In re: Rail Freight Fuel Surcharge Antitrust Litigation

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 7, 2022 Decided May 17, 2022

No. 21-7093

IN RE: RAIL FREIGHT FUEL SURCHARGE ANTITRUST

LITIGATION - MDL NO. 1869,

DONNELLY COMMODITIES INCORPORATED, ON BEHALF OF

ITSELF AND ALL OTHERS SIMILARLY SITUATED, ET AL.,

APPELLEES

v.

BNSF RAILWAY COMPANY, ET AL.,

APPELLANTS

Consolidated with 21-7095

Appeals from the United States District Court

for the District of Columbia

(No. 1:07-mc-00489)

(No. 1:11-cv-01049)

Donald B. Verrilli, Jr. argued the cause for appellants.

With him on the briefs were Benjamin J. Horwich, Glenn D.

Pomerantz, Linda S. Stein, Kent A. Gardiner, Tara L. Reinhart,

2

Saul P. Morgenstern, Matthew M. Collette, John M. Majoras,

Kristen Lejnieks, and Tyrone R. Childress.

Kathryn D. Kirmayer and Sarah Yurasko were on the brief

for amici curiae Association of American Railroads and

American Short Line and Regional Railroad Association in

support of appellants.

Kathleen M. Sullivan argued the cause for appellees. With

her on the brief were Michael D. Hausfeld, Brian A. Ratner,

Stephen R. Neuwirth, Sami H. Rashid, Meegan Hollywood,

Eamon O=Kelly, Paul M. Donovan, and Shawn Raymond.

Bryan J. Leitch, Attorney, U.S. Department of Justice,

argued the cause for amici curiae the United States and the

Federal Trade Commission in support of appellees. With him

on the brief were Daniel E. Haar and Robert B. Nicholson,

Attorneys, Joel Marcus, Deputy General Counsel, Federal

Trade Commission, and Mark S. Hegedus, Attorney.

John C. Sullivan was on the brief for amici curiae

American Chemistry Council, et al. in support of appellees.

Before: TATEL * and MILLETT, Circuit Judges, and

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

EDWARDS.

EDWARDS, Senior Circuit Judge: This matter focuses on

questions certified by the District Court for interlocutory

review pursuant to 28 U.S.C. § 1292(b). In the underlying

*

Judge Tatel assumed senior status after this case was argued

and before the date of this opinion.

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antitrust actions that gave rise to the certified questions, freight

shippers (“Plaintiffs”) allege that the nation’s four largest

freight railroads (“Defendants” or “Railroads”) have violated

the Sherman Act, 15 U.S.C. § 1, by “engag[ing] in a price-

fixing conspiracy to coordinate their fuel surcharge programs

as a means to impose supra-competitive total price increases on

their shipping customers.” In re Rail Freight Fuel Surcharge

Antitrust Litig., 520 F. Supp. 3d 1, 8 (D.D.C. 2021) (citation

omitted). Before hearing summary judgment motions, the

District Court considered Defendants’ motions to exclude

certain evidence on which Plaintiffs rely. Defendants argued

the challenged documents were inadmissible under 49 U.S.C.

§ 10706(a)(3)(B)(ii)(II) (“Section 10706”) as evidence of the

Railroads’ discussions or agreements concerning “interline”

traffic.

Interline movements are shipments carried along two or

more railroads’ tracks under a common arrangement. Section

10706 states that “[i]n any proceeding” in which rail carriers

are alleged to have violated antitrust laws, conspiracy “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.” 49 U.S.C.

§ 10706(a)(3)(B)(ii). The statute tellingly provides that

“evidence of a discussion or agreement between or among” rail

carriers “shall not be admissible if the discussion or agreement

. . . concerned an interline movement of the rail carrier,” and

“would not, considered by itself, violate the [antitrust] laws.”

Id. § 10706(a)(3)(B)(ii)(II) (emphasis added).

