UNI TED STATES DI STRI CT COURT FOR THE DI STRI CT OF COLUMBIA

__________________________________________ ) I n re RAI LFREI GHT F UEL SURCHARGE ) ANTI TRUST L I TI GATI ON ) __________________________________________) MDLDocke t No. 1869 ) Misc. No. 07-489 (PL F) This document re lates to: ) ) AL LDI RECT PUR CHASER CAS ES ) __________________________________________)
OPI NI ON This matter is befor e the Court on def endants’ motion to stay

proce eding s under Rule 23(f) of

the Fe dera l Rules of Civil Procedur e pendingresolution of their pe tition t o appea l the Court’s orde r g rantingclass ce rtification. The Court hear d oral a rgument on the stay

motion on September 13, 2012. U pon consideration of the parties' paper s, the oral a rguments prese nted by counsel, the r eleva

nt leg al authorities, and the entire r ecor d in this case, the Court will g rant the def endants’ motion as it relates to dissemination of class notice, a nd deny the motion as it relates to expert discovery , Daube rt motions, and summary judgme nt briefing . This Court will postpone ruling on any

summary judgme nt motions until after the c ourt of appe als has addr essed defe ndants’ petition (and, if it g rants the pe tition, t he mer its of the appea l), notice ha s been se nt to the class, and c lass members a re a ffor ded the oppor

tunity to opt out of the class.
I . BA CKGROUND The Court has de scribed the background of this ca se pre viously . See In re Rail Fr eig ht Fuel Surc harg e Antitrust L itig. (“ Rail Fre ight I ”), 587 F . Supp.2d 27, 29–31 (D.D.C. 2008); I n re Rail F reig ht Fuel Surc harg e Antitrust L itig. (“ Rail Fre ight I I”), 593 F . Supp.2d 29,32, 34–35 (D.D.C. 2008), a ff' d, Fa y us Enters. v. B NSF Ry . Co., 602 F.3d 444 (D.C. Cir. 2010); I n re Rail F reig ht Surcharg e Antitrust L itig. (“ Rail Fre ight I I I ”), – F .R.D. –, 2012 WL 2870207, at *1-11 (D .D.C. J une 21, 2012). I t theref ore w ill li mit it s discussion accor dingly
. Plaintiffs alleg e that def

endants — B NSF Railway Company

(“B NSF”) ; CS X Transpor tation, I nc. (“ CSX”); Norfolk Southern Railwa y Company

(“N S”); and Union Pac ific Railroad Company

(“U P”) — eng ag ed in a pr ice f ix ing c onspiracy

to coordinate their fue l surcha rg e prog rams in orde r to impose supra- competitive total price incre ases on their shipping customers. See Rail Fre ight I I I , 2012 WL 2870207, at *1. The pla intiff class is composed of persons a nd entities that alleg edly

purcha sed ra il freight transportation ser vices dire ctly

from defe ndants during the class pe riod, and who w ere assessed a rail fue l surchar g e for

those service s. I d. at *2. This litigation has be en pendingbefor e the Court since November 2007. Plaintiffs moved for c ertifica tion of the class on Mar ch 18, 2010. The Court hear d oral argument in October

2010, but delay ed its decision on class c ertification to consider the potential implications of the Supreme Court’s de cision in W al-Mar t Stores, I nc. v. Duke s, 131 S.Ct . 2541 (2011). On June 21, 2012, the Court g rante d the plaintiffs’ motion for c lass cer tification. Rail Fr eig ht I I I , 2012 WL 2870207.

Def endants promptly

filed a pe tition i n the United States Court of Appe als for the District of Columbia Circuit seeking leave to appea l the class ce rtification dec ision under Rule 23(f) . A motions panel of the D.C. Circuit has r efe rre d the petition to the merits panel. In re Rail Fr eig ht Surcharg e Antitrust L itig., No. 12- 8008 (D.C. Cir. Aug . 28, 2012). The br iefingschedule in the Circuit, initi ally

set to run throug h November 2012, has bee n suspended pe nding f urther order of the c ourt, and ora l argument has not y et bee n schedule d in this case. See I n re Rail
2Fr eig ht Surcharg e Antitrust L itig., No. 12- 7085 (D.C. Cir. Aug . 31, 2012) (sc heduling order ); I n

re Rail F reig ht Surcharg e Antitrust L itig., No. 12- 7085 (D.C. Cir. Sept. 19, 2012) (orde r suspending briefing ). De fenda nts seek a sta

y of proc eeding s in this C ourt pendingresolution of the Rule 23(f) petition in the D.C. Ci rcuit. Plaintiffs oppose this motion and urg e the Court to direc t the parties to proc eed w ith ex pert discove ry , notice to potential class membe rs, and Daube rt and summary

judgme nt briefing
.

