                             UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA



 IN RE: RAIL FREIGHT FUEL
 SURCHARGE ANTITRUST LITIGATION
                                                     MDL Docket No. 1869
 This document relates to:                           Misc. No. 07-489 (PLF/JMF/AK)

 ALL DIRECT PURCHASER CASES




                                 MEMORANDUM OPINION

       Now pending before the court is Plaintiffs’ Motion for Relief Pursuant to the Court’s July

28, 2009 Order (Docket No. 296) (“Pls. Mot.”) [#304]. Plaintiffs seek relief pursuant to

Scheduling Order [#296] and Federal Rule of Civil Procedure 37(a). Plaintiffs seek to compel

production of the following documents and/or data:

       1)     from all defendants, CSX Transportation (“CSX”), Union Pacific Railroad

              Company (“UP”), Norfolk Southern Railroad Company (“NS”), and BNSF

              Railroad Company (“BNSF”), plaintiffs seek to compel the production of

              transactional data and documents regarding “rate-regulated” traffic;

       2)     also from all defendants, plaintiffs seek to compel the production of all non-

              privileged documents referencing or noting any past, potential, or future meetings

              or communications among two or more defendants, even if the document does not

              specifically reference fuel surcharges, so long as the attendee has the power or

              capacity to influence, recommend or adopt a fuel surcharge;

       3)     from defendants CSX and UP, plaintiffs seek to compel production of

              communications concerning profitability, costs, pricing and market share and
               documents concerning meetings among defendants concerning surcharges, fuel

               costs or the need to increase rates for or profitability of freight shipments; and,

       4)      from defendant CSX, plaintiffs seek to compel production of five other categories

               of documents related to fuel costs and measures undertaken by CSX to manage

               fuel costs.

       In addition, plaintiffs seek related relief from the court regarding the correct designation

of a UP and an NS custodian. Both custodians are attorneys and, in light of this, NS and UP will

only do a narrow review of their files. Plaintiffs seek to treat these two attorneys as regular

custodians for the purposes of document collection.

                                          I. Background

       The facts of the case are set out in In re Rail Freight Fuel Surcharge Antitrust

Litigation, 587 F. Supp. 2d 27, 29-31 (D.D.C. 2008) and In re Rail Freight Fuel Surcharge

Antitrust Litigation, 258 F.R.D. 168, 168-69 (D.D.C. 2009). Briefly, plaintiffs allege that

defendants, the four largest Class I railroads based in the United States, violated federal antitrust

laws by conspiring to price-fix the cost of rail freight transportation services via the application

of rail fuel surcharges. In re Rail Freight Fuel Surcharge Antitrust Litig., 258 F.R.D. at 168. The

instant case is brought on behalf of shippers whose freight was not rate-regulated. Compl. ¶ 1.

Rate-regulated freight refers to that freight which the Surface Transportation Board (“STB”) has

the authority to regulate. Plaintiffs’ Memorandum in Support of Their Motion for Relief

Pursuant to the Court’s July 28, 2009 Order (Docket No. 296) (“Pls. Memo.”) [#304, Attach. 1]

at 6. Freight shipments governed by private contracts or otherwise exempt from regulation are

rate-unregulated freight. Id.


                                                  2
        In the court’s July 28, 2009 order, the court ordered the parties to continue discovery on a

rolling basis, beginning August 1, 2009. Scheduling Order ¶ 1. The parties agreed to attempt to

“front-load” this production. Id. The parties have spent months negotiating search terms, filters

and protocols for the search, review and production of the immense discovery in this case.

Defendants’ Joint Opposition to Direct Purchaser Plaintiffs’ Motion for Relief Pursuant to the

Court’s July 28, 2009 Order (“Defs. Joint Opp.”) [#307] at 1-2. Despite extensive discussions

between the parties regarding discovery, the parties have reached an impasse on the several

issues now before the court.

          II. Transactional data and documents regarding “rate-regulated” traffic

                                                a. Background

        The court’s July 28, 2009 Order indicated that the parties were in the process of

negotiating an agreement regarding the production of certain transactional data. Scheduling

Order ¶ 2. The court directed the parties to seek relief should they be unable to reach an

agreement. Id. The parties did confer and agreement was reached on all transactional documents

in question, save those documents solely related to rate-regulated freight. Defs. Joint Opp. at 2.

