Plaintiffs argue in a footnote that 

we should defer to this statement under Chevron, U.S.A., Inc. 

v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984).

Lest there be any confusion on the point, we note at the 

outset that Congress did not “expressly state” what the Board 

said it had. The Board in fact cited only the House committee 

report, which on the page referred to by the Board merely 

stated, “If anti-competitive behavior is alleged, under this 

section, the antitrust laws are the appropriate and only remedy 

available.” Comm. on Interstate & Foreign Commerce, 

Staggers Rail Act of 1980, H.R. Rep. No. 96-1035, at 58 

(1980), as reprinted in 1980 U.S.C.C.A.N. 3978, 4003.

In any event plaintiffs’ conclusory assertion that we owe 

the statement Chevron deference encounters insuperable 

hurdles. First, we’ve several times noted that whether an 

agency decision against preemption of a state or local law 

receives Chevron deference is an open question in this circuit. 

See Riffin v. Surface Transportation Bd., 592 F.3d 195, 197 

(D.C. Cir. 2010); Albany Eng’g Corp. v. FERC, 548 F.3d 

1071, 1074-75 (2008). Yet plaintiffs offer no argument on the 

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question; we commonly treat such an omission as a waiver. 

See, e.g., United States v. Hughes, 514 F.3d 15, 18 (D.C. Cir. 

2008). The Supreme Court’s recent treatment of the issue in 

Wyeth v. Levine, 129 S. Ct. 1187 (2009), declaring that 

“agencies have no special authority to pronounce on preemption absent delegation by Congress,” id. at 1201, which 

several circuits have invoked in declining deference, see, e.g., 

Franks Inv. Co. v. Union Pac. R.R. Co., 593 F.3d 404, 414 

(5th Cir. 2010); Barrientos v. 1801-1825 Morton LLC, 583 

F.3d 1197, 1214 (9th Cir. 2009), obviously puts the Chevron

deference claim in further doubt.

But assuming in plaintiffs’ favor that agencies are due

Chevron deference for their rulings on preemption of state 

law, the Board’s inaccurate remark in Kansas City Power & 

Light would not be due such deference. The Board was 

engaged in resolving whether it had jurisdiction over a 

shipper’s complaint: it would if the rates in question were 

common carrier tariff rates subject to 49 U.S.C. § 10701(d)(1)

(2006); id. § 10702, but would not if they were “contract 

rates” under § 10709. Because the rates fell into the common 

carrier classification under Board precedent, and the parties 

had reasonably relied thereon, it found jurisdiction but started 

a rulemaking to clarify the boundary between the two. It 

made the quoted observation about state antitrust claims only 

to illustrate the undisputed proposition that the classification 

had consequences. Such a dictum is plainly not entitled to 

Chevron deference. See United States v. Mead Corp., 533 

U.S. 218, 228 (2001). What we have just said also disposes of 

any possible claim that we owe the remark deference under 

Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944). 

Thus we address the parties’ arguments de novo.

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* * *

Plaintiffs object to the district court’s preemption 

decision on two principal grounds. First, they say that

§ 10501(b)’s preemption provisions do not apply at all to 

freight transported pursuant to private contracts that are not 

generally subject to challenge before the Board. Second, they 

say that even if those provisions apply to such transportation, 

the state law remedies they seek are not remedies “with 

respect to regulation of rail transportation” and are therefore 

not the sort of remedies that § 10501(b) preempts.

Plaintiffs’ argument that the preemption language of 

§ 10501(b) does not apply to freight transported under private 

rail contracts has two related aspects: First, in plaintiffs’ 

view, only the exclusive remedies clause is relevant to ICCTA 

preemption analysis; they criticize the district court for relying 

on cases discussing the exclusive jurisdiction clause to 

support its preemption holding, noting that the clause does not 

use the word “preemption.” Second, the exclusive remedies 

clause has an express provision for exceptions “as otherwise 

provided in this part,” and plaintiffs argue that their state law 

claims fall within that exception. We will start with 

§ 10709(c)’s provision of an exception:

(1) A contract that is authorized by this section, and 

transportation under such contract, shall not be 

subject to this part, and may not be subsequently 

challenged before the Board or in any court on the 

grounds that such contract violates a provision of this 

part.

