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Case number 21-7093 et al.

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In Ray Rail Freight Fuel Surcharge Antitrust Litigation-MDL number 1869.

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Donnelly Commodities Incorporated on behalf of itself and all others similarly situated et al.

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Versus BNSF Railway Company et al.

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Appellants.

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Mr. Verrilli for the appellants, Ms.

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Sullivan for the appellees, Mr. Lach for Amiki Currier.

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Good morning.

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Good morning and may it please the court.

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I'm Don Verrilli for the appellant railroads.

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Applying section 10706 as written promotes competition.

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The statute ensures that railroads can collaborate to make interline rail service a competitive alternative to trucking without fear that their collaboration will be turned against them by plaintiffs who try to use that collaboration as evidence of antitrust conspiracy.

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The plaintiffs in this case are doing exactly what Congress enacted section 10706 to guard against.

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They alleged that the railroads fixed fuel prices on competitive traffic.

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but their evidence consists almost entirely of bilateral discussions and agreements about shared interline traffic between an Eastern railroad and a Western railroad, railroads that aren't competitors in any meaningful sense.

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This is exactly the kind of evidence that railroad employees will inevitably create in massive quantities just by doing their jobs.

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they have to collaborate constantly on all manner of things to provide competitive interline service.

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But the district court nevertheless admitted into evidence every single one of the 60 documents that we identified as covered by section 10706.

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As matters now stand, the plaintiffs in the United States have disavowed

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the core standard that the district court applied in deciding to admit all this evidence, that standard being that the evidence concerns interline traffic under the statute only if it addresses specific interline shippers, shipments, or routes.

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But they nevertheless try to get to the same bottom line by manufacturing a series of extra textual limitations to try to shrink the statutory text for excluding evidence down to the narrowest of keyholes

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that virtually no evidence will be able to pass through.

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Now I can explain why every one of those extra textual limits is wrong, but I think the more straightforward way to go at this is to consider the words Congress actually used in the statute, give those words their ordinary meaning, and consider how those standards will actually work in the context of the concrete evidence in this case.

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Now the statute basically asks two questions.

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with respect to a piece of evidence.

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First, is it evidence of a discussion or agreement that concerns interline traffic?

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And if the answer to that question is yes, then does the discussion or agreement considered by itself violate the antitrust laws?

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With respect, I got up and sorry Mr really back up and ask you a question.

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What is the relationship of any between the inference provision and the evidentiary exclusion is your view the evidentiary exclusion is meant to reinforce and strengthen the inference or that they operate independently.

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I don't think there's a simple answer to that question, your honor, but let me try to go at it this way.

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I think the inference tells you that Congress has identified a particular risk here that pro-competitive activity is going to be misused by plaintiffs and misconstrued by juries as evidence of an unlawful antitrust conspiracy.

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And Congress is worried about that.

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And so Congress precluded that kind of an inference as a matter of law here.

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But what's extraordinary about this statute, unusual about the statute, is that Congress then took an additional step, which is to say that precluding that kind of an inference, instructing a jury that it can't make that inference, isn't enough.

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That we're going to go further and we're going to exclude evidence that concerns interline movements with the caveat I described before.

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And I think the reason for that is that Congress really wanted to make sure that there was a prophylactic shield around this pro-competitive collaboration.

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Now I do think that there are ways in which the two interact directly.

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And I think I can illustrate that and it would be helpful to illustrate it by actually going to a concrete

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piece of evidence in the case that the parties have talked about.

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And I'll show you what the plaintiffs say about that.

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And I think it'll illustrate my point.

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And the document I'd like the court to consider in particular is the document at JA 160, which is a request from one railroad, an Eastern railroad,

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NS or CSX rather to a Western railroad, BNSF to concur in the fuel surcharges that will according to the document apply to their joint line rates, their interline traffic.

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Now, it seems as clear as can be to us that that is a discussion or agreement that concerns interline traffic

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that's what it's about, a concurrence on what the inner line rates would be, which is the exact heartland of what the statute is talking about with respect to the inference.

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But if one looks at, and so it seems, and we can go into the various reasons that the plaintiffs and perhaps the United States are suggesting that that document nonetheless comes in and explain why all of them are problematic.

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But I would direct the court's attention to footnote nine on page 45 of the plaintiff's brief, where they address this document.

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They explain in footnote nine and page 45 that the reason this document should come in is because, well, yes, at the moment, at the time that the railroad, that these two railroads, an eastern and a western railroad, were engaged in this concurrence process, normal process for an online service with respective fuel surcharges, that these railroads and the other railroads were independently

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raising their fuel surcharge levels to the same level on their competitive traffic.

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Okay.

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Before you, before you get to that, keeping that exhibit in mind, you were a few minutes ago, you were going to take us to the language of the statute, which I want to ask you about in the context of that document.

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The statute says concerned and emphasize the word and inner line movement.

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of the rail carrier and movement of the rail carrier.

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That seems to suggest pretty clearly that the document you're talking about wouldn't be excludable because it's general.

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It doesn't concern an inner line movement of the rail carrier.

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In other words, it isn't specific.

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I recognize, Your Honor, that Judge Friedman read the statute that way, and that's why you had a specific requirement, but with respect- I wasn't asking you about Judge Friedman's interpretation of the statute.

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I was asking you about the language of the statute and the phrases, which Congress seemed to have wanted this to focus on a movement by a carrier.

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I don't think the statute, Tanner, should be read that way, Your Honor.

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First of all, with respect to the Dictionary Act, the single implies the plural, and vice versa, unless Congress clearly specifies otherwise.

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I don't think this is a clear specification otherwise.

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In the language of the rail carrier, it does.

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If it had meant what you said, it would have said, concerned interline movements of rail carriers.

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That would have been the way to write it.

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Concerned interline movements of rail carriers.

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But I think that's precisely why the Dictionary Act exists, Your Honor, is to avoid the incorrect kind of an inference that when Congress uses a singular, that means to exclude the plural.

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And I would point out that all of the parties here on appeal agree that this statute can cover more than a specific shipment or a specific shipper or a specific route.

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And I think the language of the rail carrier, it definitely does work.

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But what it means is that the discussion has to be between rail carriers that are engaged in the shared interline traffic.

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That's what that part of the language does.

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And I think it has to be read that way, Your Honor, because otherwise the statute is going to apply to almost nothing.

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I mean, this concurrence document here, and there are many of them in the record,

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This is the bread and butter in the heartland of the kind of collaboration that railroads have to do.

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And to read it differently would be to say that for every single separate shipment, even though the fuel surcharge for the uniline portion of it is going to be the same, they've got to send a separate recurrent, a concurrence request.

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And I think that would not, it would disserve the policy behind this statute quite greatly.

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I don't want to pursue this too far because I hear your point.

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and I'm not suggesting this is crystal clear, but the way to read it is it doesn't mean that has to be a separate concurrence document for every one of them.

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You could have a concurrence document that had a dozen specific movements and that would be covered because the document would have discussions concerning an interline movement of a carrier.

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There might be 10 of them though.

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But again, that would just be an artificially imposed limitation on the kind of natural communication that occurs in the real world every day between railroads.

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And it would serve no purpose.

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It would serve no purpose.

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This concerns interline activity.

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It concerns nothing but interline activity.

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And allowing this to be the basis for an inference of

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antitrust conspiracy is exactly what Congress was worried about in this situation.

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And I do think that by May, I think a couple of other examples may help illustrate this.

[00:11:12] Speaker 00:
Finish up with your hypothetical.

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You were working on a document.

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Finish up what you had to say about it, please.

[00:11:18] Speaker 03:
Yes, thank you, Judge Edwards.

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And so I think what I think is going on here is that

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My friends on the other side are saying, well, this document comes in because it references the general fuel surcharge tariff, which by the way is published and everybody knows about, but it references a general fuel surcharge tariff.

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And it's evidence as footnote nine of the plaintiff's brief on page 45 says, it's evidence that these two carriers agreed on an interline rate

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and at the same time we're charging the same rates for their competitive traffic.

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But that of course is exactly what the statute says you can't do.

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I'm just quoting the text of the statute here.

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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 or related matter, and that a party to such action took similar action with respect to a rate or related matter on another route or traffic.

[00:12:20] Speaker 03:
That's exactly what the statute says you can't do.

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They're trying to defend the admission of this document and the others like it on the exact theory that the statute precludes.

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And I think that shows you why it's important to give this phrase its natural meaning, concerned and interline movement.

[00:12:38] Speaker 06:
And I think it might help if I could- Sorry, can I just- I'm sorry.

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I want you to be able to help.

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I really do.

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I just want to follow up on

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to where I started.

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So to the extent the evidentiary exclusion is enforcing and or reinforcing the inference ban, the language is a bit different, but maybe not.

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And so just to be clear, when it says in the inference with respect to a rate or related matter, and then the party took action, similar action with respect to a rate or related matter on another route,

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that another route in your view includes single line routes?

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Yes, I think by definition it must.

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But then when we go down to the evidentiary exclusion,

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And it talks about discussions or agreements or any rate or other action resulting from such discussion or agreement.

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I mean, it's different words that are used there.

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But are you saying, how do you interpret the or other action resulting from such discussion or agreement?

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Well, I think again, the,

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JA 160 document we were discussing earlier is a pretty good illustration of it.

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The fact that they set the same fuel surcharge, that they agreed to set that fuel surcharge for their in-line traffic is the result, the actual carrying out of that.

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That's the fuel surcharge.

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That's the result of the agreement that that's gonna be the fuel surcharge.

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And I do, and I- Does the evidentiary exclusion extend to

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than taking that same fuel charge and applying it to single line routes in the same way that you just said the inference does as well?

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They cover the same area in that regard is what I'm trying to figure out.

[00:14:32] Speaker 03:
I understand your honest question, but I think if I could just try to approach it from a different angle, it might actually help illuminate the answer to the question.

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We've gone back and forth to parties about what does it mean for a discussion agreement to concern interline movements.

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We all agree that concern means about, but then we don't agree on what about means.

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And I think the plaintiffs have suggested that we're adopting a very broad standard that excludes everything.

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And I think it's important that we clarify exactly what our standard is.

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And I do think it goes to your honor's question.

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Our standard is that a discussion or agreement concerns or is about interline traffic when interline partners are discussing or agreeing on a subject

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because it has a direct practical bearing on their shared interline traffic.

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So a general discussion about- Sorry, can you just say that one more time when interline partners are discussing- Are discussing or agreeing on a subject because it has a direct practical bearing on their shared interline traffic.

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And JA 160 is a paradigm example of that.

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they need to set rates for their joint interline traffic.

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We're at a time in 2003 when, because of events around the Iraq war, fuel costs are spiking, they're highly volatile, the railroads are dealing with this, they need to deal with fuel charges on their interline traffic.

[00:16:05] Speaker 00:
And so they- So your principle point, I'm pretty sure, is that

[00:16:12] Speaker 00:
even though this conversation and this discussion may include or may reference in line matters, so long as your test is satisfied, unless we're in a situation where it concerns, considered by itself, it violates the law.

[00:16:34] Speaker 00:
I mean, that's where you push to the second clause in the, what I'm calling the second clause in the statute, right?

[00:16:41] Speaker 03:
Yes, Judge Edwards.

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And I think having gone through all these briefs more than once, one of the big debates certainly between you and the government is whether the district court's conception or interpretation renders that final clause a nullity, considered by a nullity.

[00:17:06] Speaker 00:
And you make a very long, strong argument that if you go with the way the district court, if you read the concern language the way the district court does, like you say, it's like threading a needle.

[00:17:20] Speaker 00:
There's nothing left for that second clause to do any work.

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Now, the government comes back equally strongly.

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And I want to hear, I really would like for you to answer this specifically because it's a huge part of the debate between the two of you.

[00:17:36] Speaker 00:
The government says that's wrong.

[00:17:38] Speaker 00:
That clause still does work.

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I think I know what your answer is going to be, but I really want to hear what you're going to say.

[00:17:45] Speaker 00:
That clause does work because carriers might freeze out price cutting competitors by agreeing to exclude them.

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Carriers might use interline discussions to implement predatory pricing schemes and other monopolistic practices.

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And when Section 10706 was enacted, it was per se illegal under the Sherman Act for parties to agree on prices if they were in a vertical supply relationship.

[00:18:11] Speaker 00:
Now, the government says these are examples to show that the considered by language still does work under the district court's construction of concern.

[00:18:20] Speaker 00:
All right.

[00:18:20] Speaker 00:
Now, how do you respond?

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In other words, are these viable examples offered by the government or not?

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How do you respond to that?

[00:18:28] Speaker 03:
No, they're not because they all involve competitive single line traffic.

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The tying, for example, the tying argument is that you're tying to the agreement on airline traffic, you're tying

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a position with respect to single line traffic, with respect to freezing out a price cutting, you notice the word in the government's brief, competitor, price cutting competitor, freezing out someone who's competing with you.

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So you're going beyond the interline traffic to the competitive traffic.

[00:18:57] Speaker 00:
So you're saying in the government's examples, and they cite no others, none that I can find anyway, they cite no others.

[00:19:04] Speaker 00:
The government's examples would fail in the first part of the statute.

[00:19:08] Speaker 00:
It doesn't concern Intuion.

[00:19:10] Speaker 03:
Correct.

[00:19:10] Speaker 00:
And you're saying they're citing nothing else and the plaintiffs are citing nothing else and so that considered by language is rendered useless

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given the district court's construction, very, very narrow, very tight construction.

[00:19:31] Speaker 07:
Why does the first example, I just wanna follow up on Judge, why does the first example flaunt the interline test, exclude other rails from joining the interline movement?

[00:19:45] Speaker 03:
Because it's punishing them for steps they're taking in competitive traffic.

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So what that's about, what that concerns is their competitive traffic.

[00:20:01] Speaker 00:
The government's example says carriers might freeze out price-cutting competitors.

[00:20:07] Speaker 03:
Competitors.

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And so that's by definitions going beyond the Interline Movement where you're not competitors, you're

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collaborators, one Eastern, one Western railroad.

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I do think this is important.

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It's an important piece of statutory legislative history here, which I think is illuminating.

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The United States opposed the evidentiary exclusion in the legislative process.

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And the reason it opposed the exclusion is it said,

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Well, if a discussion or agreement concerns interline movements, it's per se lawful.

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So you don't need this evidentiary protection.

[00:20:42] Speaker 03:
There's nothing to worry about here.

[00:20:44] Speaker 00:
And in their brief back today for this case, they say that's wrong.

[00:20:49] Speaker 03:
Is that right or wrong?

[00:20:52] Speaker 03:
Exactly.

[00:20:52] Speaker 03:
They said they told Congress that it's per se lawful, so you don't need this exclusion.

[00:20:57] Speaker 03:
Congress obviously disagreed with that because it put this exclusion in place to create this prophylactic shield.

[00:21:04] Speaker 03:
And now they've come back and said, well, there are these examples.

[00:21:08] Speaker 03:
The other thing I would point out in terms of superfluity though, even if one of those, even if they stick the landing on one of those, I don't think any of them works, but even if they stick the landing on one, the test is the Supreme Court's Andrew's decision, which we quote in our brief says, is whether it renders a statutory provision superfluous

[00:21:28] Speaker 03:
in all but the rarest or most occasional extreme cases.

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And so even if they stick the landing on one or even two, you're still in that situation.

[00:21:36] Speaker 03:
You're rendering superfluous with respect to the vast majority of applications of this statute.

[00:21:40] Speaker 03:
And I do think that's, you know, I think that's a quite significant problem.

[00:21:44] Speaker 06:
Can I follow up on your proposed meaning for concerned

[00:21:51] Speaker 06:
Interline movement.

[00:21:53] Speaker 06:
I'm still not sure how I answered my question about the parallelism between the inference and the evidence, which is different language from concerned interline.

[00:21:59] Speaker 06:
Let's just focus on concerned interline movement for now.

[00:22:03] Speaker 06:
It sounds like, well, if one of these, I'll call it East Railroad, says, you know what?

[00:22:15] Speaker 06:
I'm getting crushed, killed by truckers.

[00:22:18] Speaker 06:
So I've put a fuel surcharge on my talking to West Railroad.

[00:22:24] Speaker 06:
I've had to put a fuel surcharge on my own direct, my own line, single line traffic.

[00:22:33] Speaker 06:
And Wes goes, yeah, I've had to do the same thing.

[00:22:36] Speaker 06:
They've already done it.

[00:22:37] Speaker 06:
They're not talking about doing that.

[00:22:39] Speaker 06:
Well, don't you think we probably need to, we need to put the similar surcharge on our interline traffic?

[00:22:47] Speaker 06:
because otherwise it won't be credible as a fuel surcharge for our single line traffic, right?

[00:22:53] Speaker 06:
Everyone will realize, this is hypothetical to be clear.

[00:22:56] Speaker 06:
I don't pretend to describe the facts of this case.

[00:22:58] Speaker 06:
Everyone will realize that it's not really about fuel if we don't put it on our shared interline traffic.

[00:23:06] Speaker 06:
And so they seem to be discussing a subject and because it has a direct and we'll have a direct practical bearing using your language on the shared traffic.

[00:23:19] Speaker 06:
but I'm not sure that's what Congress would have meant to cover.

[00:23:22] Speaker 06:
Do you think Congress meant to cover that hypothetical or tell me how it doesn't fit the tests as you've articulated it?

[00:23:29] Speaker 03:
So here's how I think about that.

[00:23:31] Speaker 03:
First, I would think just, I'll answer the hypothetical, but I'm gonna just push back on it a little bit in that they wouldn't be raising their prices that are getting killed by trucking because they would need to lower their prices to do so.

[00:23:43] Speaker 03:
And with respect to a fuel surcharge,

[00:23:45] Speaker 06:
Well, we're getting more money from the people that we do have contracts with.

[00:23:48] Speaker 06:
So go ahead.

[00:23:49] Speaker 03:
So if the if the in a situation like that, the question would be,

[00:23:58] Speaker 03:
I would think that would concern an interline movement, talking about setting rates for interline movements, which is at the core of the statute.

[00:24:09] Speaker 03:
The question there would be whether that is evidence of an agreement that considered by itself would violate the antitrust laws.

[00:24:17] Speaker 03:
Well, I think that it allows me to, I think, elaborate another point that I think is important.