Plaintiffs seek to compel disclosure of transactional data and documents regarding “rate-

regulated” traffic. Pls. Mot. at 1-3.

                                        b. Summary of Arguments

        Plaintiffs’ complaint alleges a conspiracy where fuel surcharges were implemented as an

“across-the-board increase” designed to apply to both rate-regulated and rate-unregulated traffic.

Pls. Memo. at 7 (citing Compl. ¶¶ 16, 96-98); In re Rail Freight Fuel Surcharge Antitrust Litig.,

587 F. Supp. 2d at 30. Plaintiffs argue that evidence as to how fuel surcharges were discussed or


                                                  3
applied is relevant to the conspiracy claims in the case, regardless of whether it pertains to rate-

regulated or -unregulated freight. Pls. Memo. at 6. Thus, even if a document relates exclusively

to rate-regulated freight, without any reference to rate-unregulated freight, the document may

present relevant evidence of collusion.

       Plaintiffs argue that transactional data related solely to rate-regulated freight have

additional significance due to the changes implemented in defendants’ fuel surcharge programs

pertaining to rate-regulated freight after the STB ruling.1 Pls. Memo. at 7. Plaintiffs argue that

prior to the STB decision rate-regulated and rate-unregulated freight were governed by the same

fuel surcharge regime. Plaintiffs’ Reply Memorandum in Support of Their Motion for Relief

Pursuant to the Court’s July 28, 2009 Order (Docket No. 296) (“Pls. Reply) [# 309] at 11.

Accordingly, rate-regulated transactional data would provide a valuable comparison, both to data

before and after the STB directive and to rate-unregulated transactional data. Pls. Memo. at 6-7.

The differences between how rate-regulated and rate-unregulated freight were handled after the

STB ruling could have probative value in determining the effects of the conspiracy. Id. Plaintiffs

assert that the transactional data on rate-regulated freight present a unique opportunity to assess

the degree to which the surcharges at issue were supracompetitive. Pls. Reply at 3. Plaintiffs

conclude that any additional burden on defendants to produce documents and transactional data

on rate-regulated freight is minimal at worst and potentially may reduce the burden of searching


       1
         STB has sole jurisdiction over issues related to rate-regulated freight and has the
authority to direct railroads to implement changes, according to its rulings. Rail Fuel Surcharges,
STB Ex Parte No. 661 (January 25, 2007) at 10. In 2007, STB ruled that the fuel surcharge
program, as it related to rate-regulated freight, was “misleading and ultimately unreasonable.” Id.
at 4. The STB directed the railroads to change their practice of applying fuel surcharges to rate-
regulated freight. Id. at 6-7. STB does not have jurisdiction over rate-unregulated freight. Id. at
10.

                                                  4
responsive documents and data and weeding out those related only to rate-regulated freight. Pls.

Memo. at 7.

       Defendants argue that plaintiffs are not entitled to documents or transactional data related

to rate-regulated traffic and that plaintiffs overreach in seeking documents and data relating

exclusively to a category of traffic expressly outside the scope of this lawsuit. Defs. Joint Opp. at

8. In regards to plaintiffs’ request for transactional data related exclusively to rate-regulated

freight, defendants argue that plaintiffs’ assertion that transactional data would be useful for

comparative analysis is flawed. Id. at 5. Defendants argue that plaintiffs’ reference to a specific

methodology for analysis, called benchmark analysis, is inappropriate in this instance. Id.

According to defendants, the STB did not order any change in surcharges that are relevant to a

benchmark analysis. Id. They argue that, since the STB opinion does not suggest there was a

conspiracy, changes to fuel surcharges on regulated freight traffic after the STB opinion would

not constitute an appropriate “non-conspiracy period” for benchmark analysis. Id. Defendants

also argue that, in light of plaintiffs’ exclusion of rate-regulated freight from the case, data

regarding surcharges on rate-regulated freight cannot be used for comparison purposes in the

case. Id. Accordingly, if plaintiffs cannot use the transactional data for rate-regulated freight for

analysis or comparative purposes, the data are simply not relevant to the instant case and

plaintiffs have no basis for seeking that discovery. Id. at 6.

                                             c. Analysis

       Pursuant to Rule 26 of the Federal Rules of Civil Procedure, “[p]arties may obtain

discovery regarding any matter, not privileged, that is relevant to the claim or defense.” Fed. R.

