Federal judge finds in favor of Milo railroad in paper company dispute

By Nick Sambides Jr., BDN Staff
Posted April 03, 2011, at 6:41 p.m.

MADAWASKA, Maine — A federal judge has reaffirmed Montreal, Maine & Atlantic Railway’s right to control rail traffic on the 24-mile rail spur on which sits the Twin Rivers Paper Co. LLC mill, but declined to force the disputing parties into arbitration.

In a 77-page ruling released late Friday afternoon, U.S. District Court Chief Justice John A. Woodcock Jr. rejected Canadian National Railway Co.’s motion for a preliminary injunction that would allow it to carry product to and from the mill.

Woodcock rejected CN’s argument that MM&A’s interpretation of its property easement, which effectively prevents the Canadian railroad from using the MM&A tracks without an agreement with MM&A, was “perfectly senseless and monopolistic, yet self-serving” and that allowing it to continue would be unreasonably harmful to CN and Twin Rivers, an intervening party to the lawsuit.

Woodcock chided MM&A and Twin Rivers for the dispute at the heart of the court action. Twin Rivers, citing a long dissatisfaction with both the quality of MM&A’s service and its escalating costs, has sought to deal solely with CN, and in early December began trucking its paper into Canada to be loaded onto CN freight cars there rather than use MM&A.

“Despite the considerable gravitational forces pulling Twin Rivers and MM&A together,” Woodcock wrote, “the current parties for reasons of history, economics, and personality seem caught in powerful centrifugal forces” pulling them apart.

Robert C. Grindrod, chief executive officer of Montreal, Maine & Atlantic, which is headquartered in Milo, said he was satisfied with Woodcock’s ruling.

“He obviously listened very closely to all the testimony and weighed the testimony and has come up with a very well-reasoned decision,” Grindrod said Sunday.

“I think what’s going is that they [CN] filed a lawsuit to force access into the paper mill and I believe that the judge’s decision essentially says, no you don’t have the right to directly access the paper mill. You do have the right to … exchange cars with MM&A, and presumably then MM&A would do the car switching within the paper mill itself,” he added.

Mark Hallman, a spokesman for CN, did not immediately return email and telephone messages left with his office and cell phone on Sunday. Twin Rivers President and CEO Jeffrey Dutton said he was disappointed with the ruling.

“We will continue with our trans-loading [trucking arrangement] as we continue to save money [with that] versus using the MM&A,” Dutton said in an email.  “The MMA has yet to present us with a proposal that both meets our service requirements and is competitive from a cost perspective.

“Until we are convinced that they can service the account at an acceptable cost, we will not do business with them,” Dutton added.

Twin Rivers had argued that shipping with CN right from its mill would cost about a third of what Montreal, Maine & Atlantic charges, key savings that would help the fledgling company, which emerged from bankruptcy protection more than a year ago, to continue to survive.

But Woodcock cited Twin Rivers’ own testimony that its transshipping costs likely would diminish with time and had not forced any layoffs at the paper mill, while 31 layoffs occurred at MM&A. Woodcock said he saw merit in both sides’ arguments.

“The Court takes most seriously Twin Rivers‘ contention that to remain competitive, it must have railroad service that is more accommodating and cost-efficient than what MM&A has been willing or able to provide. The Court also takes most seriously MM&A’s contention that the jobs of its workers are at risk,” Woodcock wrote.

But ultimately, neither company’s position trumped the other, he said.

“Ultimately, the public interest is best served by businesses that produce high quality and price competitive products, whether paper rolls or rail transportation, so that these businesses can offer secure and high paying jobs to the members of the public and assume their respective places as good corporate citizens of the region,” Woodcock wrote. “As long as these overriding goals are being met, it matters little whether MM&A or Canadian National is operating the train.”

MM&A officials plan to contact Twin Rivers to discuss their issues, Grindrod said.

http://bangordailynews.com/2011/04/03/business/federal-judge-finds-in-favor-of-milo-railroad-in-paper-company-dispute/ printed on December 26, 2014