The parties sharply disagreed over whether and how the

rule of evidence under Section 10706 should be applied to the

documents cited by Defendants in their motions to exclude

evidence. As relevant here, the District Court held that “to be

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protected by the statute, an interline movement must be an

identifiable movement or movements with identifiable

circumstances, such as a specific shipper, specific shipments,

and specific destinations,” 520 F. Supp. 3d at 29; and it further

held that a discussion or agreement does not “concern”

interline movements if it could also be said to concern other

types of rail freight movements, id. at 33. The District Court

denied “[D]efendants’ motion for the exclusion of exhibits as a

whole,” id. at 34, and thus effectively denied full protection to

the contested documents cited by Defendants. Instead, the

District Court indicated that Defendants could “propose

redactions to remove [from documents] discussions or

agreements that concerned an interline movement of the rail

carrier, and, where redaction is impracticable or not feasible,

may request a suitable limiting instruction.” Id.

Defendants then asked the District Court to certify its order

for interlocutory appeal under 28 U.S.C. § 1292(b). The

District Court agreed after finding that the “order involves a

controlling question of law as to which there is substantial

ground for difference of opinion and . . . an immediate appeal

from the order may materially advance the ultimate termination

of the litigation.” Id.; see In re Rail Freight Fuel Surcharge

Antitrust Litig., 2021 WL 2433737, at *4-6 (D.D.C. June 15,

2021). This court, “in its discretion,” permitted the appeal

under § 1292(b).

In pressing for interlocutory review, Defendants focused

on two aspects of the District Court’s judgment: “(1) that the

phrase ‘an interline movement’ in Section 10706 means that

the statutory protections apply only to discussions or

agreements about ‘identifiable . . . movements with identifiable

circumstances, such as a specific shipper, specific shipments,

and specific destinations,’ and (2) that courts may implement

the protections of Section 10706 through redactions and

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limiting instructions.” 2021 WL 2433737, at *3 (omission in

original) (internal quotation marks and citation omitted). In the

opinion that follows below, we will focus on these two

principal issues and related matters. Because we find that the

District Court’s interpretation of Section 10706 sometimes

strays from the literal terms of the statute, we affirm in part and

reverse in part. Accordingly, we vacate the District Court’s

order and remand for the court to reconsider the evidence at

issue consistent with this court’s interpretation of Section

10706.

I. BACKGROUND

A. Statutory Framework

Congress enacted the Section 10706 statutory rule of

evidence as part of the Staggers Rail Act of 1980, Pub. L. No.

96-448, 94 Stat. 1895 (“Act”). The Act’s “primary goal” “was

to revitalize the railroad industry by reducing or eliminating

regulatory burdens.” Coal Exps. Ass’n of the U.S., Inc. v.

United States, 745 F.2d 76, 80-81 (D.C. Cir. 1984). “[T]he

underlying approach of the legislation was to move toward

much greater reliance on market forces rather than regulation

to govern rail carriage, but to temper that move with a policy

of retaining regulation where the market would be insufficient

to protect shippers and the public from abusive railroad

practices.” Id. at 81.

Rail freight traffic involves two types of movements:

interline and single-line. Br. for the United States and the

Federal Trade Commission (“FTC”) as Amici Curiae in

Support of Pls.-Appellees and Affirmance 1, 11. As explained

above, interline movements are shipments carried along two or

more railroads’ tracks under a common arrangement. Id. at 1.

In contrast, single-line shipments are moved by one carrier on

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its own tracks. Id. Outside of their shared interline traffic, rail

carriers generally compete with one another. See id.

“Facilitating interline traffic requires coordination among

competing freight railroads over logistics and shipping rates.”

In re Rail Freight Fuel Surcharge Antitrust Litig.–MDL No.

1869, 725 F.3d 244, 247 n.1 (D.C. Cir. 2013). Therefore, as

noted above, Section 10706 provides that proof of a conspiracy

“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.”

49 U.S.C. § 10706(a)(3)(B)(ii). In addition to the bar against

impermissible inferences, Section 10706 also precludes the

admission of evidence of certain discussions and agreements

between rail carriers. In relevant part, this statutory rule of

evidence states:

In any proceeding in which [an antitrust] violation is

alleged, evidence of a discussion or agreement between

or among such rail carrier and one or more other rail

carriers, or of any rate or other action resulting from

such discussion or agreement, shall not be admissible if

the discussion or agreement—

...