(2) The exclusive remedy for any alleged breach of a 

contract entered into under this section shall be an 

action in an appropriate State court or United States 

district court, unless the parties otherwise agree. This 

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section does not confer original jurisdiction on the 

district courts of the United States based on section 

1331 or 1337 of title 28, United States Code.

49 U.S.C. § 10709(c) (2006).

Plaintiffs read § 10709(c)(1) as taking private contracts 

completely outside the federal regulatory regime and as 

permitting plenary state regulation of freight moving under 

such contracts. This is a plainly erroneous reading. The

provision merely limits the Board’s authority over the terms 

of private contracts.3

Both the exclusive jurisdiction clause of the provision 

now found in § 10501(b), and the rule removing private 

contracts from federal regulation, were originally added to the 

U.S. Code as part of the Staggers Rail Act of 1980. See Pub. 

L. No. 96-448, § 208, 94 Stat. 1895, 1909 (originally codified 

at 49 U.S.C. § 10713(i) (1994), now codified as amended at 

49 U.S.C. § 10709(c) (2006)) (private contracts); id.

§ 214(c)(5), 94 Stat. at 1915 (originally codified at 49 U.S.C. 

§ 10501(d) (1994), now codified as amended at 49 U.S.C. 

§ 10501(b) (2006)) (preemption). Contrary to plaintiffs’ 

assertions that federal preemption of state remedies was first 

introduced in 1995, see Appellants’ Br. at 29 (asserting that 

“[u]nder the Interstate Commerce Act remedies were not 

exclusive, but rather cumulative”), in fact the Staggers Act’s 

exclusive jurisdiction clause gave preemption of state 

 The limitation was imposed as part of 

surface freight deregulation legislation adopted over the past 

several decades. It was not intended to restore any regulatory 

authority to the states.

 3

 A quite separate way in which Board authority may be 

curtailed is through the Board’s exercise of its authority under 49 

U.S.C. § 10502(a) to “exempt a person, class of persons, or a 

transaction or service” on the making of certain findings.

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remedies an explicit statutory basis. G. & T. Terminal 

Packaging Co. v. Consolidated Rail Corp., 830 F.2d 1230, 

1234 (3d Cir. 1987) (so holding, but noting that longstanding 

judicial interpretations of pre-Staggers Act legislation also had 

much preemptive effect).

Indeed, courts found many state laws respecting rail 

transportation to be preempted following the Staggers Act 

even though it contained only the exclusive jurisdiction clause

and not a separate exclusive remedies clause such as exists

today. Thus G. & T. Terminal Packaging Co. held, “Since 

[§ 10501(d) (1982)], as illuminated by legislative history, 

makes clear that the only remedies regarding rail rates are 

those provided by federal statutes, the savings clause, 49 

U.S.C. § 10103 (1982) [which preserved common law 

“[e]xcept as otherwise provided in this subtitle”], has no 

application to this case.” Id.; Gendron v. Chi. & N. W. 

Transp. Co., 564 N.E. 2d 1207, 1218 (Ill. 1990) (finding a 

state law challenge to a transfer of a rail line approved by the 

ICC as preempted where “granting plaintiffs the legal and 

equitable relief they seek would [have] impermissibly 

interfere[d] with the ICC’s broad authority over rail line 

transactions” and citing inter alia former 49 U.S.C. 

§ 10501(d) for the proposition that “[t]he ICC’s jurisdiction to 

approve or to condition approval of rail line transactions like 

the one challenged here is exclusive and plenary”); see also

H.R. Rep. No. 104-422, at 167 (1995) (Conf. Rep.), as 

reprinted in 1995 U.S.C.C.A.N. 850, 852 (“[S]ince 1980, 

former section 10501(d) [predecessor of the current exclusive 

jurisdiction clause] and 11501(b) [a provision dropped in 

1995, providing for limited state regulation under strict ICC 

supervision], with respect to rail transportation, had already 

replaced the former standard of cumulative remedies with an 

exclusive Federal standard, in order to assure uniform 

administration of the regulatory standards of the Staggers 

Act.”); cf. People v. Conrail Corp., 613 N.E. 2d 784, 793-94 

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(Ill. App. Ct. 1993) (arguing that former § 10501(d) “merely 

provides that to the extent of the jurisdiction conferred by the 

Commerce Act, the ICC and State authorities have exclusive 

jurisdiction with respect to transportation by rail carriers”; but 

the context was a claim that the Staggers Act preempted state 

environmental regulation, an issue which, as we explain 

below, is quite distinct from regulation of railroad-shipper 

relations).