[00:24:26] Speaker 03:
One thing that the government and the plaintiffs have suggested is that our test, our understanding of that, what we think is quite clear plain language in the statute, would only admit smoking gun evidence.

[00:24:39] Speaker 03:
And Your Honor's hypothetical, I don't think that would be smoking gun evidence.

[00:24:44] Speaker 03:
But if indeed this was evidence that the parties were conspiring to fix the prices for

[00:24:54] Speaker 03:
their single line fuel surcharges, and they could prove that up in the kind of connective tissue way that one does with respect to proving the antitrust violation that actually what this discussion was, was a key piece of evidence showing a particular agreement to actually set fuel surcharges at that level.

[00:25:14] Speaker 03:
They have to prove that by a proponent.

[00:25:18] Speaker 06:
I understand they have to prove a lot of things to win a case.

[00:25:20] Speaker 06:
I want to get back to whether in my hypothetical where they're using, they want to put a surcharge on interline traffic to help legitimate to cover up their single line charges.

[00:25:33] Speaker 06:
does that evidence of that discussion between the two interline partners come in under either, does that fall within the ordinary exclusion here?

[00:25:43] Speaker 06:
So it wouldn't come in that way.

[00:25:45] Speaker 06:
Or does it, would it come in under the considered by itself, or would it not come in at all?

[00:25:52] Speaker 03:
So I think that discussion would concern an interline movement because they're talking about setting a joint interline rate, a fuel surcharge rate.

[00:26:01] Speaker 03:
So it would concern an interline movement.

[00:26:03] Speaker 03:
Your honor suggested that they have a motivation that may be relevant to their single line movements.

[00:26:09] Speaker 03:
To the extent one could show that what they're doing in their single line movements considered by itself violates antitrust laws, then that discussion perhaps could be evidence of that and then would be admissible under the second part of the statute, but they have to prove it up and they have to prove it up not to win their case, but the way the statute works is that

[00:26:31] Speaker 03:
They have to demonstrate that by a preponderance of the evidence in order for the evidence to be admitted.

[00:26:38] Speaker 03:
And I do think this is an important point here.

[00:26:40] Speaker 03:
The statute gives a specific instruction to the district court, and I think it's important to keep this instruction in mind.

[00:26:48] Speaker 03:
It says, in any proceeding before a jury,

[00:26:51] Speaker 03:
The court shall determine whether the requirements of sub clause one or sub clause two, which is what we're talking about here, are satisfied before allowing the introduction of any such evidence.

[00:27:02] Speaker 03:
So, before allowing the introduction of evidence that concerns an interline movement, but is evidence of discussion or agreement that considered by itself violates any trust laws.

[00:27:13] Speaker 03:
plaintiff would have to demonstrate that by a preponderance of the evidence to the satisfaction of the district court judge.

[00:27:19] Speaker 03:
And in that respect, this operates really just like the co-conspirator exception to hearsay.

[00:27:26] Speaker 06:
And that- Can I back up and then I wanna flip my hypothetical around and see, just to help me understand it better.

[00:27:31] Speaker 06:
So let's say they're together and they go, you gotta make more money.

[00:27:35] Speaker 06:
We're not making enough money.

[00:27:38] Speaker 06:
We've got these great contracts that are already locked in.

[00:27:41] Speaker 06:
and they allow us to do this.

[00:27:44] Speaker 06:
We want to make more money.

[00:27:45] Speaker 06:
How about we do a fuel surcharge on our inner line movements?

[00:27:53] Speaker 06:
And then Railroad East says, of course, I'll have to tack the same surcharge onto my single line traffic just to legitimate it.

[00:28:06] Speaker 06:
And Railroad West goes thinking about it independently.

[00:28:12] Speaker 06:
I might have to do the same.

[00:28:15] Speaker 03:
Right.

[00:28:15] Speaker 03:
So in that hypothetical.

[00:28:17] Speaker 06:
Is that still concerned in an airline movement?

[00:28:22] Speaker 03:
Yes.

[00:28:22] Speaker 06:
And the airline movement is, again, the vehicle for covering up what they're doing on their short lines.

[00:28:27] Speaker 03:
Well, except that what they're doing, in your honest hypothetical, it seems to me, is exactly the thing Congress says you can't consider as proof of an antitrust conspiracy.

[00:28:36] Speaker 03:
Right.

[00:28:37] Speaker 03:
The exact language of the statute in the inference section

[00:28:40] Speaker 03:
So 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, set the rate jointly.

[00:28:49] Speaker 03:
And that a party to such action took similar action with respect to a rate or related matter on another route or traffic.

[00:28:56] Speaker 06:
And then we're gonna change it one more time.

[00:28:58] Speaker 06:
Now we're gonna go, we wanna make more money.

[00:29:02] Speaker 06:
Let's add this fuel surcharge on our airline movements.

[00:29:06] Speaker 06:
And now we're gonna discuss, but to do that together, we'll discuss, that'll only make sense.

[00:29:12] Speaker 06:
It'll only work.

[00:29:13] Speaker 06:
Our customers will only understand it if we also put that same rate on our single line traffic.

[00:29:21] Speaker 06:
So now they're not making the decision independently about single line traffic.

[00:29:26] Speaker 06:
Is that, so it starts as an interline discussion.

[00:29:31] Speaker 06:
But as part of that, they agree that the only way the center line charge is going to work is if we also do it on our single lines.

[00:29:38] Speaker 06:
Is that decision to extend the discussion about, that they have together jointly about how to charge their single line traffic, is that for purposes of the inference, sorry, the related matter on doing

[00:29:59] Speaker 06:
The evidence of a related matter on another route.

[00:30:02] Speaker 06:
So it would also the inference would be banned.

[00:30:04] Speaker 06:
And so then under your theory, it would also be other action that would be banned under the adventure exclusion.

[00:30:11] Speaker 03:
I think it would depend if if if the railroads did this, if they said we're agreeing on the fuel surcharge for our airline traffic.

[00:30:20] Speaker 03:
And at the same time, we are agreeing that we are both going to impose the same fuel surcharge on our single line traffic.

[00:30:27] Speaker 03:
then that would be a discussion or agreement that concerns interline traffic, but it would also be an agreement that considered by itself violates antitrust laws because they're price fixing with respect to competitive traffic.

[00:30:39] Speaker 03:
So that would fall out.

[00:30:40] Speaker 03:
And that shows you how the second part of the statute does work here, does real work here.

[00:30:45] Speaker 00:
And- Let me ask, can I follow up?

[00:30:47] Speaker 00:
Pat, are you done?

[00:30:49] Speaker 06:
I am, but do we need to make sure Judge Tatel is back on?

[00:30:51] Speaker 06:
He's not on my screen.

[00:30:53] Speaker 06:
I don't want him to.

[00:30:54] Speaker 00:
Oh, I don't know.

[00:30:56] Speaker 06:
Does the clerk know if Judge Tatel is still on?

[00:30:58] Speaker 06:
No, I'm here.

[00:30:59] Speaker 06:
I don't know what happened.

[00:31:00] Speaker 06:
I just want to make sure you can hear at least.

[00:31:03] Speaker 07:
No, I'm here.

[00:31:05] Speaker 07:
Then let me follow up.

[00:31:06] Speaker 07:
I'm going to try to show up here.

[00:31:09] Speaker 00:
OK.

[00:31:10] Speaker 00:
Let me follow up.

[00:31:11] Speaker 00:
Mr. Verrilli, you said when the other side, the two parties on the other side accuse you of rendering

[00:31:19] Speaker 00:
in-line superfluous.

[00:31:20] Speaker 00:
You said, no, no, no.

[00:31:21] Speaker 00:
In our interpretation, it's going to rule out protection for discussions between two railroads that do not interline, discussions about only single-line traffic, and discussions about topics without practical bearing on interline traffic.

[00:31:38] Speaker 00:
Tell me what the third category means in your mind.

[00:31:42] Speaker 03:
Well, it's actually even more expansive than that, Your Honor.

[00:31:46] Speaker 03:
For example, if there were, if two railroads were having a general discussion about fuel surcharges that was not occurring in the context of their collaboration on a shared interline movement and shared interline movements and wasn't being discussed because of the practical bearing and the need to set a fuel surcharge rate for a single line movement, that kind of general discussion in our view is not

[00:32:11] Speaker 03:
is not one that concerns an interline movement.

[00:32:15] Speaker 03:
And so I do think, again, you know, the plaintiffs have said that we've read interline out of the statute, our thing is all encompassing and sweeping and everything will get excluded.

[00:32:23] Speaker 03:
And that's not right.

[00:32:24] Speaker 03:
It's not right.

[00:32:25] Speaker 03:
It's got the discussion or agreement has got to have the discussion and agreement has to be occurring because the subject has a direct practical bearing

[00:32:35] Speaker 03:
on the interline traffic.

[00:32:36] Speaker 06:
And I do think, you know, try, we're having a- Wait a second, sorry, can I just care, and I don't mean to cut off the answer to Judge Edwards, I just need clarification.

[00:32:43] Speaker 06:
If all the railroads get together in a big conference and they all say, we need to make more money, let's all put fuel surcharges on all the traffic that we have, did you say that would or would not have a practical bearing on shared traffic?

[00:33:04] Speaker 06:
I should think it would.

[00:33:05] Speaker 03:
It might, but it would fall out on the second part.

[00:33:07] Speaker 03:
That would be.

[00:33:08] Speaker 06:
I understand how you read the first one.

[00:33:11] Speaker 06:
Wait, wait, wait, wait, wait, wait, wait, wait, please.

[00:33:15] Speaker 06:
That that would fall within your definition of concerned interline movement.

[00:33:21] Speaker 06:
So that discussion, I think, Your Honor, I understand your backup argument, but it falls out under by itself.

[00:33:28] Speaker 03:
I'm going to answer your honest question, but I do want to make a point here that I think is really important.

[00:33:33] Speaker 03:
The court has been quite appropriately asking me a series of hypothetical questions, but I think it's really important to think about the questions that are being asked and the way the statute operates in the context of the actual evidence that we have in this case.

[00:33:51] Speaker 03:
And one is not going to find any evidence like the kind that your honor described in the case.

[00:33:59] Speaker 03:
And

[00:33:59] Speaker 03:
to the extent the plaintiffs think that there is any evidence of that kind.

[00:34:03] Speaker 03:
And I'd like to discuss one document in particular, which is their kind of greatest hits document, the document of JA 937, which is the statement by a BNSF person at one of these Alliance meetings between BNSF and an Eastern railroad that we ought to consider whether to synchronize, whether fuel surcharges should be synchronized.

[00:34:26] Speaker 06:
I'm sorry, Mr. Verrilli, my screen completely froze up for a second.

[00:34:30] Speaker 06:
So I might have missed something you said.

[00:34:32] Speaker 06:
I think the point I've gotten with my two pieces is this record doesn't include that type of evidence.

[00:34:38] Speaker 06:
Was there something else I missed?

[00:34:40] Speaker 03:
Yes, and that it's really important to think about how this statute is actually going to apply in the real world to the kinds of communications

[00:34:49] Speaker 03:
that are an issue in this case.

[00:34:52] Speaker 06:
And I do think- I think in this case, but I think when we interpret statutory language, that's exactly why we're asking hypothetical questions is we're concerned about how it applies in the real world in the next case too.

[00:35:01] Speaker 03:
And they're totally appropriate, of course, Your Honor.

[00:35:03] Speaker 03:
But I do think the dynamic here is that the plaintiffs and to some extent the United States are pushing for, as I said, to narrow this evidentiary exclusion down to the narrowest keyhole possible.

[00:35:18] Speaker 03:
in order to reduce to zero the possibility that any evidence that might provide some inferential support for a conspiracy claim doesn't get excluded.

[00:35:29] Speaker 03:
The problem with doing that is that the inevitable consequence of reading it in that way, shrinking it to such a tiny keyhole is that evidence is going to be admitted that is in the heartland of the kinds of collaborations that Congress was trying to shield when it enacted the statute.

[00:35:48] Speaker 03:
And I really think that is an absolutely critical point in thinking about how this statue is going to operate.

[00:35:55] Speaker 06:
Can I just get back though?

[00:35:56] Speaker 06:
So does that hypothetical include that I have given you about the big conference about talking about all the traffic?

[00:36:03] Speaker 06:
Is that first, going through your chart, you know, this step, is that something that concerns an interline movement of the rail carry?

[00:36:13] Speaker 03:
To the extent they're discussing setting fuel surcharges for interline

[00:36:18] Speaker 06:
For all traffic.

[00:36:20] Speaker 06:
The hypothetical was they're all together in a room and they say, let's do it on all our traffic.

[00:36:26] Speaker 06:
No, because that's not an interline movement.

[00:36:28] Speaker 03:
No, because that discussion, that subject is not being discussed because it has a direct bearing on... Of course it does.

[00:36:36] Speaker 06:
If we do all our traffic, of course it's going to be a charge that's put onto our interline movements.

[00:36:41] Speaker 03:
But the because is the word that matters there.

[00:36:44] Speaker 03:
What's the reason they're having that discussion?

[00:36:46] Speaker 06:
Are they having that discussion because they need to set... Does that sound like a subjective test as to why they all got together in the conference room?

[00:36:53] Speaker 03:
Well, I think it can be applied objectively, and I think just looking at the documents, Your Honor, one can see how it would apply in an objective manner.

[00:37:03] Speaker 03:
The JA 160 is a really good example of that, but there are many, many others.

[00:37:07] Speaker 03:
This discussion is occurring because they need to set a fuel surcharge for their shared interline traffic.

[00:37:14] Speaker 07:
Mr. Verrilli, these examples, you mentioned JA-168.

[00:37:19] Speaker 07:
These examples are actually helpful.

[00:37:20] Speaker 07:
A few minutes ago, you were about to bring up another one.

[00:37:24] Speaker 07:
Would you do that?

[00:37:25] Speaker 03:
Yes, please.

[00:37:25] Speaker 03:
Thank you, Your Honor.

[00:37:26] Speaker 03:
There's several more that I'd like to focus attention on.

[00:37:29] Speaker 03:
One is to consider the evidence at JA-377.

[00:37:34] Speaker 03:
This is a discussion between a Western carrier and an Eastern carrier about

[00:37:43] Speaker 03:
how to collaborate in the future to compete with trucking, to move lumber from the Pacific Northwest to the East Coast.

[00:37:53] Speaker 03:
That is completely in the heartland of what Congress wants interlining railroads to be doing.

[00:38:01] Speaker 03:
It wants them to collaborate as joint ventures in that way, to compete more effectively with trucking, to consider new markets, new opportunities, be more effective competitors.

[00:38:10] Speaker 07:
Okay, so let me ask you this about that document.

[00:38:14] Speaker 07:
What would that document have to have added to it for it to flunk the second, the otherwise clause?

[00:38:25] Speaker 07:
In other words, is what I'm getting, are there any documents you can imagine that would pass your test for interline movements, but flunk the otherwise violate clause?

[00:38:37] Speaker 03:
So I don't think there are in fact any, but hypothetically there could be, and I'll try to illustrate it with respect to a document in this case.

[00:38:45] Speaker 03:
There's a document, JA-292.

[00:38:47] Speaker 03:
That's a document, JA-292 says, it's minutes of a meeting, an alliance meeting between an Eastern and Western railroad about interline activity.

[00:38:59] Speaker 03:
And there's a line in it that says, and this is another one of the plaintiff's greatest hits, that says that a high executive from one company and a high executive

[00:39:07] Speaker 03:
from another company are considering leading a discussion at the NEMC meeting about coordinating interline rates.

[00:39:17] Speaker 03:
NEMC is network efficiency management, something or other, network management.

[00:39:29] Speaker 03:
So, okay, so now that's standing alone.

[00:39:33] Speaker 03:
It's not an excessive agreement that violates any trust laws.

[00:39:36] Speaker 03:
but the plaintiffs would have, under our understanding of how the second part of the statute works, the plaintiffs could have said, okay, let's find evidence about that meeting.

[00:39:49] Speaker 03:
What was discussed at that meeting?

[00:39:51] Speaker 03:
Did they have that discussion at that meeting?

[00:39:53] Speaker 03:
Was there an agreement to coordinate fuel surcharges across the industry at that meeting?

[00:39:58] Speaker 03:
If they could prove that, then the document is evidence of an agreement that violates any trust laws.

[00:40:04] Speaker 03:
That's why I'm saying we're not asking for smoking gun evidence.

[00:40:07] Speaker 03:
They can use that kind of connective tissue evidence and prove it up.

[00:40:11] Speaker 03:
And then the document comes in.

[00:40:12] Speaker 03:
The problem, of course, is that they haven't been able to prove that up here.

[00:40:16] Speaker 03:
The reason, I will just tell you, I mean, it's in the summary judgment papers, is that that follow-up meeting never occurred.

[00:40:22] Speaker 03:
And that shows you exactly the problem of allowing this kind of evidence in, is that they're going to use that statement as a basis to argue to the jury that the jury should infer

[00:40:33] Speaker 03:
that there was mischief going on.

[00:40:34] Speaker 03:
They were trying to set rates for collaboratively for single line competitive traffic.

[00:40:41] Speaker 03:
But in fact, that meeting never occurred.

[00:40:45] Speaker 03:
That discussion never occurred.

[00:40:46] Speaker 03:
It was mountains and mountains years worth of e-discovery here.

[00:40:49] Speaker 03:
They could have proven that up if there was anything to prove up.

[00:40:52] Speaker 03:
Same thing is true, by the way, of the synchronization document that they focused so much time on.

[00:40:57] Speaker 03:
I'll tell you again, it was in the summary judgment papers, but it's important to understand that's their other greatest hits document, what was going on there.

[00:41:03] Speaker 03:
Which JA is that?

[00:41:07] Speaker 03:
It's JA 937.

[00:41:08] Speaker 03:
This is the document that concludes the sentences.

[00:41:17] Speaker 03:
BNSF's fuel surcharges structured differently from the other three railroads.

[00:41:21] Speaker 03:
Should BNSF's be synchronized with the other big players in the industry?

[00:41:25] Speaker 03:
Now,

[00:41:28] Speaker 03:
I'll first tell you what was going on there and then suggest what opportunity would have been available for the plaintiffs to prove up what would be necessary to admit it under the statute.

[00:41:37] Speaker 03:
What was actually going on there is that BNSF used a different benchmark, index to a different benchmark for calculating its fuel surcharge.

