DECISIONS OF THE FEDERAL MARITIME COMMISSION

Second Series 

VOLUME 6 

January 2023 – June 2023 issuance 

FEDERAL MARITIME COMMISSION, OFFICE OF THE SECRETARY, 2023
Federal Maritime Commission

Washington, D.C. 

August 18, 2023 

Daniel B. Maffei, Chairman

Rebecca F. Dye, Commissioner

Louis E. Sola, Commissioner

Carl W. Bentzel, Commissioner 

Max Vekich, Commissioner 

Office of Administrative Law Judges

Erin M. Wirth, Chief Administrative Law Judge

Linda S. Harris Crovella, Administrative Law Judge

Alex M. Chintella, Administrative Law Judge
The Federal Maritime Commission makes decisions in cases brought by parties who claim they have been 

harmed because of a violation of the Shipping Act of 1984, as amended, 46 U.S.C. chapters 401-413. The 

Commission can also determine to investigate a possible violation of the same law. In the first instance, 

these claims are heard by an Administrative Law Judge who issues an Initial Decision. That Initial 

Decision may become the final decision of the Commission 30 days later. However, the Initial Decision 

can be appealed by the parties to the proceedings, or any Commissioner can ask to review the Initial 

Decision. In either case, the Commission would then review the Initial Decision and issue a Final 

Decision in the case. This publication provides a compendium of Initial and Final Decisions in these 

matters and selected other Orders that may be significant or establish a new legal precedent.
TABLE OF CASES REPORTED BY DOCKET NUMBER

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to navigate throughout this file in your PDF viewer.

Please consult the FMC’s activity logs located at

https://www2.fmc.gov/readingroom/ProceedingSearch for the most current status of

any proceeding.

FORMAL DOCKETS 

14-06 Santa Fe Discount Cruise Parking, Inc., d/b/a EZ Cruise Parking; Lighthouse

Parking Inc; and Sylvia Robledo d/b/a 81st Dolphin Parking v. The Board of

Trustees of the Galveston Wharves; and the Galveston Port Facilities

Corporation ................................................................................................................... 134 

∗ Initial Decision Approving Settlement Agreement, February 23, 2023 

 .......................................................................................................................... 134 

∗ Notice Not to Review, March 28, 2023 ....................................................... 152 

15-11 & 1953(I) Igor Ovchinnikov, Irina Rzaeva, and Denis Nekipelov, Kairat

Nurgazinov v. Michael Hitrinov a/k/a Michael Khitrinov, and Empire United

Lines Co. Inc. ................................................................................................................. 106 

∗ Order Affirming the Initial Decision on Different Grounds, February 8, 

2023 .................................................................................................................. 106 

20-14 Intermodal Motor Carriers Conference, American Trucking Associations,

Inc. v. Ocean Carrier Equipment Management Association Inc.; Consolidated

Chassis Management, LLC; CMA CGM S.A.; COSCO Shipping Lines Co. Ltd.;

Evergreen Line Joint Service Agreement, FMC No. 011982; Hapag-Lloyd AG;

HMM Co. Ltd.; Maersk A/S; MSC Mediterranean Shipping Company S.A.; Ocean

Network Express Pte. Ltd.; Wan Hai Lines Ltd.; Yang Ming Marine Transport

Corp.; and Zim Integrated Shipping Services ............................................................ 45 

∗ Initial Decision Partially Granting Summary Decision, February 6, 2023 

 [Exceptions filed by Respondents, 3/7/23, Commission final decision pending.]

............................................................................................................................ 45 

21-05 MCS Industries, Inc. v. COSCO Shipping Lines Co., Ltd. and MSC

Mediterranean Shipping Company SA ......................................................................... 1 

∗ Initial Decision on Default, January 13, 2023 [Exceptions filed by Respondent, 

2/6/23, Commission final decision pending.]..................................................................... 1 

21-11 OJ Commerce, LLC v. Hamburg Südamerikanische DampfschifffahrtsGesellschaft A/S & Co. KG and Hamburg Sud North America, Inc. .................... 165 

∗ Initial Decision, June 7, 2023 [Exceptions filed by Complainant and a Respondent, 

 6/29/23, Commission final decision pending.].............................................................165 
21-16 Wan Hai Lines, Ltd. and Wan Hai Lines (USA) Ltd. – Possible Violations of

46 U.S.C. § 41102(c) ...................................................................................................... 141 

∗ Initial Decision Approving Remand Settlement Agreement, March 13, 

2023 .................................................................................................................. 141 

∗ Notice Not to Review, April 13, 2023 ......................................................... 153 

21-17 Ocean Network Express (North America), Inc. and Ocean Network

Express, PTE., Ltd. – Possible Violations of 46 U.S.C. § 41102(c) ........................... .24 

∗ Notice Not to Review, January 17, 2023 ....................................................... 24 

22-16 Goforth & Marti D/B/A GM Business Interiors v. HSIN Silk Road

Shipping Ltd. ................................................................................................................. 128 

∗ Initial Decision on Default, February 15, 2023 .......................................... 128 

∗ Notice Not to Review, March 21, 2023 ....................................................... 148 

22-18 Color Brands, LLC v. AAF Logistics, Inc. ......................................................... 40 

∗ Initial Decision on Default, January 27, 2023 .............................................. 40 

∗ Notice Of Commission Determination to Review, February 23, 2023 

 .......................................................................................................................... 140 

22-22 U Shippers Group Inc. v. Maersk A/S dba Maersk........................................ 154 

∗ Initial Decision Approving Settlement Agreement, April 17, 2023 ....... 154 

∗ Notice Not to Review, May 19, 2023 ........................................................... 161 

22-25 B & G Futures Inc., Revocation of Ocean Transportation Intermediary

License No. 026512NF....................................................................................................25 

∗ Initial Decision Revoking Ocean Transportation License, January 19, 

2023 .................................................................................................................... 25 

∗ Notice Not to Review, February 22, 2023 .................................................. 133 

22-26 Philip Reinisch Co. LLC v. Flexport International LLC ................................ 149 

∗ Initial Decision Approving Settlement Agreement, March 24, 2023 ..... 149 

∗ Notice Not to Review, April 25, 2023 ......................................................... 157 

22-27 Globerunners, Inc. v. Hoyer Global (USA), Inc. ............................................ 231 

∗ Initial Decision Approving Settlement Agreement, June 28, 2023 ......... 231 

22-32 Doka U.S.A. Ltd. v. MSC Mediterranean Shipping Company

(USA) Inc. ....................................................................................................................... 158 

∗ Initial Decision Approving Settlement Agreement, May 12, 2023 ......... 158 
∗ Notice Not to Review, June 15, 2023 ........................................................... 229 

22-33 CCMA, LLC v. Mediterranean Shipping Company S.A. and Mediterranean

Shipping Company (USA) Inc. ................................................................................... 162 

∗ Initial Decision Approving Settlement Agreement, May 26, 2023 ......... 162 

∗ Notice Not to Review, June 27, 2023 ........................................................... 230 
TABLE OF CASES REPORTED ARRANGED ALPHABETICALLY

This PDF file contains bookmarks. You can use the bookmark/table of contents feature 

to navigate throughout this file in your PDF viewer.

Please consult the FMC’s activity logs located at 

https://www2.fmc.gov/readingroom/ProceedingSearch for the most current status of 

any proceeding.

B & G Futures Inc., Revocation Of Ocean Transportation Intermediary License 

No. 026512NF, Docket No. 22-25 ..................................................................................25 

∗ Initial Decision Revoking Ocean Transportation License, January 19, 

2023 .................................................................................................................... 25 

∗ Notice Not to Review, February 22, 2023 .................................................. 133 

CCMA, LLC, v. Mediterranean Shipping Company S.A. and Mediterranean 

Shipping Company (USA) Inc., Docket No. 22-33 ................................................... 162

∗ Initial Decision Approving Settlement Agreement, May 26, 2023 ......... 162 

∗ Notice Not to Review, June 27, 2023 ........................................................... 230 

Color Brands, LLC v. AAF Logistics, Inc., Docket No. 22-18 ...................................40 

∗ Initial Decision on Default, January 27, 2023 .............................................. 40 

∗ Notice Of Commission Determination to Review, February 23, 2023 

 .......................................................................................................................... 140 

Doka U.S.A. Ltd. v. MSC Mediterranean Shipping Company (USA) Inc., Docket 

No. 22-32 ........................................................................................................................ 158 

∗ Initial Decision Approving Settlement Agreement, May 12, 2023 ......... 158 

∗ Notice Not to Review, June 15, 2023 ........................................................... 229 

Globerunners, Inc. v. Hoyer Global (USA), Inc., Docket No. 22-27 ...................... 231 

∗ Initial Decision Approving Settlement Agreement, June 28, 2023 ......... 231 

Goforth & Marti D/B/A GM Business Interiors v. HSIN Silk Road Shipping Ltd., 

Docket No. 22-16 ........................................................................................................... 128 

∗ Initial Decision on Default, February 15, 2023 .......................................... 128 

∗ Notice Not to Review, March 21, 2023 ....................................................... 148 
Igor Ovchinnikov, Irina Rzaeva, and Denis Nekipelov, Kairat Nurgazinov v. 

Michael Hitrinov a/k/a Michael Khitrinov, and Empire United Lines Co. Inc., 

Docket No. 15-11 & 1953(I) .......................................................................................... 106 

∗ Order Affirming the Initial Decision on Different Grounds, February 8, 

2023 .................................................................................................................. 106 

Intermodal Motor Carriers Conference, American Trucking Associations, Inc. v. 

Ocean Carrier Equipment Management Association Inc.; Consolidated Chassis

Management, LLC; CMA CGM S.A.; COSCO Shipping Lines Co. Ltd.; Evergreen

Line Joint Service Agreement, FMC No. 011982; Hapag-Lloyd AG; HMM Co. 

Ltd.; Maersk A/S; MSC Mediterranean Shipping Company S.A.; Ocean Network 

Express Pte. Ltd.; Wan Hai Lines Ltd.; Yang Ming Marine Transport Corp.; and 

Zim Integrated Shipping Services, Docket No. 20-14 ................................................ 45 

∗ Initial Decision Partially Granting Summary Decision, February 6, 

 2023 [Exceptions filed by Respondents, 3/7/23, Commission final decision pending.]

............................................................................................................................. 45 

MCS Industries, Inc. v. COSCO Shipping Lines Co., Ltd. and MSC

Mediterranean Shipping Company SA, Docket No. 21-05 ......................................... 1 

∗ Initial Decision on Default, January 13, 2023 [Exceptions filed by Respondent, 

2/6/23, Commission final decision pending.]......................................................................... 1 

Ocean Network Express (North America), Inc. and Ocean Network Express, 

PTE., Ltd. – Possible Violations of 46 U.S.C. § 41102(c), Docket No. 21-17 ............24 

∗ Notice Not to Review, January 17, 2023 ....................................................... 24 

OJ Commerce, LLC v. Hamburg Südamerikanische DampfschifffahrtsGesellschaft A/S & Co. KG and Hamburg Sud North America, Inc., 

Docket No. 21-11 ........................................................................................................... 165 

∗ Initial Decision, June 7, 2023 [Exceptions filed by Complainant and a Respondent, 

 6/29/23, Commission final decision pending.]...................................................................165 

Philip Reinisch Co. LLC v. Flexport International LLC, Docket No. 22-26 .......... 149 

∗ Initial Decision Approving Settlement Agreement, March 24, 2023 ..... 149 

∗ Notice Not to Review, April 25, 2023 ......................................................... 157 

Santa Fe Discount Cruise Parking, Inc., d/b/a EZ Cruise Parking; Lighthouse 

Parking Inc; and Sylvia Robledo d/b/a 81st Dolphin Parking v. The Board of 

Trustees of the Galveston Wharves; and the Galveston Port Facilities 

Corporation, Docket No. 14-06 ................................................................................... 134 

∗ Initial Decision Approving Settlement Agreement, February 23, 2023 

 .......................................................................................................................... 134 

∗ Notice Not to Review, March 28, 2023 ....................................................... 152 
U Shippers Group Inc. v. Maersk A/S dba Maersk, Docket No. 22-22 .................154 

∗ Initial Decision Approving Settlement Agreement, April 17, 2023 ....... 154 

∗ Notice Not to Review, May 19, 2023 .......................................................... 161 

Wan Hai Lines, Ltd. and Wan Hai Lines (USA) Ltd. - Possible Violations of 

46 U.S.C. § 41102(c), Docket No. 21-16 ...................................................................... 141 

∗ Initial Decision Approving Remand Settlement Agreement, March 13, 

2023 .................................................................................................................. 141 

∗ Notice Not to Review, April 13, 2023 ......................................................... 153 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

MCS INDUSTRIES, INC., Complainant 

v. 

COSCO SHIPPING LINES CO., LTD. AND MSC 

MEDITERRANEAN SHIPPING COMPANY SA, Respondents. 

DOCKET NO. 21-05 

Served: January 13, 2023 

ORDER OF: Erin M. WIRTH, Chief Administrative Law Judge. 

I 1 NITIAL DECISION ON DEFAULT

I. Introduction

This initial decision on default imposes a default decision against Respondent MSC

Mediterranean Shipping Company SA (“MSC Mediterranean Shipping” or “Mediterranean”) for 

failing to produce discovery, including discovery compelled as early as December 8, 2021. 

As detailed below, MSC Mediterranean Shipping has been warned multiple times that if 

it failed to produce the discovery, a default decision would be issued against it. To expedite the 

proceeding, on May 4, 2022, the undersigned granted the parties’ proposal to file a letter of 

request with authorities in Switzerland pursuant to the 1970 Hague Convention on the Taking of 

Evidence Abroad in Civil or Commercial Matters (“Hague Convention”). On June 29, 2022, the 

Swiss court denied the request as outside the scope of the Hague Convention. MSC 

Mediterranean Shipping disagrees with the Swiss court’s decision and continues to refuse to 

produce the discovery ordered in this proceeding, despite multiple orders to do so. 

As explained more fully below, a default decision is issued against MSC Mediterranean 

Shipping and it is ordered to pay reparations to Complainant MCS Industries, Inc. (“MCS

Industries”). This decision does not reach the merits of the claim but rather imposes default as a 

procedural consequence. 

1 This decision will become the decision of the Commission in the absence of review by the 

Commission. Any party may file exceptions to this decision within twenty-two days of the 

date of service. 46 C.F.R. § 502.227. 

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[Exceptions filed by Respondent, 2/6/23, Commission final decision pending.]
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

II. Discussion

A. Procedural History

This proceeding began on August 3, 2021, when the Commission issued a Notice of 

Filing of Complaint and Assignment requiring an initial decision to be issued by August 3, 2022, 

and stating that MCS Industries had filed a complaint alleging that MSC Mediterranean Shipping 

and COSCO Shipping Lines Co., Ltd. had violated the Shipping Act. 

On August 26, 2021, MSC Mediterranean Shipping filed an answer denying the 

complaint’s allegations and raising numerous defenses. 

On September 23, 2021, an initial decision approving confidential settlement agreement 

was issued, resolving the claims against Respondent COSCO Shipping Lines Co., Ltd. 

Also on September 23, 2021, a revised scheduling order was issued, adopting the parties’

proposed schedule and requiring discovery to be completed by January 27, 2022. 

On December 8, 2021, an order was issued granting MCS Industries’ motion to compel

discovery (“Order Granting Motion to Compel”). On December 21, 2021, another revised 

scheduling order was issued requiring discovery to be completed by March 22, 2022, and 

briefing completed by June 1, 2022. 

On February 4, 2022, an order on motion to amend complaint and motion to dismiss 

(“Order Denying Dismissal”) was issued and leave was given to accept the filing of the verified 

amended complaint. 

On March 4, 2022, an order on proposed revised schedule and discovery notice was 

issued which required the parties, in relevant part: to “provide a joint status report addressing the

status of discovery, the issues above, and a proposed request for overseas discovery by April 4, 

2022” and to continue to exchange discovery in an expeditious fashion. Order on Proposed 

Revised Schedule and Discovery Notice at 2. On April 4, 2022, the parties filed a joint status 

report regarding the status of discovery and Swiss discovery issues. 

On May 4, 2022, an order granting request for letter of request under Hague Convention 

was issued, finding that the letter would be “the most appropriate and efficient process” for

obtaining discovery, and attaching the letter of request “with minor modifications from the

parties’ proposal” for MCS Industries to translate and file with the appropriate Swiss authorities.

Order Granting Request for Letter of Request under Hague Convention at 1-2. 

On July 8, 2022, MCS Industries filed a notice of decision on the letter of request, with 

French and English translation of the June 29, 2022, Decision of the Judge in the Republic and 

Canton of Geneva, civil court, which denied the request on the grounds that the proceeding is 

administrative and therefore does not fall within the scope of application of the Hague 

Convention. On July 15, 2022, the parties filed a joint status report. 

On July 29, 2022, an order was issued requiring MSC Mediterranean Shipping to produce 

all outstanding discovery by August 29, 2022, including the discovery ordered to be produced in 

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the order granting motion to compel issued on December 8, 2021. On August 26, 2022, MSC 

Mediterranean Shipping filed a motion seeking an extension of time and on September 6, 2022, 

filed a notice of advice of the Swiss Federal Office of Justice. On September 2, 2022, MCS 

Industries filed an opposition to the motion for an extension of time. 

On September 8, 2022, the extension of time was denied and MSC Mediterranean 

Shipping was ordered to show cause “why a default decision should not be issued against it for

failure to produce discovery.” Order Denying Respondent’s Motion for an Extension of Time 

and Order to Show Cause at 1 (“OTSC”). 

On September 22, 2022, MSC Mediterranean Shipping filed its response to the order to 

show cause (“OTSC Respondent Response”). On October 6, 2022, MCS Industries filed its 

response to the order to show cause (“OTSC Complainant Response”). On October 14, 2022,

MSC Mediterranean Shipping filed a reply (“OTSC Respondent Reply”).

On October 18, 2022, MSC Mediterranean Shipping filed a “Notice of Determination of

the Swiss Federal Office of Justice that the Procedures of the Hague Evidence Convention Apply 

to this Proceeding and Must Be Used” (“Determination Notice”). On October 28, 2022, MCS 

Industries filed a letter objecting to the unsolicited notice (“Determination Notice Objection”).

On November 8, 2022, MSC Mediterranean Shipping filed a “Notice of Issuance of

Formal Decision of the Swiss Federal Department of Justice and Police that the Hague Evidence 

Convention Procedures Apply to this Proceeding and Must Be Used” (“Decision Notice”) with a 

French document and English translation of a decision (“Federal Council Decision”) from the 

“Federal Department of Justice and Police FDJP,” signed by a “Member of the Federal Council.” 

Complainant did not respond to the November 8, 2022, filings. 

The parties have both had the opportunity to respond to the order to show cause and the 

subsequent notices filed by MSC Mediterranean Shipping. The arguments are summarized 

below. 

B. Arguments of the Parties

MSC Mediterranean Shipping asserts that further consultation with the Swiss authorities, 

not a default judgment, is the proper course for addressing its good faith belief that discovery 

compliance would risk criminal sanctions; relevant precedent of the Commission and the federal 

courts provides no support for entry of a default judgment in the present circumstances; and the 

Commission lacks jurisdiction over this proceeding and thus there is no jurisdiction to issue a 

default order sanction. OTSC Respondent Response at 4-30. 

MCS Industries argues that MSC Mediterranean Shipping has violated multiple discovery 

orders, including in its response to the order to show cause; Mediterranean’s conduct triggers all

three of the Webb conditions, any one of which is sufficient to support a sanction of default 

judgment; and default is the most appropriate sanction because of the severity of 

Mediterranean’s misconduct and because a lesser sanction would ultimately reach the same

result. OTSC Complainant Response at 3-19. 

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In its reply, MSC Mediterranean Shipping contends that Complainant previously asserted 

and now effectively concedes that mandatory consultations under 46 U.S.C. § 41108(c) are 

required; relevant precedent provides no support for entry of a default judgment; and 

Complainant does not address MSC Mediterranean Shipping’s jurisdictional arguments or 

attempt to show why they should not be certified. OTSC Respondent Reply at 4-15. 

MSC Mediterranean Shipping filed two notices after the order to show cause briefing was 

complete. The October 18, 2022, Determination Notice states that MSC Mediterranean Shipping 

requested that the Swiss Federal Department of Justice and Police (FDJP) waive enforcement of 

Article 271 of the Criminal Code and that the Federal Office of Justice in Bern denied the 

authorization, finding that a letter of request under the Hague Convention could be resubmitted. 

Determination Notice at 1-2. 

MCS Industries filed a Determination Notice Objection on October 28, 2022, stating: 

If anything, MSC’s continued efforts with this Submission to relitigate (without 

appealing) previously decided issues in this case merely serve to reinforce its 

apparent disregard for, or even contempt of, the Presiding Officer’s decisions and,

indeed, the FMC’s jurisdiction over it. The Submission can and should be 

disregarded as addressing issues that are already decided and/or moot. Even if 

considered, nothing in the Submission alters the fact that, for the reasons detailed 

in Complainant’s October 6 response to the Presiding Officer’s Order, default

judgment against MSC is the appropriate remedy in this case. 

Determination Notice Objection at 2. 

In the November 8, 2022, Decision Notice, MSC Mediterranean Shipping asserts that “a

default judgment remains inappropriate,” the proper way forward is to refile the request for 

mutual legal assistance in an improved form, and attaches the Federal Council Decision, which 

MSC Mediterranean Shipping says is from the executive branch of Switzerland. Decision Notice 

at 2-3. MCS Industries did not respond to this second notice. 

C. Prior Relevant Orders 

A number of prior orders have been issued regarding discovery in this proceeding. 

Relevant portions of those orders are summarized and quoted below. 

1. Motion to Compel

This discovery dispute stems from a December 8, 2021, order granting MCS Industries’

motion to compel. The parties’ arguments in the motion to compel and opposition were 

organized by fourteen general topics. Rulings on each of the fourteen topics are quoted below. 

The Order Granting Motion to Compel was not appealed. 

a. General Objections 

MSC Mediterranean Shipping cannot limit its discovery to what it believes are the 

core issues in this proceeding nor can it require MCS Industries to produce 

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evidence that claims are valid before producing discovery. Commission’s Rules

permit discovery “regarding any nonprivileged matter that is relevant to any

party’s claim or defense” and the allegations in the complaint extend beyond the

specific bookings and attempted bookings identified. 46 C.F.R. § 502.141(e)(1); 

Complaint at 11-12. While parties cannot go on fishing expeditions and seek 

irrelevant discovery, they are not required to provide evidence or legal authority 

for every discovery request, especially when that request is narrowly tailored to 

conduct between the parties, between California and two ports in China, over a 

four-month timeframe. 

MSC Mediterranean Shipping’s general objections are not persuasive and the

approach to discovery proposed by MSC Mediterranean Shipping will only delay 

the proceeding. Accordingly, MSC Mediterranean Shipping is hereby 

ORDERED to respond to relevant discovery requests. 

Order Granting Motion to Compel at 4-5. 

b. Identifying Individuals with Knowledge

MCS Industries is entitled to discover information relevant to the pending claims 

and MSC Mediterranean Shipping, the other party in the proceeding, is the 

preferred entity to provide that information. Respondent merely refers generally 

to the parties’ respective document productions. While a responding party may 

answer an interrogatory by producing business records, Respondent must 

“specify[]the records that must be reviewed, in sufficient detail to enable

[Complainant] to locate and identify them as readily as [Respondent] could.” 46 

CFR § 502.145(d)(1). 

Accordingly, MSC Mediterranean Shipping is hereby ORDERED to: (1) identify 

all individuals with knowledge of facts relevant to the claims and defenses in this 

matter, (2) identify with specificity any and all documents that Respondent relied 

upon in responding to these Interrogatories, and (3) identify with specificity each 

document that Respondent contends is responsive to each of Complainant’s

Interrogatories. 

Order Granting Motion to Compel at 5. 

c. Communications Concerning Complainant

As discussed above, MSC Mediterranean Shipping cannot limit its discovery to 

what it believes should be the core issue in this proceeding. MSC Mediterranean 

Shipping improperly limited its production to only documents concerning 

“bookings and attempted bookings” which excludes relevant documents.

Accordingly, MSC Mediterranean Shipping is hereby ORDERED to produce all 

documents and communications responsive to Requests 5 through 7, subject to the 

time and geographic limitations proposed by Complainant. 

Order Granting Motion to Compel at 5-6. 

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d. Attempts to Book Cargo Pursuant to the Service Contract

One of the claims alleged by MCS Industries is a violation of section 41102(c), 

which requires a showing that the “claimed acts or omissions of the regulated

entity are occurring on a normal, customary, and continuous basis.” 46 C.F.R. 

§545.4. Thus, MSC Mediterranean Shipping’s practices are at issue, not just the

actions taken on specific bookings. Moreover, it may be necessary to understand

MSC Mediterranean Shipping’s actions in a context beyond specific, documented

requests for bookings. Accordingly, MSC Mediterranean Shipping is hereby

ORDERED to produce all documents and communications responsive to

Requests 8 through 10 and 13 and Interrogatory 8, with the limitations of time and

geography proposed by Complainant.

Order Granting Motion to Compel at 6-7. 

e. Successful Carriage of MCS Cargo

The Commission’s Rules permit discovery “regarding any nonprivileged matter

that is relevant to any party’s claim or defense.” 46 C.F.R. § 502.141(e)(1). To

understand why there were problems with some bookings it is relevant to 

understand successful bookings. While parties cannot go on fishing expeditions 

and seek irrelevant discovery, they are not required to provide evidence or legal 

authority for every discovery request, especially when that request is narrowly 

tailored to conduct between the parties, between California and two ports in 

China, over a four-month timeframe. 

Accordingly, it is hereby ORDERD that MSC Mediterranean Shipping produce 

all documents and communications responsive to Requests 10 and 11, with the 

limitations of time, geography, and scope proposed by MCS Industries. 

Order Granting Motion to Compel at 7-8. 

f. Force Majeure

MSC Mediterranean Shipping admits that it limited its response to notices to the 

market of sailings from Tianjin and Qingdao that could not be undertaken due to 

port congestion or other factors outside MSC’s control. The discovery questions

ask about notifications of force majeure. If MSC Mediterranean Shipping wants to 

raise force majeure as a defense, it needs to provide relevant discovery. The 

timeframe requested, from January 1, 2020, through the present is reasonable and 

whether such claims were raised against other shippers is relevant. Accordingly 

MSC Mediterranean Shipping is hereby ORDERED to produce all documents 

and communications responsive to Requests 14 and 15, and to answer 

Interrogatories 9 (from January 1, 2020, to the present) and 10. 

Order Granting Motion to Compel at 8. 

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g. Sailings That Did Not Occur and Alternative Sailings

It appears that MSC Mediterranean Shipping has provided information regarding 

what sailings were voided or cancelled but has not produced the documents and 

communications that would show why sailings were voided or cancelled. There 

are many factors impacting the current disruptions and it is relevant for MCS 

Industries to discover which factors impacted MSC Mediterranean Shipping. 

Accordingly, MSC Mediterranean Shipping is hereby ORDERED to produce all 

documents and communications responsive to Requests 23 and 24, with the 

limitations of time and geography proposed by Complainant. 

Order Granting Motion to Compel at 8-9. 

h. Course of Conduct

The Commission’s Rules permit discovery “regarding any nonprivileged matter 

that is relevant to any party’s claim or defense” and the allegations in the

complaint extend beyond the specific bookings and attempted bookings identified. 

46 C.F.R. § 502.141(e)(1); Complaint at 11-12. While parties cannot go on 

fishing expeditions and seek irrelevant discovery, they are not required to provide 

evidence or legal authority for every discovery request, especially when that 

request is narrowly tailored to conduct between the parties, between California 

and two ports in China, over a four-month timeframe. Accordingly, it is hereby 

ORDERD that MSC Mediterranean Shipping answer the discovery requests, as 

limited by the proposals from Complainant. 

Order Granting Motion to Compel at 9-10. 

i. Identify Potential Witnesses

As with other discovery, it appears that MSC Mediterranean Shipping limited its 

discovery responses to a narrow set of people involved with particular bookings. 

However, MCS Industries’ claim goes beyond these particular bookings to MSC

Mediterranean Shipping’s practices and MCS Industries is entitled to discovery

regarding those practices. Accordingly, it is hereby ORDERED that MSC 

Mediterranean Shipping respond to these MCS Discovery Requests sufficiently to 

identify these individuals as requested 

Order Granting Motion to Compel at 10. 

j. Capacity, Cost, and Allocation of Cargo on Respondent’s Vessels

MCS Industries offered to limit these requests geographically and has requested 

additional information about how this information is stored so that it can be 

obtained in the least burdensome manner. The requests are relevant to MCS 

Industries’ claims and the parties have a protective order in place for confidential 

material disclosed. Accordingly, MSC Mediterranean Shipping is hereby 

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ORDERED to respond to Requests 20 through 22 and 25 and Interrogatories 18 

and 19, subject to the limitations proposed by Complainant. 

Order Granting Motion to Compel at 10-11. 

k. Unbooked Space on Relevant Sailings

MCS Industries’ request is narrowly tailored to sailings from the ports at issue

during the relevant time frame. This request is relevant to MCS Industries’ claims

and the parties should work together to ensure that the information is provided in 

the least burdensome manner. Accordingly, it is hereby ORDERED that MSC 

Mediterranean Shipping answer Requests 17 through 19 in full. 

Order Granting Motion to Compel at 11. 

l. Relevant Financial Data and Ownership Information

MCS Industries requests information from January 1, 2019, and the effect of any 

force majeure event and ownership from January 1, 2020, and acknowledges that 

the responses would likely be confidential and protected under the protective 

order. MSC Mediterranean Shipping’s argument that the relationship between

parties such as handling and booking agents is already known by MCS Industries 

and also would be highly prejudicial if disclosed, seems contradictory. As has 

been previously discussed, MCS Industries is entitled to discovery regarding its 

claims. The requests are relevant to MCS Industries’ claims and MSC

Mediterranean Shipping’s defenses. Accordingly, it is hereby ORDERED that 

MSC Mediterranean Shipping answer Requests 31 through 35 and Interrogatories 

13 and 14 in full. 

Order Granting Motion to Compel at 11-12. 

m. Document Retention Policies

Discovery of document retention policies does not require Complainant to 

establish a document retention problem and the request is relevant. Accordingly, 

it is hereby ORDERED that MSC Mediterranean Shipping produce the 

documents sought in Requests 36 and 37. 

Order Granting Motion to Compel at 12. 

n. Other Allegations of Shipping Act Violations 

MSC Mediterranean Shipping has responded to these requests for the time period of 

January 1, 2020, to the present, a time period proposed by MCS Industries in their 

motion. Accordingly, it is hereby ORDERED that MSC Mediterranean Shipping 

respond to Request 39 and Interrogatory 15 from January 1, 2020, to the present. 

Order Granting Motion to Compel at 12. 

 8

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2. Order Requiring Production of Discovery

As discussed above, with only minor changes from the parties’ proposal, a letter of 

request was sent to Switzerland to ensure that discovery in this proceeding did not contravene 

Swiss legal requirements. On July 15, 2022, the parties filed a joint status report stating that the 

request was denied by the Swiss court on the grounds that it did not fall within the scope of 

application of the Hague Convention. 

On July 29, 2022, an order was issued requiring production of discovery, which stated: 

In the joint status report, Complainant asserts that the Department of State should 

be contacted to request assistance to obtain discovery and Respondent asserts that 

a new letter of request should be submitted to a different office in Switzerland. 

July 15, 2022, Joint Status Report. However, the Swiss authorities are in the best 

position to determine whether their involvement is needed and they have 

indicated that it is not as the requested discovery is outside the scope of the Hague 

Convention. Other courts have come to a similar conclusion. 

The party seeking to pursue discovery through the Hague Evidence Convention 

bears the burden of demonstrating that proceeding in that manner is necessary and 

appropriate. Luminati Networks v. Code200, 2021 U.S. Dist. LEXIS 128634, at 

*10 (E.D. Tex. 2021). A party seeking an order to apply Hague Convention

procedures in lieu of the procedures set forth in the Federal Rules of Civil

Procedure must demonstrate that a specific foreign law “actually bars the

production or testimony at issue.” Alfadda v. Fenn, 149 F.R.D. 28, 34 (S.D.N.Y.

1993). “In order to meet that burden, the party resisting discovery must provide

the Court with information of sufficient particularity and specificity to allow the

Court to determine whether the discovery sought is indeed prohibited by foreign

law.” Id. The Supreme Court has held “that the Hague Convention did not deprive

the District Court of the jurisdiction it otherwise possessed to order a foreign

national party before it to produce evidence physically located within a signatory

nation.” Societe Nationale Industrielle Aerospatiale v. United States Dist. Ct. for

S. Dist., 482 U.S. 522, 539-40 (1987).

Here, Respondent asserts that Swiss Article 271 of the Swiss Criminal Code 

(“SCC”) blocks the production of the documents at issue. Jan. 10, 2022, Joint 

Status Report; February 25, 2022, Respondent’s Notice and Update; April 4,

2022, Joint Status Report; July 15, 2022, Joint Status Report. Respondent’s Swiss

attorney in his February 25, 2022 memorandum asserts that Swiss authorities 

disagree with the Supreme Court’s finding that the Hague procedures are

optional; discusses Article 271 to conclude that to “avoid any risk of violating 

Article 271 SCC, the Swiss party requested to provide evidence must use Swissapproved procedures before producing documents located in Switzerland to a 

foreign authority;” and opines that a letter of request under the Hague Convention

is the most appropriate way to obtain the discovery. February 25, 2022, Memo on 

Swiss Law at 4-5. 

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The Court’s ultimate task “is not to definitively determine what Swiss law is, but

rather to decide whether the risk of prosecution under Article 271 is so great” as

to warrant a protective order. Microsoft Corp. v. Weidmann Elec. Tech., Inc., 

2016 U.S. Dist. LEXIS 170325, *34 n.14 (D. Vt. 2016). In EFG Bank AG v. AXA 

Equitable Life Ins. Co., the federal district court denied a protective order for EFG 

documents located in Switzerland, finding that EFG failed “to demonstrate with

sufficient particularity and specificity that the discovery sought is prohibited by 

Swiss law,” specifically Article 271. 2018 U.S. Dist. LEXIS 67521, *4-5 

(S.D.N.Y. 2018). The court cited a number of Swiss cases that found that Article 

271 did not apply where there was no threat of criminal sanction. 

Significantly, however, decisions of the Swiss Federal Department 

of Justice and Police (“FDJP”) — an administrative, non-judicial 

body — indicate that Swiss law does not preclude the voluntary 

production of documents by a private party and that “voluntary” is

defined broadly to include the production of discovery so long as 

the party faces only procedural consequences rather than criminal 

sanctions for its failure to produce. 

EFG Bank, 2018 U.S. Dist. LEXIS 67521, *5 (emphasis in original). The court 

noted: 

Conspicuously, EFG fails to identify a single case in which a party 

was found to have violated Article 271 by disclosing its own 

documents absent a court order threatening criminal sanctions. 

That is presumably because no such case exists. Indeed, EFG’s

own expert on Swiss law concedes that no court has held that 

production by a party in the circumstances presented here violates 

Article 271. 

Id., at *7-8 (footnote omitted). Similarly, another district court recently declined 

to pursue discovery under the Hague Convention or to issue a letter of request, 

finding that “although Article 271 might be implicated if the responding party was

threatened with criminal sanctions for failure to comply with a discovery order, 

the statute does not preclude voluntary disclosure in compliance with a civil 

discovery order if the consequence for noncompliance is procedural only.”

Belparts Grp., N.V. v. Belimo Automation AG, 2022 U.S. Dist. LEXIS 75450, at 

*15 (D. Ct. 2022).

In Respondent’s Swiss counsels’ April 4, 2022, Second Memorandum on Swiss 

Law, they acknowledge that: “It is true that in practice, there are not many

prosecutions based on Article 271. This is mainly because it is a norm of 

behavior.” April 4, 2022, Memo on Swiss Law at 4. The memo further asserts that 

the four-year old EFG Bank case “does not and cannot capture more recent

evolution of the case law that clearly supports a strengthening of the sensitivity to 

Article 271 violations.” Id. Moreover, Respondent’s Swiss counsel states that

there was a criminal prosecution of a Swiss asset manager for providing data to 

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American prosecutors on American clients of the asset manager, concluding that 

the Swiss Supreme Court “specifically noted that the collection and transmission

on Swiss territory of evidence that falls within the scope of international judiciary 

assistance is a breach of Article 271.” Id. (emphasis added). 

Commission Rule 150(b) outlines the procedural consequences of failing to 

provide discovery in Commission proceedings: 

(b) Failure to comply with order compelling disclosures or

discovery. If a party or a party’s officer or authorized representative

fails or refuses to obey an order requiring it to make disclosures or

to respond to discovery requests, the presiding officer upon his or

her own initiative or upon motion of a party may make such orders

in regard to the failure or refusal as are just. A motion must include

a certification that the moving party has conferred in good faith or

attempted to confer with the disobedient party in an effort to obtain

compliance without the necessity of a motion. An order of the

presiding officer may:

(1) Direct that the matters included in the order or any other

designated facts must be taken to be established for the purposes of

the action as the party making the motion claims;

(2) Prohibit the disobedient party from supporting or opposing

designated claims or defenses, or from introducing designated

matters in evidence; or

(3) Strike pleadings in whole or in part; staying further proceedings

until the order is obeyed; or dismissing the action or proceeding or

any party thereto, or rendering a decision by default against the

disobedient party.

46 C.F.R. 502.150(b). 

This proceeding is very different from a non-party providing Swiss banking 

documents to American prosecutors building a potential criminal case. This 

proceeding is not a criminal prosecution and the Commission cannot impose 

criminal penalties. The discovery sought is in relation to shipments from specific 

ports in China and Indonesia to the United States over a limited timeframe. 

Evidence is sought by a private party, Complainant MCS Industries, from a 

private party, Respondent MSC Mediterranean Shipping. Because MSC 

Mediterranean Shipping is a party, it has been able to negotiate an appropriate 

protective order. Moreover, the penalty for non-production of discovery is not 

criminal. Most critically, the Swiss authorities have reviewed the request and 

determined that it is outside the scope of the Hague Evidence Convention. 

Therefore, Respondent has not established that any additional actions need to be 

taken under the Hague convention. 

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Respondent MSC Mediterranean Shipping is alleged to be one of the largest 

container lines in the world. It has voluntarily chosen to conduct business in 

American ports and is regulated by the Federal Maritime Commission. 

Respondent has opposed providing relevant discovery which was ordered in the 

order granting motion to compel. It has delayed the proceeding by insisting that 

Swiss law prohibits discovery disclosure. But, parties appearing before the 

Commission are entitled to relevant evidence needed to prosecute their cases. 

Failure to provide discovery may result in procedural sanctions, from an inference 

that the discovery would have been adverse to Respondent’s interests to a 

decision on default. See Kawasaki Kisen Kaisha, Ltd v. The Port Authority of New 

York and New Jersey, Docket 11-12, 2014 FMC LEXIS 36, at *14-18 (Order 

Affirming Dismissal of Complaint for Complainant’s failure to provide

discovery) (FMC Nov. 20, 2014) Jamteck Int’l Shipping, Inc. - Possible 

Violations of the Comm’n’s Regulations at 46 C.F.R. Part 515, Docket No. 07-09, 

2009 FMC LEXIS 42, *6-7 (ALJ July 27, 2009) (Admin. final on August 31, 

2009) (referencing order that an inference adverse to Respondents be drawn as a 

consequence of Respondents’ failure to respond to discovery).

Order Requiring Production of Discovery at 1-4. 

3. Order to Show Cause

On September 8, 2022, an order denied MSC Mediterranean Shipping’s motion for an

extension of time and ordered that by September 22, 2022, MSC Mediterranean Shipping either 

provide the required discovery or show cause why default judgment should not be entered 

against it. 

As explained below, MSC Mediterranean Shipping’s motion seeking an extension

of time is denied and it is ordered to show cause why a default decision should not 

be issued against it for failure to produce discovery. COSCO was previously 

dismissed due to a settlement. 

MSC Mediterranean Shipping requested an extension to obtain advice from the 

Federal Office of Justice in Switzerland and propose a path forward, stating that it 

“cannot comply” with the July 29, 2022, order requiring production of documents

and “that the July 1 ruling of the Geneva Court of First Instance is in error.”

Motion at 1-2. Complainant asserts that Respondent’s failure to comply with its

discovery obligations are a crisis of Respondent’s own making; Respondent’s

motion should be denied as both substantively meritless and procedurally 

inappropriate; and, procedural sanctions are an appropriate remedy for 

Respondent’s noncompliance. Opposition at 1-6. 

Essentially, Respondent continues to argue despite rulings to the contrary in this 

proceeding and in the Republic and Canton of Geneva Court of First Instance, that 

due to Swiss legal requirements it cannot produce the discovery ordered in the 

December 8, 2021, motion to compel and the July 29, 2022, order requiring 

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production of discovery, and that the Swiss court’s decision that their intervention

is not necessary was in error. Motion at 1-5. 

The notice filed by MSC Mediterranean Shipping argues that it contacted the 

Federal Office of Justice in Switzerland to confirm that the ruling of the Geneva 

Court of First Instance was in error and the “advice from the Federal Office of

Justice directly supports MSC’s proposal that the request for judicial assistance 

should be resubmitted in order to obtain a correct assessment that the procedures 

are available.” Notice at 1. However, it is clear that this “advice” from the Federal

Office of Justice in Switzerland merely identifies the process for resubmitting a 

request and the factors that may be taken into account, without any discussion of 

the merits of this proceeding. Notice, Exhibit B. 

The question of whether Swiss assistance with discovery is required has been 

answered by the undersigned Administrative Law Judge and by the Court of First 

Instance in Geneva. MSC Mediterranean Shipping’s position did not prevail and 

now it must produce discovery or face procedural consequences. Relitigation of 

the same issue will not be permitted and has only delayed this proceeding. 

Therefore, the motion seeking an extension is denied. 

As Respondent was advised previously, pursuant to Commission Rule 150(b), if a 

party “fails or refuses to obey an order requiring it to make disclosures or to 

respond to discovery requests, the presiding officer upon his or her own initiative 

or upon motion of a party may make such orders in regard to the failure or refusal 

as are just,” including “rendering a decision by default against the disobedient

party.” 46 C.F.R. 502.150(b). 

In multiple filings, MSC Mediterranean Shipping has indicated that it will not 

produce the discovery that it has been repeatedly ordered to produce. Complainant 

asserts that “Respondent cannot accept the benefits of shipping cargo to and from 

U.S. ports while shirking its legal and regulatory obligations before the 

Commission” and that it would request a decision on default. Opposition at 6.

Given MSC Mediterranean Shipping’s statements that it will not produce the

required discovery, it is appropriate to determine whether a default decision is an 

appropriate remedy. Accordingly, MSC Mediterranean Shipping is ordered to 

show cause why a default decision should not be issued against it. 

The amended complaint seeks an FMC investigation; a finding of violations of the 

Shipping Act; a cease and desist order; and an order requiring MSC 

Mediterranean Shipping to pay an unspecified amount of reparations to 

Complainant. An FMC investigation cannot be ordered through a formal 

proceeding. However, the other requested remedies may be ordered. In their 

response to MSC Mediterranean Shipping’s filing, Complainant should identify

the dollar amount of reparations that they are seeking. MSC Mediterranean 

Shipping may file a reply to Complainant’s arguments. 

13 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The merits of the proceeding and remedy are not at issue and should not be 

addressed in these filings—the question is only whether a default decision or 

other procedural consequence is appropriate for MSC Mediterranean Shipping’s

failure to produce discovery. If MSC Mediterranean Shipping provides the 

discovery, the issue will be moot and the case can proceed to a resolution on the 

merits. The parties may also choose to settle the proceeding and if so, should 

submit a motion requesting approval of the settlement with a copy of the 

settlement agreement. 

Order Denying Respondent’s Motion for an Extension of Time and Order to Show Cause at 1-2. 

III. Analysis

A. Standard

As the parties have been advised, Commission Rule 150(b) outlines the procedural 

consequences of failure to provide discovery in Commission proceedings, including directing 

that certain matters be taken as established, prohibiting certain claims or defenses, striking 

pleadings, staying proceedings, or rendering a decision by default. 46 C.F.R. § 502.150(b). 

Commission rules have long permitted dismissal of a proceeding as a sanction for failure 

to comply with discovery orders. The current rules state that “[i]f a party or a party’s officer or 

authorized representative fails or refuses to obey an order requiring it to make disclosures or to 

respond to discovery requests, the presiding officer upon his or her own initiative or upon motion 

of a party may make such orders in regard to the failure or refusal as are just.” 46 C.F.R.

§ 502.150(b) (previously 46 C.F.R. § 502.210(a) and § 502.210(b)). As a sanction for failure to

comply with discovery orders, a presiding officer may issue an order “dismissing the action or

proceeding or any party thereto, or rendering a decision by default against the disobedient party.”

46 C.F.R. § 502.150(b)(3).

The “Commission has upheld dismissal orders under Rule 210(b) [now Rule 150(b)] 

when complainants fail to respond to discovery orders and the conduct is willful and deliberate.” 

Kawasaki Kisen Kaisha, Ltd v. The Port Authority of New York and New Jersey, Docket 11-12, 

2014 FMC LEXIS 36, at *17 (FMC Nov. 20, 2014) (Order Affirming Dismissal of Complaint 

for failure to provide discovery); see also Interpool, Ltd. v. Pac. Westbound Conf., 22 F.M.C. 

762 at 764,2 19 S.R.R. 1719 (FMC May 15, 1980) (affirming dismissal of proceeding for willful 

and deliberate failure to respond to discovery). 

B. Jurisdiction

MSC Mediterranean Shipping asserts that the Commission lacks jurisdiction over this 

proceeding, arguing that exercising jurisdiction over this proceeding is inconsistent with 

Commission precedent; that the matter is in binding arbitration; and that the issue of jurisdiction 

should be certified to the Commission for determination. OTSC Respondent Response at 26-30. 

2 Available, with other F.M.C. decisions, at www.fmc.gov/wp-content/uploads/2019/04/vol22.pdf. 

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MCS Industries states: 

In contempt of the Presiding Officer’s explicit instructions, Mediterranean’s

Response strays far beyond the bounds of the Order to Show Cause, devoting 

fully half its considerable length to arguing that the Commission “lacks

jurisdiction over this proceeding to begin with” and that there is no prejudice to 

Complainant from not receiving the discovery at issue despite the Presiding 

Officer’s clear findings to the contrary over nine months ago in the Order

Granting Motion to Compel. 

OTSC Complainant Response at 6. 

The issue of jurisdiction was adjudicated in the February 4, 2022, Order Denying 

Dismissal, which was not appealed. That order specifically addressed arbitration and Cargo One, 

Inc. v. Cosco Container Lines Co. Ltd, 28 S.R.R. 1635, 1645, 2000 FMC Lexis 14 (FMC 

Oct. 31, 2000), stating: 

Relying on the principles stated in Cargo One, the Commission has held that 

jurisdiction over a complaint alleging violations of the Shipping Act exists 

even though a proceeding in another forum may have resolved some issues 

between the parties. For instance, prior to filing its complaint with the 

Commission, one complainant had sought and obtained an arbitration award 

of several hundred thousand dollars against the Commission respondent. The 

complainant filed a complaint with the Commission alleging Shipping Act 

violations and seeking another million dollars. The Commission reversed the 

order of the administrative law judge dismissing the complaint and remanded 

for further proceedings on the Shipping Act claims set forth in the complaint. 

The Commission held that the fact that the service contract between the 

parties required arbitration: 

does not outweigh the Commission’s duty to protect the public

by ensuring that service contracts are implemented in 

accordance with the Shipping Act. . . . To preclude Anchor 

from proceeding with its complaint solely because a private 

arbitrator previously issued a ruling would be inconsistent with 

our statutory mandate to hear such complaints. 

Anchor Shipping Co. v. Aliança Navegação E Logística Ltda., 30 S.R.R. 991, 998 

(FMC 2006). 

Order Denying Dismissal at 6. 

Regarding jurisdiction, the Order Denying Dismissal concluded: 

Thus, the Commission has an obligation to determine whether an entity has 

violated the Shipping Act, even when the facts alleged may give rise to both 

breach of contract claims and Shipping Act claims. Allegations in the amended 

complaint extend beyond allegations of breach of the service contract to allege 

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practices that violate the Shipping Act, such as failing to maintain or provide 

booking reports, systematically preferring higher-priced cargo, and coercing 

surcharges. Establishing a violation of section 41102(c) requires a showing that 

the claimed acts or omissions of the regulated entity are occurring on a normal, 

customary, and continuous basis. It does not require that the acts involved be 

concerted, collusive, or parallel actions. Additionally, the way that damages are 

calculated does not determine whether or not the Commission has jurisdiction 

over a claim. The Commission has an obligation to determine the reasonableness 

of practices by regulated entities that are alleged to violate the Shipping Act. 

Order Denying Dismissal at 6. 

MSC Mediterranean Shipping continues to argue that the Commission does not have 

jurisdiction because the claims are inherently breach of contract claims that should be resolved 

by arbitration. OTSC Respondent Response at 26-30. In addition, it argues that because MCS 

Industries has recently asked the arbitration panel to stay the arbitration, Complainant’s counsel

has conceded that its claims are contractual claims. OTSC Respondent Response at 28. 

As discussed in the Order Denying Dismissal, the Commission has stated: 

The arbitration clause in the parties’ service contract does not outweigh the 

Commission’s duty to protect the public by ensuring that service contracts are

implemented in accordance with the Shipping Act. Although service contracts are 

between private parties, the Commission regulates the content as well as the 

conduct under the contracts. The regulation of service contracts is akin to the 

regulation of agreements, because the Commission is the regulatory body charged 

with administering the Shipping Act and, therefore, must ensure that service 

contracts and agreements are filed and implemented pursuant to the statutory 

requirements and Commission regulations. To preclude Anchor from proceeding 

with its complaint solely because a private arbitrator previously issued a ruling 

would be inconsistent with our statutory mandate to hear such complaints. 

Anchor Shipping, 30 S.R.R. at 998, 2006 FMC LEXIS 19, at *21-22. 

The arbitration provision in the service contract and any request by MCS Industries to 

stay arbitration does not divest the Commission of jurisdiction over alleged violations of the 

Shipping Act. Moreover, the question of whether the Commission has jurisdiction over this 

complaint has already been adjudicated. Respondent may not now seek to relitigate the order 

finding that the Commission has jurisdiction. Therefore, the finding that the Commission has 

jurisdiction is reaffirmed on the same basis as in the February 4, 2022, Order Denying Dismissal. 

If MSC Mediterranean Shipping wanted the issue of jurisdiction reviewed by the 

Commission, it should have requested review of the February 4, 2022, Order Denying Dismissal, 

not refused to provide discovery. The request for certification reiterates arguments previously 

rejected and is not timely. Therefore the request for certification is hereby DENIED. 

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C. Status of Discovery

MSC Mediterranean Shipping argues that default judgements are disfavored in favor of 

the policy to decide cases on their merits, it has not acted in bad faith, and there is no actual 

prejudice to Complainant. OTSC Respondent Response at 7-26. 

MCS Industries argues that MSC Mediterranean Shipping has violated multiple discovery 

orders, including in its response to the order to show cause, and had failed to appeal any of the 

orders to which it objects. OTSC Complainant Response at 3-7. 

Default judgements are disfavored and a last resort, which is why MSC Mediterranean 

Shipping was provided multiple opportunities to cure their discovery deficiencies. Indeed, to 

expedite the proceeding, on May 4, 2022, the undersigned agreed to issue a letter of request 

under the Hague Convention, which the Swiss court responded to on June 29, 2022, finding that 

this proceeding does not fall within the scope of application of the convention. MSC 

Mediterranean Shipping refused to follow the rulings of the undersigned Judge or the Swiss 

Judge and instead filed an ex parte request with the executive branch. 

As explained in the July 29, 2022, Order Requiring Production of Discovery, the 

Supreme Court has held “that the Hague Convention did not deprive the District Court of the 

jurisdiction it otherwise possessed to order a foreign national party before it to produce evidence 

physically located within a signatory nation.” Societe Nationale Industrielle Aerospatiale v. 

United States Dist. Ct. for S. Dist., 482 U.S. 522, 539-40 (1987). A party seeking an order to 

apply Hague Convention procedures in lieu of the procedures set forth in the Federal Rules of 

Civil Procedure must demonstrate that a specific foreign law “actually bars the production or

testimony at issue.” Alfadda v. Fenn, 149 F.R.D. 28, 34 (S.D.N.Y. 1993). “In order to meet that 

burden, the party resisting discovery must provide the Court with information of sufficient 

particularity and specificity to allow the Court to determine whether the discovery sought is 

indeed prohibited by foreign law.” Id. 

MSC Mediterranean Shipping is alleged to be one of the largest container lines in the 

world. It has voluntarily chosen to conduct business in United States ports and is regulated by the 

Federal Maritime Commission. It has not met its burden to show that the discovery sought is 

prohibited by foreign law and the undersigned is not required to resolve a conflict between the 

judicial and executive branches in Switzerland. Moreover, the ex parte ruling from the Federal 

Council does not overrule the judicial finding, but rather denies the request for authorization and 

states that the request for mutual assistance may be refiled with the court. Federal Council 

Decision at 3-4. 

This proceeding is at an impasse as MCS Industries cannot proceed with its case without 

the discovery and MSC Mediterranean Shipping has refused to provide the discovery despite 

multiple orders to do so. Therefore, the remaining issue is whether the issuance of a default 

decision is the appropriate remedy. 

D. Default Factors

Both parties refer to the factors identified in Webb v. District of Columbia. 

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In Shea v. Donohoe Construction Company, 254 U.S. App. D.C. 175, 795 F.2d 

1071 (D.C. Cir. 1986), we set forth three basic justifications that support the use 

of dismissal or default judgment as a sanction for misconduct. First, the court may 

decide that the errant party’s behavior has severely hampered the other party’s

ability to present his case--in other words, that the other party “has been so 

prejudiced by the misconduct that it would be unfair to require him to proceed 

further in the case.” Second, the court may take account of the prejudice caused to

the judicial system when the party’s misconduct has put “an intolerable burden on

a district court by requiring the court to modify its own docket and operations in 

order to accommodate the delay.” And finally, the court may consider the need 

“to sanction conduct that is disrespectful to the court and to deter similar

misconduct in the future.” A sanction imposed pursuant to any of these 

considerations must be based on findings supported by the record. 

Webb v. District of Columbia, 146 F.3d 964, 971 (D.C. Cir. 1999) (citations omitted). Although 

only one of the Webb factors is needed to support a default judgement as a sanction for 

misconduct, here, all three factors are present. 

1. Prejudice to Party

MSC Mediterranean Shipping argues that: “Substantial discovery has already been

exchanged among the parties on the core issues of the case” and discusses “the relationship of

the discovery already provided to the issues in the case” to demonstrate that there is no potential

prejudice from nonproduction that justifies default. OTSC Respondent Response at 12-13. 

MCS Industries contends that the “Order Granting Motion to Compel contained over a

dozen individual orders requiring Mediterranean to respond to well over a dozen discovery 

requests. Each of those orders came with a finding that Complainant was entitled to the requested 

discovery because it was relevant to Complainant’s well-pled claims” and that “Mediterranean

has not answered any of Complainant’s first set of interrogatories or produced any additional

documents in response to that Order, leaving both that Order and the more recent Order 

Requiring Production entirely unfulfilled.” OTSC Complainant Response at 8-9. 

Here, the dispute is not about a specific piece of evidence in Switzerland, but rather, the 

order to compel identified over a dozen different categories of information that needed to be 

disclosed. Order Granting Motion to Compel at 4-13. As has been previously found, 

Complainant is entitled to this discovery which is relevant to the claims it raised and necessary to 

establish the elements of the alleged Shipping Act violations. “MSC Mediterranean Shipping 

cannot limit its discovery to what it believes are the core issues in this proceeding nor can it 

require MCS Industries to produce evidence that claims are valid before producing discovery.”

Id. at 5. Throughout this proceeding, MSC Mediterranean Shipping has attempted to limit the 

scope of the claims and discovery to preclude review of its practices. However, it is in part these 

very practices that the Commission needs to review to determine whether there is a Shipping Act 

violation. Moreover, if MSC Mediterranean Shipping objected to the rulings in the Order 

Granting Motion to Compel, it could have sought to appeal that order at that time. Its attempt to 

relitigate the relevance of the discovery ordered is not timely and not persuasive. 

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The discovery compelled applied to broad categories of information and would likely 

have led to additional discovery requests. For example, the questions regarding identifying 

individuals with knowledge, communications concerning Complainant, and identifying potential 

witnesses may have led to depositions and additional evidence. Denial of the discovery 

compelled significantly limited MCS Industries’ ability to discover information relevant to its 

claims and the defenses. Therefore, a lesser sanction such as directing that certain matters be 

taken as established, prohibiting certain claims or defenses, or striking pleadings would not be 

effective to remedy the failure to provide such broad discovery. Due to the prejudice to MCS 

Industries from nonproduction, default is the appropriate sanction. 

MSC Mediterranean Shipping’s failure to provide discovery, even after the Swiss court 

ruled on the letter of request in June 29, 2022, significantly delayed this proceeding. This delay 

further prejudices MCS Industries, which has requested sanctions on a number of occasions. See, 

e.g., February 28, 2022, joint status report; April 4, 2022, joint status report; September 2, 2022,

opposition to motion for extension of time. Indeed, “prejudice resulting from unreasonable delay

may be presumed as a matter of law.” Peart v. City of New York, 992 F.2d 458, 462 (2d Cir.

1993). Over time, witness memories may recede and it may be more difficult to obtain relevant

evidence. Moreover, the amended complaint, in part, extended the timeframe at issue, and

alleged that the violations were “continuous and ongoing.” Amended Complaint at 20, 22, 23. It

is therefore reasonable to find that the delays due to Respondent’s intransigence exacerbates

Complainant’s injury. Thus, the delay further prejudices MCS Industries and is an additional

basis to find that default is the appropriate sanction.

2. Prejudice to Judicial System

MSC Mediterranean Shipping argues that “the facts present here do not bear any

resemblance to those in which a default judgment has been entered to protect a court’s docket”

and “there is no trial date set, nor any other dates, and there are viable alternatives to resolve the 

issues in a manner that would allow discovery to move forward.” OTSC Respondent Response at

25. 

MCS Industries asserts that default is justified because of delay and burden created by 

MSC Mediterranean Shipping’s disregard for its discovery obligations and discovery orders, 

stating that “Mediterranean’s discovery misconduct has dominated this case, occasioning 

multiple delays and rounds of unnecessary filings—all of which have imposed burdens both on 

Complainant, a much smaller entity than Mediterranean, and on the Presiding Officer’s own

docket.” OTSC Complainant Response at 10.

The Commission has stated that: “Agencies must protect their integrity and assure the

orderly conduct of business in order to maintain their effectiveness. Adherence to agency 

procedure is necessary to maintain the agency’s integrity and to ensure the orderly conduct of 

agency business in a manner protective of the rights of all parties.” Interpool, 22 F.M.C. at 767. 

In Interpool, the Commission found that dismissal was “the only appropriate sanction under

these circumstances” where the Complainant failed to respond or object to discovery and that

conduct was willful and deliberate. Id. at 768. 

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There have been multiple deadlines set in this proceeding, which have not been met due 

to MSC Mediterranean Shipping’s failure to provide discovery. Those deadlines include:

 In the Notice of Filing of Complaint and Assignment, issued August 3, 2021, the

Commission required an initial decision to be issued by August 3, 2022.

 The September 23, 2021, scheduling order which adopted the parties’ proposed

schedule, required discovery to be completed by January 27, 2022.

 The December 21, 2021, revised scheduling order indicated that the “extension

proposed by the parties is excessive,” and granted the parties “three months to

complete all remaining discovery” setting a date of March 22, 2022, for close of

discovery and June 1, 2022, for all briefs to be filed.

 The March 4, 2022, order on proposed revised schedule and discovery notice

ordered the parties to “continue to exchange discovery in an expeditious fashion.”

 The July 29, 2022, order requiring production of discovery denied “MSC

Mediterranean Shipping’s request to resubmit a request to Swiss authorities for

assistance with discovery” and ordered MSC Mediterranean Shipping “to provide

any outstanding discovery by August 29, 2022, including the discovery ordered to

be produced in the Order Granting Motion to Compel.”

 The September 8, 2022, order denying Respondent’s motion for an extension of

time and order to show cause ordered “that by September 22, 2022, MSC

Mediterranean Shipping either provide the required discovery or show cause why

default judgment should not be entered against it.”

The failure to meet these deadlines has disrupted the orderly conduct of agency business 

and burdened the Commission’s docket, requiring multiple revisions of the schedule to

accommodate the delays. The delays caused by the failure to produce discovery have prejudiced 

MCS Industries, the Commission, and the shipping public. Despite multiple clear warnings that 

failure to produce discovery could lead to a default judgement, MSC Mediterranean Shipping has 

continued to assert that it will not produce the discovery ordered. Accordingly, default is 

appropriate. 

3. Deterrence

MSC Mediterranean Shipping argues it has not acted in bad faith, there is no willful 

misconduct, and that it “continues to work in good faith to try to resolve the impasse created by

the Geneva court ruling.” OTSC Respondent Response at 2, 9-10. 

MCS Industries asserts that default is justified by “Mediterranean’s disregard for the

jurisdiction of the FMC, the Presiding Officer’s Orders, and the requirements of the FMC’s

Rules [which] fulfills the third Webb justification, regarding the need to deter conduct 

disrespecting the tribunal.” OTSC Complainant Response at 12. MCS Industries further states 

that “Mediterranean and other non-U.S. ocean common carriers, which collectively dominate the 

 20 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

market for global transoceanic shipping, could employ the same tactics to thwart discovery that 

Mediterranean has employed in this case.” OTSC Complainant Response at 13.

