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Former Cold Train executives file suit against BNSF

On April 7, a $41 million lawsuit was filed by former Cold Train executives against Burlington Northern Santa Fe Railway for damages that put the refrigerated rail car service out of business in August.

Daniel Appel, a partner at the Wenatchee law firm Foreman, Appel, Hotchkiss & Zimmerman PLLC, which is representing Cold Train, told The Produce News that Cold Train’s business plan was based on a 2009 agreement with BNSF to provide special 72-hour service from the heart of Washington’s fruit-producing area to Chicago.

Appel said Cold Train spent $12 million dollars to design and built refrigerated rail service to fulfill the service to Washington shippers. Apples and pears were the primary fresh commodities carried by Cold Train.

“It was a great service and provided shippers with an alternative to trucks,” Appel said. “It was a very beneficial service” to the produce industry.

The company grew its equipment fleet as it gained shippers. Appel indicated that Cold Train was doing “extremely well” in its business plan.

A Cold Train press release on April 7 indicated that “the shutdown of Cold Train was caused by a significant slowdown in BNSF’s service schedules on its northern corridor line beginning in the fall of 2013 because of increased rail congestion as a result of BNSF hauling larger volumes of oil and coal from the Northern Plains region. In fact, from November of 2013 to April of 2014, BNSF’s on-time percentage dramatically dropped from an average of over 90 percent to less than 5 percent. To makes matters worse, in April of 2014, BNSF abruptly sent out an announcement to customers indicating that it would be immediately reducing intermodal train service from Washington state to only one train a day from Washington state (instead of two), and that transit time would be twice as slow (three days slower) from Seattle/Quincy to Chicago.”

With degraded BNSF service, Appel said Cold Train “customers bailed left and right.”

Cold Train met “on several occasions” with BNSF, Appel said, and was assured the service issues would be addressed. Finally, in April 2014, BNSF said its service for Cold Train would go from 72 to 125 hours. Thus, “shipping produce became impossible. That takes too long.” Four months later, Cold Train closed its doors.

Plaintiffs in the lawsuit against BNSF, which was filed in the U.S. District Court, Eastern District of Washington, in Spokane, WA, are Steven Lawson, the former president and chief executive officer of Cold Train, and Mike Lerner, Cold Train’s former managing member.

Appel noted that Cold Train faced not only understandably upset customers, but with the longer service, there was a need for twice as many rail cars and twice as much fuel was needed to maintain refrigerators for 125 hours. As a result, “the hard costs went up considerably.”

BNSF has 21 days from the April 7 filing to respond to the lawsuit “and then we will begin discovery,” Appel said.

“We are very confident that we have a good case against BNSF, based on the facts as we understand them,” said Appel.

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