This pulls both legs out from under plaintiffs’ argument 

that § 10501(b)’s exclusivity provisions do not apply to the 

contract traffic in question. The exclusive jurisdiction clause

and the cases construing it are relevant to the present issue, 

and § 10709’s exception, whatever its ultimate effect, leaves

§ 10501(b) applicable to contract traffic.

The current provision largely removing private contracts 

from federal regulation (§ 10709(c)) also had its genesis in the 

Staggers Act. Railroads were authorized to enter into such 

contracts, and required to file them with the ICC, consistent 

with tariff rules to be developed by the Commission so as to 

make their essential terms available to the public. The 

Staggers Act directed the Commission to approve such 

contracts except in very limited circumstances. See Pub. L. 

No. 96-448, § 208, 94 Stat. at 1908-10 (originally codified as 

amended at 49 U.S.C. § 10713 (1994), now codified as 

amended at 49 U.S.C. § 10709 (2006)). Once so approved, a 

contract could not be challenged for violation of “this subtitle

[subtitle IV, governing economic regulation of railroads].” Id. 

at 1909 (originally codified at 49 U.S.C. § 10713(i)(1) (1994), 

now codified as amended at 49 U.S.C. § 10709(c)(1) (2006)).

Congress intended in 1980 to “clarif[y] the status of contract 

rate and service agreements in an effort to encourage carriers 

and purchasers of rail service to make widespread use of such 

agreements.” H.R. Rep. No. 96-1430, at 98-99 (1980) (Conf. 

Rep.), as reprinted in 1980 U.S.C.C.A.N. at 4130-31. In its 

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Rail Fuel Surcharges decision, the Board said that § 10709 

left the ICC with “no authority to regulate rail rates and 

services that are governed by a contract.” 2007 WL 201205, 

at *10.

Summarizing the Staggers Act’s impact on the overall 

role of state law, the conference report said: “The remedies 

available against rail carriers with respect to rail rates, 

classifications, rules and practices are exclusively those 

provided by the Interstate Commerce Act, as amended, and 

any other federal statutes which are not inconsistent with the 

Interstate Commerce Act. No state law or federal or state 

common law remedies are available.” H.R. Rep. No. 96-

1430, at 106 (emphasis added), as reprinted in 1980 

U.S.C.C.A.N. at 4138. Discussing the new private contracts 

provision, the report noted, “The existing Federal antitrust 

laws apply to this section,” see id. at 101, as reprinted in 1980 

U.S.C.C.A.N. at 4133, suggesting by negative inference that 

state antitrust laws generally did not apply. By that stage, 

then, Congress had clearly preempted state regulation of rail 

transportation, both for ICC-regulated freight and freight 

moving under private contracts.

We then must consider whether any of the changes

wrought by the ICCTA itself reduced the scope of Staggers 

Act preemption. They did not. The ICCTA did add the 

exclusive remedies clause to § 10501, along with the caveat 

that it would apply “[e]xcept as otherwise provided in this 

part.” But, as we said earlier, this provision was merely a 

reorganization of pre-1995 law, under which federal remedies 

with respect to rail transportation were already exclusive, 

subject to parties’ rights to contract enforcement. H.R. Rep. 

No. 104-422, at 167, as reprinted in 1995 U.S.C.C.A.N. at 

852 (“[S]ince 1980, former section 10501(d) and 11501(b), 

with respect to rail transportation, had already replaced the 

former standard of cumulative remedies with an exclusive 

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Federal standard, in order to assure uniform administration of 

the regulatory standards of the Staggers Act.”). Plaintiffs’ 

view would require us to infer that the addition of the general 

“[e]xcept as otherwise provided in this part” clause somehow 

converted § 10709(c)(1)’s pre-existing provision for private 

contracts into a new source of state regulatory authority. See 

49 U.S.C. § 10709(c)(1) (2006) (originally codified prior to 

amendment at 49 U.S.C. § 10713(i)(1) (1994)). They offer no 

reason supporting such a transformation.