The Commission addressed the importance of deterrence, quoting the Supreme Court and 

stating: 

“[T]he most severe in the spectrum of sanctions provided by statute or rule must 

be available to the district court in appropriate cases, not merely to penalize those 

whose conduct may be deemed to warrant such a sanction, but to deter those who 

might be tempted to such conduct in the absence of such a deterrent.”

Interpool, 22 F.M.C. at 766 (quoting NHL v. Metro. Hockey Club, 427 U.S. 639, 643 (1976)). 

MSC Mediterranean Shipping has not provided a narrow list of documents or witnesses 

located in Switzerland that it claims are protected. Rather, it asserts that that it “has provided 

substantial discovery on the core issues in the case” and it “has made substantial document 

productions, only a subset of discovery items remain outstanding, and those items could be 

addressed without recourse to a default judgment.” OTSC Respondent Response at 10; OTSC

Respondent Reply at 13. It is not clear whether the refusal to provide discovery is in fact because 

information is located in Switzerland or whether MSC Mediterranean Shipping is refusing to 

provide the discovery because it disagrees with the findings related to the Commission’s

jurisdiction and scope of these proceedings. 

Although MSC Mediterranean Shipping initially requested the letter of request and 

proposed language for it, MSC Mediterranean Shipping has refused to follow the findings of the 

Swiss court and instead engaged with Switzerland’s executive branch, which did not overrule the 

Swiss court but rather indicated that a letter of request could be refiled. This suggests that MSC 

Mediterranean Shipping will not follow rulings of the courts in Switzerland unless those rulings 

are in its favor. The refusal to abide by the decisions of the Swiss Judge and the undersigned 

Judge, even after multiple warnings that such refusal could result in a default decision, are 

therefore willful and deliberate. See Kawasaki Kisen Kaisha, 2014 FMC LEXIS 36, at *17. 

Given that MSC Mediterranean Shipping has voluntarily chosen to conduct business in 

United States ports and is regulated by the Federal Maritime Commission, it must abide by 

Commission orders. And, where appropriate, the undersigned is willing to comply with relevant 

Hague Convention requirements. However, parties are expected to follow the rulings issued in 

response to those requests and regulated entities cannot be allowed to hide evidence overseas. 

MSC Mediterranean Shipping’s repeated failure to comply with multiple orders issued in this 

proceeding, even though it had an opportunity to seek review of the orders and failed to do so, 

and its failure to abide by the determination of the Swiss court, even though the parties requested 

a ruling from that court, undermines its position that it acted in good faith. MSC Mediterranean 

Shipping’s refusal to follow judicial orders prevented this proceeding from moving forward on 

the merits of the case and does not reflect a respect for the judicial process. This type of conduct 

cannot be permitted in Commission adjudications. 

Moreover, the violations alleged in the amended complaint are of national significance, 

for example, that one of the largest container lines in the world “sought to take advantage of

 21 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unprecedented high pricing by forcing shippers with service contracts, like Complainant, to 

resort to spot market purchases” by the “practice of systematically failing to meet its quantity

commitments to Complainant between certain ports.” Amended Complaint at 1-2. Resolution of 

these allegations would provide clarity and guidance in the marketplace and benefit not just these 

parties, but also the shipping public. 

MSC Mediterranean Shipping is a party in a number of other proceedings at the 

Commission and therefore resolution of this issue is necessary to deter similar conduct from 

MSC Mediterranean Shipping or other parties in Commission proceedings. Therefore, default is 

the appropriate remedy. 

E. Remedy

MCS Industries seeks reparations for actual damages it incurred in the amount of 

$480,719 for the 2020-2021 shipping year, plus $463,936 for the first three months of the 2021-

2022 shipping year. Complainant thus seeks a total of $944,655 in reparations, plus interest, 

pursuant to 46 U.S.C. Section 41305(a). OTSC Complainant Response at 19. 

MSC Mediterranean Shipping asserts that MCS Industries must prove its damages and 

argues that there can be no default on the issue of damages because the discovery sought does 

not relate to that issue. OTSC Respondent Reply at 14-15. 

The “general rule when respondents have defaulted is to base findings for complainants 

on the well-pleaded allegations in their complaints and to award money damages for specified 

liquidated amounts requiring little or no calculations.” Go/Dan Industries, Inc. v. Eastern 

Mediterranean Shipping Corp., 1998 FMC LEXIS 5, *5-6 (ALJ Dec. 10, 1998) (Adm. final 

Jan. 27, 1999); see also Shipco Transport Inc. v. Jem Logistics, Inc., 2013 FMC LEXIS 34, *2 

(FMC Aug. 21, 2013). 

The order to show cause clearly stated that the “merits of the proceeding and remedy are

not at issue and should not be addressed in these filings” and indeed, without the evidence MCS 

Industries is entitled to, the merits cannot be reached at this stage. Order Denying Respondent’s

Motion for an Extension of Time and Order to Show Cause at 2. Respondent will not be allowed 

to pick and choose which elements of the merits of this case it wishes to litigate. Therefore, it is 

necessary and appropriate to utilize the well-pleaded allegations in the amended complaint to 

determine reparations. Moreover, the Commission’s default rule specifically permits submission

of additional information regarding reparations, stating: “The presiding officer may require 

additional information or clarification when needed to issue a decision on default, including a 

determination of the amount of reparations or civil penalties where applicable.” 46 C.F.R.

§ 502.65(c).

Regarding damages, the amended complaint states: 

119. During the term of the 2020 Service Contract, Respondent’s misconduct

alleged herein caused Respondent to carry only 1101 of the 1400 contracted

TEUs, forcing Complainant to secure 299 TEUs on the relevant lanes via the spot

market or from other carriers at significantly increased prices. In total,

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Respondent paid at least $400,000 more for carriage of those TEUs than the rates 

set forth in the 2020 Service Contract. 

120. During the first three months of the 2021 Service Contract, prior to the filing

of the Verified Complaint in this action, Respondent’s misconduct caused

Respondent to carry the equivalent of only 59 of the 182 contracted TEUs, forcing

Complainant to secure at least 123 TEUs on the relevant lanes via the spot market

or from other carriers at significantly increased prices. In total, Respondent paid at

least $400,000 more for carriage of those TEUs than the rates set forth in the 2021

Service Contract.

Amended Complaint at 24. 

MCS Industries asserts that it “is seeking reparations equaling amounts in excess of its 

service contract rates with Mediterranean that Complainant had to spend on ‘spot market’

purchases of ocean carriage in order to ship cargo between port pairs covered by its service 

contracts with Mediterranean that should have been carried by Mediterranean at service contract 

rates.” OTSC Complainant Response at 19. 

MCS Industries seeks $480,719 for the 2020-2021 shipping year plus $463,936 for the 

first three months of the 2021-2022 shipping year, amounting to a total of $944,655 in 

reparations. The amount of reparations sought by MCS Industries is consistent with the request 

in the amended complaint and is the type of damages appropriate for the claimed violation of the 

Shipping Act. Because no findings are made on the merits, a cease and desist order is not issued. 

Accordingly, MCS Industries is awarded a total of $944,655 in reparations. Interest shall be 

computed from the last day for which reparations are sought, July 31, 2021. 

MCS Industries also notes that it has incurred a total of $651,304.73 in attorney fees, 

costs, and expenses through September 30, 2022, and that the “burden of attorney fees on

Complainant has been exacerbated by Mediterranean’s discovery misconduct.” OTSC

Complainant Response at 19. Commission Rule 254 states that “to recover attorney fees, the

prevailing party must file a petition within 30 days after a decision becomes final.” 46 C.F.R

§ 502.254(c). Therefore, the request for attorney’s fees is premature at this point and denied.

IV. Order

Upon consideration of the parties’ arguments, the record herein, and for the reasons

stated above, it is hereby 

ORDERED that a default decision with prejudice be entered against MSC Mediterranean 

Shipping because of its willful and deliberate failure to provide discovery. It is 

FURTHER ORDERED that MSC Mediterranean Shipping pay a total of $944,655, plus 

interest from July 31, 2021, in reparations to MCS Industries. 

Erin M. Wirth 

Chief Administrative Law Judge 

 23 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION

Ocean Network Express (North America), Inc. And 

Ocean Network Express, PTE., Ltd. – Possible 

Violations of 46 U.S.C. § 41102(C) DOCKET NO. 21-17 

Served: January 17, 2023 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s December 13, 2022, Initial Decision has expired. Accordingly, the 

decision has become administratively final.

William Cody 

Secretary

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FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

B & G FUTURES INC., REVOCATION OF OCEAN 

TRANSPORTATION INTERMEDIARY LICENSE NO. 026512NF DOCKET NO. 22-25 

Served: January 19, 2023 

ORDER OF: Erin M. WIRTH, Chief Administrative Law Judge. 

I 1 NITIAL DECISION REVOKING OCEAN TRANSPORTATION LICENSE

I. INTRODUCTION

A. Summary and Background 

In this proceeding, the Bureau of Certification and Licensing (“BCL”) and the Bureau of 

Enforcement, Investigations, and Compliance (“BEIC”) at the Federal Maritime Commission 

(“FMC” or “Commission”) contend that Respondent B & G Futures Inc. (“B & G”) should have 

its ocean transportation intermediary (“OTI”) license revoked. B & G, representing itself, asserts 

that it has not violated the Commission’s regulations, at most there was an honest mistake, and 

its license should be not be revoked. 

Respondent B & G is an Ohio Corporation, licensed by the Commission as an ocean 

transportation intermediary on October 3, 2017. In the Form FMC-18 submitted by B & G when 

it applied for an OTI license (“OTI License Application”), B & G listed Robert Waalkes as its 

secretary and qualifying individual (“QI”), and the Commission approved Mr. Waalkes as its QI. 

Further, on January 2, 2020, when B & G submitted a Form FMC-18 application to renew its 

OTI license (“OTI License Renewal Application”), it represented in the application that Mr. 

Waalkes was still its secretary and QI. 

As explained more fully below, BCL alleges that it contacted Mr. Waalkes in October 

2021, to verify the information provided by B & G, and Mr. Waalkes stated that he had never 

worked for B & G and had no knowledge of the company. In addition, BCL asserts that evidence 

obtained while processing the Form FMC-18 application B & G submitted on November 17, 

2021, to replace its QI (“QI Replacement Application”), suggested that B & G had been 

operating without a QI since June 2017, contrary to the Commission’s regulations. 

1 This initial decision will become final within 22 days of service of this decision in the absence 

of exceptions filed by either party or review by the Commission. 46 C.F.R. § 502.708(c). 

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As a result, BCL notified B & G on August 24, 2022, that it intended to revoke B & G’s

OTI license because it had determined that B & G had violated 46 C.F.R. § 515.16(a)(1) of the 

Commission’s regulations by failing to report changes in material fact to the Commission within 

30 days, as required; 46 C.F.R. § 515.16(a)(2), by failing to respond to a lawful inquiry by the 

Commission; and 46 C.F.R. § 515.16(a)(3), by making a materially false or misleading statement 

to the Commission in connection with an application for a license or an amendment to an 

existing license. In addition, BCL stated in the letter that B & G’s application to replace its QI

would be denied because BCL had determined that B & G’s owner and president, Mr. Steven 

DiPietro, did not possess the necessary character to render OTI services because, according to 

BCL, Mr. DiPietro had made a materially false statement to BCL with regard to BCL’s inquiry

about Mr. Waalkes’ employment status. 

B & G requested a hearing in connection with the proposed revocation, and the Secretary 

of the Commission assigned this proceeding to the Office of Administrative Law Judges for 

adjudication. All required submissions have been received and the record is now ready for a 

decision. As discussed below in greater detail, the evidence supports a finding that B & G’s OTI 

license should be revoked and its application for replacement QI denied. 

B. Procedural History

On September 16, 2022, the Secretary issued a Notice of Hearing Request and 

Assignment, stating that on August 24, 2022, BCL had notified B & G by letter that the 

Commission intended to revoke its OTI license, and that on September 9, 2022, B & G had 

requested a hearing on the proposed revocation pursuant to the Commission’s Rules at 46 C.F.R.

§ 515.17 and 46 C.F.R. Part 502, at Subpart X of the Commission’s Rules of Practice and

Procedure. In addition, the Secretary assigned this proceeding to the Office of Administrative

Law Judges for adjudication, pursuant to Rule 702(a) at Subpart X. 46 C.F.R. § 502.702(a).

On September 22, 2022, a Notice and Initial Order (“Notice”) was issued pursuant to 

Rule 702(b), notifying BEIC of B & G’s hearing request and instructing BEIC to file a copy of 

the notice given to B & G and BCL’s materials supporting the notice, by October 24, 2022, as 

well as serve the same documents on B & G pursuant to 46 C.F.R. § 502.702(b). The notice also 

stated that “BEIC may file a brief with legal arguments, proposed findings of fact, or additional 

information, including requests for confidential treatment.” Notice at 1.

On October 24, 2022, BEIC filed the Notice of Revocation issued to B & G by BCL, and 

an appendix of materials supporting the Notice (“BEIC Response”). On November 23, 2022, 

B & G filed a response to BEIC’s submissions (“B & G Response”) contesting the allegations 

and providing an affidavit from Mr. Waalkes. On November 28, 2022, a Notice of Right to 

Respond was issued, in accordance with the requirements under 46 C.F.R. § 502.703, advising 

BEIC of its right under 46 C.F.R. § 502.704 to file a reply to B & G’s response. On 

December 14, 2022, BEIC submitted a reply to B & G’s response (“BEIC Reply”). 

Pursuant to Subpart X, Rule 708, the initial decision is due within 40 days of BEIC’s

reply, or by January 23, 2023. 46 C.F.R. § 502.708(a). This initial decision is therefore timely. 

 26 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C. Argument of the Parties

1. B & G’s Arguments

B & G submitted arguments on the proposed revocation and exhibits, including an 

affidavit by Mr. Waalkes (“Waalkes Aff.”). B & G avers that BCL’s statement that it filed an 

application on November 17, 2021, to replace its QI from Mr. Waalkes to Mr. DiPietro is false, 

and that rather, its tariff publisher Distribution Publications, Inc. (“DPI”), submitted an 

application to BCL on November 28, 2022, to replace B & G’s QI from Mr. Waalkes to Lorie 

Obrzut, of which BCL staff were aware. B & G Response at 1 (citing Exs. A & B). 

In addition, B & G asserts: 

B & G Futures Inc. and Mr. Steven DiPietro are not in violation of 46 CFR 

§ 515.16(a)(3), particularly regarding the employment of Robert Waalkes (Exhibit

C). Mr. Waalkes was employed on a commission basis, whereby, should Mr.

Waalkes bring revenue generating business opportunity, then Mr. Waalkes would

be financially compensated on a deal-by-deal basis. During employment, Robert

Waalkes did not generate any business and as such did not receive monetary

compensation.

B & G Response at 1 (citing Ex. C). 

B & G states that Mr. Waalkes sent an email to BCL staff on August 26, 2022, 

“confirming [employment] and knowledge of B & G Futures Inc” however, due “to computer 

issues a copy was not available” and thus “Mr. Waalkes has signed an affidavit . . . reconfirming 

employment and that due to health issues Mr. Waalkes was not of sound mind and clarity when 

communicating with BCL staff.” B & G Response at 1 (citing Exs. D & E). 

In his affidavit, Mr. Waalkes states: 

1. My name is Robert Waalkes. I served as Secretary of B&G Futures, Inc. (“B&G”)

from December 1, 2016, October 25, 2020.

2. During a portion of that period, I was identified as the Qualifying Individual (“QI”)

for purposes of B&G’s ocean transportation intermediary license with the Federal

Maritime Commission.

3. In November of 2021, I mistakenly informed representatives of the Federal Maritime

Commission that I had never heard of B&G.

4. I have a medical condition, which, when untreated (as it was in November of 2021),

can impair my ability to recall past events accurately. When my condition is being

properly treated (as it is at present), I have no such impairment.

B & G Response, Ex. F. 

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Responding to the claim that it violated 46 C.F.R. § 515.16(a)(2), B & G states that it was 

“under the notion, when hiring the services of DPI that ‘ALL’ matters related to the Federal 

Maritime Commission were monitored and addressed by them. As such B & G Futures did not 

communicate directly with BCL staff under the assumption that DPI was addressing the 

matters.” B & G Response at 1 (citing Ex. G). B & G avers that its failure to follow up with BCL 

directly “was an honest and sincere mistake as the assumption was DPI would handle all 

matters.” B & G Response at 1. 

2. BEIC’s Arguments

BEIC submitted proposed findings of fact, legal arguments, and an appendix of exhibits 

as part of its reply to B & G’s response. BEIC contends that B & G and its president and part 

owner, Mr. DiPietro, made materially false and misleading statements to BCL; B & G failed to 

respond to BCL’s lawful inquiries; and B & G and Mr. DiPietro failed to notify the Commission 

of changes in material fact, in violation of the Commission’s regulations. 

BEIC notes that section 515.16(a)(3) of the Commission’s regulations provides that an 

OTI’s license may be revoked for making a materially false or misleading statement to the 

Commission in connection with an application or amendment of a license. BEIC argues that in 

its application to renew its OTI license, B & G stated that Mr. Waalkes was still employed by 

B & G while in actuality he was not, and thus by failing to disclose the fact that Mr. Waalkes 

was no longer its employee, B & G made a materially false and misleading statement to BCL, in 

violation of section 515.63(a)(3). BEIC Reply at 8-9. BEIC contends that B &G’s arguments that 

Waalkes was employed on a commission basis, that he did not generate any business and thus 

did not receive monetary compensation, does not “specifically refute” that it made a materially 

false or misleading statement to the Commission when it failed to disclose the fact that Waalkes 

was not employed by B & G at the time B & G renewed its license. BEIC Reply at 9. 

BEIC argues that evidence submitted by B & G neither demonstrates that Mr. Waalkes 

was employed by B & G at the time it applied for an OTI license or when it renewed its license, 

nor provides any information regarding when Mr. Waalkes started or terminated his affiliation 

with B & G. BEIC contends that a commission-based payment arrangement with Mr. Waalkes 

does not make him a B & G employee because, according to BEIC, while a commission-based 

payment structure can demonstrate an independent contractor relationship, it does not 

demonstrate employment. BEIC Reply at 9-11(citing Lancaster Symphony Ochestra v. NLRB, 

822 F.3d 563, 568 (D.C. Cir. 2016)). As for Mr. Waalkes’ affidavit, BEIC argues that it does not 

comply with the Commission’s requirements at 46 C.F.R. 502.6(c) for verification of documents 

submitted to show proof of a matter and thus should be disregarded. BOE further notes that Mr. 

Waalkes states in the affidavit that he was a QI for a “portion” of the period at issue, meaning 

that there was a time in the period when B & G did not have a QI. BOE notes, in addition, that 

while Mr. Waalkes states that he has a medical condition that impaired his ability to recall past 

events accurately, “Waalkes does not elaborate on what medical condition would cause him to 

confirm on two separate occasions that he had not worked for B & G before and then sign an 

affidavit saying that he had,” and that Mr. Waalkes never explains the nature of his employment 

with B & G. BEIC Reply at 11-12. 

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Further, BEIC argues that B & G’s failure to respond to BCL’s inquiry regarding Mr. 

Waalkes’ employment start and end dates is grounds to revoke B & G’s OTI license under

section 515.16(a)(2), which provides that a license may be revoked for failure to respond to any 

lawful order or inquiry by the Commission. BEIC Reply at 13. BEIC argues that B & G’s

explanation that it believed all matters related to the Commission were monitored and addressed 

by DPI is not a defense, because, according to BEIC, “B & G cannot claim ignorance when it 

purposefully ignored BCL’s lawful inquiry regarding Waalkes’ employment after having 

responded to BCL days prior.” BEIC Reply at 13. BEIC asserts that this “illustrates B & G’s

inaction, not its attempts to respond to BCL’s inquiry.” BEIC Reply at 13-14. 

In addition, BEIC argues that by failing to notify BCL of its changes in QI, a material 

fact, B & G violated section 515.16(a)(1), which provides that a license may be revoked for 

violation of any provision of any Commission order or regulation related to carrying on the 

business of an ocean transportation intermediary. BEIC Reply at 14-15. BEIC notes that the 

Commission’s regulations require licensees to notify the Commission of any changes in material

fact, within 30 days, and that changes in the identity or status of the designated QI require prior 

approval of the Commission.2 BEIC Reply at 15. BEIC asserts that moreover, B & G’s failure to 

inform BCL of the changes in QI is a violation of 46 C.F.R. § 515.20(a)(3), which requires that 

any changes in the identity or status of the designated QI be approved by the Commission prior 

to taking effect. BEIC Reply at 15. BEIC argues that the above reasons provide justification to 

revoke B & G’s OTI license. 

II. LEGAL AND FACTUAL FINDINGS

A. Controlling Legal Authority

An applicant seeking an OTI license must demonstrate through its qualifying individual 

that it has the necessary experience by showing that “its qualifying individual has a minimum of

three years’ experience in ocean transportation intermediary activities in the United States, and 

the necessary character to render ocean transportation intermediary services.” 46 C.F.R.

§ 515.11(a)(1). If the applicant is a corporation, the qualifying individual for the applicant must

be one of the applicant’s active corporate officers. 46 C.F.R. § 515.11(b). Licenses must be

issued for an initial period of not less than one year and not greater than four years, and

thereafter renewed for sequential three-year periods upon successful completion of the renewal

process specified under the Commission’s rules. 46 C.F.R. § 515.14(c). “Though the

[Commission’s] license renewal process is not intended to result in a re-evaluation of a licensee’s

character, the Commission may review a licensee’s character at any time, including at the time of

renewal, based upon information received from the licensee or other sources.” 46 C.F.R.

§ 515.14(d)(3). A change in the identity or status of the designated QI requires prior approval of

the Commission, through a Form FMC-18. 46 C.F.R. § 515.20(a)(5). “When a partnership, LLC,

2 BEIC also states that B & G failed to notify BCL of three legal proceedings against it, 

including one bankruptcy proceeding, as required under 46 C.F.R. § 515.20(e), and argues that 

this an additional basis to revoke B & G’s OTI license. BEIC Reply at 15. Because BCL’s

notification to B & G regarding its intent to revoke B & G’s license and the supporting materials

provided to B &G did not include these allegations and thus B & G did not have an opportunity 

to respond to the new allegations, this argument will not be considered. 

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or corporation has been licensed on the basis of the qualifications of one or more of the partners, 

members, managers or officers thereof, and the QI no longer serves as a full-time employee with 

the OTI or is no longer responsible for the licensee’s OTI activities, the licensee shall report such

change to the Commission within thirty (30) days.” 46 C.F.R. § 515.20(c). “Other changes of

material fact of a licensee shall be reported within thirty (30) days of such changes, in writing by 

mail or email” to the Director of BCL. 46 C.F.R. § 515.20(e).

The Shipping Act grants authority to revoke an OTI’s license under certain conditions: 

The Federal Maritime Commission, after notice and opportunity for a hearing, 

shall suspend or revoke an ocean transportation intermediary’s license if the

Commission finds that the ocean transportation intermediary –

(1) is not qualified to provide intermediary services; or

(2) willfully failed to comply with a provision of this part or with an order or

regulation of the Commission.

46 U.S.C. § 40903(a). 

The Commission’s regulations also address when a license may be revoked or suspended, 

stating in pertinent part: 

A license may be revoked or suspended for any of the following reasons: 

(1) Violation of any provision of the Act, or any other statute or Commission order or

regulation related to carrying on the business of an ocean transportation intermediary;

(2) Failure to respond to any lawful order or inquiry by the Commission;

(3) Making a materially false or misleading statement to the Commission in connection

with an application for a license or an amendment to an existing license;

(4) A Commission determination that the licensee is not qualified to render intermediary

services; or

(5) Failure to honor the licensee’s financial obligations to the Commission.

46 C.F.R. § 515.16(a). 

Rule 502.6’s provisions regarding verification of documents state, in pertinent part: 

(b) If a party is not represented by a person admitted or qualified to practice

before the Commission, each pleading, document or other paper of such party

filed with the Commission shall be signed and verified under oath by the party

or by a duly authorized officer or agent of the party, whose address and title

shall be stated.

30 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c) Wherever, under any rules of this part, any matter is required or permitted to

be supported, evidenced, established, or proved by the sworn declaration,

verification, certificate, statement, oath, or affidavit, in writing of the person

making the same (other than a deposition under § 502.143 or § 502.144), such

matter may, with like force and effect, be supported, evidenced, established,

or proved by the unsworn declaration, certificate, verification, or statement, in

writing of such person which is subscribed by such person, as true under

penalty of perjury, in substantially the following form: . . .

(2) If executed within the United States, its territories, possessions, or

commonwealth: “I declare (or certify, verify, or state) under penalty of

perjury that the foregoing is true and correct.”

46 C.F.R. § 502.6. 

B. Burden of Proof

Under the Administrative Procedure Act (“APA”), an Administrative Law Judge may not

issue an order “except on consideration of the whole record or those parts thereof cited by a party

and supported by and in accordance with the reliable, probative, and substantial evidence.”

5 U.S.C. § 556(d); see also Steadman v. SEC, 450 U.S. 91, 102 (1981). This decision is based on 

the briefs, exhibits, proposed findings of fact and conclusions of law, and replies thereto, filed by 

the parties. 

In addition, this initial decision addresses only material issues of fact and law. BEIC 

submitted proposed findings of fact in its reply brief. Proposed findings of fact not included in 

this decision were rejected, either because they were not supported by the evidence or because 

they were not dispositive or material to the determination of the allegations of the complaint or 

the defenses thereto. Administrative adjudicators are “not required to make subordinate findings

on every collateral contention advanced, but only upon those issues of fact, law, or discretion 

which are ‘material.’” Minneapolis & St. Louis R.R. Co. v. United States, 361 U.S. 173, 193-94 

(1959). To the extent individual findings of fact may be deemed conclusions of law, they shall 

also be considered conclusions of law. Similarly, to the extent individual conclusions of law may 

be deemed findings of fact, they shall also be considered findings of fact. 

C. Findings of Fact (“FF”)

1. B & G was incorporated in Ohio on May 5, 2016. BEIC Ex. 2, at BEIC8.

2. Steven P. DiPietro was listed as 50% part-owner of B & G and its president and treasurer

on B & G’s OTI License Application Form. BEIC Ex. 2, at BEIC14, BEIC17, and BEIC

Ex. 5 at BEIC37.

3. Ami Vyas was listed as 50% part-owner and vice-president of B & G on its OTI License

Application Form. BEIC Ex. 2, at BEIC14, and BEIC Ex. 5 at BEIC37.

4. B & G applied for an OTI license on July 26, 2017. BEIC Ex. 2, at BEIC17.

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5. Robert Waalkes was listed as B & G’s secretary and QI on B & G’s OTI License

Application Form. BEIC Ex. 2, at BEIC10 and BEIC14.

6. B & G’s OTI License Application Form indicates that Robert Waalkes was selfemployed at U.S. Pack Inc from September 2006 to July 2017. BEIC Ex. 2, at BEIC11.

7. On October 3, 2017, Mr. Waalkes was approved as the QI for B & G. BEIC Ex. 2, at

BEIC14; Verified Statement of Aline Hull (“Hull V.S.”) ¶ 4.

8. B & G was approved for an OTI license and has been licensed to operate as an OTI since

October 2017, OTI License No. 026512NF. Hull V.S. ¶ 4; BEIC4; BEIC Ex. 5, at

BEIC31.

9. On January 2, 2020, Mr. DiPietro submitted a Form FMC-18 to renew B & G’s license.

Hull V.S. ¶ 6.

10. B & G’s OTI License Renewal Form repeated, without any changes, all information

previously submitted by B & G in its application for an OTI license, including the

statement that Mr. Waalkes was B & G’s QI and secretary. BEIC4; Hull V.S. ¶ 6.

11. Mr. DiPietro certified that all information provided in B & G’s OTI License Renewal

Form was true, correct, and complete to the best of his knowledge and belief. BEIC

Ex. 3, at BEIC21; Hull V.S. ¶ 5.

12. On October 4, 2021, BCL contacted B & G by email, stating that BCL had received

notice that B & G’s bond would be cancelled effective October 9, 2021, and advising

B & G to contact its surety representative to send a rescission of the bond cancelation or a

replacement bond if B & G believed the notice of cancellation was an error. BEIC Ex. 4,

at BEIC28.

13. On October 4, 2021, B & G responded to BCL’s email, attaching proof that its bond had

not been canceled, and stating in pertinent part, “[s]hould you have any additional

questions; please [feel] free to contact me.” BEIC Ex. 4, at BEIC27.

14. On October 8, 2021, BCL contacted Mr. DiPietro by email, stating: “Mr. Dipietro, Please

confirm that Mr. Robert Waalkes is a full-time employee and officer of B & G Futures

Inc.” BEIC Ex. 4, at BEIC27.

15. On October 12, 2021, Mr. DiPietro responded, stating in pertinent part: “We apologize

for not answering you sooner. We were under the assumption DPI updated our QI. We

will have this updated immediately.” BEIC Ex. 4, at BEIC26.

16. On October 12, 2021, BCL again contacted Mr. DiPietro, stating in pertinent part:

“Please advise the start and end dates of Mr. Waalkes employment with B & G Futures.

In the meantime, please have DPI submit an application proposing a replacement QI as

soon as possible, and in no case later than 30 days from the date of this message.” BEIC

Ex. 4, at BEIC26.

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17. On November 15, 2021, BCL again contacted Mr. DiPietro, stating in pertinent part:

On October 12 the Federal Maritime Commission . . . requested that you 

provide the start and end dates of Mr. Waalkes employment with B & G 

Futures. To date you have not responded. Additionally, you indicated 

your tariff publisher, Distribution Publications Inc. (DPI), would submit 

an application proposing a replacement Qualifying Individual (QI) –

however this has not occurred. B & G Futures Inc. is currently out-ofcompliance with Commission regulations . . . . If the application 

proposing the replacement QI and the dates of Mr. Waalkes employment 

are not received by Thursday, November 18, 2021 the Bureau of 

Certification and Licensing will formally notify you of our intent to 

revoke the license, at which time you will have the opportunity to request 

a hearing with the Commission or to voluntarily surrender the license. 

BEIC Ex. 4, at BEIC25. 

18. In addition, BCL contacted Mr. DiPietro by phone. According to the BCL staff who

spoke to Mr. DiPietro, “Mr. DiPietro was insistent that DPI had been provided all the

information needed to answer our questions and to complete the application. I told him

we have not received that information. He was going to call DPI.” BEIC Ex. 4, at

BEIC24.

19. On November 16, 2021, B & G submitted an application to replace its QI from Mr.

Waalkes to Lorie Obrzut. BEIC Ex. 4, at BEIC24; BEIC Ex. 5, at BEIC31, BEIC33 and

BEIC48.

20. B & G indicated in its QI Replacement Application that Lorie Obrzut was its secretary

and had been employed with B & G since July 2020. BEIC Ex. 5, at BEIC33.

21. B & G’s QI Replacement Application was submitted by Steve DiPietro, who certified in

the application “under penalties of perjury,” that “I have examined this application and to

the best of knowledge and belief, it is true, correct and complete.” BEIC Ex. 5, at

BEIC48.

22. On November 17, 2021, BCL spoke to Mr. Waalkes, who “indicated he never worked

for, nor heard of, B & G Futures.” BEIC Ex. 4, at BEIC24.

23. On November 17, 2021, Mr. Waalkes sent an email to BCL, stating in pertinent part: “I

have not been employed by, nor am I familiar with B & G Futures.” BEIC Ex. 6, at

BEIC50.

24. On August 24, 2022, BCL sent a Notice of Intent to Revoke to Mr. DiPietro, advising

him of BCL’s intent to revoke B & G’s OTI License No. 026512NF. BEIC Ex. 1 at

BEIC4.

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25. On August 26, 2022, Aline Hull, Director of Office of OTIs at BCL received an email

from Mr. Waalkes regarding the Notice of Intent to Revoke B & G Futures’ license

which stated:

I was contacted in November of 2021 and asked if I had any recollection 

of working with B&G Futures. At the time I stated that I did not. I 

sincerely apologize for the confusion, but I did indeed execute an 

agreement in 2017 with B&G Futures as a consultant. . . . 

I was introduced to B&G Futures by a close friend and business associate. 

. . . At that time I was CEO of US Pack, Inc [of] Leominster MA and our 

organization was primarily in the chemical manufacturing and export 

business. It was believed that my export experience would be a benefit to 

his new venture. However, I did not do any work with B&G after this 

agreement was executed and I ended up moving into another industry. 

BEIC Reply Attachment 1 at BEIC67-68; Hull verified statement (“Hull V.S.”) ¶¶ 1, 15, 

FF 25. 

26. In an unsworn affidavit by Mr. Waalkes (“Waalkes Aff.”), submitted into the record by

B & G, Mr. Waalkes states that he served as secretary of B & G from December 1, 2016,

to October 25, 2020, and was identified as QI for B & G “[d]uring a portion of that

period,” but that in “November of 2021, [he] mistakenly informed representatives of the

Federal Maritime Commission that [he] had never heard of B&G” and that “[he has] a

medical condition which, when untreated (as it was in November of 2021), can impair

[his] ability to recall past events accurately. When [his] condition is being properly

treated (as it is at present), [he has] no such impairment.” Waalkes Aff., B & G Response

Ex. F.

27. BCL concluded that after “numerous correspondence, lack of requested information from

B & G Futures, and analyzed BCL records on file, evidence indicated that [B & G] had a

character issue of misrepresentation.” Verified Statement of Cindy Hennigan (“Hennigan

V.S.”) ¶ 6.

III. DISCUSSION

A. The Evidence Supports a Finding that B & G’s OTI License Should be Revoked

Pursuant to section 40903(a) of the Shipping Act, an OTI’s license is subject to revocation 

for willfully failing to comply with a provision of the Shipping Act or any other statute, a 

Commission order or regulation, or based on a determination by the Commission that the OTI is 

not qualified to provide intermediary services. 46 U.S.C § 40903(a). In addition, under section 

515.16(a) of the Commission's Rules, an OTI’s license is subject to revocation for, in pertinent 

part, a violation of any provision of the Shipping Act or any statute, a Commission order or 

regulation related to carrying on the business of an ocean transportation intermediary; failure to 

respond to any lawful order or inquiry by the Commission; making a materially false or 

misleading statement to the Commission in connection with an application for a license or 

amendment to an existing license; or, based on a Commission determination that the licensee is 

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not qualified to render intermediary services. 46 C.F.R § 515.16(a). 

1. Robert Waalkes’ Employment

The parties devoted a major part of their arguments to the testimony by affidavit of 

Robert Waalkes, who B & G listed as its QI and secretary in its application for a license, as well 

as the issue of whether the evidence demonstrates that Robert Waalkes was B & G’s employee. 

Mr. Waalkes states in his affidavit dated November 22, 2022: 

1. My name is Robert Waalkes. I served as Secretary of B&G Futures, Inc. (“B&G”)

from December 1, 2016 to October 25, 2020.

2. During a portion of that period, I was identified as the Qualifying Individual

(“QI”) for purposes of B&G’s ocean transportation intermediary license with the

Federal Maritime Commission.

3. In November of 2021, I mistakenly informed representatives of the Federal

Maritime Commission that I had never heard of B&G.

4. I have a medical condition, which, when untreated (as it was in November of

2021), can impair my ability to recall past events accurately. When my condition

is being properly treated (as it is at present), I have no such impairment.

B & G Response, Ex. F. 

As an initial matter, Mr. Waalkes’ affidavit is unsworn and fails to “declare (or certify,

verify, or state) under penalty of perjury that the foregoing is true and correct,” as required. See 

46 C.F.R. § 502.6 (Verification of documents). Although the statement is unsworn, it will still be 

admitted into evidence and considered, as Respondent is acting pro se. 

According to BCL, when contacted on November 17, 2021, to confirm that he was 

B & G’s QI and secretary, Mr. Waalkes stated that he had not been employed by, nor was he 

familiar with B & G. While Mr. Waalkes blames his failure to recall B & G on a medical 

condition that was untreated at that time, he does not explain why he wrote to BCL on 

August 26, 2022, stating in pertinent part: 

I was contacted in November of 2021 and asked if I had any recollection of 

working with B&G Futures. At the time I stated that I did not. I sincerely 

apologize for the confusion, but I did indeed execute an agreement in 2017 with 

B&G Futures as a consultant. . . . 

I was introduced to B&G Futures by a close friend and business associate. . . . At 

that time I was CEO of US Pack, Inc [of] Leominster MA and our organization 

was primarily in the chemical manufacturing and export business. It was believed 

that my export experience would be a benefit to his new venture. However, I did 

not do any work with B&G after this agreement was executed and I ended up 

moving into another industry. 

35 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BEIC Reply Attachment 1 at BEIC67-68; Hull V.S. ¶ 15, FF 25. The above email contradicts 

Mr. Waalkes’ statement in his affidavit regarding serving as a secretary of B & G until 2020. The 

email is more detailed and more credible than the subsequent affidavit submitted as part of this 

proceeding. Mr. Waalkes’ affidavit is unreliable and is contradicted by statements of Mr.

Waalkes, himself. 

The evidence submitted by B & G purporting to show that Mr. Waalkes was elected as 

B & G’s secretary by special meeting on December 1, 2016 (B & G Response Ex. C), does not 

establish that Mr. Waalkes was B & G’s employee on July 26, 2017, when it applied for an OTI

license. B & G asserts in its response: 

Mr. Waalkes was employed on a commission basis; whereby, should Mr. Waalkes 

bring revenue generating business opportunity, then Mr. Waalkes would be 

financially compensated on a deal-by-deal basis. During that employment, Robert 

Waalkes did not generate any business and as such did not receive monetary 

compensation. 

B & G Response at 1. Any claim that Mr. Waalkes was B & G’s employee based on the special 

meeting reflected in this evidence, electing him as secretary on December 1, 2016, is 

contradicted by B & G’s OTI License Application form, which indicates that Mr. Waalkes was

self-employed at U.S. Pack Inc. from September 2006 to July 2017, as well as Mr. Waalkes’

statement that he entered into a consultancy agreement with B & G in 2017 but never worked for 

B & G. 

Additionally, the claim that Mr. Waalkes served as secretary for B & G from the period 

of December 1, 2016, to October 25, 2020, is contradicted by B & G’s Application to Replace its

QI (B & G, Ex. A; BEIC Ex. 2 at BEIC33), which indicates that B & G’s proposed QI, Lorie

Obrzut, was its secretary from July 2020 to the present. If B & G’s evidence is believed, both

Lorie Obrzut and Mr. Waalkes served as B & G’s secretary for the period of July 2020 to 

October 25, 2020. Accordingly, evidence submitted by B & G to demonstrate that Robert 

Waalkes was B & G’s employee is found to be unreliable, self-contradictory, and contradicted by 

the record. 

2. B & G Willfully Failed to Comply with Commission Regulations and

Inquiries from BCL

Section 515.11(b) of the Commission’s regulations requires the qualifying individual for

a corporation applying for an OTI license to be “at least one of the active corporate officers” of

the corporation. 46 C.F.R. § 515.11(b)(3) (emphasis added). B & G’s statement that Robert 

Waalkes did not receive financial compensation at any time from it (B & G Response at 1), and 

Mr. Waalkes’ statement that he did not do any work for B & G after entering into a consultancy 

agreement with them (FF 25), demonstrate that Mr. Waalkes was not an active B & G corporate 

officer. By listing Mr. Waalkes, who was not an active officer as its QI, B & G failed to comply 

with the requirements of section 515.11(b)(3). 

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Further, in Mr. Waalkes’ affidavit, he states that he was the QI for B & G only “during a

portion of that period,” that he claims to have served as B & G’s secretary. Waalkes Aff. ¶¶ 1-2. 

A change in the identity or status of the designated QI requires prior approval of the 

Commission, through a Form FMC-18, see 46 C.F.R. § 515.20(a)(5), and, “[w]hen a partnership,

LLC, or corporation has been licensed on the basis of the qualifications of one or more of the 

partners, members, managers or officers thereof, and the QI no longer serves as a full-time 

employee with the OTI or is no longer responsible for the licensee’s OTI activities, the licensee

shall report such change to the Commission within thirty (30) days.” 46 C.F.R. § 515.20(c).

“Other changes of material fact of a licensee shall be reported within thirty (30) days of such 

changes, in writing by mail or email” to the Director of BCL. 46 C.F.R. § 515.20(e). On 

January 2, 2020, Mr. DiPietro submitted a Form FMC-18 to renew B & G’s license. FF 9; Hull 

V.S. ¶ 6. B & G’s OTI License Renewal Form repeated, without any changes, all information

previously submitted by B & G in its application for an OTI license, including the statement that

Mr. Waalkes was B & G’s QI and secretary. BEIC4; Hull V.S. ¶ 6. FF 10. Accepting for the

purpose of this discussion Mr. Waalkes’ unreliable affidavit, at the very least, Mr. Waalkes was

not B & G’s QI for the entire period B & G represented in its license application that he was. By

failing to notify the Commission of the change in status of Mr. Waalkes, its QI, B & G failed to

comply with the requirements of the above regulations.

Additionally, the evidence demonstrates that B & G failed to comply with inquiries and 

instructions from the Commission. On October 8, 2021, BCL instructed B & G to confirm that 

Mr. Waalkes was a full-time employee and officer of B & G. FF 14. When B & G failed to 

respond, BCL again contacted B & G on October 12, 2021, asking it to provide “the start and 

end dates of Mr. Waalkes’ employment with B & G Futures.” FF 16. When B & G again failed 

to comply, BCL followed up with B & G staff on November 15, 2021, asking them to provide 

the requested information. FF 17-18. BEIC Ex. 4, at BEIC25-27. To date, B & G has never 

provided the requested information to BCL. 

B & G’s assertion that its failure to follow up with BCL directly “was an honest and 

sincere mistake as the assumption was DPI would handle all matters,” BEIC Response at 1, is 

unpersuasive, given that the evidence shows that B & G had personally responded to inquiries 

from BCL on previous occasions. As an example, B & G personally responded to an inquiry 

from BCL on October 4, 2021, informing B & G that its bond issuer had notified BCL that the 

bond would be canceled, and inquiring whether B & G intended to cancel its bond. B & G 

provided proof on the same day to BCL, without relying on DPI to respond, that its bond was 

still effective. Indeed, Mr. DiPietro stated in his response to BCL: “[s]hould you have any

additional questions; please [feel] free to contact me.” BEIC Ex. 4, at BEIC27. Yet, when 

contacted on the issue of Mr. Waalkes’ employment dates, B & G repeatedly ignored BCL’s

inquiries, suggesting that it did not provide the requested information because it did not have the 

information, not because it was relying on DPI to do so. Accordingly, the evidence shows that 

B & G willfully failed to comply with inquiries from the Commission. 

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3. B & G and its President, Mr. Steve DiPietro, Made Materially False

or Misleading Statements to the Commission in Connection with its

Application for an OTI License and Application to Renew its License

According to Mr. Waalkes, he “did not do any work with B&G after his agreement [in 

2017 with B & G as a consultant] was executed and [he] ended up moving into another 

industry.” BEIC Reply Attachment 1 at BEIC67-68; Hull V.S. ¶ 15, FF 25. In addition, based on 

B & G’s own evidence, Mr. Waalkes was not an active officer receiving monetary compensation, 

because Mr. Waalkes never “generate[d] any business and as such did not receive monetary

compensation.” B & G Response at 1. Also, the record does not show that Mr. Waalkes received 

any other form of compensation from B & G that would suggest that he was doing any work for 

B & G. 

B & G submitted a document titled “Waiver of Notice of Special Meeting of the Board of 

Directors of B & G Futures, Inc.,” dated December 1, 2016, and another document titled “Action

by Written Consent of Special Meeting of the Board of Directors of B & G Futures Inc.,” dated 

December 1, 2016, purporting to show that by special meeting on December 1, 2016, B & G’s

board of directors elected Mr. Waalkes as B & G’s secretary. While these documents may show 

that Mr. Waalkes was elected to and accepted the position of secretary for B & G on 

December 1, 2016, they are not evidence that Mr. Waalkes was secretary for B & G, or 

employed by B & G, at the time it applied for an OTI license on July 26, 2017, or when it 

applied to renew its license on January 2, 2020. Additionally, the documents do not establish that 

Mr. Waalkes did not subsequently fall into an inactive status, of which B & G was required to 

notify the Commission. In Mr. Waalkes’ affidavit, he states that he was QI for B & G only

“during a portion of that period,” he claims to have served as B & G’s secretary. Waalkes Aff.

¶¶ 1-2. Even accepting Mr. Waalkes’ unreliable affidavit as true, the most that could be said is 

that the evidence demonstrates that Mr. Waalkes was not B & G’s QI for the entire period B & G 

represented that he was. Mr. DiPietro submitted all of B & G’s license applications, and certified 

that all information provided in B & G’s applications was true, correct, and complete to the best 

of his knowledge and belief. Accordingly, the evidence demonstrates that B & G and Mr. 

DiPietro made materially false or misleading statements to the Commission in connection with 

an application for a license and amendment of an existing one. 

4. B & G is not Qualified to Render Intermediary Services

A license may be revoked based on a determination by the Commission that the OTI is 

not qualified to provide intermediary services. 46 U.S.C § 40903(a). See also 46 C.F.R 

§ 515.16(a). The Commission issues a license “if it determines as a result of its investigation,

that the applicant possesses the necessary experience and character to render ocean

transportation intermediary services.” 46 C.F.R. § 515.14(a)(1) (emphasis added). It stands to

reason, therefore, that a determination that an OTI lacks character would render the OTI

unqualified to render OTI services. Here, BCL concluded that “[a]fter numerous correspondence,

lack of requested information from B & G Futures, and analyzed BCL records on file, evidence

indicated that [B & G] had a character issue of misrepresentation.” Hennigan V.S. ¶ 6. The

evidence demonstrates that B & G provided false information to the Commission in its OTI

license applications, supporting BCL’s conclusion that B & G “had a character issue of

 38 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

misrepresentation.” Because the evidence shows a lack of character by B & G, it further 

corroborates BCL’s determination that B & G is not qualified to render intermediary services.

B. Conclusion

Based on the foregoing, the evidence supports a finding that B & G failed to comply with 

the Commission’s regulations and BCL’s inquiries; that B & G and its president, Mr. DiPietro, 

made materially false or misleading statements to the Commission in connection with its 

application for an OTI license and application to renew B & G’s license; and that B & G lacks 

the necessary character to render intermediary services. Accordingly, B & G’s OTI license is

revoked pursuant to 46 U.S.C § 40903(a) of the Shipping Act and 46 C.F.R § 515.16(a) of the 

Commission’s regulations. Because B & G’s OTI license is revoked, B & G’s application to 

replace its QI is denied. 

IV. ORDER

Upon consideration of the evidence and arguments in the evidence of record, and for the

reasons stated above, it is hereby 

ORDERED that B & G’s ocean transportation license be REVOKED. It is 

FURTHER ORDERED that B & G’s application to replace its qualifying individual be 

DENIED. It is 

FURTHER ORDERED that B & G cease and desist any and all ocean transportation 

intermediary activities. 

Erin M. Wirth 

Chief Administrative Law Judge 

39 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

COLOR BRANDS, LLC, Complainant 

v. DOCKET NO. 22-18 

AAF LOGISTICS, INC., Respondent. 

Served: January 27, 2023 

ORDER OF: Erin M. WIRTH, Chief Administrative Law Judge. 

I 1 NITIAL DECISION ON DEFAULT

I. INTRODUCTION AND PROCEDURAL HISTORY 

In the complaint, Color Brands, LLC (“Color Brands”) alleges that Respondent AAF

Logistics, Inc. (“AAF”) violated the Shipping Act of 1984 (“Shipping Act”) by charging for 

insurance that it did not obtain for maritime shipments. AAF has not responded to the complaint 

or otherwise participated in this proceeding. Therefore, a default decision is issued against it. 

On August 30, 2022, the notice of filing of complaint and assignment for this proceeding 

and a copy of the complaint were served on Respondent AAF. UPS provided a slightly different, 

corrected address for AAF from the one listed in the complaint. A UPS delivery notification 

states that the documents were delivered on August 31, 2022, to AAF Logistics, Inc., 17700 

Castleton St., No. 363, City of Industry, CA 91748-1700. Ex. 1; see also Order to Respond to 

Motion for Default (Dec. 6, 2022), attachment 1. 

On September 26, 2022, a notice of appearance on behalf of Respondent AAF was 

received from Attorney Henry Gonzalez and Attorney Peter Herrick. Also on September 26, 

2022, Respondent’s counsel filed a motion for extension of time to file an answer. On

September 27, 2022, the requested extension to October 17, 2022, to respond to the complaint 

was granted. 

On October 17, 2022, Attorneys Gonzalez and Herrick filed a motion to withdraw as 

counsel for Respondent. The motion stated, in part: 

 

1 This initial decision will become the decision of the Commission in the absence of review by 

the Commission. Any party may file exceptions to this decision within twenty-two days of the 

date of service. 46 C.F.R. § 502.227. 

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On October 17, 2022, Respondent notified undersigned that its services were 

being terminated and discharged effective immediately. Respondent confirmed it 

was made aware of the consequences and impact of undersigned counsels’

termination and discharge, and which decision could result in a default judgment. 

Notwithstanding, Respondent acknowledged the consequences as explained, and 

still desired to terminate and discharge undersigned counsels’ representation. 

Motion to Withdraw at 1. 

On October 18, 2022, an order was issued granting Respondent’s counsels’ motion to 

withdraw, ordering AAF to respond to the complaint, and stating that if “Respondent fails to 

respond to this order by November 18, 2022, a default decision may be entered against it, 

including awarding reparations to Complainant up to $ 322,624.17, plus attorney’s fees if sought, 

and any other appropriate penalty.” Order Granting Motion to Withdraw as Counsel and Order to 

Show Cause at 2. 

On November 28, 2022, Complainant filed a motion seeking default and entry of a 

default judgment (“Default Motion”). This Default Motion did not include a notice that it was 

served on Respondent. The Office of Administrative Law Judges (“OALJ”) emailed a copy of

the Default Motion to Complainant and attorney Charles Pok, who had been identified in the 

complaint as representing Respondent. Mr. Pok responded that he was “not the attorney of record 

in this case” and “cannot receive any document on behalf of AAR Logistics,” presumably

referring to “AAF” Logistics. Ex. 2, see also Order to Respond to Motion for Default, 

attachment 2. 

On December 6, 2022, an order to respond to motion for default was issued, serving a 

copy of Complainant’s motion for default, ordering AAF to respond to the complaint by 

January 5, 2023, and warning that a default decision may be entered against it, including 

awarding reparations to Complainant up to $ 322,624.17, plus attorney’s fees if sought, and any 

other appropriate penalty. On December 7, 2022, Respondent AAF was served at its UPS 

updated address of 17800 Castleton St., No. 363, City of Industry, CA 91748-1700. Ex. 3. 

II. DISCUSSION

A. AAF is in Default

The Commission’s rules require that AAF file its answer or otherwise respond to the 

complaint within twenty-five days after the date of service of the complaint. 46 C.F.R. 

§ 502.62(b)(1). To date, AAF has failed to respond to the complaint, the initial order, the order to

show cause, the motion for default, or the order to respond to the motion for default. AAF has

been advised that a default may be entered against it in numerous orders as well as by the

attorneys it hired to represent it. The case has been pending for over four months.

Pursuant to Commission Rule 62: 

Failure of a party to file an answer to a complaint, counterclaim, crossclaim, or 

third-party complaint within the time provided will be deemed to constitute a 

waiver of that party’s right to appear and contest the allegations of the complaint,

 41 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

counterclaim, crossclaim, or third-party complaint to which it has not filed an 

answer and to authorize the presiding officer to enter an initial decision on default 

as provided for in 46 CFR 502.65. Well pleaded factual allegations in the 

complaint not answered or addressed will be deemed to be admitted. 

46 C.F.R. § 502.62(b)(6)(i). Moreover, when “a party is found to be in default, the Commission 

or the presiding officer may issue a decision on default upon consideration of the record, 

including the complaint.” 46 C.F.R. § 502.65(b). 

Respondent was served and had notice of this proceeding. Despite multiple warnings that 

failure to respond would result in a default decision, AAF has failed to respond or participate in 

this proceeding. In addition, Respondent hired attorneys to represent it but decided to terminate 

their service. Therefore, a default decision against Respondent is appropriate. 

B. Violation of the Shipping Act

The Commission’s regulations provide that well-pleaded factual allegations in a 

complaint will be deemed to be admitted when a respondent fails to answer a complaint within 

the time provided. United Logistics (LAX) Inc. – Possible Violations of Sections 10(A)(1) and 

10(B)(2)(A) of the Shipping Act of 1984, Docket No. 13-01, 33 S.R.R. 196, 198 (FMC Feb. 6, 

2014); Century Metal Recycling Pvt. Ltd. v. Dacon Logistics, LLC, Docket 12-09, 33 S.R.R. 17, 

19 (FMC Nov. 12, 2013). When a respondent defaults, the finder of fact accepts as true all wellpleaded facts in the order. 10A Wright & Miller § 2688, pp. 58-61; Hugh Symington v. Euro Car 

Transport, Inc., Docket No. 92-47, 26 S.R.R. 871, 872 (ALJ Mar. 18, 1993) (adm. final). 

In the complaint, Color Brands alleges that AAF is a maritime common carrier subject to 

regulation by the Commission; that the Commission has jurisdiction over the claim; and that 

reparations are sought for violations of the Shipping Act, sections 41102 and 41104. Complaint 

at ¶¶ 2-6, 21. Color Brands alleges that as a result of AAF’s violations of the Shipping Act, it has

sustained injuries and damages in the amount of $322,624.17. Complaint at ¶ 22; Default Motion 

at 2. 

Specifically, the complaint contends that over the past three years, Color Brands has 

shipped freight with AAF with a stated value of $37,057,209.14; AAF charged an average rate of 

.32% of value for the requested insurance coverage; and Color Brands paid AAF $118,583.07 for 

such coverage. Complaint at ¶ 14. Color Brands states that AAF issued bills of lading for several 

of its shipments which were received in good order and delivered with physical damage and 

delay. Complaint at ¶ 15. Color Brands alleges that AAF has engaged in a pattern of improper 

practices, including failing to provide survey reports of damages, repeatedly demanding claim 

documentation that has already been provided, and denying claims improperly. Complaint at 

¶¶ 16-19. 

As a specific example, Color Brands asserts that order 5434 was an export shipment with 

container DFSU7281114 moving under AAF bill of lading COSU6301553970, dated June 1, 

2021, scheduled to move from Long Beach, California, to Karachi, Pakistan. Complaint at ¶ 7. 

Color Brands changed the consignee and paid AAF for the associated costs to change the final 

destination from Karachi to Rotterdam, where the container arrived with substantial cargo 

 42 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

damage. Complaint at ¶ 8. On December 17, 2021, Color Brands requested evidence of insurance 

on orders that were damaged in transit, but AAF provided no documentation and gave no 

indication that there was an insurance plan in place. Complaint at ¶ 9. On January 13, 2022, 

Color Brands advised AAF of an insurance claim but AAF “advised that insurance coverage was 

not available for the leg between Jebel Ali to Rotterdam.” Complaint at ¶ 10. AAF did not advise 

Color Brands, when AAF charged Color Brands an additional $10,087, that cargo insurance 

coverage was limited or not available. Complaint at ¶ 11. On February 8, 2022, AAF offered a 

partial settlement after the goods were destroyed and AAF said insurance coverage was not 

obtained for Color Brands’ shipments. Complaint at ¶ 12. Thus, Color Brands concluded that 

AAF has been charging and been paid for cargo insurance coverage but not, in fact, obtaining 

such coverage. Complaint at ¶ 12. Attempts to obtain proof of insurance coverage and to resolve 

this claim have been unsuccessful. Complaint at ¶ 13. 

Accepting the factual allegations of the complaint as true, Respondent operated as an 

ocean transportation intermediary (“OTI”), agreed to transport numerous shipments, billed and 

received payment for insurance on those shipments, and failed to obtain the appropriate 

insurance. It is not clear whether AAF is a licensed OTI or whether it is operating as an 

unlicensed OTI. However, from the factual allegations it appears that AAF holds out that it 

transports cargo by water between the United States and foreign countries for compensation, 

assumes responsibility for the transportation from the point of receipt to the point of destination, 

and uses, for all or part of that transportation, a vessel operating on the high seas between a port 

in the United States and a port in a foreign country. While it would be helpful to have additional 

information about the parties and the shipments involved, AAF’s failure to participate in the 

proceeding meant that Complainant was unable to conduct discovery and to identify additional 

evidence relevant to the allegations. 

Complainant alleges violations of the Shipping Act and a pattern of conduct sufficient to 

demonstrate a violation of the Shipping Act. AAF has not denied the allegations. Respondent 

chose not to participate in this proceeding, and its failure to participate has deprived Claimant of 

the opportunity to obtain additional evidence to support its allegations, as Respondent would be 

most likely to have information pertinent to the allegations against it. Such failure to respond has 

been found by the Commission to support a default decision. See, e.g., Century Metal Recycling, 

33 S.R.R. at 19; Shipco Transport Inc. v. Jem Logistics, Inc., and Andi Georgescu, Docket No. 

12-06, 32 S.R.R. 1855, 1857 (FMC Aug. 21, 2013); Oceanic Bridge International, Inc. -

Possible Violations of Section 10(a)(1) of the Shipping Act of 1984, Docket No. 14-02, 2014

FMC LEXIS 24, *1 (ALJ Oct. 21, 2014) (adm. final). The conduct alleged in the complaint

states a claim for violation of the Shipping Act and AAF has defaulted. Accordingly,

Complainant has established that AAF violated the Shipping Act.

C. Reparations

The Complainant seeks $322,624.17 in damages. Complaint at ¶ 22; Default Motion at 2. 

Pursuant to section 11(g) of the Shipping Act “the Federal Maritime Commission shall direct the

payment of reparations to the complainant for actual injury caused by a violation of this part, 

plus reasonable attorney fees.” 46 U.S.C. § 41305(b). Commission case law states that: “(a)

damages must be the proximate result of violations of the statute in question; (b) there is no 

presumption of damage; and (c) the violation in and of itself without proof of pecuniary loss 

 43 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

resulting from the unlawful act does not afford a basis for reparation.” Waterman v. Stockholms 

Rederiaktiebolag Svea, Docket No. 638, 3 F.M.B. 248, 249 (FMB Dec. 8, 1950); James J. 

Flanagan Shipping Corp. v. Lake Charles Harbor and Terminal Dist., Docket No. 94-32, 30 

S.R.R. 8, 13 (FMC Aug. 26, 2003). 

The evidence demonstrates that as a consequence of the violations by AAF, Color Brands 

sustained damages of $322,624.17. Color Brands is also entitled to interest running from 

December 17, 2021, when it requested evidence of insurance, to be calculated by the 

Commission when this judgement and decision become administratively final. See 46 C.F.R. 

§ 502.253. In addition, Complainant may be eligible for attorney fees, upon petition, pursuant to

Commission Rule 254. 46 C.F.R. § 502.254.

III. ORDER

For the reasons stated above, it is hereby

ORDERED that Color Brand’s motion for default be GRANTED and default be entered

against Respondent AAF Logistics. It is 

FURTHER ORDERED that Color Brands be awarded $322,624.17, plus interest from 

December 17, 2021, as reparations for violating the Shipping Act. 

Erin M. Wrth 

Chief Administrative Law Judge 

44 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

INTERMODAL MOTOR CARRIERS CONFERENCE, AMERICAN

TRUCKING ASSOCIATIONS, INC., Complainant 

v. 

OCEAN CARRIER EQUIPMENT MANAGEMENT ASSOCIATION

INC.; CONSOLIDATED CHASSIS MANAGEMENT, LLC; 

CMA CGM S.A.; COSCO SHIPPING LINES CO. LTD.; 

EVERGREEN LINE JOINT SERVICE AGREEMENT, FMC NO. 

011982; HAPAG-LLOYD AG; HMM CO. LTD.; MAERSK A/S; 

MSC MEDITERRANEAN SHIPPING COMPANY S.A.; 

OCEAN NETWORK EXPRESS PTE. LTD.; WAN HAI LINES LTD.; 

YANG MING MARINE TRANSPORT CORP.; AND 

ZIM INTEGRATED SHIPPING SERVICES, Respondents. 

DOCKET NO. 20-14 

Served: February 6, 2023 

ORDER OF: Erin M. WIRTH, Chief Administrative Law Judge. 

I 1 NITIAL DECISION PARTIALLY GRANTING SUMMARY DECISION

I. INTRODUCTION

A. Overview

Complainant Intermodal Motor Carriers Conference, American Trucking Associations, 

Inc. (“IMCC”) filed a complaint alleging violations of the Shipping Act of 1984, as amended 

(“Shipping Act”) by Respondents Ocean Carrier Equipment Management Association Inc. 

(“OCEMA”), Consolidated Chassis Management, LLC (“CCM”), and eleven different ocean 

common carriers (“ocean carriers” or “OCCs”). IMCC alleges that Respondents have “adopted 

and imposed unjust and unreasonable regulations and engaged in unjust and unreasonable 

practices by requiring the use of OCEMA member default chassis providers, and denying motor 

carriers their right to select the chassis provider for merchant haulage movements, all in violation 

of 46 U.S.C. § 41102(c).” Complaint at 2. Each of the thirteen Respondents filed an answer 

denying the allegations and raising affirmative defenses, including lack of jurisdiction, failure to 

join indispensable parties, and failure to demonstrate actual injury or causation. This initial 

decision adjudicates three motions for summary decision filed by the parties. 

1 This initial decision partially granting summary decision will become the decision of the 

Commission in the absence of review by the Commission. 46 C.F.R. § 502.227. 

