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Cold Train Lawsuit Against BNSF Railway Heats Up


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#1 CNJRoss

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Posted 14 August 2014 - 06:22 PM

Railway Age, 8/8:

Cold Train cites BNSF congestion, suspends service

Earlier this year, congestion and trackwork on its Northern Corridor forced BNSF to increase transit times for intermodal shipments between the Pacific Northwest and Chicago, a move which has driven some customers to ship via Union Pacific. Now, a segment of Northwest perishables traffic is looking elsewhere as well.

On Aug. 7, 2014 Cold Train announced it has suspended shipment of doublestacked, containerized fruits, vegetables, and other food products from its terminal in Quincy, Wash. The company blames congestion on the Northern Corridor, along with intermodal service adjustments that BNSF implemented in April. . . .

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#2 CNJRoss

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Posted 14 August 2014 - 06:24 PM

Journal of Commerce, 8/7:

Cold Train ends intermodal service, citing poor BNSF performance

Cold Train, a provider of refrigerated intermodal transport from Washington state throughout the rest of the country, has ended service, citing poor BNSF Railway performance.

Cold Train said it was forced to suspend its service from Quincy to 24 U.S. states and Ontario because of BNSF’s decreased on-time reliability, reduction in train services, and the nearly doubling of transit times. Cold Train said it has no plans to restore the service at this time.

In noting its disappointment the service would end, BNSF said it would work with Cold Train and any other operator aiming to provide service to and from Quincy, spokesman Amy Casas said.

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#3 CNJRoss

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Posted 20 August 2014 - 10:26 PM

Capital Press AG Weekly, Salem, OR, 8/19:

BNSF responds to Cold Train shutdown

Burlington Northern responds to the closure of a refrigerated car line in Quincy, Wash., whch announced it would shut down due to a reduction in services.

Earlier this month, refrigerated car service Cold Train in Quincy, Wash., shut down, citing a reduction in services by BNSF.

“We were disappointed to hear they were suspending their operations, as we had been working with Cold Train for the past few months to provide them with options that would allow them to continue to operate this service,” said Amy Casas, director of corporate communications for BNSF.

The company will keep working with Cold Train, owned by Rail Logistics of Overland Park, Kan., or another operator should they wish to provide service at Quincy, Casas said.

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#4 CNJRoss

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Posted 23 August 2014 - 11:34 AM

The Packer - Everything Produce, 8/21:

New rail services chugging along

At the same time that rail congestion led to the suspension of Cold Train Express Intermodal Service this summer, two new refrigerated rail services were just getting started.

In June, Minneapolis-based McKay TransCold began offering a refrigerated, dedicated boxcar unit train dubbed Transcold Express, which runs each week between Wilmington, Ill., and Selma, Calif. Meanwhile, Tiger Cool Express LLC, Overland Park, Kan., started intermodal services from multiple locations in southern California to destinations in the Midwest and East Coast in February.

Representatives for both companies said that the congestion that plagued Cold Train on BNSF’s northern lines has had little effect on the southern BNSF and Union Pacific routes that their equipment travels on.

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#5 CNJRoss

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Posted 22 January 2015 - 12:20 AM

RailwayAge.com, 1/16:
 

Cold Train owner sued for loan default

 

Farmington Hills, Mich.-based Federated Railways, Inc. owner Louis Ferris, in a statement released Friday, Jan. 16, 2015 said he has filed a lawsuit against Michael Lerner, the owner of Rail Logistics and Cold Train.

 

The lawsuit by Ferris seeks to recover over $1.2 million from Michael Lerner as a result of Ferris' failed acquisition attempt last year of Overland Park, Kan.-based Cold Train, which Ferris claims was caused by Lerner's deliberate shutdown of Rail Logistics, the parent company of Cold Train.

 

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#6 CNJRoss

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Posted 30 January 2015 - 04:51 PM

The Packer, 1/28:
 

McKay TransCold, TransCold Logistics file for liquidation

    

McKay_TransCold_logo_map.jpg

Five months after launching its refrigerated rail service TransCold Logistics LLC, parent company McKay TransCold LLC closed up shop and filed for Chapter 7 bankruptcy liquidation with debts of about $7 million.

