The little guy vs Mr. Big?
Is this the little guy vs Mr Big. Or is it a guy looking for free PR . Also I see some lawyers will make money on this and not thing will change. What do you thinking. Some when you are a small gear in a big machine you get stripped.Unity-area farmer Gordon Wallace (right) and his lawyer, Joel Hesje
Photograph by: SP Photo by Gord Waldner, The StarPhoenixSaskatchewan farmer Gordon Wallace has launched a lawsuit against both major Canadian railways and the federal government, claiming western farmers have been substantially overcharged for grain transportation for possibly as long as 25 years.
The Unity-area farmer is represented by McKercher LLP, a Saskatoon law firm. Wallace hopes to have the suit certified as a class action, representing all Western Canadian grain producers.
Doug Richardson, a partner with the firm, said the action is "one of the largest lawsuits of its type ever started here in Saskatchewan."
At a news conference Tuesday, Wallace said freight rates are a huge problem for farmers who must ship their grain with Canadian National or Canadian Pacific railways. Freight rates are regulated by the federal government, giving farmers no negotiating power.
"It's not like having a truck and agreeing on a freight rate," said Wallace.
Asked why he launched the suit, Wallace said, partly joking, "I like to complain." Then he added, "If you're going to complain, maybe you should try to change things."
Wallace, who farms 6,500 acres with his two brothers, said he pays abut $1 per bushel for freight when shipping his grain to port.
"It's big money. It's one of our largest costs. A dollar a bushel is a lot of money."
The suit was filed following a ruling by the Canadian Transportation Agency (CTA) in February 2008, which found the maintenance cost for a hopper car is $1,372 annually. However, freight rates included an embedded maintenance cost of $4,379 per car -- about 300 per cent higher than the real cost.
The CTA finding was challenged by CN and CP, but the Federal Court of Appeal upheld the CTA ruling in November 2008.
Wallace's lawyer, Joel Hesje, said the ruling showed there has been "serious and substantial overcharging" of grain producers.
The CTA reduced the freight revenue cap by $72.2 million for the 2007-08 crop year, but the question of how long farmers have been overcharged for grain transportation remains, said Hesje.
Railway charges to grain producers have been regulated by federal agencies since 1983, Hesje explained. In 1996, the regulated rates evolved into a rate cap system, which changed again in 2000 to the revenue cap system. The regulated environment makes it essentially impossible for individual producers to negotiate transportation rates.
The lawsuit also claims federal agencies overseeing transportation did not exercise scrutiny and due diligence. The minister of transport, now John Baird, the Canadian Transportation Commission, the National Transportation Agency and the CTA are all named as defendants.
CN, CP and the federal government were served with Wallace's statement of claim last week. Normally, the defendants have 30 days to respond with a statement of defence.
McKercher lawyers then have 90 days to file a class-action certification application. If the claim is not certified, the action will likely end there, due to the huge costs involved in conducting a class-action suit.
Hesje noted that Wallace is going up against two massive companies and the government.
"We're under no delusions that this is going to be easy," said Hesje.
None of the allegations have been proven in court.
If the defendants can prove that railways have been overcharging by approximately $70 million since 1983, the action could potentially seek $1.75 billion in damages to be returned to Western Canadian farmers.
CN and Transport Canada officials would not comment because the lawsuit is before the courts.
CP spokesperson Breanne Feigel said the company is reviewing the allegations.
However, Feigel added the amount CP is entitled to earn by moving grain is determined by the CTA, "so there's no benefit to a railway exceeding that entitlement number because that money is not capped with the railway. It's given over to the Western Grains Research Foundation to the benefit of Canadian farmers.
"We've worked for a number of years to meet that entitlement number."
jpaulson@sp.canwest.com
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