(II) concerned an interline movement of the rail

carrier, and the discussion or agreement would

not, considered by itself, violate the [antitrust]

laws . . . .

In any proceeding before a jury, the court shall

determine whether the requirements of [this subclause]

are satisfied before allowing the introduction of any

such evidence.

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Id.

B. Facts and Procedural History

Defendants BNSF Railway Co. (“BNSF”), CSX

Transportation, Inc., Norfolk Southern Railway Co., and Union

Pacific Railroad Co. (“Union Pacific”) account for the majority

of rail freight traffic in the United States. In re Rail Freight

Fuel Surcharge Antitrust Litig., 725 F.3d at 247. “In some

regions, the railroads’ networks overlap. In others, tracks may

belong almost exclusively to a single railroad.” Id. Each of the

Defendants interlines traffic with the others. See id.; Opening

Br. of Appellants 4.

The instant actions concern Plaintiffs’ challenges to rate-

based fuel surcharges that the Railroads imposed on shipments.

In re Rail Freight Fuel Surcharge Antitrust Litig., 725 F.3d at

247-48. As we have previously explained:

To offset fuel costs, freight railroads often include

fuel surcharges on top of the base rates they charge their

customers. These fuel surcharges have traditionally

taken two forms. Mileage-based fuel surcharges raise

total rates in proportion to shipping distances. Rate-

based fuel surcharges, by contrast, depend on a

prearranged “strike” or “trigger” price. When fuel

prices are below the trigger price, no fuel surcharge

supplements the base rate. But once fuel prices exceed

the trigger price, a surcharge is imposed as a function

of the base rate. . . .

Rate-based fuel surcharges were not unheard of at

the start of the new millennium, but neither were they

the norm. That all changed by the mid–2000s, when

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fuel surcharge provisions became ubiquitous,

governing the vast majority of the [D]efendants’

shipments. At the same time, the [D]efendants

sharpened the surcharges’ sting, with all four dropping

their trigger prices between March 2003 and March

2004. . . .

The heyday of the rate-based fuel surcharge did

not last. Eventually, the Surface Transportation Board

(STB) put an end to the practice with respect to

common carrier traffic within its regulatory authority.

See Rail Fuel Surcharges, Ex Parte No. 661, 2007 WL

201205 (S.T.B. Jan. 25, 2007). The STB was especially

troubled by the disconnect between the purported

rationale for the fuel surcharges—fuel cost recovery—

and the formula’s dependence on base rates, which

need not reflect the marginal fuel costs of a particular

shipment. See id. at *4. The [STB] decision did not,

however, directly implicate those shippers whose

traffic was governed by bilateral contract. See id. at

*10.

Id. at 248.

Following the STB’s decision, shippers filed lawsuits

alleging that the Railroads had violated antitrust laws by

conspiring to fix fuel surcharges for traffic outside the STB’s

jurisdiction. See id. Two of those actions are now before this

court. The first, In re: Rail Freight Fuel Surcharge Antitrust

Litigation, MDL No. 1869, No. 1:07-mc-00489 (D.D.C.),

includes cases brought against all four Defendants and

consolidated by the Judicial Panel on Multidistrict Litigation.

The matter has been before this court several times before. See

Fayus Enters. v. BNSF Ry. Co., 602 F.3d 444, 447-54 (D.C.

Cir. 2010) (affirming dismissal of state law claims); In re Rail

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Freight Fuel Surcharge Antitrust Litig., 725 F.3d at 254-55

(vacating class certification); In re: Rail Freight Fuel

Surcharge Antitrust Litig. - MDL No. 1869, 934 F.3d 619, 622-

27 (D.C. Cir. 2019) (affirming denial of class certification).

The second action, Oxbow Carbon & Minerals LLC v. Union

Pacific Railroad Co., No. 1:11-cv-01049 (D.D.C.), involves

claims against Union Pacific and BNSF only.