The ICCTA, to be sure, altered the context slightly, but 

entirely in a deregulatory direction, making it most 

improbable that Congress intended to invite state regulatory 

authority into the picture. First, Congress further narrowed 

the authority of the regulatory agency (now the STB) to 

regulate private contracts, principally by eliminating certain 

procedures that allowed rather limited challenges before the 

old ICC. See H.R. Rep. No. 104-422, at 174, as reprinted in

1995 U.S.C.C.A.N. at 859 (describing the eliminated 

procedures as “very limited and seldom utilized”). But there 

was no change in § 10709(c)’s provision that contract rail 

transport “shall not be subject” to the provisions of the Act, 

meaning that the 1995 Act did not effect any substantive 

change on that score. See Pub. L. No. 104-88, § 102(a), 109 

Stat. at 817 (codified at 49 U.S.C. § 10709(c)(1) (2006)).

Further, in one respect Congress explicitly expanded the 

scope of preemption: it deleted from the exclusive jurisdiction 

clause any reference to ICC-certified state authorities and the 

associated certification procedures. See Pub. L. No. 96-448, 

§ 214(c)(5), 94 Stat. at 1915 (originally codified at 49 U.S.C. 

§ 10501(d) (1994), now codified as amended at 49 U.S.C. 

§ 10501(b) (2006)) (“The jurisdiction of the Commission and 

of State authorities (to the extent such authorities are 

authorized to administer the standards and procedures of this 

title pursuant to this section and section 11501(b) of this title) 

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over transportation by rail carriers, and the remedies provided 

in this title with respect to the rates, classifications, rules, and 

practices of such carriers, is exclusive.”). This of course was 

a deregulatory move—not, as plaintiffs would have us 

believe, an invitation to states to fill the regulatory void 

created by federal deregulation. See, e.g., S. Rep. No. 104-

176, at 6 (1995) (“The bill would also eliminate Federal 

certification and review procedures for State regulation of 

intrastate rail transportation. However, nothing in this bill 

should be construed to authorize States to regulate railroads in 

areas where Federal regulation has been repealed by this 

bill.”).

In short, the ICCTA left the exclusive jurisdiction clause 

in full force, supplementing it with the exclusive remedies 

clause and its explicit exception, expressly alluding to the preexisting § 10709(c)’s provision for contract actions.

* * *

Plaintiffs’ fallback argument is that their state law claims 

do not involve “regulation of rail transportation” and therefore 

are not preempted by § 10501(b). The district court discussed

the state law claims of each type as a general class without 

discussing any state-to-state differences among the laws, see

In re Rail Freight Fuel Surcharge Antitrust Litig., 593 F. 

Supp. 2d at 37-39, and on appeal both parties have generally

followed the same approach. We therefore treat the plaintiffs 

as having waived any argument that unique aspects of certain 

states’ law governing consumer protection, unjust enrichment, 

or antitrust might compel a different result for a class of 

plaintiffs whose claims would be governed by such laws. We 

will proceed, as the parties have, on the assumption that any 

differences in individual states’ laws are immaterial to the 

preemption analysis.

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Plaintiffs correctly point out that the ICCTA does not 

preempt all state and local regulations. The circuits appear 

generally, for example, to find preemption of environmental 

regulations, or similar exercises of police powers relating to 

public health or safety, only when the state regulations are 

either discriminatory or unduly burdensome. See, e.g., Adrian 

& Blissfield R.R. Co. v. Village of Blissfield, 550 F.3d 533, 

539 (6th Cir. 2008); Green Mountain R.R. Corp. v. Vermont, 

404 F.3d 638, 643-44 (2d Cir. 2005) (including risk of 

permitting delay in assessment of burden); N.Y. Susquehanna 

& W. Ry. Corp. v. Jackson, 500 F.3d 238, 252-55 (3d Cir. 

2007); Friberg v. Kansas City S. Ry. Co., 267 F.3d 439 (5th 

Cir. 2001) (finding common law nuisance preempted); Fla. E. 