[00:41:46] Speaker 03:
I'm in the weeds here, but I think it's helpful to understand this.

[00:41:49] Speaker 03:
BNSF benchmarked off of the highway diesel fuel price.

[00:41:56] Speaker 03:
The other three railroads benchmarked off of the West Texas intermediate crude price.

[00:42:02] Speaker 03:
That generated different methodologies and different numbers and customers complained about that in the course of the interline traffic.

[00:42:10] Speaker 03:
They can, why is this being done differently by different railroads?

[00:42:13] Speaker 03:
This is bothering us as consumers are bothered by it.

[00:42:16] Speaker 03:
So they raised that subject at this discussion.

[00:42:19] Speaker 03:
Now, if the plaintiffs could show that that

[00:42:26] Speaker 03:
Raising this question about synchronization led in a concrete way to steps taken by the other railroads in the aftermath of this meeting to actually synchronize in that way.

[00:42:39] Speaker 03:
and to synchronize prices.

[00:42:41] Speaker 03:
As I said, this is about methodologies, not about prices and summary judgment papers make that clear.

[00:42:46] Speaker 03:
But if they could prove that up, then this would be evidence of an agreement that violates any trust laws and it would come in.

[00:42:52] Speaker 03:
But they haven't tried to prove any of that up.

[00:42:54] Speaker 00:
That's- I'm not saying this is all done on your view under the statute.

[00:42:59] Speaker 00:
That question is decided by a trial within the trial.

[00:43:02] Speaker 03:
I'd say it's decided the way rule 104 would apply.

[00:43:06] Speaker 03:
So it's not necessarily rule 104, the rules of evidence would apply.

[00:43:08] Speaker 03:
So it's not necessarily a trial within a trial, flexible procedures, hearsay counts.

[00:43:12] Speaker 03:
It can be informal in ways for co-conspirator exception to hearsay.

[00:43:18] Speaker 00:
Right.

[00:43:19] Speaker 00:
It's essentially a trial within the trial.

[00:43:21] Speaker 00:
I'm sorry, David.

[00:43:22] Speaker 00:
I just want to make sure because this procedural thing has been

[00:43:26] Speaker 00:
a real question in my mind, too.

[00:43:28] Speaker 00:
So we've got a lot of little trials going on, and they say no, and they want to stop and let us try and show you, and then we stop and wait.

[00:43:35] Speaker 00:
And then the district court judge, in your view, waits until that's done before deciding whether to admit or exclude.

[00:43:43] Speaker 03:
No, not quite Judge Edwards.

[00:43:45] Speaker 03:
The responsibility to make that judgment is on the district court judge under the terms of the statute.

[00:43:49] Speaker 03:
The statute says the court shall determine whether the requirements of subclause two are satisfied before allowing the introduction of any such evidence to the jury.

[00:43:57] Speaker 03:
So it's a threshold decision by the court under a preponderance of the evidence standard under rule 104.

[00:44:02] Speaker 00:
Right, but I mean this is a trial within the trial.

[00:44:05] Speaker 03:
As I said, just the reason I'm pushing back on the idea of a trial within a trial is that it's a much more flexible informal procedure.

[00:44:14] Speaker 00:
Yeah, no, no, no.

[00:44:15] Speaker 03:
I understand that there are- It's a normal rule, 104%.

[00:44:17] Speaker 03:
Just like a co-conspirator exception to hearsay, you've got to make that kind of judgment.

[00:44:21] Speaker 00:
I want to ask you one thing before our presiding judge says you can stop, because I'm going to ask all three counsel the same thing.

[00:44:32] Speaker 00:
Was certification and providently granted

[00:44:35] Speaker 00:
Going through all of these briefs and listening to the first of your and the next two arguments going to be of similar sort, but taking a different position, it really seems to me it's quite hazardous for the Court of Appeals at this point to be rendering biblical statements with respect to matters that are evidentiary fights that a district court should be in the best position to work out.

[00:44:58] Speaker 00:
And then if there's potential error when the case comes up on review, if it does later on,

[00:45:04] Speaker 00:
the one claiming there has to show that it wasn't harmless.

[00:45:08] Speaker 00:
Why would we try and make, I mean, one of the things that was in my mind as I prepared this case, and it's probably even more so now, and it probably even be greater by the time we're done today, is why would I want to decide questions of this sort now?

[00:45:22] Speaker 00:
What sense does it make?

[00:45:24] Speaker 00:
Because so many of them involved, as you say, well, but look at 377, look at 292, look at 937, the other side is going to say, no, look, here's what we want to cite you to.

[00:45:34] Speaker 00:
These are all matters that the district court works through during the course of the trial to decide whether to admit or to exclude.

[00:45:43] Speaker 00:
You keep emphasizing you want us to stay on this case, in other words, to do the work of the district court now.

[00:45:49] Speaker 00:
Why should we do that?

[00:45:50] Speaker 03:
We're not asking you to do the work of the district court now, Judge Edwards.

[00:45:54] Speaker 03:
I'm not asking the court to make any definitive judgment about any of those documents.

[00:46:00] Speaker 00:
My general question was

[00:46:04] Speaker 00:
certification and providently granted.

[00:46:09] Speaker 00:
We very rarely grant certification.

[00:46:11] Speaker 00:
We very rarely grant certification in a situation like this where there's so many factual nuances involved in so many hypotheticals that can go so many different ways.

[00:46:22] Speaker 00:
That's the one kind of case we try like the devil not to grant certification on.

[00:46:27] Speaker 03:
We rarely grant it ever.

[00:46:33] Speaker 03:
asked you to answer these questions.

[00:46:34] Speaker 03:
Well, and we sometimes say no, and we still have the right to say no.

[00:46:40] Speaker 03:
You do, but you should say yes.

[00:46:42] Speaker 03:
And the reason why, I think, is because, you know, here we are, right, at the district court excluded this evidence, I think, virtually all, I mean, found it virtually all admissible, rather,

[00:46:55] Speaker 03:
on the ground that there was a specificity requirement.

[00:46:58] Speaker 03:
You had to have specific shippers, routes, et cetera.

[00:47:02] Speaker 03:
Everyone before you this morning says that's wrong.

[00:47:04] Speaker 03:
That's the wrong standard.

[00:47:06] Speaker 00:
And so- Well, we could issue a judgment and say everyone agreed as to that one standard it's wrong and say, as for the rest, we'll leave it to the district court to do its work.

[00:47:16] Speaker 03:
Well, I think the problem with that, your honor, is that this is a case that's been going on.

[00:47:20] Speaker 03:
I'm sure Ms.

[00:47:21] Speaker 03:
Sullivan will highlight this for a very, very long time.

[00:47:25] Speaker 03:
and as many, many years have gone into it, the court cannot decide this pending summary judgment motions.

[00:47:33] Speaker 03:
This bears directly on the summary judgment motions because they have to be decided on the basis of admissible evidence.

[00:47:40] Speaker 00:
I hear you.

[00:47:42] Speaker 00:
You know what my retort would be?

[00:47:44] Speaker 00:
Join the crowd of cases in litigation across the country.

[00:47:47] Speaker 00:
Lots of cases are in this posture.

[00:47:49] Speaker 00:
Why an exception here?

[00:47:50] Speaker 00:
But I hear you.

[00:47:52] Speaker 00:
I hear what you're saying.

[00:47:52] Speaker 03:
And it's because this is an unusual statute, Your Honor, and that Congress has made a judgment here that evidence should be excluded for very important policy reasons.

[00:48:04] Speaker 03:
It has put that burden on the judge before the trial occurs.

[00:48:07] Speaker 03:
And I think that's why Judge Friedman wants the guidance.

[00:48:10] Speaker ?:
OK.

[00:48:11] Speaker 07:
May I ask one last question?

[00:48:16] Speaker 07:
I want to just ask you, I just want to pursue the question I asked you earlier about your use of those examples is very, very helpful.

[00:48:28] Speaker 07:
But the question I asked was whether you can imagine a document that would qualify under the inner line provision of the statute under your standard.

[00:48:41] Speaker 07:
but nonetheless considered by itself.

[00:48:44] Speaker 07:
And the examples you gave us were documents where you pointed out, well, the plaintiffs through discovery could pursue some of these statements.

[00:48:53] Speaker 07:
But you didn't give us an example of a document.

[00:48:57] Speaker 07:
And I know you don't think there is one, but I'm looking for it.

[00:49:00] Speaker 07:
Yes, I can.

[00:49:01] Speaker 07:
I apologize, Your Honor.

[00:49:02] Speaker 03:
You see what I'm asking?

[00:49:03] Speaker 03:
Yes, absolutely.

[00:49:03] Speaker 07:
Give me an example of it.

[00:49:05] Speaker 07:
OK, that's what I want.

[00:49:08] Speaker 03:
If there were a document that said,

[00:49:11] Speaker 03:
We will Railroad A and Railroad B will agree on our interline fuel surcharges and we will agree to charge the same fuel surcharge on our competitive traffic that will concern interline movement because it's setting the fuel surcharge for interline movements.

[00:49:29] Speaker 03:
It would on its face be an agreement to fix prices on competitive traffic and therefore considered by itself violate the antitrust laws.

[00:49:37] Speaker 03:
And so that would be a smoking gun kind of piece of evidence.

[00:49:41] Speaker 03:
If there isn't a smoking gun, they still have the opportunity to prove it up through connective tissue evidence.

[00:49:46] Speaker 03:
But that would be an example of something that falls out.

[00:49:51] Speaker 03:
Right.

[00:49:51] Speaker 03:
Thank you.

[00:49:52] Speaker 06:
Can I just clarify one thing?

[00:49:53] Speaker 06:
And that is, you said in your beginning here, and you say in your brief, nearly every communication at issue here is between one Eastern and one Western railroad.

[00:50:09] Speaker 06:
Which ones, what nearly must be carving something out.

[00:50:15] Speaker 03:
There are a couple, and the reason for this is there are small number of circumstances, but they do happen where two Western railroads or two Eastern railroads interline because they don't, in order to get something from one destiny, from the source to the destination, both railroads need to cooperate to do it.

[00:50:34] Speaker 03:
So some small, small amount of interlining that occurs

[00:50:38] Speaker 03:
between an Eastern railroad, two Eastern railroads or two Western railroads.

[00:50:42] Speaker 03:
And a couple of the documents are concurrence requests for fuel surcharges in that interlining situation.

[00:50:47] Speaker 03:
It's interlining, it's totally, look at them, you'll see 100% interlining, they're just concurrence documents.

[00:50:52] Speaker 03:
But that's why we put the word nearly in because there are a couple of documents like that.

[00:50:56] Speaker 06:
All right, so there aren't any under your viewpoint that involve communications where the lines compete.

[00:51:04] Speaker 06:
Correct.

[00:51:05] Speaker 07:
That's great.

[00:51:06] Speaker 07:
So, okay.

[00:51:09] Speaker 07:
Judge Mollett, Judge Edwards, unless you have any more questions, I think we should hear Ms.

[00:51:13] Speaker 07:
Sullivan.

[00:51:18] Speaker 05:
Thank you, Your Honor, and may it please the Court, Kathleen Sullivan on behalf of the plaintiff shippers.

[00:51:24] Speaker 05:
I'd like to begin with Judge Edwards question about whether certification was improvidently granted.

[00:51:29] Speaker 05:
And judges you know we certainly vigorously opposed your acceptance of the district court certification for the very reasons that you cite that it gets in.

[00:51:38] Speaker 05:
Issues may seem to be inextricably involved with detailed evidentiary rulings that are the province of the district court and which can be reviewed if there's prejudice at final judgment.

[00:51:50] Speaker 05:
There's also no conflicting opinion and many issues of first impression don't warrant certification.

[00:51:56] Speaker 05:
And the district court was very clear he was right.

[00:51:58] Speaker 05:
So for all those reasons, we oppose.

[00:52:00] Speaker 05:
But, Your Honor, at this point, we do believe that you can providently decide the certified questions if you keep it narrowly to the two statutory construction questions that are presented here.

[00:52:14] Speaker 05:
And those are simply legal interpretation questions.

[00:52:18] Speaker 05:
First, what is the definition and contours and boundaries

[00:52:23] Speaker 05:
of the narrow evidentiary exclusion in section 10-706.

[00:52:29] Speaker 05:
And second, and I think this is very important because it didn't come up in the 50 minutes of colloquy you had with my friend, Mr. Verrilli.

[00:52:36] Speaker 05:
The second issue is, can the district court honor the statutory exclusion through the commonplace case management devices of redaction and limiting instructions?

[00:52:47] Speaker 05:
And the answer to that in both cases is the district court got it right.

[00:52:51] Speaker 05:
And I'd like to just begin with why the district court got it right on the statutory construction of the exclusion itself.

[00:52:57] Speaker 05:
Now, to hear my friend, Mr. Verrilli tell it, Section 10706 was a kind of coordination protection act, but of course it isn't.

[00:53:06] Speaker 05:
In the world of deregulated freight traffic, of course, competition is now the norm and has been for 40 years.

[00:53:15] Speaker 05:
And coordination is the very, very narrow exception.

[00:53:18] Speaker 05:
And Judge Millett on this notion that interlining

[00:53:21] Speaker 05:
is such a big part of freight traffic.

[00:53:26] Speaker 05:
The record is clear that the railroads need to collaborate on joint line traffic where they're giving one bill for two or more railroads to a single shipper.

[00:53:39] Speaker 05:
It's undisputed in the record that's 15% of the traffic.

[00:53:42] Speaker 05:
That's in the red brief at pages five to six.

[00:53:45] Speaker 05:
And this notion that the East and West railroads are hermetically sealed apart from one another in their segments of the United States, they don't compete, that's simply wrong.

[00:53:57] Speaker 05:
And I would commend the court's attention to the prior rulings of the district court in this case, in which the district court expressly found back at the class certification stage that the captive shippers, there was an argument about captive shippers who could only use one set of railroads in one part of the country,

[00:54:15] Speaker 05:
And the district court rejected that argument saying that all four big railroads compete nationwide.

[00:54:25] Speaker 05:
And the citations, your honor, are to the prior rulings of the district court in 2017 at 292 F sub third 14 at 99 to 100 and 287 federal rules decisions

[00:54:42] Speaker 05:
one at 42.

[00:54:44] Speaker 05:
So I just want to set the stage here that the court does not want to give voice to the proverbial expression about the tail wagging the dog.

[00:54:57] Speaker 05:
The notion that a limited carve out for necessary collaboration on the minority of shipments

[00:55:05] Speaker 05:
in which the railroads must coordinate a single bill to their shippers for traffic that travels on more than one railroad would really disserve the purpose of the statute.

[00:55:16] Speaker 05:
So I want to start with the first principle that the statute is principally about competition among the railroads.

[00:55:23] Speaker 05:
I'd cite your honors to 19 USC 10101, section 1101011,

[00:55:32] Speaker 05:
which of course says the whole point of the Stacker's Act is to allow market competition now to set railroad rates to the maximum extent possible.

[00:55:42] Speaker 05:
And that's how we have to read this carve out.

[00:55:44] Speaker 05:
It is a narrow carve out for necessary coordination on interline shipments only.

[00:55:53] Speaker 05:
And your honors, if I can just go back to why the district court was so eminently correct in its interpretation of concerned and interline movement of a rail carrier.

[00:56:05] Speaker 05:
And if you bear with me on this, I'm going to try to say you never need to get to the second part of the test about considered by itself violates the antitrust laws.

[00:56:13] Speaker 05:
You can affirm here just based on the proper interpretation of concerned and interline movement of a rail carrier.

[00:56:20] Speaker 05:
Now there's an important part that got

[00:56:23] Speaker 05:
left out of the colloquy with Mr. Verrilli.

[00:56:26] Speaker 05:
He says that the district court imposed a specificity test, but of course, that's not what the district court imposed.

[00:56:31] Speaker 05:
The district court's definition, and it's worth reminding ourselves, this appears in the decision at Joint Appendix 41, said that a concerned and interline movement means an identifiable movement or movements.

[00:56:46] Speaker 05:
And judge title the dictionary act, we can see now we didn't below what we do now that it can be more than one movements.

[00:56:54] Speaker 05:
So you don't have to have 12 memos for 12 shipments you can have one memo for 12 shipments that it has to be identifiably interline.

[00:57:03] Speaker 05:
So, and why do we know it has to be identifiably?

[00:57:07] Speaker 05:
Well, there is the word Anne and there are the words of a rail carrier and there is of course the word interline.

[00:57:13] Speaker 05:
Now the railroads say that concerned and I think Judge Millett's hypotheticals showed the breathless limitless scope of Mr. Verrilli's argument.

[00:57:26] Speaker 05:
All three of Judge Millett's hypotheticals in our view are obviously admissible

[00:57:33] Speaker 05:
admissible because they concerned single line traffic on which the railroads compete or all movements on which the railroad compete and they shouldn't be immunized or carved out just because they also had what Mr. Verrilli called a practical bearing on interline traffic.

[00:57:52] Speaker 05:
So their definition would allow all of those documents to be excluded

[00:57:57] Speaker 05:
Judge Friedman's definition would allow all those documents to be admitted.

[00:58:02] Speaker 05:
Judge Millett's subject to the important qualification that you can redact the part that's just about interline movements, or you can have a limiting instruction if you want to say, pay no attention to that part about interline movements, but you can pay attention to the part about fuel surcharges on all movements.

[00:58:20] Speaker 00:
How do you redact

[00:58:23] Speaker 00:
Let me tell you where my concern is so that along the way, I'd appreciate you addressing it.

[00:58:29] Speaker 00:
The district court added language to the statute.

[00:58:31] Speaker 00:
The statute doesn't say what the district court said.

[00:58:34] Speaker 00:
It does not say discussions that include interline and other things as well cannot be excluded.

[00:58:42] Speaker 00:
That's not what the statute says.

[00:58:44] Speaker 00:
And I've gone over this.

[00:58:45] Speaker 00:
And in my view, before I even read the relevant papers, the relevant papers convinced me even more.

[00:58:52] Speaker 00:
seems utterly impractical and unreasonable.

[00:58:55] Speaker 00:
There are going to be any of a number of conversations where those who are talking to people in the business will be talking about obviously permissible interline things and maybe some inline things that are related to that and therefore not impermissible to add a requirement or to add a rule which says, but

[00:59:15] Speaker 00:
If your discussion, which was otherwise okay, was also a discussion that included something about in line, it fails.