I I . L EGAL

STANDARD Rule 23(f) of

the Fe dera l Rules of Civil Procedur e provide s that a cour t of appea ls, in it s discretion, may allow an a

ppeal f rom a district cour

t order grantingor deny

ing class ce rtification. “A n appea l does not stay proce eding s in the district court unless the district judge or the c ourt of appe als so order s.” F ed. R. Civ. P. 23(f).

Although the D.C. Circuit has not y et ar ticulated the standa

rd for evalua ting a proposed stay

pending decision on a Rule 23( f) pe tition, J udg e Hog an has a pplied the established four- fac tor balanc ing te st used for pr eliminary injunctions and other injunctive re lief. In re L orazepam & Clorazepate Antitrust L itig., 208 F .R.D. 1, 3 (D.D.C. 2002); see also Bla ir v. Equifax Check Servs., 181 F .3d 832, 835 (7th Cir. 1999) (noting that a cour t should eng ag e in the same a

naly sis when dec iding whe ther to g rant a stay under Rule 23( f) a s when c ourt considers g rantingpreliminary injunctions and stay s of administrative dec isions). Under this test,
a cour t should consider the following : (1) whe ther ther e is a substantial likelihood that the movant will succe ed on the mer its of the claims/appea l;

3(2) whe ther the mova nt will suffer irr epar able injury if an injunction/st ay

does not issue; (3) whe ther other s will suffer ha rm if an injunction/stay

is gr anted; and (4) whe ther the public inter est will be furthe red by an injunction/st ay . I n re L orazepam & Clorazepa te Antitrust L itig., 208 F .R.D. at 3 (citingWashington Metro. A rea Transit Comm'n v. Holiday Tours, Inc., 559 F .2d 841, 842-43 (D.C. Cir. 1977); Virg inia Petroleum J obbers Ass' n v. FPC, 259 F.2d 921, 925 (D .C. Cir. 1958)). The pa rties ag ree that this is the appropr iate standa

rd. See D efs.’ Mot. at 3; Pl s.’ Opp’n at 5.

I I I . DI SCUS SI ON As the Seventh Circuit has noted, a n action is stay ed only

if the movants show “that the pr obability

of er ror in the c lass cer

tification dec ision is hi g h enough that the costs of pressingahea d in the district court excee d the costs of wa iting.” B lair v. Equifa x Check Servs., 181 F.3d at 835. Defe ndants have failed to make this showing her e. A. Likelihood of Succe

ss on the Merits Most challeng es to class c ertification will not survive the initial step of per suading the cour t of appe als to g rant the Rule 23( f) pe tition. S ee I n re L orazepam & Clorazepate Antitrust L itig., 289 F .3d 98, 105-06 (D.C. Cir. 2002) ( “The sheer number of c lass actions, the district court' s authority

to modify

its class cer

tification dec ision . . . and the ea se with which litigants ca

n char acte rize leg al issues as novel, a ll mil itate in favor of nar rowingthe scope of Rule 23(f) r eview.” ). The D .C. Circuit, however, ha s identified three circ umstances in which it is likely to consider a

n appea l from a c lass cer

tification dec ision: 4(1) whe n there is a death-knell situation for either the plaintiff or defe ndant that is independe nt of the merits of the unde rly ing claims, coupled w ith a class ce rtification dec ision by the district court that is questionable, taking into ac count the district cour t's discretion over

class ce rtification; (2) whe n the ce rtification dec ision presents an unse ttled and fundame ntal issue of law r elatingto class ac tions, im portant both to the specific litigation and g ener ally , that is likely to evade end-of -the-c ase r eview; a

nd (3) whe n the district court' s class ce rtification dec ision is manifestly

err oneous. I d. at 99-100; see id. at 105.