Coast Ry. Co. v. City of W. Palm Beach, 266 F.3d 1324, 1331 

(11th Cir. 2001)); cf. City of Auburn v. U.S. Gov’t, 154 F.3d 

1025, 1030 (9th Cir. 1998) (seeming to apply a broader 

preemption rule). Several of the cases, in addressing these 

environmental regulations, note that the ICCTA “does not 

preempt only explicit economic regulation.” N.Y. 

Susquehanna & W. Ry. Corp., 500 F.3d at 252; see also City 

of Auburn, 154 F.3d at 1030 (similar). By implication, such 

cases recognize that the core of ICCTA preemption is 

“economic regulation,” which we take to refer to regulation of 

the relationship before us here, that of shippers and carriers.

Railroad-shipper transactions indeed pose a problem quite 

different from environmental regulation. As we have seen, 

§ 10709(c)(1) explicitly makes actions in state or federal court 

the “exclusive remedy for any alleged breach of a contract 

entered into under this section.” This provision for 

conventional contract enforcement obviously is an 

“[e]xcept[ion] . . . otherwise provided in this part” 

contemplated by the exclusive remedies clause. And courts 

readily provide such remedies. See PCS Phosphate Co. v. 

Norfolk S. Corp., 559 F.3d 212 (4th Cir. 2009) (affirming 

contract enforcement); PCI Transp., Inc. v. Fort Worth & W. 

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R.R. Co., 418 F.3d 535, 545-46 (5th Cir. 2005) (recognizing 

propriety of state law contract claim but denying relief on the 

merits).

By contrast, the circuits have found shippers’ quests for 

non-contractual relief to be preempted as would-be invasions 

of the regulatory domain. Thus in Port City Props. v. Union 

Pac. R.R., 518 F.3d 1186 (10th Cir. 2008), the court preserved 

a shipper’s contract claim against a railroad for ceasing 

service on a spur but found its tort claim to be completely 

preempted by ICCTA. Id. at 1188-91. And in G. & T. 

Terminal Packaging Co., the court found that, for shipments 

exempted from regulation, the Staggers Act had completely 

preempted state common law remedies for railroad price 

discrimination among shippers. 830 F.2d at 1233-36. 

The legislative history supports the courts’ refusal to let 

non-contract state law intrude into the statutorily preserved 

shipper-carrier remedies. As the House Report on ICCTA 

said, “Although States retain the police powers reserved by 

the Constitution, the Federal scheme of economic regulation 

and deregulation is intended to address and encompass all 

such regulation and to be completely exclusive.” H.R. Rep. 

No. 104-311, at 95-96 (1995) (emphasis in original), as 

reprinted in 1995 U.S.C.C.A.N. 793, 808; see also H.R. Rep. 

No. 104-422, at 167, as reprinted in 1995 U.S.C.C.A.N. at 

852 (noting that some criminal statutes are not preempted by 

the ICCTA “because they do not generally collide with the 

scheme of economic regulation (and deregulation) of rail 

transportation” (emphasis added)); H.R. Rep. No. 96-1430, at 

105, as reprinted in 1980 U.S.C.C.A.N. at 4137 (noting that 

the Staggers Act “reaffirms that where the commission has 

withdrawn its jurisdiction to regulate, the State could not 

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assume such jurisdiction”).4

Congress also recognized that enforcement of state law 

outside the contract realm could easily lead to balkanization, 

with shipments subject to fluctuating rules as they crossed 

state lines. As the House Report on ICCTA said: “Although 

States retain the police powers reserved by the Constitution, 

the Federal scheme of economic regulation and deregulation 

is intended to address and encompass all such regulation and 

to be completely exclusive. Any other construction would 

undermine the uniformity of Federal standards and risk the 

balkanization and subversion of the Federal scheme of 

minimal regulation for this intrinsically interstate form of 

transportation.” H.R. Rep. No. 104-311, at 96, as reprinted in

 As the legislative comments 

quoted above make clear, Congress sought to avert the sort of 

frustration of its deregulatory purpose potentially inflicted by 

state rights and remedies outside the specifically preserved 

realm of contract breach.