45 6 F.M.C. 2d

[Exceptions filed by Respondents, 3/7/23, Commission final decision pending.]
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chassis are the metal frame and wheels upon which intermodal shipping containers are 

mounted for movement over the road. Chassis are critical to moving intermodal shipping 

containers throughout the country, as explained by a recent Federal Maritime Commission 

(“FMC” or “Commission”) report. 

Chassis are the wheels of the supply chain. Prior to 2005, intermodal chassis were 

typically owned and operated by the ocean carriers, which allowed carriers to 

more accurately deploy sufficient chassis resources to cover intermodal shipping 

needs. When the carriers made the decision to disinvest in chassis, because of 

increasing concerns about safety and the imposition of regulatory requirements 

for safe management of chassis, it created another coordinating point in the 

supply chain, the intermodal equipment provider. 

While the approach has worked and injected higher levels of safety and 

maintenance in chassis operations there have been other challenges as well. If 

chassis are not available, then containers do not move. By removing or delaying 

the use of one component of operational equipment, the entire supply chain will 

slow down. Movements from marine terminals to inland and destination points in 

the interior are heavily reliant on chassis for intermodal trucking services. 

Final Report, Commissioner Carl W. Bentzel, Assessment of P.R.C. Control of Container and 

Intermodal Chassis Manufacturing, at 5 (released Mar. 30, 2022), available at: 

www.fmc.gov/wp-content/uploads/2022/03/ContainerandChassisManufacturingFinalReport.pdf. 

Chassis are provided for lease by non-party intermodal equipment providers (“IEPs”), 

also referred to as chassis providers. Chassis may be provided by individual IEPs or competing 

IEPs may combine their chassis into interoperable pools with various methods for allocating 

chassis charges. Motor carriers, also referred to as truckers, arriving at a port or intermodal 

terminal generally pick up a chassis that is already loaded with a container in wheeled operations 

or pick up a chassis and have a container loaded onto it in grounded operations. 

As part of door-to-door service, the ocean carrier is responsible for arranging and 

obtaining transportation between the port and a customer’s location, including payment to a 

chassis provider for the chassis used during transport. Such container movements are referred to 

as “carrier haulage” or “CH.” For port-to-port service, the ocean carrier’s responsibility ends at 

the port and the customer (such as a beneficial cargo owner (“BCO”), non-vessel-operating 

common carrier (“NVOCC”), or motor carrier hired by the customer2

) is responsible for 

arranging and obtaining transportation between the port and the customer’s location, including 

paying for chassis. Such container movements are classified as “merchant haulage” or “MH.”

Generally, the ocean carrier is responsible for chassis used in CH, while the motor carrier is 

responsible for chassis used in MH. MH tends to be a greater percentage of total movements as 

compared to CH. 

2 The focus of this case is motor carriers, so that term will be used to also include the customer 

who hired the motor carrier, such as the BCO or NVOCC. 

46 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Respondent OCEMA is a non-profit corporation established pursuant to an FMC-filed 

agreement which has been amended a number of times, including to establish and oversee the 

operation of chassis pools managed by CCM. Respondent CCM, its affiliates, and its affiliated 

pools are created by and operate pursuant to an FMC-filed agreement. OCEMA and CCM have 

rules that impact how individual ocean carriers contract for and utilize chassis. Ocean carriers 

typically contract with IEPs to provide chassis in both CH and MH moves on an exclusive or 

preferred/default basis. The motor carriers are not parties to these contracts between the ocean 

carrier and IEP. This proceeding focuses on MH, in which the motor carriers pay for the chassis 

but may not freely select the chassis provider of their choice, due to the ocean carriers’

designation of exclusive or default chassis providers. 

Best practices for chassis pools were addressed in the Ocean Shipping Reform Act of 

2022, passed on June 16, 2022, after the motions for summary decision sub judice were filed. 

The new law requires the Commission to enter into an agreement to “carry out a study and 

develop best practices for on-terminal or near-terminal chassis pools that provide service to 

marine terminal operators, motor carriers, railroads, and other stakeholders that use the chassis 

pools, with the goal of optimizing supply chain efficiency and effectiveness.” Pub. L. No. 117-

146, §19, 136 Stat. 1272, 1283 (2022). In developing best practices, the Transportation Research 

Board shall: “(1) take into consideration – (A) practical obstacles to the implementation of 

chassis pools; and (B) potential solutions to those obstacles; and (2) address relevant 

communication practices, information sharing, and knowledge management.” Id. On October 3, 

2022, the Commission announced that it had awarded a contract to the National Academies of 

Science Transportation Research Board to conduct a study examining intermodal chassis pools 

and to provide recommendations on best practices for their management. “Commission Contracts

with National Academies for OSRA Mandated Chassis Study,” FMC News Release, Oct. 3,

2022, available at: www.fmc.gov/commission-contracts-with-national-academies-for-osramandated-chassis-study. 

This proceeding raises the issue of whether current chassis practices by Respondents 

violate the Shipping Act. This decision does not address the broader questions involved in 

determining best practices for chassis pools. Indeed, as early as January 29, 2021, IMCC was 

cautioned that while “the Commission may have an interest in efficiency, it will be

Complainant’s obligation to establish that the regulations and practices are unreasonable, not 

Respondents’ obligation to establish that the practices are the most efficient.” Order Denying 

Respondents’ Motion for Leave to File Interlocutory Appeal at 6.

This is a large and complex proceeding with thirteen respondents, discovery from multiple 

non-parties, and well over a million pages of documents produced in discovery. Given the size of 

the proceeding, the parties limited the time frame and geographic scope to initially focus their 

efforts on four geographic regions. Because each geographic area has unique characteristics and 

the eleven ocean carriers have different regulations and practices in different areas, this decision 

only addresses the four geographic areas selected and briefed by the parties at this stage. 

The parties filed three separate motions for summary decision making novel legal 

arguments based on complex economic theories and extensive expert economist testimony. The 

parties also filed corresponding oppositions, replies, and two motions to strike. The parties agreed 

to 319 jointly stipulated findings of fact; presented 1,048 proposed and disputed facts; and filed 

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over 9,000 pages of documents. Because there are multiple motions for summary decision,3 many 

of the filings have similar names. A chart at Appendix A lists the relevant filings, dates filed, and 

shorthand references used in this decision. The filings are listed in chronological order and the 

shorthand references are constructed so that oppositions and replies are associated with the motion 

to which they refer. Public versions of documents with confidential material were also filed. 

Summary decision is appropriate when there is no genuine dispute of material facts and 

the party is entitled to judgement as a matter of law. Complainant IMCC seeks a summary 

decision, alleging that the Commission has jurisdiction over the complaint and that a number of 

specific practices by Respondents are unreasonable and violate the Shipping Act. Respondents 

seek a summary decision, alleging that the Commission does not have jurisdiction to adjudicate 

the complaint, the non-party IEPs are necessary and indispensable parties, and the practices at 

issue are reasonable. Evergreen Line Joint Services Agreement (“Evergreen”) joins in 

Respondents’ motion for summary decision but also files a supplementary motion for summary 

decision, arguing that Evergreen should be dismissed because it has a different chassis provision 

model. 

As discussed more fully below, IMCC’s motion for summary decision is granted in part

and denied in part. Respondents’ motion for summary decision and Evergreen’s supplemental

motion for summary decision are denied. Understanding the legal requirements of the Shipping 

Act will assist regulated entities in ensuring that their practices conform to the requirements of 

the Shipping Act and help focus further proceedings. 

To summarize the findings, IMCC establishes that the Commission has jurisdiction over 

this proceeding. IMCC has also established as a matter of law based on the undisputed material 

facts that the exclusive chassis agreements at issue violate the Shipping Act when the motor 

carrier is not able to utilize the chassis provider of its choice for MH transportation. As explained 

in more detail below, the sometimes overlapping unreasonable practices include: CCMP 

Operating Rules which limit motor carrier choice of chassis providers for MH; the contractual 

linkage of CH price with MH volume; the designation of IEPs by Respondent ocean carriers for 

MH when motor carriers cannot unilaterally select a chassis provider of their choice; and ocean 

carrier designation of an IEP in the “Pool-of-Pools” (“POP”) at the ports of Los Angeles and 

Long Beach, while such designation cannot be altered by motor carriers for MH. 

However, IMCC has not established as a matter of law based on the undisputed material 

facts at this stage that a default chassis agreement violates the Shipping Act or that having a 

default chassis provider is necessarily unreasonable, when the default arrangement does not 

prevent motor carriers from unilaterally using the chassis provider of their choice. As 

Respondents assert, chassis must be available and utilized to move containers off the port. The 

assignment of a default provider where a motor carrier does not have another preference may 

serve the interests of the shipping public by ensuring that a system is in place to efficiently 

assign chassis to containers and incentivizing the efficient flow of cargo. 

3 The term “summary decision” may be used in administrative proceedings where initial 

decisions are issued, while the term “summary judgment” is used in courts where judgements are

issued. Both terms are used interchangeably in this decision. 

48 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As an overview, relying primarily on Commission case law regarding exclusive 

agreements, this decision finds that preferred agreements, where a default chassis provider is 

selected but not required, are not necessarily unreasonable but that exclusive agreements, which 

prevent motor carriers from using the chassis provider of their choice for MH, are unreasonable 

and violate the Shipping Act. In addition, the Commission has the authority to prevent regulated 

entities from withdrawing from interoperable pools, where multiple IEPs contribute chassis, 

although additional proceedings will be needed to determine any markets where this is 

appropriate. The parties are given an opportunity to appeal this decision as a whole prior to 

determining next steps, including final briefing on the remaining issues in these four regions and 

discovery regarding other geographic regions. 

Next, this section summarizes the procedural history, arguments asserted in each motion, 

and preliminary evidentiary issues. Section two summarizes the legal and factual background. 

Section three discusses IMCC and Respondents’ motions. Section four discusses Evergreen’s

supplemental motion. Section five provides the order. 

B. Procedural History 

On August 24, 2020, this proceeding commenced when a notice of filing of complaint 

and assignment was issued. On November 18, 2020, an order denied Respondents’ motion to

dismiss on the basis of a lack of subject matter jurisdiction, failure to state a claim for which 

relief may be granted, failure to state a claim for which relief may be granted as to Respondents 

OCEMA and CCM, and failure to join necessary parties. On December 3, 2020, Respondents 

filed a motion seeking leave to file an interlocutory appeal of the denial of the motion to dismiss. 

On January 29, 2021, an order denying Respondents’ motion for leave to file an interlocutory

appeal was issued. 

On February 18, 2021, Respondents filed answers to the complaint and the case 

proceeded, with a March 4, 2021, order on confidentiality and a June 9, 2021, amended order of 

confidentiality. The parties conducted discovery, including from a number of expert witnesses, 

with orders issued on various motions to compel on June 1, 2021, August 31, 2021, and 

September 27, 2021. On February 23, 2022, the parties filed a joint stipulation of facts (“JSF”).

A number of scheduling orders were issued, concluding with the fourth amended scheduling 

order which set the final deadline to complete discovery as April 15, 2022. 

On April 29, 2022, three motions for summary decision and related documents were 

filed: (1) Complainant’s motion for summary decision (“CMSD”), Complainant’s statement of

undisputed material facts (“CSUMF”), appendix, and Complainant’s motion for confidential 

treatment, (2) Respondents’ motion for summary decision, Respondents’ statement of material

facts (“RSUMF”), Respondents’ memorandum of law in support of motion for summary

decision (“RMSD”), and appendix, and (3) Evergreen’s supplemental motion for summary 

decision and memorandum of law in support thereof (“EMSD”), Evergreen’s statement of

undisputed material facts (“ESUMF”), and Evergreen’s appendix. 

On May 4, 2022, Complainant filed a supplemental motion for confidential treatment and 

Respondents also filed a motion for confidential treatment of certain materials. 

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On May 27, 2022, two oppositions to the three motions for summary decision and related 

documents were filed: (1) Respondents’ memorandum of law in opposition to CMSD 

(“CMSD/ROpp”), Respondents’ supplemental appendix, and Respondents’ response to 

Complainant’s SUMF (“CSUMF/RResp”); and (2) Complainant’s response to RMSD and 

EMSD (“RMSD/COpp”), Complainant’s response to RSUMF and ESUMF (“RSUMF/CResp”)

with Complainant’s supplemental statement of undisputed material facts beginning on page 69 of 

RSUMF/CResp (“CSUMF2”), Complainant’s supplemental appendix, and Complainant’s

motion for confidential treatment. 

On June 2, 2022, Complainant filed a supplemental motion for confidential treatment and 

Respondents also filed a motion for confidential treatment. 

On June 13, 2022, Respondents filed their reply memorandum of law in support of 

RMSD (“RMSD/RReply”), Respondents’ response to Complainant’s supplemental statement of

undisputed material facts (“CSUMF2/RResp”), and Respondents’ second supplemental

appendix, with Respondents’ motion for confidential treatment following on June 16, 2022. Also 

on June 13, 2022, Complainant filed its reply memorandum in support of CMSD 

(“CMSD/CReply”) and reply appendix, Complainant’s reply in support of its SUMF

(“CSUMF/CReply”), and Complainant’s motion for confidential treatment, with Complainant’s

supplemental motion for confidential treatment following on June 16, 2022. 

In addition, on June 13, 2022, Complainant filed a motion to strike untimely expert 

declarations from Respondents and for sanctions (“CStrike”). On June 21, 2022, Respondents 

filed an opposition to CStrike (“CStrike/Opp”) followed by a motion for confidential treatment 

on June 24, 2022. 

On June 30, 2022, Respondents filed a motion to strike Complainant’s reply to

Respondents’ response to Complainant’s statement of undisputed material facts (“RStrike”). On 

July 1, 2022, Complainant filed its response to RStrike (“RStrike/Opp”).

On December 14, 2022, due to over-redacted public filings, IMCC was ordered to file a 

corrected public version of Complainant’s opposition to respondents’ motions for summary

decision and Respondents were ordered to file a corrected public version of Respondents’

response to IMCC’s statement of material facts. IMCC submitted its revised public version of 

RMSD/COpp on December 19, 2022. Respondents submitted their revised public version of 

CSUMF/RResp on December 21, 2022. 

C. Arguments Asserted in Each Motion for Summary Decision

IMCC asserts that the Commission has jurisdiction over all parties and claims; a number 

of Respondents’ practices are unjust and unreasonable; Respondents’ practices proximately

caused harm to motor carriers and consumers; the remaining section 41102(c) requirements are 

met; and IMCC is entitled to cease-and-desist relief. CMSD at 17-30. Respondents oppose these 

arguments. CMSD/ROpp at 3-29. 

Respondents argue that the Commission does not have subject matter jurisdiction over 

intermodal chassis; IMCC failed to establish that the conduct at issue violates section 41102(c); 

IMCC failed to demonstrate that motor carriers have been harmed; and the complaint must be 

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dismissed for failure to join necessary and indispensable parties. RMSD at 5-29. IMCC opposes 

these arguments. RMSD/COpp at 5-24. 

Respondent Evergreen filed a separate supplemental motion for summary decision, 

contending that it is uniquely situated with respect to the provision of chassis and that the 

undisputed facts do not support IMCC’s allegations against Evergreen. EMSD at 4-9. IMCC 

opposes these arguments in combination with its opposition to Respondents’ motion. 

RMSD/COpp at 21-22. 

Because the arguments in IMCC’s motion and Respondents’ motion overlap, they will be

addressed together, followed by a discussion of Evergreen’s supplemental motion. Before 

addressing the legal and factual background and the motions, rulings are made on preliminary 

evidentiary issues. 

D. Preliminary Evidentiary Issues

1. Stipulations of Fact

Because this proceeding is at the motion for summary decision stage, findings will not be 

made on genuinely disputed facts. The parties submitted a document labeled as joint stipulations 

of fact (“JSF”), signed by both parties. No objections were raised regarding the facts in the 

stipulation and the stipulated facts are thorough and helpful to resolving issues in this 

proceeding. The 319 stipulated facts are hereby admitted into the record as facts to which the 

parties jointly agree. The findings of fact provided in the JSF are adopted, however, they are not 

repeated in their entirety in this decision to make this decision more focused and readable. 

There also is factual agreement between the parties found outside of the joint stipulations 

of fact. The parties both submitted proposed statements of material facts, CSUMF and RSUMF, 

and Evergreen submitted a proposed statement of material facts, ESUMF. IMCC also submitted 

a supplemental proposed statement of material facts, CSUMF2. The responses to these proposed 

statements of material facts, as well as statements by the parties in briefing, disclose agreement 

on some of the material facts. To the extent that there is no genuine dispute about material facts, 

they may be utilized in this decision. For example, while the parties disagree as to the application 

and implications of CCM Pools (“CCMP”) Rule 5.7, they agree that Rule 5.7 is contained in 

CCMP Operations Manual Version 4.0, effective October 1, 2019, available at CX2379, and that 

the text of this rule remains in effect. CSUMF ¶ 84; CSUMF/RResp ¶ 84. Moreover, the parties 

agree regarding the general methods of allocating chassis, although there are factual disputes 

about which Respondents utilize which methods and how those methods are applied. This 

decision is based on the material facts for which there is no genuine dispute. Any remaining 

disputed facts would need to be determined as this proceeding progresses. 

IMCC requests a hearing on their motion. CMSD at 1. The filings submitted by the 

parties are sufficient to rule on the issues in the motions for summary decision, therefore, it is 

hereby ordered that the request for a hearing at this point in the proceeding be DENIED. 

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2. Motions to Strike

a. IMCC’s Motion to Strike Expert Declarations 

On June 16, 2022, IMCC filed a motion to strike declarations from Respondents’ experts,

Mr. Coates and Dr. Reitzes; to strike references thereto in Respondents’ statement of material

facts, responses, and briefing; and for attorney’s fees and costs. CStrike at 1. IMCC contends that 

the two declarations, submitted during summary decision briefing, violate the scheduling order; 

contain supplementary analysis and opinions that were not disclosed in their previous reports; 

prejudice IMCC by preventing cross-examination and rebuttal expert opinion; Dr. Reitzes’s

declaration performs new and complex statistical analyses not included in his rebuttal; and 

Respondents did not submit any of Dr. Reitzes’s underlying work papers that would allow for 

review. CStrike at 1-7. IMCC presents an affidavit from Dr. Langenfeld in support of IMCC’s

contentions, and asserts that the Langenfeld Affidavit performs no new analysis, but rather 

articulates broadly what would be required to rebut the untimely Reitzes Declaration. CStrike 

at 3 n.2. 

Respondents argue that IMCC has mischaracterized the declarations; the declarations 

were submitted to avoid inadmissible hearsay; an expert is permitted to supplement, elaborate 

on, and explain his report; rather than constituting new reports, the declarations are recitations 

under oath of the statements and opinions articulated by Mr. Coates and Dr. Reitzes in their 

respective reports and elaborations of those opinions; and sanctions are neither warranted nor 

available. CStrike/Opp at 1-3. 

It appears that the declarations were not filed timely and Respondents do not contend that 

the filings were timely. The fourth amended scheduling order, served December 7, 2021, states 

that the cutoff for expert discovery was April 1, 2022, and the cutoff for all discovery was 

April 15, 2022. The disputed Coates declaration is dated April 29, 2022, and the disputed Reitzes 

declaration is dated May 27, 2022, and therefore both were filed after the discovery cut-off. 

However, because this proceeding is at the summary decision stage, the focus is not on disputed 

facts nor resolving competing economic theories, but rather on the controlling legal issues. 

Accordingly, it is hereby ordered that IMCC’s motion to strike the disputed declarations be 

DENIED, however, the declarations are given limited weight. 

In the future, the parties should note that untimely filed expert reports may be stricken 

and objecting to a filing in a footnote does not constitute a motion to strike. If this case proceeds 

to a determination on the merits, IMCC may file a motion requesting underlying work papers and 

that request will be considered at the appropriate time. 

b. Respondents’ Motion to Strike IMCC’s Reply to CSUMF/RResp 

On June 30, 2022, Respondents filed a motion to strike IMCC’s reply to Respondents’

response to IMCC’s statement of undisputed material facts. RStrike at 1. Respondents assert that 

the August 24, 2020, initial order included detailed pretrial procedure and there is no provision 

permitting the filing of a reply by a movant to a non-movant’s response to a movant’s statement

of material facts; IMCC’s headings are argumentative and numbered paragraphs include more 

than a single proposed fact, erroneously attempting to persuade the Presiding Officer to weigh 

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disputed evidence; and Respondents assert that once a challenge to a factual statement has been 

supported with citations to evidence, that fact has been properly disputed and, if material, then 

summary judgment must be denied because summary judgment can only be granted if the 

movant shows that there is no genuine dispute as to any material fact. RStrike at 1-5. 

Respondents therefore move to strike the reply, CSUMF/CReply; or in the alternative, 

Respondents request that, if a reply is permissible, they also be allowed to file a reply. RStrike 

at 5. 

IMCC argues in response that there is nothing in the Commission Rules or the Presiding 

Officer’s orders that prohibits a reply statement of material facts; Respondents’ motion should 

additionally be denied because it was not timely filed; IMCC filed its reply to assist the Presiding 

Officer in determining whether material facts were genuinely in dispute; and IMCC did not ask 

the Presiding Officer to weigh evidence or evaluate credibility. RStrike/Opp at 1-3. 

The scheduling order does not allow time to file replies to oppositions to statements of 

material facts. Typically, such replies should not be filed. Given the procedural posture of this 

case, such replies are not particularly useful. Because this proceeding is at the summary decision 

stage, the focus of this decision is not on disputed facts. Therefore, IMCC’s reply to

Respondents’ opposition to Complainant’s statement of undisputed material facts has limited 

relevance and will be given limited weight. For the same reasons, the record will not benefit 

from allowing Respondents to file a reply to IMCC’s response to Respondents’ statement of

material facts. Therefore, IMCC’s CSUMF/CReply will not be stricken but will be given limited 

weight and Respondents will not be permitted to file a reply to RSUMF/CResp. Accordingly, it 

is hereby ordered that Respondents’ motion to strike CSUMF/CReply be DENIED. 

3. Motions for Confidential Treatment

On May 24, 2021, an order entering stipulation and amended order of confidentiality was 

issued. On June 9, 2021, in response to a joint request by the parties, an order entering stipulation 

and second amended order of confidentiality (“Second Confidentiality Order”) was entered.

Subsequently, and pursuant to the Second Confidentiality Order, the following requests for 

confidential treatment were received: (1) a motion for confidential treatment filed by IMCC on 

April 29, 2022; (2) a motion for confidential treatment of certain materials filed by Respondents 

on May 4, 2022; (3) a supplemental motion for confidential treatment filed by IMCC on May 4, 

2022; (4) a motion for confidential treatment filed by IMCC on May 27, 2022; (5) a motion for 

confidential treatment of certain materials filed by Respondents on June 2, 2022; (6) a 

supplemental motion for confidential treatment filed by IMCC on June 2, 2022; (7) a motion for 

confidential treatment filed by IMCC on June 13, 2022; (8) a motion for confidential treatment 

of certain materials filed by Respondents on June 16, 2022; (9) a supplemental motion for 

confidential treatment filed by IMCC on June 16, 2022; and (10) a motion for confidential 

treatment of certain materials filed by Respondents on June 24, 2022. None of the ten motions 

for confidential treatment were contested. 

These ten motions request confidential treatment for certain testimony and documents 

that were designated either as confidential or confidential outside counsel eyes only (“OCEO”).

Categories of documents falling under these requests include: deposition transcript excerpts; 

expert reports; declarations and affidavits based on underlying data and documents designated as 

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confidential or confidential OCEO; contracts and negotiations between IEPs and ocean carriers 

or between IEPs and motor carriers regarding chassis terms; internal presentations and 

communications; and non-public business, financial, research, and marketing data, the disclosure 

of which, these motions attest, would damage party and non-party commercial interests. 

Commission Rule 5 outlines the procedure for filing documents containing confidential 

information. 46 C.F.R. § 502.5. On August 25, 2020, an initial order was issued which provided 

detailed information about filing confidential material. If confidential information was filed, a 

“motion justifying confidential treatment” was required which showed “good cause by 

demonstrating that the information is a trade secret or other confidential research, development, 

or commercial information.” Initial Order at 5 (citing 46 C.F.R. § 502.141(j)(1)). 

Among the documents for which the parties seek confidential treatment is the CCMP 

Operations Manual, version 2.9, effective April 1, 2019; and version 4.0, effective October 1, 

2019, including what are currently numbered as Rules 5.5 and 5.7 which are directly at issue in 

this proceeding. CX2170; CX2379; see also April 29, 2022, IMCC Motion for Confidential 

Treatment, Ex. A at 4 (requesting confidential treatment of version 2.9 at CX2170-2220 and 

version 4.0 at CX2379-2429). However, Respondents did not seek confidential treatment of 

version 4.5, effective January 26, 2022, APP1799-1848, or quotations of version 4.4, effective 

July 20, 2020, RSUMF ¶¶ 212-217. 

When the complaint was filed, the relevant portion of CCMP Rule 5.7 was included 

without confidential designation. Complaint ¶ 44. Moreover, the complaint cites the July 20, 

2020, version 4.2 of the manual, which was publicly available on the internet. Indeed, the 

undersigned cited to that version of the manual and downloaded a copy of it from the internet in 

January 2021. Order Denying Interlocutory Appeal at 5. Version 4.2 of the manual has since 

been removed from the internet, however, the current CCM website links to CCMP Operations 

Manual, version 4.6, effective November 25, 2022,4 which includes Rules 5.5 and 5.7 and has 

language identical to the language of the rules marked as confidential. Respondents’ production

of version 4.5 of the manual and inclusion of its Rules 5.5 and 5.7 language in its RSUMF, and 

the current availability online of a later version than included in the exhibits, with identical 

relevant rules language, heavily weigh against granting versions 2.9 and 4.0 confidential 

treatment. However, in version 4.2 (previously on the Internet), version 4.4 (quoted in the 

record), version 4.5 (in the record), and version 4.6 (available on the internet now) neither 

exhibits C nor G were included. Therefore exhibits C & G of version 4.0 (CX2423 and CX2428-

29) and exhibit C of version 2.7 (CX2218) will be granted confidential treatment. There were no

exhibits past D in version 2.7.

There were other instances where the parties over-designated confidential material. For 

example, the parties designated all of the expert witness reports and testimony as confidential, 

although not everything in those reports and testimony are entitled to confidential treatment. 

Where information that is not entitled to confidential treatment has been necessary to include in 

4 Version 4.6 is not part of the record and was not reviewed by the undersigned or considered in 

this decision, other than to rule on the confidentiality requests. See: ccmpool.com/wpcontent/uploads/2022/11/CCMP-Ops-Manual-v4.6-change-to-OU-rates-eff-October-1-2022-

changes-accepted.pdf. 

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this decision it has been included, for example: (1) the argument that “CH and MH volumes are

not determined by the ocean carriers, but are driven by BCOs,” from CMSD/ROpp at 14 (citing 

Coates reports at CX1533, CX1692); (2) deposition testimony by Respondents’ expert Coates

that ocean carriers “are trying to do things in their own economic self-interest,” from Coates

Dep. at CX882; and (3) the statement that: “Without the prospect of losing motor carrier business

to a competitor, the default IEP would have no incentive to negotiate a lower rate for MH moves. 

The fact that IEPs enter into such negotiations and subsequent contracts is evidence that there is 

competition among the IEPs for the motor carriers’ MH business,” from Coates Rebuttal Report 

at CX1691. The requests for confidential treatment of these statements is denied. 

In addition, the parties designated the entirety of other witnesses’ deposition transcripts

as confidential although not everything in those transcripts is entitled to confidential treatment. 

The parties also over-redacted material that ought to have been public from the public version of 

briefs as described in the December 14, 2022, order to correct public filings. This has since been 

remedied by the parties per their December 19 and 21, 2022, submissions of corrected public 

filings. 

The over-designation of confidential material unnecessarily complicates the proceeding, 

causes delay, and limits discussion of important issues. For example, the utility of the expert 

reports in this decision is limited, as the only portions that are public are the portions selectively 

cited by the parties in their filings without confidentiality requests or statements specifically 

denied confidential treatment. In the future, confidentiality may be denied to all exhibits if 

parties have not made a conscientious effort to only seek confidential treatment of appropriate 

portions of documents or testimony. Entire reports, depositions, or transcripts are generally not 

going to be granted confidential treatment and it is the parties’ responsibility to designate

appropriate portions for confidentiality requests. 

Commission Rule 5 authorizes confidential treatment for confidential commercial 

information, such as most of the information identified by the parties. Although not all the 

information in the confidential exhibits constitutes confidential information, most of the requests 

are permissible. Further, this decision is readable without the need for significant quotations 

from material designated as confidential. In the future, the parties must review all exhibits and 

only mark sections or pages that contain confidential material. Accordingly, it is hereby ordered 

that these ten motions requesting confidentiality be GRANTED IN PART AND DENIED IN 

PART. The requests for confidentiality of the items noted above and CCMP manual portions at 

CX2170-2217, CX2219-20, CX2379-2422, and CX2424-27 are DENIED. 

II. LEGAL AND FACTUAL BACKGROUND

A. Relevant Law 

To understand the issues in this case, it is helpful to review the laws governing both 

motions for summary decision and section 41102(c) claims, before summarizing relevant facts. 

1. Summary Decision Standard 

Although the Commission’s Rules of Practice and Procedure (“Rules”) do not explicitly

provide for motions for summary decision, Rule 12 of the Commission’s Rules states that the

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Federal Rules of Civil Procedure (“Federal Rules”) will be followed in instances that are not 

covered by the Commission’s Rules, to the extent that application of the Federal Rules is

consistent with sound administrative practice. 46 C.F.R. § 502.12. 

Pursuant to Federal Rule 56, a party is entitled to the entry of summary judgment if 

“there is no genuine dispute as to any material fact and [the moving party] is entitled to judgment

as a matter of law.” Fed. R. Civ. P. 56(a); Tucker v. Johnson, 211 F. Supp. 3d 95, 99 (D.D.C. 

2016). A material fact is one that is capable of affecting the outcome of litigation. Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). However, “[t]o defeat a motion for summary

judgment, the non-moving party must offer more than mere unsupported allegations or denials.”

Dormu v. District of Columbia, 795 F. Supp. 2d 7, 17 (D.D.C. 2011) (citing Celotex Corp. v. 

Catrett, 477 U.S. 317, 324 (1986)). If the non-movant’s evidence is “merely colorable” or “not

significantly probative,” summary judgment may be granted. Tucker, 211 F. Supp. 3d at 99 

(quoting Anderson, 477 U.S. at 249-50). 

The mere existence of a factual dispute will not in and of itself defeat an otherwise 

properly supported motion for summary judgment. Anderson, 477 U.S. at 247-48. Further, 

“[w]here the record taken as a whole could not lead a rational trier of fact to find for the 

nonmoving party, there is no ‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. Zenith 

Radio Corp., 475 U.S. 574, 587 (1986) (citation omitted). However, the inferences to be drawn 

from the underlying facts must be viewed in the light most favorable to the nonmoving party. 

Matsushita, 475 U.S. at 587. 

The Commission has emphasized that: 

At the summary judgment stage, the role of the judge “. . . is not himself to weigh

the evidence and determine the truth of the matter but to determine whether there 

is a genuine issue for trial.” The party seeking summary judgment . . . has the 

burden of demonstrating that there is no genuine issue of material fact. 

EuroUSA Shipping, Inc., Tober Group, Inc., and Container Innovations, Inc., Docket No. 06-06, 

31 S.R.R. 540, 545 (FMC Dec. 18, 2008) (citations omitted). 

Even if summary judgment is technically proper, sound judicial policy and the proper 

exercise of judicial discretion permit denial of such a motion for the case to be developed fully at 

trial. Roberts v. Browning, 610 F.2d 528, 536 (8th Cir. 1979); In re Korean Air Lines Disaster, 

597 F. Supp. 613, 618 (D.D.C. 1984); see also Fed. R. Civ. P. 56 advisory committee notes on 

2007 amendments (“although there is no discretion to enter summary judgment when there is a 

genuine issue as to any material fact, there is discretion to deny summary judgment when it 

appears that there is no genuine issue as to any material fact”).

2. Section 41102(c) Elements

IMCC alleges that Respondents violated section 41102(c) of the Shipping Act, previously 

numbered as section 10(d)(1), which states that a “common carrier, marine terminal operator, or

ocean transportation intermediary may not fail to establish, observe, and enforce just and 

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reasonable regulations and practices relating to or connected with receiving, handling, storing, or 

delivering property.” 46 U.S.C. § 41102(c). 

On December 17, 2018, after notice and comment, the Commission issued Rule 545.4, 

specifying five elements for a section 41102(c) claim. 

46 U.S.C. 41102(c) is interpreted to require the following elements in order to 

establish a successful claim for reparations: 

(a) The respondent is an ocean common carrier, marine terminal operator, or

ocean transportation intermediary;

(b) The claimed acts or omissions of the regulated entity are occurring on a

normal, customary, and continuous basis;

(c) The practice or regulation relates to or is connected with receiving, handling,

storing, or delivering property;

(d) The practice or regulation is unjust or unreasonable; and

(e) The practice or regulation is the proximate cause of the claimed loss.

Final Rule: Interpretive Rule, Shipping Act of 1984 (“Section 41102(c) Final Rule”), 83 Fed. 

Reg. 64478, 64479 (Dec. 17, 2018); 46 C.F.R. § 545.4. 

Although this case is not about demurrage and detention, the Commission’s Demurrage 

and Detention Rule, which discusses the reasonableness requirement, is instructive. 

The main thrust of the rule is that although demurrage and detention are valid 

charges when they work, when they do not, there is cause to question their 

reasonableness. This derives from the well-established principle that to pass 

muster under section 41102(c), a regulation or practice must be tailored to meet 

its intended purpose, that is, ‘‘fit and appropriate for the end in view.’’ The

Commission determined that because the purpose of demurrage and detention are 

to incentivize cargo movement, it will consider in the reasonableness analysis 

under section 41102(c) the extent to which demurrage and detention are serving 

their intended purposes as financial incentives to promote freight fluidity. 

Final Rule: Interpretive Rule on Demurrage and Detention Under the Shipping Act (“Demurrage

and Detention Rule”), Docket No. 19-05, 85 Fed. Reg. 29638, 29651 (May 18, 2020) (citing 

Distribution Services Ltd. v. Trans-Pac. Freight Conf. of Japan and its Member Lines, Docket 

No. 86-12, 24 S.R.R. 714, 722, 1988 FMC LEXIS 52, at *16-18 (FMC Jan. 6, 1988) (quoting 

Investigation of Free Time Practices – Port of San Diego, 9 F.M.C. 525, 547 (FMC May 24, 

2966))).5 

5 Decisions in F.M.C. and F.M.B. from 1919 to 1987 are available at: www.fmc.gov/fmc-reports. 

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The Commission has long had the responsibility of ensuring an efficient transportation 

system for ocean commerce. When this case was filed, one of the purposes of the Shipping Act 

was to “provide an efficient and economic transportation system.” 46 U.S.C. § 40101(2). The

Ocean Shipping Reform Act of 2022 modified this to “ensure an efficient, competitive, and 

economical transportation system.” Pub. L. 117-146, §2, 136 Stat. 1272 (June 16, 2022). Thus, 

consideration of the efficiency of practices is not limited to detention and demurrage cases. 

B. Relevant Facts

1. Parties

1. Complainant IMCC is a conference of the American Trucking Associations, Inc.

(“ATA”) whose membership includes ATA member companies engaged in the

intermodal transportation of ocean containers on chassis. JSF ¶¶ 1-2.

2. Respondent OCEMA is a non-profit corporation created and established pursuant to FMC

Agreement No. 011284. JSF ¶ 3. The OCEMA Agreement has been amended a number

of times, including to establish and oversee the operation of chassis pools managed by

CCM. JSF ¶ 6.

3. Respondent CCM, its affiliates, and its affiliated pools are created pursuant to, and have

operated pursuant to, the Consolidated Chassis Management Pool Agreement (“CCMP

Agreement”), FMC Agreement No. 011962, the current version of which is FMC

Agreement No. 011962-018, effective January 30, 2021. JSF ¶ 14.

4. The eleven Respondent ocean common carriers are regulated by the Commission. JSF

¶¶ 25, 42, 58, 72, 87, 102, 117, 132, 148, 162, 176.

5. Each Respondent engages in international maritime commerce and publishes tariffs for

transportation of cargo containers to and from ports in the United States. JSF ¶¶ 28, 29,

45, 46, 61, 62, 75, 76, 90, 91, 105, 106, 120, 121, 136, 137, 150, 151, 165, 166, 179, 180.

6. Each Respondent except Wan Hai and Yang Ming is part of both the OCEMA and

CCMP agreements. JSF ¶¶ 26, 27, 43, 44, 59, 60, 73, 74, 88, 89, 103, 104, 118, 119, 134,

135, 164, 177, 178.

7. Wan Hai is not a member of CCM but has been a member of OCEMA since 2016. JSF

¶ 149. Yang Ming is a member of CCM and was a member of OCEMA from 2000-2018.

JSF ¶¶ 163-164.

8. Evergreen obtains chassis from IEPs at a single, fixed contractual daily rate for use in

both CH and MH. ESUMF ¶ 4; RSUMF ¶ 88; RSUMF/CResp ¶ 88. Evergreen’s

customers pay a fixed chassis usage charge if they want Evergreen to provide a chassis to

the motor carrier for MH. EMSD at 6; ESUMF ¶ 7; RSUMF ¶ 91; RSUMF/CResp ¶ 91.

This fee then covers the day of delivery plus four business days, after which time motor

carriers pay a per diem of $20 per day. EMSD at 6; ESUMF ¶ 11; RSUMF ¶ 95;

RSUMF/CResp ¶ 95.

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2. CH and MH Container Movements 

9. Ocean carriers generally provide transportation of containers to and from the United

States using store-door, port-to-port, and inland intermodal rates. JSF ¶¶ 33, 50, 66, 80,

95, 110, 122, 123, 124, 141, 155, 170, 184.

10. In store-door, also called “through,” “door-to-door,” or simply “door” moves, the ocean

carrier is responsible for arranging and obtaining rail and/or motor carrier transportation

between a port or inland intermodal terminal and a customer’s location. Such container

movements are classified as carrier haulage or “CH.” JSF ¶¶ 32, 49, 65, 79, 83, 94, 109,

124, 140, 154, 169, 183.

11. In port-to-port moves, ocean carrier customers (such as BCOs or NVOCCs) are

responsible for arranging for and obtaining motor carrier transportation between the port

and the customer’s location. Such container movements are classified as merchant

haulage or “MH.” JSF ¶¶ 30, 47, 63, 77, 83, 92, 107, 122, 138, 152, 168, 181.

12. When an ocean carrier’s rates are to/from inland intermodal terminals, the ocean carrier is

responsible for arranging and obtaining rail and/or motor carrier transportation between

the port and the inland intermodal terminal. When the ocean carrier’s rates do not include

inland transportation, the ocean carrier’s customer is responsible for arranging for and

obtaining motor carrier transportation between the inland terminal and the final

destination. These latter container movements are also classified as MH. See, e.g., JSF

¶¶ 31, 48, 64, 93, 108, 139, 153, 182.

13. Respondents assert that CH “presently constitutes 45% of all cargo movements.”

CMSD/ROpp at 11 (citing to Coates Rebuttal Report at CX1692). IMCC provides its

own assessments broken down by year and by ocean carrier but agrees to the extent that

MH tends to be a greater percentage of total movements than CH. Langenfeld Report at

CX1309, CX1319.

3. Chassis Pools

14. The concept of a single-provider pool is also known as a “proprietary pool,” “private

pool,” or a “neutral pool” (because it serves multiple ocean carriers). CSUMF ¶ 42;

CSUMF/RResp ¶ 42. The major IEPs denominate their single-provider chassis pools as

“neutral” pools because the chassis in those pools may be made available to multiple

ocean carriers. JSF ¶ 192.

15. In the single-provider model, an individual IEP owns chassis pooled at selected locations,

usually in proximity to container yards, and the motor carrier must pick up and drop

chassis from selected locations offered by the IEP. The daily charges for chassis used

from a private pool are set via negotiated contract or through posted daily rates. CSUMF

¶ 42; CSUMF/RResp ¶ 42.

16. “Fully interoperable” or “gray” chassis pools are chassis pools managed by a single entity

in which equipment contributed by multiple equipment providers are commingled. JSF

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¶ 193. A gray chassis pool does not require matching a specific equipment provider’s

chassis with a particular ocean carrier’s containers. JSF ¶ 194.

17. According to OCEMA’s website, at one point in time CCM had “over 120,000 chassis

under management at regional pools in 29 major metropolitan transportation hubs.” JSF

¶ 198.

18. According to the October 28, 2020, OCEMA Senior Steering Committee meeting

presentation, CCM chassis inventory had reduced in size. JSF ¶ 199.

19. Under the CCM Pools Operations Manual, CCM rules establish a mechanism for the

assignment of chassis “usage” to a contributor, which gives that contributor the right to

bill its customer for usage of a chassis regardless of the contributor of the chassis the

customer physically uses. Tock (CCM) Dep. at CX459; CSUMF ¶ 36; CSUMF/RResp ¶

36.

20. CCM Pools Operations Manual Version 4.0, effective October 1, 2019, renumbered

Rules 8.5 and 8.7 as Rules 5.5 and 5.7. CSUMF ¶ 84; CSUMF/RResp ¶ 84; CX2190 (8.5

and 8.7); CX2398-99 (5.5 and 5.7). The text of Rules 5.5 and 5.7 as of October 1, 2019,

remains in effect. CSUMF ¶ 84; CSUMF/RResp ¶ 84.

21. CCMP Section 5.5 (“Rule 5.5”) states: “Usage Days will be assigned by default to the

User associated with the Container Line Operator for the container loaded on a Chassis,

(i.e., to either the User itself or to the User for whom the Container Line Operator is a

customer).” CX2398. “User” is defined as “an entity that has entered into a written

Master Chassis Use Agreement with a pool” and “Container Line Operator” is defined as

“the ocean carrier that is operating the container at the time of usage.” CX2390.

22. CCMP Section 5.7 (“Rule 5.7”) states:

Notwithstanding Section 5.5, under the Choice Program, Usage Days may be 

directed to another User when the Container Line Operator and the User for 

whom the Container Line Operator is a Customer authorize a deviation from 

the default assignment. To utilize this program, the Container Line Operator 

must notify CCM that it allows exceptions: at the shipment level (based on 

booking or bill of lading reference); upon request and approval; based on the 

motor carrier (for merchant haulage moves); or for all merchant haulage 

moves (provided the Container Line Operator provides CCM with access to 

shipment data sufficient to make such assignments). 

CX2398-99. 

23. CCM’s Gulf Consolidated Chassis Pool closed as of August 2020, which had served

ports including Houston, El Paso, and New Orleans. JSF ¶¶ 201-202.

24. CCM’s Chicago & Ohio Valley Consolidated Chassis Pool (“COCP”) also closed in

August 2020, which had served numerous intermodal terminals in the Midwest, including

in Illinois, Indiana, and Ohio. JSF ¶¶ 203-204.

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25. CCM’s pools described as open at the time of briefing included: Denver Consolidated

Chassis Pool (serving Denver, CO and Salt Lake City, UT); Mid-South Consolidated

Chassis Pool LLC (“MCCP”) (serving Memphis, TN and Nashville, TN); Mid-West

Consolidated Chassis Pool LLC (serving St. Louis, MO, Kansas City, KS, and Omaha,

NE); and South Atlantic Chassis Pool LLC (serving Atlanta, GA, Charleston, SC,

Charlotte, NC, Jacksonville, FL, Savannah, GA, and Tampa, FL). JSF ¶¶ 200-206.

26. At the “Pool-of-Pools” (“POP”), established by DCLI, TRAC Intermodal, and Flexi-Van

at the ports of Los Angeles and Long Beach (“LA/LB”), chassis owned by those IEPs can

be used on an interoperable basis. JSF ¶ 195.

27. As of August 20, 2020, the POP website stated:

Prior to the POP, the operation of multiple independent chassis pools in Los 

Angeles and Long Beach created situations where chassis in different pools 

were segregated at facilities for use only by certain user bases, and returnable 

only to a fraction of the facilities otherwise available to receive chassis. These 

inefficiencies often resulted in lost time and revenue to a motor carrier, 

duplicative repositioning, and confusion on terminals and rail ramps. The 

“gray fleet” that is the POP has smoothed the impacts to chassis operations 

that would have otherwise occurred in the ever-changing landscape of ocean 

carrier alliances and terminal operations, increases overall efficiency and 

availability, and significantly reduces chassis splits. 

Pool of Pools, About Us, web.archive.org/web/20200820222149/http://www.poplalb.com; JSF ¶ 196. 

28. The U.S. Department of Justice issued a business review letter to Flexi-Van Leasing, Inc.

and Direct ChassisLink, Inc. with respect to the POP. JSF ¶ 196. Usage of chassis in the

POP is assigned to the IEP that has a contractual relationship with the ocean carrier

whose container is being moved. JSF ¶ 197.

29. Non-party North American Chassis Pool Cooperative, LLC (“NACPC”) was formed by

motor carriers and is an enterprise that has leased and rented chassis as an IEP. JSF ¶ 191;

RSUMF ¶ 6; RSUMF/CResp ¶ 6.

30. As of August 24, 2020, the three major IEPs – TRAC Intermodal, DCLI, and Flexi-Van –

leased chassis to ocean carriers and motor carriers. NACPC and several smaller chassis

providers also have leased chassis to ocean carriers and motor carriers. JSF ¶ 207.

31. The Chicago region was previously served by an interoperable CCM pool which

collapsed and is now only served by proprietary IEP pools. JSF ¶¶ 200, 203-204; CMSD

at 5-6; CMSD/ROpp at 26; Reitzes Report ¶ 120 at CX1675.

32. The Savannah region is served by a CCM interoperable gray pool. JSF ¶¶ 200, 206;

Reitzes Report ¶ 123 at CX1676; CMSD at 7.

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33. The Memphis region is served by a CCM interoperable gray pool, as well as by

proprietary pools from DCLI and TRAC. JSF ¶ 200; CSUMF ¶ 646; CSUMF/RResp

¶ 645 (responding to CSUMF ¶ 646); CMSD at 7.

34. The LA/LB region is served by the POP, which is interoperable, however usage of

chassis in the POP is assigned to the IEP that has a contractual relationship with the

ocean carrier whose container is being moved, regardless of the IEP whose chassis is

physically being used. JSF ¶ 195, 197; CSUMF ¶ 48; CSUMF/RResp ¶ 48; CX1701 at

¶ 6; CX1703 at ¶ 6; CX1705 at ¶ 6; CMSD at 6. These “box rules” remain in force, and

motor carriers do not have the ability to select an IEP other than the IEP designated by

the ocean carrier. CMSD ¶ 50; CMSD/RResp ¶ 50; Coates Rebuttal Report at CX1693;

CMSD at 6.

III. IMCC AND RESPONDENTS’ MOTIONS 

This section discusses the motions filed by IMCC and Respondents, addressing subject

matter jurisdiction, joinder, reasonableness of five practices, other section 41102(c) elements 

including proximate cause, conclusions and remedy, and exceptions and appeal. Evergreen’s

motion is addressed in the next section. 

A. Subject Matter Jurisdiction

1. Summary

Both parties request summary decision regarding subject matter jurisdiction, with IMCC 

requesting a decision that the Commission has subject matter jurisdiction and Respondents 

requesting a decision that the Commission does not have subject matter jurisdiction. 

As explained more fully below, taking into consideration the facts not in dispute, the 

Commission has jurisdiction over Respondents’ practices as Respondents are regulated entities

alleged to have violated the Shipping Act. Therefore, IMCC’s motion for summary decision on 

the issue of jurisdiction is granted and Respondents’ is denied. However, Respondents’

arguments that there are limits to the Commission’s jurisdiction are well-taken and this decision 

is limited to ruling on matters within the Commission’s jurisdiction.

2. Parties’ Arguments

IMCC asserts that the Commission has jurisdiction over all Respondents and claims, 

arguing that ocean carrier Respondents are common carriers subject to the Commission’s

jurisdiction; OCEMA and CCM are controlled by Respondent ocean carriers, and have filed 

governing agreements and minutes with the Commission; the shipping public needs chassis to 

move containers containing property and the Shipping Act governs ocean carrier practices that 

affect receiving, handling, storing, or delivering property in containers being transported in 

connection with common carrier services; chassis are an integral part of through-transportation 

for shipments in international maritime commerce, and the Commission’s jurisdiction extends to

domestic portions of that through-transportation; Respondents’ practices are related to the cost 

and access to chassis necessary for receipt or delivery of containers under Respondents’ port-toport and port-to-terminal tariffs and service contacts; and Respondents cannot shield their illegal 

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conduct behind contracts with unregulated entities, like the IEPs. CMSD at 17-18; RMSD/COpp 

at 5-7; CMSD/CReply at 4-5. 

Respondents allege that the Commission does not have subject matter jurisdiction over 

intermodal chassis, arguing that the Shipping Act does not regulate the ownership, leasing, and 

utilization of chassis; the Commission lacks authority to regulate IEPs and motor carriers in 

connection with chassis; the Commission lacks statutory authority to remedy every allegation of 

misconduct against unregulated parties; IMCC has failed to substantiate its allegations that 

Respondents in fact control the provision of chassis to motor carriers for domestic only 

movements; the Commission does not have subject matter jurisdiction with respect to the MH 

segment of a transit; and IMCC has not carried its burden of establishing that subject matter 

jurisdiction exists. RMSD at 5-11; CMSD/ROpp at 3-4; RMSD/RReply at 5-7. 

3. Standard

The Shipping Act provides that a “person may file with the Federal Maritime

Commission a sworn complaint alleging a violation of this part.” 46 U.S.C. § 41301(a). Pursuant

to this provision, the Commission has jurisdiction over a complaint alleging that a respondent 

committed an act prohibited by the Shipping Act. See, e.g., Anchor Shipping Co. v. Aliança 

Navegação E Logística Ltda., Docket No. 02-04, 2006 FMC LEXIS 19, at *24 (FMC May 10, 

2006) (holding “the Commission is obligated to hear those allegations particular to the Shipping 

Act”); Cargo One, Inc. v. COSCO Container Lines Co., Docket No. 99-24, 28 S.R.R. 1635, 

1645, 2000 FMC LEXIS 14, at *33-34, (FMC Oct. 31, 2000) (affirming that alleged violations of 

the Shipping Act including claims regarding “just and reasonable regulations and practices, are

inherently related to Shipping Act prohibitions and are therefore appropriately brought before the 

Commission.”); Chief Cargo Services. v. FMC, 586 Fed. Appx. 730, 731, 2014 U.S. App. 

LEXIS 18831, at *2 (2d Cir. 2014) (“The FMC’s jurisdiction extends to all alleged violations of

the Act.”).

While the Commission has a limited jurisdiction, it is fully empowered to hear Shipping 

Act disputes. “Congress specifically authorized the FMC” to review, approve, and police 

“agreements among ocean common carriers. This delegation of authority by Congress, coupled 

with the FMC’s technical knowledge of the subject matter, cautions us to accord great weight to 

the agency’s judgment.” A/S Ivarans Rederi v. United States, 895 F.2d 1441, 1447, 1990 U.S. 

App. LEXIS 1687, at *19 (D.C. Cir. 1990). Indeed, the Commission is not only authorized – it is 

obligated – to hear Shipping Act claims. See, e.g., Anchor Shipping Co., 2006 FMC LEXIS 19, 

at *24 (finding that the ALJ’s determination not to exercise jurisdiction over the complainant’s

Shipping Act claims was incorrect and explaining “[b]ecause alleged Shipping Act violations are 

intertwined with breach of contract issues in the present case, such matters must be resolved 

before the Commission.”); New York Shipping Ass’n v. FMC, 854 F.2d 1338, 1364, 1371 (D.C. 

Cir. 1988). 

“It is elementary law that a tribunal should determine its jurisdiction before proceeding to 

the merits of a controversy.” NPR, Inc. v. Board of Comm’rs of the Port of New Orleans, Docket 

No. 98-23, 28 S.R.R. 1178 (ALJ Nov. 23, 1999); see also River Parishes Co. v. Ormet Primary 

Aluminum Corp., Docket No. 96-06, 28 S.R.R 751, 762 (FMC Feb. 3, 1999) (“As the ALJ

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correctly held, an agency must reach jurisdictional issues before addressing the merits of a case.” 

(citations omitted)). 

4. Analysis

The complaint alleges that “OCEMA members control the operation of chassis pools at

ports and intermodal terminals nationwide through the rules and practices they adopt for pool 

operation, their contracts with equipment providers, and their own rules and practices governing 

how the cargo containers that they own may be interchanged.” Complaint at 2. The complaint

further contends: 

The Commission has jurisdiction over this Complaint pursuant to 46 U.S.C. 

§ 41301 because it alleges violations of the Shipping Act of 1984, 46 U.S.C.

§ 41102(c), by ocean common carriers and their agents engaged in international

maritime commerce of the United States at ports and inland intermodal terminals

where they engage in the interchange of cargo containers and container chassis

moving in such commerce.

Complaint at 11. 

The Commission’s jurisdiction has been considered at two prior points in this proceeding. 

First, in the context of a motion to dismiss, it was held: 

Complainant asserts that Respondents are ocean common carriers and their agents 

engaged in international maritime commerce of the United States at ports and 

inland intermodal terminals where they engage in the interchange of cargo 

containers and container chassis moving in such commerce. As the Commission 

indicated, the chassis situation is “complicated,” ocean carriers may “substantially

affect chassis availability via chassis pools owned by ocean carrier agreements 

such as OCEMA,” and “‘[o]cean carriers also exert control over chassis via ‘‘box

rules,’’ under which ocean carriers determine which chassis a trucker must use in 

a carrier haulage situation.” 85 FR at 29655 (citations omitted). Complainant

makes a plausible claim of jurisdiction by alleging that ocean carriers affect and 

exert control over chassis availability through their regulations and practices. 

Accepting the allegations in the complaint as true, subject matter jurisdiction is 

sufficiently alleged. 

Order Denying Motion to Dismiss at 4 (Nov. 18, 2020). 

It was later noted in the order denying interlocutory appeal that: 

The complaint sub judice does not cite any terms of contracts between ocean 

carriers and trucking companies, but rather cites terms in FMC agreements among 

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ocean carriers, including the OCEMA agreement,6 CCMP agreement,7 and CCMP 

operations manual.8 It is alleged that through these and related agreements, ocean 

carriers affect and exert control over chassis availability, implying that they may 

be effectively functioning as a standard setting organization.9 

. . . . 

In this proceeding, Respondents’ arguments focus on whether the Commission has

jurisdiction over the relationship between ocean carriers and truckers. This focus is 

misplaced as the complaint does not object to contracts between specific trucking 

companies and individual ocean carriers but rather contests industry-wide 

agreements among regulated entities filed with the FMC. In contrast to Sea-Land 

Dominicana, this complaint objects to regulations and practices regarding the 

receiving, handling, storing, and delivering of property, subjects specifically 

regulated by section 41102(c), implemented pursuant to Commission approved 

agreements, where adverse effects on shippers are alleged. 

Order Denying Respondents’ Motion for Leave to File Interlocutory Appeal at 4-6 (“Order

Denying Interlocutory Appeal”) (Jan. 29, 2021). The order thus held:

Ocean carriers sought the protection and benefits of FMC-approved agreements 

over the last thirty years and now that regulations and practices adopted pursuant 

to their authority are contested, the ocean carriers claim that the FMC lacks 

jurisdiction. This argument is not persuasive. Indeed, it is unlikely that the parties’

challenges to these FMC agreements and related regulations could be heard 

anywhere else. 

Order Denying Interlocutory Appeal at 6. 

6 Ocean Carrier Equipment Management Association, FMC Agreement No. 011284, available at: 

www2.fmc.gov/FMC.Agreements.Web/Public/AgreementHistory/1560. Complaint at 16. 

7 Consolidated Chassis Management Pool Agreement, FMC Agreement No. 011962-016, 

available at www2.fmc.gov/FMC.Agreements.Web/Public/AgreementHistory/454. Complaint 

at 17. 

8 CCMP Operations Manual, Version 4.2 (July 20, 2020), available at 

www.ccmpool.com/UploadedDocuments/Membership/Resources/LEGAL-45198472v1-CCMPOps-Manual-v42.pdf. Complaint at 22. 

9 See, e.g., Allied Tube & Conduit Corp. v. Indian Head, 486 U.S. 492, 500 (1988) (“Typically,

private standard-setting associations . . . include members having horizontal and vertical business 

relations. There is no doubt that the members of such associations often have economic 

incentives to restrain competition and that the product standards set by such associations have a 

serious potential for anticompetitive harm. Agreement on a product standard is, after all, 

implicitly an agreement not to manufacture, distribute, or purchase certain types of products.”)

(citations omitted). 

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Now considering jurisdiction at the summary decision stage, there continues to be no 

basis to dismiss this case for lack of subject matter jurisdiction. Rather, as explained below, 

IMCC presents questions central to the Shipping Act, including allegations and evidence that 

regulated entities have acted in violation of the Shipping Act, and therefore IMCC has 

established that the Commission has jurisdiction over this proceeding. 

Discussing the issue of section 41102(c) as it relates to chassis providers, the 

Commission noted in the Section 41102(c) Final Rule that section 41102(c) “does not cover

chassis providers who do not otherwise fall within the definition of a regulated entity under the 

Shipping Act.” Section 41102(c) Final Rule, 85 FR 29650 n.185. Therefore, this proceeding does 

not seek to adjudicate claims against chassis providers that are not FMC-regulated entities. 

The eleven ocean common carrier Respondents are regulated entities. JSF ¶¶ 25, 42, 58, 

72, 87, 102, 117, 132, 148, 162, 176. In addition, OCEMA and CCM, as associations of carriers 

created by FMC agreements, are regulated entities under the Shipping Act. See Int’l Assoc. of

NVOCCs v. Atl. Container Line (“NVOCCs”), Docket No. 81-5, 25 S.R.R. 734, 743, 1990 FMC 

LEXIS 37, at *27 (FMC Feb. 5, 1990); Distribution Services, 1988 FMC LEXIS 52, at *35. 

Here, the OCEMA and CCMP agreements were filed with the FMC and conferred benefits and 

protections onto the signatories, including limited antitrust immunity, concurrently assuring the 

Commission’s jurisdiction over the agreements.

The complaint is focused on the actions of ocean common carriers and their associations, 

who are regulated entities under the Shipping Act, and whose regulations and practices are at 

issue. As was stated in the order denying interlocutory appeal: 

The Commission has jurisdiction over Respondents, who are regulated entities. 

The Commission also has subject matter jurisdiction over the OCEMA and 

CCMP agreements which authorize the operating rules at issue. Moreover, to the 

extent that agreements between regulated entities implement regulations and 

practices regarding the receiving, handling, storing, and delivering of property 

that are shown to violate the Shipping Act, the Commission has jurisdiction over 

those claims. 

Order Denying Interlocutory Appeal at 6. 

As noted above, this case is not about regulating non-FMC-regulated providers of chassis 

or IEPs, just as the Commission’s action in California Stevedore & Ballast Co. v. Stockton Port 

District was not about regulating stevedoring. Docket No. 898, 7 F.M.C. 75, 81 (FMC Jan. 25, 

1962) (“Respondents’ second claim that section 15 does not apply, and that we lack power to

strike down an unjust and unreasonable practice setting up a stevedoring monopoly, because we 

lack power to regulate the stevedoring business, is also without merit, and a plain non sequiter. 

Our action in condemning and preventing such unjust and unreasonable practices does not 

constitute regulation of stevedoring.”). Respondents’ arguments with respect to registration 

requirements for IEPs is thus beside the point because the Commission does not seek to regulate 

IEPs. 

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The Commission may not fail to hear Shipping Act claims because ocean common 

carriers also have contracts with IEPs, whose conduct may be subject to antitrust regulation 

under the antitrust laws. See, e.g., New York Shipping Ass’n, 854 F.2d at 1364 (“the Commission

may not in any event ‘abandon an independent inquiry into the requirements of its own statute’”)

(quoting Local 1976, United Bhd. of Carpenters & Joiners of Am. v. NLRB, 357 U.S. 93, 111 

(1958)). Indeed, even in the case that “an irreconcilable conflict is presented, the agency should 

not shrink from pursuing its statutory mandate” and would be bound to assess Shipping Act

implications, allowing other agencies to perform their statutory responsibilities on their own 

terms. New York Shipping Ass’n, 854 F.2d at 1371. Here, no irreconcilable conflict is present –

the Commission has been presented with allegations of Shipping Act violations by regulated 

entities and it must decide these claims; and IEPs are not parties to this action, neither are their 

practices under review, but rather, Respondents’ practices. 

In a recent decision addressing Commission jurisdiction, the Commission stated: 

The Commission can adjudicate allegations that contract terms are violative of the 

Shipping Act. See Final Rule: Interpretive Rule on Demurrage and Detention, 

Docket No. 19-05, 85 Fed. Reg. 29638 at 29648 (May 18, 2020) (“Ocean carriers

and marine terminal operators (and ocean transportation intermediaries) do not 

have an unbounded right to contract for whatever they want. They are limited by 

the prohibitions of the Shipping Act, one of which is section 41102(c).”); see also 

Cargo One, Inc. v. COSCO Container Lines Co., Docket No. 99-24, 28 S.R.R. 

1635, 1645, 2000 FMC LEXIS 14, *32 (FMC Oct. 31, 2000) (the test for the 

Commission’s jurisdiction is whether a Claimant’s allegations “also involve

elements peculiar to the Shipping Act”).

TCW, Inc., v. Evergreen Shipping Agency (Am.) Corp., Docket No. 1966(I), 2022 FMC LEXIS 

589, at *6 (FMC Dec. 29, 2022). 

Respondents are entirely correct, however, that the Commission’s jurisdiction is limited.