[00:59:23] Speaker 00:
It makes no sense to me.

[00:59:24] Speaker 00:
That's not what the statute says, for the first, incidentally, and it makes no sense as far as I can tell.

[00:59:31] Speaker 00:
Forgetting the question about considered by itself and what we do with that.

[00:59:36] Speaker 00:
Just forget that completely.

[00:59:38] Speaker 00:
That is a great worry of mine.

[00:59:40] Speaker 00:
given the arguments that you all have presented.

[00:59:43] Speaker 00:
But before I even get there, the first thing that concerned me in these arguments is district court is construing a statute to put in notions that are not there, and they don't seem to make sense.

[00:59:54] Speaker 05:
Well, Your Honor, I agree that you don't need to get to the second.

[00:59:57] Speaker 05:
Clause, let's put that to.

[00:59:59] Speaker 05:
Well, I didn't say I didn't.

[01:00:00] Speaker 05:
Well, because I share your concern about the trials within a trials.

[01:00:04] Speaker 05:
But let's not get there.

[01:00:05] Speaker 05:
Let's go back to what the district court said.

[01:00:06] Speaker 05:
And let me respectfully suggest, Your Honor, that the district court construed exactly what is in the statute.

[01:00:12] Speaker 05:
And remember, the statute says evidence of a discussion or agreement that concerned an interline movement of a rail character, a rail carrier.

[01:00:23] Speaker 05:
Evidence can be clause specific.

[01:00:28] Speaker 05:
It didn't say that the document containing the evidence is inadmissible.

[01:00:33] Speaker 05:
Congress didn't say as a prophylactic measure any document that has multiple topics and it includes an interline discussion that gets excluded.

[01:00:41] Speaker 05:
They didn't say that.

[01:00:41] Speaker 05:
They said evidence.

[01:00:43] Speaker 05:
And the district court took pains to say, I think the unit of analysis for evidence of a discussion or agreement

[01:00:49] Speaker 05:
can be clause by clause.

[01:00:51] Speaker 05:
And so, Your Honor, if I could just take some of the examples that Mr. Verrilli cited and show why the wisdom of the district court's approaches, he says, I'm going to be faithful to the statute.

[01:01:03] Speaker 05:
I'm open to redacting at a later point anything that is evidence of a purely interline discussion or agreement that's only about the interline movement of a rail carrier.

[01:01:16] Speaker 05:
but I'm gonna let the whole document come in and point your honors to two examples, one of which Mr. Verrilli discussed.

[01:01:23] Speaker 05:
Exhibit 49, that's one that we, the shippers, quote, because it talks about, let's have an industry position on fuel surcharges.

[01:01:36] Speaker 05:
That's at Joint Appendix 292, an industry position on fuel surcharges.

[01:01:41] Speaker 05:
That is Judge Millett's third hypothetical in living action.

[01:01:46] Speaker 05:
Now, of course, elsewhere in the document Mr really quoted language or the blue brief quotes language about this is an innocent document exhibit 49 because it has language about coast to coast product at joint appendix to 90 that sounds kind of interline.

[01:02:04] Speaker 05:
and car flows, backhauls, and empty miles.

[01:02:07] Speaker 05:
That's at Joint Dependix 293.

[01:02:10] Speaker 05:
Well, if the same document has smoking gun evidence about agreeing on fuel surcharges across the industry, that should come into the case.

[01:02:20] Speaker 05:
And if the defendants at a later point want to convince the district court to block out the coast to coast product line, because that's inadmissible, because it is interline specific,

[01:02:30] Speaker 05:
Reduction is the perfect way to accomplish it.

[01:02:32] Speaker 05:
So Judge Edwards, in answer to your question, I think if we look at the word evidence in its natural and ordinary meaning, it's appropriately handled because evidence can be, one clause is evidence of interline movements, we exclude it, another clause in the same document, and I've just cited you exhibit 49 as a perfect example,

[01:02:52] Speaker 05:
has to come in.

[01:02:54] Speaker 05:
Another example.

[01:02:56] Speaker 06:
I do want you to go right back to answering that question.

[01:03:01] Speaker 06:
I just want to confess something about my ignorance, having not really done much trial work in my life.

[01:03:08] Speaker 06:
There are evidence bars all over the place, both in the federal rules of evidence, the common law, and other statutory ones.

[01:03:17] Speaker 06:
Is it is this process of redacting the view of evidence you had it doesn't say the document doesn't come in it's only that evidence for is that how it applies commonly is that it's commonly understood when through Congress or state law or common law evidence isn't allowed to come in it's just that evidence and redaction is the rule.

[01:03:38] Speaker 05:
Well, yes, Your Honor, we believe that a redaction is an exclusion.

[01:03:43] Speaker 05:
We cite in the red brief Federal Rule of Evidence 407 as an example.

[01:03:47] Speaker 05:
You can't admit an evidence of a repair of a defect.

[01:03:53] Speaker 05:
For some purposes, it can be admitted for others.

[01:03:55] Speaker 05:
And typically, that is accomplished at the retail level in trial courts through redactions or limiting instructions.

[01:04:01] Speaker 05:
That's the workaday world by which the district court takes something that may be admissible in part.

[01:04:07] Speaker 05:
inadmissible in another part, and lets the admissible part come in, we don't think we think that Friedman, the solomonic beauty of that Friedman's decision here is he said, you know,

[01:04:19] Speaker 05:
a scourge on both your houses.

[01:04:21] Speaker 05:
The defendants are saying the whole document has to be excluded.

[01:04:24] Speaker 05:
The plaintiffs are saying the whole document has to come in.

[01:04:27] Speaker 05:
I will handle this through the time-honored method of excluding the inadmissible evidence contained within the otherwise admissible document.

[01:04:39] Speaker 05:
And that's a sensible, sensible way to handle it.

[01:04:41] Speaker 00:
And I cite, I know that we don't want to get- The problem is a reference to in-line.

[01:04:48] Speaker 00:
in a document that everyone would agree, don't make a controversy.

[01:04:53] Speaker 00:
Everyone agreed the discussion is about interline, but there is reference to inline because it's relevant and everyone would agree it appropriately came up.

[01:05:06] Speaker 00:
It's a part of the conversation.

[01:05:07] Speaker 00:
It was totally appropriate in this context.

[01:05:10] Speaker 00:
Even the government's position would say, yeah, that was okay.

[01:05:13] Speaker 00:
Why would redaction be required in that kind of situation?

[01:05:16] Speaker 00:
The statute does not require it.

[01:05:19] Speaker 00:
The evidence and I may disagree with you and answer to my colleagues question, at least in my experience long time ago, the evidence would be that document.

[01:05:29] Speaker 00:
And then you're talking about, do we redact something from that evidence?

[01:05:34] Speaker 00:
The document that includes the discussion is the evidence.

[01:05:38] Speaker 00:
And now you're proposing, well, the way we'll get to our very rigid interpretation is we'll strike any sentences that wander off and talk appropriately about inline.

[01:05:49] Speaker 00:
That doesn't make sense to me.

[01:05:51] Speaker 05:
Well, Your Honor, now I'm tempted to go back to your point that you should dismiss as improvidently granted.

[01:05:57] Speaker 05:
But if you don't do that, if I could just, Your Honor, I wonder if I could bring us back to first principles here.

[01:06:04] Speaker 05:
And I want to focus on two things.

[01:06:05] Speaker 05:
Number one, the language, the text.

[01:06:08] Speaker 05:
I think text and then purpose.

[01:06:11] Speaker 05:
And if you could just humor me on this for a minute, the text says, concerned and interline movement of a rail carrier.

[01:06:19] Speaker 05:
And we think that the district court got that exactly right when the district court said that means the evidence is not inadmissible if it's about single line rates or if it's about all rates.

[01:06:36] Speaker 05:
In other words, concerned and interline movement necessarily excludes

[01:06:43] Speaker 05:
single line rate discussions and all rate discussions and what Mr. Verrilli called our greatest hits.

[01:06:52] Speaker 05:
If you pay attention to nothing else in our brief, Your Honor, I would commend the Court's attention to page 16 of our brief, pages 15 and 16, which lists unambiguous

[01:07:04] Speaker 05:
statements contained in these documents that refer to uniform application of fuel surcharges across the industry would be helpful.

[01:07:14] Speaker 05:
That's a joint appendix 266.

[01:07:18] Speaker 05:
Or the marketing officers are going to lead a discussion of a potential industry position on fuel surcharges.

[01:07:28] Speaker 05:
That's the exhibit I referred to earlier, exhibit 49 at JA

[01:07:33] Speaker 05:
292, that, Your Honor, that evidence, those lines about fuel surcharges across all movements is exactly what the statutory language excludes.

[01:07:47] Speaker 05:
Now, just here's a simple example.

[01:07:49] Speaker 05:
If, you know, my friend, Mr. Verrilli says, well- The statute would not exclude, is what you're saying.

[01:07:55] Speaker 05:
I know.

[01:07:55] Speaker 05:
I've got to exclude.

[01:07:56] Speaker 05:
There's too many excludes in that sentence.

[01:07:59] Speaker 00:
Because considered by itself, it's a problem.

[01:08:02] Speaker 05:
Well, no, I would say it fails step one.

[01:08:06] Speaker 00:
I mean, we may disagree, but at least understand what I'm saying.

[01:08:13] Speaker 00:
I don't agree that mere reference to concern means a document that includes discussions of both inline and interline.

[01:08:24] Speaker 00:
I just, I don't get it, especially when you have a clause that considered by itself, you take into account what you're now pointing to that you say was in your brief.

[01:08:35] Speaker 00:
I understand that, but that's where it's addressed.

[01:08:38] Speaker 00:
That's why the statute was written that way, at least in my view.

[01:08:42] Speaker 05:
Your honor, let me, let's go back to, if you didn't like my first principles of the text, let's go back to first principles of statutory purpose.

[01:08:49] Speaker 05:
It couldn't have been clearer.

[01:08:51] Speaker 05:
that Congress created this evidentiary carve out kind of under protest.

[01:08:58] Speaker 05:
It's sort of like we're in a competitive world.

[01:09:00] Speaker 05:
We accept there's this narrow carve out for interline discussions where you have to collaborate on rates because you got to figure out what you're charging the shipper when the cargo container travels on two different railroads.

[01:09:13] Speaker 05:
Okay, we're going to have that narrow exception, but concerned

[01:09:17] Speaker 05:
And an interline movement of a rail carrier and interline movement, even if we accept it can be multiple movements of a rail carrier the participating rail carrier.

[01:09:29] Speaker 05:
It necessarily does not apply.

[01:09:31] Speaker 05:
That exception does not apply to Judge Millett's hypotheticals.

[01:09:37] Speaker 05:
A discussion about, well, we did this on single rate.

[01:09:39] Speaker 05:
Let's now do it on interline.

[01:09:41] Speaker 05:
We did this on interline.

[01:09:42] Speaker 05:
We better now do it on single rate, single line, or let's just do this field search on all lines under Mr. Gorilla.

[01:09:51] Speaker 00:
You're not addressing my hypothetical.

[01:09:53] Speaker 00:
I understand the argument you'd want to make, whether you want to do it under considered by itself or under concerned.

[01:09:58] Speaker 00:
But that's not my concern.

[01:10:00] Speaker 00:
I'm talking about situations where it's perfectly innocent.

[01:10:04] Speaker 00:
The reference to inline is not using your wildest imagination.

[01:10:10] Speaker 00:
You cannot make it in any way problematic.

[01:10:13] Speaker 00:
It is not only okay, it's what you would expect given these business folks talking about what they're talking about.

[01:10:19] Speaker 00:
Inline comes up.

[01:10:21] Speaker 00:
District court's rule is that never can be excluded document.

[01:10:26] Speaker 00:
That is not what the statute says.

[01:10:28] Speaker 05:
Well, Your Honor, we disagree on that.

[01:10:30] Speaker 05:
We think evidence properly means a portion of a document.

[01:10:34] Speaker 05:
Congress won.

[01:10:35] Speaker 07:
Sorry, Your Honor.

[01:10:39] Speaker 07:
Can you just step back for a second and tell me, I understand your interpretation of interline.

[01:10:45] Speaker 07:
I get that.

[01:10:46] Speaker 07:
What role, and under your theory, all of the evidence in this case flunks that part of the test.

[01:10:52] Speaker 07:
It's all admissible.

[01:10:54] Speaker 07:
Under your theory, what role does considered by itself play in other cases?

[01:11:01] Speaker 07:
In fact, the railroads, Mr. Verrilli's argument is that under your interpretation in the district court, this clause is surplus, it plays no role, right?

[01:11:12] Speaker 07:
So can you give us some examples of situations where

[01:11:15] Speaker 07:
a discussion of an inner line movement that is excludable under your standard would nonetheless be admissible under the considered by itself.

[01:11:34] Speaker 05:
Yes, I can, Your Honor.

[01:11:35] Speaker 05:
And Mr. Verrilli is incorrect on this point and the district court was correct.

[01:11:40] Speaker 05:
And let me cite you, your honor, to the examples we gave in the red brief at page 32 and the examples that the government gave in the DOJ brief at 17 to 18.

[01:11:52] Speaker 05:
And if I could just go right to a case, because Judge Edwards, you asked the same question before and you asked for case authority.

[01:11:58] Speaker 05:
And my friend, Mr. Verrilli, conspicuously ignored the case cited on the government brief

[01:12:04] Speaker 05:
in the government brief at page 18 and that's Delaware and Hudson Railway Company versus Consolidated Rail Corp.

[01:12:11] Speaker 05:
902F2174, second circuit case out of 1990.

[01:12:17] Speaker 05:
Of course, we don't have Conrail anymore, but the principle of the case was this.

[01:12:21] Speaker 05:
You had a big carrier, you had a little carrier, they're carrying paper from Canada,

[01:12:27] Speaker 05:
And the big carrier Conrail says, well, I'll interline with you little carrier, but I'm going to use my monopoly power to make sure that I get to gobble up all of the rates.

[01:12:36] Speaker 05:
I'm going to get all of the shared business.

[01:12:40] Speaker 05:
I'm going to allocate most of the rates to myself.

[01:12:42] Speaker 05:
That is a anti-competitive agreement pertaining solely to the interline traffic between the big carrier and the little carrier.

[01:12:50] Speaker 05:
Now let's remember there's a lot.

[01:12:52] Speaker 00:
You know, I did look at Delaware, respectfully, and to me it flunks under your thinking and the government's thinking, it should flunk the concern test.

[01:13:02] Speaker 00:
The conference of the discussion there was not about Interline, it was about exercising monopoly power.

[01:13:08] Speaker 00:
It just so it doesn't support your or the government.

[01:13:12] Speaker 00:
I definitely went and looked because this concern by itself question to me is huge and the parties are not coming together on it.

[01:13:20] Speaker 00:
And I looked it up because the government had it in its list.

[01:13:23] Speaker 00:
It's a different case.

[01:13:24] Speaker 00:
It's a case where for me anyway, it would flunk the concern test right away.

[01:13:28] Speaker 00:
It's gone.

[01:13:29] Speaker 00:
It's not that's not what the concern was.

[01:13:32] Speaker 00:
The railroad, the big railroad there was trying to squeeze, obviously trying to squeeze out a small railroad.

[01:13:37] Speaker 05:
Well, Your Honor, we respectfully disagree.

[01:13:39] Speaker 05:
And I certainly didn't say you ignored the case.

[01:13:41] Speaker 05:
I just said Mr. Verley did.

[01:13:42] Speaker 00:
No, no, no.

[01:13:43] Speaker 00:
And I'm not.

[01:13:44] Speaker 00:
But wait.

[01:13:45] Speaker 05:
I'm not doing it.

[01:13:47] Speaker 07:
But Your Honor, let me ask you a question.

[01:13:50] Speaker 07:
What specifically respond to what Judge Edwards said about that case?

[01:13:56] Speaker 07:
Because the way you described it, and I read it too, the way you described it, this is just a discussion about an interline movement between

[01:14:05] Speaker 07:
carrier big and carrier little, right?

[01:14:08] Speaker 07:
Where carrier big is trying to, you know, get more of the money out of carrier little, right?

[01:14:16] Speaker 07:
So is that an interval?

[01:14:19] Speaker 07:
So why does that, why isn't that funkier?

[01:14:24] Speaker 07:
Well, explain to us, why, why doesn't that, why does that pass your concern test?

[01:14:28] Speaker 05:
You're on our discussion about how to share the joint rate.

[01:14:34] Speaker 07:
Right.

[01:14:35] Speaker 05:
between the two carriers, you could say, I'm gonna take 90% of the joint rate and you're gonna take 10% of the joint rate or let's split it 50-50.

[01:14:42] Speaker 05:
That is a discussion of an interline movement.

[01:14:49] Speaker 05:
It's solely about an interline movement.

[01:14:51] Speaker 05:
It's not a discussion about, I believe my friend on the other side said, those discussions will be about some other competitive market.

[01:14:59] Speaker 05:
This is not, Con Ed is just about something that is otherwise

[01:15:05] Speaker 05:
admissible under, sorry, it's otherwise inadmissible under step one, because it's just about an interline movement of a rail carrier.

[01:15:17] Speaker 05:
It's identifiable movement of a rail carrier.

[01:15:22] Speaker 07:
But it violates the interline movement.

[01:15:25] Speaker 07:
Suppose the little carrier, suppose that was its only route.

[01:15:30] Speaker 07:
It had no other route.

[01:15:32] Speaker 07:
That was it.

[01:15:35] Speaker 07:
Wouldn't the threat by carrier big?

[01:15:39] Speaker 07:
That would be limited to that carrier's route.

[01:15:44] Speaker 07:
So that would be completely interlined.

[01:15:45] Speaker 07:
But suppose that carrier had other routes that interline with the big carrier.

[01:15:51] Speaker 07:
Wouldn't that, by definition, be a threat about other traffic, not just interline traffic?

[01:15:58] Speaker 07:
And then, therefore, it would fault the concern test?

[01:16:00] Speaker 05:
Well, Your Honor, railroads

[01:16:04] Speaker 05:
sometimes engage in interline traffic with other railroads that also have single line routes for the same geographic areas.