Def endants a ssert that the Court committed manifest e rror in finding that cer

tain cate g ories of c lass members ha d suffe red injury as a r esult of the fue l surchar g es. The Court finds that the cour

t of appe als is unlikely

to reve rse on this issue, as the “ manifest er ror” standard is very difficult to satisfy . See In re L orazepam & Clorazepate Antitrust L itig., 289 F .3d at 109 (re jecting challeng e to district court’s f actua l findings a

nd noting that district cour t could further ref ine the cla ss as additional fac ts came to lig ht).

Def endants a lso assert that the Court applied e rrone ous leg al standar ds on two issues. First , defe ndants claim that the Court improper ly failed to pe rfor

m a full evidentiar

y analy sis under Da

ubert v. Mer

rell Dow Phar

m., 509 U.S. 579 (1993), when e valuatingplaintiffs’ expert testimony . Second, def endants a ssert that the Court applied the incorre ct standar d for evaluating the numbe r of injure d class member s sufficient to pre clude a finding of pre dominance. Def endants a rgue that their pe tition i s likely to be g rante d beca

use these a

re unse ttled and fundame ntal leg al issues, and be cause an er roneous de cision is likely to force defe ndants into settlement neg otiations. The Court ag ree s that there is some possibility that the cour

t of appe als

5will consider one or both of these issues. The Court finds, however , that defe ndants are unlikely to ultim ately

preva il on appeal. Def endants c orre ctly

identify a cir cuit split as to whether a district court must addre ss Dauber

t challeng es at the c lass cer tification stag e. Compare Am. Honda Co. v. Allen, 600 F.3d 813, 816 ( 7th Cir. 2010) (“[T]he district court must perform a full Daube rt ana ly sis befor e ce rtify

ing the class if the situation war rants.”) , with In re Z urn Pex P lumbing Products L iability L itig., 644 F .3d 604, 612-14 (8th Cir. 2011) (c oncluding that district court nee d not assess the a dmissibi lity

of expert testimony

at the cla ss cer

tification stag e; “f

ull Dauber

t hear ing” not require d so long a s court conduc ts “rig orous ana ly sis” of par ties’ claims re g ardingexpert testimony as it relate s to common proof). F urthermor e, def endants note tha

t the Supreme Court
rec ently g rante d a petition for a

writ of ce rtiorar i that impli cate s this question. Def endants, 1 howeve r, do not clea

rly identify how re solution of this leg al question would aff ect the Court’ s decision her e, as de fenda

nts never r aised a

Daube rt cha lleng e bef

ore this Court decide d the class
cer tification issue. Nor is it obvious that a full Daube rt ana ly sis would have yielded a dif fer ent result. See, e .g ., Rail Fre ight I I I , 2012 WL 2870207, at *18 (findingthat plaintiffs’ expert’s use of re g ression ana ly sis was a g ener ally acc epted ba sis for ce rtify ing a class); id. at *66-67 (obser ving that multi ple re g ression ana ly sis is particularly useful in antitrust actions); id

. at *33, n. 11 (noting cre dentials of plaintiffs’ e x pert).

The Supreme Court gr anted a petition for writ of c ertiora ri on the following 1 question: “Whether a district c ourt may cer tify a cla ss action without resolvingwhether the plaintiff class ha s introduced a dmissibl e evide nce, inc luding e x pert testimony , to show that the case is susceptible to awa rding damag es on a c lass-wide ba sis.” See Comcast Corp. v. B ehre nd, – S.Ct . –, 2012 WL113090, at *1 (June 25, 2012). 6I t is also unlikely that defe ndants will prevail on the que stion of the corr ect standard f or including uninjured member s in a class, a s the law on this issue does not appe ar to be unsettled. See Kohen v. Pac ific Inv. Manag ement Co. L L C, 571 F.3d 672, 677-78 ( 9th Cir. 2009) (r econc iling ca se law holdingthat a cla ss may include a sma ll number of uninjured pe rsons with contrar

y statements in other c ases)
. Def endants a lso argue that the c ourt of appe als’ orde r direc ting the pa rties to brief the merits of their a

ppeal sug g ests that the cour t is will ing to e ntertain the substantive issues prese nted in the petition. Although this is a plausible theory , this Court has located five case s in which the D.C. Circuit re fer red a Rule 23(f) pe tition di rec tly to the merits panel, a

nd in ever y
case , that petition ulti mately was de nied. I t is a fool’s er rand to try

to predict what the court of 2 appea ls is li kely

to do before it acts or, abse nt expl anation, to spec ulate on why it has made a
cer tain proce dural de cision.