Civ. P. 26(b)(1). In Food Lion, Inc. v. United Food and Commercial Workers International


                                                   5
Union, 103 F.3d 1007, 1012 (D.C. Cir. 1997), the court of appeals indicated that relevance for

the purposes of discovery is to be construed broadly. The court then stated that, while the

boundaries defining relevance to the subject matter involved in the litigation are vague, defying

efforts to state a general rule, “it is also true that ‘no one would suggest that discovery should be

allowed of information that has no conceivable bearing on the case.’” Id. (quoting 8 Charles

Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure § 2008 at

107-108 (1994)). The court then reversed the lower court’s ruling when it could not see “any

reasonable likelihood that allowing discovery” of certain documents would lead to “discovery of

evidence relevant to the underlying action.” Id. at 1003. Notably, the next section of the treatise

cited by the court states that “it is not too strong to say that a request for discovery should be

considered relevant if there is any possibility that the information sought may be relevant to the

subject matter of the action. If protection is needed, it can better be provided by the

discretionary powers of the court under Rule 26(c) than by a constricting concept of relevance.”

Wright et al, supra, § 2008 at 109. Accordingly, the court’s obligation, when confronted with a

discovery demand to which an objection has been made, is first to ascertain whether there is a

reasonable likelihood or possibility that the information sought may be relevant to a claim or

defense or likely to lead to such evidence. Fed. R. Civ. P. 26(b)(1).2 If there is, the court must

still weigh the burden and expense of the proposed discovery against its likely benefit, using the

factors identified in Rule 26(b)(C)(iii). See Fed. R. Civ. P. 26(b)(1) (“All discovery is subject to




       2
        Note that upon a showing of good cause the court may expand the scope of discovery to
any matter “relevant to the subject matter involved in the action.” Fed. R. Civ. P. 26(b)(1).

                                                  6
the limitations imposed by Rule 26(b)(2)(c).”).3

       While plaintiffs’ claims are brought on behalf of shippers whose freight was unregulated,

plaintiffs have clearly alleged that defendants participated in a conspiracy to implement an

“across-the-board” price increase via fuel surcharges that would apply to both rate-regulated and

rate-unregulated traffic. Documents related solely to rate-regulated freight may be probative of

the alleged conspiracy, an essential element of the antitrust conspiracy claim; however, the

question remains whether documents and data related to rate-regulated traffic would be relevant

in the entire period subject to discovery. I will analyze documents and data separately.

       While I have not had access to the data themselves, it would appear that the date of the

STB order in 2007 is a logical breaking point. All documents before 2007 pertaining to fuel

surcharges related to both rate-regulated and rate-unregulated freight because, until that point,

the defendants imposed fuel surcharges on both types of freight. It would follow that, if the

document was otherwise relevant or likely to lead to relevant evidence of an element of the

claims or defenses, it would not become irrelevant because it dealt with regulated freight rather

than unregulated freight. For this purpose, regulation (or lack of it) is immaterial to whether or

not the document is relevant or likely to lead to relevant evidence. Hence, it cannot be said that

the relevance and consequential discoverability of documents from this period is a function of

whether they deal with regulated or unregulated freight. I therefore cannot find that their



       3
         As Wright et al. point out, this sentence was added by the 2000 amendments to remind
lawyers and judges of the limitations imposed by Rule 26(b)(C)(iii). “The [Advisory]
Committee [on the Federal Rules of Civil Procedure] Note accompanying the changes notes the
reports that courts have not implemented the limitations and explains that the ‘otherwise
redundant cross-reference’ was added to ‘emphasize the need for active judicial use of
subdivision (b)(2) to control excessive discovery.’” Wright et al. § 2008.1 at 60 (Supp. 2009).

                                                   7
pertaining to unregulated freight is a basis to declare them not discoverable. The analysis would

be the same as to transactional data related to rate-regulated freight before the STB decision in

2007. The same alleged conspiratorial regime applied to both rate-regulated and rate-

unregulated freight during this time period; therefore, there would be no distinction between the

data for the two in regards to relevancy.

       The post-STB ruling documents and data fall into a different category. This is also where

the analysis between documents and transactional data differs most. I will address the issue of

the documents first.