 4

 This Report is addressed to the original Senate proposal, 

which explicitly stated the point made in the report with language 

omitted from the ultimate version, but that in other respects did not 

go as far as the ultimate version in curtailing state regulatory 

authority. Compare S. Rep. No. 96-470, at 77-78 (1979) (Senate 

proposing that the statute contain a subsection making clear that 

“[f]ederal withdrawal from certain areas of regulation shall not be 

construed as relinquishing Federal jurisdiction”), with H.R. Rep. 

No. 96-1430, at 106, as reprinted in 1980 U.S.C.C.A.N. at 4138 

(discussing House proposals, all adopted in the final version, that 

“only State authorities whose standards and procedures have been 

certified by the Commission may exercise jurisdiction over 

intrastate rail,” that “[d]ecisions of State authorities may be 

appealed to the Commission,” and that “where the Interstate 

Commerce Act provides an exclusive remedy, such remedy is not in 

addition to remedies under another law or at common law”).

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1995 U.S.C.C.A.N. at 808.5

As pitched in this litigation, plaintiffs’ state law claims 

would directly interfere with the ICCTA’s deregulatory 

objectives. Plaintiffs left the basis for many of these claims 

unclear in their complaint, asserting only conclusorily that the 

defendants had violated various state laws. E.g., Indirect 

Purchasers’ Consol. Am. Compl. ¶ 155 (alleging, without 

further elaboration, that “[d]efendants have engaged in unfair 

competition or unfair or deceptive acts or practices in 

violation of New York Gen. Bus. Law § 349 et seq.; and New 

York common law against restraints of trade”). But the legal 

theories plaintiffs have presented in briefing make clear that 

these claims are designed as a means of getting the district 

court to apply state law to assess the substantive “fairness” of 

the contracts the railroads entered into, including with 

reference to the manner in which the rates were computed. 

See Davis v. Coca-Cola Bottling Co. Consol., 516 F.3d 955, 

982 (11th Cir. 2008) (suggesting that if necessary a district 

court may use Rule 12(c) motions and the parties’ memoranda 

to make sense of plaintiffs’ allegations).

State antitrust claims obviously 

present a risk of balkanized legal norms, a risk not posed by 

federal antitrust law.

Thus, plaintiffs relied extensively before the district court 

on the argument that the Board, in Rail Fuel Surcharges, the

proceeding that addressed fuel surcharges applied to common 

carrier freight, had found aspects of the rate computation 

“unfair” or “unreasonable.” See Indirect Purchase Pls.’ Mem. 

Opp’n Defs.’ Joint Mot. Dismiss 40 (“[T]he STB has already 

 5

 Although the House Report is addressing a bill that lacks the 

phrase “with respect to rail transportation,” there is no reason to 

suppose that inclusion of that phrase in the final bill reflected a 

congressional embrace of balkanization.

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18

determined that the fuel surcharges at issue here are 

‘unreasonable,’ ‘misleading’ and ‘unfair’ as contemplated by 

the consumer protection laws.”); id. at 21 (describing this 

litigation as “seek[ing] recovery for conspiratorial and unfair

overcharges” (emphasis added)); id. at 42 (characterizing the 

plaintiffs’ claims as “challeng[ing] only the unfair and/or 

misleading nature of Defendants’ fuel surcharges” (emphasis 

added)). And plaintiffs made no bones about their goal of 

extending the remedies that the STB ordered for regulated

freight to freight over which Congress deliberately stripped 

the STB—and states—of any regulatory authority. See id. at 

40 (“By raising consumer protection claims, Plaintiffs merely 

seek to enforce the STB’s ruling . . . for claims arising in 

private contract.”); id. at 29 (“[T]he court is asked only to 

enforce the STB’s finding of unreasonableness such that 

Plaintiffs may obtain adequate redress.”).

The law applicable to § 10709(c) contracts, of course, 

may involve state common law doctrines such as fraud and 

consideration, doctrines that will in some cases cause a 

contract to be negated or even modified. But whatever the 

circumstances in which unjust enrichment, consumer 

protection, or antitrust claims may be unpreempted, they do 

not include those before us, where those claims are advanced 

as a means of challenging the substantive reasonableness of 

the rates charged under private contracts.