In advance of the District Court’s consideration of

summary judgment motions in both cases, Defendants invoked

Section 10706 to exclude certain documents upon which

Plaintiffs seek to rely. Defendants argue that the contested

documents are inadmissible under Section 10706 because they

constitute evidence of discussions or agreements concerning

interline movements. Noting that it would “be the first court to

interpret Section 10706 since Congress enacted the statute in

1980,” the District Court invited the Government to submit a

statement of interest reflecting the views of the Department of

Justice, the Federal Trade Commission, and the STB on the

interpretation and application of the statute. See Order (Mar.

16, 2020), No. 1:07-mc-00489, ECF No. 947, reprinted in Joint

Appendix (“J.A.”) 420-22. The court also permitted the

plaintiffs in a related multidistrict litigation pending before a

different District Court judge to file memoranda addressing the

motions. See generally In re Rail Freight Fuel Surcharge

Antitrust Litig. (No. II) - MDL No. 2925, No. 1:20-mc-00008

(D.D.C.).

In the decision now under review, the District Court

denied Defendants’ motions to exclude evidence under Section

10706. In re Rail Freight Fuel Surcharge Antitrust Litig., 520

F. Supp. 3d 1, 15-38 (D.D.C. 2021). The court held that a

discussion or agreement “concern[s] an interline movement of

the rail carrier” within the meaning of Section 10706 only if the

discussion or agreement is about “an identifiable movement or

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movements with identifiable circumstances, such as a specific

shipper, specific shipments, and specific destinations” and “all

of the parties to the discussion or agreement participate in the

interline movement or movements that are the subject of the

discussion or agreement.” Id. at 29-30. The court also held that

a discussion or agreement about “potential interline business of

the participating carriers without regard to specific shipments

or movements” does not qualify for exclusion under the statute.

Id. at 29. Turning to the issue of documents that are internal to

one rail carrier, the court held that a railroad’s internal

documents “may be evidence of a protected discussion or

agreement to the extent that [the internal document]

summarizes or otherwise conveys the substance of a discussion

or agreement that occurred between two or more rail carriers.”

Id. at 27. Finally, the District Court concluded that documents

qualifying for exclusion under the statute “need not be either

admitted or excluded in their entirety.” Id. Instead, the court

held, the statute’s protections may be implemented through

redactions and, “to the extent that redaction is impracticable or

inadvisable, limiting instructions may be employed.” Id. at 26.

Defendants then moved to have the District Court certify

its order for interlocutory appeal. The District Court granted

the motions and certified its order for immediate review. In re

Rail Freight Fuel Surcharge Antitrust Litig., 2021 WL

2433737, at *6-13 (D.D.C. June 15, 2021). Defendants

petitioned this court for permission under 28 U.S.C. § 1292(b)

to appeal, and a motions panel of this court granted the petitions

without prejudice to reconsideration by the merits panel. See

Order (Aug. 19, 2021), reprinted in J.A. 85-86.

We exercise our discretion to hear these consolidated

interlocutory appeals pursuant to 28 U.S.C. § 1292(b).

“[A]ppellate jurisdiction applies to the order certified to the

court of appeals, and is not tied to the particular question

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formulated by the [D]istrict [C]ourt.” Yamaha Motor Corp.,

U.S.A. v. Calhoun, 516 U.S. 199, 205 (1996). As such, we

“may address any issue fairly included within the certified

order.” Id.

II. ANALYSIS

On appeal, Defendants principally challenge: (1) the

District Court’s interpretation of Section 10706’s phrase

“concerned an interline movement”; (2) the court’s holding that

a rail carrier’s internal documents are not inadmissible under

Section 10706 unless they convey the substance – rather than

merely the existence – of a discussion or agreement concerning

interline movements; (3) the court’s conclusion that the

statute’s protections can be implemented via redactions; and

(4) the court’s conclusion that judges can employ limiting

instructions under certain circumstances to enforce the

protections afforded by Section 10706. We address these issues

in order below.