        Defendants have a legitimate complaint that, once the STB issued its ruling, documents

pertaining to rate-regulated freight cannot prove a conspiratorial intent since plaintiffs have not

alleged that a conspiracy continued in regards to the imposition of fuel surcharges on rate-

regulated freight after this ruling. I will therefore deny plaintiffs’ motion to compel documents

solely related to rate-regulated freight after January 26, 2007, the date the STB released its

decision.

       The more difficult issue is that of post-STB ruling transactional data related exclusively

to rate-regulated freight. This data may be relevant to the comparison of a market victimized by

an alleged conspiracy to one that was not. Plaintiffs so contend, but defendants insist that, since

the STB did not rule on whether a conspiracy existed, the comparison of data is a comparison

between an apple and an orange and not two apples. It is true, however, that, regardless of

whether the pre-STB ruling market was the product of a conspiracy, the post-STB ruling market

divided into two. Data from the rate-regulated market might make the claim of damages from

defendants’ behavior more or less likely or might be relevant to show the effects of the anti-


                                                 8
competitive conspiracy in restraining trade or commerce. On the basis of what I have learned to

date in this case, I cannot dismiss plaintiffs’ attempt to compare those two markets as so unsound

that there is no reasonable likelihood or possibility that the comparison may be relevant to either

the issues of liability or damages.

        I could condition discovery upon plaintiffs’ producing an expert report that confirms such

a comparison is legitimate and would meet the standards of Rule 702 of the Federal Rules of

Evidence. I question the legitimacy of ordering the plaintiffs to prove their case to compel

discovery in order to prove their case. I also fear that, by requiring this of plaintiffs, I would be

starting a small, but expensive, expert mini-war that would cost more than producing the data

will.

        On the other hand, I appreciate defendants’ concern that plaintiffs should not be

permitted to expand their claims beyond those they have pled. Nevertheless, the record does not

permit me to say that the production of this transactional data for rate-regulated freight in the

post-STB ruling period is in itself so costly that it overwhelms the potential utility to plaintiffs of

comparing markets of all freight before and after the STB decision, particularly in light of the

stipulation that I have recently approved regarding discovery protocols. I will therefore grant

plaintiffs’ motion to compel as it relates to transactional data on rate-regulated freight.

    III. All non-privileged documents referencing or noting any past, potential, or future
                 meetings or communications among two or more defendants

        Plaintiffs propounded Request for Production of Documents Number 67 that demanded

the production of “calendars and expense reports of ‘officers, directors, and other executives

with responsibility for [each defendants’] Rail Freight Transportation Services business.’” See

e.g., Direct Purchaser Plaintiffs’ Second Request for Production to Defendant BNSF Railway

                                                   9
Company (“Pls. Req. for Docs.”) [#304, Attach. 3] at 15. Plaintiffs agreed, however, that

defendants needed to provide calendars only for those employees who were production

custodians in this case and subject to redaction of purely personal information.

        Defendants agreed only to produce calendars and expense reports of vice presidents who

head business groups and their superiors and only as to contacts among the defendants

representing trade association meetings and internal meetings concerning fuel surcharges. I

resolved the dispute by requiring the defendants to produce calendars and expense reports of

only those persons who had the power to influence, recommend or adopt a fuel surcharge and by

permitting the defendants to redact “entries in calendars that would appear to a reasonable person

to be purely personal and unrelated to any business or professional obligation whatsoever.”

Memorandum Order re Response to Order of the Court (“July 13 Order”) [#292] at 9.

       On August 6, 2009, plaintiffs’ counsel sent an e-mail to defendants’ counsel expressing

that, in his opinion, my July 13 Order required the production of “all non-privileged documents”

that referenced or noted any meeting or communication between two or more of the people

defined by my order (i.e., persons who had the power to influence, recommend or adopt a fuel

surcharge) regardless of whether the document “specifically references fuel surcharges, so long

as the attendee had the power or capacity to influence, recommend or adopt a fuel surcharge.”

Defs. Joint Opp. Ex. B. Defendants assert that they do not have to produce such documents

unless they facially discuss certain topics. Defs. Joint Opp. at 16.