We should say a few additional words about plaintiffs’ 

state law antitrust claims, because plaintiffs make one 

argument against preemption unique to such claims: They 

point out that a provision of the ICCTA, by creating a rule of 

evidence applicable to state law antitrust suits (as well as to 

federal ones), arguably contemplates preservation of state 

antitrust actions. The statute provides: “In any proceeding in 

which it is alleged that a carrier was a party to an agreement, 

conspiracy, or combination in violation of a Federal [antitrust] 

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19

law . . . or of any similar State law, proof of an agreement, 

conspiracy, or combination may not be inferred from evidence 

that two or more rail carriers acted together with respect to an 

interline rate . . . [approved in accordance with 

§ 10706(a)(2)].” 49 U.S.C. § 10706(a)(3)(B)(ii) (2006) 

(emphasis added). Plaintiffs also point to legislative history 

that seemed to contemplate the applicability of at least some 

antitrust law. For example: “The Conference provision retains 

this general rule, while clarifying that [§ 10501(b)’s] 

exclusivity is limited to remedies with respect to rail 

regulation—not State and Federal law generally. For 

example, criminal statutes governing antitrust matters not preempted by this Act, and laws defining such criminal offenses 

as bribery and extortion, remain fully applicable unless 

specifically displaced, because they do not generally collide 

with the scheme of economic regulation (and deregulation) of 

rail transportation.” H.R. Rep. No. 104-422, at 167, as 

reprinted in 1995 U.S.C.C.A.N. 850, 852.

Although the question is not before us, there is nothing in 

our reasoning inconsistent with the notion that some subset of 

state or federal antitrust claims might permissibly be brought 

against railroads, for price-fixing or other violations. The 

relevant question is not whether all potential antitrust suits are 

preempted, but rather whether this antitrust suit, as formulated 

by the plaintiffs, impermissibly infringes the federal 

deregulatory interests in the ICCTA.

There has been a tension—and in federal antitrust law a 

radical change over time—between the goal of increasing 

consumer welfare in the economic efficiency sense and 

contrasting goals such as protecting small competitors or

preventing the concentration of economic or political power 

without regard to economic efficiency. See Brooke Group 

Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 

224 (1993); Coastal Fuels of P.R., Inc. v. Caribbean Petrol. 

USCA Case #09-7023 Document #1240266 Filed: 04/16/2010 Page 19 of 21
20

Corp., 79 F.3d 182, 192 (1st Cir. 1996). It is far from clear 

that state antitrust law has, as a general matter, made the 

transition that has marked federal law. See, e.g., Robert H. 

Bork, The Antitrust Paradox: A Policy at War with Itself 73-

74 (Free Press 1993) (1978) (describing the movement to 

“consumer welfare orientation” under federal antitrust law); 

id. at 74-77 (discussing early U.S. Supreme Court cases 

striking down state antitrust laws in which liability turned on 

the unreasonableness of prices); Richard A. Duncan & Alison 

K. Guernsey, Waiting for the Other Shoe to Drop: Will State 

Courts Follow Leegin?, 27 Franchise L.J. 173, 173 (2008)

(noting that even states generally following federal decisional 

law in antitrust matters typically “leave themselves an escape 

route if federal law varies from state statute or putative state 

policy goals”).

Illinois Brick, which plaintiffs’ suit expressly seeks to 

avoid, represents the Supreme Court’s judgment that allowing 

plaintiffs to use an indirect purchaser theory offensively, 

while prohibiting defendants from using the theory 

defensively, “would create a serious risk of multiple liability 

for defendants,” and “the possibility of inconsistent 

adjudications.” 431 U.S. at 730. Illinois Brick also rested on

the proposition that full recovery for direct purchasers would 

generate more effective enforcement of the law. Id. at 734-35. 

Application of state laws rejecting Illinois Brick would 

jeopardize the federal interest in protecting railroad regulation 

from inefficient norms and balkanization.

We are presented in this case with an antitrust claim that

was unambiguously concerned not just with strict “economic 

efficiency” but also with resurrecting in a different form statelevel regulation of railroads, by inviting judicial supervision 

of the reasonableness and fairness of rates charged to 

shippers. Allowing state law antitrust claims of this nature 

would undermine the deregulatory and anti-balkanization 

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policies underlying the ICCTA. We need not address 

imaginable state antitrust claims that might not run afoul of 

either of those congressional policies.

The judgment of the district court is 

Affirmed.

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