 

General manager Randy McKay signed separate Chapter 7 cases for McKay Transcold and Transcold Express Dec. 31, and Jan. 16, respectively. Company officials discontinued their refrigerated rail service that launched in May 2014 on Nov. 1, according to multiple media reports.

 

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#7 CNJRoss

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Posted 11 April 2015 - 10:21 PM

The News Tribune, Tacoma, WA 4/7:

 
Produce train execs claim BNSF Railway killed their business

Executives of a former rail-based produce express service from Washington to the Midwest say BNSF Railway ruined their business when the railroad gave priority to coal and oil trains moving to the Pacific Northwest.

 

Those executives, Steven Lawson and Mike Lerner, said their Cold Train business was growing rapidly until BNSF reneged on a promise of 72-hour service between the Northwest and Chicago. Cold Train had ordered new refrigerated produce cars and had reached an agreement to sell the business when the railroad changed its service guarantee from 72 hours to 125 hours to cover the distance between the fields and orchards of Eastern Washington to the Windy City, they claimed in a federal lawsuit filed Tuesday in Spokane.

 

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#8 CNJRoss

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Posted 25 November 2015 - 01:42 PM

News Release via PR Newswire, 11/23:

 

Cold Train Lawsuit Against BNSF Railway Heats Up As Amended Lawsuit Is Filed With More Charges

 

Several parties challenge BNSF settlement with Great Western Bank to buy creditor claims for pennies on the dollar in Kansas Court

 

Nov 23, 2015, 09:25 ET from Cold Train

 

SPOKANE, Wash., Nov. 23, 2015 /PRNewswire/ -- Following their original $41 million lawsuit in April of 2015 against Burlington Northern Santa Fe (BNSF) Railway in the United States District Court in Spokane, Washington for damages incurred for having to shut down the Cold Train Express Intermodal Service in 2014,  Steven Lawson, the former President/CEO of Cold Train, LLC., and Mike Lerner, the Managing Member of Cold Train, LLC., have filed an amended complaint for damages (on November 20, 2015) in the U.S. District Court which details even more significant issues about BNSF actions, which caused Cold Train's demise.

 

Photo - http://photos.prnews...20151123/290117
Photo - http://photos.prnews...20151123/290118

 

In particular, the amended lawsuit states that BNSF engaged in unfair and deceptive trade practices and violated the Washington Consumer Protection Act by wrongfully requiring Mr. Lerner, Mr. Lawson, and Cold Train, LLC to agree to a 95% carriage requirement, which effectively prohibited Cold Train from using other rail carriers. BNSF refused to revise its wrongful 95% carriage requirement despite promises to the contrary, and by refusing to allow the Cold Train to ship more than 5% of its traffic on other railroads.  BNSF's unfair and deceptive trade practices were conducted in the course of its railroad business and caused significant harm to Mr. Lerner, Mr. Lawson, and Cold Train, LLC. 

 

Cold Train was also greatly harmed 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 Performance (OTP) dramatically dropped from an average of over 90% to less than 5%.  To makes matters worse, in April of 2014, BNSF abruptly sent out an announcement to customers indicating that it would be immediately reducing its "Z Train" 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 (3 days slower) from Seattle/Quincy to Chicago.  The sudden change of service quickly caught the attention of lawmakers at the State and Federal Level and became the subject of a US Senate Transportation Committee Hearing in Washington DC in 2014.

 

In 2009, Steven Lawson and Mike Lerner had discussions with BNSF about starting a refrigerated intermodal shipping service in which the primary focus was to ship fresh produce grown in central Washington to retailers in the Midwest.  The success of this business hinged on consistent expedited Z train rail service between intermodal terminal in Quincy, Washington (which Cold Train leased from the Port of Quincy) and the BNSF's intermodal ramp in Chicago, Illinois. Additionally, before founding Cold Train, Mr. Lerner and Mr. Lawson obtained promises and representations from BNSF regarding the 72-hour service from Quincy to Chicago.  Based on this 72-hour service schedule promised by BNSF, Cold Train developed a business plan using refrigerated intermodal shipping containers that allowed fresh produce to be directly loaded into a refrigerated container, delivered by truck to the intermodal terminal at the Port of Quincy, and loaded onto an eastbound train the same day. 