       As is first evident, plaintiffs are expanding my ruling concerning calendars and expense

reports and redefining the very nature of the discovery that they seek. The July 13 Order did not

speak to any category of information other than calendars and expense reports and cannot be


                                                 10
distorted to reach an issue that was not presented. Moreover, the demand in the e-mail that

defendants produce documents pertaining to communications that have nothing to do with fuel

surcharges because the persons communicating had the power that I described in my order is

archetypical of overbreadth. According to plaintiffs, the subject matter is relevant so long as the

persons communicating occupied a particular position irrespective of the nature or purpose of the

communication; this will produce documents that have nothing to do with fuel surcharges and

cannot possibly be relevant to this lawsuit. I will not permit that.

       Furthermore, plaintiffs’ original formal request as propounded sought only two

categories of documents, calendars and expense reports. I cannot permit plaintiffs to amend it on

the fly and to demand by an e-mail what they did not demand in their initial request. Thus, the

only question presented is whether defendants can be required to produce all calendars and

expense reports generated by persons defined in my order merely because such persons had the

power or capacity to influence, recommend or adopt a fuel surcharge.

       The court has already noted that meetings between defendants could be probative of a

conspiracy. See In re Rail Fuel Surcharge Antitrust Litig., 587 F. Supp. 2d at 35. Plaintiffs have

taken advantage of this and seek the broadest discovery to uncover any meeting that might lead

to evidence of the conspiracy. While it may be true that broad discovery is necessary in antitrust

cases where plaintiffs have alleged conspiracy and where “broad discovery may be needed to

uncover evidence of insidious design, pattern, or intent,” there must surely be limits to this

breadth. See B-S Steel of Kan., Inc. v. Tex. Indus., Inc., No. 01-CV-2410, 2003 WL 21939019

(D. Kan. July 22, 2003).

       A meeting between defendants could be probative of a conspiracy, but I am concerned


                                                 11
that plaintiffs cast their nets much too wide and that there is a high probability that many of the

documents plaintiffs seek will be irrelevant to their claims. To ensure a greater probability of

relevance, I will not require defendants to produce calendar entries and expense reports related to

meetings of unspecified purposes for a date prior to February 15, 2003. In choosing this date, I

sought a date by which mere possibility shifted to a viable probability that a meeting between top

officials of defendants, the purpose of the meeting being unspecified, might be relevant to

plaintiffs’ claims. In their complaint, plaintiffs allege that, from at least Spring 2003, top

executives of each defendants held meetings to discuss their industry. Compl. ¶ 58. According

to plaintiffs’ allegations, the conspiracy related to fuel surcharges began in 2003 after the spring

meetings. Id. at ¶¶ 59-60. Therefore, it is reasonable to assume that meetings prior to this date

whose purposes are unspecified have only a mere possibility of relevance, while there is a

greater probability that meetings after this date with unspecified purposes might be relevant to

plaintiffs’ claims.

        I have already ordered that the calendar entries and expense reports related to meetings

about fuel surcharges must be produced. I also will order the production to include those

calendar entries and expense reports related to meetings where the purpose is unclear or

unspecified, provided the calendar or expense report is dated after February 15, 2003 but before

the end date that the parties have agreed upon for discovery. Defendants will have to search for

calendars and expense reports for a limited number of people over about a four-year period. I

appreciate all that the defendants have done and will do to comply with discovery. Nevertheless,

this additional burden is not so great as to trump the potential utility of the discovery, given that

courts have traditionally found that meetings among competitors may be crucial circumstantial


                                                  12
evidence of conspiratorial intent. I find this to be true, even if I allow for defendants’ legitimate

assertion that in a regulated industry, such as this one, meetings are necessary to effectuate

Congressional requirements. I will order defendants to produce those calendar entries and

expense reports for the time period identified where the purpose of the meeting is unclear or

unknown, so long as the attendee had the power or capacity to influence, recommend or adopt a

fuel surcharge.

    IV. Communications concerning profitability, costs, pricing and market share and
documents concerning meetings among defendants concerning surcharges, fuel costs or the
             need to increase rates for or profitability of freight shipments

       Plaintiffs propounded discovery requests Nos. 5 and 18 seeking documents concerning

meetings and communications between or among two or more of the Defendants relating to Fuel

Surcharges, investments in new track, or bids or proposals to serve individual shippers and

documents relating to certain topics if they concern meetings or communications between

defendants and the AAR. Pls. Memo. Ex. 1 at 8-9. According to plaintiffs, in individual meet-

and-confers with defendants, they offered a compromise request in place of Nos. 5 and 18,

seeking only communications among defendants related to profitability, costs, pricing and

market share. Plaintiffs further agreed that only documents from agreed-upon custodians needed

to be searched and that agreed-upon search terms could be used. According to plaintiffs, each

defendant took this compromise under advisement, pending the negotiation of the search terms.