A. Standard of Review

“The court reviews de novo the [D]istrict [C]ourt’s . . .

statutory interpretation.” United States ex rel. Am. Civ. Constr.,

LLC v. Hirani Eng’g & Land Surveying, PC, 26 F.4th 952, 956

(D.C. Cir. 2020), reissued 2022.

B. “Concerned an Interline Movement”

We turn first to the meaning of the statutory phrase

“concerned an interline movement.” In interpreting a statute,

this court begins “with the language of the statute itself” and,

if necessary, “may turn to other customary statutory

interpretation tools, including structure, purpose, and

legislative history.” Genus Med. Techs. LLC v. FDA, 994 F.3d

12

631, 637 (D.C. Cir. 2021) (internal quotation marks and

citations omitted).

Before this court, Defendants argue that a discussion or

agreement “concern[s] an interline movement” within the

meaning of Section 10706 if the discussion or agreement “is

about—that is, it has practical bearing on—the discussant

railroads’ shared interline traffic.” Opening Br. of Appellants

33. On their read, this “is true regardless of how specific or

general the discussion is, and regardless of whether the

discussion might be said to concern other things too.” Id. at 33-

34. Defendants maintain that “many of the issues that matter

for interline traffic also matter for single-line traffic,” and that

“[n]obody has explained how interlining railroads could have

a reasonable conversation about many essential topics—fuel

costs among them—that would not also seem relevant (at least

in hindsight) to all traffic.” Id. at 59-60. For their part, Plaintiffs

contend that a discussion or agreement “concern[s] an interline

movement” only if the discussion or agreement is “limited to

interline movements and [does not] include single-line

movements.” Redacted Br. for Pls.-Appellees 22. In Plaintiffs’

view, Defendants’ contrary interpretation “would transform a

narrow evidentiary rule into a license for collusion on all rates.”

Id. at 25. Neither party has it right.

We hold that a discussion or agreement “concern[s] an

interline movement” only if Defendants meet their burden of

showing that the movements at issue are the participating rail

carriers’ shared interline traffic. A discussion or agreement

need not identify a specific shipper, shipments, or destinations

to qualify for exclusion; more general discussions or

agreements may suffice. For example, evidence of a discussion

or agreement about policies applicable to all of the

participating railroads’ shared interline traffic is excludable

under Section 10706, provided the evidence satisfies the

13

statute’s other requirements and the court can identify the

movements at issue as the carriers’ shared interline traffic. The

same is true of discussions or agreements about the formation

of the participating railroads’ interline agreements, as well as

about their anticipated shared traffic. A single document may

reference more than one discussion or agreement. See In re Rail

Freight Fuel Surcharge Antitrust Litig., 520 F. Supp. 3d 1, 25

(D.D.C. 2021). Defendants acknowledge that this is so. See

Opening Br. of Appellants 74-75. The court must consider each

discussion and agreement separately in determining whether it

should be excluded under Section 10706.

Consistent with the foregoing interpretation of the statute,

evidence of discussions or agreements about single-line traffic

or about freight traffic generally is not excludable under

Section 10706. A de minimis (i.e., brief and insignificant)

reference to non-interline traffic does not automatically

disqualify evidence from exclusion under Section 10706.

Instead, evidence of discussions or agreements about

identifiable interline movements that also contain a de minimis

reference to other traffic can qualify for exclusion under

Section 10706 if the carriers demonstrate that the reference was

either fleeting and inconsequential or appropriate to the

advancement of the interline discussion itself. To carry this

burden, the railroads must demonstrate that any such reference

did not change the focus of the discussion or agreement away

from the participating railroads’ shared, identifiable interline

movements.

Our construction of Section 10706 reflects the most

natural reading of the statute’s text. Rail freight traffic involves

two discrete types of movements: interline and single-line, see

Br. for the United States and the FTC as Amici Curiae in

Support of Pls.-Appellees and Affirmance 1, 11, and all parties

before this court agree that the term “concerned” as it appears

14

in the statute is synonymous with “about,” see Opening Br. of

Appellants 53 n.4; Redacted Br. for Pls.-Appellees 26; Reply

Br. of Appellants 22. Congress used “concerned” to connect

“discussion or agreement” with “an interline movement,”

indicating that a discussion or agreement does not “concern[]

an interline movement” if the discussion or agreement is about

single-line traffic or rail freight generally. Reading “concerned

an interline movement” to encompass discussions or

agreements about a mutually inconsistent category – i.e.,

single-line movements – defies logic.