 

The refrigerated intermodal rail service to/from Quincy, Washington proved to be very popular with both growers and retailers.  In fact, the service was being used by many of the top ten retailers, wholesalers, food processors and fresh shippers in the United States

 

Initially, BNSF required the Cold Train to acquire a minimum of 111 containers.  By May 2012, Cold Train had 175 containers in service with another 100 on order for delivery in January 2013.  Cold Train continued to purchase and lease containers, and by September 2013, Cold Train had over 400 refrigerated shipping containers in service, and was delivering refrigerated cargo from Quincy, Washington (and Portland, Oregon) to terminals in nineteen Midwest and East Coast states and one Canadian province.  

 

During August 2013, Lawson and Lerner began looking for a capital partner to provide the needed funds to continue the expansion of the Cold Train's business.  In September 2013, BNSF's On-Time Performance (OPT) abruptly dropped to 81% and by February 2014 it had dropped to only 4%.  Throughout this time, BNSF continued to assure Cold Train that it was working hard to resolve the OTP issues and represented that timely, consistent service would be restored. 

 

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 encouraged Lawson and Lerner to proceed with the sale, and as a result, Steven Lawson and Mike Lerner signed a letter of intent dated January 20, 2014, formalizing the deal with Federated. 

 

In March 2014, Steven Lawson and Federated met with BNSF representatives in Fort Worth to discuss the Cold Train's business and its future with BNSF.  At the meeting, BNSF continued to encourage Lawson, Lerner and Federated to proceed with the sale and promised another 5 year term of the existing Z train service at Quincy, WA.  Immediately thereafter, as a direct result of the encouragement, Federated provided Cold Train a $1.25 million capital infusion based solely on that meeting and then publicly announced that it was acquiring Cold Train

 

In April 2014, BNSF's OTP dropped to a dismal 3%.  Cold Train repeatedly complained to the BNSF that the continued degradation of service was detrimental to the Cold Train's business and that if timely service was not restored, the viability of Cold Train was in serious jeopardy.  The extreme delays in service and low OTP ultimately caused Cold Train to lose most of its business as its customers refused to tolerate the delays.

 

Despite the service failure, 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 Port to expand its intermodal facilities in Quincy

 

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.  In fact, on April 8th, just two weeks prior to notifying Lawson and Lerner of BNSF's decision to termination of the Z train service, BNSF issued a letter to Steven Lawson reaffirming its "partnership" and commitment to complete a new contract by June of 2014 to include incentives from BNSF to help with more investment on the part of Lawson, Lerner and Federated.

 

As a result of the scheduling change by BNSF in April of 2014, BNSF's rail transit time nearly doubled.   This caused Cold Train's costs of equipment, fuel and other costs to double, and caused many customers, especially fresh produce shippers, to look for other transportation service options.  In fact, because of BNSF's scheduling issues (beginning in November 2013), Cold Train lost most of its fresh produce business, which was more than 70% of the company's business.  

 

Because of BNSF's decision to terminate Cold Train's three day Z train service and replace it with six day Q train service, it took twice as much equipment, refrigeration fuel, etc. to move the same freight, which caused Cold Train to incur millions of dollars in operating losses and capital investment losses.  

 

As a direct result of the service change and BNSF's refusal to revise its wrongful 95% carriage requirement despite promises to the contrary, Federated withdrew its offer to purchase the Cold Train.  In essence, Lawson and Lerner would walk away with nothing from a business that had been worth over $40 million prior to April 24, 2014.   Moreover, BNSF would not restore its 72-hour service, nor was it willing to provide any substantial concession or compensation to the Cold Train to make up for the ruinous effects of its abrupt change of service. 

 

Additionally, the termination of the Z train service left numerous Washington State residents unemployed as well as many Washington State companies and other secured and unsecured creditors with significant receivables and debts.  Furthermore, BNSF has continued its extensive effort of bad faith and unfair dealings towards Lawson, Lerner, and the creditors of Cold Train by initiating negotiations with the Great Western Bank, the senior secured creditor, to extinguish its liability to the unsecured creditors, Lawson, Lerner and Federated by offering to buy the claim for pennies on the dollar against itself from the Rail Logistics estate in Kansas State court, without proper notice to the unsecured creditors.  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.  Several creditors have intervened in the Kansas Court, challenging this settlement agreement.






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