If this case presented only questions concerning chassis usage as between IEPs and motor 

carriers, then the Commission might not have jurisdiction to resolve those issues. But 

Respondents, in citing to American Union Transport v. River Plate & Brazil Conferences, appear 

to have focused insufficiently on the latter portion of the guidance: “we wish to point out that 

this agency’s jurisdiction is as set out in statute, and we cannot, by our own act or omission, 

enlarge or divest ourselves of that statutory jurisdiction.” Docket No. 758, 5 F.M.B. 216, 224 

(FMB Mar. 25, 1957); see also Demurrage and Detention Rule, 85 F.R. at *29644. 

Regarding the Commission’s jurisdiction with respect to CH and MH, it is well

established that the Commission’s jurisdiction does not automatically stop at the port.

“Conceptually, so long as a bill of lading requires substantial carriage of goods by sea, its 

purpose is to effectuate maritime commerce – and thus it is a maritime contract. Its character as a 

maritime contract is not defeated simply because it also provides for some land carriage.”

Norfolk S. Railway Co. v. Kirby, 543 U.S. 14, 27 (2004). The Supreme Court explained that the 

fundamental interest giving rise to maritime jurisdiction is “‘the protection of maritime 

commerce.’” Kirby, 543 U.S. at 25 (citations omitted). Thus “[w]hile it may once have seemed 

natural to think that only contracts embodying commercial obligations between the ‘tackles’ (i.e.,

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from port to port) have maritime objectives, the shore is now an artificial place to draw a line.”

Kirby, 543 U.S. at 25. “Furthermore, to the extent that these lower court decisions fashion a rule 

for identifying maritime contracts that depends solely on geography, they are inconsistent with 

the conceptual approach our precedent requires.” Kirby, 543 U.S. at 27. 

Respondents agree that “[s]ubject matter jurisdiction applies to a through bill of lading 

during the times that a containerized shipment is in transit pursuant to the terms of that bill of 

lading.” RMSD/RReply at 7. They argue, however, that FMC jurisdiction does not apply during 

the MH segment, which occurs before the ocean carrier takes possession of a shipment or after 

delivery has been made. RMSD/RReply at 7. 

Kirby showed that a through bill of lading can pull domestic transport into the 

Commission’s jurisdiction. The Commission has found that a “port’s exclusive tug system

‘“extend[ed] the . . . [marine terminal operator’s] furnishing of terminal facilities from the pier 

onto the waters of the harbor,’” and had “‘an underlying purpose relating to terminal operations 

and a more than incidental relationship to the receiving and handling of property and cargo.’””

Canaveral Port Authority – Possible Violations of Section 10(b)(10), Unreasonable Refusal to 

Deal or Negotiate, Docket No. 02-02, 2003 FMC LEXIS 28, at *30 (FMC Feb. 24, 2003) (citing 

Petchem, Inc. v. Canaveral Port Authority, Docket No. 84-28, 23 S.R.R. 974, 987 (FMC 

Mar. 28, 1986)). Similarly, here, the conduct of regulated ocean common carriers pulls the MH 

segment of transit into the Commission’s jurisdiction to the extent that the regulated entities are 

exerting control over chassis in MH. 

IMCC alleges that “chassis are an integral part of through-transportation for shipments in 

international maritime commerce, and the Commission’s jurisdiction extends to domestic

portions of that through-transportation” and that “Respondents’ practices are ‘related to or

connected with’ the cost of, and access to, chassis necessary to the receipt or delivery of

containers under Respondents’ port-to-port and port-to-terminal tariffs (and service contracts), 

putting burdens on shippers, and their motor carrier agents using those tariffs.” RMSD/COpp at

5-6. Thus, IMCC alleges that Respondents’ practices extend beyond the boundaries of CH into

the province of MH and that Respondents’ conduct and practices regarding CH tie to and directly

and negatively impact MH.

While the Commission generally may not have jurisdiction based on domestic inland 

movements only, there is no dispute that the Commission has jurisdiction over ocean common 

carriers and chassis used in CH. To the extent that Respondents have chosen to tie CH to MH, a 

Shipping Act question is presented which the Commission must resolve. Stated differently, the 

question is whether Respondents have, through their CH practices, exerted control over MH 

practices. 

Respondents also contend that McKenna Trucking supports the proposition that the 

Commission lacks authority to regulate relationships between ocean carriers and unregulated 

members of the industry, such as motor carriers, even when there are allegations of unlawful, 

prejudicial, and discriminatory conduct under the Shipping Act. RMSD at 9-10 (referring to 

McKenna Trucking Co. v. A.P. Moller-Maersk Line, Docket No. 97-02). The McKenna Trucking 

decision is of limited usefulness, however, for a number of reasons. McKenna Trucking did not 

involve a section 41102(c) claim. In addition, the parties in McKenna Trucking requested that the 

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complaint be dismissed, so the decision was not subject to review by the Commission and is not 

binding. Docket No. 97-02, 27 S.R.R. 1343, 1344, 1997 FMC LEXIS 17, at *1 (ALJ Aug 12, 

1997). Further distinguishing McKenna Trucking, at issue was an ocean carrier who had signed a 

contract with a specific trucking company. This is a far jump from alleged industry-wide 

practices of regulated entities present here. 

Moreover, in a recent decision, the Commission concurred with the statement that 

“during the [demurrage and detention] rulemaking process the Commission made clear that 

truckers were one of the entities meant to be protected under § 41102(c).” TCW v. Evergreen, 

2022 FMC LEXIS 589, at *15 (also expressly affirming the rejection of Evergreen’s argument

that because the claimant was a motor carrier the claim was outside Commission jurisdiction); 

see also “50 Mile Container Rules” Implementation by Ocean Common Carriers Serving U.S.

Atl. and Gulf Coast Ports, Docket No. 81-11, 24 S.R.R. 411, 462, 1987 FMC LEXIS 20, at *167 

(FMC Aug. 3, 1987) (pet. for review denied, sub nom., N.Y. Shipping Ass’n v. FMC, 854 F.2d 

1338, 1377 (DC Cir. 1988)) (“While we need not decide in this case the outer limits of the group 

entitled to protection under section 10(b)(6)(C), it seems clear that such protection extends at 

least to those entities seeking containers on behalf of shippers. Thus, truckers, warehousemen, 

freight forwarders, customs brokers and non-NVO consolidators may not be unjustly 

discriminated against in the matter of cargo space accommodations or other facilities, to the 

extent that they are seeking and utilizing such accommodations or facilities as or on behalf of 

members of the shipping public.”)

IMCC posits that if the Commission does not have the power to review whether those 

practices are just, reasonable, and consistent with the ocean carriers’ common carrier obligations 

under the Shipping Act, then nobody does. RMSD/COpp at 6-7. The assertion that if these 

claims cannot be reviewed by the Commission, they probably cannot be reviewed by anyone, 

may be correct. 

Therefore, taking into consideration the facts not in dispute, the Commission has 

jurisdiction over Respondents’ practices as Respondents are regulated entities alleged to have

violated the Shipping Act. Therefore, IMCC’s motion for summary decision on the issue of 

jurisdiction is GRANTED and Respondents’ motion for summary decision on the issue of 

jurisdiction is DENIED. However, Respondents’ arguments that there are limits to the

Commission’s jurisdiction are well-taken and this proceeding is limited to ruling on matters 

within the Commission’s jurisdiction. 

B. Joinder

1. Parties’ Arguments

Respondents allege that the complaint must be dismissed because IMCC has failed to join 

necessary and indispensable parties without whom relief cannot be granted, arguing that the 

allegations of IMCC’s complaint actually target the IEPs’ conduct; the IEPs, not the ocean

carriers, contribute chassis to pools; and the IEPs are necessary and indispensable parties to this 

proceeding. RMSD at 26-29; see also RMSD/RReply at 7-9; CMSD/ROpp at 25-26. 

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IMCC asserts that the IEPs are not necessary parties; the Presiding Officer can tailor 

relief at the initial decision stage; the IEPs are not ignorant of the proceedings and could have 

requested intervention but have chosen not to; and Commission precedent establishes that the 

IEPs are not necessary parties. RMSD/COpp at 22-24; CMSD/CReply at 15. 

2. Standard

The Commission’s Rules do not explicitly address required joinder of parties. Therefore,

as explained supra, the Federal Rules will be applied. To determine if a party is “indispensable”

under Federal Rules 12(b)(7) and 19, a court must perform a two-step analysis. Gen. Refractories 

Co. v. First State Ins. Co., 500 F.3d 306, 312 (3d Cir. 2007). First, the court must determine if 

the absent parties are “necessary” pursuant to Federal Rule 19(a), which provides:

A person who is subject to service of process and whose joinder will not deprive 

the court of subject-matter jurisdiction must be joined as a party if: (A) in that 

person’s absence, the court cannot accord complete relief among existing parties; 

or (B) that person claims an interest relating to the subject of the action and is so 

situated that disposing of the action in the person’s absence may: (i) as a practical 

matter impair or impede the person’s ability to protect the interest; or (ii) leave an

existing party subject to a substantial risk of incurring double, multiple, or 

otherwise inconsistent obligations because of the interest. 

Fed. R. Civ. Proc. Rule 19(a)(1). 

If a party is necessary under Rule 19(a)(1) but joinder is not feasible, then the court must 

determine whether the party is indispensable pursuant to Rule 19(b), which provides: 

If a person who is required to be joined if feasible cannot be joined, the court 

must determine whether, in equity and good conscience, the action should 

proceed among the existing parties or should be dismissed. The factors for the 

court to consider include: 

(1) the extent to which a judgment rendered in the person’s absence might

prejudice that person or the existing parties;

(2) the extent to which any prejudice could be lessened or avoided by: (A)

protective provisions in the judgment; (B) shaping the relief; or (C) other

measures;

(3) whether a judgment rendered in the person’s absence would be adequate; and

(4) whether the plaintiff would have an adequate remedy if the action were

dismissed for nonjoinder.

Fed. R. Civ. Proc. Rule 19(b). 

Both the term “necessary” and “indispensable” are legal terms of art. “To say that a court 

‘must’ dismiss in the absence of an indispensable party and that it ‘cannot proceed’ without him 

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puts the matter the wrong way around: a court does not know whether a particular person is 

‘indispensable’ until it has examined the situation to determine whether it can proceed without

him.” Provident Tradesmens Bank Co. & Trust Co. v. Patterson, 390 U.S. 102, 119 (1968). 

“While the party advocating joinder has the initial burden of demonstrating that a missing 

party is necessary, after ‘an initial appraisal of the facts indicates that a possibly necessary party 

is absent, the burden of disputing this initial appraisal falls on the party who opposes joinder.’”

Ameriprise Fin., Inc. v. Bailey, 944 F. Supp. 2d 541 (N.D. Tex. 2013) (quoting Hood ex rel 

Mississippi v. City of Memphis, 570 F.3d 625, 628 (5th Cir. 2009)). 

3. Analysis

Applying the two-step analysis discussed supra, first as to whether the absent parties are 

“necessary” pursuant to Federal Rule 19(a), Respondents have not carried their initial burden of

demonstrating that IEPs are necessary parties. The complaint’s focus is on the OCEMA and 

CCMP agreements, CCMP Operations Manual, and ocean carrier regulations and practices. 

Complaint at 16-42; see also CMSD at 18-30. The complaint requests relief in the form of an 

order to remove and to cease and desist enforcement of a section of the CCMP Operations 

Manual; to cease and desist adopting, maintaining, and/or enforcing any regulation or practice 

that limits the ability of a motor carrier to select the chassis provider it designates, including 

default provider designations, for MH movements or other movements for which a motor carrier 

is billed for usage or per diems; and to cease and desist from utilizing single-provider chassis 

pools that are not interoperable with pools operated by other IEPs at all ports and intermodal 

terminals serving more than one Respondent under rules that do not permit effective chassis 

choice for motor carriers. Complaint at 40-41. Respondents have offered no compelling evidence 

to suggest that the court would be unable to accord the complete relief requested in the absence 

of the IEPs. For instance, Respondents’ contention that IEPs contribute chassis to pools would 

not hinder the Commission from providing the relief requested from the existing parties. 

It is possible that this proceeding could have an impact on ocean carrier contracts with 

chassis providers if a violation of the Shipping Act is found. But that possible impact does not 

equate to them having status as “necessary” parties. See Provident Tradesmens Bank, 390 U.S. at 

123 (holding “the Court of Appeals’ reliance on . . . language to show that in any case where an 

outsider ‘may be affected’ it is necessarily unjust to proceed [without him], is altogether 

misplaced.” (emphasis in original)). Here, Respondents have not carried their burden of 

demonstrating IEPs to be necessary parties. 

Further, even if chassis providers were necessary parties who could not be joined, the 

case could nevertheless continue, because the analysis does not stop there. Federal Rule 19(b) 

provides factors for a court to consider in determining if an action can proceed even if necessary 

parties cannot be joined. 

The indispensability analysis balances various interests based on the particular 

facts of each case . . . . The inquiry is flexible and pragmatic. Some courts have 

voiced the opinion that they prefer not to dismiss for nonjoinder. Any such 

preference simply recognizes that dismissal is by nature a disruptive event that 

should not be ordered routinely. Obviously, dismissal should be ordered if the 

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court decides that equity and good conscience require it. The issue of whether to 

proceed or dismiss is vested in the sound discretion of the district judge, whose 

conclusion will be upheld unless it constitutes an abuse of discretion. 

4 Moore’s Federal Practice – Civil § 19.05 (2020) (citations omitted). 

Applying these factors, even if chassis providers were necessary and their joinder were 

not feasible, the Federal Rule 19(b) factors – prejudice, shaping relief, adequate relief, and 

alternative forum – weigh in favor of continuing the proceeding. Because this is a Shipping Act 

claim, no other venue would be able to adjudicate it. In addition, any prejudice may be lessened 

or avoided by shaping any relief ordered. 

Respondents argue that ocean carriers’ relationships with IEPs are governed by separate

chassis usage agreements between those parties, that ocean carriers therefore owe legal duties 

and obligations under those chassis usage agreements, and that in the event that the Commission 

grants the relief requested the ocean carriers would be in material default under their chassis 

usage agreements with IEPs; thus, IEPs must be joined but the Commission lacks personal 

jurisdiction over the IEPs per 46 U.S.C. § 41102(c). But it is circular to argue that contracts 

derived from practices which may be in violation of the Shipping Act may be used to justify the 

preservation of those practices. 

Entities regulated by the Shipping Act may not be allowed to evade review of their 

conduct simply by entering into contracts with unregulated third parties. Sea-Land Serv., Inc. & 

Gulf Puerto Rico Lines, Inc. – Proposed Rules on Containers, Docket No. 73-17, 18 S.R.R. 553, 

557, 21 F.M.C. 1, 4 (FMC June 14, 1978) (Rejecting respondents’ contention, which it 

characterized as “tantamount to an acknowledgement by us that a common carrier by water or

other person subject to our jurisdiction could escape our jurisdiction by the simple device of 

voluntarily . . . entering into an agreement which obligates the common carrier to take actions 

which may be or are in clear violation of the Shipping Act.”)

Indeed, the necessity of FMC review in exchange for limited antitrust immunity is central 

to the purpose of the Shipping Act itself. “The scheme of regulation adopted [by the Shipping 

Act] thus permits the conferences to continue operation but insures that their immunity from the 

antitrust laws will be subject to careful control.” FMC v. Aktiebolaget Svenska Amerika Linien, 

390 U.S. 238, 243 (1968); see also Agreement No. 57-96, Pac. Westbound Conference Extension 

of Authority for Intermodal Svs., 19 F.M.C. 291, 301 (FMC Sept. 15, 1976) (Reviewing 

conference agreements and asserting that the Commission must “assure that ‘the conduct

legalized [by such agreements] does not invade the prohibitions of the antitrust laws any more 

than is necessary to serve the purpose of the regulatory statute.’” (citation omitted)). 

Ocean carriers cannot point to IEP contracts to avoid review of their own regulations and 

practices. The Commission has also demonstrated it is willing and able to provide relief in the 

form of orders that would necessarily result in the need for the regulated party to alter separate 

contracts. 50 Mile Container Rules, 24 S.R.R. at 414-415, 1987 FMC LEXIS 20, at *7, *10-11, 

*188-189 (ordering that the carriers cease and desist from publishing in their tariffs and

enforcing the relevant provisions of the Rules on Containers despite the fact that underlying

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agreements between the carrier and the International Longshoremen’s Association reflected this

same content). 

In 50 Mile Container Rules, the Commission allowed for the effective date of the order to 

be delayed for 90 days from the date of the decision, “in order to give the carriers a reasonable

amount of time to conform their collective bargaining arrangements with the requirements of the 

shipping laws.” 1987 FMC LEXIS 20, at *10-11. The Commission explained that this “serves

the public interest and will avoid any unnecessary disruption of the collective bargaining process 

by giving the parties ample time to accommodate the ILA’s interests in some manner other than 

the present Rules on Containers.” 1987 FMC LEXIS 20, at *188 (also noting that the delay of 

the effective date of its order was consistent with the initial decision in Sea-Land, Docket No. 

73-17, 21 F.M.C. 7, 35 (ALJ Oct. 9, 1975)). However, regarding its decision to delay the order’s

effective date, the Commission emphasized that it did “not take this step casually, because it

requires us to countenance 90 more days of continuing violations of the Intercoastal Act and the

1984 Act with the accompanying burdens upon shippers and other affected persons.” 50 Mile

Container Rules, 1987 FMC LEXIS 20, at *10-11. Similar protective measures, allowing for

time for certain aspects of an order to take effect, could be taken here.

Respondents’ argument that all parties to a contract must be present per Natural 

Resources fails for related reasons. RMSD at 29 (quoting Natural Resources Defense Council v. 

Kempthorne, 539 F. Supp. 2d 1155, 1185 (E.D. Cal. 2013)). The chassis usage agreements are 

separate contracts entered into by ocean carriers, apart from those identified in the complaint and 

regulated by the FMC. “It is generally recognized that a person does not become indispensable to 

an action to determine rights under a contract simply because that person’s rights or obligations 

under an entirely separate contract will be affected by the result of the action.” Ferrofluidics 

Corp. v. Advanced Vacuum Components, Inc., 968 F.2d 1463, 1472 (1st Cir. 1992) (citing 

Helzberg’s Diamond Shops, Inc. v. Valley W. Des Moines Shopping Ctr., Inc., 564 F.2d 816, 820 

(8th Cir. 1977)); see also Casas Office Machs. v. Mita Copystar Am., 42 F.3d 668, 676 (1st Cir. 

1994) (“When a person is not a party to the contract in litigation and has no rights or obligations

under that contract, even though he may have obligated himself to abide by the result of the 

pending action by another contract that is not at issue, he will not be regarded as an indispensable 

party in a suit to determine obligations under the disputed contract, although he may be a Rule 

19(a) party to be joined if feasible.” (citing 7 Charles A. Wright, Fed. Prac. & Proc. § 1613, at 

199-200 (1986))); Thayer/Patricof Educ. Funding, L.L.C. v. Pryor Resources, Inc., 196 F. Supp.

2d 21, 28, 2002 U.S. Dist. LEXIS 7264, at *16 (D.D.C. 2002) (“a third party is not a necessary

or indispensable party to an action to determine the rights of other parties under a contract”

(citations omitted)).

Respondents have not established that this proceeding should be dismissed for failure to 

join necessary and indispensable parties. Accordingly, Respondents’ motion for summary 

decision on the issue of failure to join indispensable parties is DENIED. IMCC did not move for 

summary judgement on this issue. Next, the section 41102(c) elements are reviewed, starting 

with reasonableness. 

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C. Reasonableness

Of the five elements necessary to establish a violation of section 41102(c), the issue most 

contested between the parties is the element of the reasonableness of the practices. This section 

focuses on the element of reasonableness and discusses the parties’ arguments, antitrust 

principles and exclusive arrangements, and analysis of the five specific violations alleged by 

IMCC: (a) CCMP Rules 5.5 and 5.7, (b) contractual linkage of CH and MH, (c) designation of 

IEP for MH in chassis usage agreements, (d) designation of proprietary chassis pools and 

withdrawal from interoperable pools, and (e) MH chassis in the LA/LB Pool of Pools. The other 

section 41102(c) elements are discussed in the next section. 

1. Parties’ Arguments

IMCC alleges a number of ways in which Respondents’ conduct is unreasonable.

Specifically, IMCC argues that CCMP Rules 5.5 and 5.7 unnecessarily restrict chassis choice 

and are more restrictive than necessary; ocean carriers’ contracts that link MH volumes with CH 

prices are unjust and unreasonable; ocean carrier contracts that designate an IEP for MH 

movements are unjust and unreasonable; ocean carriers’ designation of a proprietary chassis pool

and withdrawal from an interoperable chassis pool is unjust and unreasonable; and ocean 

carriers’ contracts and practices to use MH chassis in the Pool of Pools are unjust and 

unreasonable while they fail to implement chassis choice for motor carriers. CMSD at 18-25. 

Each of these five reasonableness arguments will be addressed in turn. 

Respondents contend that Sections 5.5 and 5.7 of the CCMP Operations Manual are 

neither unjust nor unreasonable because the sections do not restrict choice, are not unreasonable, 

and are not more restrictive than necessary; IMCC has not demonstrated that chassis usage 

agreements unfairly and unjustly link MH volumes with CH prices; designation of an IEP for 

MH movements in chassis usage agreements is not unjust or unreasonable; IEPs make business 

decisions about whether to serve their ocean carrier customers at a particular location via an 

interoperable pool or a proprietary pool and the ocean carrier customer may have input into how 

it is served, or it may have no choice but to go along with the decisions of the IEP; the 

withdrawal of IEPs from interoperable pools does not constitute a violation of the Shipping Act 

by Respondents; and IMCC’s argument with respect to the Pool of Pools is flawed.

CMSD/ROpp at 4-20. Respondents also raise defenses, such as the deference given to reasonable 

business discretion, which are also addressed. 

2. Antitrust Principles and Exclusive Arrangements

In the Shipping Act, a balance was created whereby limited antitrust immunity was 

granted to regulated ocean common carriers, with the understanding that effective government 

supervision would also be required to avoid abuses. FMC v. Svenska Amerika Linien, 390 U.S. at 

242-43 (1968); Carnation Co. v. Pac. Westbound Conf., 383 U.S. 213, 218-19 (1966).

Discussing the historical background of the Shipping Act, the Supreme Court recounted that the

“Congress which enacted the Shipping Act was not hostile to antitrust regulation. On the

contrary, the Shipping Act was the end product of an extensive investigation of the shipping

industry that was conducted by the Congress which enacted the Clayton Act.” Carnation, 383

U.S. at 218 (footnote omitted). This committee remarked: “‘While admitting their many

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advantages, the Committee is not disposed to recognize steamship agreements and conferences, 

unless the same are brought under some form of effective government supervision. To permit 

such agreements without government supervision would mean giving the parties thereto 

unrestricted right of action. Abuses exist, and the numerous complaints received by the 

Committee show that they must be recognized.’” Carnation, 383 U.S. at 219 (quoting H. R. Doc. 

No. 805, 63rd Cong., 2d Sess., pp. 417-18 (1941)). The Supreme Court concluded: “Therefore, it

seems likely that the Committee really only wanted to give the shipping industry a limited 

antitrust exemption.” Carnation, 383 U.S. at 219; see also FMC v. Seatrain Lines, Inc., 411 U.S. 

726, 733 (1973); New York Shipping Ass’n v. FMC, 854 F.2d 1338, 1374 (D.C. Cir. 1988) (citing 

FMC v. Svenska Amerika Linien, 390 U.S. at 243). 

The Commission, reviewing allegations of unreasonable preference or disadvantage and 

unreasonable practices under the Shipping Act of 1984, has recognized the “limited role of the

antitrust laws in Shipping Act enforcement” as well as “the usefulness of antitrust principles in

analysis of the issues raised by exclusive arrangements or self-preference by marine terminal 

operators or ports under the Shipping Acts.” All Marine Moorings, Inc. v. ITO Corp. of 

Baltimore, Docket No. 94-10, 1996 FMC LEXIS 68, at *29 (FMC May 15, 1996). The 

Commission discussed Gulf Container Line, stating: 

In that case, we recognized that it was not necessary to show that a practice would 

constitute a violation of the antitrust laws in order to establish that it was 

sufficiently anti-competitive to be found unreasonable under the Shipping Acts. 

The case did not, however, hold that the antitrust laws or antitrust analysis of 

relevant market or competitive effects are irrelevant to the reasonableness standard. 

All Marine, 1996 FMC LEXIS 68, at *30 (discussing Gulf Container Line v. Port of Houston 

Auth., Docket No. 89-18, 25 S.R.R. 1454, 1991 FMC LEXIS 107 (FMC May 3, 1991)). 

“While no determination of whether a particular practice or action would be considered 

violative of the antitrust laws is necessary to a determination of reasonableness under the 

Shipping Act, the concepts, terminology, and framing and analysis of issues involved in antitrust 

cases are frequently useful in such determinations.” All Marine, 1996 FMC LEXIS 68, at *31. 

Antitrust concepts can help articulate and explain the practices at issue here. “Restraints

imposed by agreement between competitors have traditionally been denominated as horizontal 

restraints, and those imposed by agreement between firms at different levels of distribution as 

vertical restraints.” Business Elec. Corp. v. Sharp Elec. Corp., 485 U.S. 717, 730 (1988). 

The relationships between ocean carriers, IEPs, motor carriers, and BCOs are primarily 

vertical. “The antitrust laws also affect a variety of ‘vertical’ relationships – those involving 

firms at different levels of the supply chain – such as manufacturer-dealer or suppliermanufacturer.” FTC, “Dealings in the Supply Chain,” available at: www.ftc.gov/adviceguidance/competition-guidance/guide-antitrust-laws/dealings-supply-chain. Generally, the law 

considers “most vertical arrangements as beneficial overall because they reduce costs and 

promote efficient distribution of products. A vertical arrangement may violate the antitrust laws, 

however, if it reduces competition among firms at the same level (say among retailers or among 

wholesalers) or prevents new firms from entering the market.” Id. 

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The relationship between ocean carriers is horizontal, as well as potentially the 

relationship of the motor carriers in MH with the ocean carriers in CH. Horizontal relationships 

refer to relationships among competitors in the relevant market. Eastman Kodak Co. v. Image 

Tech. Services, 504 U.S. 451, 471 n.18 (1992); see also Sprint Nextel Corp. v. AT&T Inc., 821 

F. Supp. 2d 308, 317-18 (D.D.C. 2011) (explaining “as participants in a number of different

markets, wireless carriers are related both horizontally and vertically. In certain markets, the

carriers compete with each other to sell outputs, and in other markets, they compete to purchase

inputs. Such relationships are deemed horizontal in that they pit carriers against carriers, acting

in parallel as either sellers or buyers. . . . In yet other markets, the wireless carriers buy and sell

services to and from each other, and are therefore vertically related. In this complex and

constantly evolving industry, markets are interconnected and the carriers play multiple roles

simultaneously.”).

Respondents’ practices may be considered akin to exclusive dealing. “The primary

antitrust concern with exclusive dealing arrangements is that they may be used by a monopolist 

to strengthen its position, which may ultimately harm competition.” Sanofi-Aventis U.S., LLC v. 

Mylan, Inc., 44 F.4th 959, 983 (10th Cir. 2022) (citation omitted). Reliance on antitrust 

principles is not necessary, however. As the Commission has stated: 

The Commission has in the past found unreasonable various terminal practices 

involving requirements that terminal users purchase related services from certain 

providers granted exclusive status (Agreement Nos. 8225 and 8225-1 Between 

Greater Baton Rouge Port Commission and Cargill Inc., 5 F.M.B. 648 

(1959) aff’d sub nom. Greater Baton Rouge Port Commission v. United States, 

287 F.2d 86 (5th Cir. 1961)), or from terminal operators themselves (Perry’s 

Crane Service v. Port of Houston Authority, 16 SRR 1459 (I.D. 1976), adopted in 

part, [19 F.M.C. 548 (FMC Feb. 25, 1977)]) without reliance on the antitrust laws. 

We do so again here. 

Gulf Container Line, 1991 FMC LEXIS 107, at *18. 

The Commission has addressed exclusive arrangements, stating: “In sum, the appropriate

standard for judging exclusive terminal arrangements under the Shipping Acts is a synthesis of 

the St. Philip and Agreement No. T-2598 decisions. Such arrangements are generally undesirable 

and, in the absence of justifications by their proponents, may be unlawful under the Shipping 

Acts.” Petchem, Inc. v. Canaveral Port Authority, Docket No. 84-28, 23 S.R.R. 974, 990 (FMC 

Mar. 28, 1986) (aff’d, sub nom. Petchem, Inc. v. FMC, 853 F.2d 958 (D.C. Cir. 1988)). In Seacon 

Terminals, “the Commission again reviewed its doctrine and reconfirmed that proponents of

exclusive or monopolistic arrangements at ports had to justify them, although the ultimate burden 

of proof remained with parties complaining about the arrangement.” All Marine Moorings, Inc. 

v. ITO Corp. of Baltimore, Docket No. 94-10, 1995 FMC LEXIS 22, at *39 (ALJ Oct. 6, 1995)

(aff’d, All Marine, 1996 FMC LEXIS 68 (FMC 1996)) (citing Seacon Terminals, Inc. v. Port

of Seattle, Docket No. 90-16, 26 S.R.R. 886, 898 (FMC Apr. 14, 1993)).

However, in certain circumstances, such [exclusive] arrangements may be 

necessary to provide adequate and consistent service to a port’s carriers or 

shippers, to ensure attractive prices for such services and generally to advance 

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the port’s economic well-being. The burden of adducing evidence of such 

circumstances falls upon the port and the other parties to the exclusive 

arrangement, both because they are the arrangement’s proponents and because 

evidence of that nature usually lies within their control. Nevertheless, the ultimate 

burden of proof in any Shipping Act challenge to an exclusive terminal 

arrangement or franchise rests with the party wishing to overturn the franchise. 

Petchem, 23 S.R.R. at 990. 

Once a prima facie case of unreasonableness is raised, the burden of producing evidence 

justifying the practices shifts to Respondents. However, the proponent of the proposition that a 

practice is unreasonable “bears the burden of proving that proposition, including the burden of

producing evidence adequate to persuade the Commission. Respondent is not required to show 

that the practice is reasonable.” All Marine, 1996 FMC LEXIS 68, at *34 (footnote omitted); see 

also Seacon Terminals, 26 S.R.R. at 898. 

In Perry’s Crane, the complaint alleged that certain tariff rules and related practices gave 

the Port of Houston’s cranes first priority, or “first call” on jobs, even to the extent of displacing, 

or “bumping” Perry’s cranes that were already working. Perry’s Crane Serv., Inc. v. Port of

Houston Authority of Harris County, TX, Docket No. 75-51, 19 F.M.C. 548 (“Perry’s Crane

FMC”) (FMC Feb. 25, 1977). Perry’s Crane argued that Houston’s practices interfered with the 

right of the stevedores to hire cranes of their choice; disrupted the proper handling of ships; and 

increased expenses and financial harm to stevedores as well as private crane owners. Perry’s

Crane Serv. v. Port of Houston Authority of Harris County, TX, Docket No. 75-51, 16 S.R.R. 

1459, 1471 (“Perry’s Crane ALJ”) (ALJ Sept. 28, 1976) (aff’d in part, Perry’s Crane FMC, 19 

F.M.C. 548). Houston defended its practices by arguing that “bumping” is a last resort;

stevedores decide which private crane to displace; Houston has a heavy investment in its cranes

and is a state agency; Houston is losing out in the competitive battle for the crane rental business;

and private owners agreed to the conditions. Perry’s Crane ALJ, 16 S.R.R. at 1472

The ALJ in Perry’s Crane found the first call and bumping practices to be unjust and 

unreasonable and held that they should be modified by the Commission “to restore to the 

stevedores as far as circumstances warrant the right to select the most suitable cranes available to 

work the ships without interference.” Perry’s Crane ALJ, 16 S.R.R. at 1472. The ALJ further 

noted that the “right of the stevedore as well as the master of the vessel to select proper

equipment and personnel to service the ship is well recognized by this Commission and the 

courts.” Perry’s Crane ALJ, 16 S.R.R. at 1477. 

The ALJ did not find that Houston was seeking to monopolize the crane market “in the

sense of seeking an exclusive right to carry on the business” but did find a “limited minimonopoly” which required justification. Perry’s Crane ALJ, 16 S.R.R. at 1472, 1476. The ALJ 

stated, “it is not only private crane owners like Perry who have been affected by these violations

of law but also stevedores who must hire cranes and ultimately vessels which may be serviced by 

cranes which are not the best ones suitable and available for the job.” Perry’s Crane ALJ, 16 

S.R.R. at 1479. The ALJ concluded: 

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Ultimately vessels, the Port, and the public suffer since the present practices, 

having curtailed the stevedore’s right to choose freely the most suitable and least 

costly equipment, perpetuate inefficiencies and higher costs. This is a direct 

violation of respondent’s duty to promote efficiencies and facilitate the flow of 

cargo over its piers. 

Perry’s Crane ALJ, 16 S.R.R. at 1479 (citing American Export-Isbrandtsen Lines, Inc. v FMC, 

444 F.2d 824 (D.C. Cir. 1970)). 

The Commission adopted the ALJ’s initial decision in Perry’s Crane, except the portion 

which permitted limited “bumping,” finding that “the practice of ‘bumping’ cannot be justified 

even as modified by the Presiding Officer.” Perry’s Crane FMC, 19 FMC at 552-53. 

In a case just a few years after Perry’s Crane, the D.C. Circuit set aside violations found 

by the Commission for failure to condition use of the terminal on, and failure to allow, sharing of 

high-speed container cranes by a competing carrier. Puerto Rico Ports Authority v. FMC, 642 

F.2d 471, 473 (D.C. Cir. 1980). The Court found that the Commission’s findings were not

supported by substantial evidence in the record. Regarding exclusive arrangements, the court

stated:

Commission precedent establishes that the exclusive assignment of public 

facilities to one carrier does not violate section 16 unless the challenged lease 

either fails to compensate the port adequately or unreasonably forecloses other 

carriers from securing adequate facilities. Moreover, the Commission has 

expressly refused to find discrimination or preference in a situation in which the 

port indicated willingness to make similar, but not necessarily identical, 

arrangements available to other carriers. 

Puerto Rico Ports Authority, 642 F.2d at 482-83 (footnotes omitted). 

This case sub judice does not involve an exclusive arrangement provided by a public port 

or marine terminal operator but rather the practices of regulated ocean common carriers. 

Moreover, the allegations here involve motor carriers allegedly denied the ability to utilize 

chassis provider of their choice, resulting in disruption and delays to moving containers, and 

increasing expenses and financial harm to motor carriers. Although there are differences between 

the exclusive dealing cases and this proceeding, this line of cases is instructive and provides a 

useful analytical framework. 

3. Analysis

The parties organize their discussion of reasonableness into five specific practices. The 

first three focus on preferred and exclusive agreements: (a) CCMP Rules 5.5 and 5.7, 

(b) contractual linkage of CH and MH, and (c) designation of IEP for MH in chassis usage

agreements. The last two focus on proprietary and interoperable pools: (d) designation of

proprietary chassis pools and withdrawal from interoperable pools, and (e) MH chassis in the

LA/LB Pool of Pools.

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a. CCMP Rules 5.5 and 5.7

(1) Arguments of the Parties

The complaint alleges that the Respondents violated the Shipping Act by “[a]dopting and 

enforcing CCM Pool Rule 5.7, giving ocean carriers ultimate control by mandating their power 

of ‘consent’ over chassis choice.” Complaint ¶ 3a. The complaint further alleges that “the CCMP

Operations Manual gives ocean carriers veto power over motor carrier chassis choice and 

prevents motor carriers from exercising ‘the freedom to use the chassis of [their] choice.’”

Complaint ¶ 44 (citation omitted). 

In its MSD, IMCC begins its reasonableness analysis by arguing that Rules 5.5 and 5.7 of 

the CCMP Operations Manual violate section 41102(c) “because they give ocean carriers the 

unfettered right to veto a motor carrier’s selection of MH chassis;” the “ocean carrier veto right 

warps competition because the entity paying for the MH chassis (the motor carrier or BCO) is 

not the same entity selecting the chassis;” and therefore, that the CCMP operating rules 

unreasonably restrain competition and increase costs in the market for MH chassis. CMSD at 18-

19 (footnote omitted). In addition, IMCC asserts that “CCM’s ‘Choice Program’ is more 

restrictive than necessary, and thus not ‘tailored to meet its intended purpose.’” CMSD at 19. 

Respondents contend that a number of ocean carriers grant exceptions or have a policy of 

allowing choice; Rules 5.5 and 5.7 “do not result in the ‘systematic’ denial of choice that IMCC 

has alleged;” the facts do not show that ocean carriers deny choice; and the rules are not more 

restrictive than necessary and do not apply in geographic regions wherein CCM pools are not 

present. CMSD/ROpp at 5-13. 

In their MSD, Respondents also contend that IMCC fails to establish that Rule 5.7 of the 

CCMP Operations Manual is unlawful and assert that Respondents have not systematically 

denied choice requests. RMSD at 15-17. In opposition, IMCC reasserts that the CCMP 

Operations Manual rules unreasonably restrict chassis choice. RMSD/COpp at 10-12. 

(2) CH, MH, and Chassis Choice 

IMCC asserts that because “motor carriers and their customers, not the Respondents, 

have the duty and responsibility for chassis supply in MH movements, the proper ‘end in view’

for this case for ocean carriers is to secure sufficient chassis only for CH movements.”

RMSD/COpp at 10 (emphases in original). Respondents acknowledge that “cargo interests

determine whether their shipments move via CH or MH.” CMSD/ROpp at 2. 

It is agreed that ocean carriers have the responsibility to provide chassis for CH. 

However, the responsibility for providing chassis for MH rests with the motor carriers. If motor 

carriers prefer to contract for MH chassis through an IEP other than the IEP selected by the 

ocean carrier, then ocean carriers should not be able to prevent them from doing so. This finding 

does not depend on whether or not the price for chassis will be lower or higher. Indeed, it is 

possible that individual motor carriers will face higher costs for chassis when they are 

contracting for a limited volume. With freedom to compete, however, the market may freely 

adjust. 

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A purpose of CCMP Rules 5.5 and 5.7 is to establish who may determine the allocation 

of charges to entities for chassis, which are an integral part of the international transportation of 

containerized cargo. To be tailored to meet its intended purpose, these charges should incentivize 

the efficient flow of cargo, whether the chassis is used for CH or MH. To determine whether the 

rules are more restrictive than necessary, it is important to understand the limitations on chassis 

choice under these rules. 

In the few locations where CCM pools are present, CCMP Rule 5.5 assigns chassis 

charges to the ocean carriers’ preferred provider while Rule 5.7 allows choice, i.e. another 

provider to be utilized, but only if ocean carriers and IEPs permit the exception. CX2398-99; 

JSF ¶¶ 200-206. There are a number of ways the ocean carrier can permit exceptions and 

different carriers have utilized different approaches. For example, Respondents assert that Hapag 

Lloyd, Yang Ming, ZIM, and Wan Hai grant choice when requested. CMSD/ROpp at 5. 

Respondents also contend that chassis choice is moot in some situations, for example, when the 

shipper accepts Evergreen or MSC’s offer to provide a chassis at the discharge port. 

CMSD/ROpp at 7. The parties dispute, as a factual matter, the extent to which various ocean 

carriers permit or deny exception requests. Resolving this issue would require a factual 

determination not appropriate at the summary decision stage of the proceeding. 

The contractual framework that permits ocean carriers to exert control over how chassis 

are charged for MH is not disputed. CCMP Rule 5.5 assigns charges for chassis based on the 

ocean carriers’ preferred provider, including for MH moves which are paid for by motor carriers. 

CX2398. Respondents do not dispute the clear language of Rule 5.5, but rather point to the 

ability to obtain exceptions under Rule 5.7 to argue that choice is not restricted. CMSD/ROpp at 

4-5.

IMCC describes the choice program as follows: 

CCM Pools offer a “Choice Program” using a “choice by exception” model,

under which every ocean carrier is both permitted and presumed to assign both 

CH and MH chassis usage to its “default” IEP with which it has a contractual

relationship. Thus, for MH movements, current Rule 5.5 permits the ocean carrier 

to require that a motor carrier or BCO must use that default IEP. Current Rule 5.7 

permits, but does not require, the ocean carrier to allow the motor carrier or BCO 

to request an exception in favor of an alternative IEP in the pool. Thus the Rules 

give ocean carriers a final veto right over MH chassis choice. 

RMSD/COpp at 10 (citations omitted); see also CX2160 (“Chassis ‘Choice’ Dilemma”

presentation); CSUMF ¶ 86 (referencing CCM Choice Program webpage, CX1992). 

Respondents agree that both the ocean carrier and the IEP must approve choice. See, e.g., 

CSUMF/RResp ¶ 87 (responding in part that the “language listed on CCM’s website is handled 

by both the IEP and ocean carrier after ‘both parties sign off’” (citations omitted)). For purposes 

of the present analysis, what is relevant is not whether an IEP may also act to block a choice 

request, but that an ocean carrier, acting on its own, retains the ability to block a motor carrier 

choice request under the present rules. 

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Thus, there is no genuine dispute that although Rule 5.7 allows a motor carrier to request 

a different chassis provider, the ocean carrier can block such a request. Moreover, the language 

of Rule 5.7 on its face supports IMCC’s assertion that ocean carriers have the power to veto a 

motor carrier’s choice of an alternate chassis provider. Thus, the ocean carriers are giving the 

selected IEP an exclusive right to provide chassis, or a de facto mini-monopoly. 

Respondents argue that there is no evidence that a number of ocean carriers, including 

CMA-CGM, COSCO, Hapag-Lloyd, Yang Ming, Wan Hai, and ZIM, deny choice requests. 

CMSD/ROpp at 5. Respondents further assert that HMM and Maersk support chassis choice but 

confer with their chassis provider in response to choice requests, while ONE’s policy is to grant 

requests for choice. CMSD/ROpp at 6 (also acknowledging an example of “choice requests that 

were initially deferred because ONE was in the process of re-negotiating its contract with 

TRAC”). Respondents state that “Evergreen and MSC have unique business models which give 

the shipper, at the time that a shipment is booked, the option to allow Evergreen/MSC to provide 

the chassis at the discharge port.” CMSD/ROpp at 7 (footnote omitted). IMCC agrees that 

“ocean carrier policies differ significantly with respect to allowing MH chassis choice, reflecting 

the discretion granted to ocean carriers and their IEPs by the Rules.” RMSD/COpp at 11. 

Respondents assert that choice requests are not common and that “choice is usually 

granted when requested.” CMSD/ROpp at 10-11; see also RMSD at 12. IMCC responds that MH 

choice requests are routine and that “many choice requests would be futile because ocean carriers

automatically deny choice, or impose burdensome procedures.” CMSD/CReply at 7. 

Respondents’ assertions that exceptions under Rule 5.7 are often granted argues against

the necessity for this rule in the first instance and support IMCC’s arguments that the rule unduly

restricts motor carriers’ ability to choose their own IEPs for MH. If, as Respondents argue, 

chassis choice requests are frequently approved, then there is no need for a clause in the CCMP 

operating manual allowing ocean carriers to restrict chassis choice. But the inclusion of such a 

clause, and all of the argument concerning the clause’s preservation in the instant proceeding,

suggests that ocean carriers are concerned about motor carriers choosing chassis providers other 

than that which the ocean carrier would prefer, in the absence of compulsion. In Transshipment, 

the Commission identified a similar inconsistency of sorts, noting “if JNYRA now enjoys a de 

facto monopoly of the transshipment cargo originating in Indonesia, there is no need for an 

exclusive arrangement clause in their contract with Pelni. But the inclusion of such a clause leads 

inescapably to the conclusion that the JNYRA members are concerned that some independent 

competition may be inaugurated.” Transshipment and Apportionment Agreements from 

Indonesian Ports to U.S. Atl. and Gulf Ports, Docket No. 65-17, 10 F.M.C. 183, 195 (FMC 

Oct. 13, 1966). 

It is also somewhat confusing that Respondents insist on preserving their right to deny 

chassis choice when such chassis would be provided by an alternate IEP, and yet simultaneously 

assert that a motor carrier can always bring its own chassis. See, e.g., CMSD/ROpp at 8 

(asserting that IMCC’s argument “ignores both the availability of choice and the ability of motor 

carriers to provide their own chassis (via ownership or long term lease).” (emphasis added)); see 

also CMSD/ROpp at 8 (“no motor carrier is required to use a CCM pool chassis to perform an 

MH move.”). If it is acceptable to ocean carriers, with no additional reservations or terms 

specified, for motor carriers to utilize a self-owned chassis, this suggests a lack of actual 

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transportation or functional reasons underlying exercises of denial of choice to use an alternate 

chassis provider. 

At this point, it is more appropriate to focus on the policy rather than specific instances of 

particular choice requests. The parties agree that requests for choice under Rule 5.7 are made; 

those requests are sometimes granted and sometimes denied; and different ocean carriers impose 

different requirements to process such requests. It is not necessary to determine the precise 

number of requests that are made or that would be made if requests for exceptions were not 

required. Also, given the current Rule 5.7, even if an ocean carrier were to grant a request for an 

exception today, it would be free to deny a similar request tomorrow, with no recourse available 

to motor carriers. 

Essentially, the ocean carriers have given the IEPs a mini-monopoly over chassis that can 

move their containers. At this stage, it is not necessary to determine the factual questions 

regarding the extent to which each specific ocean carrier permits or denies requests for choice. 

Rather, the legal issue is whether it is reasonable for ocean carriers to designate default chassis 

providers and to require approval for motor carriers to utilize the chassis provider they prefer for 

MH. As these practices are exclusive or monopolistic, restricting the motor carriers’ right to

select the chassis provider of their choice, the Respondents must justify them. 

(3) Justifications 

Respondents raise a number of justifications for their practices, including ensuring a 

supply of safe chassis, IEP veto, and deference to business decisions. They are addressed below. 

(a) Supply of Safe Chassis

Respondents argue that contracts with IEPs are necessary to ensure the supply of chassis, 

stating that “unless entities such as local port authorities step up to ensure chassis are made

available, the burden to ensure adequate supplies has by default landed on the shoulders of the 

ocean carriers.” CMSD/ROpp at 12. IMCC responds that “there is not a single piece of record 

evidence demonstrating that MH chassis choice has any negative effect on the supply [of] 

chassis.” CMSD/CReply at 7 (emphasis omitted). IMCC also points to deposition testimony by 

Respondents’ expert, where Coates acknowledges that ocean carriers “are trying to do things in

their own economic self-interest.”10 CMSD/CReply at 2-3 (citing Coates Dep. at CX882). 

Sufficient supply of safe chassis is a legitimate concern. However, Respondents do not 

sufficiently explain how ocean carrier control over chassis will ensure sufficient and safe supply. 

Respondents assert as well that “the ocean carrier Respondents own or lease the containers in 

which international cargo is transported and have a legitimate interest in ensuring the safe and 

reliable delivery of those containers. This is true for CH movements for which the carrier bears 

responsibility for the inland move as well as MH moves for which it does not, because the 

customer experience with both types of moves impacts the reputation of the ocean carrier in the 

eyes of the customer.” CMSD/ROpp at 16. But here again, motor carriers’ interests are well 

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aligned, as their reputation is similarly on the line where they have been hired to complete the 

delivery. 

In California Stevedore, the Commission evaluated the reasonableness of a “practice

relating to and connected with the receiving, handling, storing, or delivering of property” – an 

arrangement by which the Port of Stockton, a public corporation, paid certain sums of money for 

the exclusive right to stevedore bulk grain cargoes. 7 F.M.C. at 76, 79, 82. They found the 

arrangement to be “both unjust and unreasonable” and also commented on the lack of evidence

concerning the justification offered by Respondents, writing: “We have as is our duty weighed 

and considered the meager argument offered to justify this monopolistic practice, and find it 

singularly lacking in weight. It seems to be primarily that the terminal facilities would be safer in 

hands selected by respondents (there is no proof of this) . . . .” 7 F.M.C. at 82-83. Commenting 

on the evils “likely to accompany monopoly, such as poor service and excessive costs,” the 

Commission continued, in an accompanying footnote: “It is not significant that these evils have

not been proved to actually exist yet at Stockton. Healthy competition for business which is the 

best known insurance against such evils has been destroyed.” 7 F.M.C. at 83 & n.5. Here, the 

motor carrier being a captive audience for the IEP selected by the ocean carrier, rendered unable 

to select another chassis provider, may similarly result in the destruction of healthy competition 

for business. 

There may be motor carriers who do not have a preference for which chassis provider is 

used and, in those cases, it would be reasonable and efficient to allow the ocean carriers to 

identify a default chassis provider. Respondents assert that ocean carriers “have a significant 

interest in ensuring that their customers’ containers arrive timely and safely at their destination . .

. even those moving under MH.” CMSD/ROpp at 13. It should also be reiterated, however, that 

in terms of ensuring an available supply of safe chassis, motor carrier incentives would seem to 

be well aligned with those of ocean carriers. A motor carrier who cannot obtain a chassis cannot 

deliver the container to the end destination, as every container ultimately needs a chassis. See 

Coates Report at CX1542. Thus, if a motor carrier desires to use a different chassis provider, it 

stands to reason that this decision would be based on an assessment of chassis availability and 

safety in addition to other factors it sees as beneficial. Therefore, ensuring a sufficient supply of 

safe chassis does not justify the restraints on competition. 

(b) IEPs Can Veto Choice Requests

Respondents contend that they do not control chassis choice because IEPs may separately 

veto choice requests. Yet, any veto right that IEPs may also possess (in addition to the ocean 

carriers’ veto right) is an ability that the ocean carriers have provided contractually or by other 

agreement. The IEPs have no pre-existing right or ability to contractually bind MH truckers 

when those motor carriers are not themselves a party to the contract and have not consented to be 

bound. 

Respondents argue that “the terms of chassis usage agreements which provide favorable

rates to ocean carriers for chassis utilized in CH moves are the lawful result of the ocean carriers’

commitment to long-term leases and usage volumes.” RMSD at 12-13. But Respondents fail to 

reasonably explain by what right ocean carriers utilize MH volume to negotiate prices and then 

do not pass on to truckers the negotiated prices premised in part upon their captive volume. That 

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ocean carriers utilize chassis choice denials to enhance their negotiating position is 

acknowledged by their expert. Coates Report at CX1550. To the extent that ocean carriers are 

binding not only themselves, but also motor carriers – with ocean carriers passing on an 

obligation to use a particular IEP, yet withholding the deal’s volume discount – this impacts the 

reasonableness of the arrangement. 

The Commission has expressed concern regarding restraints placed on third parties. “If

we are to discharge our regulatory obligations under section 15, we must be especially wary of 

any agreement which places restraints upon third parties.” Transshipment, 10 FMC at 194. The 

Commission also cited to the Supreme Court’s admonition that “[f]reedom allowed conference 

members to agree upon terms of competition subject to Board approval is limited to freedom to 

agree upon terms regulating competition among themselves.” Transshipment, 10 FMC at 194 

(emphasis added) (citing FMB v. Isbrandtsen Co., 356 U.S. 481, 491, 493 (1958)). 

Thus, the concern is allowing Respondents to alter the rights of motor carriers through 

contracts or agreements to which the motor carriers are not parties, thereby giving IEPs the right 

to veto motor carriers’ MH choice requests. Therefore, that IEPs can also veto chassis choice 

requests does not justify the restraints on competition. 

(c) Deference to Business Decisions

Respondents assert that the Commission should defer to commercial parties’ reasonable,

discretionary business decisions. CMSD/ROpp at 5 (citing Maher Terminals, LLC v. Port 

Authority of New York and New Jersey , Docket No. 08-03, 33 S.R.R. 821, 853 (FMC Dec. 17, 

2014)). IMCC contends in response that Respondents have erroneously interpreted their 

obligations under the Shipping Act and that regulated carriers “must adopt policies that are least 

intrusive for the shipping public, not themselves” and that “the Commission evaluates whether

the challenged conduct is ‘excessive and thus unreasonable,’ including by whether ‘less intrusive

methods’ exist to satisfy a ‘worthy objective’ – not merely an ocean carrier’s financial selfinterest.” CMSD/CReply at 6 (emphasis omitted) (citing Distribution Services, 1988 FMC 

LEXIS 52, at *17-18). 

The Commission has given deference to the managerial decision of public ports, 

explaining: 

We are of the opinion that under such circumstances as currently prevail at Port 

Canaveral, the duly authorized Port Authority is the proper body to weigh and 

evaluate business risks related to that Port’s efficiency in the first instance. It is 

not our function to gainsay the day-to-day economic decisions of this Port, nor 

would it be appropriate for us to do so. . . . Clearly it is not the function of this 

agency to substitute its judgment for that of the Port. It is, however, our duty to 

direct appropriate changes upon finding that the Port’s action or inaction based on 

its own judgment is contrary to the statutes we administer. 

Agreement No. T-2598 – Port Canaveral and Luckenbach S.S., Docket No. 72-24, 17 F.M.C. 

286, 297 (FMC Mar. 20, 1974). 

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Such deference to business decisions does not extend to permitting conduct that violates 

the Shipping Act. As discussed previously, this case is about whether the practices at issue 

violate the Shipping Act. Thus, any deference to business decisions does not justify unreasonable 

practices. Moreover, unlike in the Maher case cited or the Port Canaveral case above, this 

proceeding does not involve a public port authority. Respondents are making decisions based on 

their economic self-interest, which is not improper, but where those decisions harm the supply 

chain and violate the Shipping Act, the case law does not support finding that they are entitled to 

deference. 

(4) More Restrictive than Necessary 

Respondents do not articulate a legitimate reason why it is necessary for ocean carriers to 

review motor carrier requests to use other chassis providers or to have the power to prohibit 

motor carriers from using the chassis provider of their choice. Respondents also do not explain 

when or why it would be necessary and appropriate for ocean carriers to deny motor carriers the 

ability to utilize the chassis provider of their choice for MH. 

IMCC relies on Distribution Services to argue that the rules are more restrictive than 

necessary. In Distribution Services, the rules at issue provided for reimbursement of the costs of 

transloading cargo from an ocean container into containers/trailers provided by inland carriers 

but stated that such costs would not be reimbursed if the transloading services were performed at 

the facilities of a shipper, consignee, freight forwarder, NVOCC, or ocean carrier. Distribution 

Services, 1988 FMC LEXIS 52, at *4-8. The Commission found that prevention of rebates and 

false billing, asserted by Respondents as justification for the rules at issue, was a “worthy

objective,” but held that there was insufficient proof to find that the “more intrusive” methods 

required by the challenged rule were necessary. Distribution Services, 1988 FMC LEXIS 52, at 

*17-18. “In order to pass muster under section 10(d)(1), a regulation or practice must be tailored

to meet its intended purpose. A regulation or practice may have a valid purpose and yet be

unreasonable because it goes beyond what is necessary to achieve that purpose.” Distribution

Services, 1988 FMC LEXIS 52, at *17. Respondents assert that reliance on this case is

misplaced.

Respondents assert that “OCEMA and CCM’s current policy is as unrestrictive as

possible since it allows the ocean carrier Respondents, which are members of OCEMA, to decide 

what their policy as to chassis choice is to be.” CMSD/ROpp at 10. But by agreeing amongst 

themselves that ocean carriers must approve choice requests by motor carriers, the policy is not 

as unrestrictive as possible for motor carriers. Respondents assert further that ocean carrier 

Respondents’ conduct “was neither ‘systematic’ nor was it impermissible, insofar as sections 5.5 

and 5.7 were intended to allow flexibility, a principle the Commission has emphasized when 

evaluating commercial relationships.” CMSD/ROpp at 7. This perspective is self-focused, 

providing flexibility for ocean carriers but denying choice to motor carriers. 

Neither IMCC nor any individual motor carrier is a party to the CCMP agreement. In the 

context of billing, the Commission clarified that a goal for the Detention and Demurrage Rule 

“‘was to emphasize the importance of ocean carriers and marine terminal operator bills aligning 

with contractual responsibilities’” and stating that “[g]eneral contract law principles provide that

one party cannot enforce a contract against another who did not assent to be bound by its terms 

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and conditions. This can include situations where one party attempts to bind another party with 

unilaterally defined terms.” Notice of Inquiry – Vessel-Operating Common Carrier Definition & 

Application of the Term ‘Merchant’ in Bills of Lading, Docket No. 20-16 at 4 (Oct. 7, 2020) 

(citing Demurrage and Detention Rule, 85 Fed. Reg. at 29662). Although this is not a demurrage 

and detention case, the general principle of having contracts align with contractual 

responsibilities applies. 

IMCC has established that Rules 5.5 and 5.7 limit the ability of motor carriers to utilize 

the chassis provider they prefer for MH, because their requests must be approved. If choice is 

denied, then motor carriers are required to use the IEP selected by the ocean carrier. This 

essentially makes the motor carrier a captive audience for the IEP selected by the ocean carrier 

and creates a mini-monopoly. In addition, this restrains competition in the IEP market, as motor 

carriers are limited in their ability to select other chassis providers. These rules are not narrowly 

tailored to ensure an efficient transportation system. By permitting the ocean carriers to veto a 

motor carrier’s choice of chassis provider for MH, the rules go beyond what is necessary. 

(5) Conclusion

IMCC has not established as a matter of law, based on the uncontested facts at this stage, 

that the default provision in Rule 5.5 violates the Shipping Act if the motor carrier is able to 

freely select the chassis provider of its choice for MH. IMCC has not established that having a 

default IEP, in and of itself, creates anticompetitive harm or is otherwise unreasonable. As 

Respondents assert, chassis must be available and utilized to move containers off the port. The 

assignment of a default provider where a motor carrier does not have another preference serves 

the interests of the shipping public by ensuring that a system is in place to efficiently assign 

chassis to containers. Further development of the facts could change the analysis. 

The record does, however, establish that the limitations on motor carriers’ ability to 

choose their own chassis provider for MH is unreasonable. And, the evidence from the ocean 

carriers who allow choice demonstrates that a less restrictive alternative is available. 

Accordingly, based on the uncontested facts in the record, IMCC has established that the 

choice program in CCMP Rule 5.7 is more restrictive than necessary and therefore unreasonable, 

because it places the final decision on MH chassis provider in the hands of the regulated ocean 

common carrier rather than in the hands of the motor carrier who is responsible for arranging and 

paying for the chassis. Moreover, Respondents have not produced evidence of a legitimate 

justification for requiring approval of choice requests. Therefore, IMCC has met its burden of 

persuasion that the choice requests in Rule 5.7 for MH is unreasonable as a matter of law, based 

on the facts not in dispute. The next issue raised is the contractual linkage of CH and MH. 

b. Contractual Linkage of CH and MH

(1) Arguments of the Parties

IMCC asserts that each “ocean carrier unjustly and unreasonably benefits from contracts

with IEPs that trade lower CH rates to the ocean carrier in exchange for provisions that enhance 

the ability of IEPs to obtain higher MH rates and reduced MH price [competition].” CMSD at 20.

IMCC contends that “the contracts award lower CH pricing for lower CH volume” so that “the

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linkages are the opposite of ‘volume discounts’ by which one typically receives a lower price in

exchange for more volume” to argue that “the contracts are not volume discounts, but rather

cross-subsidization: ocean carriers fund undercharges for CH chassis using the overcharges for 

MH chassis.” RMSD/COpp at 12 (emphasis in original) (footnote omitted). Stated another way, 

IMCC contends that “through their contracts, ocean carriers agree to restraints on competition

that enhance IEPs’ pricing power to increase MH rates, in exchange for lower CH rates or direct 

payments.” RMSD/COpp at 13.

Respondents acknowledge that ocean carriers enter into a “chassis usage agreement,

typically after engaging in an extensive [request for proposal (“RFP”)] process with multiple 

IEPs, which contains language that designates the counter-party IEP as an exclusive or preferred 

provider of chassis under that agreement.” CMSD/ROpp at 13. Respondents add that if “ocean

carriers did not make contractual commitments to utilize the chassis of a particular IEP, that IEP 

would be less likely to provide chassis at the location in question.” CMSD/ROpp at 13-14. 

Respondents further argue that ocean carriers “ensure adequate supplies of chassis;” have “a

significant interest in ensuring that their customers’ containers arrive timely and safely at their 

destination;” that “CH and MH volumes are not determined by the ocean carriers, but are driven

by BCOs;”11 and “MH rates are determined by the IEPs.” CMSD/ROpp at 13-15. 

(2) Market Impacts

There is no genuine dispute that Respondent ocean common carriers entered into chassis 

usage agreements providing for total chassis volumes, including both CH and MH, with CH rates 

calculated based on these total volumes. CSUMF ¶ 497; CSUMF/RResp ¶ 496 (responding to 

CSUMF ¶ 497). When Respondents structure contracts with IEPs providing for a total chassis 

volume, including MH volumes, and calculate CH rates based on these total volumes – or 

otherwise integrate or incorporate MH volumes in the course of structuring pricing with IEPs –

this constitutes a contractual linkage of CH and MH. IMCC has pointed to numerous ways that 

such linkages may be created. CSUMF ¶ 497; see also CMSD at 21. The relevant market will be 

discussed before addressing chassis rates. 

(a) Relevant Market Definition

The “definition of the appropriate market for consideration of the effect on competition 

of a challenged practice is the kind of antitrust-type analysis which is appropriate to cases arising 

under the Shipping Act standards of ‘undue’ preference or ‘unreasonable’ practice.” All Marine, 

1996 FMC LEXIS 68, at *31-32. Relevant markets require determination of the relevant 

geographic market and the relevant product market. 

IMCC notes that at “the Presiding Officer’s suggestion, the parties focused discovery on

four geographic regions, Chicago, Los Angeles/Long Beach, Memphis, and Savannah” and 

resulting from that, “analysis of the Respondents’ conduct with respect to participation in

interoperable pools primarily concerns these four areas.” CMSD at 5. IMCC identifies, as

relevant geographic markets: (1) the region surrounding the intermodal rail facilities of Chicago, 

Illinois, (2) the region surrounding the port facilities at Los Angeles/Long Beach, California, 

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(3) the region surrounding the intermodal rail facilities of Memphis, Tennessee; and (4) the

region surrounding the port facilities at Savannah, Georgia. CMSD at 6-7.