Our interpretation is also consistent with the Act’s

purpose. The Act states that, “[i]n regulating the railroad

industry,” the Government’s policy is “to allow, to the

maximum extent possible, competition and the demand for

services to establish reasonable rates for transportation by rail.”

49 U.S.C. § 10101(1); see also ICC v. Texas, 479 U.S. 450, 460

(1987) (“In its statement of rail transportation policy, Congress

unambiguously expressed its interest in allowing free

competition, to the maximum extent possible, to govern the

financial health of the railroad industry.”). Adopting an

expansive interpretation of “concern[s] an interline movement”

would render Section 10706 “little more than a de facto

immunity for anticompetitive actions that happen to coincide

with interline traffic.” Br. for the United States and the FTC as

Amici Curiae in Support of Pls.-Appellees and Affirmance 13

(internal quotation marks omitted). We decline to adopt an

interpretation of the statute so clearly at odds with Congress’

intent.

At the same time, Section 10706, by its plain terms,

evinces Congress’ clear desire to allow rail carriers to

collaborate with one another about their shared interline traffic.

In addition to promulgating the rule of evidence at issue here,

the statute provides that proof of a conspiracy “may not be

15

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.”

§ 10706(a)(3)(B)(ii); see also H.R. Rep. No. 96-1430, at 114

(1980) (“[C]arriers must talk to competitors about interline

movements in which they interchange. That requirement could

falsely lead to conclusions about rate agreements that were

lawfully discussed.”). Interpreting Section 10706 to require

discussions or agreements to contain shipment-by-shipment

specificity, or to strip rail carriers of the statute’s protections

based solely on a de minimis reference to non-interline traffic,

would significantly frustrate the statute’s objective. Finally, the

statute’s use of the singular phrase “an interline movement”

should be interpreted to include multiple movements. See 1

U.S.C. § 1 (“In determining the meaning of any Act of

Congress, unless the context indicates otherwise—words

importing the singular include and apply to several persons,

parties, or things.”). That reinforces our conclusion that more

general discussions or agreements about all interline traffic are

excludable under Section 10706.

Defendants’ principal counterargument to the reading of

“concerned an interline movement” we adopt is that our

interpretation renders superfluous the second clause of Section

10706. Under that clause, evidence of a discussion or

agreement “concern[ing] an interline movement” is

inadmissible only if “the discussion or agreement would not,

considered by itself, violate the [antitrust] laws.”

§ 10706(a)(3)(B)(ii)(II). On Defendants’ read, discussions and

agreements about participating carriers’ shared, identifiable

interline movements “are never unlawful (at least outside the

most contrived hypotheticals).” Opening Br. of Appellants 61.

Therefore, they contend, the “paradoxical result,” id., of our

construction is that no discussion “concern[ing] an interline

16

movement” could ever, “considered by itself, violate the

[antitrust] laws,” § 10706(a)(3)(B)(ii)(II).

We are not persuaded. As the Government’s amicus brief

explains, a discussion or agreement can both “concern[] an

interline movement” consistent with our interpretation and

violate antitrust laws. See Br. for the United States and the FTC

as Amici Curiae in Support of Pls.-Appellees and Affirmance

18-19. For example, a larger carrier might pressure a smaller

carrier into accepting an unreasonably low share of interline

profits under threat of losing access to interline business. See,

e.g., Del. & Hudson Ry. Co. v. Consol. Rail Corp., 902 F.2d

174, 177-81 (2d Cir. 1990) (holding that a smaller rail carrier

presented genuine issues of material fact with respect to its

antitrust claims against a larger carrier where the larger carrier

“placed [the smaller carrier] in a bind between giving up almost

all of its profits on a given route and losing entirely the ability

to carry freight on the route”). Accordingly, the “considered by

itself” clause retains full force under our reading of the statute.