       CSX and UP now, however, have taken the position that even if the search terms produce

documents from custodians related to profitability, costs, pricing and market share, reviewers

will not produce those documents that are unrelated to fuel surcharges. Defendants’ brief does

not reference the compromise offered at any meet-and-confer with plaintiffs and instead alleges


                                                 13
that plaintiffs have unilaterally expanded the documents sought under these two requests.

       Thus, the dispute turns not on what these defendants will produce but what they will

exclude from what is yielded by the use of the search terms. Plaintiffs protest that it may be

cheaper to produce everything that the search terms yield rather than to exclude from what is

produced documents that defendants claim are not relevant. It is more likely than not that the

search terms may produce documents that will lack any relevance to plaintiffs’ claims since no

one can pretend that the search terms are such finely honed instruments that they will only

produce what is relevant. It appears to me that defendants therefore have a legitimate claim that

the use of search terms should not expand the scope of discovery; however, in my view,

excluding everything produced by the search that does not specifically relate to fuel surcharges

is unfair. Plaintiffs’ claims relate to more than just fuel surcharges. Plaintiffs allege a

conspiracy to change the cost adjustment indexing for the entire industry to allow for the

implementation of a conspiratorial fuel surcharge regime unrelated to the actual cost of fuel.

Instead of a cost recovery mechanism, defendants allegedly applied fuel surcharges in a manner

that dramatically increased profits. Plaintiffs further claim that rather than use these profits to

negotiate discounts with consumers to increase competition and individual defendant’s market

shares, defendants, via their conspiratorial agreement, maintained roughly the same market

shares throughout the course of the alleged conspiracy. Thus, some communications between

defendants relating to profitability, costs, pricing and market share are more likely than not to be

relevant to plaintiffs’ claims, even if they did not specifically relate to fuel surcharges. I do,

however, agree, that given the nature of the industry not every communication between

defendants related to profitability, costs, pricing and market share will be relevant.


                                                  14
        Reviewing the search terms in the stipulation I have approved, it appears that only

documents produced by search term queries 20-21 will be in issue. Plaintiffs seek

communications between defendants, and these queries relate to communications among

defendants but are not further limited by additional terms, such as “AII” or “RCAF.”4 From the

documents produced by search term queries 20-21, I will order defendants CSX and UP to

produce those documents that relate to profitability, costs, pricing or market share, regardless of

whether they specifically relate to fuel surcharges, if the documents relate to fuel costs. I

therefore will require CSX and UP to produce documents that speak to the cost of fuel,

projections of cost of fuel, and all manners and means of either reducing those costs, passing

them onto customers or the impact of such costs on profitability, pricing and market share.

       In a related issue, CSX and UP have also refused to produce documents concerning

meetings at the National Freight Transportation Association (“NFTA”) and “the need to increase

rates for or profitability of freight shipments.” Defendants CSX and UP have already agreed to

produce documents concerning meetings at the NFTA that pertain to rail fuel surcharges, the

AII, the AIILF5 and the RCAF. CSX has also agreed to produce NFTA meeting documents

related to fuel costs; UP has refused in regards to fuel costs. I will not order CSX and UP to

produce those NFTA meeting documents related to “the need to increase rates for or profitability

of freight shipments,” as the relevance of such documents is too attenuated to plaintiffs’ claims,

if they do not also relate to one of the topics defendants have agreed to produce. I will, however,


       4
        “AII” refers to the All Inclusive Index, published by the Association of American
Railroads. “RCAF” refers to means the Rail Cost Adjustment Fact published by the Surface
Transportation Board.
       5
           “AIILF” refers to the All Inclusive Index Less Fuel, published by the AAR.

                                                 15
order UP to produce those NFTA meeting documents that relate to fuel costs as I have just

defined that term.