Regarding the relevant product market, IMCC asserts that “[i]n each of the four

geographies, ocean carriers and motor carriers (and their customers) obtain chassis on a daily 

usage basis from pools under contracts with IEPs or at their posted rates.” CMSD at 7. IMCC

contends that the relevant market should be defined as daily chassis usage, and notes that it has 

provided two reports from an expert economist, Dr. Langenfeld, on product market definition 

from an antitrust perspective. CMSD at 8 n.5. IMCC adds “[a]lthough defining a market is not 

strictly necessary to evaluate the effects of Respondents’ conduct under the Shipping Act, Dr.

Langenfeld has confirmed the appropriateness of daily usage chassis as a relevant product 

market and the provision of daily-rate chassis for MH movements as a relevant submarket.”

CMSD at 8 n.5. IMCC further asserts in its proposed statement of facts that chassis “supplied by 

IEPs on a daily usage basis is a relevant product market because that is the basis by which both 

ocean carriers and motor carriers (and their customers) obtain chassis from chassis pools. Chassis 

at daily usage prices are obtained either through contracts with IEPs or at the IEP’s posted daily

prices. CSUMF ¶ 682. 

Respondents contend that the “fact that discovery was ultimately limited to certain

locations – at IMCC’s vehement insistence – does not mean those locations are appropriate 

proxies for every port and location in the United States” and further that “the record plainly

establishes that there are significant geographic and market differences in the many different 

chassis supply regions in the United States.” CMSD/ROpp at 28. Thus, Respondents do not 

contest these four geographic markets but rather assert that the four markets may not be 

indicative of other geographic locations. This decision focuses only on these four geographic 

markets, so if other markets have other relevant justifications or factors, those can be raised at a 

later date. 

Respondents do not directly address the relevant product market in their motion for 

summary decision briefing, nor in their proposed statements of material facts. Respondents, 

however, assert in their response to IMCC’s proposed material facts that the relevant product 

market is in dispute, citing to the May 27, 2022, Reitzes Declaration. CSUMF/RResp ¶ 681 

(responding to CSUMF ¶ 682). IMCC asserts in response that there is no dispute of material fact 

regarding the relevant product market, adding that “Respondents cite solely to an untimely expert

declaration as support for their contention that ‘the relevant product market is in dispute.’”

CSUMF/CReply ¶ 682. It is not necessary at this stage, however, to make a determination 

regarding the relevant product market. This issue can be further developed by the parties when 

appropriate. 

(b) Chassis Rates

IMCC asserts that “each ocean carrier has contracts whereby the ocean carrier receives

lower CH rates in exchange for higher or more predictable MH volumes” and that ocean carriers’

linkage of MH volumes with CH prices unreasonably restrains competition. CMSD at 20-21. 

Respondents, in contrast, contend that this “is not an issue of cross-subsidizing as alleged by 

Complainant. Rather, it is a pragmatic system of securing sufficient chassis to meet the needs of 

ocean carrier Respondents’ customers” and arguing that “any price differentials between CH and 

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MH chassis usage rates are attributable to long term lease commitments and volume discounts.”

CMSD/ROpp at 8, 13 n.7. Whether it is labeled as cross-subsidizing or “loss of volume”

discounts, the chassis usage agreements between ocean carriers and IEPs set CH rates based on 

total chassis volume, including both CH and MH. This ensures that any benefits of long term 

lease commitments and volume discounts go to the ocean carrier and not the motor carrier 

paying for the MH shipments. 

Ocean carriers assert that they enter into “a chassis usage agreement, typically after

engaging in an extensive RFP process with multiple IEPs, which contains language that 

designates the counter-party IEP as an exclusive or preferred provider of chassis under that 

agreement.” CMSD/ROpp at 13. Yet after such lengthy RFPs, Respondents claim that any 

“incentives are largely ignored by and do not influence the behavior of the ocean carrier 

Respondents.” CMSD/ROpp at 2, see also CMSD/ROpp at 14. 

IMCC does not allege that ocean carriers set MH prices, but rather that “ocean carriers

restrict MH chassis choice, which gives pricing power to IEPs because motor carriers and BCOs 

have no reasonable alternatives to which to turn.” CMSD/CReply at 9. Respondents argue that 

they “play no role in establishing the charges assessed for chassis used in MH moves;” that there 

“is no dispute that MH rates are determined by the IEPs;” and that “ocean carrier Respondents do

not establish, discuss, or agree on chassis usage charges for MH moves – that is done exclusively 

by the IEPs without ocean carrier involvement.” CMSD/ROpp at 2, 15, 24. To the extent that 

ocean carriers are binding motor carriers to a particular IEP, and yet are playing no role in 

establishing the chassis charges to be assessed, motor carriers have little hope of any negotiating 

power, and likewise would be unable to commit to the same “long-term leases and usage 

volumes,” to which Respondents contend they owe their “favorable rates.” See RMSD at 12-13; 

see also CMSD/ROpp at 8 (referring to “Respondents’ evidence that any price differentials

between CH and MH chassis usage rates are attributable to long term lease commitments and 

volume discounts.”)

Respondents conclude this section by arguing that “motor carriers can purchase chassis,

enter into long term leases of chassis and/or can negotiate chassis usage agreements with IEPs 

providing for lower daily rates based on volume usage.” CMSD/ROpp at 15-16; Coates Report at 

CX1538; Coates Rebuttal Report at CX1690-91. However, it is not cost effective for motor 

carriers to own or long-term lease chassis if they pick up a mix of CH and MH shipments as 

ocean carriers may not compensate them for the chassis for CH containers and there may be 

additional costs and delays, for example from flips. And, without bargaining power, motor 

carriers are unlikely to be able to negotiate volume discounts from IEPs. 

Respondents cite to their expert’s rebuttal report, which argues that IEPs compete for MH 

business, relying on the increasing number of choice requests, and asserts: “Without the prospect 

of losing motor carrier business to a competitor, the default IEP would have no incentive to 

negotiate a lower rate for MH moves. The fact that IEPs enter into such negotiations and 

subsequent contracts is evidence that there is competition among the IEPs for the motor carriers’

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MH business.”12 Coates Rebuttal Report at CX1691. This logic supports IMCC’s argument that 

the ability to select a different chassis provider is critical to ensure price competition. 

Thus, based on the undisputed evidence in the record, when ocean carriers link CH to 

MH, often linking CH price in part to MH volume, this limits the motor carriers’ ability to

negotiate volume discounts for itself and therefore must be justified by Respondents. 

(3) Justifications

There is no genuine dispute that ocean carrier contracts, which set CH pricing, also 

include MH volumes, with Respondents admitting that ocean carriers typically enter into a 

chassis usage agreement which designates IEPs as exclusive or preferred providers of chassis. 

CMSD/ROpp at 13. To the extent that ocean carriers choose to link CH with MH, thereby 

limiting the ability of motor carriers to select the chassis of their choice and impacting the market 

for MH chassis, those practices must be justified. It is noted that Evergreen has a different model 

which is addressed separately below. 

Respondents justify these practices by arguing that ocean carriers “ensure adequate

supplies of chassis” and have “a significant interest in ensuring that their customers’ containers

arrive timely and safely at their destination.” CMSD/ROpp at 13. However, as previously 

discussed, motor carriers also have an interest in ensuring a sufficient supply of safe chassis. 

Moreover, motor carriers have the responsibility to arrange for MH chassis under port-to-port 

movements. In addition, contractually linking CH with MH is not narrowly tailored to ensure a 

sufficient supply of safe chassis. 

Respondents also contend that “CH and MH volumes are not determined by the ocean

carriers, but are driven by BCOs,” that “MH rates are determined by the IEPs,” and that any 

incentives in chassis usage agreements do not influence the behavior of the ocean carriers. 

CMSD/ROpp at 2, 14 n.9, 14-15. However, the fact that MH volumes are driven by beneficial 

cargo owners similarly argues against permitting a contractual linkage as it denies beneficial 

cargo owners the financial benefit of higher potential volumes. Moreover, by contracting for an 

exclusive chassis provider, the ocean carrier is financially rewarded for creating and providing to 

its selected IEP a captive, monopolistic market and the motor carrier is denied the opportunity to 

utilize the chassis provider of its choice for MH. In situations where the ocean carrier only 

contracts for a preferred provider but allows the motor carrier to opt-out and select a different 

chassis provider, without limitations, the market impacts are more limited. 

(4) Conclusion

Based on the facts not in dispute, IMCC has established that typically, an ocean carrier 

contract links CH prices with MH volume to establish an exclusive or preferred/default chassis 

provider, creating a mini-monopoly. Respondents have not provided sufficient justification for 

contractually obligating motor carriers, who have the responsibility for arranging and paying for 

MH movements, to utilize the IEP selected by the ocean carrier for MH, especially as the motor 

carrier is not a party to that agreement. Where an exclusive IEP arrangement has been 

12 This quote does not disclose confidential material and is not entitled to confidential treatment. 

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contractually created by the ocean carrier, and where this prevents a motor carrier from using a 

chassis at a lower rate from an alternate chassis provider of its choice, the motor carrier is 

financially harmed and the market for chassis is restrained. Motor carriers are responsible for 

arranging and paying for chassis in MH, and motor carriers should derive any benefit from MH 

volume. However, where the motor carrier does not have a preference for the MH chassis 

provider, contracts which only set up a preferred, or default, provider may not be unreasonable, 

as long as there is an option exclusively within the control of the motor carrier to opt-out of using 

the default IEP. Therefore, IMCC has established that linking CH to MH is unreasonable where 

the contract creates an exclusive arrangement limiting the motor carrier’s ability to use the

chassis provider of its choice for MH. 

At this stage of the proceeding, it cannot be determined which Respondents may have 

violated this provision in particular markets as the factual basis for these determinations is 

disputed. However, it appears that the Respondent ocean carriers regularly link CH with MH. 

IMCC has established as a matter of law, based on the facts not in dispute, that the contractual 

linkage of CH prices and MH volume is unreasonable in the four markets currently at issue. The 

next argument raised, which is related to this issue, is the designation of an IEP for MH in 

chassis usage agreements. 

c. Designation of IEP for MH in Chassis Usage Agreements

The parties’ arguments in this section overlap significantly with their arguments in the 

previous section. IMCC asserts that ocean carriers “steer MH chassis usage to the IEP supplying 

chassis for CH movements by designating that IEP for MH movements” which results in going 

beyond what is necessary to ensure the supply chain has sufficient MH chassis. CMSD at 22. 

Respondents contend that ocean carriers “have a legitimate interest in ensuring the safe

and reliable delivery of those containers” because they “own or lease the containers in which

international cargo is transported,” and because MH moves impact “the reputation of the ocean

carrier in the eyes of the customer.” CMSD/ROpp at 16. Respondents argue that the Commission 

“gives deference to the parties’ exercise of reasonable business discretion” and that “IMCC has

failed to meet its burden of proof and to overcome this deference.” CMSD/ROpp at 17. 

As established in the section above, ocean common carriers enter into chassis usage 

agreements which frequently identify an exclusive or preferred/default chassis provider. This 

section focuses on the designation of an IEP as opposed to the linkage of CH and MH. Similar to 

the analysis in the section on CCM pools, such exclusive or preferred designations limit 

competition and must be justified by Respondents. 

Respondents contend that they have safety and reputational interests that justify these 

provisions. CMSD/ROpp at 16. While ocean carriers may have an interest in safe and reliable 

delivery of containers, motor carriers also have an interest in safe chassis. Moreover, that interest 

could be addressed in other ways, for example by limiting use of chassis in disrepair. It is also 

not clear that ocean carriers would have a reputational interest in the chassis utilized in MH 

movements if motor carriers were able to freely select the chassis. 

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Ocean carriers cannot require motor carriers to utilize specific chassis providers for MH, 

where the motor carrier is responsible for arranging and paying for the MH shipment, especially 

as the motor carrier is not a party to the agreement between the ocean carrier and IEP. 

Agreements for a default provider may be acceptable, however, as long as the alternate chassis 

provider of the motor carrier’s choice can be utilized without limitation or approval when desired 

by the motor carrier. 

As discussed earlier, based on the uncontested facts in the record, IMCC has not 

established that having a preferred or default chassis provider is unreasonable as long as the 

motor carrier is not required to use the preferred IEP (i.e. the motor carrier can select from any 

available pools or chassis providers with no restrictions imposed by virtue of elections made by 

the ocean carrier). Therefore, IMCC’s motion for summary decision that preferred or default 

IEPs for MH movements are unreasonable is denied. As discussed above, however, exclusive 

arrangements or limitations that prevent motor carriers from selecting the chassis provider of 

their choice for MH are unreasonable and violate that element of section 41102(c). 

d. Designation of Proprietary Chassis Pools and Withdrawal

from Interoperable Chassis Pools

IMCC alleges that interoperable pools avoid significant hidden costs including: chassis 

splits, chassis flips, additional demurrage and detention, longer terminal wait times, 

repositioning, additional equipment inventory needs, limits on motor carrier paid trips and 

efficiency, reduced rail efficiency, and increased BCO inventory needs. CMSD at 8-9. IMCC 

argues that decisions to withdraw from existing interoperable chassis pools are unjust and 

unreasonable and that by designating a proprietary pool for MH movements, the ocean carrier 

grants the IEP pricing power for that ocean carrier’s MH movements. CMSD at 22. IMCC 

contends, as well, that because proprietary pools are inherently non-interoperable, none of the 

benefits of interoperability accrue to the supply chain. CMSD at 22-25. IMCC adds that these 

“arrangements not only prevent chassis interoperability and choice, but also reduce the number 

of interoperable chassis available in CCM pools in their regions. When an ocean carrier signs a 

contract to use the proprietary pool, the IEP then withdraws those respective chassis from the 

CCM pool. When a CCM pool no longer contains sufficient chassis to service the remaining 

ocean carriers using the pool, the pool collapses. This dynamic caused the COCP to cease 

operations in 2020.” CMSD at 12.

Respondents contend that IEPs, not ocean carriers, join or withdraw from interoperable 

pools; IMCC must establish that the chassis provision regulations and practices are unreasonable; 

and, the Commission cannot require IEPs, over which it has no jurisdiction, to contribute their 

assets to interoperable chassis pools to benefit motor carriers. CMSD/ROpp at 18-20. 

The parties agree that “fully interoperable” or “gray” chassis pools are chassis pools 

managed by a single entity in which equipment contributed by multiple equipment providers are 

commingled and a “gray chassis pool does not require matching a specific equipment provider’s

chassis with a particular ocean carrier’s containers.” JSF ¶¶ 193-194. Another business model is 

a proprietary pool, a single-provider pool which is not interoperable with other pools, therefore 

allowing for negotiation only with one proprietary vendor, versus the possibility of negotiating 

with multiple vendors in a gray pool like CCM. CX1155 (CMA Dep.); CSUMF ¶ 525. 

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Regarding interoperability, Commissioner Dye noted in a May 22, 2019, statement: 

“Today, shipping lines, cargo owners or trucking companies rent the equipment – often obtaining 

it through chassis pools of various types – including, for example, ‘interoperable’ or gray pools

that offer chassis from multiple providers.” See www.fmc.gov/statement-of-dye-stb-demurrage. 

IMCC in its complaint referred to “chassis pools that are interoperable (from the standpoint of 

usage with the containers of multiple ocean carriers)” and point to the Memphis Team

conclusion that the essential qualities of a high performing gray chassis pool include: “1.

Adequate supply of interoperable chassis . . . .” Complaint at 19-20. Respondents have also 

referred to interoperability as meaning that a motor carrier can use any chassis in the pool to 

transport the container of any container line. See, e.g., Coates Rebuttal at CX1693; JSF ¶ 193. 

As discussed above, based on facts not in dispute, Respondents violate the Shipping Act 

when they restrict the ability of motor carriers to utilize the chassis provider of their choice for 

MH, when the motor carrier is paying. Therefore, the remaining issue here is whether it is 

unreasonable for ocean carriers to benefit from IEPs withdrawing from interoperable pools for 

CH. Because ocean carriers are responsible for obtaining and paying for chassis for CH, they 

have greater latitude to determine the best business model to utilize. Moreover, the evidence 

shows that ocean carriers utilize different business models in different geographic regions and at 

different times, adjusting to changing market conditions. There is value in allowing ocean 

carriers to innovate and allow market forces to guide their approach, as long as unreasonable 

practices are not adopted. 

Respondents do not assert that non-interoperable pools are more efficient than 

interoperable pools, although they do state that “there are ‘different operational situations where

the actual dynamics are going to either favor or not favor interoperable pools.’” CMSD/ROpp at 

19 (citing Coates Dep, APP2136-37). However, the focus of this proceeding is not determining 

the most efficient model of chassis provision but rather whether the Respondents’ conduct is 

unreasonable and violates the Shipping Act. 

“IMCC seeks an order for ocean carriers to cease and desist from ongoing withdrawals

from interoperable CCM pools, such as the MCCP,” which, it argues, is different from requiring 

ocean carriers, or IEPs, to construct and operate interoperable pools. CMSD/CReply at 12 

(emphasis omitted). The Commission could order Respondents to cease and desist withdrawing 

from interoperable CCM pools if such withdrawals violate the Shipping Act. Respondents are 

correct that IMCC has the burden of proof to establish that withdrawing from interoperable pools 

violates the Shipping Act. 

In its motion for summary decision, IMCC asserts that the supply chain benefits from 

interoperability are being lost, stating that “in pursuit of lower CH chassis pricing, Respondents 

have willingly agreed to their IEPs’ withdrawal of chassis from interoperable pools – depriving 

the American supply chain of the benefits of those gray pools and limiting the throughput of 

containers moving along the supply chain.” CMSD at 2. IMCC asserts that the benefits of 

interoperability include: fewer chassis splits, fewer chassis flips, reduced demurrage and 

detention, shorter terminal wait times, less repositioning, less equipment inventory needed, 

increased motor carrier and rail efficiency, and less BCO inventory needed. CMSD at 8-9. The 

Memphis Supply Chain Innovation Team White Paper similarly identified that, due to noninteroperability, the “result is handcuffed chassis usage, which requires shippers and truckers to 

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use a specific color chassis when the train arrives” such that “[s]upply is restricted and held 

captive to ocean carrier alignments with chassis providers that they have no part in the selection 

process, yet pay the cost. The result is rising costs and wasted time. Access is limited and supply 

is an on-going problem.” White Paper, A Single Gray Chassis Pool Fosters Fluid Commerce and 

Improves Supply Chain Velocity, (“Memphis White Paper”), at 3.13

IMCC argues that in the Chicago region, the interoperable COCP collapsed, depriving the 

entire region of the benefits of the interoperable pool. CMSD at 2, 22-23. IMCC contends that 

the Memphis geographic region could be next. CMSD at 2, 23. IMCC asserts that “these

withdrawal decisions achieve short-term reductions in CH chassis prices and shift the burden of 

non-interoperability to others in the supply chain.” CMSD at 24. Indeed, IMCC presents 

compelling evidence that ocean carriers receive discounted rates in return for withdrawing from 

interoperative pools and entering proprietary pools. This is rational and in the economic selfinterest of both the ocean carrier, which receives a discounted rate, and the IEP, which ensures 

greater utilizations of their chassis. However, it may have a negative impact on competition and 

potentially on prices for motor carriers and the shipping public. 

Essentially, interoperable pools are joint ventures between competing IEPs authorized by 

competing ocean carriers. The Supreme Court has found that withdrawing from a cooperative 

joint venture may violate antitrust laws. In Aspen Skiing, the Court upheld a jury verdict for the 

plaintiff that a dominant firm operating three of four mountain ski areas in Aspen, Colorado, had 

violated the Sherman Act by refusing to continue cooperating with its smaller rival in offering a 

combined four-mountain ski pass. Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 

585, 603-04, 608-611 (1985). The Supreme Court explained in Trinko that the Aspen 

Skiing Court “found significance in the defendant’s decision to cease participation in a 

cooperative venture,” particularly where the defendant’s “unilateral termination of a voluntary 

(and thus presumably profitable) course of dealing suggested a willingness to forsake short-term 

profits to achieve an anticompetitive end.” Verizon Communications, Inc. v. Law Offs. of Curtis 

V. Trinko, LLP, 540 U.S. 398, 409 (2004) (emphasis in original) (citing Aspen Skiing, 472 U.S.

at 608, 610-11)). Moreover, “the defendant’s unwillingness to renew the [joint] ticket even if

compensated at retail price revealed a distinctly anticompetitive bent.” Verizon

Communications, 540 U.S. at 409. The Aspen Skiing court considered the impact on consumers

and competition and noted that in other markets, the defendant participated in interchangeable

lift tickets, undermining the stated justifications. Aspen Skiing, 472 U.S. at 605, 608-09. The

United States Department of Justice (“DOJ”), in a recent filing, similarly stated that “under

certain circumstances, ceasing a profitable prior course of dealing with a shipper could be an

indicator of unreasonableness.” NPR – Definition of Unreasonable Refusal to Deal or Negotiate

with Respect to Vessel Space Accommodations Provided by an Ocean Common Carrier, Docket

No. 22-24, Comments of the DOJ at 5 (Oct. 21, 2022).

As discussed above, the Commission has long had the responsibility of ensuring an 

efficient transportation system for ocean commerce. When this case was filed, one of the 

purposes of the Shipping Act was to “provide an efficient and economic transportation system.”

46 U.S.C. § 40101(2). The Ocean Shipping Reform Act of 2022 modified this to “ensure an

efficient, competitive, and economical transportation system.” Pub. L. 117-146, §2, 136 Stat. 

13 Available at: www.fmc.gov/wp-content/uploads/2019/05/MemphisSupplyChainWhitepaper.pdf. 

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1272 (June 16, 2022). The D.C. Circuit recognized the Commission’s power to reject 

unreasonable practices in upholding the Commission’s truck detention rule at the Port of New 

York and New Jersey. “Efficiency of manpower, ships and vehicles is dependent upon the

prompt handling of such cargo and determines whether the flow of interstate and foreign 

commerce is obstructed or facilitated. The public interest in their efficient operation is 

unquestioned.” American Export-Isbrandtsen Lines, 444 F.2d at 828. The power conferred “is to 

be used for the purpose of facilitating the free flow of commerce by guaranteeing an efficient 

terminal system.” American Export-Isbrandtsen Lines, 444 F.2d at 829. 

In Puerto Rico Port Authority, where the D.C. Circuit set aside two Commission 

decisions that had found Shipping Act violations with respect to crane-sharing agreements, the 

Court considered the requirements of efficient port management, noting that they may change 

over time. 

As we noted above, in early years, when adequate facilities were limited, efficient 

port management, in the Ports Authority’s judgment, required crane sharing. 

Now, with a number of berths at Puerto Nuevo remaining under-developed and 

unprofitable despite huge investments, that sharing is no longer necessary. Indeed, 

by minimizing the carrier’s incentive to improve a berth suitable for its own 

operations, the continued requirement of crane sharing may inhibit the 

development of the Port of San Juan. 

Puerto Rico Port Authority, 642 F.2d at 485. 

It is therefore clear that while the Commission may require the sharing of facilities, those 

decisions are heavily fact dependent. IMCC presents a strong argument that interoperable chassis 

pools are more efficient and that ocean carriers agree to withdraw from interoperable chassis 

pools in exchange for their own financial benefits. See, e.g., CSUMF ¶¶ 563-66, 569-577, 598-

605.14 

In this proceeding, the facts necessary to determine the reasonableness of decisions to 

withdraw from interoperable pools are disputed. Therefore, it cannot be determined by summary 

decision whether the decisions to withdraw from interoperable pools in the four geographic 

regions at issue are unreasonable. However, one of the regions at issue here is the Memphis area, 

and IMCC points specifically to this region, asserting that a “collapse of the MCCP would 

increase costs for all supply chain stakeholders in the region.” CMSD at 23.

The Commission’s Memphis Supply Chain Innovation Team found that the “current

chassis provisioning model is broken and needs immediate address to improve supply chain 

velocity” and recommended a “gray chassis pool with the following critical elements to improve

velocity and fluidity in moving international containers in Memphis and the Mid-south: 1. 

Adequate supply of chassis/Interoperability; 2. Quality and Safe chassis; 3. Fair Access to 

14 Respondents’ argument that, to the extent an agreement was executed, the “discussions and 

negotiations are merged in the agreement and are not admissible,” see, e.g., CSUMF/RResp 

¶¶ 562-564, is not supported by legal argument and is not adopted. Both the negotiations and the 

agreement are relevant and admissible. 

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chassis (Choice!); [and] 4. Accountability of chassis supply by a single manager.” Memphis 

White Paper at 1. If this case progresses at this level, the parties may be required to submit final 

briefing on Memphis as the next step, prior to conducting any additional discovery on other 

geographic regions. 

Respondents also assert that IMCC must establish that the chassis provision model is 

unreasonable and the Commission cannot require IEPs, over which it has no jurisdiction, to 

contribute their assets to interoperable chassis pools to benefit a second unregulated entity, motor 

carriers. CMSD/ROpp at 18-20. It appears that IMCC may have sufficient evidence to establish 

that withdrawing from interoperable pools is unreasonable. The Commission can require conduct 

that conforms to the Shipping Act from regulated entities, such as Respondents. Moreover, the 

decision in this proceeding is not based on motive but rather whether specific practices violate 

the Shipping Act. 

Accordingly, at this stage of the proceeding, IMCC’s motion for summary decision that

withdrawing from interoperable pools is unreasonable cannot be granted. However, as a matter 

of law, the Commission has the power to make such a determination, may consider what chassis 

system would be most efficient, and could require Respondents to continue to participate in 

interoperable chassis pools if there is sufficient evidence in the record. Because the factual basis 

for these determinations is disputed, such a decision would be premature at this stage. The next 

question raised is about how IEPs are utilized at one of the geographic regions at issue, the ports 

of Los Angeles and Long Beach. 

e. MH Chassis in the Pool of Pools

At the Pool of Pools (“POP”), established by DCLI, TRAC Intermodal, and Flexi-Van at 

the California ports at Los Angeles and Long Beach, chassis owned by the three IEPs can be 

used on an interoperable basis. JSF ¶ 195. Usage of chassis in the POP is assigned to the IEP that 

has a contractual relationship with the ocean carrier whose container, or “box,” is being moved. 

JSF ¶ 197; CX1700 ¶ 6; CX1702 ¶ 6; CX1704 ¶ 6. 

IMCC asserts that “current POP rules do not allow the motor carrier or BCO to exercise

chassis choice in MH movements” so that “ocean carrier agreements to obtain chassis from the

POP IEPs are unjust and unreasonable because ocean carriers are taking advantage of lower CH 

rates and the benefits of interoperability in a more restrictive manner than is necessary.” CMSD 

at 25-26. 

Respondents contend that “rules governing the operation of the Pool of Pools are

established and enforced by the IEPs that operate the Pools of Pools;” that “when performing 

MH moves, no motor carrier is required to use a chassis from the Pool of Pools;” and that “IEPs

secured a Business [R]eview Letter from the DOJ with respect to the operation of the Pool of 

Pools prior to initiating operations.” CMSD/ROpp at 20-21. Respondents further contend that 

ocean carriers have “rightly prioritized their interests in securing an adequate chassis supply 

from the Pool of Pools at competitive prices in order to support the interests of the shipping 

public and legitimate business interests that have been historically recognized by the FMC” and 

the “IMCC has not met its burden here because it has failed to demonstrate – and has not even 

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alleged – that any particular ocean carrier conduct is unreasonable or unjust as it relates to the 

Pool of Pools.” CMSD/ROpp at 22. 

As of August 20, 2020, the POP website stated the following: 

Prior to the POP, the operation of multiple independent chassis pools in Los 

Angeles and Long Beach created situations where chassis in different pools were 

segregated at facilities for use only by certain user bases, and returnable only to a 

fraction of the facilities otherwise available to receive chassis. These 

inefficiencies often resulted in lost time and revenue to a motor carrier, 

duplicative repositioning, and confusion on terminals and rail ramps. The “gray

fleet” that is the POP has smoothed the impacts to chassis operations that would 

have otherwise occurred in the ever-changing landscape of ocean carrier alliances 

and terminal operations, increases overall efficiency and availability, and 

significantly reduces chassis splits. 

Pool of Pools, About Us, available at: web.archive.org/web/20200820222149/http://www.poplalb.com; JSF ¶ 196. 

The impact of the business review letter and the box rules will each be discussed. 

(1) Business Review Letter

The DOJ issued a business review letter to Flexi-Van Leasing, Inc. (“FVLI”) and Direct 

Chassis-Link, Inc. (“DCLI”) with respect to the POP. JSF ¶ 196. The 2014 DOJ business review 

letter states that it is based upon the following representations made by FVLI and DCLI to the 

DOJ: 

The parties propose to enter into the Chassis Use Agreement in order to establish 

a “gray” chassis concept. The gray chassis concept extends benefits associated 

with individual pools by allowing the interchange of chassis across multiple 

pools, which encompasses several terminals, container yards, rail ramps and other 

locations within the greater LA/LB port complex. You represent that the increased 

flexibility created by the interchangeability will enhance customer service, 

improve chassis productivity and respond to the desire of LA/LB port authorities 

to achieve better overall utilization of the region’s chassis fleets. You represent 

that after a period of initial implementation, the parties intend to permit 

open participation by any other pools and third parties in the LA/LB port 

complex. 

The proposed agreement would allow users of any of the pools managed by FVLI 

or DCLI to interchange chassis among each others’ pools. Pursuant to this 

arrangement, a chassis user could pick up a chassis from one of the DCLImanaged pool start/stop locations and eventually return it to one of the FVLImanaged start/stop locations, and vice versa. 

You represent that the parties will continue to (a) manage their respective pools; 

(b) independently establish their published merchant haulage rates for motor

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carriers in the region; (c) compete openly with one another and other chassis 

providers for steamship line customers that desire to participate in the gray chassis 

pool; and (d) negotiate independently with other users in the region for access to 

chassis. 

DOJ BRL, available at: www.justice.gov/atr/response-flexi-van-leasing-inc-and-directchassislink-inc-request-business-review (emphasis added) (cited in Complainant’s

Memorandum of Law in Opposition to Motion to Dismiss at 27 n.9); JSF ¶ 196. 

The parties represented to the DOJ that the POP would have “open participation by any

other pools and third parties in the LA/LB port complex;” would “compete openly with one 

another and other chassis providers;” and would “negotiate independently with other users in the 

region for access to chassis.” DOJ BRL at 2. If these policies were in place, IMCC’s allegations

regarding the POP may not have been brought. Because this is not the policy, the DOJ business 

review letter does not apply to the POP as implemented in the eight years since DOJ issued its 

business review letter. See, e.g., CX461-62 (Tock/CCM depo). Moreover, the DOJ was 

addressing individual IEPs whereas this decision is focused on the practices of Respondents 

which are entities regulated by the Commission and bound by the Shipping Act. 

(2) POP Box Rules

The parties do not sufficiently explain how the POP box rules work in their briefs. 

However, from reviewing the evidence presented, it appears that in the LA/LB region, the POP is 

the exclusive chassis provider, which bills MH at the rates set by the IEP selected by the ocean 

carrier’s container, or “box,” which is being transported. Therefore, if a motor carrier is using a 

POP chassis, the motor carrier does not have a choice of which chassis provider will bill it and 

the motor carrier must ultimately accede to the rate imposed by whichever IEP has contracted 

with the ocean carrier. CX663; APP1085; CX4102; CX1540-43. 

The parties agree on how the POP operates. JSF ¶¶ 195-197. Pursuant to the undisputed 

facts, motor carriers are required to pay the IEP selected by the ocean carrier, even for MH 

shipments where the motor carrier is being billed. CX1701 ¶ 6; CX1703 ¶ 6; CX1705 ¶ 6. 

Moreover, common carriers receive discounts based on the volume of MH shipments, but those 

discounts are not passed on to the motor carrier. CX1540-43. Rather, the motor carrier is a 

captive audience which must pay the rate determined by the IEP selected by the ocean carrier, 

even though the motor carrier is not a party to that agreement. CX1701 ¶ 6; CX1703 ¶ 6; 

CX1705 ¶ 6. 

Respondents contend that the POP establishes and enforces its own rules. However, 

ocean carriers select an IEP with full knowledge that the motor carrier will not be able to change 

that election, and therefore ocean carriers are explicitly committing both MH volumes and CH 

volumes, resulting in their ultimate CH pricing. They are thus benefiting from lower CH prices 

due, in part, to MH volumes. 

Because the POP does not allow choice and is not operating consistent with the “open

participation” it promised to the DOJ, it is restricting competition for MH. The POP is only able 

to operate in this manner because of the consent of ocean carriers and the contracts that ocean 

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carriers sign with it. The Commission may require ocean carriers, as regulated entities, not to 

participate in contracts which undermine the efficient flow of international ocean commerce. 

Ocean carriers, through selecting an IEP for themselves in the POP, may not obligate motor 

carriers to utilize the same IEP for MH shipments. Motor carriers transporting MH shipments in 

LA/LB should have the right to select the chassis provider of their choice. 

That is not to say that the ocean carriers may not participate in the POP at all. But ocean 

carriers may not deny, or benefit from an IEP denying, motor carriers the free choice of chassis 

provider that ocean carriers themselves have available – and thereby obtain the benefits from that 

captive MH volume in the contracts that they sign, while motor carriers are left with no ability to 

select the chassis provider of their choice from within the POP, and no real negotiating leverage, 

when all involved understand that motor carriers are bound by the ocean carriers’ selected IEP 

even though the motor carriers are not party to the ocean carriers’ contracts with the POP IEPs. 

Respondents may address this through working with the POP to allow for motor carrier 

selection of an IEP, as is allowed for ocean carriers. But this is not the only path open to 

Respondents. Respondents could themselves not make an election of an IEP in the POP, while it 

remains impossible to sever the ocean carrier’s election in CH from the motor carrier’s election

in MH. Or, Respondents could consider seeking a contractual arrangement that fully includes 

both the motor carrier and the IEP. Or, in the vein of Respondents’ own argument, if “no motor

carrier is required to use a chassis from the Pool of Pools” then it would seem to follow that no 

ocean carrier is required to use a chassis from the Pool of Pools. CMSD/ROpp at 20. 

Respondents also contend that under the POP rules, motor carriers could bring their own 

chassis, in which case they would not be charged by the ocean carrier’s IEP when picking up the 

MH container. CMSD/ROpp at 20-21. In addition to all of the factors addressed earlier in this 

decision, there are a range of logistical considerations making this a sub-optimal choice for 

motor carriers. As one example, if the motor carrier brings its own chassis and then ends up 

picking up a CH container, the ocean carrier generally will not pay the motor carrier for the 

chassis, as ocean carriers typically contract away their ability to pay for chassis from any 

providers other than the exclusive IEP. See, e.g., CX4103; CX1286-87. For motor carriers, 

therefore, it is typically not cost effective to bring one’s own chassis, because they may end up 

picking up a CH container or may want to pick up a CH container after delivering a container, 

among other logistical inefficiencies resulting from a motor carrier bringing its own chassis. 

CX251-53. 

Accordingly, IMCC’s motion for summary decision that ocean carrier practices regarding 

the Pool of Pools are unjust and unreasonable is granted. Ocean carrier agreements to obtain 

chassis from the POP IEPs are unjust and unreasonable to the extent that ocean carriers are 

taking advantage of lower CH rates and the benefits of interoperability in a more restrictive 

manner than is necessary. Respondent ocean carriers shall not take any action which limits a 

motor carriers’ ability to utilize the chassis provider of their choice for MH. As requested by 

IMCC, Respondent ocean carriers shall not extend or continue their contracts with an IEP in the 

POP while motor carriers cannot unilaterally elect a different IEP of their choice for MH. Having 

addressed the parties’ reasonableness arguments, the other elements of a section 41102(c) claim

are addressed next. 

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D. Other Section 41102(c) Elements, including Proximate Cause

The parties’ arguments regarding proximate cause overlap with their arguments regarding 

the appropriate remedy. This section will address the 41102(c) elements, including proximate 

cause. The separate issue of remedy will be addressed later. 

Section 41102(c) requires the following elements: (a) the respondent is an ocean common 

carrier, marine terminal operator, or ocean transportation intermediary; (b) the claimed acts or 

omissions of the regulated entity are occurring on a normal, customary, and continuous basis; 

(c) the practice or regulation relates to or is connected with receiving, handling, storing, or

delivering property; (d) the practice or regulation is unjust or unreasonable; and (e) the practice

or regulation is the proximate cause of the claimed loss. 46 C.F.R. § 545.4.

Respondents are ocean common carriers or associations of common carriers which are 

regulated entities. JSF ¶¶ 3, 14, 25, 42, 58, 72, 87, 102, 117, 132, 148, 162, 176. The practices at 

issue are occurring on a normal, customary, and continuous basis for the vast majority of 

shipments which arrive on container ships. See, e.g., JSF ¶¶ 14, 16, 20, 24, 27, 41, 44, 57, 60, 71, 

74, 86, 89, 101, 104, 116, 119, 133, 135, 147, 161 164, 175, 178, 195-197, 207-319. The 

practices are related to the receiving and delivering of property as chassis are used to transport 

shipments to and from United States ports. See, e.g., JSF ¶¶ 45-50, 61-66, 75-81, 90-95, 105-110, 

120-126, 136-141, 150-156, 165-170, 179-184. These three elements are not contested on the

basis of facts genuinely in dispute. The issue of whether specific practices are unjust or

unreasonable has been addressed above and some of the practices at issue are found to be

unreasonable. The final element, then, is whether the practice or regulations at issue are the

proximate cause of the claimed loss.

IMCC alleges that Respondents’ conduct forces motor carriers and their customers to pay

higher prices for MH chassis; Respondents’ conduct harms the prompt handling of cargo; and 

Respondents’ violations proximately caused motor carriers harm, and are occurring on a normal, 

customary, and continuous basis. CMSD at 26, 28, 29; see also RMSD/COpp at 19-21. 

Respondents contend that IMCC failed to provide evidence that any cargo owner or other motor 

carrier customer has suffered economic harm; IMCC failed to carry its burden to show that 

Respondents’ practices have proximately caused harm to motor carriers or to the shipping public; 

IMCC offers no evidence of any causal relationship between the CH usage rates and the MH 

usage rates; and by focusing solely on MH, IMCC neglects to consider the benefit of the highly 

competitive CH market to transport users. RMSD at 25-26; CMSD/ROpp at 10, 22-25. 

“In numerous decisions, the Commission has ruled that only the party who actually paid 

the carrier (or the valid assignee of the payor) can sue for reparations.” TCW v. Evergreen, 2022 

FMC LEXIS 589, at *16 (citing In Re Vehicle Carrier Services, Docket No. 16-01, 1 F.M.C. 2d 

440, 446 (FMC Oct. 21, 2019)). Therefore, if motor carriers paid for MH chassis, even if that 

cost was passed on to the shipping public, proximate cause is established. 

Moreover, as discussed above, the practices found to be unreasonable are CCMP 

Operating Rules which limit motor carrier choice of chassis providers for MH; the contractual 

linkage of CH price with MH volume; the designation of IEPs by Respondent ocean carriers for 

MH when motor carriers cannot unilaterally select a chassis provider of their choice; and ocean 

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carrier designation of an IEP in the POP at the ports of Los Angeles and Long Beach, while such 

designation cannot be altered by motor carriers for MH. The harm is not merely the financial 

impacts on IMCC members, which have not been quantified and are disputed at this point, but 

also harms to competition in the chassis market and harms to the efficiency of the transportation 

system – harms caused by the practices at issue. Therefore, for these practices, IMCC has 

established proximate cause. 

E. Conclusions and Remedy

Based on legal precedent and the material facts not in dispute, IMCC’s motion for

summary decision is GRANTED IN PART AND DENIED IN PART. Respondents’ motion

for summary decision is DENIED. Issues that could not be determined by summary decision 

will be resolved as this case proceeds. However, the parties will be given an opportunity to 

appeal this decision as a whole prior to determining next steps. 

IMCC asserts that at the “relief phase, IMCC will seek to tailor the injunction to allow all

parties enough time to construct a POP that allows MH chassis choice;” that a “cease-and-desist 

order will be necessary to prevent Respondents’ ongoing violations of the Shipping Act, even if

they voluntarily cease particular acts because ‘there is a reasonable likelihood that [Respondents] 

would continue to violate the Shipping Act without’ one;” and that on this motion, “the Presiding 

Officer is not required to determine specific relief. Rather, if the Presiding Officer finds liability, 

the parties will brief the proper remedy for the Initial Decision.” CMSD at 26 n. 18, 30. IMCC 

states in its opposition to Respondents’ motion that it “seeks only cease-and-desist relief, and so 

the Presiding Officer need not resolve any factual disputes as to the amount of damages.”

RMSD/COpp at 20; see also CMSD/CReply at 4. 

Respondents contend that IMCC seeks relief that cannot be granted and/or is unjustified, 

arguing that requiring ocean carriers and IEPs to provide chassis through interoperable pools that 

offer choice for MH movements is beyond the authority of the Commission; Congress 

“eliminated the Commission’s authority to determine, prescribe, and order enforcement of a just

and reasonable regulation or practice;” the Commission lacks authority to require such practices 

from entities that are not subject to the Shipping Act; IMCC’s requested relief goes beyond the

scope of the record and these four geographic regions; and bifurcation of the remedy is not 

appropriate in this case. CMSD/ROpp at 26-29; see also RMSD/RReply at 10-11. 

It is not clear whether IMCC intends to seek reparations at a later date or if all it would be 

seeking in this proceeding is a cease-and-desist order. There is not sufficient evidence in the 

record to award reparations at this stage of the proceeding. Whether reparations are appropriate 

can be addressed later if the issue is properly raised. At a later date, the parties can further 

address the relevant arguments, including Respondents’ assertion that there is no financial harm 

as the motor carriers mark up the chassis charges to customers. 

“Under Commission precedent, a cease-and-desist order may be issued where there is a 

violation of the Shipping Act.” TCW v. Evergreen, 2022 FMC LEXIS 589, at *17. The 

Commission explained: 

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The imposition of a cease and desist order normally requires a showing that 

unlawful conduct is ongoing or likely to resume. See Alex Parsinia d/b/a Pac. 

Int’l Shipping and Cargo Express, [Docket No. 97-01,] 27 SRR 1335, 1342 (ALJ 

1997) (“a cease and desist order is appropriate when the record shows that there is 

a likelihood that offenses will continue absent the order and when the record 

discloses persistent offenses”); and Portman Square Ltd.-Possible Violations of 

Section 10(a)(1) of the Shipping Act of 1984, [Docket No. 96-17,] 28 SRR 80, 86 

(ALJ 1998) (“the general rule is that [cease and desist] orders are appropriate

when there is a reasonable likelihood that respondents will resume their unlawful 

activities”). After proving violations of the Act, in order for Maher to obtain cease

and desist relief against PANYNJ, it will have to make that showing. 

Maher Terminals, LLC v. Port Authority of New York and New Jersey (“PANYNJ”), Docket No. 

08-03, 32 S.R.R. 1185, 1190 n.8 (FMC Jan. 31, 2013).

A cease-and-desist order must be tailored to the needs and facts of the particular case. 

Marcella Shipping Co. Ltd., Docket No. 85-13, 23 S.R.R. 857, 871-72 (ALJ Feb. 13, 1986). In 

addition to protecting the shipping public, a cease-and-desist order will alert the shipping 

industry, forestall future violations, and facilitate injunctions against possible unlawful activity in 

the future. Pac. Champion Express Co. – Possible Violations of Section 10(b)(1) of the Shipping 

Act of 1984, Docket No. 99-02, 28 S.R.R. 1185, 1190-91 (ALJ Nov. 17, 1999). Once a practice 

has been found to be unreasonable, the Commission can “determine, prescribe, and order” a

reasonable rule. “Inherent in our authority to prescribe a reasonable rule or practice is the

authority to set aside any rule or practice which would interfere with this authority.” American 

Export-Isbrandtsen Lines, 444 F.2d at 828 (citation omitted). The “language used in cease-anddesist orders generally mirrors the violations committed coupled with the statutory language.”

Universal Logistic Forwarding Co. – Possible Violations of Section 10(a)(1) and 10(b)(1) of the 

Shipping Act of 1984, Docket No. 00-10, 29 S.R.R. 474, 476 (FMC Jan. 18, 2002). 

IMCC asserts that a cease-and-desist order will be necessary and that without such an 

order, the Shipping Act may continue to be violated. Respondents, however, properly contend 

that only four regions have been investigated and briefed so far in this proceeding. Therefore, an 

appropriate cease-and-desist order may only be directed at the Respondents’ conduct in the four 

regions briefed. However, the legal analysis may apply to other regions and the shipping industry 

is on notice of the type of conduct that violates the Shipping Act. If such conduct continues in 

other regions, that may be the basis not only for a cease-and-desist order directed to those 

regions but also for reparations. Moreover, as discussed earlier, the cease-and-desist order is only 

addressed to the regulated parties in this proceeding. As to bifurcation of the remedy, because 

this decision does not address all of the allegations in the complaint, it will be necessary to revisit 

a number of issues, including the issue of reparation and any other remedies, at a later date. 

The cease-and-desist order imposed closely tracks a portion of the language requested in 

the complaint’s request for relief at ¶ 3(c), which should be sufficient to address the violations of 

the Shipping Act found here. Complaint at 41. Respondents are ordered to cease and desist from 

violating the Shipping Act in Chicago, Los Angeles/Long Beach, Memphis, and Savannah by 

ceasing and desisting adopting, maintaining, and/or enforcing any regulations or practices that 

limit the ability of a motor carrier to select the chassis provider of its choice for MH. 

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Therefore, Respondents shall cease and desist from those practices found unlawful in this 

decision in the relevant regions. Balancing the need to expedite resolution of these violations 

with the need for orderly implementation, the cease-and-desist order shall be effective thirty days 

after the date this decision becomes final. See 50 Mile Container Rules, 1987 FMC LEXIS 20, at 

*10-11 (90 days to revise tariffs); Sea-Land Serv., 21 F.M.C. at 6 (“30 days is sufficient time to

allow Respondent to order its affairs and conform its tariffs, if necessary”). The case may

continue to adjudicate remaining practices not resolved through summary decision and other

geographic regions.

F. Exceptions and Appeal

IMCC’s motion for summary decision is granted in part and certain practices of

Respondents are found to violate the Shipping Act. Other practices at issue in the complaint 

cannot be decided at this stage of the proceeding. Respondents’ motion for summary decision is

denied and Evergreen’s supplemental motion for summary decision is also denied. Therefore, the 

claims that remain are the allegations relating to whether withdrawal from an interoperable 

chassis pool violates section 41102(c). Typically, a grant of summary decision is appealable 

while a denial of summary decision is not appealable as the case continues to a decision on the 

merits. 

Pursuant to Commission Rule 227, Respondents may file exceptions as a matter of right 

to the granting of summary decision and pursuant to Commission Rule 227(d), the Commission 

may choose to review this decision. 46 C.F.R. § 502.227. Because some claims, such as those 

relating to withdrawal from interoperable pools, are not dismissed, those portions of this ruling 

would not be reviewed at this time pursuant to Rule 227. 

Commission Rule 221, previously Rule 153, provides that the presiding officer may 

allow an interlocutory appeal to the Commission if she finds it necessary “to prevent substantial

delay, expense, or detriment to the public interest, or undue prejudice to a party.” 46 C.F.R.

§ 502.221(a); Maher Terminals, LLC v. PANYNJ, Docket No. 08-03, 32 S.R.R. 1, 33 (ALJ

May 16, 2011) (aff’d in part, 32 S.R.R. 1185 (FMC Jan. 31, 2013)). Permitting an interlocutory

appeal of the denial of Respondents’ motion, denial of Evergreen’s supplemental motion, and for

the partial denial of IMCC’s motion would allow the Commission to review novel legal issues

before the parties engage in additional expensive and time-consuming discovery and briefing. In

addition, efficiency is enhanced by maintaining the proceeding in a consolidated state.

Accordingly, sua sponte, the parties are granted leave to appeal the denial of all or part of the

motions for summary decision. If a party chooses to appeal, their brief is due twenty-two days

after this decision and the response is due twenty-two days after the appeal, unless the

Commission directs otherwise. 46 C.F.R. § 502.227.

The remaining issues are intertwined with the issues decided. Therefore, if any portion of 

this proceeding is reviewed by the Commission, either by request of the parties or the 

Commission itself, the Commission will have the entire proceeding before it. If the proceeding is 

not heard by the Commission, the parties shall file a joint status report with proposed schedule 

within forty-five days of the date of this decision. The parties should address whether any 

discovery is needed before briefing the remaining issues in these four geographic regions. 

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IV. EVERGREEN’S MOTION

Evergreen fully adopted the Respondents’ MSD and also filed its own MSD arguing that 

Evergreen provides chassis to motor carriers free of charge; motor carriers are not overcharged 

for Evergreen MH chassis; there is no difference in Evergreen’s daily usage fees for CH and 

MH; choice is moot for Evergreen MH moves; and Evergreen nonetheless allows choice. EMSD 

at 5-9. 

IMCC contends that Evergreen’s business model does not absolve its harm to the

shipping public, asserting that Evergreen does not provide chassis free of charge because its 

customers pay a chassis usage charge, and that Evergreen’s model is harmful to MH carriage 

because it denies motor carriers chassis choice in MH movements, thus restricting the ability of 

motor carriers to switch away from chassis per diems. RMSD/COpp at 21-22. 

Evergreen obtains chassis from IEPs at a single, fixed contractual daily rate for the 

transport of shipments on both a CH and MH basis. RSUMF ¶ 88; RSUMF/CResp ¶ 88. 

Evergreen’s customers pay a fixed chassis usage charge (“CUC”) if they want Evergreen to 

provide a chassis to the motor carrier for MH. EMSD at 6; ESUMF ¶ 6; RSUMF ¶ 91; 

RSUMF/CResp ¶ 91. Evergreen asserts that motor carriers then receive use of these chassis for 

MH “free of charge” for the day of delivery plus four business days; but if the motor carrier does

not return the chassis within the free time period, it must pay Evergreen a per diem rate of $20 

per day, commencing the day after “free time” expired and running until the chassis is returned. 

EMSD at 6; RUSMF ¶¶ 92, 95; ESUMF ¶¶ 8, 11. IMCC notes that the initial five days are 

neither “free time” nor “free of charge” as those days are covered by the $80 CUC paid by the

BCO. RSUMF/CResp ¶¶ 93, 95. 

By obtaining chassis from exclusive chassis providers at a single, fixed contractual daily 

rate for use in both CH and MH moves, Evergreen is presumably benefitting from volume 

discounts as well as profiting from any upcharges on chassis daily late fees. The undisputed 

evidence shows that the IEP charges Evergreen at the same rate, whether the shipment is CH or 

MH. However, Evergreen is not passing these same charges on to the motor carrier. Rather, 

Evergreen is linking MH volumes to obtain discounted prices for MH and CH chassis and 

instituting a separate pricing system for motor carriers, including that after the five initial days, 

motor carriers must pay a daily late fee, with any profits over the amount Evergreen is being 

charged going to Evergreen. 

By designating an IEP as the preferred and exclusive chassis provider for Evergreen’s

CH and MH moves, Evergreen is exerting an influence over competition in the market. The harm 

from this may include less competition for chassis and potentially higher prices for motor 

carriers and/or for shipping consumers. In a sense, Evergreen itself has become the exclusive IEP 

in this model, in that Evergreen determines the per diem charge for motor carriers and the motor 

carrier has no ability to substitute away, if the end shipper has selected this arrangement. 

Evergreen also does not address the situation when an end shipper does not elect for Evergreen 

to provide a chassis, in which case Evergreen would be in the position of any other Respondent 

ocean carrier in handling an MH shipment. Thus, while Evergreen’s shipping model may have

some competitive benefits, it also has competitive harms. Therefore, a summary decision in favor 

of Evergreen is not appropriate. 

 104 6 F.M.C. 2d
IMCC did not move for summary decision against Evergreen separately from the other 

Respondents. Evergreen’s practices violate the Shipping Act to the extent that Evergreen 

engages in the practices found above to violate the Shipping Act. 

Evergreen has not established that it is entitled to summary decision on the basis of its 

model for providing chassis in the regions of Chicago, Los Angeles/Long Beach, Memphis, and 

Savannah. Therefore, Evergreen’s motion for summary decision is DENIED. 

V. ORDER

Upon consideration of IMCC’s motion for summary decision; Respondents’ motion for

summary decision; Evergreen’s motion for summary decision; the related filings including the 

oppositions, replies, motions, joint statement of facts, and exhibits; and the record herein, for the 

reasons stated above and the determination that Respondents violated the Shipping Act, it is hereby 

ORDERED that the ten Motions for Confidential Treatment be GRANTED IN PART 

AND DENIED IN PART. Confidentiality is granted as requested with the exception of the nonconfidential CCMP manual portions at CX2170-2217, CX2219-20, CX2379-2422 and CX2424-

27, the selected statements used in this decision, and the corrected public filings. It is 

FURTHER ORDERED that IMCC’s Motion to Strike Declarations and Respondents’

Motion to Strike both be DENIED. It is 

FURTHER ORDERED that IMCC’s Motion for Summary Judgment be GRANTED 

IN PART AND DENIED IN PART. Within thirty days of the date this decision becomes final, 

Respondents shall cease and desist from violating the Shipping Act in Chicago, Los Angeles/ 

Long Beach, Memphis, and Savannah by ceasing and desisting adopting, maintaining, and/or 

enforcing any regulations or practices that limit the ability of a motor carrier to select the chassis 

provider of its choice for merchant haulage. It is 

FURTHER ORDERED that Respondents’ Motion for Summary Decision be DENIED. 

It is 

FURTHER ORDERED that Evergreen’s Supplemental Motion for Summary Decision 

be DENIED. It is 

FURTHER ORDERED that the parties are granted leave to file an interlocutory appeal 

of the denial of all or part of the motions for summary decision. If a party chooses to appeal, 

their brief is due twenty-two days after this decision and the response is due twenty-two days 

after the appeal, unless the Commission directs otherwise. It is 

FURTHER ORDERED that if the Commission does not review this proceeding, by 

exceptions, appeal, or its own request, that the parties shall file a joint status report with 

proposed schedule within forty-five days of the date of this decision. 

Erin M. Wirth 

Chief Administrative Law Judge 

 105 6 F.M.C. 2d
 

 

FEDERAL MARITIME COMMISSION 

IGOR OVCHINNIKOV, IRINA 

RZAEVA, AND DENIS NEKIPELOV, 

Complainants, 

KAIRAT NURGAZINOV, 

Claimant,

 v. 

MICHAEL HITRINOV A/K/A 

MICHAEL KHITRINOV, AND EMPIRE 

UNITED LINES CO. INC., 

Respondents. 

Consolidated Docket Nos. 

15-11 & 1953(I) 

Served: February 8, 2023 

BY THE COMMISSION: Daniel B. MAFFEI, Chairman, 

Rebecca F. DYE, Louis E. SOLA, Carl W. BENTZEL, Max M. 

VEKICH, Commissioners. 

Order Affirming the Initial Decision on Different Grounds 

Before the Commission in this consolidated action are 

Complainants’ Exceptions to the Initial Decision (“I.D.”) granting 

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OVCHINNIKOV V. HITRINOV 

Respondents’ Motion for Judgment on the Pleadings and dismissing 

with prejudice Complainants’ claims. Although the Commission has 

determined to dismiss with prejudice Complainants’ claims, we 

must also address our concerns that the I.D.’s reasoning is at odds 

with Commission precedent and policy. Specifically, the I.D. finds 

that Complainants lack standing to bring their claims and that the 

Commission lacks subject matter jurisdiction to hear them. The I.D. 

is mistaken on both points. To the extent that standing is required to 

bring an action before the Commission, a complainant need only 

allege a violation of the Shipping Act to meet that requirement. 

Here, Complainants allege that Respondents violated 46 U.S.C. § 

41102(c); thus, they have standing to bring their claims. 

Complainants further allege that Respondents are subject to § 

41102(c); thus, the Commission has the authority to adjudicate 

Complainants’ claims. 

However, even with standing, Complainants’ claims are not 

viable. Complainants seek “direct damages” corresponding to the 

relevant “purchase” price of four vehicles that they allegedly 

purchased in the United States to be shipped to them via ocean 

freight, which Complainants never received. The problem with 

Complainants’ request is that Complainants did not actually 

“purchase” the vehicles from Respondents. By their own account, 

each Complainant “purchased” one vehicle from an entirely 

different company, which was never named as a respondent and is 

unaffiliated with Respondents. Notably, Complainants do not allege 

that they paid anything at all to Respondents; instead, Complainants 

assert that the ocean freight charges for the relevant cargo was paid 

by the third-party company to Respondents. Because Complainants 

did not purchase the vehicles from Respondents, they do not 

properly state, and could never prove, their claims for damages 

because there is no alleged causal link between any complained of 

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OVCHINNIKOV V. HITRINOV 

conduct and the monetary relief sought. Accordingly, as explained 

below, the I.D.’s dismissal with prejudice is the correct outcome, as 

Complainants have failed to state a claim upon which relief could 

be granted, and amendment of their claims would be futile. For these 

reasons, the Commission will affirm on different grounds the I.D.’s 

dismissal of these actions with prejudice. 

Respondents’ Counsel additionally maintains that this 

matter is before the Commission on what he characterized as 

exceptions to the Administrative Law Judge’s denial of his motion 

for an order to show cause why the Commission should not revoke 

the privilege of Complainants’ Counsel, Marcus Nussbaum, to 

practice before the agency. Respondents’ Counsel is incorrect. The 

Commission’s Rules of Practice and Procedure do not contemplate 

exceptions to such rulings. Exceptions are reserved for initial 

decisions and other orders of dismissal, and counsel also did not 

seek (let alone receive) leave to appeal the ruling. To be sure, the 

Commission has the authority to act on the serious allegations of 

misconduct against Mr. Nussbaum. The Commission could, for 

example, issue an order to show cause initiating a new proceeding 

aimed at addressing not only Mr. Nussbaum’s alleged misconduct 

in this action, but also his conduct in other Commission matters, 

about which the Commission has repeatedly warned him. The 

Commission is choosing not to proceed in that fashion at this time, 

but may do so in the future. 

I. BACKGROUND 

A. Facts as Alleged 

Dkt. 15-11 Complainants Igor Ovchinnikov, Irina Rzaeva, 

and Denis Nekipolev, and Dkt. 1953(I) Claimant Kairat Nurgazinov 

(collectively “Complainants”) are residents of Russia and 

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OVCHINNIKOV V. HITRINOV 

Kazakhstan. 15-11 Compl., Doc. 1 ¶¶ 1-3.1 Complainants allege 

that in mid- to late-2012, they each “purchased” one U.S.-based 

vehicle from a non-party company called G-Auto Sales, Inc. (“GAuto”) and/or its supposedly affiliated entity, non-party Effect Auto 

Sales Inc. (“Effect”), both of which sell used vehicles. See id. ¶¶ 26, 

35, 38, 51, 66. 

“G-Auto/Effect,” Complainants continue, contracted with 

Respondent Michael Hitrinov, a New York resident and alleged 

owner of Respondent Empire United Lines Co., Inc. (“Empire”), a 

Commission-licensed non-vessel-operating common carrier 

(“NVOCC”) and warehouse operator, “to secure shipping and 

warehouse services related to [the] vehicles sold by GAuto/Effect[.]” Id. ¶¶ 4, 6, 36. According to the Hitrinov/Empire-GAuto/Effect arrangement, Complainants allege, the four vehicles 

were, at some point, stored in Empire’s New Jersey warehouse, and, 

in November and December 2012, shipped by Empire from the Port 

of Elizabeth, New Jersey, to a customs bonded warehouse in Kotka, 

Finland, operated by former Respondent CarCont, which, “upon 

[Complainants’] information and belief, is [also] owned by 

Hitrinov.” See id. ¶¶ 9, 26, 34. G-Auto paid Empire for each 

vehicle’s “[o]cean freight and related charges,” and the vehicles 

were shipped on a Mediterranean Shipping Company (“MSC”) 

vessel pursuant to a service contract between Empire and MSC. See 

id. ¶¶ 33-34, 45, 59, 71. Each corresponding bill of lading designated 

Empire as the shipper and CarCont as the consignee. See Compl. ¶ 

36. 

The Complaints are unclear as to what, if anything, was 

supposed to happen with the vehicles after they arrived at CarCont’s 

warehouse in Kotka, Finland. See generally id. Nevertheless, 

Complainants assert, in early 2013 and within days of the vehicles’ 

arrival at CarCont’s warehouse, they each “contacted CarCont 

regarding the release of” the vehicles, and were told that the vehicles 

1 Unless otherwise indicated, the 1953(I) Claim is identical to the 15-11 

Complaint. Thus, only the relevant sections of the Complaint are cited herein. 

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OVCHINNIKOV V. HITRINOV 

“would not be released” to Complainants. Id. ¶¶ 43, 57, 70. Despite 

Complainants’ “multiple requests that CarCont release” the vehicles 

to them, CarCont told Complainants that “[Empire] would not 

authorize the release of the [relevant vehicles] because there was an 

unpaid loan due and owing to [Empire] by the principal of GAuto/Effect.” Id. ¶¶ 44, 47, 58. At some point thereafter, 

Complainants maintain, Respondents Empire and Hitrinov (and 

former Respondent CarCont)2 simply converted the vehicles “and 

have sold [them] to [various] third part[ies] in order to satisfy a loan 

allegedly due and owing from the principal of Effect/G-Auto to 

[Empire] and Hitrinov.” Id. ¶¶ 49, 64, 74. 