[01:16:16] Speaker 05:
And if we go back to the beginning, what Congress really thought it was doing was just saying, if you're two carriers and you interline sometimes, and there's also single line traffic other times,

[01:16:27] Speaker 05:
going to make sure you can't use the underline discussions as evidence of price fixing or other anti-competitive behavior over on the single line.

[01:16:34] Speaker 05:
So I give you kind of, there could be other examples, an exclusive dealing arrangement, if you say, I'm only going to interline with you if you agree that we're going to lock up the shippers in 20-year contracts.

[01:16:47] Speaker 05:
I'm not going to interline with you otherwise.

[01:16:49] Speaker 05:
And remember, again, shippers have some choices.

[01:16:52] Speaker 05:
A shipper in one part of the country can increase production in another part of the country, even if it's captive to one railroad, in order to lower its rail freight prices in another part of the country.

[01:17:02] Speaker 05:
So there are many examples of interline specific discussions in which an exclusive dealing arrangement or a monopolistic arrangement.

[01:17:15] Speaker 05:
And Your Honors, just let's remember the breadth of the statutory reference here.

[01:17:20] Speaker 05:
The Considered by Itself clause pulls in Sherman Act, Clayton Act, Robinson-Patman Act, and related state laws.

[01:17:30] Speaker 05:
And there could be unfair competition laws that are state laws that are the violation here.

[01:17:36] Speaker 05:
So what Congress is trying to do here, we think, and the proper way to read Considered by Itself is it's a kind of backstop

[01:17:44] Speaker 05:
So if you let the railroads go off and coordinate on interline traffic, and they're really coordinating on interline traffic, not all traffic, not single line traffic in the guise of interline traffic, but they're really doing an interline traffic discussion, they can't otherwise violate the antitrust laws through that agreement.

[01:18:04] Speaker 05:
And it's a very sensible restriction.

[01:18:06] Speaker 05:
So we think the two parts of the clause work great if you interpret it our way and Judge Friedman's way.

[01:18:12] Speaker 05:
You've got a very narrow exception for interline only rail traffic and it's got to be really about interline only traffic, but that narrow exception cannot itself violate the antitrust laws.

[01:18:25] Speaker 05:
Now, Judge Edwards, I agree that if you take Mr. Verrilli's sweeping broad approach in which everything has a practical bearing on interline rates and you let all this evidence in, then you really need the second step as a backstop because then you're going to let in a lot of evidence, smoking gun and otherwise, of an overarching conspiracy to impose fuel surcharges in a coordinated fashion

[01:18:53] Speaker 05:
as a surrogate for price fixing in violation of the Sherman Act section one.

[01:18:57] Speaker 05:
So, you know, we don't think you need to reach step two considered by itself if you take the district courts and our narrow interpretation of step one.

[01:19:08] Speaker 05:
You don't need to ever get to step two in this case, but the statute has meaning and the surplusage or nullity or

[01:19:16] Speaker 05:
superfluity argument is really incorrect.

[01:19:19] Speaker 07:
And I respect- We had a big discussion with Mr. Borrelli about that and specifically about the government's examples of documents that would be admissible under the concern clause, but would flunk the second clause.

[01:19:40] Speaker 07:
And he says, no, they'd all flunk the first clause.

[01:19:43] Speaker 07:
What's your answer to that?

[01:19:45] Speaker 05:
Well, that's wrong.

[01:19:47] Speaker 05:
Yeah, I thought you'd say that.

[01:19:49] Speaker 07:
Well, Your Honor, do you have the government's examples there in front of you?

[01:19:53] Speaker 00:
You think the government's examples would pass the concern clause?

[01:19:57] Speaker 07:
Why don't you pull out those in front of you about the specific examples, OK?

[01:20:02] Speaker 00:
I really do want to hear this time.

[01:20:03] Speaker 00:
And I'm adding my question because I'm astonished at that possibility of that answer, that the government's examples for getting the Delaware case and our disagreement over that, you think the government's examples

[01:20:15] Speaker 00:
survive the concern clause?

[01:20:18] Speaker 05:
I do, Your Honor.

[01:20:19] Speaker 05:
And remember, the government is here.

[01:20:22] Speaker 00:
But that's your view of concern.

[01:20:24] Speaker 07:
Can we just go through them?

[01:20:29] Speaker 07:
The first one is two rail carriers.

[01:20:37] Speaker 07:
The first one is that two rail carriers could fix interline terms to exclude other railways from joining it.

[01:20:44] Speaker 07:
So what about that one?

[01:20:47] Speaker 05:
Well, that purely interline agreement.

[01:20:50] Speaker 05:
Many interline arrangements involve more than two railroads.

[01:20:54] Speaker 05:
And the two who agree to set interline rates together by excluding a third railroad from participating in a joint

[01:21:03] Speaker 05:
interline arrangement, that's standard refusal to deal, and that's an antitrust violation.

[01:21:10] Speaker 07:
And yet- But aren't they excluding them from a different interline arrangement?

[01:21:13] Speaker 05:
No, no, no.

[01:21:14] Speaker 05:
That example, as I understand it, again, Mr. Leach is here to explain the example in a moment.

[01:21:19] Speaker 05:
But the way two railroads engaging in a discussion or agreement about interline traffic alone agree that

[01:21:30] Speaker 05:
they will not contract with a third railroad to engage in interline traffic.

[01:21:34] Speaker 05:
That's a hundred percent interline discussion up and down the block.

[01:21:38] Speaker 05:
It's only about who gets to join in the interline traffic.

[01:21:43] Speaker 05:
And yet it's a refusal to deal or a monopolistic or an exercise of monopoly.

[01:21:49] Speaker 00:
David, their first example in the government is carriers might freeze out price cutting competitors by agreeing to exclude

[01:21:56] Speaker 00:
them from three or four part interline movements.

[01:21:59] Speaker 00:
You think that passes the first part of the statutory test?

[01:22:04] Speaker 05:
Absolutely, because it's an agreement about who gets to participate in an interline movement.

[01:22:08] Speaker 00:
No, it's an agreement about price cutting, and I have a way to use my power situation to deal with you on the price cutting.

[01:22:17] Speaker 05:
Your Honor, the point is that the interline

[01:22:23] Speaker 05:
contracts themselves.

[01:22:24] Speaker 00:
Is the weapon that they're using, yeah.

[01:22:26] Speaker 00:
But they have no legitimate purpose as a statute of law.

[01:22:30] Speaker 00:
There's no legitimate purpose to deal with an interline question.

[01:22:33] Speaker 00:
They're simply using the availability of that to gain some power with respect to price cutters that they're trying to punish.

[01:22:41] Speaker 07:
Your honor, if you're- You're saying that, okay, so if they're engaged, so you're saying in this first example that even though they're talking about different, excluding the competitor from different interline traffic, it's still interline traffic.

[01:22:57] Speaker 05:
Correct, your honor.

[01:22:58] Speaker 05:
That's exactly right.

[01:22:59] Speaker 07:
You want to go on to the second example?

[01:23:02] Speaker 07:
They might also use interline discussions to implement predatory pricing schemes.

[01:23:07] Speaker 07:
What about that one?

[01:23:08] Speaker 05:
Absolutely, that in this case, we happen to involve a fact situation where prices are being increased through the use of fuel surcharges.

[01:23:17] Speaker 05:
Remember, the case arises because unilateral fuel surcharges weren't working.

[01:23:22] Speaker 05:
They were being undercut, including by East against West railroads.

[01:23:26] Speaker 05:
In a different case, two railroads with interline traffic might agree to engage in predatory pricing

[01:23:33] Speaker 05:
pricing below average marginal cost on an interline only.

[01:23:37] Speaker 07:
Is this your Delaware case?

[01:23:38] Speaker 07:
Is this hypothetically the same as your Delaware?

[01:23:41] Speaker 05:
Very similar.

[01:23:42] Speaker 05:
Is that what that is?

[01:23:43] Speaker 05:
Well, exactly so.

[01:23:45] Speaker 05:
In other words, and the point here is,

[01:23:49] Speaker 05:
We, if we go and I tried to go back to the first principle of statutory purpose here remember Congress said, okay railroads we're going to give you this narrow carve out, but don't come back to us and use it as a fig leaf to cover up naked anti competitive behavior.

[01:24:05] Speaker 05:
come back in and try to append the kind of interline discussion to a separate price fixing or other unlawful antitrust conspiracy.

[01:24:14] Speaker 05:
And then this little exception in the considered by itself clause is, and by the way, in your interline only discussion, you can't violate the antitrust laws either.

[01:24:25] Speaker 05:
And so when we read the whole thing together, we know two things.

[01:24:28] Speaker 05:
We know that the exclusion of evidence does not apply to discussion or agreement

[01:24:34] Speaker 05:
evidence of discussion or agreement about single line rates or about all rates, that evidence is admissible.

[01:24:46] Speaker 05:
And at the first step, the only thing that gets excluded is purely interline discussions to the extent they're not the con ed type discussion that's really an interline

[01:24:57] Speaker 05:
antitrust violation.

[01:24:59] Speaker 05:
And that's a very coherent view of the statute.

[01:25:02] Speaker 05:
Now we don't think you need to get to the second step, the considered by itself step here, if you affirm the district court's interpretation of the statute, because here I, the railroads really concede that if you go with the district court's definition, all of this evidence

[01:25:21] Speaker 05:
comes in, because it contains, maybe with the exception of Joint Appendix 160, I know my friend Mr. Gurley loves to come back to exhibit number 17, which he says is that's as pure an interline discussion as you can get.

[01:25:34] Speaker 05:
But in context, as we explained in footnote nine, that was an interline discussion in the context of a broader field search discussion.

[01:25:42] Speaker 05:
Now, maybe later, they can go to the district court in the motion and lemonade and say, hey, you know, exhibit 17,

[01:25:48] Speaker 05:
We think if you're redacting the whole thing, it really isn't worth the candle.

[01:25:55] Speaker 05:
But if you go back to our examples, and again, I stress the red brief at pages 15 to 16 gives you many of these, it would completely defy Congress's purpose if that evidence of conspiracy to fix industry-wide fuel surcharges

[01:26:13] Speaker 05:
to set fuel surcharges uniformly across the industry, to have an industry position on fuel surcharges, to come up with a consensus on a uniform fuel surcharge approach.

[01:26:26] Speaker 05:
If all of that evidence were to be excluded, along with the little fig leaf of an interline discussion.

[01:26:36] Speaker 05:
And by the way, remember, railroads were having interline discussions through low level executives

[01:26:42] Speaker 05:
for years before this case came up, they were having interline discussions about fuel surcharges among low-level employees from 2000 to 2003.

[01:26:53] Speaker 05:
It's only in 2003 that the senior executives get involved in all of the evidence in these cases.

[01:26:59] Speaker 05:
And why?

[01:27:00] Speaker 05:
Because unilateral fuel surcharges weren't working, they wanted to have a coordinated approach.

[01:27:06] Speaker 05:
And it would invite great mystery if you- Go ahead, finish your sentence.

[01:27:11] Speaker 05:
I just, excuse me, Judge Mallette, just want to say it would invite great mischief in the future if you were to adopt the railroad's position here, because it would give them a playbook that says, here's how you cover up your price fixing conspiracy.

[01:27:25] Speaker 05:
Just embed it in a bilateral discussion between an east-west railroad and throw some interline discussion into the memo, and you can keep the whole document out.

[01:27:33] Speaker 05:
And just, Judge Mallette, if I could have said one thing, and I'm sorry to

[01:27:37] Speaker 05:
Delay your question, but I don't want to forget to refer you to read brief at pages 45 to 46.

[01:27:43] Speaker 05:
Because there you will see and it's sealed material, so I won't state it out loud, but it read brief pages 45 to 46 we quote the antitrust internal antitrust guidelines of the railroads themselves we cite all four of them.

[01:27:57] Speaker 05:
The antitrust guidelines of the railroads themselves says you should be careful to segregate your interline discussions which are excludable in a future antitrust case from your other discussions of single line rates or all rates, those should be kept separate.

[01:28:14] Speaker 05:
And Your Honor, maybe that's cumbersome.

[01:28:17] Speaker 05:
Maybe it's cumbersome to have to have two sets of documents about the two meetings, sort of like having, you know, the meetings of the executive session of the board separate from the open session of the board.

[01:28:27] Speaker 05:
And when Your Honors go into conference, you don't share everything with the court staff and the clerks.

[01:28:32] Speaker 05:
I mean, people can separate the evidence in a practical way.

[01:28:37] Speaker 05:
But here we're not even asking the railroads to do that.

[01:28:39] Speaker 05:
We're not saying you have to keep all your documents in separate silos.

[01:28:43] Speaker 05:
Judge Freeman just said, I will use the practical device of redaction to make sure you can have your communication, it can practically cover a lot of topics, and I will redact what is truly interline specific within the narrow exception Congress gave you.

[01:28:57] Speaker 05:
I'm sorry, Judge Mallette, I just wanted to make sure.

[01:29:02] Speaker 06:
It's complicated.

[01:29:03] Speaker 06:
I want you to make sure you get your thoughts out.

[01:29:06] Speaker 07:
Did you have a question?

[01:29:08] Speaker 06:
I did.

[01:29:09] Speaker 06:
And I'm back to my trying to figure out how the inference and the evidentiary exclusion work together, even though they seem to be phrased differently.

[01:29:17] Speaker 06:
Because as I read the inference exclusion, and I think Mr. Verrilli agreed, if they agree to take some action, it's a plainly exclusively interline discussion.

[01:29:30] Speaker 06:
We're going to have this surcharge.

[01:29:34] Speaker 06:
And then the railroad goes back and applies it that same rate to another route, a single line route.

[01:29:44] Speaker 06:
The inference, no inference would be allowed to be drawn from the fact that say both of these lines, after they agreed on their interline surcharge, went home and applied that same surcharge to their single line routes.

[01:29:56] Speaker 06:
Is that a correct reading of this inference?

[01:29:59] Speaker 05:
Yes.

[01:30:00] Speaker 06:
But then it sounds like the evidentiary exclusion

[01:30:04] Speaker 06:
If they mentioned what they were going to do during that interline discussions, clearly it's all about interline and subject matter.

[01:30:13] Speaker 06:
It's all they talk about.

[01:30:14] Speaker 06:
And at the end they go, yeah, you know, on the way out, they go, but, you know, I think I'm also going to have to just send this to my single line graphic, just so it makes sense to customers.

[01:30:25] Speaker 06:
then I thought you would say that that piece of evidence would no longer concern, or the district court would say that no longer concerns an airline movement, because they've talked about all rights at that moment.

[01:30:36] Speaker 06:
But that would seem to create a gap between the evidentiary exclusion and the inference.

[01:30:41] Speaker 05:
Yeah.

[01:30:41] Speaker 05:
We think there's no gap, Your Honor, because the evidentiary exclusion is a prophylactic rule in service of the inference clause.

[01:30:50] Speaker 05:
It's just a backstop.

[01:30:52] Speaker 05:
And I think the way to think about it is,

[01:30:54] Speaker 05:
The inference clause imagines two separate decisions.

[01:30:58] Speaker 05:
One is a discussion about the interline rate and the other is a subsequent or parallel decision about the single line rate.

[01:31:08] Speaker 05:
And the interline discussion cannot be used as evidence of price fixing as to the single line rate.

[01:31:15] Speaker 05:
Now, remember at the beginning, the railroads wanted this exclusion because sometimes they had interline and single line

[01:31:21] Speaker 05:
traffic on the exact same routes.

[01:31:24] Speaker 05:
And so you didn't want the discussion of interline traffic to be used as evidence of single line rate collusion.

[01:31:33] Speaker 05:
And the prophylactic rule is that once, but if there's the same discussion, your honor, if there's one discussion that involves both interline and single line, or that involves both interline identifiable interline traffic,

[01:31:48] Speaker 05:
and all fuel surcharges, like our examples on Redbrief 15 to 16, that does not concern an interline movement, because it's not limited to an interline movement.

[01:31:58] Speaker 06:
But I think mine was more of an evolution in the discussion.

[01:32:01] Speaker 06:
Sure, if they have a memo that says this discussion is about all traffic, that's easy.

[01:32:08] Speaker 06:
Or exclusively interline traffic, that's easy.

[01:32:12] Speaker 06:
But the fact that discussions evolve

[01:32:16] Speaker 06:
And if 99% of it was about interline traffic, but at the end they go, wait a minute, I have these single traffic lines that do some are part of the same route.

[01:32:26] Speaker 06:
I guess I'm going to have to apply it.

[01:32:27] Speaker 06:
It was my first hypothetical.

[01:32:28] Speaker 06:
I guess I'm going to have to apply it to the my single line routes.

[01:32:31] Speaker 06:
And the other person, other railroad goes, yeah, me too.

[01:32:34] Speaker 06:
Which it seems to be entry exclusion is narrower than the inference.

[01:32:40] Speaker 06:
involved into both traffic lines covered.

[01:32:47] Speaker 05:
Your Honor, we think the evidentiary exclusion disappears when the discussion strays beyond identifiable interline movements.

[01:32:59] Speaker 05:
And it's not a constraint on how they talk to each other.

[01:33:01] Speaker 05:
It's just a constraint on what evidence they can keep out of a subsequent antitrust suit.

[01:33:06] Speaker 05:
They are free to talk to each other in this.

[01:33:08] Speaker 05:
If they followed their own guidelines, they would have been more careful about segregating the discussions.

[01:33:13] Speaker 05:
If they violate their own guidelines and talk about all movements and single line movements in the same breath or in the same document as they talk about interline movements, they have lost the benefit of the exclusion.

[01:33:27] Speaker 05:
And, Your Honor, we're not stopping them from communicating as they see fit.

[01:33:31] Speaker 05:
We're just saying they don't get the benefit of the exclusion.

[01:33:34] Speaker 05:
unless they carefully confine themselves to interline discussions.

[01:33:37] Speaker 05:
And the reason.

[01:33:38] Speaker 07:
Okay.

[01:33:39] Speaker 07:
So can I ask one more question?

[01:33:41] Speaker 07:
No, please finish.

[01:33:43] Speaker 07:
I'm sorry.

[01:33:46] Speaker 07:
Did you have another question?

[01:33:48] Speaker 07:
I just had one more question.

[01:33:51] Speaker 07:
Well, I'd like to finish what she was just saying.

[01:33:55] Speaker 07:
Okay.