I n sum, although it is possible that defe ndants may preva il on their appea l, defe ndants have not shown that they are substantially

likely to do so. B. Irreparable I

njury to Defendants if the Action Proce eds Def endants a rgue that if the a ction proce eds, the pa rties will spend consider able time and money

conductingexpert discovery , disseminating notice , and pre paringDaube rt and summary judgme nt briefs. I f the D.C. Circuit modifies or re verse s the ce rtification dec ision, they maintain, some or most of this prepar ation may have to be redone
. See In re L orazepam & Clorazepa te Antitrust L itig., 289 F .3d 98 (D.C. Cir. 2002); 2 I n re V enema

n, 309 F.3d 789 ( D.C. Cir 2002); I n re James, 444 F.3d 643 ( D.C. Cir. 2006); I n re D.C. Water and Sewe r Auth., 561 F .3d 494 (D.C. Cir. 2009); In re U -Ha ul, I nt’l I nc. , No. 08- 7122, 2009 WL 902414 (D.C. Cir. April 6, 2009). 7No doubt subjecting a par ty to duplicative and wa steful litigation exerc ises is a signific ant har

m. See J ohnson v. Geico Cas. Co., 269 F .R.D. 406, 413 (D. De l. 2010) (staying discovery on class member ship, which was likely to be af fec ted if cour

t of appe als modified or
reve rsed pa

rt of the c ertifica

tion order) ; Gray

v. Golden Gate Nat. Rec reational Area , 2011 WL 6934433, at *2 (N.D . Cal. Dec . 29, 2011) (notingthat litigation expenses ca n constitute “substantial har

m”); but see I

n re L orazepam & Clorazepate Antitrust L itig., 208 F .R.D. at 6 (“litig ation expenses alone do not nec essar ily qualify as irre para

ble har m.”). Courts, there fore , have c onsidered c are fully the implications of an appe al on the natur e and sc ope of the class action proc eeding . See, e.g ., I n re L orazepam & Clorazepate Antitrust L itig., 208 F .R.D. at 6 (applying f

lexi ble balanc ing of

fac tors, and stay

ing pr ocee dings where the impact of r ever sal could be dispositive of the c ase) ; Be attie v. CenturyTel Inc., No. 02- 10277-B C, 2006 W L 1722207, at *8 (E.D. Mic h. J une 20, 2006) ( denying sta y motion in part where litigation would still proce ed eve n if class c ertifica tion decision were reve rsed.) As in Be attie, litigation will almost certa inly proce ed in this case, e ven if the
cer tification dec ision is reverse d or modified. See Pls.’ Opp. Stay at 12; Def

s.’ Motion St ay

at 6 (conc eding that “the na

med Plaintiffs’ claims would re main” eve n if class c ertification is denied). This sugg ests that some, perha ps most, of the parties’ w ork in prepa ring expert discovery , Daube rt motions, and summary judgme nt briefs will be of use even if the def endants pre vail on their appe al. In the Court’s view, de fenda nts have fa iled to show that they will be irrepa

rably harme d if the par

ties are require d to proce ed with expert discover y and the pr epar ation of Daube rt and summary

judgme nt briefs.

8C. Harm to Others if the Action is Stayed I n this five-y ear

old lawsuit, delay ed re solution of the claims would substantially harm c lass members, a s a stay would postpone summary judgme nt and trial for

many months, or possibly over a y ear . See Gr iffiths v. Ohio Fa rmers I ns. Co., No. 1:09-CV-1011, 2010 WL 2774446, at *3 (N.D . Ohio 2010) (“ Delay ing disc overy

or the star

t of a trial c an har

m the non-moving party , espec ially when it is unclea

r if and when appe llate re view will be g rante d.”); cf. In re L orazepam & Clorazepate Antitrust L itig., 208 F .R.D. at 4-5 (stay ing c ase where expected dela

