Oxbow’s coal/petcoke complaint against two railroads allowed to proceed

A federal district judge, who had previously dismissed a lawsuit by Oxbow Carbon & Minerals LLC against the two major western U.S. railroads, on Feb. 24 allowed a new version of the lawsuit to stand.

The lawsuit, filed in 2011 at the U.S. District Court for the District of Columbia, accuses the Union Pacific Railroad and the BNSF Railway of price fixing related to movements of coal and petroleum coke. Oxbow, controlled by billionaire Blll Koch, controls a coal mine in Colorado and is also a major marketer of coal and petcoke.

This court previously dismissed the complaint without prejudice for failure to state a claim. After plaintiffs filed a substantially revised amended complaint, defendants Union Pacific Railroad and BNSF Railway again moved to dismiss for failure to state a claim and for lack of Article III standing. “After carefully considering the arguments made by the parties in their papers and the oral arguments presented by counsel in court on January 8, 2015, the Court concludes that plaintiffs’ amended complaint sufficiently states a claim on all counts and it therefore denies defendants’ motions to dismiss,” said the Feb. 24 ruling from Judge Paul Friedman.

The plaintiffs are five related companies (collectively referred to as “Oxbow”) — Oxbow Carbon & Minerals, Oxbow Mining LLC (which controls the Colorado coal mine), Oxbow Midwest Calcining LLC, Oxbow Calcining LLC, and Terror Creek LLC — that mine, sell, and ship coal and petroleum coke. They allege that UP and BNSF engaged in anticompetitive conduct, both in concert and, in the case of UP, independently, that harmed plaintiffs. They allege that defendants conspired to: fix prices above competitive levels through a uniform fuel surcharge; and allocate certain markets to each other, granting UP a monopoly in at least one region.

In response to the court’s dismissal of the original version of the lawsuit, Oxbow filed a substantially amended complaint which brings claims under Section 1 and Section 2 of the Sherman Act. Count I, the fuel surcharge conspiracy claim, and Count II, the conspiracy not-to-compete claim, are brought under Section 1. Count III, which alleges both monopolization or attempted monopolization by UP and a conspiracy to monopolize by both defendants, is brought under Section 2. Counts II and III concern two specific markets for coal and petcoke, the Uinta Basin and the Powder River Basin. The final count, for breach of contract, is brought under state law. Oxbow alleges that UP breached the “Tolling Agreement,” an agreement to, among other things, toll the statute of limitations for Oxbow’s claims while the parties negotiated a potential settlement for those claims that did not come to fruition.

Said the Feb. 24 ruling in part: “As to Count II, the Section 1 conspiracy not-to-compete claim, UP argues that Oxbow Carbon & Minerals and Oxbow Mining — the only two plaintiffs to bring this claim — lack standing as to any allegations concerning the Powder River Basin because they solely reside in the Uinta Basin. According to UP, Oxbow thus ‘does not have standing to maintain an action for an alleged antitrust violation affecting a relevant market in which it does not participate.’ But the alleged conspiracy not-to-compete encompasses two relevant markets: the Uinta and Powder River Basins. That alleged conspiracy therefore does affect the relevant market in which Oxbow participates. The fact that it also affected another market that plaintiffs do not participate in does not deprive plaintiffs of standing; nor does it bar them from making allegations concerning that market. This reasoning applies equally to Count III, the Section 2 conspiracy to monopolize claim, which is brought by the same two plaintiffs.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.