[01:33:58] Speaker 07:
Go ahead.

[01:34:00] Speaker 05:
Your honor, I think I was finished.

[01:34:02] Speaker 05:
I just wanted to emphasize the point that we're not constraining how the railroads communicate.

[01:34:09] Speaker 05:
Remember, the district court keeps out any, the district court denied the benefit of the exclusion to documents that included but were not limited to identifiable interline movements.

[01:34:25] Speaker 05:
And the reason is my point earlier that Congress,

[01:34:29] Speaker 05:
did not want there to be antitrust conspiracies or other unlawful activity protected by the shield of the interline exclusion.

[01:34:41] Speaker 05:
They didn't want the tail to wag the dog.

[01:34:44] Speaker 05:
They didn't want the interline exclusion to become a kind of invitation to mischief.

[01:34:49] Speaker 05:
And that was the point I started to make before.

[01:34:51] Speaker 05:
It would be an invitation to mischief to give the railroads a playbook for

[01:34:57] Speaker 05:
getting all kinds of naked unlawful conspiratorial activity excluded from a subsequent antitrust suit just because it included, but was not limited to shared identifiable movement.

[01:35:10] Speaker 05:
So I commend to the court the brilliance of the judge's judge treatment solution, which is redactions.

[01:35:16] Speaker 05:
We'll keep the inadmissible stuff out of the jury's can, but we will allow the admissible stuff to come in.

[01:35:23] Speaker 05:
And your honor, my last question questions.

[01:35:28] Speaker 06:
I understand your point about redactions, but the limiting instructions seems to be quite different.

[01:35:33] Speaker 06:
Because if we read this statute as the jury can't see it and and it's the Congress doubled down, you know, you don't get the inference.

[01:35:43] Speaker 06:
It's not only can you jury not rely on it to give true effect to that or to to

[01:35:48] Speaker 06:
put a hedge around that, we're gonna keep this body of evidence out.

[01:35:54] Speaker 06:
And if you have a discord then saying, well, I can't separate the two, they're interwoven.

[01:36:02] Speaker 06:
So I'm going to put it in with a limiting instruction and the very evidence Congress said don't let the jury see is being seen by the jury.

[01:36:12] Speaker 06:
So limiting instructions feel to me quite different from your whole theory of your redaction is they're not seeing what Congress said don't see.

[01:36:19] Speaker 06:
Limit instructions don't do that.

[01:36:22] Speaker 05:
I hear you, Your Honor, and I agree that limiting instructions is a little harder in an inadmissibility statute than redaction.

[01:36:29] Speaker 05:
A redaction literally renders the evidence inadmissible.

[01:36:34] Speaker 05:
A limiting instruction is harder.

[01:36:36] Speaker 05:
I would revert here to a reminder that we're here on 1292B, that no limiting instructions have been sought or imposed.

[01:36:44] Speaker 05:
No

[01:36:45] Speaker 05:
evidence has been found to be so inextricably intertwined that a redaction wouldn't suffice.

[01:36:50] Speaker 05:
And I think we really are outside the ken of a 1292B legal standard appeal if we try to specify future hypothetical circumstances in which the limiting instruction would be required.

[01:37:05] Speaker 06:
But- Mr. Gord said limiting instructions are a proper tool under the statute.

[01:37:09] Speaker 05:
only where redactions are impracticable.

[01:37:11] Speaker 05:
And I think that's because they're inextricably intertwined.

[01:37:15] Speaker 05:
I don't think that violates the statutory text because the text says the evidence.

[01:37:21] Speaker 05:
Remember, the evidentiary exclusion is in the service of the no inference and a limiting instruction is in the service of a no inference from the interline discussion.

[01:37:30] Speaker 05:
So it's serving the exact same purpose as the first sentence is with no inferences.

[01:37:35] Speaker 05:
So that's point 1.2.

[01:37:37] Speaker 05:
A limiting instruction is understood in many contexts, literally to render something inadmissible.

[01:37:44] Speaker 05:
take it outside the ken of the fact finder so that the fact finder cannot rely on it.

[01:37:49] Speaker 05:
And that renders it practically inadmissible.

[01:37:52] Speaker 05:
So I think it may be formally admitted, but it's practically and functionally inadmissible.

[01:37:57] Speaker 05:
So I don't think there's any problem in that as a matter of statutory construction.

[01:38:02] Speaker 05:
If there's a problem down the line, as Judge Edwards said earlier, we see if it's prejudicial.

[01:38:06] Speaker 05:
We see if it happens.

[01:38:07] Speaker 05:
We see if it's prejudicial.

[01:38:08] Speaker 05:
And we see if on final judgment, the court wants to say, I'm sorry, the limiting instruction there didn't conform with the statute.

[01:38:14] Speaker 05:
but it would be premature to foreclose these ordinary tools of case management to the district court.

[01:38:21] Speaker 05:
And again, the limiting instruction is what the government, what the, I'm sorry, what the railroads emphasize, but it's only a backstop.

[01:38:29] Speaker 05:
Your Honor, I just want to stress to you that I think you'll find that

[01:38:34] Speaker 05:
If you look at some of these documents the other one I know that Mr really loves the green lumber coming from Vancouver to the northeast the railroad site that twice in their briefs but that's an exhibit 67.

[01:38:44] Speaker 05:
And if you look at exhibit 67, you could.

[01:38:47] Speaker 05:
on Joint Appendix 377, you could black out the target green lumber sentence if you want, but you wouldn't black out the part where on JA 374 in the same document, where the railroads say, let's get together on our fuel surcharge coverage statistics, which is evidence as to all rates, and it shouldn't be excluded.

[01:39:10] Speaker 05:
So redactions will, as a practical matter, handle this.

[01:39:12] Speaker 05:
I don't think I've heard any

[01:39:14] Speaker 05:
suggestion from the railroads of what piece of evidence couldn't be subject to the redaction approach because these clauses are truly separate.

[01:39:22] Speaker 05:
And if we face that problem, we'll face general.

[01:39:25] Speaker 05:
So for these reasons, Your Honor, I know Judge Taylor, you've been very indulgent.

[01:39:29] Speaker 05:
Just to sum up, we respectfully submit that you can keep this on 1292 B review so long as the court confines itself to the statutory construction issues.

[01:39:39] Speaker 05:
Before that, the district court was correct in its interpretation of the statute

[01:39:44] Speaker 05:
as narrowly confining the exception to identifiable interline movements of a rail carrier, of the participating rail carriers, and allowed properly for redactions and limiting instructions as a matter of statutory construction.

[01:39:57] Speaker 05:
You don't need to reach the second clause about considered by itself, but if you adopt Mr. Verrilli's interpretation, it's so broad, it says all this evidence comes in, then you've got an antitrust conspiracy, and then it should be independently affirmed.

[01:40:11] Speaker 05:
under the second prong.

[01:40:12] Speaker 05:
Thank you very much for your indulgence with your time.

[01:40:14] Speaker 07:
Thank you.

[01:40:16] Speaker 07:
We'll hear from the government, Mr. Leach.

[01:40:22] Speaker 02:
Thank you, Judge, and may it please the court.

[01:40:25] Speaker 02:
Brian Leach on behalf of the government.

[01:40:28] Speaker 02:
I'd like to start as well with Judge Edwards' question.

[01:40:33] Speaker 02:
The government does not have a position on whether certification was improperly granted.

[01:40:37] Speaker 02:
I think that's a determination the court should make in its own discretion.

[01:40:41] Speaker 02:
But on the issues that have been raised today.

[01:40:45] Speaker 02:
You know, the first one I can judge Edwards brought this up and judge to ask questions about is the role of the considered by itself.

[01:40:53] Speaker 02:
And so I want to go right to that and I want to emphasize that our reading does not render

[01:40:58] Speaker 02:
that clause superfluous, it still gives meaningful application to that statute.

[01:41:03] Speaker 02:
And I'm happy to discuss the precise examples we provided.

[01:41:06] Speaker 02:
The first one would satisfy, which refers to freezing out a price cutting competitor from three or four part airline movements.

[01:41:14] Speaker 02:
That's a discussion that would concern shared interline traffic.

[01:41:19] Speaker 02:
It would be the two carriers discussing how their three and four-part movements are going to operate.

[01:41:24] Speaker 02:
And within the scope of that discussion, they are engaging in anti-competitive conduct.

[01:41:28] Speaker 02:
Now, the fact that they may have in mind something else

[01:41:33] Speaker 02:
is in our view not relevant to the concern clause.

[01:41:35] Speaker 02:
And I think this underscores though Mr. Verrilli is really asking for, the carriers are asking for, is a subjective intent standard.

[01:41:41] Speaker 02:
They say the concern can't mean, a discussion can't concern an underlying movement if there's some sort of anti-competitive effect in mind.

[01:41:51] Speaker 02:
But of course that will always be true for any discussion that would by itself violate the antitrust law.

[01:41:55] Speaker 02:
Our focus is on the objective content of the discussion or agreement viewed in light of the communications of the parties.

[01:42:06] Speaker 02:
So concern in our view means about refers to subject matter.

[01:42:10] Speaker 02:
And that takes an objective test and looks at what were the carriers discussing and what was the context of the discussion.

[01:42:17] Speaker 02:
The second example

[01:42:18] Speaker 02:
is to the same effect and really does track quite closely the fact pattern in the Delaware and Hudson case because you have two carriers that are discussing their interline traffic, the interline traffic they carry out.

[01:42:32] Speaker 02:
And the big carrier says to the little carrier, I'm not going to work with you unless you give me essentially all of the money.

[01:42:38] Speaker 02:
And the second circuit, that's a tribal issue on a section two claim.

[01:42:43] Speaker 02:
Now, the carriers point out that section two involves, you know, lateral conduct typically.

[01:42:48] Speaker 07:
But your view, that fails the concern clause, right?

[01:42:53] Speaker 02:
I'm sorry.

[01:42:53] Speaker 07:
No, it doesn't fail.

[01:42:55] Speaker 07:
It passes the concern clause, but it passes it.

[01:42:58] Speaker 02:
That's correct.

[01:42:59] Speaker 07:
Okay, gotcha.

[01:42:59] Speaker 02:
Right.

[01:43:01] Speaker 07:
Right.

[01:43:02] Speaker 02:
Right.

[01:43:02] Speaker 02:
Because what they're saying is they're shared in traffic.

[01:43:05] Speaker 02:
Right.

[01:43:06] Speaker 02:
The dominant carrier has in mind some anti-competitive consequence.

[01:43:09] Speaker 02:
Right.

[01:43:09] Speaker 02:
It doesn't change the fact that the subject of the discussion viewed objectively in its content and context was their shared interline traffic.

[01:43:16] Speaker 02:
So that's an exception.

[01:43:18] Speaker 02:
The other example we provide was just as a matter of historical background.

[01:43:22] Speaker 02:
When Congress enacted this statute, what the carriers described as a vertical supply relationship was per se unlawful, and there were exceptions to that.

[01:43:30] Speaker 02:
There were defenses that could be started like the ancillary restraints doctrine.

[01:43:34] Speaker 02:
But at the time, those were per se unlawful restraints.

[01:43:40] Speaker 02:
Subsequent developments in antitrust law have changed the rule from a per se standard to a rule of reason standard.

[01:43:47] Speaker 02:
But that doesn't change or that shouldn't justify an expansion of the concern clause.

[01:43:51] Speaker 02:
The fact that something could have been subject to a different rule and may have been a violation considered by itself and Congress enacted it, I think shows that there was independent meaning to this clause.

[01:44:01] Speaker 02:
It was enacted and there continues to be because

[01:44:03] Speaker 02:
Joint venture discussions and agreements are not immune from the antitrust laws.

[01:44:07] Speaker 02:
The standard that CARE is proposing

[01:44:09] Speaker 02:
is one that would suggest that any discussion within a joint venture is somehow, you know, categorically lawful.

[01:44:17] Speaker 02:
I think that would be news to the Supreme Court in the NCAA cases.

[01:44:20] Speaker 02:
But additionally, the point that the carriers pointed out was that there is testimony in the record legislative history of the Stagger's Act where the Department of Justice and a staff member from FTC discussed interline traffic in

[01:44:36] Speaker 02:
They were talking in generalities about the ordinary case.

[01:44:39] Speaker 02:
And I would agree that in the ordinary case, many airline arrangements are going to be appropriate if they will not, by themselves, violate the infant trust laws.

[01:44:48] Speaker 02:
But that's not the question.

[01:44:49] Speaker 02:
The standard that the CARES are asserting is it would render it superfluous in almost all of its applications.

[01:44:55] Speaker 02:
And that's simply not correct.

[01:44:57] Speaker 02:
And they agree that

[01:44:59] Speaker 02:
the analysis that would take place would involve a rule of reason type of inquiry in many instances.

[01:45:06] Speaker 02:
They make this concession at pages 15 to 16 of the reply brief.

[01:45:10] Speaker 02:
So in some ways, our application, in our understanding, considered by itself clauses not that far off from theirs with a few considerable exceptions.

[01:45:19] Speaker 02:
But I want to emphasize that our reading of concern is an effort to give meaning to

[01:45:23] Speaker 02:
all of the words of the provision in the clause related to concerned and inaligned movement, and then it does not render considered by itself an afterthought.

[01:45:33] Speaker 02:
Judge Malik, you asked a question about, you had a series of hypotheticals, and it was, I think, again, telling that the carrier standard would really be one that would ask what the, you know, they propose a new standard today.

[01:45:48] Speaker 02:
that I don't take from their brief, which was because of some sort of subjective intent or causation standard.

[01:45:54] Speaker 02:
What was the motivating factor for the carriers to get together and discuss, which would sweep in a discussion about all rates for all traffic without any limitation or connection to shared airline traffic, simply because that's a necessary subset of a communication about all rates.

[01:46:10] Speaker 02:
That really renders the interline term in the statute largely superfluous.

[01:46:15] Speaker 02:
And the reason for that is the term movement by itself, as the carriers admit, refers to and captures both single line and interline traffic.

[01:46:25] Speaker 02:
The reason why Congress added the word interline was to limit the scope of the statute's protections to discussions and agreements that are about shared interline traffic rather than rail freight generally or single line competing traffic.

[01:46:38] Speaker 00:
But not to the exclusion of some innocuous reference to in line.

[01:46:42] Speaker 00:
I mean, that's the problem where forget the considered by clause.

[01:46:47] Speaker 00:
I hear the argument.

[01:46:48] Speaker 00:
I see where you're both coming from.

[01:46:49] Speaker 00:
I still don't know how you get to a conclusion that concern is limited means only.

[01:46:57] Speaker 00:
I just that's not what the statute says.

[01:47:01] Speaker 00:
And there you all are agreeing you as well.

[01:47:04] Speaker 00:
You're certainly not disagreeing.

[01:47:06] Speaker 00:
going to be many situations where the references to inline would be totally appropriate.

[01:47:12] Speaker 00:
Anyone working in the industry would say, yeah, that was perfectly innocuous, fair reference.

[01:47:17] Speaker 00:
It was not.

[01:47:18] Speaker 00:
The concern is nothing that anyone would worry about.

[01:47:21] Speaker 00:
It made sense because of the way the tracks are connected or the way these people have interacted in the past, innocuous, and it should pass mustard.

[01:47:31] Speaker 00:
And you're saying, and it should be excluded, because if you looked at it fairly, you and I, all of us, Sullivan, all of us would agree, this conversation was basically about the internet interline movement and the mere reference to inline, totally innocuous, totally understandable, blocks it.

[01:47:52] Speaker 00:
And it doesn't make any sense to me.

[01:47:54] Speaker 00:
Consistent with your view of Congress's purpose, it makes no sense to me.

[01:48:00] Speaker 02:
We agree the statute does not say solely concern.

[01:48:03] Speaker 02:
Our test for the concern clause would be the discussion has to be about shared interline traffic rather than unidentified rail freight generally, and does not involve more than a de minimis reference to single line traffic.

[01:48:16] Speaker 06:
The de minimis reference- So would that cover my hypothetical where they're setting interline charges of some sort, fuel surcharge?

[01:48:26] Speaker 06:
A hypothetical, I'm not talking about what's at issue here.

[01:48:28] Speaker 06:
And then at the end of the meeting, shake hands at the end of the meeting, Ms.

[01:48:34] Speaker 06:
East Railroad says, you know, I'm going to have to apply this to my single line traffic just so it will make sense to customers.

[01:48:42] Speaker 06:
It won't make sense to everyone who's in charge.

[01:48:44] Speaker 06:
It applies only to certain lines and not others.

[01:48:47] Speaker 06:
And Mr. West, your railroad says that was my thought too.

[01:48:51] Speaker 06:
So there wasn't collaboration on it.

[01:48:54] Speaker 06:
It's both sort of say it was their independent thinking, but they're talking about rates.

[01:48:58] Speaker 06:
Is that mean, look, that's a subject that discussion or agreement, that's what this is about, the session or agreement falls within the concern clause, because that's sort of incidental.

[01:49:12] Speaker 06:
Or does that mean that little tag along sentence at the end is supposed to come in sort of stripped of any context, because all the other stuff would have to be redacted, the other 99% of the conversation, how would it work?

[01:49:27] Speaker 02:
That would not be a de minimis reference.

[01:49:29] Speaker 02:
We would define a de minimis reference as a brief, insignificant comment.

[01:49:33] Speaker 02:
You're honest.

[01:49:34] Speaker 02:
Say that again?

[01:49:35] Speaker 02:
A what?

[01:49:35] Speaker 02:
A brief and insignificant comment.

[01:49:38] Speaker 02:
So that is a brief comment, but it would not be a significant one because you have a situation where concerted action can absolutely be inferred from that exchange, from that communication.

[01:49:47] Speaker 02:
That is absolutely indicative of collusive activity in the rail industry where one says it can't.

[01:49:52] Speaker 06:
So the whole conversation comes in?

[01:49:54] Speaker 06:
The whole conversation.

[01:49:56] Speaker 06:
The other side is now arguing exactly that inference that you want.

[01:49:59] Speaker 06:
The whole conversation.

[01:50:01] Speaker 01:
comes in or we just say you don't even you don't even redact it the whole thing comes in no no it could be absolutely subject to redaction our point is that it's not going to make any sense that's the whole point it doesn't wait mr least your answers to my colleagues have just confused me a little bit if you if you have a document

[01:50:24] Speaker 07:
Let's assume that the document has a discussion.

