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Class action against railways considered

Aproposed class-action suit against Canada’s two major railways over grain freight rates was due Feb. 1 in a Calgary courtroom, where it will be decided whether the suit can proceed on all Prairie farmers’ behalf.

In a letter to potential “class” members, Regina lawyer Tony Merchant said the certification hearing in Alberta Court of Queen’s Bench is expected to run over eight days, through to Feb. 10.

Merchant said $675 million, plus interest and further amounts accumulating each year, are “what we believe we can establish are ongoing wrongful charges,” which he said makes the case a “billion-dollar farm issue.”

The claim is filed in the name of Edmonton-area farmer Tom Jackson, a former commissioner with the Alberta Pulse Growers Commission and one-time director candidate for the Canadian Wheat Board, as the suit’s representative plaintiff.

In his brief filed Dec. 30 ahead of the certification hearing, Merchant’s suit alleges that between Aug. 1, 1995 and July 31, 2007, Canadian National and Canadian Pacific railways (CN, CP) “did charge unfair and unreasonable shipping rates” based on “unreasonable” hopper car maintenance costs.

The claim stems from a February 2008 ruling by the Canadian Transportation Agency (CTA) that has since substantially lowered the maximum annual revenue CN and CP are allowed to keep for moving Prairie grain.

The CTA ruling, upheld in November 2008 by the Federal Court of Appeal, found that the railways’ costs for maintenance of grain hopper cars, previously “embedded” in both railways’ federally capped grain freight revenue at $4,379 per car, were in fact $1,371 per car.

Merchant’s claim alleges the railways set tariffs and shipping rates under the maximum rate scales and maximum revenue entitlement allowed to them for handling Prairie grain under the Canada Transportation Act “without regard” to their actual hopper car maintenance costs.

Merchant’s brief estimated the amount allegedly overcharged from 1994 to 2007 at about $1.66 per tonne, for a total of $577 million.

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