Cold Train challenge regarding settlement now in court

QUINCY — The Cold Train, a dream designed to meet the needs of Washington fresh food growers and Midwest consumers, is now a lingering court case.

Cold Train owners Steven Lawson and Mike Lerner filed a $41 million lawsuit in federal court in Spokane in April, claiming damages against Burlington Northern Santa Fe for the role they say BNSF played in the demise of Cold Train.

On Nov. 20 the Cold Train owners filed an amendment complaint which details “even more significant issues about BNSF actions.”

Lawson and Lerner claim they were forced to shut down the Cold Train Express Intermodal Service in 2014 because of actions BNSF took knowing they would harm Cold Train.

The lawsuit states that BNSF violated the Washington Consumer Protection Act by wrongfully requiring Mr. Lerner, Mr. Lawson and Cold Train, LLC. to agree to a 95 percent carriage requirement.

Lawson and Lerner say this effectively prohibited Cold Train from using other rail carriers. BNSF refused to revise its carriage requirement despite promises to the contrary, they said.

Cold Train was launched in April 2010. It’s purpose was to move central Washington fruit and produce to the Midwest by an express rail system. In 2009, Lawson and Lerner had discussions with BNSF about starting a refrigerated intermodal shipping service.

The success of this business hinged on consistent expedited Z Train rail service between the Cold Train’s intermodal terminal in Quincy (leased from the Port of Quincy) and the BNSF’s intermodal ramp in Chicago.

According to Lawson and Lerner, BNSF notified Cold Train of a special service (the Z Train service) for expedited container movement with a 72-hour eastbound transit time between these cities.

“This expedited service schedule was used to establish the Cold Train express intermodal service,” Lawson and Lerner claim.

The refrigerated intermodal rail service to and from Quincy was popular with growers and retailers, Lawson and Lerner said.

According to Lawson and Lerner, the Cold Train shipped approximately 300 containers a month in 2011. That number rose to 500 per month in 2012, and to nearly 700 per month in 2013 with a realistic goal of 1,000 per month by the end of 2013.

Lawson and Lerner claim Cold Train was greatly harmed by a significant slowdown in BNSF’s service schedules on its Northern Corridor line, beginning in the fall of 2013. There was rail congestion as a result of BNSF hauling larger volumes of oil and coal from the Northern Plains region.

Before founding Cold Train, Lerner and Lawson obtained promises and representations from BNSF regarding the 72-hour service from Quincy to Chicago. They claim BNSF knew that a guaranteed shipping time of 72 hours was absolutely necessary for shipping the fresh produce.

Lawson and Lerner say Cold Train continued to draw new customers at a steady rate, adding approximately 200 loads per month for the last part of 2013 alone.

In September 2013, BNSF’s on time performance abruptly dropped to 81 percent. BNSF representatives assured Cold Train that the OTP issues would be addressed and that service would be restored to previous levels, Lawson and Lerner claim.

In October 2013, the OTP dropped to 54 percent, but again BNSF continued to provide assurances that the issues would be resolved. The OTP continued to get worse, falling all the way to four percent in February of 2014.

On January 13 and 14, 2014, Steven Lawson met with BNSF’s representatives in Fort Worth, Texas, to inform them of an offer they had received to sell the Cold Train business to Federated Railways, Inc. BNSF responded enthusiastically, and Lawson and Lerner signed a letter of intent.

In April 2014, BNSF’s OTP dropped to three percent. The extreme delays in service ultimately caused Cold Train to lose most of its business.

BNSF asked Cold Train and the Port of Quincy to enlarge the Port of Quincy Intermodal Terminal to accommodate larger trains. BNSF wrote a letter dated April 24, 2014, to the U.S. Secretary of Transportation in support of the Port of Quincy’s application for a TIGER VI grant, which would allow the expansion

Meanwhile, on the same day (April 24, 2014), BNSF informed Cold Train that it was cancelling the 72-hour service and substituting a new 125-hour service, effective the following business day. Shortly thereafter, Lawson and Lerner say Cold Train learned that BNSF was planning to make this change for at least several months and purposefully concealed this from Cold Train until the last minute.

Cold Train’s costs doubled, and many customers, especially fresh produce shippers, looked for other transportation service options. Cold Train lost most of its fresh produce business, including apples, onions, pears, potatoes, carrots and cherries, which was more than 70 percent of the company’s business.

Lerner and Lawson met with BNSF representatives on April 28, 2014 to reiterate just how disastrous the service change was to their business, but BNSF declined to restore the express service.

Federated withdrew its offer to purchase the Cold Train. Lawson and Lerner said they walked away with nothing from a business that had been worth more than $40 million prior to April 24, 2014.

BNSF has continued its extensive effort of bad faith and unfair dealings towards Lawson, Lerner and the creditors of Cold Train, they say, by initiating negotiations with the Great Western Bank, the senior secured creditor.

The latest move by BNSF, if approved, would leave millions of dollars of unsecured creditor debt without any means of relief, all to the benefit of BNSF, Lawson and Lerner claim. Several creditors, including the Port of Quincy, have intervened in the Kansas Court, challenging this settlement agreement.

For more information, please contact Steve Lawson at cold.train3@gmail.com or call 509-731-4734.