[01:50:27] Speaker 07:
It's a 10 page document and one paragraph in that document is about an identifiable interline movement, okay?

[01:50:38] Speaker 07:
Now, isn't the government's theory that that's excludable and that that would be, the rest of the document is admissible, that it would be, that one paragraph would be redacted.

[01:50:49] Speaker 07:
Isn't that the government's position?

[01:50:51] Speaker 02:
Yes, Your Honor, that is the position we have.

[01:50:55] Speaker 02:
And so that, I mean, there's a distinction between viewing.

[01:50:59] Speaker 07:
So what difference would it make whether the discussions that aren't about the inner line movement are significant or what was the word you used?

[01:51:10] Speaker 07:
Diminimus.

[01:51:12] Speaker 07:
Diminimus.

[01:51:14] Speaker 07:
Your point is that they all come in, the document gets admitted, but the inner line discussion gets retracted, right?

[01:51:23] Speaker 02:
That's your position.

[01:51:25] Speaker 02:
If we're talking about a single discussion.

[01:51:28] Speaker 07:
No, I'm talking about a document that has many discussions in it, one of which is about an identifiable interline movement.

[01:51:39] Speaker 02:
If that is a discussion by itself, that would be redacted.

[01:51:43] Speaker 02:
If it's a qualifying discussion or agreement, that would be redacted.

[01:51:46] Speaker 02:
If the rest of the document is not evidence of a qualifying discussion or agreement, if it is evidence of a discussion about single line traffic or rail freight generally, or if it is evidence of a discussion or agreement that could by itself by future trust laws, it would not be subject to inadmissibility or redaction.

[01:52:02] Speaker 00:
Okay.

[01:52:02] Speaker 00:
Suppose I keep wanting to go back to an innocuous situation where in line is reference

[01:52:10] Speaker 00:
All of us would say, yeah, I'd be surprised if they didn't reference it.

[01:52:15] Speaker 00:
One railroad, I don't know.

[01:52:16] Speaker 00:
I'm too far away from this industry now.

[01:52:20] Speaker 00:
Because of the rates, one, a lot of it's about interline.

[01:52:26] Speaker 00:
And one says, well, my inline rate, that's how I made the calculation there.

[01:52:31] Speaker 00:
And I'll probably use the same calculator.

[01:52:32] Speaker 00:
That's all I'm talking about.

[01:52:33] Speaker 00:
Then they go back to the interline.

[01:52:35] Speaker 00:
You're saying that because

[01:52:38] Speaker 00:
One of the carriers there referenced how they made a calculation on their inline because it was informative, it was useful, it was nothing bad about it.

[01:52:49] Speaker 00:
No one would suggest that it was unlawful.

[01:52:52] Speaker 00:
You're going to say the documents is not excluded.

[01:52:56] Speaker 02:
No, we would say that would be, if it's perfectly innocent, it's a brief and insignificant comment.

[01:53:02] Speaker 02:
It's a de minimis reference to, yeah, so it would be... Well, I've been asking that question all day.

[01:53:09] Speaker 00:
We're now up to all afternoon.

[01:53:10] Speaker 00:
I've been asking that all day, if there is a totally innocent... My concern is the district court said, as I read it, any reference to anything other than interline among those who are using it,

[01:53:24] Speaker 00:
It's dead.

[01:53:26] Speaker 00:
It's admissible.

[01:53:28] Speaker 00:
My initial look at this caused me to think there've got to be instances where these folks are going to reference because of how they do business, how they operate, how the tracks connect.

[01:53:39] Speaker 00:
They are going to make references here and there about inline stuff.

[01:53:43] Speaker 00:
But the thrust of it is not about inline, it's about interline.

[01:53:48] Speaker 00:
And yet I was reading, and I heard plaintiffs to be saying this, I thought her last colloquy with my colleague was exactly that.

[01:53:56] Speaker 00:
Too bad, you lose.

[01:53:57] Speaker 00:
When they were talking about the inferences and the exclusions, I thought that's exactly what Ms.

[01:54:02] Speaker 00:
Sullivan, you're saying the opposite, which is more consistent with what my instinct would be.

[01:54:07] Speaker 00:
That mere innocent reference

[01:54:10] Speaker 00:
common sense.

[01:54:11] Speaker 00:
It is not about doing anything bad in the interline.

[01:54:14] Speaker 00:
It's just the point.

[01:54:15] Speaker 00:
We looked at it.

[01:54:16] Speaker 00:
We happened to mention it.

[01:54:18] Speaker 00:
Ms.

[01:54:18] Speaker 00:
Sullivan seemed to be saying to me, the mere mention of that kills it.

[01:54:21] Speaker 00:
That document cannot be excluded, period.

[01:54:24] Speaker 00:
You're saying now, no, that would be okay, because that's innocent.

[01:54:28] Speaker 02:
I think we might have a slightly different position on the plaintiffs on that.

[01:54:31] Speaker 02:
Our position would be a de minimis exception to speak, you know, brief insignificant references or, you know, we don't, this is not a gotcha provision.

[01:54:39] Speaker 02:
We are trying.

[01:54:39] Speaker 00:
I know that's exactly what my concern is.

[01:54:42] Speaker 02:
Yes.

[01:54:42] Speaker 02:
We are recognizing the slip of the tongue in the meeting of two railroad executives.

[01:54:47] Speaker 02:
We're not looking to just, uh, you know, have this be something where they can't ever mention or have a relationship to their single line traffic.

[01:54:55] Speaker 02:
Well, we're talking about our situations where,

[01:54:57] Speaker 02:
The concern we have as United States in the Federal Trade Commission is that you're going to have a situation where rail carriers are getting together to discuss and summarize competing rates or rates on all traffic, and that they are then coming to court and say, you can't admit any of that because none of those discrete communications shows an express agreement that by itself would violate the antitrust laws, which would severely hamper

[01:55:20] Speaker 02:
and impair the ability of private entities as well as the government to enforcing act trust laws in the rail industry.

[01:55:26] Speaker 02:
That's our concern.

[01:55:26] Speaker 02:
We're not concerned with a fleeting reference or passing allusions to single line traffic.

[01:55:31] Speaker 02:
We're concerned with the serious real world types of communications.

[01:55:35] Speaker 07:
I would think you would say that a fleeting reference doesn't satisfy the concern test because it doesn't deal with an identifiable movement, right?

[01:55:45] Speaker 07:
but that if it did, if it was a fleeting reference that happened to deal with an identifiable movement, then that would be redacted and the rest of the document would commit.

[01:55:54] Speaker 07:
Isn't that the government's position?

[01:55:56] Speaker 02:
A single reference to single line traffic or interline traffic, Your Honor?

[01:56:01] Speaker 02:
Interline.

[01:56:03] Speaker 07:
in-line traffic.

[01:56:04] Speaker 07:
Single line, single line.

[01:56:06] Speaker 07:
Interline traffic, exchange traffic between the Western carrier and the Eastern carrier.

[01:56:11] Speaker 07:
If it's a fleeting reference and it's not an identifiable movement, it's not covered by the considered clause.

[01:56:21] Speaker 07:
If it is a fleeting reference to a identifiable movement, then it's redactable, but the rest of the document.

[01:56:30] Speaker 02:
I'm sorry.

[01:56:30] Speaker 07:
Is that what we're on?

[01:56:32] Speaker 02:
Is that your position?

[01:56:33] Speaker 02:
I may not have made myself clear.

[01:56:35] Speaker 02:
A mere mention of interline traffic, identifiable or not, I think even the carriers concede that would not satisfy the concern clause.

[01:56:43] Speaker 02:
So a mere mention of interline traffic would not satisfy.

[01:56:46] Speaker 02:
What we're saying is that a mere mention of single line traffic would not disqualify what is otherwise a discussion or agreement about interline traffic.

[01:56:55] Speaker 00:
Yeah, and I'm doing, see David, I was raising the opposite.

[01:56:58] Speaker 00:
limited mentions of in line, does that corrupt something that would otherwise be excludable, which doesn't make any sense to me.

[01:57:06] Speaker 07:
That's why I followed up with my question.

[01:57:12] Speaker 02:
Judge Edwards, to go to your question, the practical realities of communications in business sometimes involve

[01:57:18] Speaker 02:
passing references to subjects that go beyond interwine traffic.

[01:57:22] Speaker 02:
We acknowledge that.

[01:57:23] Speaker 02:
But as Ms.

[01:57:24] Speaker 02:
Sullivan noted, it's really important to emphasize that the carrier's internal anti-trust policies counsel them to take the very steps that we're discussing in this case.

[01:57:34] Speaker 00:
Yeah, no, I understand that.

[01:57:35] Speaker 00:
I'm just trying to understand, since we're being made to do this on certification, subject to me thinking it, I'm trying to understand what we're thinking about.

[01:57:44] Speaker 00:
That's all.

[01:57:46] Speaker 00:
Yes.

[01:57:47] Speaker 00:
I mean, you all have done a very good job in presenting us

[01:57:50] Speaker 00:
And we're not being critical, but it's not a straightforward case.

[01:57:54] Speaker 00:
Let me tell you, this is not an arbitrary and capricious case.

[01:57:58] Speaker 00:
Someone stole my jello.

[01:58:02] Speaker 00:
All right.

[01:58:03] Speaker 06:
Wait, I want to go ahead.

[01:58:06] Speaker 06:
Sorry, if Judge Edwards is done.

[01:58:09] Speaker 06:
And I'm sorry, I don't usually ask questions.

[01:58:12] Speaker 06:
But I've been assuming, Judge Edwards, when you say in line, you mean single line by that.

[01:58:16] Speaker 00:
Yes, yes, yes, yes.

[01:58:17] Speaker 00:
Yes, I'm sorry.

[01:58:18] Speaker 06:
And then so.

[01:58:22] Speaker 06:
I appreciate all these concerns about you diminish this or insignificant.

[01:58:26] Speaker 06:
You know, the test turns on what the discussion or agreement concerned, not with a single comment concerned.

[01:58:33] Speaker 06:
That's how Congress phrased it.

[01:58:35] Speaker 06:
And I was with respect again to my question where at the end, independently, no evidence of any joint collaboration.

[01:58:42] Speaker 06:
One goes, I think Ms.

[01:58:44] Speaker 06:
East Railroad says, I'm gonna have to extend this to my single line.

[01:58:52] Speaker 06:
traffic.

[01:58:54] Speaker 06:
And you said, well, and Mr. West says the same thing.

[01:58:57] Speaker 06:
And you said, well, you could infer antitrust from that.

[01:59:02] Speaker 06:
But why isn't that in the teeth of the inference prohibition, which says, if you've had a discussion or agreement about interline rates, that obviously can't come in.

[01:59:12] Speaker 06:
Or that a party to such action took similar action with respect to a rate or related matter on another route.

[01:59:22] Speaker 02:
Yes, because what the district court correctly concluded was that an action or similar action within the meaning of the first sentence did not include discussions about rates, it included actions pertaining to race, but it did not include discussions and the reason is the second.

[01:59:36] Speaker 02:
draws a distinction between discussions or agreements on the one hand, and an action resulting from such discussion or agreement.

[01:59:43] Speaker 02:
So the district court correctly concluded, I think, a note, it wasn't an issue the district court had to address, it was sort of providing guidance on it, but the district court's conclusion is correct, a discussion about interline rates.

[01:59:55] Speaker 02:
and then a discussion about single line rates would allow for that inference because those are not actions with respect to the interline rate or related matter or similar actions with respect to another rate or route or traffic, I believe is the language of the statute.

[02:00:11] Speaker 00:
That's a really thin line.

[02:00:13] Speaker 00:
So if I go out of the room having had that thought and it's very clear to all of us, we're all thinking the same thing, it's okay.

[02:00:21] Speaker 00:
But if I happen to mention on the way out, oh, I may have to change my single line rate, that changes it all.

[02:00:28] Speaker 06:
That changes the content of the discussion or agreement?

[02:00:33] Speaker 02:
Yes, that's what he's saying.

[02:00:34] Speaker 02:
Yes, because that would be more than if it's part of the same discussion.

[02:00:38] Speaker 06:
But if they wink at each other on the way out, that's action.

[02:00:41] Speaker 00:
Not unless someone got a video of the wink is what they're saying.

[02:00:45] Speaker 02:
It could be a verbal act, in which case it would be part of a discussion.

[02:00:49] Speaker 02:
A verbal act?

[02:00:53] Speaker 06:
We're distinguishing between verbal acts now?

[02:00:55] Speaker 06:
The statute doesn't net just as such action.

[02:00:58] Speaker 02:
Right.

[02:00:59] Speaker 01:
That's correct.

[02:01:00] Speaker 06:
I took similar action.

[02:01:01] Speaker 06:
Sorry, similar ice.

[02:01:03] Speaker 06:
The link seems similar action, right.

[02:01:05] Speaker 01:
It could be.

[02:01:06] Speaker 02:
It could very well be, but I want to emphasize the limitation on inferences in the first sense, not a categorical bar on inferences from parallel conduct.

[02:01:14] Speaker 02:
As your honor noted earlier, there has to be a party in common.

[02:01:18] Speaker 02:
So if A and B handle interline traffic at X rate, and then they go off and handle interline traffic with other people at the same rate, no inference of conspiracy can be created there.

[02:01:30] Speaker 02:
But if the- You're not supposed to talk about it.

[02:01:32] Speaker 06:
Right, but for obvious reasons, for obvious reasons.

[02:01:35] Speaker 02:
Yes, yes, but if A and B handle linear line traffic at X-ray, and then C and D handle linear line traffic at the same rate, that would not be barred as an inference of conspiracy.

[02:01:44] Speaker 02:
Now it wouldn't prove conspiracy, but because it doesn't involve a party to the first action, conspiracy could be inferred.

[02:01:50] Speaker 02:
And the reason for that is we think that Congress wanted to create, allow for inferences of industry-wide conspiracy.

[02:01:57] Speaker 02:
They wanted to allow for the possibility that A and B might secretly be conspiring C and D about all rates, and that that would be reflected in the parallel pricing on airline traffic, even though it doesn't involve a similar party.

[02:02:09] Speaker 02:
Now, there was an important point that was raised earlier.

[02:02:12] Speaker 06:
Well, hang on.

[02:02:13] Speaker 06:
I'm sorry.

[02:02:13] Speaker 06:
And I want you to make sure you get to make your important point.

[02:02:15] Speaker 06:
But I'm just trying to puzzle this through.

[02:02:16] Speaker 06:
So A and B.

[02:02:20] Speaker 06:
who are East and West Railroads get together and they have a discussion about fuel surcharges.

[02:02:26] Speaker 06:
And part of it, they pull out a recent expert witness, expert economist study on this.

[02:02:36] Speaker 06:
And they go, this shows this is exactly what we should be doing on our interline traffic.

[02:02:41] Speaker 06:
And they agree to do it.

[02:02:44] Speaker 06:
And a week later, C&D,

[02:02:47] Speaker 06:
railroad, which are also East and West get together and say, we need to have a fuel surcharge.

[02:02:52] Speaker 06:
And they pull out the exact same expert study and say, and it turns out the transcripts sound very similar.

[02:02:59] Speaker 06:
This is exactly what we need to be doing.

[02:03:01] Speaker 06:
This is exactly the economic rationale for we should do it.

[02:03:06] Speaker 06:
That first conversation is what seemed to me clearly covered by both the inference and the evidentiary exclusion.

[02:03:11] Speaker 06:
Yes.

[02:03:13] Speaker 02:
It would be covered by the evidentiary provision because

[02:03:16] Speaker 02:
Because what you're referring to is- Wouldn't be now.

[02:03:18] Speaker 02:
Wouldn't be considered in the district court's interpretation.

[02:03:21] Speaker 06:
I'm sorry.

[02:03:22] Speaker 06:
I got a glitch in my hearing.

[02:03:23] Speaker 02:
It would- Sorry.

[02:03:25] Speaker 02:
It would be covered by the evidentiary clause.

[02:03:28] Speaker 02:
Okay.

[02:03:28] Speaker 02:
The inferential sentence though, because action does not include discussions, the discussion about the expert report and the discussion to plan out the rate would still be available there as evidence to create an inference of conspiracy.

[02:03:42] Speaker 02:
It's only the rates- What?

[02:03:44] Speaker 06:
that's the rationale for whether every okay so that's you have an extremely narrow view of this exclusion, so when they say here's the reason why I think we should do this together on our interline rates, you say that comes in.

[02:03:59] Speaker 02:
That would be that would be that would concern the interline move in the real care, it would be excluded from evidence, yes.

[02:04:05] Speaker 06:
And I guess in that sense, and the expert report that they're relying on and talking about would be excluded.

[02:04:11] Speaker 06:
The entire conversation about what we should do and why we should do it.

[02:04:16] Speaker 06:
Yes.

[02:04:16] Speaker 06:
It's all interline.

[02:04:18] Speaker 02:
I think I may have misunderstood your honest question.

[02:04:19] Speaker 02:
Yes, that discussion, as you posit it, would be something that would be.

[02:04:23] Speaker 02:
OK, good.

[02:04:23] Speaker 08:
I thought you were going to go through it word by word.

[02:04:25] Speaker 02:
Yes, if it's not evidence of that discussion, as Ronna describes it, would likely concern shared interline traffic.

[02:04:34] Speaker 06:
And then, C and D, when they do the same thing the next week, would not get that protection because then it looks like it's a nationwide?

[02:04:42] Speaker 02:
No, we're referring to a fact of the parallel price, not necessarily the discussions leading up to them in terms of the inferential.

[02:04:49] Speaker 06:
OK, so the exclusion would still apply assuming you don't get to the considered by itself clause.

[02:04:54] Speaker 02:
Yes, that's right.

[02:04:56] Speaker 06:
OK, that helps me understand better.

[02:04:57] Speaker 06:
Thank you.

[02:04:58] Speaker 02:
Yes.

[02:04:58] Speaker 06:
And you had an important point you wanted to make.

[02:05:01] Speaker 07:
Did you have one other point you wanted to make?

[02:05:04] Speaker 02:
I can make it another time.

[02:05:07] Speaker 02:
We're done.

[02:05:08] Speaker 06:
You said you had an important point.

[02:05:12] Speaker 06:
I'd like to hear your important point.

[02:05:14] Speaker 00:
Do we have a date we don't know about here?