 V. Other categories of documents related to fuel costs and measures to manage fuel costs

       Defendant CSX has refused to produce five other categories of documents that relate to

fuel costs and measures undertaken to manage fuel costs. Plaintiffs argue that documents related

to fuel costs and measures taken to reduce fuel costs (including fuel hedging) are relevant in

addressing defendants’ assertions that fuel surcharges were implemented as a cost recovery

measure, rather than to increase profits. Pls. Memo. at 15-20. In addition, production of

information related to fuel charges is important to show that defendants all had varying fuel

costs, but all implemented the same fuel surcharge program. Id. Defendants argue that the

request is irrelevant and crosses a line of reasonableness. Defs. Joint Opp. at 20-22. Defendants

are particularly concerned about the request for documents related to fuel hedging that do not

also concern fuel surcharges. Id. at 21. Defendants take care to explain the concept of fuel

hedging as an investment strategy for companies (or a “bet”). Id. According to CSX, whether or

not companies make a good bet in fuel hedging, the loss or gain should not be passed on to

customers (i.e. reflected in fuel surcharges); therefore, communications related only to fuel

hedging are not relevant to the questions at hand. Id. at 23. Plaintiffs rebut CSX’s arguments

that fuel hedging was an investment strategy, the losses and profits of which should not affect

the cost to customers, by claiming that this contradicts public statements made by defendants in

SEC filings. Pls. Memo. at 13. In the SEC filings, CSX expressly states that fuel hedging was

established to manage exposure to fuel price fluctuations and that the fuel surcharge program

gradually replaced hedging as protection against these fluctuations. Pls. Reply Ex. 4. Plaintiffs


                                                16
also argue that fuel costs are relevant to the case, because while defendants may have had

differing fuel costs, they implemented identical fuel surcharge programs; therefore, this

information may be probative of the existence of a conspiracy. Pls. Reply at 14-16.

       Plaintiffs do correctly characterize CSX’s SEC filing. CSX does not characterize fuel

hedging as an investment opportunity, as it attempts to do in its Opposition Memorandum.

Instead, CSX compares fuel hedging to fuel surcharges as manners by which to protect the

company from fluctuations in fuel costs. Further, the SEC filing indicates that CSX is phasing

out fuel hedging in favor of fuel surcharges. In the SEC document, CSX maintains that it will

continue to assess the global fuel market and determine if and when to resume the program.

Plaintiffs have alleged a conspiracy relating to fuel surcharges. As I have just explained,

information related to fuel costs and measures to manage fuel costs, including fuel hedging, may

provide information probative of a conspiracy. Thus, plaintiffs’ request is reasonably calculated

to lead to admissible evidence. CSX must produce these documents.

                       VI. Designation of UP and NS custodian-lawyers

       Defendants have agree to prioritize production of documents from an initial subset of

custodians prior to the deadline for the completion of the first wave of discovery. Pls. Memo. at

20 (citing August 5, 2009 Order [# 299]). Defendants UP and NS identified two custodians who

serve as their in-house counsel. Pls. Memo. at 20. Defendants refuse to treat these two

custodians as “normal custodians” or to search their files using the same procedures as those for

all other custodians because of their status as attorneys. Id. Instead, UP and NS insist on only a

narrow search focused on a single meeting where fuel surcharges were discussed. Id. at n.16.

       According to plaintiffs, documents already produced by defendants show that the two


                                                17
custodians in question were charged with examining how all the railroads could implement the

same fuel surcharge. Id. at 21. Plaintiffs have already agreed to a search procedure that includes

a privilege filter. Id. at 22. Further, it is far from certain that all communication by these

custodians will be privileged, as their roles may include non-legal duties. Id. Notably, the UP

custodian served in an executive business function and may have relevant, non-privileged

documents based on his business capacity. Id. at 23. Plaintiffs argue that the relevance of the

discovery from these custodians is very clear because even in the limited documents already

produced by defendants, these custodians’ names emerged. Pls. Reply at 22. The evidence

presented in this limited disclosure implicates both custodians in potentially critical price-fixing

discussions. Id. at 22-23.

       Defendants argue that the reference made to the custodians in question in meeting

minutes regarding fuel surcharges is misleading. Defs. Joint Opp. at 24-25. Defendants assert

that these custodians serve a mostly legal function in UP and NS and that the “potential

relevance of the lawyers is limited.” Id. at 26. They also argue that the executive function of the

NS custodian alluded to by plaintiffs does not reflect the custodian’s function but is merely a

typographical error in the custodian’s title. Id. Defendants assert that reviewing these

custodians’ documents and logging all the privileged documents is overly burdensome, in light

of the minimal relevance of these custodians’ documents. Id. at 27. Defendants then provide a

proposal for a limited scope of discovery for these custodians related to the time period around

the meeting in question (referred to by plaintiffs as the “cusp of the conspiracy”). Id. at 28.