Nearly three years later, Complainants filed a complaint 

against Hitrinov and Empire, but not against G-Auto, Effect, or their 

principal(s). See 15-11 Compl. (filed Nov. 12, 2015); 1953(I) Claim 

(filed Jan. 11, 2016). According to Complainants, Empire violated 

46 U.S.C. § 41102(c) in two ways: first, “by failing to provide 

Complainants and any other necessary parties with: (1) proper and 

lawful documents of ownership; (2) shipping invoices and house 

bills of lading; . . . (3) the terms and conditions of transport; [and] 

(4) failing to deal in good faith and further failing to provide proof 

of ownership;” and second, “by detaining and converting 

Complainants’ automobiles on the grounds that the principal of GAuto/Effect owed monies to [R]espondents for reasons not related 

to the instant shipments.”3 

2 Complainants never served former Respondent CarCont and, therefore, the 

Administrative Law Judge (“ALJ”) dismissed CarCont from the action. 

Complainants do not except to the ALJ’s dismissal, nor did they ever serve 

CarCont. 

3 Complainants initially also alleged claims under 46 U.S.C. §§ 40301, 40302, 

40501, 40701(a), 41104(2), 41104(3), 41104(4), 41104(8), 41104(9), 41104(10), 

41106(2), and 41106(3), and 46 C.F.R. Part 515. Compl. ¶¶ 24, V(A)-(D). In the 

I.D., however, the ALJ found that Complainants had abandoned all but their § 

41102(c) claims, and, therefore, dismissed them. See I.D., Doc. 152 at 68. 

Complainants do not challenge the dismissal of any of these claims. See 

Complainants’ Exceptions, Doc. 173. 

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OVCHINNIKOV V. HITRINOV 

As relief, Complainants request “direct damages” 

corresponding to the “amounts paid for the purchase” of each 

vehicle, “additional consequential damages,” plus, for two 

Complainants, “additional damages for sums” related to loans 

obtained to finance the purchase of the vehicle. Compl. ¶¶ VII(A), 

VIII(B). 

B. Procedural History 

Much of the tortured procedural history of this proceeding is 

irrelevant to the issues currently before the Commission. Indeed, the 

parties filed over 100 motions before the ALJ, all of which were 

opposed. Accordingly, the Commission recounts here only those 

motions and orders that bear on the matters at hand. 

1. Motions and Orders Below 

Respondents filed several early motions in which they 

explained that G-Auto, the company from which Complainants 

allegedly purchased the vehicles, is, along with Effect Auto Sales, 

Inc., and Global Auto, Inc., one of several “related companies 

owned and/or controlled by a Mr. [Sergey] Kapustin,” which 

Respondents (and, later, Complainants and the ALJ) sometimes 

collectively refer to as “Kapustin Global Auto Group,” “Group,” or 

“Global.” See, e.g., Resp’ts’ Mot. to Stay, Doc. 13 at 2. 

Respondents accept as true that Complainants purchased a 

vehicle from the Group and acknowledge that per the Empire-Group 

usual business arrangement, the Group “contracted with Empire to 

transport [these and other] cars in containers from the United States 

to a facility in Kotka, Finland operated by CarCont, where the 

containers were opened and the cars and other cargo de-vanned.” 

E.g., Respt’s’ Mot. for Additional Time, Doc. 10 at 4. “The 

vehicles,” Respondents continue, “were then picked up by a member 

of the Kapustin Global Auto Group ([a company called] Global 

Cargo Oy), after a request for release was made by the Group. This 

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arrangement existed for years, and involved many cars beyond the 

few at issue [here].” Id. 

Further, Respondents assert: 

Empire never dealt with individual customers of the 

Kapustin Global Auto Group; and had no knowledge 

as to their identity. This was true as a general matter, 

and is true here. Neither Complainants nor the Group 

ever requested Empire to release the vehicles in 

question and . . . Empire did not know who the 

individual customers were until well after the cars 

were sold. 

Doc. 13 at 2-3. 

Although Complainants objected to the various forms of 

relief sought in Respondents’ corresponding motions, they never 

took issue with the above explanation of the relevant parties, or the 

general business relationship described above. 

At the ALJ’s direction, the parties subsequently filed the 

shipping documents “related to the transportation by water of the 

vehicles,” and identified, among other things, the relevant common 

carrier, shipper, consignee(s), port or point of origin, date of 

shipment, port or point of delivery, and payor for the transportation 

by water, for each of the four vehicles and pursuant to any bill of 

lading issued regarding the transportation. See Order to File 

Shipping Documents, Doc. 17; 1953(I) Order to File Shipping 

Documents (Apr. 27, 2016); Order to Supplement, Doc. 67. The 

parties’ responsive submissions confirmed what was alleged in the 

Complaint: the only relevant bills of lading are those issued by 

MSC, and all four of the bills of lading list Empire as the shipper 

and CarCont as the consignee. See, e.g., Doc. 78; Doc. 79. 

After the actions were consolidated, Respondents moved to 

dismiss the Complaints, arguing that the Commission lacked subject 

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OVCHINNIKOV V. HITRINOV 

matter jurisdiction to adjudicate the claims, and, therefore, that they 

were entitled to judgment on the pleadings, and/or that 

Complainants had failed to state a claim for relief (reparations). 

Order of Consolidation, Doc. 43; Respt’s’ Mot., Doc. 49. 

Respondents advance several arguments. First, Respondents 

maintain that Empire was not acting as an NVOCC for the 

shipments at issue because it “had a 60 percent ownership interest 

in each vehicle being transported” and “the arrangement between 

[Empire] and Global Auto Enterprise was a joint investment 

agreement.” Id. at 8. Because Empire was not acting as a 

Commission-regulated entity in connection with the relevant 

shipments, Respondents claim, the Commission lacks subject matter 

jurisdiction over those shipments. See id. at 8-9. Additionally, or 

alternatively, Respondents aver the Commission lacks jurisdiction 

because Complainants were not shippers or consignees of the 

vehicles, and because Complainants “lack standing to seek 

reparations” since if they were harmed, it would only be “as an 

indirect result of [any] alleged violations.” Id. at 9-14. Even if the 

Commission has subject matter jurisdiction, Respondents next argue 

Complainants fail to state a claim for reparations because they are 

“strangers to the transaction,” and, separately, because the 

Complaints do not allege sufficient facts to make out a claim. Id. at 

14-18. Complainants opposed Respondents’ Motion. Doc. 60. 

2. The Initial Decision 

The ALJ granted Respondents’ Motion for Judgment on the 

Pleadings and dismissed the Complaints with prejudice. I.D. Doc. 

152. In so doing, the ALJ did not make a finding as to Respondents’ 

first jurisdictional argument, that Empire was not acting as an 

NVOCC for the shipments at issue. Id. at 50. While the Commission 

has the authority to resolve disputes of fact when subject matter 

jurisdiction is challenged, the resolution would, according to the 

ALJ, involve legal questions related to the business relationship 

between Empire and Mr. Kapustin (Global Auto Group’s principal), 

including resolving who among these entities had the right to sell 

these and similarly situated vehicles. Id. Further, the ALJ wrote, 

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those matters were then-pending before a federal district court. Id. 

The ALJ did not stay his ruling until the relevant district court 

decided those issues; instead, he assumed for the purposes of the 

I.D. that Empire acted as an NVOCC for the shipments at issue. Id. 

at 51. 

The ALJ then effectively compressed Respondents’ 

remaining jurisdictional arguments, finding, in relevant part, that 

because Complainants were not consignees on the shipments, 

“Complainants do not have standing to challenge Empire’s refusal 

to deliver the cars to them or Empire’s ultimate sale of the cars 

before the Commission. [Thus,] Complainants have failed to 

establish that the Commission has subject matter jurisdiction over 

their complaints.” Id. at 6, 60-67. 

The ALJ next analyzed the merits the Complaints’ claims. 

Assuming that the Commission had jurisdiction, the ALJ summarily 

concluded that: “If it were determined that Complainants were 

consignees on the shipments, the complaints state claims of 

violation of [§] 41102(c).” Id. at 73. 

3. Complainants’ Exceptions 

Complainants maintain that the ALJ erred by: (1) 

considering Respondents’ motion for judgment on the pleadings as 

a factual, as opposed to facial, attack “in the absence of permitting 

Complainants to conduct necessary discovery;” and (2) finding that 

Complainants lacked standing to bring their claims. See id. at 22-30. 

In support of their Exceptions, Complainants filed 23 appendices 

spanning 553 pages. Docs. 174, 175. 

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OVCHINNIKOV V. HITRINOV 

II. DISCUSSION 

A. Standard of Review and Burden of Proof 

When the Commission reviews exceptions to an I.D., it has 

“all the powers which it would have in making the initial decision.” 

46 C.F.R. § 502.227(a)(6). The Commission reviews the ALJ’s 

findings de novo and can make additional findings where, as here, 

the ALJ dismissed claims for lack of subject matter jurisdiction or 

failure to state a claim. Id.; see also Maher Terminals, LLC v. Port 

Auth. of N.Y. & N.J., FMC Dkt. No. 12-02, 2015 FMC LEXIS 43, 

*110-*11 (FMC Dec. 18, 2015). 

The I.D. granted Respondents’ motion for judgment on the 

pleadings, which was brought alongside Respondents’ motion to 

dismiss for failure to state a claim. Motions for judgment on the 

pleadings are brought under Federal Rule of Civil Procedure 12(c), 

and motions to dismiss for failure to state a claim are brought under 

Rule 12(b)(6). The standard of review under these motions “is 

essentially the same.” See Schuchart v. La Taberna Del Alabardero, 

Inc., 365 F.3d 33, 35 (D.C. Cir. 2004); see also Samuels v. Safeway, 

Inc., 391 F. Supp. 3d 1, 2 (D.D.C. 2019) (noting that while the 

standards of review are basically the same, “a Rule 12(b) motion 

may be based on procedural failures, including lack of subjectmatter jurisdiction or a lack of factual allegations to support a claim, 

[and] a Rule 12(c) motion centers upon the substantive merits of the 

parties’ dispute”) (internal quotation and alterations omitted). 

On either motion, fact finders are to construe claims 

liberally, accept as true all well-pleaded facts, and draw all 

reasonable inferences in the complainant’s favor. Ashcroft v. Iqbal, 

556 U.S. 662, 663 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 

544, 555 (2007). Although a fact finder “generally may not rely on 

facts ‘outside’ the pleadings in deciding [either] motion, . . . it may 

consider matters incorporated by reference or integral to the claim, 

items subject to judicial notice, and matters of public record.” 

United States v. All Assets Held at Bank Julius Baer & Co., 772 F. 

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OVCHINNIKOV V. HITRINOV

Supp. 2d 191, 197 (D.D.C. 2011) (internal citations and alterations 

omitted). 

Challenges to subject matter jurisdiction are made under 

Rule 12(b)(1), and complainants bear the burden of proving by a 

preponderance of the evidence that the Commission has subject 

matter jurisdiction to adjudicate their claims. River Parishes Co., 

Inc. v. Ormet Primary Aluminum Corp., 28 S.R.R. 188, 201, 1998 

FMC Lexis 16, *66-67 (ALJ 1998), aff’d 28 S.R.R. 751, 1999 FMC 

Lexis 32, *67 (FMC 1999); see also 5 U.S.C. § 556(d); 46 C.F.R. § 

502.155. 

B. Complainants Have Standing and the Commission Has

Subject Matter Jurisdiction to Adjudicate

Complainants’ Claims

In their Exceptions, Complainants first maintain that the ALJ

erred in finding that they lack standing to bring their claims. Doc. 

173 at 27-30. Specifically, Complainants argue, the ALJ “erred in 

delimiting Complainants’ standing to sue, by imposing 

requirements that Complainants (1) demonstrate that they were 

consignees [on the shipments], and (2) demonstrate that 

Respondents had a duty to deliver the subject vehicles to 

Complainants.” Id. at 27. Complainants are essentially correct. 

In the I.D., the ALJ found that “[b]ecause they were not 

consignees on the shipments, Complainants do not have standing to 

challenge Empire’s refusal to deliver the cars to them or Empire’s 

ultimate sale of the cars before the Commission.” Doc. 152 at 6; see 

also id. at 67 (“Complainants have not identified evidence that 

would support a finding that shipper Kapustin [as principal for 

Global Auto] intended that they be identified as consignees or that 

Empire, operating as an NVOCC, agreed to deliver the cars to 

Complainants. Complainants have not established that they have 

standing to bring their complaints before the Commission.”). 

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1. Article III Standing Requirements Do Not Apply to 

Commission Proceedings 

It is not clear what the ALJ meant by “standing”—a term 

that can be used loosely by litigants and tribunals alike. Generally, 

when used in the context of subject matter jurisdiction, “standing” 

refers to constitutional standing: the threshold concern for all federal 

Article III courts, as to whether a case or controversy comprises an 

actual injury, suffered by the complainant and caused by the 

complained of conduct, which can be redressed by a favorable 

ruling. See, e.g., Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-

61 (1992); see also Doc. 152 at 29 (quoting the D.C. Circuit for the 

proposition that Article III courts lack subject matter jurisdiction 

when claimants lack standing to pursue their claims). 

As the Commission recently explained, however, the 

standing requirements of Article III “are not directly applicable to 

agency proceedings.” See Stmt. of the Commission on 

Representative Complaints, Dkt. 21-13 at 2 n.9 (citing cases). And 

as to Commission actions specifically, “any person may file a 

complaint alleging a violation [of Chapter 411 of Title 46].” Id. at 1 

(emphasis omitted) (citing 46 U.S.C. § 41301(a)); see also id. at 2 

(“the Commission has long interpreted § 41301(a) to allow any 

person to file a complaint, even if that person does not allege that it 

was injured by the alleged violation”) (citing, e.g., Cargill, Inc. v. 

Waterman Steamship Corp., FMC Dkt. No. 79-72, 1981 FMC 

LEXIS 34, *39 (FMC Nov. 30, 1981) (Complainant “clearly has 

standing to prosecute a complaint under section 22 of the Shipping 

Act [of 1916] even if it were not alleging injuries to itself.”); Fed. 

Mar. Comm’n v. Zim Israel Navigation, 263 F. Supp. 618, 621 

(SDNY 1967) (“Whether or not [Complainants] are entitled to 

reparations in the proceedings before the Commission . . . they have 

standing to file the complaint and the Commission has jurisdiction 

to entertain it.”). In other words, to the extent that standing is 

required to bring a Commission action, a complainant need only 

allege a violation of the Shipping Act to meet that requirement. 

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Here, Complainants allege that Respondents violated 46 

U.S.C. § 41102(c); thus, they have standing to bring their claims. 

Complainants are correct that they did not have to establish, or even 

allege, that they were the consignees on the shipments for them to 

have standing or for the Commission to have subject matter 

jurisdiction to adjudicate their claims.4 See Dkt. 21-13; 

Complainants’ Exceptions, Doc. 152 at 27-30.5 

4 To be clear—and given Complainants’ incorrect assertions to the contrary— 

neither the ALJ nor the Commission in this Order makes any finding as to whether 

Empire was acting as an NVOCC for the purposes of the shipments at issue. 

Because the Commission finds that the Complaints should be dismissed for failure 

to state a claim, it need not determine Empire’s NVOCC status as to these 

shipments, and, indeed, Respondents request as much. See Doc. 49 at 2 

(“Respondents would not object if the Presiding Officer were to dismiss for failure 

to state a claim without addressing the jurisdictional issues” raised in 

Respondents’ motion for judgment on the pleadings) (citing Inlet Fish Producers, 

Inc. v Sea-Land Service, Inc., 28 S.R.R. 1631, 1632 (ALJ 2000) (“The general 

rule is that an agency must first find that it has jurisdiction over the parties and 

the subject matter of the proceeding before it addresses the merits, unless the facts 

necessary to resolve the issue of jurisdiction are the same as the facts bearing on 

the merits”). 

5 If the ALJ instead used standing to mean that Complainants lack statutory 

standing, even if the ALJ were right, statutory standing is not jurisdictional. See 

Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128 n.4 

(2014) (statutory standing goes to whether Congress has accorded a particular 

complainant the right to sue under a statute, but it does not limit the power of the 

tribunal to adjudicate the case). “As a result, a dismissal for lack of statutory 

standing is effectively the same as a dismissal for failure to state a claim, and a 

motion to dismiss on this ground is [properly] brought pursuant to [Federal] Rule 

12(b)(6) [for failure to state a claim upon which relief can be granted], rather than 

Rule 12(b)(1) [for lack of jurisdiction].” Leyse v. Bank of Am. Nat. Ass’n, 804 

F.3d 316, 320 (3d Cir. 2015) (internal quotations, citations, and alterations 

omitted). The same result would be true if the ALJ used standing to mean that 

Complainants were not the proper parties to bring these claims; that is: if Empire 

committed a Shipping Act violation with respect to the shipments at issue, it did 

so to the detriment, if any, to Global (for whom it arguably shipped the cargo) 

and/or CarCont (the consignee), and, therefore, any claims should have been 

brought by those parties and are not properly brought by Complainants. See Doc. 

152 at 60-62 (discussing, in the context of the finding that Complainants lacked 

standing, the contractual relationship between Kapustin, Empire, and CarCont); 

see also Resp’ts’ Mot., Doc. 49 at 12-13 (“If anyone has a conceivable Shipping 

Act claim against [Empire] it is Global Auto Enterprise.”). 

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C. Complainants Have Failed to State A Claim For 

Reparations or For Which Relief Can be Granted 

Complainants allege violations of 46 U.S.C. § 41102(c), 

which prohibits common carriers, marine terminal operators, and 

ocean transportation intermediaries from “fail[ing] to establish, 

observe, and enforce just and reasonable regulations and practices 

relating to or connected with receiving, handling, storing, or 

delivering property.” Specifically, Complainants allege that 

Respondents violated § 41102(c) by (1) “failing to provide 

Complainants and any other necessary parties with certain shipping 

documents including “shipping invoices and house bills of lading” 

and (2) detaining and otherwise refusing to release to Complainants 

the vehicles that Complainants allegedly bought from GAuto/Effect. See Compl. ¶¶ V(B), V(E). 

Respondents moved to dismiss Complainants’ claims 

arguing, in relevant part, that Complainants failed to state a claim 

for reparations and/or claims for which relief may be granted for two 

reasons. Respt’s’ Mot. for J. on the Pleadings, Doc. 49 at 14-16, 17-

18. First, Respondents assert, “as their own documents show, 

Complainants are total strangers to the shipping transactions alleged 

in the Complaint, and so can have no claim for relief.” Id. at 14. 

Second, Respondents continue, “Complainants fail to allege [basic] 

facts that would entitle them to relief.” Id. 

As an initial matter, Complainants seek “direct damages” 

corresponding to the relevant vehicle’s “purchase” price plus, when 

incurred, additional damages for sums “arising out of” bank loans 

taken to pay for the vehicle(s), plus, in the case of Complainant 

Rzaeva, damages relating to her travel to Kotka, Finland, to try to 

find “her” vehicle. Compl. ¶ VII(A). A complaint, however, only 

properly seeks reparations “for an injury to the complainant caused 

by the [alleged] violation” of Chapter 411 of Title 46. 46 U.S.C. § 

41310(a); see also id. § 41305(b) (reparations are appropriate only 

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for “actual injury” to the complainant and “caused by a violation of 

this part”). The Complaints here seek no such relief. 

The problem with Complainants’ request is that 

Complainants did not actually purchase the vehicles from 

Respondents. By their own account, each Complainant purchased 

one vehicle “from G-Auto,” which was never named as a 

Respondent and is, by all accounts, unaffiliated with Respondents. 

Compl. ¶¶ 31, 58, 65. In fact, Complainants do not allege that they 

paid anything at all to Respondents; instead, Complainants assert, 

“ocean freight and related charges [were] paid to [Empire] by GAuto.” Id. ¶¶ 45, 59, 71. Because Complainants did not purchase the 

vehicles from Respondents, they do not properly state—and could 

never prove—their claims for damages as there is no alleged causal 

link between any complained-of conduct and the monetary relief 

sought. See 46 U.S.C. § 41310; see also, e.g., Iqbal, 556 U.S. at 663. 

There is similarly no causal connection between any alleged 

violation of the Shipping Act and Complainants’ purported injuries, 

as required to maintain reparations claims. Specifically, 

Complainants first allege that Respondents violated § 41102(c) by 

failing to provide various shipping documents. Compl. ¶ V(B). Even 

assuming (i) that Empire did, in fact, fail to provide this paperwork 

(which Empire maintains never existed because, according to 

Empire, it was not acting as an NVOCC), and (ii) that such a failure 

constitutes a § 41102(c) violation (a proposition for which 

Complainants cite no authority), this failure is entirely separate from 

Complainants’ having paid for the vehicles, which, again, is what 

Complainants request reparations for. In other words, even had 

Empire issued and provided house bills of lading and other nowsought shipping documentation, Complainants would still be out the 

respective vehicles’ purchase prices. 

In any event, the Complaints do not include any allegation 

that the cars were actually meant to be delivered, let alone shipped 

or released, to Complainants. See generally Compl.; Claim. As 

Respondents point out in their Motion, “the Complaint[s] fail[] to 

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assert any basis in law or reason why [Empire] (or CarCont) was 

obligated to release the vehicles or provide the requested shipping 

documents to Complainants.” Doc. 49 at 17; see also id. at 17-18 

(asserting that had Empire released the vehicles to Complainants, 

doing so may have actually constituted a § 41102(c) violation since 

Complainants were not designated as someone to whom the vehicles 

should be released) (citing Bimsha International v. Chief Cargo 

Services, Inc., 2013 WL 9808692, at *7 (FMC 2013) (finding that 

an NVOCC violated § 41102(c) when it released cargo “without the 

presentation of the original bills of lading,” even to the proper 

“notify party”). 

Indeed, it is unclear what, if anything, was supposed to 

happen to the vehicles after their arrival in CarCont’s warehouse. 

Complainants have failed to assert what went wrong here, including 

as it relates to the receiving, handling, storing, or delivering of the 

vehicles. As Complainants allege: “G-Auto/Effect contracted with 

[R]espondents Hitrinov and Empire to secure shipping and 

warehouse services related to vehicles sold by G-Auto/Effect and 

destined for Kotka, Finland, with the consignee on each shipping 

bill of lading designated as . . . CarCont.” Compl. ¶ 36. Assuming 

Complainants refer here to the vehicles at issue (in addition to 

explaining the parties’ general arrangement), the vehicles were to be 

stored in Empire’s New Jersey warehouse until they would be 

trucked to the Port Elizabeth and shipped via vessel to Kotka, 

Finland, where they would be unloaded and stored by CarCont. This 

is exactly what Complainants maintain happened. See generally 

Compl.; Claim. 

For these reasons, Complainants have failed to state a claim 

upon which relief can be granted, and the Complaints should be 

dismissed. See 46 U.S.C. § 41305(b); Twombly, 550 U.S. at 555 

(claims are only viable when they “raise a right to relief above the 

speculative level”). Moreover, dismissal with prejudice is 

appropriate because any amendment to the complaint would be 

futile. Complainants have produced thousands of pages of exhibits 

in support of their claims, and not a single page connects the 

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vehicles’ shipment by water from the U.S. to Complainants, let 

alone evinces that Respondents knew who Complainants were when 

Complainants requested release of the vehicles. 

Accordingly, the Commission upholds the I.D.’s dismissal 

with prejudice. 

D. Complainants’ Contention that the ALJ Improperly 

Construed Respondents’ Motion as a Factual Attack on 

Subject Matter Jurisdiction 

Complainants additionally argue that the ALJ “erred in 

construing [R]espondents’ motion to dismiss as a ‘factual’ attack 

upon subject matter jurisdiction in the absence of allowing 

[C]omplainants to conduct the very discovery necessary to obtain 

evidence and facts to fully oppose defendants’ [sic] motion.” Doc. 

152 at 26. Complainants’ argument makes little sense. 

To be sure, and as the Commission has previously explained, 

there is a difference between a factual attack and facial attack to a 

tribunal’s subject matter jurisdiction, the latter of which involves 

accepting as true all well-pleaded facts. See, e.g., Mitsui O.S.K. 

Lines Ltd. v. Global Link Logistics, Inc., 2011 WL 7144008, at *11-

12 (FMC 2011) (citing Sinaltrainal v. Coca-Cola Company, 578 

F.3d 1252, 1260 (11th Cir. 2009)). Here, however, the ALJ’s 

conclusion regarding subject matter jurisdiction was grounded in the 

ALJ’s finding that Complainants are not the consignees of the 

relevant cargo, which is exactly what Complainants allege in their 

Complaints. Compare Doc. 152 at 6, 60-67 with Compl. ¶ 36 (“At 

all times mentioned herein, G-Auto/Effect contracted with 

[R]espondents . . . to secure shipping and warehouse services related 

to vehicles sold by G-Auto/Effect and destined for Kotka, Finland, 

with the consignee on each shipping bill of lading designated as 

Defendant [sic] CarCont.”) (emphasis supplied). In other words, 

even if the ALJ considered matters outside of the pleadings such that 

Respondents’ attack was construed as a factual one, any error was 

harmless: Complainants’ allegations regarding the identity of the 

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consignee(s) were accepted as true, which would have been the case 

if Respondents’ motion were instead treated as a facial attack. 

Accordingly, although Complainants are correct that the 

Commission has subject matter jurisdiction, their exceptions here 

are without merit. 

E. Complainants’ Remaining Exceptions 

Complainants additionally argue that “as a licensed ocean 

transportation intermediary, Respondents had a statutory duty to 

know, and in fact did know, that Complainants were the ultimate 

consignees for the subject vehicles.” Doc. 173 at 30. 

As an initial matter, although Complainants maintain that 

Respondents were under some “statutory duty,” they fail to cite the 

statute from which this supposed duty arises. See id. at 30-44. More 

importantly, Complainants discuss at length regulations 

administered by agencies other than the Commission, with no 

explanation of how any supposed failure to comply with these other 

agencies’ regulations constitutes a violation of 46 U.S.C. § 41102(c) 

(or any other provision of the Shipping Act). See id. (detailing 

regulations enforced by the Bureau of Industry and Security and 

U.S. Customs and Border Patrol, respectively). In other words, even 

if Complainants are correct that Respondents were under some duty 

to know who (or what) the ultimate consignee is or was, their efforts 

here are wasted as the relevant question is whether Respondents 

violated the Shipping Act or the Commission’s implementing 

regulations. 

Complainants’ contentions that the ALJ made several 

“material errors” and “omitted certain material facts” are similarly 

misguided. Doc. 173 at 50-56. Even assuming that Complainants 

accurately stated certain facts that the ALJ supposedly got wrong 

(and they did not), nothing listed in these pages was material to the 

ALJ’s findings. See, e.g., id. at 50 (maintaining that an obvious 

typographical error is a material error); id. at 50 n.15 (same); id. at 

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49 (falsely, or at least misleadingly, asserting that there was no 

formal discovery before the ALJ rendered his opinion); id. at 50-52 

(maintaining that Respondents were deliberately misrepresenting 

information to the U.S. Census Bureau). 

III. Respondents’ Counsel’s Motion For An Order To Show 

Cause Is Not Before The Commission 

When the action was still pending before the ALJ, 

Respondents’ Counsel moved for an order to show cause as to why 

Complainants’ Counsels’ privilege of practicing before the 

Commission should not be revoked. Doc. 112. The next day, 

Complainants’ Counsel, Mr. Nussbaum, opposed the motion and, in 

the same filing, cross-moved for an order to show cause as to why 

Respondents’ Counsel should not be suspended from practicing 

before the Commission for at least six months and why he should 

not be “personally removed” as Respondents’ Counsel. Doc. 114. 

The ALJ summarily denied both motions, finding that 

because each counsel had other matters pending before an ALJ 

and/or the Commission itself, the claims “should be directed to the 

Commission, not to an administrative law judge in an individual 

case.” Doc. 124 at 4. The ALJ therefore “denied [the motions] 

without prejudice to the parties presenting the arguments to the 

Commission in a more appropriate manner.” Id. 

Respondents’ Counsel filed what they characterize as 

exceptions to the ALJ’s decision. Doc. 128. This filing, however, 

does not cite to any Commission regulation allowing for exceptions 

to such a ruling. See id. Indeed, exceptions are reserved for initial 

decisions and other orders of dismissal of the proceeding in whole 

or in part. 46 C.F.R. § 502.227; see also id. § 502.221 (governing 

appeals from a ruling of presiding officer “other than orders of 

dismissal in whole or in part,” and requiring that “any party seeking 

to appeal [such an order] must file [with the presiding officer] a 

motion for leave to appeal”); accord id. § 502.94 (“all claims for 

relief or other affirmative action by the Commission . . . must be by 

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written petition”). Respondents’ Counsel did not seek leave from the 

ALJ to appeal the ruling. Accordingly, these so-called exceptions, 

and Respondents’ Counsel’s underlying motion, are not properly 

before the Commission.6 

That is not to say, however, that the Commission is without 

authority to address the serious allegations of misconduct lodged 

against Mr. Nussbaum, which center on Mr. Nussbaum having 

allegedly: (1) falsified evidence in an attempt to support 

Complainants’ claims; (2) gotten the template for these documents 

only as a result of his having previously represented Mr. Kapustin 

and his criminal enterprises; (3) used these and other confidentiallygotten documents from, and to the detriment of, Mr. Kapustin; (4) 

misrepresented facts and the parties’ arguments; and (5) acted 

extremely uncivilly. See Doc. 112; see also Doc. 145. 

The Commission takes seriously these grave accusations, 

and has already warned Mr. Nussbaum about similar behavior. Most 

recently, for example, in now-closed Dkt. 20-12, Mr. Nussbaum, 

among other things, repeatedly misquoted the record to support his 

client’s claims and attacked the ALJ as advocating for the opposing 

side. See Andrew v. Marine Transport Logistics, FMC Dkt. 20-12, 

Complainants’ Exceptions, Doc. 38; see also id. Complainants’ 

Proposed Findings of Fact, Doc. 31. Some three years before that, 

the Commission was compelled to direct Mr. Nussbaum “not to file 

any pleading, motion or other document that does not meet the [46 

C.F.R.] § 502.6 verification requirements or fails to comply with the 

ABA Model Rules,” after it found that “Mr. Nussbaum c[ame] close 

to admitting that nothing more than speculation underlies [his] 

motion when he argues that the Commission should decide [a] 

seminal issue by speculating that one of Respondents’ attorneys 

altered evidence but has no evidence that either attorney added 

information to the document or did so with intent to mislead 

6 Neither did Respondents’ Counsel file a petition for the same relief with the 

Commission, despite the ALJ’s having written that such requests for relief should 

not be brought “in an individual case.” 

 125 6 F.M.C. 2d
 

 

 

OVCHINNIKOV V. HITRINOV 

anyone.” Crocus Investments, LLC v. Marine Transport Logistics, 

Inc., FMC Dkt. 15-04, 2018 WL 2113084, at *1, *8 (FMC 2018). 

Indeed, the Commission noted that such conduct “bears the 

unmistakable hallmarks of other pleadings filed by Mr. Nussbaum 

in this case and other proceedings before the Commission,” and 

warned him that, “[f]urther violation of these rules may result in 

sanctions by the Commission.” Id. *1, *8. So too here is the record 

replete with possibly inappropriate conduct. See, e.g., 

Complainants’ Opp’n and Cross-Motion, Doc. 114 (nominally 

opposing Respondents’ Counsel’s motion before the ALJ, but 

dedicating the entirety of that filing to Mr. Nussbaum’s own crossmotion); Complainants’ Resp. to Order to Supplement, Doc. 218 

(similarly failing to deny this and other serious alleged misconduct); 

accord id. at 3 (incorrectly maintaining that the ALJ “finally and 

conclusively resolved” the issues raised by Respondents’ Counsel’s 

motion, and, therefore “relitigation of [these] issues would be barred 

by res judicata”); id. at 5 (failing to deny the allegations of forgery 

and (perhaps correctly) maintaining that such allegations “should . . 

. be supported by a credible forensic examiner”); id. at 9-10 

(continuing to rely on an asserted waiver of attorney-client privilege 

supposedly executed by Mr. Kapustin, Mr. Nussbaum’s former 

client, which was written (and signed) in English despite elsewhere 

maintaining that Kapustin cannot speak (or write) in English). 

Although Respondents’ Counsel’s underlying motion is not 

properly before the Commission, we note that the agency has the 

authority to act on Mr. Nussbaum’s apparent misconduct in this and 

all actions before the Commission. It could, for example, initiate a 

new proceeding that addresses Mr. Nussbaum’s concerning conduct 

across of all of his Commission actions. See 46 C.F.R. § 502.91 

(“The Commission may institute a proceeding by order to show 

cause.”); id. § 502.26 (“An attorney practicing before the 

Commission is expected to conform to the standards of conduct set 

forth in the American Bar Association’s Model Rules of 

Professional Conduct in addition to the specific requirements of this 

chapter.”); Polydoroff v. I.C.C., 773 F.2d 372, 374 (D.C. Cir. 1985) 

(“There can be little doubt that the [Interstate Commerce] 

 126 6 F.M.C. 2d
OVCHINNIKOV V.HITRINOV 

Commission, like any other institution in which lawyers or other 

professionals participate, has authority to police the behavior of 

practitioners appearing before it.”). 

As noted, however, Respondents’ Counsel’s underlying 

motion is not properly before the Commission. The Commission 

cannot emphasize strongly enough, however, that it retains the 

option to exercise all lawful authority with respect to Mr. 

Nussbaum’s conduct. 

IV. CONCLUSION 

Accordingly, the Commission AFFIRMS ON 

DIFFERENT GROUNDS the Initial Decision. 

THEREFORE, IT IS ORDERED that Complainants’ 

Complaint and Claim be DISMISSED WITH PREJUDICE. 

IT IS FURTHER ORDERED that this proceeding be 

DISCONTINUED. 

By the Commission. 

William Cody 

Secretary 

 127 6 F.M.C. 2d
 

 

 

 

FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

GOFORTH & MARTI D/B/A GM BUSINESS INTERIORS, 

Complainant 

v. 

HSIN SILK ROAD SHIPPING LTD., Respondent. 

DOCKET NO. 22-16 

Served: February 15, 2023 

OPINION OF: Linda S. Harris CROVELLA, Administrative Law Judge. 

Initial Decision on Default 

I. INTRODUCTION AND BACKGROUND

On July 11, 2022, the Commission issued a Notice of Filing of Complaint and

Assignment (“Notice”) advising that complainant Goforth & Marti D/B/A GM Business Interiors 

(“Goforth & Marti”), commenced this proceeding by filing a Verified Complaint with the 

Secretary pursuant to section 11 of the Shipping Act of 1984, 46 U.S.C. §41301, alleging that 

respondent HSIN Silk Road Shipping LTD. (“HSIN”) violated the Act. As discussed more fully 

below, HSIN has not answered the Complaint or responded to an order requiring it to do so by 

October 3, 2022. Order to Respond to Complaint at 1. Accordingly, HSIN is (1) found to be in 

default; (2) is found to have violated the Act; (3) is found to have caused actual injury to Goforth 

& Marti by its violations; and (4) is ordered to pay a reparation award to Goforth & Marti. 

A. Goforth & Marti’s Complaint

Goforth & Marti filed its Complaint on July 11, 2022,1 alleging that HSIN, a non-vesseloperating common carrier (“NVOCC”) subject to regulation by the Federal Maritime 

Commission (“Commission”), issued a bill of lading on about October 7, 2021, to carry four 

containers of adjustable desk frames and table parts from Ningbo, PRC, to Los Angeles, 

California. Complaint at 2. It is further alleged that Goforth & Marti d/b/a GM Business 

Interiors was the owner of the cargo, had prepaid the freight, and was listed on the bill of lading 

as the consignee and notify party. Complaint at 2. Complainant alleges that it received an 

“Arrival Notice/Freight Invoice” from Respondent notifying it that the Nomadic Milde, the 

vessel which transported the four containers, had an estimated time of arrival (ETA) of 

November 6, 2021. Complaint at 3. Complainant alleges that after it paid the accompanying 

invoice for “berthing fees,” “DTHC,” and a “delivery order fee,” it received a second “Arrival 

1

 The Complaint is dated June 17, 2022, but pursuant to § 502.62(a)(7), “[a] complaint is 

deemed filed on the date it is received by the Commission,” which was July 11, 2022. 

128 6 F.M.C. 2d
 

 

 

 

Notice/Freight Invoice” in 2022 notifying it that the ETA of the Nomadic Milde “was revised to 

March 10, 2022.” Complaint at 3. Accompanying the notice was another invoice for berthing 

fees, DTHC, and a storage fee, which when contacted, Respondent attributed to additional costs 

the vessel incurred related to the pandemic and long-term berthing at the Los Angeles terminal 

that it did not anticipate. Complaint at 3. 

Goforth & Marti alleges that HSIN violated § 41102(c) of the Shipping Act by assessing 

additional fees in both November 2021 and March 2022 that are “unjust, unlawful, unfounded 

and excessive,” and it seeks reparations for those amounts it was compelled to pay Respondent 

“related to receiving, handling, storing or delivering property.” Complaint at 4. 

I take official notice under 46 C.F.R. § 502.226 of Commission records showing that the 

Secretary served the Notice to HSIN by FedEx at the business address in the Complaint: 

RM2902 29/F Ho King Comm CTR 2-16, Fa Yuen St. Mongkok Kin Hong Kong, 31500 Hong 

Kong. The tracking number shows that the envelope was delivered on July 18, 2022, to the 

receptionist/front desk and was signed for by R. Chop. Attachment A. In addition, the Office of 

the Secretary reported that it emailed the Notice to Respondent on July 11, 2022. HSIN has not 

answered or otherwise responded to the Complaint. 

B. Order to Respond to Complaint 

On July 13, 2022, an Initial Order was issued, explaining the parties’ obligations to 

participate in a preliminary conference and confer on a joint status report and proposed schedule 

and noted the 150-day timeline for completion of discovery. The order reiterated the 

Commission’s requirement that the initial decision in this case must issue within one year from 

filing of the Complaint. Initial Order at 1. 

On September 16, 2022, an Order to Respond to the Complaint was issued and sent to 

Respondent by FedEx at the same business address to which the Notice was sent in July 2022, 

but it was returned as “undeliverable.” Attachment B. On September 21, 2022, the Order to 

Respond was sent by email to Respondent at info@hsinship.com and copied to Complainant. 

The Order to Respond noted that a response to the Complaint was due 25-days after the 

Commission issued the Notice. See § 502.62(b). The Order to Respond again notified the parties 

that if Respondent failed to respond to the Complaint, a default judgment may be issued against 

it for the full amount that the Complainant is seeking, which is $74,000, and Respondent HSIN 

was ordered to respond to the Complaint by October 3, 2022. 

On November 10, 2022, an email was sent to both parties requesting an update on the 

case; Complainant responded that it had not heard from Respondent and Respondent did not 

reply to the email. To date, no response to the Complaint has been filed and no request for an 

extension of time has been received. 

Respondent HSIN was a Commission-bonded non-vessel operating cargo carrier 

(“NVOCC”) at the time the transportation at issue occurred, but its NVOCC bond was cancelled 

on June 5, 2022, and revoked on June 6, 2022. It is unclear if HSIN has ceased operations. 

Official notice is taken of the Commission’s records showing that HSIN’s registered address was 

2 

 129 6 F.M.C. 2d
 

the address to which the Complaint was successfully served, and to which the Order to Respond 

was sent. 

For the reasons discussed below, I find that Complainant is entitled to a default decision 

and reparations from Respondent in the amount of $74,000. 

II. DISCUSSION 

A. Respondent is in Default 

Pursuant to Commission Rule 62: 

Failure of a party to file an answer to a complaint, counterclaim, crossclaim, or 

third-party complaint within the time provided will be deemed to constitute a 

waiver of that party’s right to appear and contest the allegations of the complaint, 

counterclaim, crossclaim, or third-party complaint to which it has not filed an 

answer and to authorize the presiding officer to enter an initial decision on default 

as provided for in 46 CFR 502.65. Well pleaded factual allegations in the 

complaint not answered or addressed will be deemed to be admitted. 

46 C.F.R. § 502.62(b)(6)(i). “All parties and representatives are under a continuing obligation to 

provide the Commission and all other parties in a proceeding with accurate and current contact 

information including a street address, telephone number, and e-mail address.” 46 C.F.R. 

§ 502.2(h)(1). Moreover, when “a party is found to be in default, the Commission or the 

presiding officer may issue a decision on default upon consideration of the record, including the 

complaint.” 46 C.F.R. § 502.65(b). 

Respondent was served and had notice of this proceeding. If Respondent’s address 

changed, it failed to notify the Commission as required by Commission Rules. Because 

Respondent accepted service of the Complaint at its Commission-registered place of business but 

then failed to file a response or participate further in the proceeding with no explanation or 

request for extensions, a default decision against Respondent is appropriate. 

B. Complainant Establishes that Respondent Violated Section 41102(c) 

Complainant must establish that Respondent’s conduct gives rise to a section 41102(c) 

violation. Commission Rule 203 provides that, “[i]n all cases governed by the requirements of 

the Administrative Procedure Act, 5 U.S.C. 556(d), the burden of proof is on the proponent of 

the motion or the order.” 46 C.F.R. § 502.203. The Supreme Court in Director, OCWP v. 

Greenwich Collieries, 512 U.S. 267, 276 (1994), found that the “burden of proof” under the 

Administrative Procedure Act (APA) means “the burden of persuasion.” Here, the Complainant 

bears the burden of persuasion to prove its case by a preponderance of the evidence. See 

Steadman v. SEC, 450 U.S. 91, 102 (1981). Finally, while an administrative law judge cannot 

rely on mere speculation, inferences may be drawn from certain facts and circumstantial 

evidence may be considered. Waterman S.S. Corp v General Foundries, Inc., 26 S. R.R. 1173, 

1180 (ALJ 1993). 

3 

 130 6 F.M.C. 2d
The Commission’s regulations provide that well-pleaded factual allegations in a 

complaint will be deemed to be admitted when a respondent fails to answer a complaint within 

the time provided. United Logistics (LAX) Inc. – Possible Violations of Sections 10(A)(1) and 

10(B)(2)(A) of the Shipping Act of 1984, Docket No. 13-01, 33 S.R.R. 196, 198 (FMC Feb. 6, 

2014); Century Metal Recycling Pvt. Ltd. v. Dacon Logistics, LLC, Docket 12-09, 33 S.R.R. 17, 

19 (FMC Nov. 12, 2013). When a respondent defaults, the finder of fact accepts as true all wellpleaded facts in the order. 10A Wright & Miller § 2688, pp. 58-61; Hugh Symington v. Euro Car 

Transport, Inc., Docket No. 92-47, 26 S.R.R. 871, 872 (ALJ Mar. 18, 1993) (adm. final). 

Complainant alleges that “practices and regulations” by Respondent with regard to its 

imposition of berthing fees, storage fees and other fees in its arrival notices and freight invoices 

related to the receiving, handling, storing or delivering of property and are “unjust, unlawful, 

unreasonable and unfounded.” Complaint at 4. Complainant further alleges that as a result of 

Respondent’s alleged conduct Complainant suffered financial injury. Complaint at 4. 

Complainant alleges violations of the Shipping Act and a pattern of conduct sufficient to 

demonstrate a violation of the Shipping Act. Respondent has not denied the allegations. 

Respondent chose not to participate in this proceeding, and its failure to participate has deprived 

Claimant of the opportunity to obtain additional evidence to support its allegations, as 

Respondent would be most likely to have information pertinent to the allegations against it. Such 

failure to respond has been found by the Commission to support a default decision. See, e.g., 

Century Metal Recycling, 33 S.R.R. at 19; Shipco Transport Inc. v. Jem Logistics, Inc., and Andi 

Georgescu, Docket No. 12-06, 32 S.R.R. 1855, 1857 (FMC Aug. 21, 2013); Oceanic Bridge 

International, Inc. - Possible Violations of Section 10(a)(1) of the Shipping Act of 1984, Docket 

No. 14-02, 2014 FMC LEXIS 24, *1 (ALJ Oct. 21, 2014) (adm. final). The conduct alleged in 

the complaint states a claim for violation of the Shipping Act and Respondent has defaulted. 

Accordingly, Complainant has established that Respondent violated the Shipping Act. 

C. Reparations 

Complainant seeks $74,000 in damages. Complaint at 4. Pursuant to section 11(g) of the 

Shipping Act “the Federal Maritime Commission shall direct the payment of reparations to the 

complainant for actual injury caused by a violation of this part, plus reasonable attorney fees.” 46 

U.S.C. § 41305(b). Commission case law states that: “(a) damages must be the proximate result 

of violations of the statute in question; (b) there is no presumption of damage; and (c) the 

violation in and of itself without proof of pecuniary loss resulting from the unlawful act does not 

afford a basis for reparation.” Waterman v. Stockholms Rederiaktiebolag Svea, Docket No. 638, 

3 F.M.B. 248, 249 (FMB Dec. 8, 1950); James J. Flanagan Shipping Corp. v. Lake Charles 

Harbor and Terminal Dist., Docket No. 94-32, 30 S.R.R. 8, 13 (FMC Aug. 26, 2003). 

The evidence demonstrates that as a consequence of the violations by Respondent, 

Complainant sustained damages of $74,000. Goforth & Marti is also entitled to interest running 

from March 23, 2022, when it paid the second invoice to obtain the release of its cargo, to be 

calculated by the Commission when this judgement and decision become final. See 46 C.F.R. 

§ 502.253. In addition, Complainant may be eligible for attorney fees, upon petition, pursuant to 

Commission Rule 254. 46 C.F.R. § 502.254. 

4 

 131 6 F.M.C. 2d
III. ORDER

For the reasons stated above, it is hereby

ORDERED that default be entered against Respondent HSIN Silk Road Shipping

Limited. It is 

FURTHER ORDERED that Goforth & Marti be awarded $74,000, plus interest from 

March 23, 2022, from Respondent HSIN Silk Road Shipping Limited as reparations for violating 

the Shipping Act. 

Linda S. Harris Crovella 

Administrative Law Judge 

5 

 132 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION

B & G FUTURES INC, REVOCATION OF OCEAN 

TRANSPORTATION INTERMEDIARY LICENSE NO. 026512NF DOCKET NO. 22-25 

Served: February 22, 2023 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s January 19, 2023, Initial Decision Revoking Ocean Transportation 

License, in this docket has expired. Accordingly, the decision has become administratively final. 

William Cody

Secretary

 133 6 F.M.C. 2d
 FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

SANTA FE DISCOUNT CRUISE PARKING, INC., D/B/A EZ

CRUISE PARKING; LIGHTHOUSE PARKING INC; AND SYLVIA 

ROBLEDO D/B/A 81ST DOLPHIN PARKING, Complainants

v.

THE BOARD OF TRUSTEES OF THE GALVESTON WHARVES;

AND THE GALVESTON PORT FACILITIES CORPORATION, 

Respondents. 

DOCKET NO. 14-06 

Served: February 23, 2023 

ORDER OF: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION A

1

PPROVING SETTLEMENT AGREEMENT

I. INTRODUCTION

On February 7, 2023, remaining Complainant Sylvia Robledo d/b/a 81st Dolphin Parking

(“81st Dolphin”) and Respondents The Board of Trustee of the Galveston Wharves (“Board”) 

and the Galveston Port Facilities Corporation (“GPFC”), filed a document labeled as a Joint 

Petition for Approval of Partial Settlement (“Motion”). This filing is a joint motion to approve a 

settlement between the remaining parties, which would conclude this proceeding in its entirety. 

As discussed in greater detail below in the procedural history section, Respondent GPFC 

was dismissed as a party and Complainants EZ Cruise and Lighthouse entered into a settlement 

with Respondents. Therefore, the remaining parties in this proceeding are Complainant 81st

Dolphin and Respondent Board. The parties are also engaged in litigation before the United 

States District Court for the Southern District of Texas, Houston Division (the “Federal District 

Court Lawsuit”) which is also resolved as part of this settlement agreement. 

This proceeding has been extensively litigated and has a lengthy procedural history. 

Pertinent portions of the procedural history are summarized below to provide context for this 

initial decision. For the reasons discussed below, the settlement agreement of the few remaining 

issues is approved. Although the motion mentioned confidential treatment, the Office of the 

Secretary confirmed with the parties that they are not seeking confidentiality for the motion or 

settlement agreement.

1

 This initial decision will become the decision of the Commission in the absence of review by 

the Commission. 46 C.F.R. § 502.227. 

 134 6 F.M.C. 2d
II. PROCEDURAL HISTORY

On June 16, 2014, Complainants Santa Fe Discount Cruise Parking, Inc. d/b/a EZ Cruise 

Parking (“EZ Cruise”), Lighthouse Parking, Inc. (“Lighthouse”), and 81st Dolphin, private owners 

or operators of parking lots located outside the Port of Galveston, commenced this proceeding by 

filing a complaint with the Commission, alleging that the Board and GPFC, operators of a cruise 

ship terminal complex in Galveston Island, Texas, violated 46 U.S.C. §§ 41102(c), 41106(2) 

and 41106(3) of the Shipping Act of 1984 regarding parking fees charged by the terminal. On 

October 21, 2014, Complainants filed an Amended Complaint, adding paragraphs regarding a 

September 22, 2014, amended tariff. Leave to file the amended complaint was granted on 

November 21, 2014. 

On October 21, 2014, Respondents moved to dismiss the complaint and the ALJ granted 

in part and denied in part Respondents’ motion. Santa Fe Discount Cruise Parking, Inc. v. The 

Bd. of Trustees of the Galveston Wharves, Docket No. 14-06, 33 S.R.R. 1283, 2014 FMC LEXIS 

31 (ALJ Nov. 21, 2014). The ALJ dismissed with prejudice Complainants’ § 41102(c) and 

§ 41106(3) claims but allowed the § 41106(2) claims to proceed. 2014 FMC LEXIS 31 at *26-

*32, *37-*38. Neither party filed exceptions to the ALJ’s order, which then became

administratively final, and the parties subsequently filed briefs on the § 41106(2) claims. On

December 4, 2015, the ALJ dismissed the claims against Respondent GPFC as well as the

§ 41106(2) claims. 2015 FMC LEXIS 44 at *3-*4 (ALJ Dec. 4, 2015).

On January 13, 2017, the Commission issued an order affirming the dismissal of the 

Complaint and the claims against GPFC. 2017 FMC LEXIS 1 (FMC Jan. 13, 2017) (Order 

Affirming Initial Decision’s Dismissal of Complaint). Complainants EZ Cruise and 81st Dolphin 

sought review of the Commission’s decision by the United States Court of Appeals for the 

District of Columbia Circuit (“D.C. Circuit”). On May 11, 2018, the D.C. Circuit granted their

petition for review, vacated the FMC Order, and remanded the case to the Commission for further 

proceedings consistent with the court’s opinion. Santa Fe Discount Cruise Parking, Inc. v. Fed. 

Mar. Comm’n, 889 F.3d 795, 797 (D.C. Cir. 2018). 

On August 9, 2018, the Commission remanded the proceeding to the ALJ. Santa Fe 

Discount Cruise Parking, Inc. v. The Bd. of Trustees of the Galveston Wharves, 1 F.M.C. 2d 155 

(FMC Aug. 9, 2018) (Order Remanding Proceeding to Administrative Law Judge). On 

November 16, 2018, the ALJ issued an Initial Decision on Remand (“I.D.R.”). 2018 FMC LEXIS 

55 (FMC Nov. 16, 2018). The ALJ found that Complainants had not proven by a preponderance 

of the evidence that the Port violated section 41106(2), and again dismissed the Complaint with 

prejudice. 2018 FMC LEXIS 55 at *14-*15. Complainants filed exceptions to the I.D.R. 

On April 16, 2021, the Commission issued an Order on Initial Decision on Remand 

(“Order on I.D.R.”), partially reversing the I.D.R. and remanding the case to the ALJ for further 

proceedings. 2021 FMC LEXIS 56 at *59-*60 (FMC Apr. 16, 2021). The Order on I.D.R. found 

that Respondent Board violated 46 U.S.C. § 41106(2) with respect to EZ Cruise and 81st

Dolphin; vacated the I.D.R. with respect to attorney fees; affirmed the dismissal of all other 

claims, including the dismissal of GPFC in the I.D.; and, remanded the case to the ALJ to 

determine an appropriate reparations award. 2021 FMC LEXIS 56 at *82. 

 135 6 F.M.C. 2d
On April 20, 2021, a Notice was issued, reassigning this proceeding to the undersigned 

due to the retirement of the ALJ previously adjudicating this proceeding. In addition, an Order 

Requiring Joint Status Report (“April 20, 2021, Order for JSR”) was issued the same day, 

instructing the parties to file a joint status report with proposed schedule. Order Requiring Joint 

Status Report (ALJ April 20, 2021). 

On May 17, 2021, prior to the filing of the joint status report, Respondent Board filed a 

Petition for Reconsideration and Unopposed Motion for Stay of Proceedings (“Petition for 

Reconsideration”). The Petition for Reconsideration effectively stayed the proceeding before the 

ALJ. However, while the Petition for Reconsideration was pending before the Commission, the 

parties filed their joint status report with proposed schedule on May 24, 2021, and then filed their 

briefs in conformity with their proposed schedule on June 30, 2021 (Complainants), and July 30, 

2021 (Respondent). 

On July 26, 2021, Complainants EZ Cruise and Lighthouse and Respondents filed a Joint 

Petition for Approval of Partial Settlement, requesting approval of a settlement of this 

proceeding as well as the Federal District Court Lawsuit. On September 10, 2021, the 

Commission approved the settlement, which left only the claim by Complainant 81st Dolphin 

remaining. 

On June 2, 2022, the Commission issued an Order Granting in Part and Denying in Part 

Petition for Reconsideration (“Commission Remand Reconsideration Order”). The Commission 

granted Respondent’s petition on the issue of the correct end-date for recovering reparations and 

amended the Order on I.D.R. to allow the parties to submit arguments on the correct end-date for 

calculating reparations on the selective enforcement claim; granted the Board’s request to 

address the method for calculating reparations on remand; and denied Respondent’s petition as to 

all other issues. Commission Remand Reconsideration Order at 14-19. 

Following service of the Commission Remand Reconsideration Order, 2 on August 8, 

2022, another Order Requiring Joint Status Report (“August 8, 2022, Order for JSR”) was issued 

to the parties, directing them to discuss whether this proceeding could be settled, and instructing 

them to file a joint status report with a proposed schedule for briefing the remaining two issues in 

the proceeding: the correct end-date for calculating reparations on the selective enforcement 

claim and the method for calculating reparations on remand. August 8, 2022, Order for JSR at 2. 

On August 23, 2022, the parties submitted a joint status report. On August 30, 2022, a Remand 

Reconsideration Scheduling Order was issued. 

On September 30, 2022, Complainant filed its brief and supporting materials. On 

October 31, 2022, Respondent filed, together with its brief and supporting materials, an opposed 

motion seeking leave to include supplemental records regarding decal fees. On November 1, 

2022, Complainant filed a response to the motion and an Emergency Motion for Enlargement of 

Time to File Reply to Respondents’ Reply Brief on Remand. On November 7, 2022, an Order on 

Supplemental Evidence and Extension of Time was issued, granting Respondent leave to enter 

supplemental documents regarding decal fees into the record and granting Complainant 

2

 The Commission Remand Reconsideration Order was not served on OALJ until August 4, 2022. 

 136 6 F.M.C. 2d
additional time to respond. Order on Supplemental Evidence and Extension of Time at 4-5. On 

November 22, 2022, Complainant submitted its reply brief on reparations. 

On January 9, 2023, an order was issued granting an unopposed motion for a temporary 

stay while the parties mediated the dispute. On February 7, 2023, remaining Complainant 81st

Dolphin and Respondents filed a motion seeking approval of the settlement agreement.

III. DISCUSSION

Using language borrowed in part from the Administrative Procedure Act,3 Rule 75 of the

Commission’s Rules of Practice and Procedure gives interested parties an opportunity, inter alia, 

to submit offers of settlement where “time, the nature of the proceeding, and the public interest 

permit.” 46 C.F.R. § 502.75(b). If dismissal is sought due to a settlement by the parties, “the 

settlement agreement must be submitted with the motion for determination as to whether the 

settlement appears to violate any law or policy and to ensure the settlement is free of fraud, 

duress, undue influence, mistake, or other defects which might make it unapprovable.” 46 C.F.R. 

§ 502.72(a)(3). “Unless the order states otherwise, a dismissal under this paragraph is without

prejudice.” 46 C.F.R. § 502.72(a)(3).

The Commission has a strong and consistent policy of “encourag[ing] settlements and 

engag[ing] in every presumption which favors a finding that they are fair, correct, and valid.”

Inlet Fish Producers, Inc. v. Sea-Land Serv., Inc., 29 S.R.R. 975, 978 (ALJ 2002) (quoting Old 

Ben Coal Co. v. Sea-Land Serv., Inc., 18 S.R.R. 1085, 1091 (ALJ 1978) (Old Ben Coal)). See 

also Ellenville Handle Works, Inc. v. Far Eastern Shipping Co., 20 S.R.R. 761, 762 (ALJ 1981). 

The law favors the resolution of controversies and uncertainties through 

compromise and settlement rather than through litigation, and it is the policy of 

the law to uphold and enforce such contracts if they are fairly made and are not in 

contravention of some law or public policy. . . . The courts have considered it 

their duty to encourage rather than to discourage parties in resorting to 

compromise as a mode of adjusting conflicting claims. . . . The desire to uphold 

compromises and settlements is based upon various advantages which they have 

over litigation. The resolution of controversies by means of compromise and 

settlement is generally faster and less expensive than litigation; it results in a 

saving of time for the parties, the lawyers, and the courts, and it is thus 

advantageous to judicial administration, and, in turn, to government as a whole. 

Moreover, the use of compromise and settlement is conducive to amicable and 

peaceful relations between the parties to a controversy. 

Old Ben Coal, 18 S.R.R. at 1092 (quoting 15A AM. JUR. 2D Compromise and Settlement § 3 

(1976)). 

3

“The agency shall give all interested parties opportunity for – (1) the submission and 

consideration of facts, arguments, offers of settlement, or proposals of adjustment when time, the 

nature of the proceeding, and the public interest permit.” 5 U.S.C. § 554(c). 

 137 6 F.M.C. 2d
“While following these general principles, the Commission does not merely rubber stamp 

any proffered settlement, no matter how anxious the parties may be to terminate their litigation.”

Old Ben Coal, 18 S.R.R. at 1092. However, if “a proffered settlement does not appear to violate 

any law or policy and is free of fraud, duress, undue influence, mistake or other defects which 

might make it unapprovable despite the strong policy of the law encouraging approval of 

settlements, the settlement will probably pass muster and receive approval.” Old Ben Coal, 18 

S.R.R. at 1093. “[I]f it is the considered judgment of the parties that whatever benefits might 

result from vindication of their positions would be outweighed by the costs of continued 

litigation and if the settlement otherwise complies with law the Commission authorizes the 

settlement.” Delhi Petroleum Pty. Ltd. v. U.S. Atlantic & Gulf/Australia – New Zealand Conf. 

and Columbus Line, Inc., 24 S.R.R. 1129, 1134 (ALJ 1988) (citations omitted). 

“Reaching a settlement allows the parties to settle their differences, without an admission 

of a violation of law by the respondent, when both the complainant and respondent have decided 

that it would be much cheaper to settle on such terms than to seek to prevail after expensive 

litigation.” APM Terminals North America, Inc. v. Port Authority of New York and New Jersey, 

31 S.R.R. 623, 626 (FMC 2009) (citing Puerto Rico Freight Sys. Inc. v. PR Logistics Corp., 30 

S.R.R. 310, 311 (ALJ 2004)). 

The parties jointly request approval of the settlement agreement, stating: 

In the instant case, the settlement is the result of arm’s-length negotiations between 

sophisticated Parties, all of whom have been represented by counsel during the 

negotiation process. The proposed agreement does not contravene any law or 

public policy, nor is it unjust or discriminatory in any way. Additionally, this 

agreement will not result in any adverse effects to any third parties or on the 

shipping public. Indeed, the Parties’ disputes concern “access fees” assessed under 

Tariff provisions which no longer exist. The proposed settlement is fair and 

reasonable and reflects the Parties’ desire to resolve their issues without the need 

for costly and uncertain litigation. 

Motion at 5-6. 

This proceeding has been pending for an extended period of time and has been the 

subject of multiple appeals, including to the D.C. Court of Appeals. All of the Complainants 

have settled except for Complainant 81st Dolphin. The Commission issued an Order on Initial 

Decision on Remand on April 15, 2021, and an Order Granting in Part and Denying in Part 

Petition for Reconsideration on June 2, 2022. These Commission orders have narrowed the 

remaining issue to specific questions with regard to calculating reparations. This settlement 

agreement is nearly identical to a request approved previously by the Commission with other 

Complainants in this proceeding. 

Based on the representations in the joint motion and other documents filed in this matter, 

the parties have established that the settlement agreement does not appear to violate any law or 

policy or contain other defects which might make it unapprovable. The parties are represented by 

counsel and have engaged in arms-length settlement discussions. The parties have determined 

 138 6 F.M.C. 2d
that the settlement reasonably resolves the issues raised in the complaint without the need for 

additional costly and uncertain litigation. Accordingly, the settlement agreement is approved.

IV. ORDER

Upon consideration of the motion, the settlement agreement, and the record, and good

cause having been stated, it is hereby: 

ORDERED that the request to approve the settlement between 81st Dolphin Parking and 

The Board of Trustee of the Galveston Wharves be GRANTED. It is 

FURTHER ORDERED that this proceeding be DISMISSED WITHOUT 

PREJUDICE.

Erin M. Wirth 

Chief Administrative Law Judge 

 139 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION

COLOR BRANDS, LLC, Complainant.

v. 

AAF LOGISTICS, INC., Respondent. 

DOCKET NO. 22-18 

Served: February 23, 2023 

NOTICE OF COMMISSION DETERMINATION TO REVIEW

Notice is given that, pursuant to 46 C.F.R. § 502.227, the Commission has determined to 

review the Administrative Law Judge’s January 27, 2023, Initial Decision on Default in this 

proceeding. 