[02:05:19] Speaker 00:
We're going on spring break.

[02:05:20] Speaker 00:
Forget it.

[02:05:22] Speaker 06:
What's your important point?

[02:05:25] Speaker 02:
The important point I wanted to make was that there has been a discussion about Eastern carriers and Western carriers somehow never being a competitive posture.

[02:05:32] Speaker 02:
And that is incorrect.

[02:05:34] Speaker 02:
They are direct competitors in many important respects.

[02:05:37] Speaker 02:
And that is due to a fact, a phenomenon in the rail industry known as source competition.

[02:05:42] Speaker 02:
Called what?

[02:05:43] Speaker 02:
Known as source competition.

[02:05:45] Speaker 07:
Yeah, okay.

[02:05:46] Speaker 02:
Source competition is the circumstance in which a shipper has multiple destinations in which they can sell their product.

[02:05:52] Speaker 02:
And so from there, for example, the example we use in our statement of interest below was a shipper in Chicago.

[02:05:58] Speaker 02:
who are selling a bulk fungible commodity and could sell it in San Francisco or New York.

[02:06:04] Speaker 02:
If the rates go up on one line, the eastern line, you can sell it, you can send it to the western line.

[02:06:09] Speaker 02:
From that consumer's perspective, those rail lines are substitute competing services.

[02:06:15] Speaker 02:
And in that sense, they are direct competitors.

[02:06:17] Speaker 02:
And that is a pervasive feature of the rail industry.

[02:06:19] Speaker 02:
That is a common

[02:06:20] Speaker 02:
occurrence where shippers, particularly for the sorts of bulk fungible commodities, they're not constrained by intermodal competition from trucks.

[02:06:28] Speaker 02:
Things like coal, steel, grain, chemicals, things that cannot feasibly be trafficked via truck are routinely subject to that type of source competition in which the Eastern carrier and the Western carrier are direct competitors.

[02:06:41] Speaker 02:
They are not competitively neutral.

[02:06:43] Speaker 02:
They are not interline partners.

[02:06:45] Speaker 02:
So when they meet, there should not be any assumption that they are necessarily talking about their shared interline traffic, which is part of the carrier's argument.

[02:06:53] Speaker 02:
Their whole argument about internal documents, I think it does suggest that if an Eastern carrier and a Western carrier get together to meet,

[02:07:00] Speaker 02:
The court should just, the fact of the meeting should create a presumption that a concern shared into line traffic, regardless of whether we know about the substance of the discussion or not.

[02:07:09] Speaker 06:
And so our point is- I think he was saying, I don't think he was saying that when I specifically asked, do any of, and people may disagree about the content of these documents, but do any of these involve the areas in which they compete?

[02:07:19] Speaker 06:
The answer was no.

[02:07:20] Speaker 06:
I think he was claiming to say that if East and West railroads get together,

[02:07:25] Speaker 06:
Discussing where they compete or where they compete with somebody else.

[02:07:28] Speaker 06:
Absolutely.

[02:07:31] Speaker 02:
I was referring to their argument about internal documents that don't convey anything about the substance.

[02:07:38] Speaker 02:
And their argument, as I understand it, and I don't mean to mischaracterize, is that there's an internal document that we don't know anything about what was discussed.

[02:07:48] Speaker 02:
the court should conclude that that concern shared into our traffic.

[02:07:51] Speaker 02:
And the principle fact that they point to is I understand the argument is that it's an Eastern carrier and a Western carrier meeting and that they don't have competing traffic or that essentially the assumption is that there's no competing traffic ever between those two carriers.

[02:08:04] Speaker 06:
And that just goes into their burden of proof, right?

[02:08:06] Speaker 06:
The defendant has the burden, no one here has seemed to dispute the burden of proof assignment by the district court.

[02:08:11] Speaker 06:
So they have to prove affirmatively the discussion or agreement

[02:08:15] Speaker 06:
involved interline movement.

[02:08:17] Speaker 06:
Not that they got together, we don't know what they talked about.

[02:08:19] Speaker 02:
That's exactly right.

[02:08:20] Speaker 02:
And the identifiability requirement is really baked into that.

[02:08:23] Speaker 02:
And a lot of the arguments about concern are really tightly knit with the fact that the bird is on the carriers for that stuff.

[02:08:30] Speaker 07:
Mr. Leach, I assume you made this point about the eastern and western carriers being competitors in service of your position that the considered clause has to be limited to identifiable movements, right?

[02:08:43] Speaker 07:
Is that your point?

[02:08:45] Speaker 02:
Yes, that is part of our point.

[02:08:46] Speaker 07:
Is that why you said that?

[02:08:49] Speaker 02:
Because they're competitors?

[02:08:51] Speaker 02:
Yeah.

[02:08:52] Speaker 02:
That's absolutely part of our concern there, yes.

[02:08:55] Speaker 02:
What's the other part?

[02:08:58] Speaker 02:
Well, the other part is, I guess that is the concern.

[02:09:02] Speaker 02:
I mean, our concern generally is not just that they are Eastern and Western fairs in competition, but that they could be getting into matters that have competitive impact.

[02:09:10] Speaker 02:
It's important to note that even if there's no actual competition, there's often potential competition.

[02:09:14] Speaker 02:
And I trust law looks at actual potential competitors.

[02:09:16] Speaker 02:
really are kind of the same footing.

[02:09:18] Speaker 02:
And so the fact that there may not be, in this case, discussions involving competing traffic, there may be, or there may be situations where this didn't involve competitors directly, doesn't suggest that an Eastern carrier and a Western carrier are in every case going to be

[02:09:33] Speaker 02:
competitively neutral.

[02:09:35] Speaker 02:
The identifiability requirement is, as I mentioned, really baked into the burden of proof on carriers because the risk of non-persuasion is on them.

[02:09:42] Speaker 02:
Identifiability in our understanding is not a requirement of specificity, but it is a requirement that there be something identifiable in the traffic, either the period of time or the region or something of that nature.

[02:09:53] Speaker 06:
And so the carriers have to make- What I've been curious about is what if two airlines, excuse me, two railroads are

[02:10:02] Speaker 06:
want to talk together to establish an underlying agreement.

[02:10:05] Speaker 06:
So there's not identifiable traffic already.

[02:10:07] Speaker 06:
They haven't yet set up the arrangement.

[02:10:10] Speaker 06:
But they want to get together to talk about, should we do this?

[02:10:13] Speaker 06:
Does it make sense for our business?

[02:10:15] Speaker 06:
I can help you.

[02:10:16] Speaker 06:
You can help me.

[02:10:17] Speaker 06:
And preliminary things and if we did it here's some ideas on how it would be profitable for us to do it together, I assume that counts as identifiable in your three but it wasn't clear to me at all from the district court decision or the briefing.

[02:10:30] Speaker 02:
I think in our view that would be identifiable because it would be.

[02:10:33] Speaker 02:
As long as it's clear that what they're discussing is railroad traffic that those two carriers will handle, that would be enough.

[02:10:39] Speaker 02:
The concern we have is a situation where you have discussions about rail freight generally, and the carriers come in and say, oh no, what we meant was we were talking to our interline partner.

[02:10:49] Speaker 02:
What we meant subjectively was our shared interline traffic when there's no objective indication from the communication.

[02:10:55] Speaker 02:
All right.

[02:10:56] Speaker 06:
May I ask, I'm sorry, just tell you, I'm so sorry.

[02:10:58] Speaker 06:
May I ask one more question?

[02:10:59] Speaker 06:
I'm so sorry.

[02:11:01] Speaker 06:
And that is, you've talked about this exception, the concerned has an exception for, first you called it de minimis, which sounds like a volume issue, and then you call it insignificant, which sounds like a content issue.

[02:11:13] Speaker 06:
If you were trying to write a rule for a court to adopt, please tell me exactly how you would articulate

[02:11:23] Speaker 06:
That concern.

[02:11:26] Speaker 02:
Yes.

[02:11:28] Speaker 02:
I'll try and say it is from start to finish.

[02:11:31] Speaker 02:
The discussion has to be about shared interline traffic rather than rail freight generally unidentified rail freight.

[02:11:39] Speaker 02:
And it cannot involve more than a de minimis reference to single line traffic.

[02:11:43] Speaker 02:
De minimis in this context means brief and insignificant.

[02:11:47] Speaker 02:
So if there are significant competitive implications from the reference to single line traffic, that would not count.

[02:11:54] Speaker 02:
Or if it was an extended discussion.

[02:11:56] Speaker 02:
Now, we would acknowledge there is no algorithmic formula for making these determinations.

[02:12:00] Speaker 02:
Many of them will be discretion and judgment calls for the district.

[02:12:03] Speaker 02:
But those are judgments district courts are well-equipped to make, and they make routinely thousands of times every day on pieces of evidence in cases across the country.

[02:12:11] Speaker 07:
Thank you.

[02:12:14] Speaker 07:
Thank you, Mr. Leach.

[02:12:17] Speaker 07:
Let's see.

[02:12:18] Speaker 07:
Mr. Varela, you were out of time, but we'll give you three minutes.

[02:12:23] Speaker 03:
Thank you, Your Honor.

[02:12:25] Speaker 03:
In terms of going ahead with answering certified question, I think another important factor there is in addition to the specific case, there's the MDL that Judge Howell is supervising, where there are a huge number of individual cases by shippers, all of which are going to be looking to this decision for guidance about how the evidence applies in those cases as well.

[02:12:44] Speaker 03:
I think that's an additional reason why Judge Freeman was right to ask for clarity.

[02:12:48] Speaker 03:
Now, in terms of the standard, this idea of identifiability and what it means,

[02:12:56] Speaker 03:
The burden is on us to demonstrate that a discussion or agreement is about interline movements using the definition that I provided in answer to your question earlier, Judge Mollett.

[02:13:06] Speaker 03:
We've got to satisfy that burden, but there shouldn't be anything beyond that, future, general, et cetera.

[02:13:13] Speaker 03:
Once we've satisfied that burden, we've satisfied that burden, we've proven concern.

[02:13:17] Speaker 03:
Now, in terms of, it sounds like- What's the delta between

[02:13:23] Speaker 06:
The test has to be about shared interline traffic, not general freight traffic and no more than a brief and insignificant reference.

[02:13:33] Speaker 06:
to single-line traffic.

[02:13:34] Speaker 06:
What's the delta between that and your, we're discussing that subject because it has, discussing a subject because it has a direct bearing, practical bearing on shared traffic.

[02:13:47] Speaker 06:
What are you covering that they're not?

[02:13:50] Speaker 03:
Starting with a brief and insignificant reference.

[02:13:53] Speaker 03:
I mean, if you cut it off at that point, we're in agreement.

[02:13:55] Speaker 03:
We're in agreement, okay?

[02:13:57] Speaker 03:
So we're not advocating the kind of sweeping standard that they claim we are.

[02:14:02] Speaker 03:
And it isn't, it's not something we're saying for the first time today.

[02:14:05] Speaker 03:
I direct the court to consider page 54 of our brief, our opening brief, where we say a discussion concerns a rail movement when it is about how that movement will be arranged and performed or has a practical bearing

[02:14:18] Speaker 03:
on the commercial and operational demands of that movement.

[02:14:21] Speaker 03:
And then we said that repeatedly in different ways in that same paragraph on that page.

[02:14:25] Speaker 06:
So what would you put in instead of brief and insignificant?

[02:14:27] Speaker 06:
Because you'd have to recognize that it can't be 50-50.

[02:14:32] Speaker 06:
So what would you substitute?

[02:14:34] Speaker 06:
You agreed up to that point.

[02:14:36] Speaker 03:
The way I would handle that, Your Honor, the way I urge the court to handle it is to ask the question of whether one can view

[02:14:43] Speaker 03:
the discussion that is not about shared traffic as a separate discussion.

[02:14:51] Speaker 03:
If one can look at the document and view it as a separate discussion, it's segregable.

[02:14:55] Speaker 03:
As we said in our reply brief, at that point, I think you would redact and that would come in, but it has to be segregable.

[02:15:02] Speaker 03:
The majority of the situation is going to be the ones that are posited by Judge Edwards, where there's an occasional comment interwoven.

[02:15:09] Speaker 03:
I realize my time is running out here,

[02:15:12] Speaker 03:
The redaction point is really critical here.

[02:15:15] Speaker 03:
I know it seems like a simple, elegant solution, but it isn't.

[02:15:19] Speaker 03:
And it came up, Judge Millett, in a couple of the hypos that you posed.

[02:15:23] Speaker 03:
And I'm gonna go back to one of my favorite documents, JA 160, but this is true about any number of documents.

[02:15:29] Speaker 03:
Let's say one redacts everything except the general reference to the tariff for fuel surcharges.

[02:15:39] Speaker 03:
That document is going to make an 8 million times worse impression on the jury than the unredacted document, because the unredacted document shows that the reason that this information is being conveyed is as a basis to set the underlying rates.

[02:15:52] Speaker 03:
With the redaction, then the plaintiffs are free to argue, look, they're trading information about their fuel surcharges generally.

[02:16:00] Speaker 03:
And that's really a pervasive problem.

[02:16:02] Speaker 03:
So while there may be some situations in which redactions work,

[02:16:06] Speaker 03:
A lot of them are going to pose exactly that problem.

[02:16:08] Speaker 03:
And I think in that situation, the document has to be inadmissible.

[02:16:11] Speaker 03:
And the reason, I think, is precisely what you said, Judge Muller, is because the limiting instruction can't cure that problem.

[02:16:20] Speaker 03:
The whole point of this statute, the whole reason that there's an evidentiary exclusion,

[02:16:24] Speaker 03:
is because the Congress decided that the limiting instruction, which had insisted that it be given generally, no inference, wasn't enough.

[02:16:32] Speaker 07:
Well, is it possible, Mr. Verrilli, that it just becomes inadmissible under Rule 403 instead of this statute?

[02:16:39] Speaker 07:
It might, well, it might be- The district court just excluded, you could just argue it's more prejudicial than relevant.

[02:16:45] Speaker 07:
You could just have it excluded that way, right?

[02:16:47] Speaker 03:
Well, I think rule 403 would be a backup, but I guess what I'm trying to suggest, Judge Tatel, is that the reason Congress said that discussions or agreements of concern in online traffic are inadmissible is precisely because of the risk of an improper inference.

[02:17:01] Speaker 03:
And heavy reliance of redaction is going to, I think, exacerbate exactly the risk that Congress is trying to protect against.

[02:17:09] Speaker 03:
Now, just a couple more points, if I could.

[02:17:13] Speaker 03:
This is not a situation, the United States suggested this, the plaintiffs suggested this, where we're asking for an immunity or a safe harbor to collude.

[02:17:27] Speaker 03:
There are all kinds of ways in which that's not correct.

[02:17:30] Speaker 03:
As I said in response to your question earlier, Judge Millett, if you can look at a document or a piece of evidence and say, well, that's a separate discussion, and that separate discussion comes in.

[02:17:40] Speaker 03:
If it's, if it's evident on the face of the conversation and it's a sham district judge will judge will see that and of course that evidence will come in.

[02:17:50] Speaker 03:
Beyond that, it's important to take a step back and remember the plaintiffs in a case like this have the opportunity to prove a horizontal antitrust conspiracy using all the tools that plaintiffs normally use.

[02:18:02] Speaker 03:
They can use evidence that's about single line communications, the single line communications between carriers, internal documents about single line communications, in trade meetings, industry trade meetings which are often a source for evidence.

[02:18:16] Speaker 03:
They can have expert testimony about

[02:18:19] Speaker 03:
about elasticities and competitiveness.

[02:18:22] Speaker 03:
They can use every one of the tools in the toolbox.

[02:18:26] Speaker 03:
What they can't do is draw on this particular kind of evidence, which exists for the unique reason that interlining is necessary to enhance competition.

[02:18:36] Speaker 03:
It's there to enhance competition and this kind of communication is protected in order to ensure that that enhanced competition flourishes.

[02:18:44] Speaker 03:
So the idea, and then of course, beyond all that, they've got the safety belt.

[02:18:47] Speaker 03:
If the evidence, if it's evidence of a discussion agreement that considered by itself violates antitrust laws, it comes in.

[02:18:53] Speaker 03:
As I said, it's not smoking gun with respect to that.

[02:18:56] Speaker 03:
That evidence can come in if they can prove it up with the connective tissue.

[02:18:59] Speaker 03:
They haven't shown you that they can here.

[02:19:01] Speaker 03:
And that's because it's, you know, when it goes back, we'll see that they can't.

[02:19:05] Speaker 03:
And then just one last point, what the plaintiffs have argued for in the United States, I thought in this brief was arguing the same point, but they seem to have changed today.

[02:19:16] Speaker 03:
is that concern means solely concerned, that anything beyond that, whatever it was, de minimis reference, and this is out from the statute.

[02:19:26] Speaker 03:
But that's not the statute that Congress wrote.

[02:19:29] Speaker 03:
I mean, I think the statute that Congress could have written a statute that says, evidence of a discussion or agreement shall not be admitted if the discussion or agreement solely concerned

[02:19:39] Speaker 03:
an interline movement of a rail carrier and does not constitute evidence of unlawful collusion.

[02:19:44] Speaker 03:
That's the statute they're claiming in this case that Congress wrote.

[02:19:48] Speaker 03:
But compare that to the words that Congress actually used.

[02:19:52] Speaker 03:
It had a much broader, it defined a much broader scope of what counts as inadmissible and a much narrower scope of what gets admitted at the second stage.

[02:20:04] Speaker 03:
That's the statute Congress wrote and it wrote it because it made a judgment

[02:20:08] Speaker 03:
that these kinds of interactions are vital to enhance competition and that it was making a judgment that the risk that perhaps some circumstantial evidence that might provide a couple of tiles in a mosaic of an overall claim of conspiracy would get excluded, that that risk was worse than the risk of chilling, the kind of collaboration needed to make interline movements effective, right there on the face of the statute and I urge the court to apply the statute as written.

[02:20:37] Speaker 03:
Thank you.

[02:20:37] Speaker 07:
Thank you.

[02:20:38] Speaker 07:
Mr. Verrelli, Ms.

[02:20:40] Speaker 07:
Sullivan, Mr. Leach, thank you very much for your extremely helpful arguments this morning.

[02:20:44] Speaker 07:
The case is submitted.