C. Internal Documents

Next, Defendants challenge the District Court’s ruling that

a rail carrier’s internal documents are not inadmissible under

Section 10706 unless they “summarize[] or otherwise convey[]

the substance of a discussion or agreement that occurred

between two or more rail carriers.” In re Rail Freight Fuel

Surcharge Antitrust Litig., 520 F. Supp. 3d at 27. Defendants

argue that an internal document referring to the existence of a

discussion or agreement concerning interline movements with

another carrier, even without summarizing the substance of

that discussion or agreement, is inadmissible. They maintain

that “[a]n internal document that references an interline

discussion, but does not convey its substance, is an especially

powerful invitation to jury speculation about the contents of

17

that discussion,” potentially forcing railroads “to admit the

entire interline discussion, just to show that there is nothing

nefarious about it.” Opening Br. of Appellants 67-68. Plaintiffs

disagree, contending that internal documents must reference

the substance of an interlining discussion or agreement with

another carrier to qualify for exclusion under Section 10706. In

their view, a carrier’s internal document that does not reference

the substance of a such a discussion or agreement “cannot

satisfy the plain language of the evidentiary exclusion.”

Redacted Br. for Pls.-Appellees 41.

We agree with Defendants that a rail carrier’s internal

documents need not convey the substance of a discussion or

agreement concerning interline movements to qualify for

exclusion under the statute. Instead, an internal document that

references only the existence of such a discussion or agreement

with another carrier is inadmissible, provided the document

meets the statute’s other requirements and the court can

identify the subject of the underlying discussion or agreement

as the participating railroads’ shared interline traffic. This

holding applies with equal force to internal documents

prepared in advance of discussions or agreements with other

carriers concerning shared interline movements.

The plain language of the statute supports this conclusion.

Section 10706 provides that evidence of a discussion or

agreement between or among rail carriers is inadmissible if,

among other requirements, “the discussion or agreement”

“concerned an interline movement of the rail carrier.”

§ 10706(a)(3)(B)(ii)(II) (emphases added). Such a discussion

or agreement is “of the rail carrier” only if the discussion or

agreement is between or among carriers participating in or that

are actively considering participation in the interline traffic at

issue. The plain terms of the statute require the “discussion or

agreement” itself – but not necessarily the evidence of that

18

discussion or agreement – to be between or among

participating carriers. This indicates that a carrier’s internal

document can qualify for exclusion, provided the underlying

discussion or agreement to which the document refers is about

the participating carriers’ shared interline movements. As such,

an internal document that refers to the existence of a discussion

or agreement concerning interline movements – without

conveying its substance – can qualify for exclusion under

Section 10706, provided the court is satisfied that the

discussion or agreement to which the internal document refers

concerns the participating railroads’ shared interline traffic.

This interpretation is also consistent with Congress’

expressed desire to allow railroads to collaborate with one

another about their shared interline traffic. See Section II.B,

supra. Reaching a contrary conclusion could cause a jury to see

references to an interlining discussion’s existence even if

separate evidence of that discussion’s substance is

inadmissible, inviting speculation about what the carriers

discussed. Such an outcome would contravene Congress’ clear

purpose for enacting Section 10706.

For these reasons, a carrier’s internal documents need not

convey the substance of a discussion or agreement concerning

interline movements to qualify for exclusion under the statute.

D. Redactions

Defendants challenge the District Court’s holding that

Section 10706 can be implemented via redactions. On

Defendants’ read, the statute’s directive that qualifying

evidence “shall not be admissible” indicates that courts cannot

implement the statute’s protections via redactions. Instead,

they argue that under Section 10706, evidence either “comes

in, or it stays out.” Opening Br. of Appellants 70. Plaintiffs

19

disagree, maintaining that the District Court properly

authorized redactions. They argue that the Railroads’ argument

against redactions reflects an attempt “to shield unlawful price-

fixing agreements if there is a single reference somewhere in

the same communication to shared interline movements.”