       Limited document production reveals that the two custodians in question either

participated in a meeting on fuel surcharges or in follow-up to the meeting. Their status as


                                                  18
attorneys does not shield these custodians unconditionally from fulfilling the discovery

obligations of defendants. Again, most commendably, the parties have agreed to apply a

privilege filter to the search of these custodians’ documents. Defendants explain:

                 The parties negotiated a privilege filter as part of a global
                 discovery protocol whereby a short list of search terms, such as
                 “work product” and “privilege” will be applied to ESI6 in which
                 the names of in-house counsel appear. All ESI triggered by the
                 filter will be logged automatically and will not be reviewed further
                 unless the receiving party in good faith requests further
                 information to substantiate the ESI’s inclusion in the privilege log.

Defs. Joint Opp. at 27 n.14.

       Plaintiffs argue that what burden does exist will be mitigated by the filter, which will

capture the ESI that contains the search terms and the names of in-house counsel. Since these

documents will be captured and not reviewed further, the use of the filter should dispense largely

with the need for manual review of files for privilege. Thus, these custodians should be treated

as all other custodians for the purpose of discovery.

       Defendants counter that (1) certain ESI generated by counsel that escape the filter

because in-house counsel may not have affixed words like “privileged communication” or other

explicit labels of privilege to the ESI and that (2) hard copy documents will have to be reviewed

manually. They insist that, despite the filter of the ESI, the burden of manually reviewing the

hard copies cannot be justified because the potential relevance of the documents generated by in-

house counsel is minimal. Id. at 27-28.

       Unfortunately, the dispute turns on the unknown: how many hard copy documents are

there by these lawyers that will not be captured when the ESI is produced and subjected to the


       6
           “ESI” refers to electronically stored information.

                                                  19
privilege filter? The parties do not provide me with an estimate but my common sense tells me

there would be few. It has been a long time since I have used a typewriter and I would have to

suppose that sophisticated counsel, working for large corporations, are producing their written

work product on a computer. Even if it is printed and put in a file, the original ESI will be in the

computer’s hard drive or network server or both and will be captured by the electronic search,

whether or not a hard copy exists. If I am right in that supposition, the number of hard copy

documents to be reviewed may not be great.

       Nevertheless, I appreciate the time and money that can be spent in logging documents for

a privilege log. I also appreciate that I may be wrong and there may be a number of hard copy

documents to be reviewed that will not also be produced as ESI. I postulate that these

documents will fall into one of three categories: 1) documents that were created as ESI, then

printed and placed in the attorney’s file and the ESI file deleted; 2) hand-written documents in

the attorney’s files; and 3) hard copy documents created by third parties that have been filed in

the attorney’s paper files. I am reluctant to see money spent unnecessarily on logging these

documents, and I am anxious to keep the initial production on schedule. I therefore will limit the

initial search of these custodians’ documents to the ESI in the initial production. Once that is

done, I will ask the defendants to provide me with a status report with a reasonable estimate of

the number of hard copy documents in the lawyers’ possession that are responsive and a

reasonable estimate of the percentage of these documents defendants will claim as privileged. At

that point, I am hopeful that, working together, we will be able to devise a method of reviewing

the hard copies for privilege without the necessity of a log. For example, I may be able to

review representative samples or, if the number of documents is not great, all of them to see if


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they are privileged. This will eliminate the cost of producing a privilege log; I am afraid that all

too often I have found the traditional privilege log useless. See Marshall v. D.C. Water &

Sewage Auth., 214 F.R.D. 23, 25 n.4 (D.D.C. 2003).

                                         VII. Conclusion

       For the reasons herein discussed, the court will grant plaintiffs’ motion in part. An order

accompanies this memorandum opinion.
                                                                         Digitally signed by
                                                                         John M. Facciola
                                                                         Date: 2009.10.23
                                                                         09:10:41 -04'00'
                                                      ___________________________________
                                                      JOHN M. FACCIOLA
                                                      UNITED STATES MAGISTRATE JUDGE




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