y would be limited to a fewmonths). A stay would postpone any

compensa

tion that class member s might re ceive if plaintiffs succ eed on the merits, and would dela y a def initive resolution of the c ase r eg ardle ss of who ultimately preva ils. P laintiffs also point out that the fac tual rec ord will g row we aker with ag e and that some witnesses may become unavailable
. Be cause the extensive fac t discovery has alre ady

been c ompleted, the fa ctual re cord is somewhat protec ted; nonetheless, the Court r ecognizes that case de lay s may compromise plaintiffs’ a bility to call re levant witnesses at trial or that memories may fade
. Plaintiffs, theref

ore, ha ve demonstrated a r isk of signific ant har m that offsets that fac ed by defe ndants, particula

rly in light of de fenda

nts’ failure to show a substantial likelihood of preva iling on the mer its of their appe al.
D. Other Public I

nterest Factors Def endants c orre ctly

note that proc eedingwith class notice while the Rule 23(f) petition is pending c ould lead to conf usion among the public and the a bsent class membe rs. See Manual for

Complex L itigation (F ourth) § 21.28 (2004) (the district cour t “should ordinarily

stay the dissemination of class notice to avoid the conf usion and substantial expense of re notification 9that may

result from a

ppellate r ever sal or modification after notice dissemination”); J enkins v. Hy undai Motor Fina

ncing Co., No. C2-04-720, 2008 WL2268319, at *5 (S.D. Ohio 2008) (re cog nizi ng the public intere st in mi nimiz ing pote ntial confusion that could re sult from potentially

err oneous notices, a

nd staying notice to class); B eattie v. Century Tel Inc., 2006 WL 1722207, at *8 (same ). This public interest c onsideration counse ls in favor of sta y ing c lass notice until after

the cour t of appe als has ac ted on the petition. Def endants propose that notice be se nt to absent class membe rs only afte r the court of a ppeals ha s addre ssed def

endants’ pe tition and, if the petition is gra nted, the mer its of the appe al. Plaintiffs sugg est a two-ste p notice proc ess: one notice notify ing the class of the suit now and a

nother notice trig g eringthe opt-out period a fter the court of a ppeals a cts. I t is unclear what would be g ained by

notify ing c lass members immediately , as the ne x t step in the liti g ation proce ss is ex pert discove ry (a pr ocess that r equire s no involvement by class member s), and a s the primary purpose of

notice is to permit class member s an opportunity to decide whether

to stay in the lawsuit or opt out. Peters v. Nat’l R.R. P asseng er Corp., 966 F .2d 1483, 1486 (D.C. Cir. 1992). 3 This Court has discretion as to the timing of notice, provide d that notice is sent prior to entry

of final judg ment. Fe d. R. Civ. P . 23(c) (2)( B) ; Fed. R. Civ. P. 23(d); see a lso I n re Vene man, 309 F.3d 789, 792 ( D.C. Cir. 2002) (“due proce ss require s that putative class membe rs

At oral a rgument, counsel for

plaintiffs sug g ested that a second pur

pose of a Rule 3 23 notice, one that argues for a first notice now and a

second a fter the court of a ppeals ha s acte d, is to mi tigate any

person or entity communicatingwith class member s and providinginacc urate or purpose ly

false inf ormation about the c ase. B ut plaintiffs have pr ovided no evidenc e that this a proble m in this case . 10rec eive notice and an oppor tunity to opt out”). The Court finds that a sta y of cla ss notice is appropr iate at this time.
I V. CONCLUSI ON

I n sum, the Court finds that defenda nts have fa iled to demonstrate that the likelihood of succe ss of their appe al is sufficiently high that the costs of proc eeding with expert discovery , Daube rt motions, and summary judgme nt briefingoutweig h the costs of fur ther de lay
. I t finds, however , that a stay of cla ss notice is warr anted at this t ime. Acc ording ly , the Court will deny defe ndants’ motion as it pertains to expert discovery and brie fing of the Da

ubert a nd summary judgme nt issues and g rant the motion as it perta ins to class notice. An Or der c onsistent with this Opini on will be issued this same day
.

SO ORDERED. /s/____________________________ PAULL . FRI EDMAN United States District J udg e DATE: September

20, 2012

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