Redacted Br. for Pls.-Appellees 55.

We agree with Plaintiffs that Section 10706 can be

implemented through redactions of truly segregable portions of

documents. As Defendants concede, “different parts of a single

document could conceivably reflect two separate discussions,

one of which concerns interline traffic, and one of which does

not.” Opening Br. of Appellants 74-75. Under such a scenario,

“redacting only the interline discussion would be appropriate

because the unredacted material is not evidence of a qualifying

discussion, and thus lacks any claim to inadmissibility under

the statute.” Id. at 75.

The text of Section 10706 does not address the issue of

redactions. Absent a clear congressional directive to the

contrary, we decline to read the statute as divesting trial courts

of their authority to redact truly segregable portions of

documents. See United States v. Lemonakis, 485 F.2d 941, 949

(D.C. Cir. 1973) (recognizing trial courts’ “discretionary power

to delete objectionable portions” of evidence “where

appropriate”). As such, where segregable portions of

documents contain protected evidence of discussions or

agreements concerning interline movements, the District Court

may employ redactions. However, the Railroads remain free to

argue that any contested documents that might be subject to

redaction should be excluded in their entirety where the

probative value of the evidence is substantially outweighed by

the danger of unfair prejudice. See Fed. R. Evid. 403.

20

E. Limiting Instructions

Finally, the Railroads argue that limiting instructions are

irreconcilable with the text and purpose of Section 10706. We

largely agree.

Defendants convincingly contend that,

[i]n practical effect, the limiting instruction approach

negates the statute’s purpose. It allows a jury to see the

interline evidence Congress sought to exclude, and

leaves it up to the jury to decide what evidence to

disregard. But leaving it up to the jury is exactly what

Congress did not want, just as it did not want a jury

deciding whether, having seen evidence of lawful

interline collaboration, a conspiracy existed between

interline partners. Exclusion is the only remedy that

serves Congress’s purpose.

Opening Br. of Appellants 74. Defendants raise compelling

points in support of their claim that the text, structure, and

purpose of Section 10706 rule out limiting instructions:

Unlike many rules of evidence that permit [limiting

instructions], Section 10706 explicitly prescribes a

different remedy: The court must evaluate the evidence

“before allowing [its] introduction,” and evidence

meeting the statutory criteria “shall not be admissible.”

49 U.S.C. § 10706(a)(3)(B)(ii). That exclusion-based

approach to evidence stands in meaningful contrast to

the instruction-based approach that Section 10706 takes

to impermissible inferences. And in practical effect, the

District Court’s approach negates the statute’s purpose

by allowing a jury to see the interline evidence

Congress sought to exclude.

21

Id. at 31-32 (second alteration in original).

What is clear here is that Section 10706 “includes both an

inferential protection and an evidentiary rule, which operate

very differently at a jury trial.” Id. at 71. “The inferential

portion directs the jury not to infer a conspiracy from certain

parallel action, and it is implemented through an instruction at

trial.” Id. at 72. However, the Section 10706 evidentiary rule

is meant to guard against juries “fail[ing] to distinguish (a)

lawful interline discussions plus parallel action from (b)

conspiracy.” Id. Congress therefore made it clear that “‘[t]he

court shall determine’ whether the requirements of Section

10706 are met ‘before allowing the introduction of any such

evidence.’” Id. at 72-73 (quoting § 10706(a)(3)(B)(ii)).

Limiting instructions will not do.

In the light of the text and purpose of Section 10706, we

hold that limiting instructions may not be used to enforce the

protections of the statute except in those very rare instances in

which protected evidence is unavoidably and inextricably

intertwined with evidence that does not qualify for exclusion.

And in these limited situations, the court must take care to craft

instructions that do not open the door to a jury’s drawing the

very type of inferences that Congress intended Section 10706

to protect against.

III. CONCLUSION

For the foregoing reasons, we affirm in part and reverse in

part the District Court’s interpretation of Section 10706. We

vacate the District Court’s order and remand for the court to

reconsider the evidence at issue consistent with this court’s

interpretation of the statute.