William Cody

Secretary

 140 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

WAN HAI LINES, LTD. AND WAN HAI LINES (USA) LTD. -

POSSIBLE VIOLATIONS OF 46 U.S.C. § 41102(C) 

DOCKET NO. 21-16

Served: March 13, 2023 

ORDER OF: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION APPROVING R

1 EMAND SETTLEMENT AGREEMENT

I. BACKGROUND AND HISTORY

On February 24, 2022, the Bureau of Enforcement, Investigations, and Compliance 

(“BEIC”) and Respondents Wan Hai Lines, Ltd. and Wan Hai Lines (USA) Ltd. (collectively 

“Wan Hai”) filed a motion and joint memorandum in support of proposed settlement (“Motion”), 

together with a copy of the proposed settlement agreement. The parties seek approval of the 

settlement agreement and dismissal of this proceeding with prejudice.

The Federal Maritime Commission (“Commission”) initiated this proceeding on 

December 30, 2021, by issuing an Order of Investigation and Hearing (“OIH”) to determine 

whether Respondents violated section 41102(c) of the Shipping Act regarding Respondents’ 

charges relating to empty container returns. OIH at 1. In addition, the Commission ordered the 

proceeding to be expedited. OIH at 9. 

The parties reached a previous settlement agreement. On June 7, 2022, an order was 

issued denying the previous joint settlement motion. The parties filed a joint appeal of the order 

denying the joint settlement motion. On December 15, 2022, the Commission issued an order 

affirming the denial of the joint settlement motion and returning the proceeding for further 

proceedings and resolution within four months.

On December 16, 2022, the parties were ordered to file a joint status report with proposed 

schedule. On December 27, 2022, a remand scheduling order was issued. The parties filed a joint 

petition for stay and revision of the schedule. On February 9, 2023, the Commission served an 

order denying the joint petition for stay. Earlier on February 9, 2023, the parties had filed a joint 

motion for stay of deadlines pending settlement. On February 10, 2023, an order was issued 

granting a two-week extension of deadlines as the parties finalized the settlement.

1

 This initial decision will become the decision of the Commission in the absence of review by 

the Commission. Any party may file exceptions to this decision within twenty-two days of the 

date of service. 46 C.F.R. § 502.227. 

 141 6 F.M.C. 2d
II. LEGAL STANDARD

Using language borrowed in part from the Administrative Procedure Act, Rule 75 of the 

Commission’s Rules of Practice and Procedure gives interested parties an opportunity, inter alia, 

to submit offers of settlement where “time, the nature of the proceeding, and the public interest 

permit.” 46 C.F.R. § 502.75(b); see 5 U.S.C. § 554(c). If dismissal is sought due to a settlement 

by the parties, “the settlement agreement must be submitted with the motion for determination as 

to whether the settlement appears to violate any law or policy and to ensure the settlement is free 

of fraud, duress, undue influence, mistake, or other defects which might make it unapprovable.” 

46 C.F.R. § 502.72(a)(3). “Unless the order states otherwise, a dismissal under this paragraph is 

without prejudice.” 46 C.F.R. § 502.72(a)(3).

The Commission has a long history of approving settlement agreements that meet the 

required criteria, including in enforcement proceedings.

The Commission’s decisions and regulations have long indicated a broad policy 

favoring settlement. In reviewing a proposed settlement, the Commission 

evaluates whether it would contravene any law or public policy, and whether it is 

“fair, reasonable, and adequate.” As the parties note, the Commission weighs 

enforcement policy in terms of deterrence and compliance, likely costs and delay, 

and “pragmatic litigative possibilities” regarding the proceeding’s potential 

outcomes. 

Possible Unfiled Agreement Between Hyundai Merchant Marine Company, Ltd. and 

Mediterranean Shipping Co., S.A., Docket No. 97-07, 2000 FMC LEXIS 2 at *4 (FMC May 2, 

2000) (citing Old Ben Coal Co. v. Sea-Land Serv., 21 F.M.C. 506, 512-513; 18 S.R.R. 1085, 

1091 (ALJ Nov. 29, 1978); Far Eastern Shipping Co. – Possible Violations of Sections 16, 

Second Paragraph 18(b)(3) and 18(c), Shipping Act, 1916, 21 S.R.R. 743, 1014 (ALJ Mar. 25, 

1982)). 

The Commission has routinely held that negotiated settlement agreements should 

be approved unless the agreements present one of a few defects requiring 

disapproval. The Commission has consistently adhered to a policy of encouraging 

settlements and engaging in every presumption which favors a finding that they 

are fair, correct, and valid. Despite the general preference for approval of 

settlement agreements, the Commission does not merely rubber stamp any 

proffered settlement. Instead, the Commission typically reviews a settlement 

agreement to ensure that it does not contravene law or public policy. Such review 

typically includes evaluating factors to determine that the settlement agreement 

was not a product of fraud, duress, undue influence, or mistake. The Commission 

also reviews the terms of settlement agreements to ensure that the terms are fair, 

reasonable, and adequate. The review process frequently involves a balancing of 

the likelihood of success on the merits against the cost and complexity of 

proceeding to final judgment. 

World Chance Logistics (Hong Kong), Ltd. and Yu, Chi Shing, a.k.a. Johnny Yu – Possible 

Violations of Section 10 of the Shipping Act of 1984, Docket No. 09-07, 2010 FMC LEXIS 27 at 

*5, 31 S.R.R. 1346, 1350 (FMC May 20, 2010) (internal citations omitted).

 142 6 F.M.C. 2d
This is an enforcement proceeding and Commission Rules require consideration of the 

Subpart W factors. Under Subpart W, Commission Rule 603(b), in “determining the amount of 

any penalties assessed,” the Commission is required to “take into account the nature, 

circumstances, extent and gravity of the violation committed and the policies for deterrence and 

future compliance with the Commission’s rules and regulations and the applicable statutes. The 

Commission shall also consider the respondent’s degree of culpability, history of prior offenses, 

ability to pay and such other matters as justice requires.” 46 C.F.R. § 502.603(b). These factors 

have since been codified in 46 U.S.C. § 41109 by the passage of the Ocean Shipping Reform Act 

of 2022, Pub. L. No. 117-146, 136 Stat. 1272. 

In addition, Commission Rule 603(a), governing the assessment of civil penalties in 

Commission-instituted proceedings, states that the “full text of any settlement must be included 

in the final order of the Commission.” 46 C.F.R. § 502.603(a); see also Remand Order at 6. 

III. SETTLEMENT AGREEMENT ANALYSIS

A. Settlement Terms

The parties state that the “revised Settlement Agreement addresses the purpose the 

Commission articulated in its OIH and Order Reversing the Initial Decision and Remand; 

specifically, the rules in Subpart W, which govern, among other things, the assessment of civil 

penalties 46 C.F.R. §§ 502.601-502.605.” Motion at 2 (footnote omitted). In addition, the parties 

state: 

The Parties agree to resolve their legal dispute in the Settlement Agreement and 

agree that settlement is in the interest of both parties, as it conserves litigative and 

administrative resources. Furthermore, the Settlement Agreement addresses the 

Commission’s enforcement interests of deterrence and compliance. A summary of 

terms of the Settlement Agreement are as follows: 

1. Within ten (10) calendar days after a decision approving this Settlement

Agreement becomes administratively final, Wan Hai shall make monetary

payment of civil penalties to the Commission, by cashier’s or certified

check or by online payment, in the total amount of $950,000.00.

2. Within fifteen (15) calendar days after a decision approving this

Settlement Agreement becomes administratively final, Wan Hai shall

refund to the underlying parties charges collected under the twenty-one

(21) invoices at issue in this proceeding as listed in Attachment A to the

Order of Investigation and Hearing).

3. Upon submission of this Settlement Agreement to the Administrative

Law Judge, Wan Hai agrees to cease and desist from knowingly assessing

detention charges where: (a) Wan Hai failed to provide an equipment return

location; (b) where Wan Hai identified an equipment return location that

was not accepting the container chassis; or (c) where appointments were

unavailable for equipment return, so as to comply hereafter with the

Interpretive Rule regarding Detention and Demurrage, 46 C.F.R.

§ 545.5(c)(1); 85 FR 29638 (May 18, 2020).

 143 6 F.M.C. 2d
4. BEIC and Wan Hai shall jointly submit to the Administrative Law Judge

a motion seeking approval of this Settlement Agreement.

5. Wan Hai hereby waives all rights now and, in the future, to seek judicial

review or otherwise challenge or contest the validity of the order entered

pursuant to this Agreement.

6. Upon a decision of the Administrative Law Judge or the Commission

approving this Settlement Agreement becomes administratively final, this

instrument shall forever bar the commencement or institution of any

assessment proceeding or other claim for recovery of civil penalties from

Wan Hai arising from the alleged violations set forth above as related to the

twenty-one (21) invoices identified in Attachment A to the Order of

Investigation and Hearing.

7. It is expressly understood and agreed that this Agreement is not, and is

not to be construed as, an admission by Wan Hai to the alleged violations

set forth above.

8. This agreement is subject to approval by the Commission in accordance

with 46 C.F.R. § 502.603. If the agreement is not approved, all Wan Hai’s

obligations hereunder shall cease.

Motion at 2-3.

Consistent with Commission Rule 603(a), the full text of the settlement agreement is 

attached to this order. 46 C.F.R. § 502.603(a). In addition, the settlement agreement has been 

posted on the docket on the Commission website. 

B. Criteria

1. Rule 72 Factors

Commission Rule 72 requires consideration of “whether the settlement appears to violate 

any law or policy and to ensure the settlement is free of fraud, duress, undue influence, mistake, 

or other defects which might make it unapprovable.” 46 C.F.R. § 502.72(a)(3).

The parties assert that the agreement is public and therefore “the agreement will inform 

other carriers and the shipping public so they may take note of its terms and conform their 

conduct thereto.” Motion at 5. The parties further contend that the settlement agreement “is free 

of fraud, duress, undue influence, mistake, or other defects which would otherwise result in its 

disapproval” and that “the settlement is the result of arms-length, good-faith negotiations 

conducted with the advice of counsel.” Motion at 5-6. 

Both parties are represented by counsel who have engaged in arm’s length negotiation 

and there is no indication of fraud, duress, undue influence, mistake, or other defects. The 

settlement promptly resolves an issue important to the shipping industry and avoids the potential 

costs and uncertain outcome inherent in litigation. Moreover, the agreement does not appear to 

violate any law or policy and is consistent with Commission requirements as outlined below. 

 144 6 F.M.C. 2d
2. Rule 603 Factors

Commission Rule 603(b) requires consideration of “the nature, circumstances, extent and 

gravity of the violation committed and the policies for deterrence and future compliance with the 

Commission’s rules and regulations and the applicable statutes. The Commission shall also 

consider the respondent’s degree of culpability, history of prior offenses, ability to pay and such 

other matters as justice requires.” 46 C.F.R. § 502.603(b). The parties have different positions 

regarding a number of these factors.

Regarding the nature, circumstances, extent, and gravity of the violation, Wan Hai 

indicates that it has evidence that “contradicts the position taken in the OIH and by BEIC in this 

proceeding and supports the reasonableness of its conduct” and asserts that it “would vigorously 

argue that the nature, circumstances, extent and gravity of the alleged violations do not warrant 

imposition of a significant penalty.” Motion at 6-7. 

BEIC contends that “the violations are serious, and that the nature, circumstance, extent, 

and gravity are all aggravating factors that compel a commensurate civil penalty” and that “this 

penalty amount will serve as a deterrent against future violations.” Motion at 7. BEIC further 

asserts that: 

Beyond the dollar amount of the civil penalty, the Settlement Agreement 

importantly provides for Wan Hai’s agreement to immediately comply with the 

Interpretive Rule and related statutory and regulatory requirements in the U.S. 

foreign trades. The Settlement Agreement coupled with the issuance of a ceaseand-desist order will deter future similar violative acts by Wan Hai. Moreover, it 

will serve as notice to other VOCCs that violative acts in contravention of the 

Interpretive Rule, 46 C.F.R. § 545.5(c)(1) run afoul of the Shipping Act. 

Motion at 7. 

Unlike the prior settlement agreement, this settlement agreement is clear, narrowly 

tailored to the specific facts of this case, and does not contain prescriptive measures which may 

or may not be reasonable as applied to future litigants. The civil penalty is significant and is 

consistent with the nature, circumstances, extent, and gravity of the 21 violations alleged. 

Moreover, there is a benefit to the shipping public in having an expeditious resolution which 

imposes a clear cease and desist order. While it is difficult to determine the degree of culpability 

at this stage of the proceeding, the civil penalty is significant and the cease and desist order 

ensures that further violations do not occur. Therefore, the proposed settlement is reasonable. 

Regarding the enforcement policy of deterrence and compliance, the parties assert: 

With respect to the policy of enforcement, BEIC stresses the importance of 

ensuring compliance with the law. Wan Hai supports the Commission’s 

objectives and has, in addition to payment of a civil penalty, agreed to comply 

with the Interpretive Rule, 46 C.F.R. § 545.5(c)(1) for all shipments within the 

jurisdiction of the Commission. The relief agreed to by Wan Hai provides 

assurances of deterrence and future compliance. Wan Hai’s commitment to these 

changes is reflected in its agreement to a cease-and-desist order. The agreed civil 

penalty adds further weight to the deterrent effect. Wan Hai also recognizes that 

 145 6 F.M.C. 2d
its failure to comply with the cease-and-desist order may result in much higher 

penalties being demanded by the Commission in any enforcement action resulting 

from such failure. Additionally, approval of the Settlement Agreement would put 

other ocean common carriers on notice and is likely to deter them from engaging 

in similar practices. 

Motion at 7-8. These factors also significantly weigh in favor of approving the proposed 

settlement agreement. 

Regarding litigative realities, the parties assert that the “litigative realities and cost of 

continued litigation weigh in favor of approving the Settlement Agreement” and that the 

“decision to settle reflects the consideration that, if the matter were not settled, both parties 

would be expected to vigorously defend their respective positions.” Motion at 11. The parties 

state: 

The litigative realities and cost of continued litigation weigh in favor of approving 

the Settlement Agreement. The decision to settle reflects the consideration that, if 

the matter were not settled, both parties would be expected to vigorously defend 

their respective positions and incur substantial administrative and financial costs 

based on the fact that several procedural steps remain in this proceeding. 

Acknowledging the Parties remain divergent on the merits of the case, they have 

carefully considered the costs, benefits, and risks of further litigation, and 

determined that settlement is in their mutual interests, as well as that of the 

shipping public. Both sides recognize the litigation reality that resolution of the 

proceeding by trial would be an expensive undertaking that would divert 

resources from each of the Parties. Moreover, it is likely that, even with the 

expedited schedule required by the Remand Order, as implemented by the ALJ’s

Remand Scheduling Order issued on December 27, 2022, the likelihood of appeal 

to the Commission and the courts, the matter would take significant time to reach 

a final resolution. The Settlement Agreement by contrast, would resolve the 

matter without extended litigation thereby bringing substantial, valuable, and 

immediate relief to the shipping public, including refunds of charges on the 21 

invoices at issue in this proceeding. Accordingly, consideration of these benefits 

along with the risks, costs, and uncertainties of continued litigation weighs in 

favor of approval of the Settlement Agreement. 

Motion at 8. The prompt settlement of this proceeding benefits the parties as well as the shipping 

public and therefore is a reasonable balance of the relevant factors. 

Regarding history of prior offenses and ability to pay, the parties state that “Wan Hai has 

no recent history of prior offenses” and “Wan Hai is one of the smaller ocean common carriers 

serving the U.S. Transpacific trade.” Motion at 8-9. These factors are consistent with the 

proposed penalty. 

A review of the settlement agreement and the relevant factors indicates that it satisfies the 

criteria for approval. Therefore, the settlement agreement is reasonable and will be approved, 

including imposition of civil penalties and a cease and desist order. 

 146 6 F.M.C. 2d
IV. ORDER

Accordingly, upon consideration of the motion, settlement agreement, and the record, and

good cause having been stated, it is hereby: 

ORDERED that the motion to approve the settlement agreement between the Bureau of 

Enforcement, Investigations, and Compliance and Wan Hai Lines, Ltd. and Wan Hai Lines 

(USA) Ltd. be GRANTED. It is 

FURTHER ORDERED that Wan Hai is hereby ORDERED to refund the underlying 

parties for charges collected under the twenty-one (21) invoices at issue in this proceeding as 

listed in Attachment A to the Order of Investigation and Hearing. It is

FURTHER ORDERED that the request for a cease and desist order be GRANTED. 

Wan Hai is hereby ORDERED to cease and desist from knowingly assessing detention charges 

where: (a) Wan Hai failed to provide an equipment return location; (b) where Wan Hai identified 

an equipment return location that was not accepting the container chassis; or (c) where 

appointments were unavailable for equipment return, so as to comply hereafter with the 

Interpretive Rule regarding Detention and Demurrage, 46 C.F.R. § 545.5(c)(1); 85 FR 29638 

(May 18, 2020). It is 

FURTHER ORDERED that this proceeding be DISMISSED WITH PREJUDICE. 

Erin M. Wirth 

Chief Administrative Law Judge 

 147 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION

GoForth & Marti D/B/A GM Business Interiors., 

Complainant 

v. 

HSIN Silk Road Shipping LTD., Respondents 

DOCKET NO. 22-16 

Served: March 21, 2023 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review 

the Administrative Law Judge’s February 15, 2023, Initial Decision has expired. Accordingly, 

the decision has become administratively final.

Pursuant to 46 C.F.R. §502.253, respondent HSIN Silk Road Shipping LTD shall pay 

to Claimant by April 5, 2023, reparations ($74,000) and interest ($2,361.41), totaling, 

$76,361.41. 

William Cody 

Secretary

 148 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

PHILIP REINISCH CO. LLC, Complainant

v.

FLEXPORT INTERNATIONAL LLC, Respondent. 

DOCKET NO. 22-26 

Served: March 24, 2023 

ORDER OF: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION A

1

PPROVING SETTLEMENT AGREEMENT

On March 9, 2023, Complainant Philip Reinisch Co. LLC (“Philip Reinisch”) and 

Respondent Flexport International LLC (“Flexport”) filed a joint motion seeking approval of a 

settlement, confidential treatment of the settlement agreement, and voluntary dismissal of the 

complaint (“Motion”) with a copy of the confidential settlement agreement. 

Using language borrowed in part from the Administrative Procedure Act, Rule 75 of the 

Commission’s Rules of Practice and Procedure gives interested parties an opportunity, inter alia, 

to submit offers of settlement where “time, the nature of the proceeding, and the public interest 

permit.” 46 C.F.R. § 502.75(b); see 5 U.S.C. § 554(c). If dismissal is sought due to a settlement 

by the parties, “the settlement agreement must be submitted with the motion for determination as 

to whether the settlement appears to violate any law or policy and to ensure the settlement is free 

of fraud, duress, undue influence, mistake, or other defects which might make it unapprovable.”

46 C.F.R. § 502.72(a)(3). “Unless the order states otherwise, a dismissal under this paragraph is 

without prejudice.” 46 C.F.R. § 502.72(a)(3).

The Commission has a strong and consistent policy of “encourag[ing] settlements and 

engag[ing] in every presumption which favors a finding that they are fair, correct, and valid.”

Inlet Fish Producers, Inc. v. Sea-Land Serv., Inc., 29 S.R.R. 975, 978 (ALJ 2002) (quoting Old 

Ben Coal Co. v. Sea-Land Serv., Inc., 18 S.R.R. 1085, 1091 (ALJ 1978) (Old Ben Coal)). See 

also Ellenville Handle Works, Inc. v. Far Eastern Shipping Co., 20 S.R.R. 761, 762 (ALJ 1981). 

The law favors the resolution of controversies and uncertainties through 

compromise and settlement rather than through litigation, and it is the policy of 

the law to uphold and enforce such contracts if they are fairly made and are not in 

1

 This initial decision will become the decision of the Commission in the absence of review by 

the Commission. Any party may file exceptions to this decision within twenty-two days of the 

date of service. 46 C.F.R. § 502.227. 

 149 6 F.M.C. 2d
contravention of some law or public policy. . . . The courts have considered it 

their duty to encourage rather than to discourage parties in resorting to 

compromise as a mode of adjusting conflicting claims. . . . The desire to uphold 

compromises and settlements is based upon various advantages which they have 

over litigation. The resolution of controversies by means of compromise and 

settlement is generally faster and less expensive than litigation; it results in a 

saving of time for the parties, the lawyers, and the courts, and it is thus 

advantageous to judicial administration, and, in turn, to government as a whole. 

Moreover, the use of compromise and settlement is conducive to amicable and 

peaceful relations between the parties to a controversy. 

Old Ben Coal, 18 S.R.R. at 1092 (quoting 15A AM. JUR. 2D Compromise and Settlement § 3 

(1976)). 

“While following these general principles, the Commission does not merely rubber stamp 

any proffered settlement, no matter how anxious the parties may be to terminate their litigation.”

Old Ben Coal, 18 S.R.R. at 1092. However, if “a proffered settlement does not appear to violate 

any law or policy and is free of fraud, duress, undue influence, mistake or other defects which 

might make it unapprovable despite the strong policy of the law encouraging approval of 

settlements, the settlement will probably pass muster and receive approval.” Old Ben Coal, 18 

S.R.R. at 1093. “[I]f it is the considered judgment of the parties that whatever benefits might 

result from vindication of their positions would be outweighed by the costs of continued 

litigation and if the settlement otherwise complies with law the Commission authorizes the 

settlement.” Delhi Petroleum Pty. Ltd. v. U.S. Atlantic & Gulf/Australia – New Zealand Conf. 

and Columbus Line, Inc., 24 S.R.R. 1129, 1134 (ALJ 1988) (citations omitted). 

“Reaching a settlement allows the parties to settle their differences, without an admission 

of a violation of law by the respondent, when both the complainant and respondent have decided 

that it would be much cheaper to settle on such terms than to seek to prevail after expensive 

litigation.” APM Terminals North America, Inc. v. Port Authority of New York and New Jersey, 

31 S.R.R. 623, 626 (FMC 2009) (citing Puerto Rico Freight Sys. Inc. v. PR Logistics Corp., 30 

S.R.R. 310, 311 (ALJ 2004)). 

The parties state:

In this action, the Parties, both sophisticated corporate entities, and represented by 

counsel, arrived at the Confidential Settlement Agreement through arm’s length 

negotiations and support this motion and the relief that it seeks. The Confidential 

Settlement Agreement does not contravene any law or public policy and is neither 

unjust nor discriminatory. It does not contemplate any adverse effects on any third 

parties or the shipping public. Instead, the Confidential Settlement Agreement is a 

fair and reasonable resolution of the disputes between the Parties and reflects their 

desire to resolve their issues without the need for costly and uncertain litigation. 

For these reasons, the Parties respectfully request that the Confidential Settlement 

Agreement be approved and, on that basis, the Complaint in this matter be 

dismissed with prejudice. 

Motion at 3. 

 150 6 F.M.C. 2d
Based on the representations in the joint motion and other documents filed in this matter, 

the parties have established that the settlement agreement does not appear to violate any law or 

policy or contain other defects which might make it unapprovable. The parties are represented by 

counsel and have engaged in arms-length settlement discussions. The proceeding would require 

potentially expensive discovery and briefing. The parties have determined that the settlement 

reasonably resolves the issues raised in the complaint without the need for costly and uncertain 

litigation. Accordingly, the settlement agreement is approved. 

The parties request that the settlement agreement be kept confidential. Pursuant to 

Commission Rule 5(b), parties may request confidentiality. 46 C.F.R. § 502.5(b); see also 46 

C.F.R. § 502.141(j). “If parties wish to keep the terms of their settlement agreements

confidential, the Commission, as well as the courts, have honored such requests.” Al Kogan v.

World Express Shipping, Transportation and Forwarding Services, Inc., 29 S.R.R. 68, 70 n.7

(ALJ 2000) (citations omitted); Marine Dynamics v. RTM Line, Ltd., 27 S.R.R. 503, 504 (ALJ

1996); Int’l Assoc. of NVOCCs v. Atlantic Container Line, 25 S.R.R. 1607, 1609 (ALJ 1991).

The confidential settlement agreement has been reviewed by the undersigned and is 

available to the Commission. Given the parties’ request for confidentiality, confidential 

information included in the settlement agreement, and the Commission’s history of permitting 

agreements settling private complaints to remain confidential, the parties’ request for 

confidentiality for the settlement agreement is granted. The settlement agreement will be 

maintained in the Secretary’s confidential files.

Upon consideration of the motion, the settlement agreement, and the record, and good 

cause having been stated, it is hereby: 

ORDERED that the motion to approve the settlement agreement between Complainant 

Philip Reinisch and Respondent Flexport be GRANTED. It is 

FURTHER ORDERED that the request for confidential treatment be GRANTED. It is 

FURTHER ORDERED that this proceeding be DISMISSED WITH PREJUDICE. 

Erin M. Wirth 

Chief Administrative Law Judge 

 151 6 F.M.C. 2d
 

 

 

FEDERAL MARITIME COMMISSION

DOCKET NO. 14-06

SANTA FE DISCOUNT CRUISE PARKING, INC., d/b/a EZ CRUISE PARKING;

LIGHTHOUSE PARKING INC.; and

SYLVIA ROBLEDO d/b/a 81

st DOLPHIN PARKING

v.

THE BOARD OF TRUSTEES OF THE GALVESTON WARVES; 

and THE GALVESTON PORT FACILITIES CORPORATION 

Served: March 28, 2023

NOTICE NOT TO REVIEW 

 

Notice is given that the time within which the Commission could determine to 

review the Administrative Law Judge’s February 23, 2023, Initial Decision has 

expired. Accordingly, the decision has become administratively final. 

William Cody

Secretary

 152 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION

) 

WAN HAI LINES, LTD. AND ) 

WAN HAI LINES (USA) LTD.– ) DOCKET NO. 21-16 

) 

POSSIBLE VIOLATIONS OF 46 U.S.C. § 41102(C) ) 

) 

Served: April 13, 2023

Notice Not to Review 

 Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s March 13, 2023, Initial Decision Approving Remand Settlement 

Agreement has expired. Accordingly, the decision has become administratively final.

William Cody

Secretary

 153 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

U SHIPPERS GROUP INC., Complainant 

v. 

MAERSK A/S DBA MAERSK, Respondent. 

DOCKET NO. 22-22 

Served: April 17, 2023 

ORDER OF: Linda S. Harris CROVELLA, Administrative Law Judge. 

INITIAL ECISION PPROVING ETTLEMENT GREEMENT1 

On March 31, 2023, Complainant U Shippers Group, Inc. (“U Shippers”), and 

Respondent Maersk A/S DBA Maersk (“Maersk”), filed a joint motion seeking approval of a 

confidential settlement agreement and dismissal with prejudice of the complaint (“Motion”), 

with a copy of the confidential settlement agreement. 

Using language borrowed in part from the Administrative Procedure Act, Rule 75 of the 

Commission’s Rules of Practice and Procedure gives interested parties an opportunity, inter alia, 

to submit offers of settlement where “time, the nature of the proceeding, and the public interest 

permit.” 46 C.F.R. § 502.75(b); see 5. U.S.C. § 554(c). If dismissal is sought due to a settlement 

by the parties, “the settlement agreement must be submitted with the motion for determination as 

to whether the settlement appears to violate any law or policy and to ensure the settlement is free 

of fraud, duress, undue influence, mistake, or other defects which might make it unapprovable.” 

46 C.F.R. § 502.72(a)(3). “Unless the order states otherwise, a dismissal under this paragraph is 

without prejudice.” 46 C.F.R. § 502.72(a)(3). 

The Commission has a strong and consistent policy of “encourag[ing] settlements and 

engag[ing] in every presumption which favors a finding that they are fair, correct, and valid.” 

Inlet Fish Producers, Inc. v. Sea-Land Serv., Inc., 29 S.R.R. 975, 978 (ALJ 2002) (quoting Old 

Ben Coal Co. v. Sea-Land Serv., Inc., 18 S.R.R. 1085, 1091 (ALJ 1978) (Old Ben Coal)). See 

also Ellenville Handle Works, Inc. v. Far Eastern Shipping Co., 20 S.R.R. 761, 762 (ALJ 1981). 

The law favors the resolution of controversies and uncertainties through 

compromise and settlement rather than through litigation, and it is the policy of 

1 This initial decision will become the decision of the Commission in the absence of review by 

the Commission. Any party may file exceptions to this decision within twenty-two days of the 

date of service. 46 C.F.R. § 502.227. 

D A S A 

 154 6 F.M.C. 2d
the law to uphold and enforce such contracts if they are fairly made and are not in 

contravention of some law or public policy. . . . The courts have considered it 

their duty to encourage rather than to discourage parties in resorting to 

compromise as a mode of adjusting conflicting claims. . . . The desire to uphold 

compromises and settlements is based upon various advantages which they have 

over litigation. The resolution of controversies by means of compromise and 

settlement is generally faster and less expensive than litigation; it results in a 

saving of time for the parties, the lawyers, and the courts, and it is thus 

advantageous to judicial administration, and, in turn, to government as a whole. 

Moreover, the use of compromise and settlement is conducive to amicable and 

peaceful relations between the parties to a controversy. 

Old Ben Coal, 18 S.R.R. at 1092 (quoting 15A AM. JUR. 2D Compromise and Settlement § 3 

(1976)). 

“While following these general principles, the Commission does not merely rubber stamp 

any proffered settlement, no matter how anxious the parties may be to terminate their litigation.” 

Old Ben Coal, 18 S.R.R. at 1092. However, if “a proffered settlement does not appear to violate 

any law or policy and is free of fraud, duress, undue influence, mistake or other defects which 

might make it unapprovable despite the strong policy of the law encouraging approval of 

settlements, the settlement will probably pass muster and receive approval.” Old Ben Coal, 18 

S.R.R. at 1093. “[I]f it is the considered judgment of the parties that whatever benefits might 

result from vindication of their positions would be outweighed by the costs of continued 

litigation and if the settlement otherwise complies with law the Commission authorizes the 

settlement.” Delhi Petroleum Pty. Ltd. v. U.S. Atlantic & Gulf/Australia – New Zealand Conf. 

and Columbus Line, Inc., 24 S.R.R. 1129, 1134 (ALJ 1988) (citations omitted). 

“Reaching a settlement allows the parties to settle their differences, without an admission 

of a violation of law by the respondent, when both the complainant and respondent have decided 

that it would be much cheaper to settle on such terms than to seek to prevail after expensive 

litigation.” APM Terminals North America, Inc. v. Port Authority of New York and New Jersey, 

31 S.R.R. 623, 626 (FMC 2009) (citing Puerto Rico Freight Sys. Inc. v. PR Logistics Corp., 30 

S.R.R. 310, 311 (ALJ 2004)). 

The parties state: 

In this action, the parties, both sophisticated corporate entities represented by 

counsel, arrived at the Confidential Settlement Agreement through arm’s length 

negotiations and support this motion and the relief that it seeks. The Confidential 

Settlement Agreement does not contravene any law or public policy, and is 

neither unjust nor discriminatory. It does not contemplate any adverse effects on 

any third parties or the shipping public. Instead, the Confidential Settlement 

Agreement is a fair and reasonable resolution of the dispute between the parties 

and reflects their desire to resolve their issues without the need for costly and 

uncertain litigation. For these reasons, the parties respectfully request that the 

Confidential Settlement Agreement be approved and, on that basis, the complaint 

in this matter be dismissed with prejudice. 

 155 6 F.M.C. 2d
 

Motion at 3. 

Based on the representations in the joint motion and other documents filed in this matter, 

the parties have established that the settlement agreement does not appear to violate any law or 

policy or contain other defects which might make it unapprovable. The parties are represented by 

counsel and have engaged in arms-length settlement discussions. The proceeding would require 

potentially expensive discovery and briefing. The parties have determined that the settlement 

reasonably resolves the issues raised in the complaint without the need for costly and uncertain 

litigation. Accordingly, the settlement agreement is approved. 

The parties request that the settlement agreement be kept confidential. Pursuant to 

Commission Rule 5(b), parties may request confidentiality. 46 C.F.R. § 502.5(b); see also 46 

C.F.R. § 502.141(j). “If parties wish to keep the terms of their settlement agreements

confidential, the Commission, as well as the courts, have honored such requests.” Al Kogan v.

World Express Shipping, Transportation and Forwarding Services, Inc., 29 S.R.R. 68, 70 n.7

(ALJ 2000) (citations omitted); Marine Dynamics v. RTM Line, Ltd., 27 S.R.R. 503, 504 (ALJ

1996); Int’l Assoc. of NVOCCs v. Atlantic Container Line, 25 S.R.R. 1607, 1609 (ALJ 1991).

The confidential settlement agreement has been reviewed by the undersigned and is 

available to the Commission. Given the parties’ request for confidentiality, confidential 

information included in the settlement agreement, and the Commission’s history of permitting 

agreements settling private complaints to remain confidential, the parties’ request for 

confidentiality for the settlement agreement is granted. The settlement agreement will be 

maintained in the Secretary’s confidential files. 

Upon consideration of the motion, the settlement agreement, and the record, and good 

cause having been stated, it is hereby: 

ORDERED that the motion to approve the settlement agreement between Complainant 

U Shippers and Respondent Maersk be GRANTED. It is 

FURTHER ORDERED that the request for confidential treatment be GRANTED. It is 

FURTHER ORDERED that this proceeding be DISMISSED WITH PREJUDICE. 

 ____________________________ 

Linda S. Harris Crovella 

Administrative Law Judge 

 156 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION 

PHILIP REINISCH CO. LLC, Complainant 

v.

FLEXPORT INTERNATIONAL LLC, Respondent.

DOCKET NO. 22-26

Served: April 25, 2023

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s March 24, 2023, Initial Decision has expired. Accordingly, the 

decision has become administratively final.

William Cody

Secretary

 157 6 F.M.C. 2d
 

 

 

 

FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

DOKA U.S.A. LTD., Complainant 

v. 

MSC MEDITERRANEAN SHIPPING COMPANY (USA) INC., 

Respondent. 

DOCKET NO. 22-32 

Served: May 12, 2023 

ORDER OF: Linda S. Harris CROVELLA, Administrative Law Judge. 

INITIAL DECISION APPROVING SETTLEMENT AGREEMENT1 

On April 27, 2023, Complainant Doka U.S.A. Ltd. (“Doka”) and Respondent MSC 

Mediterranean Shipping Company (USA) Inc. (“MSC Mediterranean”) filed a joint motion 

seeking approval of a confidential settlement agreement and dismissal with prejudice of the 

complaint (“Motion”), with a copy of the confidential settlement agreement. 

Using language borrowed in part from the Administrative Procedure Act, Rule 75 of the 

Commission’s Rules of Practice and Procedure gives interested parties an opportunity, inter alia, 

to submit offers of settlement where “time, the nature of the proceeding, and the public interest 

permit.” 46 C.F.R. § 502.75(b); see 5. U.S.C. § 554(c). If dismissal is sought due to a settlement 

by the parties, “the settlement agreement must be submitted with the motion for determination as 

to whether the settlement appears to violate any law or policy and to ensure the settlement is free 

of fraud, duress, undue influence, mistake, or other defects which might make it unapprovable.” 

46 C.F.R. § 502.72(a)(3). “Unless the order states otherwise, a dismissal under this paragraph is 

without prejudice.” 46 C.F.R. § 502.72(a)(3). 

The Commission has a strong and consistent policy of “encourag[ing] settlements and 

engag[ing] in every presumption which favors a finding that they are fair, correct, and valid.” 

Inlet Fish Producers, Inc. v. Sea-Land Serv., Inc., 29 S.R.R. 975, 978 (ALJ 2002) (quoting Old 

Ben Coal Co. v. Sea-Land Serv., Inc., 18 S.R.R. 1085, 1091 (ALJ 1978) (Old Ben Coal)). See 

also Ellenville Handle Works, Inc. v. Far Eastern Shipping Co., 20 S.R.R. 761, 762 (ALJ 1981). 

The law favors the resolution of controversies and uncertainties through 

compromise and settlement rather than through litigation, and it is the policy of 

1 This initial decision will become the decision of the Commission in the absence of review by 

the Commission. Any party may file exceptions to this decision within twenty-two days of the 

date of service. 46 C.F.R. § 502.227. 

 158 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

the law to uphold and enforce such contracts if they are fairly made and are not in 

contravention of some law or public policy. . . . The courts have considered it 

their duty to encourage rather than to discourage parties in resorting to 

compromise as a mode of adjusting conflicting claims. . . . The desire to uphold 

compromises and settlements is based upon various advantages which they have 

over litigation. The resolution of controversies by means of compromise and 

settlement is generally faster and less expensive than litigation; it results in a 

saving of time for the parties, the lawyers, and the courts, and it is thus 

advantageous to judicial administration, and, in turn, to government as a whole. 

Moreover, the use of compromise and settlement is conducive to amicable and 

peaceful relations between the parties to a controversy. 

Old Ben Coal, 18 S.R.R. at 1092 (quoting 15A AM. JUR. 2D Compromise and Settlement § 3 

(1976)). 

“While following these general principles, the Commission does not merely rubber stamp 

any proffered settlement, no matter how anxious the parties may be to terminate their litigation.” 

Old Ben Coal, 18 S.R.R. at 1092. However, if “a proffered settlement does not appear to violate 

any law or policy and is free of fraud, duress, undue influence, mistake or other defects which 

might make it unapprovable despite the strong policy of the law encouraging approval of 

settlements, the settlement will probably pass muster and receive approval.” Old Ben Coal, 18 

S.R.R. at 1093. “[I]f it is the considered judgment of the parties that whatever benefits might 

result from vindication of their positions would be outweighed by the costs of continued 

litigation and if the settlement otherwise complies with law the Commission authorizes the 

settlement.” Delhi Petroleum Pty. Ltd. v. U.S. Atlantic & Gulf/Australia – New Zealand Conf. 

and Columbus Line, Inc., 24 S.R.R. 1129, 1134 (ALJ 1988) (citations omitted). 

“Reaching a settlement allows the parties to settle their differences, without an admission 

of a violation of law by the respondent, when both the complainant and respondent have decided 

that it would be much cheaper to settle on such terms than to seek to prevail after expensive 

litigation.” APM Terminals North America, Inc. v. Port Authority of New York and New Jersey, 

31 S.R.R. 623, 626 (FMC 2009) (citing Puerto Rico Freight Sys. Inc. v. PR Logistics Corp., 30 

S.R.R. 310, 311 (ALJ 2004)). 

The parties, “both sophisticated corporate entities,” state that they “arrived at the 

Confidential Settlement Agreement through arm’s length negotiations and support this motion 

and the relief that it seeks.” Motion at 3. The parties state: 

The Confidential Settlement Agreement does not contravene any law or public 

policy and is neither unjust nor discriminatory. It does not contemplate any 

adverse effects on any third parties or the shipping public. Instead, the 

Confidential Settlement Agreement is a fair and reasonable resolution of the 

disputes between the parties and reflects their desire to resolve their issues with 

the need for costly and uncertain litigation. 

Id. 

 159 6 F.M.C. 2d
Based on the representations in the joint motion and other documents filed in this matter, 

the parties have established that the settlement agreement does not appear to violate any law or 

policy or contain other defects which might make it unapprovable. The parties are represented by 

counsel and have engaged in arms-length settlement discussions. The proceeding would require 

potentially expensive discovery and briefing. The parties have determined that the settlement 

reasonably resolves the issues raised in the complaint without the need for costly and uncertain 

litigation. Accordingly, the settlement agreement is approved. 

The parties request that the settlement agreement be kept confidential. Pursuant to 

Commission Rule 5(b), parties may request confidentiality. 46 C.F.R. § 502.5(b); see also 46 

C.F.R. § 502.141(j). “If parties wish to keep the terms of their settlement agreements

confidential, the Commission, as well as the courts, have honored such requests.” Al Kogan v.

World Express Shipping, Transportation and Forwarding Services, Inc., 29 S.R.R. 68, 70 n.7

(ALJ 2000) (citations omitted); Marine Dynamics v. RTM Line, Ltd., 27 S.R.R. 503, 504 (ALJ

1996); Int’l Assoc. of NVOCCs v. Atlantic Container Line, 25 S.R.R. 1607, 1609 (ALJ 1991).

The confidential settlement agreement has been reviewed by the undersigned and is 

available to the Commission. Given the parties’ request for confidentiality, confidential 

information included in the settlement agreement, and the Commission’s history of permitting 

agreements settling private complaints to remain confidential, the parties’ request for 

confidentiality for the settlement agreement is granted. The settlement agreement will be 

maintained in the Secretary’s confidential files. 

Upon consideration of the motion, the settlement agreement, and the record, and good 

cause having been stated, it is hereby: 

ORDERED that the motion to approve the settlement agreement between Complainant 

Doka and Respondent MSC Mediterranean be GRANTED. It is 

FURTHER ORDERED that the request for confidential treatment be GRANTED. It is 

FURTHER ORDERED that this proceeding be DISMISSED WITH PREJUDICE. 

Linda S. Harris Crovella 

Administrative Law Judge 

 160 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION

U SHIPPERS GROUP INC., COMPLAINANT

V.

MAERSK A/S DBA MAERSK, Respondent 

DOCKET NO. 22-22

Served: May 19, 2023 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s April 17, 2023, Initial Decision Approving Settlement has expired. 

Accordingly, the decision has become administratively final.

William Cody 

Secretary

 161 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges 

CCMA, LLC, Complainant

v. 

MEDITERRANEAN SHIPPING COMPANY S.A. AND

MEDITERRANEAN SHIPPING COMPANY (USA) INC., 

Respondents. 

DOCKET NO. 22-33 

Served: May 26, 2023 

ORDER OF: Linda S. Harris CROVELLA, Administrative Law Judge. 

INITIAL DECISION APPROVING SETTLEMENT AGREEMENT1

On May 12, 2023, Complainant CCMA, LLC (“CCMA”) and Respondents 

Mediterranean Shipping Company S.A. (“MSC S.A.”) and Mediterranean Shipping Company 

(USA) Inc. (“MSC USA”), filed a joint motion seeking approval of a confidential settlement 

agreement and dismissal with prejudice of the complaint (“Motion”), with a copy of the 

confidential settlement agreement.

Using language borrowed in part from the Administrative Procedure Act, Rule 75 of the 

Commission’s Rules of Practice and Procedure gives interested parties an opportunity, inter alia, 

to submit offers of settlement where “time, the nature of the proceeding, and the public interest 

permit.” 46 C.F.R. § 502.75(b); see 5. U.S.C. § 554(c). If dismissal is sought due to a settlement 

by the parties, “the settlement agreement must be submitted with the motion for determination as

to whether the settlement appears to violate any law or policy and to ensure the settlement is free 

of fraud, duress, undue influence, mistake, or other defects which might make it unapprovable.” 

46 C.F.R. § 502.72(a)(3). “Unless the order states otherwise, a dismissal under this paragraph is 

without prejudice.” 46 C.F.R. § 502.72(a)(3). 

The Commission has a strong and consistent policy of “encourag[ing] settlements and 

engag[ing] in every presumption which favors a finding that they are fair, correct, and valid.” 

Inlet Fish Producers, Inc. v. Sea-Land Serv., Inc., 29 S.R.R. 975, 978 (ALJ 2002) (quoting Old

Ben Coal Co. v. Sea-Land Serv., Inc., 18 S.R.R. 1085, 1091 (ALJ 1978) (Old Ben Coal)). See 

also Ellenville Handle Works, Inc. v. Far Eastern Shipping Co., 20 S.R.R. 761, 762 (ALJ 1981). 

1 This initial decision will become the decision of the Commission in the absence of review by 

the Commission. Any party may file exceptions to this decision within twenty-two days of the 

date of service. 46 C.F.R. § 502.227. 

162 6 F.M.C. 2d
The law favors the resolution of controversies and uncertainties through 

compromise and settlement rather than through litigation, and it is the policy of 

the law to uphold and enforce such contracts if they are fairly made and are not in 

contravention of some law or public policy. . . . The courts have considered it 

their duty to encourage rather than to discourage parties in resorting to 

compromise as a mode of adjusting conflicting claims. . . . The desire to uphold 

compromises and settlements is based upon various advantages which they have 

over litigation. The resolution of controversies by means of compromise and 

settlement is generally faster and less expensive than litigation; it results in a 

saving of time for the parties, the lawyers, and the courts, and it is thus 

advantageous to judicial administration, and, in turn, to government as a whole. 

Moreover, the use of compromise and settlement is conducive to amicable and 

peaceful relations between the parties to a controversy. 

Old Ben Coal, 18 S.R.R. at 1092 (quoting 15A AM. JUR. 2D Compromise and Settlement § 3 

(1976)). 

“While following these general principles, the Commission does not merely rubber stamp 

any proffered settlement, no matter how anxious the parties may be to terminate their litigation.” 

Old Ben Coal, 18 S.R.R. at 1092. However, if “a proffered settlement does not appear to violate 

any law or policy and is free of fraud, duress, undue influence, mistake or other defects which 

might make it unapprovable despite the strong policy of the law encouraging approval of 

settlements, the settlement will probably pass muster and receive approval.” Old Ben Coal, 18 

S.R.R. at 1093. “[I]f it is the considered judgment of the parties that whatever benefits might 

result from vindication of their positions would be outweighed by the costs of continued 

litigation and if the settlement otherwise complies with law the Commission authorizes the 

settlement.” Delhi Petroleum Pty. Ltd. v. U.S. Atlantic & Gulf/Australia – New Zealand Conf. 

and Columbus Line, Inc., 24 S.R.R. 1129, 1134 (ALJ 1988) (citations omitted). 

“Reaching a settlement allows the parties to settle their differences, without an admission 

of a violation of law by the respondent, when both the complainant and respondent have decided 

that it would be much cheaper to settle on such terms than to seek to prevail after expensive 

litigation.” APM Terminals North America, Inc. v. Port Authority of New York and New Jersey, 

31 S.R.R. 623, 626 (FMC 2009) (citing Puerto Rico Freight Sys. Inc. v. PR Logistics Corp., 30 

S.R.R. 310, 311 (ALJ 2004)). 

The parties, “both sophisticated corporate entities,” state that they “arrived at the 

Confidential Settlement Agreement through arm’s length negotiations and support this motion 

and the relief that it seeks.” Motion at 3. The parties state:

The Confidential Settlement Agreement does not contravene any law or public 

policy and is neither unjust nor discriminatory. It does not contemplate any 

adverse effects on any third parties or the shipping public. Instead, the 

Confidential Settlement Agreement is a fair and reasonable resolution of the 

disputes between the parties and reflects their desire to resolve their issues 

without the need for costly and uncertain litigation. 

 163 6 F.M.C. 2d
Id. 

Based on the representations in the joint motion and other documents filed in this matter, 

the parties have established that the settlement agreement does not appear to violate any law or 

policy or contain other defects which might make it unapprovable. The parties are represented by 

counsel and have engaged in arms-length settlement discussions. The proceeding would require 

potentially expensive discovery and briefing. The parties have determined that the settlement 

reasonably resolves the issues raised in the complaint without the need for costly and uncertain 

litigation. Accordingly, the settlement agreement is approved. 

The parties request that the settlement agreement be kept confidential. Pursuant to 

Commission Rule 5(b), parties may request confidentiality. 46 C.F.R. § 502.5(b); see also 46 

C.F.R. § 502.141(j). “If parties wish to keep the terms of their settlement agreements

confidential, the Commission, as well as the courts, have honored such requests.” Al Kogan v.

World Express Shipping, Transportation and Forwarding Services, Inc., 29 S.R.R. 68, 70 n.7

(ALJ 2000) (citations omitted); Marine Dynamics v. RTM Line, Ltd., 27 S.R.R. 503, 504 (ALJ

1996); Int’l Assoc. of NVOCCs v. Atlantic Container Line, 25 S.R.R. 1607, 1609 (ALJ 1991).

The confidential settlement agreement has been reviewed by the undersigned and is 

available to the Commission. Given the parties’ request for confidentiality, confidential 

information included in the settlement agreement, and the Commission’s history of permitting 

agreements settling private complaints to remain confidential, the parties’ request for 

confidentiality for the settlement agreement is granted. The settlement agreement will be 

maintained in the Secretary’s confidential files. 

Upon consideration of the motion, the settlement agreement, and the record, and good 

cause having been stated, it is hereby:

ORDERED that the motion to approve the settlement agreement between Complainant 

CCMA and Respondents MSC S.A. and MSC USA be GRANTED. It is 

FURTHER ORDERED that the request for confidential treatment be GRANTED. It is

FURTHER ORDERED that this proceeding be DISMISSED WITH PREJUDICE. 

Linda S. Harris Crovella 

Administrative Law Judge

 164 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION

Office of Administrative Law Judges 

OJ COMMERCE, LLC, Complainant

v. 

HAMBURG SÜDAMERIKANISCHE DAMPFSCHIFFFAHRTSGESELLSCHAFT A/S & CO. KG AND HAMBURG SUD NORTH

AMERICA, INC., Respondents. 

DOCKET NO. 21-11 

Served: June 7, 2023 

ORDER OF: Erin M. WIRTH, Chief Administrative Law Judge. 

INITIAL DECISION1

[Exceptions filed by Complainant and a Respondent, 6/29/23, Commission final decision pending.]

I. INTRODUCTION

A. Overview

This proceeding began on December 13, 2021, when the Federal Maritime Commission 

(“Commission” or “FMC”) issued a notice of filing of complaint and assignment, indicating that 

Complainant OJ Commerce, LLC (“OJC”) had filed a complaint against Respondents Hamburg 

Südamerikanische Dampfschifffahrts-Gesellschaft A/S & CO. KG (“HSDG”) and Hamburg Sud 

North America, Inc. (“HSNA”). As the decision shows, much of the conduct at issue was 

performed by HSNA employees acting as agents for HSDG, therefore, this decision will refer to 

“Hamburg,” in the singular, to include both entities. 

An amended complaint, entered on February 18, 2022, alleges that Hamburg violated the 

Shipping Act of 1984 (“Shipping Act”) at 46 U.S.C. §§ 41102(b)(2), 41102(c), 41104(a)(3), 

41104(a)(5), 41104(a)(9), and 41104(a)(10). On August 31, 2022, OJC’s claims under sections 

41102(b)(2), 41104(a)(5), and 41104(a)(9) were dismissed. In addition, OJC’s claim of 

unreasonable practices under section 41102(c) is resolved, as Hamburg refunded the full amount 

of the demurrage charges at issue. Brief at 9 n.15.2 Therefore, the remaining claims are sections 

41104(a)(3) (retaliation), and 41104(a)(10) (refusal to deal). 

1

 This initial decision will become the decision of the Commission in the absence of review by 

the Commission. Any party may file exceptions to this decision within twenty-two days of the 

date of service. 46 C.F.R. § 502.227. 

2 The parties’ filings are abbreviated as follows: Complainant’s brief (“Brief”), Complainant’s 

proposed findings of fact (“CPFF”), Respondents’ reply brief (“Opposition”), Respondents’ 

proposed findings of fact (“RPFF”), Respondents’ response to Complainant’s proposed findings 

165 6 F.M.C. 2d
This case raises novel legal issues about refusal to deal claims, retaliation claims, and 

calculation of reparations. In addition, the parties disagree about many of the factual allegations. 

The parties heavily litigated this proceeding, with multiple motions to compel evidence filed. 

Indeed, both parties allege that the other party violated discovery requirements. 

OJC asserts that after receiving a demand letter on April 28, 2021, from OJC’s attorneys 

threatening to file an FMC complaint, Hamburg refused to deal and retaliated both by refusing to 

fulfill existing contractual obligations under the 2020-21 service contract and by refusing to renew 

or negotiate a 2021-22 service contract. Hamburg contends that it did not retaliate or refuse to deal 

or negotiate, that OJC fails to prove damages with reasonable certainty, and that an adverse 

decision would require it to consent to any terms demanded by a shipper. 

Commission case law is clear that an ocean common carrier does not have a duty to grant a 

contract to every potential party. However, long-standing Commission precedent prohibits 

common carriers from shutting out any person for reasons having no relation to legitimate 

transportation-related factors and from retaliating against shippers. As outlined in detail below, the 

evidence shows that here, Hamburg’s decision on April 29, 2021, to “disengage” from fulfilling 

the 2020-21 service contract and negotiating a 2021-22 service contract was made due to the 

“litigation risk” posed by OJC, which under these facts is not a legitimate transportation-related 

factor. The specific conduct in the record here establishes both the refusal to deal and retaliation 

claims.

The parties also contest how damages should be determined. OJC seeks lost profit damages 

for failure to meet the service contract’s minimum quantity commitment (“MQC”), also referred to 

as minimum volume commitment (“MVC”), by 15 containers3 in 2020-21; failure to meet weekly 

allocation by 105 containers in 2020-21; extra shipping charges for 143 containers shipped on the 

spot market in 2021-22; and loss from refusal to renew the contract in 2021-22 for up to 4,700 

containers, equaling a total damages claim of over 100 million dollars. Hamburg asserts that OJC 

is not entitled to any damages because of contractual limitations, damages being speculative and 

based on insufficient data, and OJC failing to prove damages with reasonable certainty, for 

example, the projected 4,700 containers including trade routes and volumes beyond what is 

included in the 2020-21 service contract.

As explained below, OJC has established that HSDG violated the Shipping Act by refusing 

to deal and by retaliating against OJC. However, OJC does not establish that it is entitled to the 

over $100 million in damages that it seeks. OJC establishes that 15 of the contracted 200 

containers were not shipped in 2020-21 and taking this shortfall of 15 times the average profit per 

container of $22,892.48 measures its 2020-21 actual injury as $343,387.20. OJC does not establish 

that Hamburg failed to meet the 2020-21 weekly allocation, nor that 2021-22 damages should be 

calculated based on up to 4,700 containers. Rather, the damages for 2021-22 are calculated based 

on the trade routes and volume in the 2020-21 contract, resulting in actual injury of $4,578,496. 

of fact (“RRPFF”), Complainant’s reply brief (“Reply”), and Complainant’s response to 

Respondents’ proposed findings of fact (“CRPFF”).

3 This decision will use “container” to refer to forty-foot equivalent units (“FFEs”), as OJC’s 

expert did. RX 1032-1033. One FFE equals 2 twenty-foot equivalent units (“TEUs”). 

166 6 F.M.C. 2d
Therefore, OJC establishes that it sustained a total actual injury in the amount of 

$4,921,883.20. Moreover, because OJC establishes a violation of the anti-retaliation provision, 

additional damages may be awarded. Given that the violation was knowing and willful, double 

damages are found to be appropriate. Accordingly, OJC is awarded reparations of $9,843,766.40 

from HSDG. 

B. Procedural History

On December 13, 2021, the Commission issued a notice of filing of complaint and 

assignment, initiating this proceeding. On January 18, 2022, Hamburg filed a partial answer and 

a motion to dismiss and/or for summary judgment. On February 2, 2022, OJC filed a motion for 

leave to file an amended complaint (“Amended Complaint”). On February 18, 2022, an order 

was issued allowing the entry of the amended complaint and dismissing as moot Hamburg’s 

motion to dismiss and/or for summary judgment. On March 1, 2022, HSDG and HSNA filed 

answers to the amended complaint. 

On March 10, 2022, a scheduling order was issued. On April 26, 2022, and June 22, 

2022, confidentiality stipulations and protective orders were issued. On June 29, 2022, OJC’s 

motion to compel and the joint motion to modify the scheduling order were granted in part and 

denied in part. 

On July 26, 2022, Hamburg filed a partial motion to dismiss and/or for summary 

judgment. On August 31, 2022, Hamburg’s partial motion to dismiss and/or for summary 

judgment was granted in part and denied in part, dismissing OJC’s claims under sections 

41102(b)(2), 41104(a)(5), and 41104(a)(9); OJC’s motion for expedited relief was granted in 

part; and Hamburg’s motion for a protective order was denied. 

On September 30, 2022, an order was issued denying Hamburg’s motion to compel, 

denying OJC’s motion for clarification, and granting in part and denying in part OJC’s motion 

for an extension of time for limited discovery. 

On November 9, 2022, OJC filed its brief, proposed findings of fact, and appendix

(exhibits labeled as CX). On December 8, 2022, Hamburg filed its reply brief, proposed findings 

of fact, appendix (exhibits labeled as RX), response to OJC’s proposed findings of fact, and 

request for confidential treatment. On December 23, 2022, OJC filed its reply brief, response to 

Hamburg’s proposed findings of fact, and supplemental appendix (exhibits labeled as SCX). 

On January 31, 2023, the parties were ordered to resubmit confidential versions of filings 

in order to properly indicate confidential material and to submit clarifying information 

concerning requests for confidential treatment of appendix material. On February 6, 2023, OJC 

submitted the requested information and corrected filings, along with a motion justifying 

confidential treatment. On February 8, 2023, Hamburg submitted the requested information and 

corrected filings. 

On February 24, 2023, the parties were ordered to review confidentiality requests for 

deposition testimony in the appendices. On March 10, 2023, OJC responded with a list of dedesignations and provided updated materials. On March 14, 2023, OJC filed a supplement to its 

motion for confidential treatment incorporating Hamburg’s updates. On March 14, 2023, 

167 6 F.M.C. 2d
Hamburg provided its updated materials, including a revised motion for confidential treatment of 

certain materials.

C. Arguments of the Parties

OJC argues that Hamburg retaliated against OJC by unreasonably refusing to renew or 

even negotiate a service contract with OJC, and by refusing to fulfill Hamburg’s existing 

contractual obligations; Hamburg should be sanctioned and precluded from challenging OJC’s 

damages based on Hamburg’s repeated violations of court orders and FMC Rules; and OJC is 

entitled to reparations for the actual injury it sustained as a result of Hamburg’s violations of the 

Shipping Act with damages doubled due to Hamburg’s willful violation of section 41104(a)(3). 

Brief at 16-49; Reply at 8-52. 

Hamburg asserts that OJC has the burden of proof; Hamburg did not refuse to deal or 

negotiate with OJC; Hamburg did not retaliate against OJC; OJC fails to prove damages with 

reasonable certainty; and Hamburg complied with its discovery obligations. Opposition at 7-49. 

D. Motions for Confidential Treatment

On April 26, 2022, an order entering confidentiality stipulation and protective order was 

issued as requested by the parties. On June 22, 2022, in response to a joint request by the parties, 

an amended confidentiality stipulation and protective order was entered. 

On December 8, 2022, Hamburg filed a motion for confidential treatment of certain 

materials included or referred to in Respondents’ filings. On January 31, 2023, the parties were 

ordered to resubmit confidential versions of filings in order to properly indicate confidential 

material and to submit clarifying information concerning requests for confidential treatment of 

appendix material. On February 6, 2023, OJC filed a motion justifying confidential treatment of 

certain material and corrected filings. On February 8, 2023, Hamburg submitted the requested 

information and corrected filings. 

On February 24, 2023, the parties were ordered to review their confidentiality requests 

for deposition testimony included in their appendices. On March 10, 2023, OJC filed a 

supplement to its motion for confidential treatment, stating that it “removed 95% of its 

deposition designations and the vast majority of its designations on its damages reports,” and 

requested confidentiality for OJC annual sales revenues and OJC company valuations. On 

March 14, 2023, Hamburg filed a revised motion for confidential treatment of certain materials 

which limited the confidentiality requests, updated deposition transcripts in the appendix to 

reflect line-by-line redactions as ordered, and noted no objection to OJC’s requests. Also on 

March 14, 2023, OJC filed a notice of its compliance with order on motions for confidential 

treatment which included objections to Hamburg’s confidentiality designations. 

Commission Rule 5 authorizes confidential treatment for confidential commercial 

information. The revised requests for confidential treatment significantly limit the amount of 

information for which confidential treatment is sought. Confidential treatment is sought for 

annual sales revenues; company valuations; non-public financial, marketing, and business 

activities; and non-public, commercially sensitive information about prices, pricing policies and 

strategies, marketing strategy, and customer relations. As narrowed, the requests are reasonable. 

168 6 F.M.C. 2d
Further, this decision is readable without the need for quotations from material designated as 

confidential. In the future, the parties must review all exhibits and only mark sections or pages 

that contain confidential material and depositions should be conducted with confidential material 

covered separately from non-confidential material. Accordingly, it is hereby ordered that as 

revised and supplemented, the motions requesting confidentiality be GRANTED. 

E. Evidence

Under the Administrative Procedure Act, an administrative law judge may not issue an 

order “except on consideration of the whole record or those parts thereof cited by a party and 

supported by and in accordance with the reliable, probative, and substantial evidence.” 5 U.S.C. 

§ 556(d); see also Steadman v. SEC, 450 U.S. 91, 98-102 (1981). This initial decision is based on

the pleadings, exhibits, briefs, proposed findings of fact and conclusions of law, and replies

thereto filed by the parties.

This initial decision addresses only material issues of fact and law. Proposed findings of 

fact not included in this decision were rejected, either because they were not supported by the 

evidence or because they were not dispositive or material to the determination of the allegations 

in the complaint or the defenses thereto. Administrative adjudicators are “not required to make 

subordinate findings on every collateral contention advanced, but only upon those issues of fact, 

law, or discretion which are ‘material.’” Minneapolis & St. Louis R.R. Co. v. United States, 361 

U.S. 173, 193-94 (1959). To the extent individual findings of fact may be deemed conclusions of 

law, they shall also be considered conclusions of law. Similarly, to the extent individual 

conclusions of law may be deemed findings of fact, they shall also be considered findings of fact.

Specific findings of fact are in part two, prior to the analysis and conclusions of law in 

part three, and the order in part four. 

II. FINDINGS OF FACT

A. Relevant Entities

1. Complainant OJC is a limited liability company organized and existing under the law of

the State of Delaware, with a principal place of business in Miramar, Florida. Amended

Complaint at ¶ 1; Brief at 10.

