SPOKANE, WA - It looks like the Cold Train versus Burlington Northern Santa Fe (BNSF) Railway saga will continue a little bit longer, with Cold Train now adding additional charges to its original $41 million lawsuit.

Filed in a United States District Court in Spokane, WA, Steven Lawson, the former President and CEO of Cold Train, LLC., and Mike Lerner, the Managing Member of Cold Train, LLC., this week have unveiled details about what they say are even more significant issues about BNSF actions, which caused Cold Train’s downfall. 

Allegedly, and according to the amended lawsuit, BNSF engaged in “unfair and deceptive trade practices,” including but not limited to:

• Requiring Lerner, Lawson, and Cold Train, LLC. to agree to a 95% carriage requirement—effectively prohibiting Cold Train from using other rail carriers.
• Deceptively causing a significant slowdown in BNSF’s service schedules on its Northern Corridor line including the termination of an existing “Z train” service and replacement with a slower “Q train” service.
• Deceiving Lerner and Lawson into agreeing to a 72-hour service from Quincy to Chicago, before abruptly dropping its on time percentage (OTP) for the shipment to 3% by April of 2014. Cold Train’s business plan relied on allowing 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.
• Persuading Lawson and Lerner to sell the Cold Train business to Federated Railways, Inc. (Federated) with promises that the sale would allow for further expansion of its business and traffic on the BNSF line from Quincy, WA to Chicago, IL.
• The sale was worth approximately $32 million at closing and another $10 million from the ongoing operations, and also and was contingent upon Lawson accepting ownership in the new entity, a multi-million dollar cash payment and a long term employment contract to remain as President & CEO of new entity, Federated Cold Train. The total benefit to Steven Lawson personally was in excess of $21 million, separate and apart from Cold Train.
• 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.

According to the amended lawsuit, BNSF informed Cold Train that it was cancelling the 72-hour service and substituting a new 125-hour service nearly doubling BNSF’s rail transit time. 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.

BNSF’s business decision to direct its resources away from Cold Train resulted in millions of dollars in operating losses and millions of dollars in capital investment losses, they say, and 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 Cold Train. Lawson and Lerner say this resulted in the two walking away with nothing from a business that had been worth over $40 million prior to April 24, 2014.

Furthermore, 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.

The amended lawsuit states that BNSF’s actions were deliberate, and contrary to its known promises and representations to Cold Train, Mike Lerner, and Steve Lawson.  

Currently, several parties are challenging the original BNSF settlement with Great Western Bank in a Kansas Court, but for more updates on this lawsuit as they’re unveiled, check back with AndNowUKnow.

Cold Train