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Hyundai, Kia sue four big U.S. railroads over fuel surcharges

Published 10/01/2019, 10:47 AM
Updated 10/01/2019, 10:51 AM
Hyundai, Kia sue four big U.S. railroads over fuel surcharges

By Jonathan Stempel

(Reuters) - Hyundai Motor Co (KS:005380) and its Kia affiliate have sued the four largest U.S. railroads, accusing them of violating U.S. antitrust law by conspiring to drive up shipping costs though coordinated fuel surcharges.

The South Korean automakers filed three lawsuits on Monday accusing BNSF, CSX Corp (O:CSX), Norfolk Southern Corp (N:NSC) and Union Pacific Corp (N:UNP) of imposing the surcharges between July 2003 and December 2008.

BNSF is a unit of billionaire Warren Buffett's Berkshire Hathaway Inc (N:BRKa), but was a standalone company at the time of the alleged conspiracy.

The lawsuits seek triple damages and were filed in the federal court in Santa Ana, California, near the automakers' respective U.S. headquarters.

Lawyers for BNSF referred a request for comment to that company, which did not immediately respond. The other railroads' lawyers did not immediately respond to requests for comment.

Citing meetings, phone calls and emails, Hyundai and Kia accused the railroads of conspiring to impose fuel surcharges, under the guise of a fuel cost recovery program, that ultimately generated billions of dollars in profit at customers' expense.

Their lawsuits cited a 2007 independent study that said the railroads' fuel surcharge revenue exceeded their fuel costs by more than $6 billion from 2003 to March 2007.

Hyundai and Kia sued 6-1/2 weeks after a federal appeals court in Washington, D.C. said nationwide litigation over the surcharges could not proceed as a class action because more than 2,000 members of the proposed class were not harmed. The automakers' law firm also worked on that case.

The cases in the U.S. District Court, Central District of California, are Hyundai Motor America Inc v BNSF Railway Co et al, No. 19-01878; Hyundai Motor America Inc v BNSF Railway Co et al, No. 19-01880; an Kia Motors America Inc v BNSF Railway Co et al, No. 19-01881.

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