2. OJC is an e-commerce retailer that sells “dropship products” from domestic inventory of

hundreds of brands. OJC also has a direct import program where OJC buys household

goods, including a wide variety of furniture and office products globally for sale in the

United States. OJC’s imports come from Asia and Brazil and are delivered to California

or Kentucky. CX 467.

3. Respondent HSDG was previously a corporation organized and existing under the laws of

Germany, with a principal place of business in Hamburg, Germany. Amended Complaint

at ¶ 2.

4. HSDG was merged into its former parent company, Maersk A/S, on November 1, 2021.

HSDG Answer at 1 n.1.

169 6 F.M.C. 2d
5. HSDG was a common carrier as defined by the Shipping Act, 46 U.S.C. §40102(7),

through October 31, 2021. Amended Complaint at ¶ 2; HSDG Answer at ¶ 2.

6. Respondent HSNA is a corporation organized and existing under the laws of the State of

Delaware, with a principal place of business in Morristown, New Jersey. HSNA Answer

at ¶ 3; Amended Complaint at ¶ 3.

7. HSNA was a wholly-owned subsidiary of HSDG that acted as the United States general

agent of HSDG until November 1, 2021, when it became a wholly-owned, indirect

subsidiary of Maersk A/S. CX 101.

8. On January 1, 2022, HSNA was merged into Maersk Agencies USA, Inc., the United

States subsidiary and general agent of Maersk A/S. CX 101; HSNA Answer at 1 n.1;

Brief at 10 n.18.

9. HSDG became a wholly owned subsidiary of Maersk A/S, although HSDG did not cease

to exist as a separate legal entity until late 2021. RX 1120 at ¶ 4.

10. Maersk continues to operate the “Hamburg Sud” brand, which offers different services

than Maersk A/S. Opposition at 1 n.1; RX 1120 at ¶ 4.

B. Relevant Contracts and Communications

11. Fiscal year 2020 is defined as June 1, 2020, through May 31, 2021, and fiscal year 2021

is defined as June 1, 2021, through May 31, 2022. CX 423.

12. In June 2020, OJC and HSDG “c/o” HSNA entered a service contract numbered

AECC0000291 (“2020-21 service contract”), effective June 23, 2020, to May 31, 2021.

CX 119; CX 467 at ¶ 5.

13. The 2020-21 service contract had signature lines for OJC President Jacob Weiss as well

as Pestana Rodrigo and Serena Cheung, both listed as signing for HSNA. CX 120.

14. The copy of the service contract in the record is not signed, however, according to

internal Hamburg emails, there may not be “a version of this contract which has been

formally executed by both parties” as the record contains “the page of the contract signed

by the customer. Carrier signed page was not provided to the customer.” CX 155.

15. The 2020-21 service contract was for the shipment of goods by sea from foreign

countries to the United States and for the delivery to warehouse facilities within the

United States via truck. CX 467 at ¶ 5.

16. In the 2020-21 service contract, OJC agreed to tender, and Hamburg agreed to transport,

a minimum volume/quantity commitment of 400 TEUs (equal to 200 FFEs) from Asia to

California at specified rates. CX 125-126 (noting as trade/shipping lane: East Asia –

North America West Coast); CX 467 at ¶ 5.

170 6 F.M.C. 2d
17. Among other provisions, the 2020-21 service contract indicated that “Shipper agrees . . .

that the tender of cargo under this Contract shall be reasonably spaced throughout the

term hereof.” CX 125.

18. The service contract includes a liquidated damages provision stating in relevant part:

In the event that the Minimum Volume Commitment of this Contract is 

reduced by 10% or more as a result of Carrier’s failure to provide space, 

Carrier agrees to pay, and Shipper agrees to accept, in lieu of other 

damages from Carrier, liquidated damages calculated by subtracting the 

number of TEUs actually shipped under the Contract from 90% of the 

MVC and multiplying the TEU deficit, if any, by USD250 per TEU. 

CX 125. 

19. Hamburg initially referenced OJC as being allocated 8 TEU/week under the 2020-21

service contract. See, e.g., CX 147 (July 13, 2020, internal Hamburg email stating,

“Based on signed MQC (400 TEU) they would have 8 TEU/wk to USWC. Anything

above this number we can only accept if customers pays [sic] a premium . . . .”); see also

RX 794 (July 13, 2020, email from Ms. Casanova to Mr. Weiss, stating “Based on signed

MQC (400 TEU) OJ Commerce would have 8 TEU/wk to USWC, The only way we can

provide space to USWC is if customer accepts an extra fee of $800/40’hc (this amount

we have agreed with other BCOs).”).

20. On August 3, 2020, OJC was informed by email that space protection (“SP”) was

increased to 10 TEU per week. CX 156. Internal Hamburg emails afterwards referred to

OJC as being allocated 10 TEUs per week. See, e.g., CX 153 (September 22, 2020,

internal Hamburg email stating “Customer OJ Commerce reported we are not confirming

bookings to their agent Syntrans. Please note that there is a MQC of 10 TEUS per week

under agreement # AECC0000291. I appreciate you confirm them at least to meet the

MQC . . . .”); see also CX 206.

21. On October 16, 2020, OJC sent a demand letter to HSNA and HSDG, which stated in

part:

Pursuant to the “Minimum Volume Commitment” clause of the 

agreement, [Page 7], HAMBURG SÜD committed to a minimum of 400 

TEU between June 23, 2020 and May 31, 2021. Since June 23, 2020, 

HAMBURG SÜD refused to accept the agreed upon 10 TEUs per week. 

OJC hereby provides HAMBURG SÜD notice of breach of the 

Service Agreement, which has caused significant economic harm to 

OJC. I hereby demand that HAMBURG SÜD immediately honor the 

Service Agreement rates and minimum TEU quantities. Failure to 

cure the breach by October 22, 2020, may result in legal action against 

you and your affiliates. 

CX 159 (bold in original) (“OJC first demand letter”). 

171 6 F.M.C. 2d
22. HSNA Risk Management Michael Gast sent an email on October 19, 2020, discussing

OJC’s first demand letter and asking whether there was “any formal documentation

confirming our obligation to carry the additional 2 TEUs a week or does this fall under

the terms of the contract which stipulate we can accept more cargo at our discretion” and

Ms. Casanova responded that there “was not a formal documentation” but that “Customer

was informed by email that SP was increased to 10 TEU per week on 08/03/2020.” CX

155-157; see also CX 208.

23. On October 21, 2020, Mr. Gast emailed HSNA Product Management Rodrigo Pestana,

cc’ing other Hamburg employees and RNA-claims, writing:

I just spoke with Andrea about this situation. What can we do to provide at 

least space for 8-10TEU per week for this account? I understand space is 

limited and other customers are paying a premium for space presently but 

any additional profit gained from those premiums is going to quickly go 

out the window if this matter goes to trial. I can tell you that based on the 

tone of the lawyer’s initial email and their response they are quite 

confident in their ability to recover significant damages from us and that 

they are more than ready to pursue this course of action on an immediate 

basis if we do not fix the space issue. 

Per the response I received they are confident that [their] liquidated 

damages of $250/TEU will not apply and be considered invalid based on a 

case precedent set by the US Supreme Court. They indicate that such a 

limitation is only admissible in the case that actual losses cannot be 

reasonably substantiated however, they have indicated they are able to 

easily and clearly [substantiate] losses in the thousands of dollars for each 

TEU we have failed to carry. While our contract states we are only liable 

for any short shipments in excess of 40TEU I would not be surprised if 

they attempt to recover their losses for 56TEUs. With a weekly average of 

8 calculated by the MVC and number of weeks in the contract term we are 

indeed behind by 56. 

This is a very bad case for us which we will likely lose so I must ask that 

special dispensation be granted for this customer and they be treated with 

hyper care for the immediate future until such time that things have 

stabilized and they have backed off their threats of formal lawsuit. If we 

can at least establish we are working to uphold our contractual obligations 

I would feel much more comfortable about this case. At present based on 

the emails I have seen I do not have confidence in our ability to establish 

that we are doing our part under these terms. It also sounds like they have 

a lot of emails showing we have canceled their bookings [which] will only 

serve to make us look bad in front of a judge and jury. 

Should there be any questions please do let me know but again we must please 

take into account that our losses could easily exceed US$100,000 between our 

lawyer fees and any final judgment which may be awarded to them by a court. If 

172 6 F.M.C. 2d
the customer does not know the services or vessels on which they are entitled to 

have space it would be Risk Management’s recommendation that we provide a 

clear overview of the services they are entitled to book against and the vessels 

which operate under those services. Also, if the customer makes a booking against 

the wrong service we should assist them to correct the issue. 

We hope it is understood that even if it is outside the standard procedures we need 

to make every reasonable effort to pacify this customer and their lawyer in the 

short term so that we can correct this shortfall over the course of the contract term 

and avoid an unnecessary lawsuit. 

CX 161. 

24. The 2020-21 service contract was set to expire May 31, 2021. CX 120.

25. Throughout the 2020-21 service contract, OJC repeatedly asked for more space per week.

See, e.g., CX 206-208 (“Q: Did Jacob Weiss ask you to increase to a lot more than 10

TEUs per week? A. Yes. He did request to have more space per week. . . . A. He was

usually saying to me I remember, if I remember correctly, you can give me 15, 20, 30,

like, whatever more you can provide to us, we will – we can provide with shipments. . . .

A. Okay. And you indicated later today in your testimony that Mr. Weiss frequently came

to you on a – repeatedly on – he repeatedly came to you seeking more and more space. I

think you said at some point, it was like 15, 30, whatever you can give me he wanted. Is

that right? A. Yes. That is correct.”); RX 622 (July 15, 2020, email from Ms. Casanova to

Mr. Pestana and Mr. Maldonado, writing “The customer requests any additional space

that we can accommodate beyond the MQC and assures that its volume is constantly

peaking and that anything we can offer today they can compromise to us for the months

when we would need cargo, their projection is growing.”); RX 638 (May 26, 2020, email

from Ms. Casanova to Mr. Li, Mr. Gonzalo, and Mr. Pestana stating “According to the

customer, online furniture purchases in the USA increased by more than 200% due to

Covid-19 measures and OJ Commerce grew nearly 400% in sales compared to the initial

year’s forecast and the trend is estimated to continue. Due to the above, they trust that

they have and will have volume to meet the amount committed to each carrier. Price is

very important for this product as it is a low value product.”).

26. OJC also expressed frustration on multiple occasions regarding space cancellations by

Hamburg and falling behind on bookings for the 2020-21 service contract. See, e.g., RX

823 (OJC arguing that the parties agreed to 10 TEUs per week, but that Hamburg had not

even honored 8); RX 647 (October 15, 2020, email from Ms. Casanova stating “It is

worth mentioning, that the customer is no [sic] happy that we were unable to

accommodate additional space to cover the rejected and canceled spaces from the

previous weeks, resulting in not meeting with the SP per week provided to the

customer.”); RX 653 (October 13, 2020, email from Mr. Pestana stating “Dear allocation

team, pls note customer complaint about SPL not being honored. any particular issue

resulting on bookings being cancelled/rejected? We must honor the SPL.”); RX 685; RX

688; RX 687; RX 787; RX 695; RX 693; RX 817.

173 6 F.M.C. 2d
27. OJC began negotiations for a 2021-22 service contract with Hamburg in early 2021, with

OJC President Weiss as lead negotiator for OJC and HSNA Account Executive Andrea

Casanova as lead negotiator for Hamburg. CX 466-467; CX 203; RX 799 (showing Jan.

2021 discussions regarding a renewal with increased allocation).

28. HSNA Cargo Flow Specialist Kevin Li testified that the majority of contracts will be

negotiated and entered in the first quarter of the year, through April, or possibly May. RX

977; see also RX 988A (generally contracts for Asia to North America run starting May 1

for 12 months).

29. OJC did not renew its service contracts with other carriers it had been using in 2020-21

and focused on consolidating all of its imports with Hamburg. CX 467. OJC based this

decision on interactions with Ms. Casanova, which OJC interpreted as a promise that in

return for OJC consolidating all of its imports with Hamburg, Hamburg would make OJC

a priority customer with benefits including supplying more containers, dedicated space

protection, and committed personnel to ensure better service for OJC’s shipments. CX

467; RX 1010-1011; RX 1017-1018; RX 1024.

30. On January 11, 2021, Ms. Casanova emailed Ivan Cheung of Maersk4and HSNA

Manager East Coast Sales Gonzalo Maldonado writing:

We are moving regularly shipments with furniture for [Trans-Pacific 

Eastbound (“TPEB”)] through the account OJ COMMERCE - NAOMI 

HOME to PLD City of Industry CA and customer is looking for an 

increase in their allocation since last year their business grew by 20% this 

trend seems to continue this year due to the increase in online shopping as 

consequence of the pandemic. 

In addition, we would to revisit another route to PLD Louisville KY, similar 

volume to CA. Unfortunately, last year, this business was turned down due to lack 

space to this destination point. 

RX 799-800 (wording as in original); CX 410. 

31. On February 9, 2021, Ms. Casanova declined Mr. Weiss’s request to re-route OJC’s

cargo because OJC had run out of space in its City of Industry, California warehouse.

RX 747-751. Ms. Casanova stated: “Due to the current situation in Asia with lack of

equipment and space and the shortage of truck power and port Congestion in Los

Angeles/Long Beach terminals, we are not negotiating new lanes in the trade since we

cannot guarantee service due to the reasons mentioned above.” RX 747.

32. Hamburg provided OJC a short-term spot rate quote valid from March 3, 2021, to

April 30, 2021, for Brazil to the United States, Quotation No. NOAQ1006436, dated

March 3, 2021. RX 768-774; CX 136-146. The record shows that OJC shipped at least 3

4

 Mr. Cheung’s email address ends in @maersk.com, unlike the majority of Respondents’ emails, 

which end in @hamburgsud.com. RX 799. Mr. Cheung works in Hong Kong. Opposition at 47. 

References to Mr. Cheung in this decision are to Mr. Ivan Cheung. 

174 6 F.M.C. 2d
FFEs pursuant to this quotation. RX 16-17 (dated April 22, 2021); RX 18-19 (dated 

April 30, 2021); RX 6-7 (dated May 4, 2021); see also CX 467 at ¶ 5.

33. During March and April 2021, the parties engaged in discussions about renewing the

service contract. Throughout those discussions, there were conversations about the

minimum quantity commitment of the renewal, but never about there being no renewal at

all. Amended Complaint 14 at ¶ 41; HSNA Answer at ¶ 41; HSDG Answer at ¶ 41.

34. On March 2, 2021, Mr. Weiss received an email from Hamburg Sud (China) key account

manager stating “Checked with concern party, and learn that no SPL for this account on

UPAS1 (Ningbo and Qingdao). Pls ask contract holder to further communicate with

HSDG concern sales.” RX 688. On March 4, 2021, Mr. Weiss forwarded this email to

Ms. Casanova, writing “Andrea, any update? This is again cauing [sic] a major backlog

as for many weeks we haven’t been able to secure the contracted space.” RX 688.

35. On March 4, 2021, Ms. Casanova responded to Mr. Weiss, writing “The Space Protection

(SP) expired at the end of December. We are working with our Origin office to reinstate

the SP who are reviewing the performance to make a decision.” RX 687.

36. Later on March 4, 2021, Mr. Weiss emailed Ms. Casanova, writing “Our team in china

keeps working locally and escalates only after they keep hitting a brick wall. Do u want

me to tell them to email you every attempt for space?” RX 685. Ms. Casanova replied,

also on March 4, “If your team in China were not getting space as per SP we should have

been informed as they did now so we can address the situation with our Trade Manager

otherwise we are not able to know and seems that we did not get the participation as

agreed. I will inform the below to our Trade Manager and revert back to you.” RX 684.

37. On April 12, 2021, Mr. Weiss sent an email to Ms. Casanova stating: “Please advise what

time today we can get on a call to discuss the current situation with us not getting our

contracted space for many weeks. I urgently need to get this resolved today.” RX 787.

38. On April 13, 2021, Mr. Weiss sent an email to Ms. Casanova stating: “Please advise

when u have a few minutes for a call. Urgently need your help resolving the space issue.”

RX 787.

39. On April 13, 2021, Ms. Cananova responded to Mr. Weiss, stating: “I was out office

Friday and Monday and today I was catching up emails including your request. I will call

you tomorrow at 10 am so it will give me time to collect information about your

cases/requests.” RX 786.

40. On April 15, 2021, Ms. Casanova emailed Mr. Cheung and Mr. Maldonado, writing

“Customer OJ Commerce insists that we have declined space in the past weeks and

months. I spoke with customer and advised that the first time we received this type of

information was on March and it was immediately addressed with our team in origin.

However, customer is asking for our support with space in next weeks to catch up all the

backlog for the weeks of no space releases.” RX 695 (spelling in original).

175 6 F.M.C. 2d
41. On April 19, 2021, Mr. Weiss emailed Ms. Casanova, stating: “Haven’t heard back from 

you on a plan for our backed up containers? Also are we going to meet up this week in 

Miramar?” RX 786.

42. On April 20, 2021, Ms. Casanova emailed Mr. Weiss, stating: “I have not received 

response from our team in Asia. We have followed up with them. We will be back with 

response about the space and meeting as soon as possible.” RX 785-786. 

43. On April 24, 2021, Ms. Casanova emailed Mr. Cheung and Mr. Maldonado, writing that 

OJC “claims for the space that has been declined during these weeks, since March 

according to the customer. Could you please advise how we are going to fulfill the 

declined space plus current SP with this account? . . . Customer told us yesterday that we 

continue declining space.” RX 693. 

44. On April 27, 2021, Mr. Weiss emailed Ms. Casanova, stating: “At this point I have run 

out of options, Hamburg’s ignoring this dire situation at the detriment of OJC. Unless I 

hear back from you by noon today I will turn it over to legal.” RX 785. 

45. On April 27, 2021, Ms. Casanova emailed Mr. Weiss, stating: “We received from our 

office in Asia that due to the existing situation of lack of capabilities/space in this market, 

we are not able to compensate space at this time, but we are trying to be flexible when the 

situation allows it. It was been [sic] approved to release 2x40’ additional at POL Ningbo 

on top of ex PINE (area) regular SPL (2teu), on UPAS1-vessel GEMSK 113N.” She 

provided a list with the confirmed bookings for the next weeks. RX 784-785. 

46. In an internal Hamburg email on April 27, 2021, Ms. Casanova conveyed that OJC 

planned to move between 4,200 to 4,700 FFE in 2021: 

Customer OJ Commerce contract is expiring on May 31, 2021, and the 

customer wants to renew the contract and if possible to increase the MQC 

and add the route to Louisville KY. 

The current contract AECC0000291 has a validity of year and contains 

routes to City of Industry CA and MQC of 400 TEUs 

According to the customer, they moved 3500x40HC in 2020 and plans to 

move between 4200 to 4700 FFE in 2021. 70% of this volume is to 

Kentucky and the remaining is to California 

If we are interested in KY business, their warehouse if very close to the 

CSX Rail Yard for the drop and pull moves. 

Attached is the contract with lanes and current rates and below is the 

customer’s performance from Tableau. 

Appreciate any advice and if there are any new guideline regarding TPEB 

contracts so we can start working on this contract renewal. 

 176 6 F.M.C. 2d
CX 203. 

47. Later on April 27, 2021, HSNA Manager East Coast Sales Gonzalo Maldonado emailed 

Mr. Li, Mr. Cheung, and Ms. Casanova, writing: “Hi Kevin, This is the account that we 

spoke [about] during the TPEB account review that you need to add to our list.” CX 218. 

Mr. Li replied on April 27, 2021, asking “What’s the MQC for this account?” CX 218. 

48. Ms. Casanova replied to the same group on April 28, 2021, at 1:14 PM, writing: “Hi 

Kevin, Thank you, the client did not mention a specific MQC target but he mentioned the 

projected volume and is open to our proposal. They are willing to give us also KY 

business if we can carry it. In the past, it was declined since were [sic] not pursuing 

business to this IPI.” CX 217. 

49. Mr. Li replied to the same group on April 28, 2021, at 4:32 PM, writing: “Hi Andrea, We 

will need a clear target in order to put it on target list. They signed 200 FFE last year for 

City of Industry, CA and almost fulfilled that this year. Based on that what would be the 

MQC target for next year with and without KY business? I do suggest to maintain focus 

on local destination only.” CX 217. 

50. Ms. Casanova emailed Mr. Weiss on April 28, 20921, at 4:25 PM: “I did not receive a 

response from our office in Asia regarding the additional space and contract renewal. 

Please allow us to follow up with them again today.” RX 784. 

51. Ms. Casanova reached out to OJC on April 28, 2021, at 6:04 PM, to confirm an exact 

MQC OJC was willing to sign to continue with process renewal, considering place of 

delivery as City of Industry CA only. RX 808-809 (“As we spoke yesterday, we are 

working on your contract renewal so we would like to know an exact minimum quantity 

commitment you are willing to sign to continue with process renewal.”). 

52. On April 28, 2021, at 10:27 AM, an attorney representing OJC emailed a demand letter to 

Respondents, copying Mr. Weiss, asserting that failure to cure the described breach of the 

service agreement may result in the “filing of a petition to the Federal Maritime 

Commission to seek relief.” CX 209. This demand letter read in part:

Please be advised that the undersigned represents OJ COMMERCE, LLC 

(“OJC”) against [Hamburg] in connection with a breach of Service 

Contract that was executed between HAMBURG SÜD and OJC. A copy 

of the agreement is hereby attached.

Pursuant to the “Minimum Volume Commitment” clause of the 

agreement, [Page 7], HAMBURG SÜD committed to a minimum of 400 

TEU between June 23, 2020 and May 31, 2021. Over the last few months, 

HAMBURG SÜD refused to accept the agreed upon 10 TEUs per week, 

as a result OJC has accumulated over 40 containers waiting for shipment, 

causing significant economic harm and interruption of business. 

OJC hereby provides HAMBURG SÜD notice of breach of the 

Service Agreement, which has caused significant economic harm to 

 177 6 F.M.C. 2d
OJC. I hereby demand that HAMBURG SÜD immediately honor the 

Service Agreement rates and minimum TEU quantities. Failure to 

cure the breach by May 3, 2021, may result in legal action against you 

and your affiliates, as well as the filing of a petition to the Federal 

Maritime Commission to seek relief. 

CX 209 (bold in original) (“OJC second demand letter”).

53. April 28, 2021, is the first time in the record that a threat to complain to the FMC is 

explicitly conveyed from OJC to Respondents. CX 209. 

54. Ms. Casanova continued to work on a contract renewal with OJC, creating a contract 

template in Hamburg’s computer system with a 400 FFE MVC (double the MVC from 

2020-21). She “picked this MVC as a way of potentially offsetting the anticipated deficit 

in 2020-21 and showing an interest in handling more of OJC’s volume.” RX 1139 at

¶ 44. This template existed only within HSDG’s computer system, was not provided to 

OJC contemporaneously, and contained the same rates as 2020-21 because those were the 

rates in the system from the prior contract. RX 1139 at ¶ 45; RX 963. 

55. Ms. Casanova sent an internal Hamburg email on April 29, 2021, at 10:16 AM, stating: “I 

created the new SVC NOAC1000728 Effective June 1, 2021, until May 31, 2022. The 

new contract contains the same lanes, rates, and conditions of the current contract 

AECC0000291 and an increased MQC 400 FFE.” CX 214. 

56. There are no contemporaneous emails from Hamburg suggesting they are willing to ship 

4,200 to 4,700 containers in a 2021-22 service contract with OJC; rather Ms. Casanova’s 

400 FFE MQC was the largest volume incorporated into a draft 2021-22 service contract 

with OJC. CX 214. 

57. On April 29, 2021, at 10:38 AM, Ms. Casanova emailed Mr. Li, Mr. Cheung, Mr. Gast, 

and Mr. Maldonado, presumably attaching OJC’s attorney’s letters, stating: 

Regarding the current contract that will expire on May 31, 2021, as of 

today, we are short to satisfy the MQC of 200 FFE by 18 FFE since space 

has been declined since last month, according to the customer. This 

situation has been addressed with our team at origin but at this time we are 

not able to commit with additional space on top of the current SP 4 TEU a 

week until the end of the contract. The customer is claiming for this space 

and we received a letter from his lawyer about this. Attached are the 

emails (1st and 2nd attachments), you were not in copy. 

I have spoken with the customer and he has stated that he does not want to 

end the relationship with us and just look for the fair that we promised. He 

is open to any solution that can offset this deficit.

Therefore, based on the above and since we are working to renew the 

contract, I want to ask if it is possible to Increase MQC by 200 FFE giving 

a total of $400 [sic] FFE, that will not only cover the deficit by also show 

 178 6 F.M.C. 2d
our interest to participate more of their volume, of course, if we truly can 

satisfy this volume.

This is not a short term account and the customer has been constant in his 

volumes and is willing to commit to much more of the current MQC.

CX 215 (wording as in original). 

58. On April 29, 2021, at 2:04 PM, Mr. Li emailed HSNA Senior Vice President 

Juergen Pump: 

Sorry to trouble you but I need your executive decision on this account, it was the 

one being mentioned in our call with AEC this Tuesday. I was completing 

unaware of the legal action they put against us during the time I left the TPEB 

team, and I don’t believe it was shared in our call as well.

Long story short, they are threatening us on liquidated damage against the space 

that we couldn’t provide under committed 200 FFE MQC, which so far we 

already fulfilled 182 FFE and their contract will only expire by end of May. 

Meanwhile, they are proposing a renewal contract with 400 FFE MQC but all 

rates remain the same from last year contract.

In my opinion this is pathetic and unacceptable, it will be a risk to continue work 

with this account especially considering our space situation this coming year. I 

can work with APAROM to ensure they will get the remaining 18 FFE before end 

of May. But let me know if you still want to engage this account with contract 

renewal, we can setup a call to discuss if needed.

CX 220-221 (spelling in original); CX 89. 

59. In his deposition, Mr. Li was asked: “So, when you gave your opinion of this was 

pathetic and unacceptable. What were you attempting to convey to Mr. Pump in this 

email?” Mr. Li responded: “That was a comment that I make to the fact that we did not 

know about all this potential litigation during our call with Seth.” RX 981. 

60. On April 29, 2021, at 1:13 PM,5

 Mr. Pump emailed: “Fully agree. We should not engage 

in any renewal discussions with customer in light of the potential litigation, I would also 

not provide them with space under the existing contract. The shortfall will be 

compensated as per contract terms.” CX 220. 

61. Mr. Li responded on April 29, 2021, at 4:52 PM to Ms. Casanova’s 10:38 AM email, 

directing her to disengage on renewal negotiations with the OJC account, writing in part: 

Hi Andrea,

5 Because of different time zones, times listed on emails may not be consistent.

 179 6 F.M.C. 2d
As you mentioned, I was completely unaware of their legal action against 

us since I left the TPEB team. I consulted with Juergen and the executive 

decision is that we should not engage in any renewal discussion with 

customer in light of potential litigation. Please disengage on renewal 

negotiation with this account, thanks. 

Hi Ivan,

Please reject the new agreement mentioned below. Meanwhile, we will 

leave it up to APAROM's decision to handle the remaining 18 FFE that 

required to fulfill the 200 FFE MQC on current contract. But just to 

express our position on this, we should also consider not to provide them 

with space under existing contract. The shortfall will be compensated as 

per contract terms, considering we already fulfilled over 90% of the MQC 

agreement. Thanks. 

CX 213 (also asking Mr. Gast “if it is definitely required to provide the remaining 18 

FFE from your prospective.”). 

62. On May 4, 2021, Mr. Maldonado emailed Hamburg (“HS”) employees including Mr. Li, 

Ms. Casanova, and Mr. Cheung stating: “Please note we were advise from customer in 

case that HS will not fulfill its contractual volume, it will proceed with legal actions 

against HS. We believe due to the small volume remaining to fulfil MQC of 200 FFE; 

this could be avoid it. I would appreciate please your feedback and authorization to grant 

space for this month of May for those 18 FFE’s needed.” CX 227. 

63. On May 4, 2021, Mr. Cheung responded to Mr. Maldonado and other Hamburg 

recipients, writing: 

Hi Gonzalo and Andrea, I’ve been working with the area here at APA for 

additional volume acceptance, and now we have found a space ex YTN 

for customer as below: 

 UPAS2 Maersk Eindhoven 120N – 12FFE (ex YTN) 

This is already confirmed and our local booking desk will release the 

additional volume on above sailing to customer. 

RX 755; RX 728; see also RX 725 (email from Mr. Cheung to Ms. Casanova identifying 

12FFE (ex YTN) and another 6 FFE (ex NGB)); RX 726 (Ms. Casanova responding 

“With this space (18FFE), we should fulfill MQC of 200FFE”). But ultimately Hamburg 

only fulfilled 185 FFE. CX 212. 

64. On May 5, 2021, Ms. Casanova responded to Mr. Cheung’s email, writing “Good 

Morning Ivan – That is great news and our effort to fulfill the contract. I have shared this 

information with the customer,” and Mr. Maldonado replied to Ms. Casanova, writing 

“Despite the fact that we will lose this volume for next term. Nice job handling this 

account to avoid conflict with them.” RX 728; RX 754-755. 

65. On May 4, 2021, Ms. Casanova emailed Mr. Weiss, stating: 

 180 6 F.M.C. 2d
As per our conversation, we are not able to renew the contract at this time 

due to the lack of space and equipment in Asia and the shortage of truck 

power in the US that we and the entire industry are facing. This situation 

does not allow us to commit with space for another period, however, we 

can work case by case. We deeply apologize contract cannot be renewed 

and thank you for your support and understanding. 

RX 808. 

66. Hamburg admitted that “Out of the blue and with no prior notice, on May 4, 2021, 

Respondents unilaterally notified Complainant that there would be no service contract 

renewal under any terms, but instead that Respondents would ‘work case by case’ with 

Complainant using spot market rates. Thereafter, Complainant attempted to negotiate a 

contract with an even more limited scope – such as a port-to-port only contract – but 

Respondents rejected Complainant’s proposal out of hand within hours, leaving 

Complainant entirely without a shipping service contract of any sort past May 31, 2021.” 

Amended Complaint at ¶ 42 (bold in original); HSNA Answer at ¶ 42 (admitted); HSDG 

Answer at ¶ 42 (admitted); see also CPFF at ¶ 42; RRPFF at ¶ 42; RX 529; RX 568; RX 

593. 

67. On May 5, 2021, OJC responded to Ms. Casanova, stating: “I am super disappointed to 

learn that after all these conversations we’ve had over the last few weeks on size of 

renewal, were now told NO renewal at all. Will you be able to offer a contract for PORT 

to PORT so chassis and truckers are not HAMBURG’s concern?” RX 811. 

68. Casanova replied to OJC later on May 5, stating: “Unfortunately, we are no in the 

position to provide a contract primarily due to the space situation in Asia more than truck 

power and chassis availability in the US. Nevertheless, I am going to check with our 

Trade team again and let you know if there is any change.” RX 811 (spelling in original). 

69. In a separate email chain, on April 29, 2021, an email from “Customer Claims, Maersk 

Legal” to Mr. Gast stated: “just noted this in the general claims mailbox, trust you have 

seen it already... Looking forward to further comments / background info from your side 

in due course.” CX 230. 

70. On April 29, 2021, Mr. Gast replied, copying additional internal Hamburg emails: 

As background this is the second time we have received such a threat of 

suit for this same reason and I believe the third time this customer has 

threatened to sue us this year. I believe the other time was related to 

demurrage charges.

As it stands I believe we are unlikely to meet our duties under these 

contract terms. I have raised this issue to both commercial teams here and 

colleagues at origin responsible for accepting these bookings. The first 

time this occurred I stressed the financial impact such a lawsuit could 

carry and I have done so again. It appears our local sales colleagues had 

 181 6 F.M.C. 2d
tried to address the capacity issue with origin but were advised that no 

additional space would be granted for this customer. 

The contract stipulates the merchant can request to reduce the minimum 

volume commitment under the terms however I believe they are unlikely 

to do so and instead would pursue commercial damages for any shortfall 

under this contract citing that the shortfall is our fault due to a failure to 

provide proper weekly space.

The first time this came up I engaged with the lawyer and can advise he 

seems to be on the aggressive side and seemingly would prefer to sue us 

rather than discuss amicable resolutions. Further while the contract 

contains a provision for consolidated damages at a rate of $250/TEU he 

has indicated that he would waive the consolidated damages and instead 

pursue actual damages which would of course be a significantly higher 

amount. 

It also seems we are considering signing another contract with this 

customer with an increased capacity. I understand sales needs to meet 

certain quotas and more business is always great but personally I would 

not want to do business with someone who repeatedly jumps to threat of 

lawsuit such as this. Should such a lawsuit occur I can easily imagine the 

cost would easily wipe out any profits gained from the commercial 

relationship due to potential breach of contract judgements against us and 

the cost of our own legal representation. 

At this point I do not know what more could be done from my side other 

than to wait for May 31 to see how bad the shortfall is and perhaps hope 

that due to the customer wanting to sign a renewal contract that they 

would choose to not pursuit this breach of contract suit for minor shortfalls 

under the present agreement.

CX 229. 

71. OJC’s second demand letter was sent to Hamburg on April 28, 2021, and one day later, 

on April 29, 2021, Hamburg made the “executive decision” to “disengage on renewal 

negotiation” and “consider not to provide them with space under existing contract.” 

CX 209; CX 220; CX 213. 

72. No contract was ultimately concluded between OJC and HSDG for 2021-22. Opposition 

at 2-3; CX 212 (the “contract expired on May 31st and renewal was not approved by 

Upper Management.”).

73. HSDG did not provide all of the space it had committed under the 2020-21 service 

contract, moving 185 of the 200 FFEs from June 23, 2020, to May 31, 2021. Opposition 

at 2; CX 212. 

 182 6 F.M.C. 2d
74. An email from Ms. Casanova to Mr. Li, Mr. Gast, Mr. Cheung, and others at Hamburg on 

June 10, 2021, stated: “The MQC was not fulfilled, we closed with 185 out 200 FFE and 

the customer is claiming the remaining 15 FFE. The contract expired on May 31st and 

renewal was not approved by Upper Management. Please advise how we are going to 

proceed with this claim. Thank you.” CX 212. 

75. The 15 FFE shortfall under the 2020-21 service contract was not a result of space being 

unavailable, rather these final containers were not shipped due to the “potential 

litigation.” CX 220; CX 213. 

76. After April 29, 2021, Hamburg entered into service contracts with other shippers for a 

significantly higher amount of space than OJC was requesting. CX 469 at ¶ 16; CX 283-

284; see also CX 285-286. 

77. Hamburg transported shipments for OJC after April 29, 2021, including shipments that 

were already scheduled, obtained via third-party freight forwarder such as United 

Shippers Association, or obtained via limited spot quotes. SCX 509 at ¶ 3. 

78. Hamburg provided short-term spot rate quotes to OJC prior to April 29, 2021, including 

from Brazil, RX 768-774 (Quotation No. NOAQ1006436, dated March 3, 2021), and RX 

673-678 (Quotation No. NOAQ1009430, dated March 31, 2021). 

79. Hamburg also provided short-term spot rate quotes to OJC after April 29, 2021, including 

from Asia, RX 608-618 (Quotation No. NOAQ1020050, dated July 20, 2021), and from 

Brazil, RX 596-601 (Quotation No. NOAQ1014177, dated July 20, 2021), and RX 741-

745 (Quotation No. NOAQ1028947, dated October 28, 2021). 

80. OJC shipped a small number of containers with Hamburg from Brazil to the United 

States under these short-term spot rate quotes including in April and May 2021 under 

Quotation No. NOAQ1006436; May and June 2021 under Quotation No. 

NOAQ1009430; and in August and September 2021 under Quotation No. 

NOAQ1014177. RX 2-21; RX 45-56. 

81. “While HSDG did handle some shipments for OJC from Brazil to the U.S., it did so on a 

case-by-case basis through rate quotations that were typically valid only for 60 days. 

None of these quotes constitute a service contract.” RRPFF No. 87 (citing to 

NOAQ1006436, NOAQ1009430, NOAQ1014177, and NOAQ1028947).

C. Reparations 

1. Pricing

82. Mr. Pump testified that from 2019 to 2021, contract rates doubled or more and spot rates 

tripled if not more. RX 989; see also RX 577; RX 913. 

83. Mr. Pump testified: 

 183 6 F.M.C. 2d
 Our biggest challenge in 2021 was capacity, as the existing customers, all 

asked, with very few exceptions, all asked for higher MQC, more capacity 

commitments, that was the overriding objective. And that was our biggest 

single challenge. Because we could not get a firm handle on the capacity 

that we would be able to sell in 2021. And then we had the challenge of 

who do we give more capacity to where, where does it come from.

RX 993. 

84. After Respondents cut off 2021-22 service contract negotiations, OJC could not obtain a 

shipping contract with any other carrier. CX 469. 

85. Because OJC did not obtain a contract with Respondents for 2021-22, OJC obtained what 

limited space it could on the spot market at extremely high rates. But often OJC was 

unable to secure shipments, and in most cases was forced to forgo making shipments of 

goods to the United States altogether because the spot rates became too expensive to 

justify the cost of container freight. CX 468. 

86. OJC shipped 143 containers in 2021-22 on the spot market and/or through freightforwarders. SCX 511; Brief at 21. OJC described that these 143 FFEs were lower than 

regular spot market rates at the time, “as they were through a shipping organization or the 

result of last-minute fill-ins when other companies could not take the space.” SCX 511 at 

¶ 8.

87. Mr. Berning testified that when he referred to a “container,” he meant a standard 40-foot 

container. RX 1032-1033. 

88. Mr. Weiss computed, and Mr. Berning validated, average gross revenue per container of 

$60,250.30 and average gross profit for container of $22,892.48 for the time period of 

June 1, 2020, through July 16, 2022. CX 423; CX 470; RX 1033-1034. 

89. Mr. Berning and Mr. Weiss stated that gross profit “is revenue less the costs of the 

product” and that OJC “captured all the costs including the purchase cost, sales 

commissions, fulfillment center costs, shipping costs and any other costs directly 

associated with the product. OJC utilizes third parties for shipping, fulfillment, 

warehousing and other needed tasks to sell the product. All of these costs have been 

captured.” CX 423; CX 470. 

90. Mr. Berning and Mr. Weiss calculated average net profit per container to also be equal to 

$22,892.48, explaining that due to the structure of the company, the direct variable costs 

included produce the net profit per container. CX 423; CX 470. 

2. Routes 

91. On July 8, 2020, Ms. Casanova emailed Mr. Pestana concerning OJC, writing “I Want to 

revisit the Kentucky business. If we are not able to offer inland ramp and ramp/door 

business to this interior point, Can we offer port-to-port service to the nearest port of 

 184 6 F.M.C. 2d
discharge, either Charleston to Norfolk? There is potential with this account and client is 

interested in our service.” CX 243. 

92. Later on July 8, 2020, Ms. Casanova emailed a larger group of Hamburg recipients 

regarding OJC, writing: 

Is there anything we can do to obtain this business for Louisville KY? 

Port to port alone does not work for the customer, as a ramp needs to be 

involved for delivery to Louisville KY (door) and all motor movement will 

be very costly for this product. 

The original volume was 1266x40hc per year (pls see attached), but the 

customer had already signed a contract with other carriers since we rejected 

it initially.

The customer has offered their overflow volume that is expected to be 

300x40’hc for the rest of the year and possibly more, since the online 

furniture retailer business has increased due to the pandemic. There is also 

the possibility of obtaining the full volume next year or a significant 

percentage. The main POLs are Ningbo, Xiamen, Yantian and Ho chi Minh. 

Please note that we closed the California business for this account. 

CX 242-243. 

93. On July 8, 2020, HSNA Logistics and Services Manager Dennis Seeraj replied to Ms. 

Casanova and others, writing: “If they already booked with another carrier via Louisville 

Rail they will not pay a much higher cost for us to arrange direct trucking from CHS or 

SAV port. Trucking cost will be approximately $2400. @ Tawab, do we have a running 

list of rail ramps which we don’t want to service perhaps I can look into cross dock 

options. Especially for this kind of volume, I would have love to take a look before we 

declined 2500TEU.” CX 242. Mr. Maldonado replied later on July 8, 2020, noting in part 

“Louisville is one of the ramps with negative impact in our PnL.” CX 242. 

94. On October 9, 2020, Mr. Weiss emailed Ms. Casanova, writing “Wondering if you would 

be open to entertain a 6 month (Oct- March) contract for 60 40’ HQ containers monthly 

from the below listed ports to our KY warehouse . . . .We are experiencing a spike way 

above our original projections and can award additional containers to carrier.” RX 803. 

95. On October 13, 2020, Ms. Casanova replied to Mr. Weiss regarding the opportunity, 

writing “we have to respectfully decline our participation, as our volume will continue on 

demand as it is now until the Chinese New Year, which does not allow us to have more 

space to sign a new long term contract and no additional volume for interior point 

intermodal shipments.” RX 802. 

96. Hamburg transported cargo to inland destinations, including Kentucky, from Brazil and 

other South American ports. RPFF at ¶ 25; CRPFF at ¶ 25; see also CX 287 (During 

2021 and during 2022 HSDG shipped cargo from Brazil to Kentucky). 

 185 6 F.M.C. 2d
D. Knowledge 

97. Mr. Pump testified that he did not “receive or review copies of any correspondence from 

OJ Commerce or any representative of OJ Commerce threatening legal action against 

Hamburg Sud” but rather made his decision based on the emails he received from Mr. Li 

and conversation with Mr. Li. RX 994-995. 

98. In the deposition of Mr. Pump, the following was discussed: 

Q But complaining to the FMC could not be a reason not to negotiate with 

customers. Correct? 

A That is right.

Q That was part of the compliance training? 

A Yes. 

CX 96. 

99. Mr. Pump also stated: 

Q Was there -- during this compliance training was there any discussion 

about if a customer threatened to or actually filed a lawsuit as opposed to a 

FMC complaint, whether or not that would be allowed in that situation to 

retaliate or refuse to deal with that customer? 

A I do not remember whether we had that specific example, meaning, a 

lawsuit. But it is clearly understood in the organization that this is not a 

factor in the decision whether or not to negotiate a service contract. 

CX 96. 

III. ANALYSIS AND CONCLUSIONS OF LAW

A. Preliminary Issues 

1. Jurisdiction

The Shipping Act provides that a “person may file with the Federal Maritime 

Commission a sworn complaint alleging a violation of this part.” 46 U.S.C. § 41301(a). Pursuant 

to this provision, the Commission has jurisdiction over a complaint alleging that a respondent 

committed an act prohibited by the Shipping Act. See Anchor Shipping Co. v. Aliança 

Navegação E Logística Ltda., Docket No. 02-04, 30 S.R.R. 991, 2006 WL 2007808, at *11 

(FMC May 10, 2006); see also Cargo One, Inc. v. COSCO Container Lines Co., Docket No. 99-

24, 28 S.R.R. 1635, 1645, 2000 WL 1648961, at *15 (FMC Oct. 31, 2000). OJC alleges 

violations of the Shipping Act within the Commission’s jurisdiction by both HSNA and HSDG. 

 186 6 F.M.C. 2d
2. Burden of Proof

To prevail in a proceeding to enforce the Shipping Act, a complainant bears the burden of 

proving their allegations by a preponderance of the evidence. 5 U.S.C. § 556(d); 46 C.F.R. 

§ 502.203; Maher Terminals, LLC v. Port Auth. of N.Y. & N.J., FMC Docket No. 08-03, 2014 

WL 9966245, at *14 (FMC Dec. 17, 2014). Under the preponderance standard, a complainant 

must show that their allegations are more probable than not. Crocus Investments, LLC v. Marine 

Transport Logistics, Inc., Docket No. 15-04, 2021 WL 3732849, at *3-4 (FMC Aug. 18, 2021) 

(Order Affirming Initial Decision on Remand). It is appropriate to draw inferences from certain 

facts when direct evidence is not available, and circumstantial evidence alone may even be 

sufficient; however, such findings may not be drawn from mere speculation. Waterman 

Steamship Corp. v. General Foundries, Inc., Docket No. 93-15, 26 S.R.R. 1173, 1180 (ALJ Dec. 

9, 1993), adopted in relevant part, 26 S.R.R. 1424, 1994 WL 279898 (FMC June 13, 1994). 

B. Relevant Law 

The remaining two claims in the proceeding both involve section 41104(a), which, as of 

the filing of this complaint, stated: 

(a) In general. – A common carrier, either alone or in conjunction with any other 

person, directly or indirectly, shall not – ... 

(3) retaliate against a shipper by refusing, or threatening to refuse, cargo 

space accommodations when available, or resort to other unfair or unjustly 

discriminatory methods because the shipper has patronized another carrier, 

or has filed a complaint, or for any other reason; . . . 

(10) unreasonably refuse to deal or negotiate.

46 U.S.C. §§ 41104(a)(3), (10). Section 41104(a)(3) was previously section 10(b)(3). Section 

41104(a)(10) was previously section 10(b)(10), and before OSRA-1999, section 10(b)(12). See

Canaveral Port Authority - Possible Violations of Section 10(b)(10), Unreasonable Refusal to 

Deal or Negotiate, Docket No. 02-02, 29 S.R.R. 1436, 2003 WL 723336, at *5 n.6 (FMC 

Feb. 24, 2003). 

OJC filed the amended complaint prior to the June 16, 2022, changes to the Shipping Act. 

In the Ocean Shipping Reform Act of 2022 (“OSRA 2022”), Congress modified section 

41104(a) to: “(3) unreasonably refuse cargo space accommodations when available, or resort to 

other unfair or unjustly discriminatory methods;” and “(10) unreasonably refuse to deal or 

negotiate, including with respect to vessel space accommodations provided by an ocean common 

carrier.” OSRA 2022, Pub. L. No. 117-146, §7, 136 Stat. 1272, 1274 (2022). These changes do 

not apply to this proceeding and are not discussed. In addition, in September of 2022, the 

Commission issued a refusal to deal Notice of Proposed Rulemaking. Notice of Proposed 

Rulemaking, Definition of Unreasonable Refusal to Deal or Negotiate with Respect to Vessel 

Space Accommodations Provided by an Ocean Common Carrier, Docket No. 22-25, 87 Fed. 

Reg. 57674, 2022 WL 4356068 (Sept. 21, 2022) (“NPRM Refusal to Deal”). The proposed rule 

is not binding and it has not been adopted. 

 187 6 F.M.C. 2d
The Shipping Act defines and regulates a number of different types of entities that are 

involved in the international shipment of goods by water, including common carriers, which are 

subject to sections 41104(a)(3) and (10) at issue in this proceeding. The Shipping Act defines the 

term common carrier.

The term “common carrier” – (A) means a person that – (i) holds itself out to the 

general public to provide transportation by water of passengers or cargo between 

the United States and a foreign country for compensation; (ii) assumes 

responsibility for the transportation from the port or point of receipt to the port or 

point of destination; and (iii) uses, for all or part of that transportation, a vessel 

operating on the high seas or the Great Lakes between a port in the United States 

and a port in a foreign country. 

46 U.S.C. § 40102(7). 

The statutory definitions are echoed in the Commission’s regulations: 

Common carrier means any person holding itself out to the general public to 

provide transportation by water of passengers or cargo between the United States 

and a foreign country for compensation that: 

(1) Assumes responsibility for the transportation from the port or point of 

receipt to the port or point of destination, and 

(2) Utilizes, for all or part of that transportation, a vessel operating on the high 

seas or the Great Lakes between a port in the United States and a port in a 

foreign country . . . . 

 

46 C.F.R. § 515.2(e). 

The Shipping Act provides for reparations “for actual injury caused by a violation.” 

46 U.S.C. § 41305(b). In addition, double damages are available for certain claims, including 

violations of section 41104(a)(3), the anti-retaliation provision. The additional reparations 

provision applicable to this proceeding states: 

On a showing that the injury was caused by an activity prohibited by section 

41102(b), 41104(3) or (6), or 41105(1) or (3) of this title, the Commission may 

order the payment of additional amounts, but the total recovery of a complainant 

may not exceed twice the amount of the actual injury. 

46 U.S.C. § 41305(c). OSRA-22 changed “41104(3) or (6)” to “paragraph (3) or (6) of section 

41104(a),” which appears to have clarified, but not changed, the citation. 46 U.S.C. § 41305(c). 

C. Discussion

This section will address the 41104(a)(10) allegations of refusal to deal before addressing 

the section 41104(a)(3) allegations of retaliation. At times, the parties’ arguments conflate the 

 188 6 F.M.C. 2d
two, but they are separate statutory provisions. Each section will discuss the legal framework 

before addressing the necessary elements.

 1. Section 41104(a)(10): Refusal to Deal 

OJC asserts that Hamburg unlawfully refused to deal and negotiate with OJC and that 

Hamburg’s after-the-fact pretexts for its retaliation and refusal to deal are all baseless. Brief at 

21-26; Reply at 18-22. Hamburg contends that it did not refuse to deal and that it did not refuse 

to negotiate, asserting that there was never a meeting of the minds on the material terms of a new 

contract. Opposition at 7-14. 

Section 41104(a)(10) prohibits a common carrier from unreasonably refusing to deal or 

negotiate. 46 U.S.C. § 41104(a)(10). The Commission has found that a common carrier should 

“refrain from ‘shutting out’ any person for reasons having no relation to legitimate 

transportation-related factors.” New Orleans Stevedoring Co. v. Bd. of Commissioners of the Port 

of New Orleans, Docket No. 00-11, 29 S.R.R. 1066, 1070, 2002 WL 33836158 (FMC June 28, 

2002), aff’d sub nom. New Orleans Stevedoring Co. v. FMC, 80 Fed. Appx. 681 (D.C. Cir. 

2003). The Commission has stated that “in determining reasonableness, the agency will look to 

whether a marine terminal operator gave actual consideration to an entity’s efforts at 

negotiation.” Canaveral Port Authority, 2003 WL 723336, at *18. “Refusals to deal or negotiate 

are factually driven and determined on a case-by-case basis,” although the ultimate burden of 

persuasion remains with the complainant to show that the refusal to deal or negotiate was 

unreasonable. Canaveral Port Authority, 2003 WL 723336, at *13, *18. To establish a violation 

of section 41104(a)(10), the Complainant must establish that (a) Respondents are common 

carriers, (b) Respondents refused to deal or negotiate, and (c) such refusal was unreasonable.

Each element is discussed below.

a. Common Carrier

Because section 41102(a) only governs the activities of common carriers, to violate it an 

entity must be a common carrier within the meaning of the Shipping Act. Each Respondent is 

discussed below. 

i. HSDG 

The parties agree that HSDG was a common carrier as defined by the Shipping Act, 

46 U.S.C. §40102(7), through October 31, 2021. Amended Complaint at ¶ 2; HSDG Answer at

¶ 2. HSDG became a wholly owned subsidiary of Maersk A/S, although HSDG did not cease to 

exist as a separate legal entity until late 2021. RX 1120 at ¶ 4. Maersk continues to operate the 

“Hamburg Sud” brand, which offers different services than Maersk A/S. Opposition at 1 n.1; RX 

1120 at ¶ 4. This element is not in dispute and the evidence establishes that HSDG operated as a 

common carrier during the timeframe at issue in this proceeding. 

ii. HSNA 

OJC asserts that the FMC has jurisdiction over HSNA because it is a “person” subject to 

regulation by the FMC based on its acts in conjunction with HSDG; HSNA is a party to the 

 189 6 F.M.C. 2d
service contract with OJC and both Respondents; and HSNA and its employees were part and 

parcel of the decision to retaliate and refuse to deal with OJC. Brief at 10 n.17. 

Respondents assert that HSNA should be dismissed, stating: 

HSNA should be dismissed. In two verified complaints, OJC alleged that HSNA 

is either a marine terminal operator (Complaint ¶ 3) or an ocean transportation 

intermediary (Amended Complaint ¶ 3). OJC offers no evidence to support either 

categorization. Instead, it offers an argument—unsupported by facts or 

precedent—that HSNA is subject to regulation without falling into one of the 

categories of persons subject to regulation under the Act. OJC Brief at 10, n.17. 

OJC fails to meet its burden of proof with respect to the existence of FMC 

jurisdiction over HSNA. 

Opposition at 7 n.2. 

OJC argues that HSNA is an “other person” under section 41104(a), which begins: “A 

common carrier, either alone or in conjunction with any other person, directly or indirectly, may

not . . . .” 46 U.S.C. § 41104(a)(10) (emphasis added). Commission decisions considering the 

“other person” language have found that the language “either alone or in conjunction with any 

other person” does not extend section 41104’s prohibitions to new classes of persons, rather it 

clarifies that an ocean carrier cannot excuse its prohibited conduct on the basis that it did not 

commit the conduct alone. The Commission explained: 

Section 10(b) forbids carriers from certain practices undertaken by the carriers 

alone or with other persons. It does not provide that if a carrier engages in one of 

the condemned activities ‘in conjunction with’ someone else, that other person 

has violated the statute as well and is equally liable for reparations to an injured 

party. As section 10(a) shows, Congress did make all ‘persons’ liable for some 

Shipping Act violations. In enforcing section 10(a), the Commission may reach 

any U.S. or foreign individual or enterprise. If Congress had wished to make a 

similar choice with respect to the practices covered by section 10(b), the statutory 

language would have so indicated. The legislative history of the 1984 Act reflects 

awareness on Congress’s part that section 10(b) was more restricted in coverage 

than section 10(a). 

Int’l Assoc. of NVOCC’s v. Atlantic Container Line, Docket No. 81-5, 1990 WL 427461, at *12 

(FMC Feb. 5, 1990) (citations omitted).

The evidence shows that HSNA was a wholly-owned subsidiary of HSDG that acted as 

the United States general agent of HSDG until November 1, 2021, when it became a whollyowned, indirect subsidiary of Maersk A/S. CX 101. On January 1, 2022, HSNA was merged into 

Maersk Agencies USA, Inc., the U.S. subsidiary and general agent of Maersk A/S. CX 101. 

The evidence further shows that the 2020-21 service contract names OJC and HSDG, 

identified as carrier, “c/o” HSNA as parties. CX 119. The contract has signature lines for OJC 

President Jacob Weiss and two employees of HSNA. CX 120. HSNA employees were integral to 

 190 6 F.M.C. 2d
the conduct at issue here. Although the contract does not explicitly identify HSNA as the agent 

of HSDG, the evidence establishes that HSDG was the “carrier;” HSNA was holding out HSDG 

to provide transportation by water of cargo between the United States and foreign countries; 

HSDG assumed responsibility for the transportation; and HSDG vessels were operating on the 

high seas. Therefore, the actions of HSNA employees discussed herein are found to be within the 

scope of their authority as agent for HSDG and attributable to HSDG. 

Based on the facts in this proceeding, HSNA is not a regulated entity under this section, 

but rather is an “other person” with whom HSDG operated. Moreover, here, HSNA was acting as 

an agent of a disclosed principal, and such agents are typically not liable for the acts of their 

principal. 12 Williston on Contracts § 35:34 (4th ed.); Landstar Express America, Inc. v. FMC, 

569 F.3d 493, 497 (D.C. Cir. 2009). Accordingly, OJC has not established that HSNA is an 

entity regulated by section 41104(a)(10). Therefore, the allegations against HSNA are denied. 

b. Refusal to Deal or Negotiate 

Because OJC’s refusal to deal arguments are intertwined with its retaliation claim, it is 

sometimes difficult to determine which arguments correspond with which claim. However, OJC 

asserts that after the April 28, 2021, demand letter, Hamburg responded by “immediately and 

abruptly cutting off (i) all renewal negotiations and (ii) all shipping under the Parties’ existing 

service contract.” Brief at 7.

Hamburg contends that they did not “shut out” OJC, but rather transported 185 of the 200 

FFEs they committed to transport during the term of the 2020-21 service contract; the mere fact 

of not entering into a service contract does not constitute a refusal to deal; and Hamburg 

continued to transport significant amounts of OJC’s cargo throughout 2021 and 2022. Opposition 

at 8-10. Moreover, Hamburg contends that they did not refuse to negotiate; their actions were 

reasonable; there is no evidence that HSDG refused to communicate with OJC during the 

contract term; there was no agreement on minimum volume commitment, trade lanes, and rates; 

and parties agreed on rates and HSDG transported OJC’s cargo from Asia and Brazil in 2021-22 

after OJC threatened to sue. Opposition at 10-14. 

In Canaveral Port Authority, the Commission found a refusal to deal where the Port set 

up a procedure that would only award a tug franchise by a public hearing of convenience and 

necessity, and the Port refused to hold such a hearing to consider a request for a tug franchise. 

2003 WL 723336, at *16. 

In Global Link, the ALJ dismissed a refusal to deal claim, finding that Hapag-Lloyd did 

not unreasonably refuse to deal or negotiate by refusing to reduce service contract rates when 

market shipping rates declined during the life of the contract. Global Link Logistics, Inc. v. 

Hapag-Lloyd AG, Docket No. 13-07, 33 S.R.R. 512, 2014 WL 5316345, at *18 (ALJ April 17, 

2014), proceeding dismissed due to settlement, 2015 WL 3955128 (FMC April 14, 2015). The 

Global Link decision enforced the terms of the parties’ contract, stating: 

Focusing on Global Link’s claim that Hapag-Lloyd unreasonably refused to deal 

or negotiate on Global Link’s request to reduce the 2012 Service Contract rates, 

the question in this proceeding becomes: When an ocean common carrier has 

 191 6 F.M.C. 2d
negotiated with a shipper and entered into a service contract, does that carrier 

unreasonably refuse to deal or negotiate with the shipper in violation of section 

41104(10) if the carrier will not renegotiate the terms of the exiting service 

contract when the shipper so demands? In other words, when a shipper states it is 

no longer satisfied with the terms of an existing contract - in this case, by 

claiming that the rates set forth in the service contract are too high because market 

shipping rates declined after the parties signed the contract and the shipper wants 

to renegotiate for lower rates - does section 41104(10) require the carrier to 

abandon its rights established by the contract and agree to lower rates? I conclude 

that the answer is no. 

Global Link, 2014 WL 5316345, at *18 (emphasis in original). This case involves OJC seeking 

to enforce the terms of the 2020-21 service contract and to negotiate a 2021-22 service contract. 

Hamburg asserts that it did not refuse to negotiate with OJC and that “[c]ommunications 

between parties constitute ‘negotiation’ even if no agreement is reached.” Opposition at 10-11 

(citing Global Link, 33 S.R.R. at 527). 

In reply, OJC states: 

OJC has presented ample smoking-gun emails and testimony showing that 

Maersk refused OJC available cargo space during the contract term, in retaliation 

for threatening to air its grievances with the Commission: 

● On April 29, 2021, Pump made the “executive decision” “in light of the 

potential litigation” to “not provide [OJC] with space under the existing 

contract.” (CX 220 (emphasis added).)

● That same day, Li disseminated Pump’s “executive decision” that “we 

should also consider not to provide them with space under existing contract.” 

(CX 227 (emphasis added).) 

● Maersk’s acknowledgement that its local sales team “were advised that no 

additional space would be granted for this customer.” (CX 229 (emphasis 

added).) 

● On June 10, 2021, Maersk reiterated that “[t]he MQC [of the 2020-2021 

Service Contract] was not fulfilled” as ordered. (SCX 515.) 

Reply at 10 (emphasis and changes in original) (OJC referred to Hamburg as Maersk). 

Before the afternoon of April 29, 2021, the evidence demonstrates that Hamburg was 

negotiating in good faith with OJC, including regarding the minimum quantity commitment. For 

example, on April 27, 2021, HSNA Account Executive Andrea Casanova sent an internal email 

stating that OJC wanted “to increase the MQC and add the route to Louisville KY.” CX 203. 

HSNA Cargo Flow Specialist Kevin Li then sent an email stating that OJC “signed 200 FFE last 

year for City of Industry, CA and almost fulfilled that this year. Based on that what would be the 

MQC target for next year with and without KY business? I do suggest to maintain focus on local 

 192 6 F.M.C. 2d
destination only.” CX 217. The hesitation to include the Kentucky route is consistent with 

Hamburg’s decision in October 2020 to decline to bid on the Asia to Kentucky route. RX 802-

803. 

The morning of April 29, 2021, Ms. Casanova continued to work on a contract renewal 

with OJC, starting with a draft contract with “the same lanes, rates, and conditions of the current 

contract” and “an increased MQC 400 FFE.” CX 214. Also on April 29, 2021, at 10:38 AM, Ms. 

Casanova emailed Mr. Li and Mr. Cheung, asking: “if it is possible to Increase MQC by 200 FFE 

giving a total of $400 FFE, that will not only cover the deficit by also show our interest to 

participate more of their volume, of course, if we truly can satisfy this volume.” CX 215. This 

email also discussed and attached the two OJC demand letters from October 16, 2020, and 

April 28, 2021. CX 215. 

After Ms. Casanova’s April 29, 2021, 10:38 AM email, Hamburg’s willingness to 

negotiate a service contract with OJC ended and Hamburg frankly identified the reason. On the 

afternoon of April 29, 2021, Mr. Li emailed HSNA Senior Vice President Juergen Pump, stating: 

Sorry to trouble you but I need your executive decision on this account, it was the 

one being mentioned in our call with AEC this Tuesday. I was completing [sic]

unaware of the legal action they put against us during the time I left the TPEB 

team, and I don’t believe it was shared in our call as well.

Long story short, they are threatening us on liquidated damage against the space 

that we couldn’t provide under committed 200 FFE MQC, which so far we 

already fulfilled 182 FFE and their contract will only expire by end of May. 

Meanwhile, they are proposing a renewal contract with 400 FFE MQC but all 

rates remain the same from last year contract.

In my opinion this is pathetic and unacceptable, it will be a risk to continue work 

with this account especially considering our space situation this coming year. I 

can work with APAROM to ensure they will get the remaining 18 FFE before end 

of May. But let me know if you still want to engage this account with contract 

renewal, we can setup a call to discuss if needed.

CX 220-221 (spelling in original). 

Mr. Pump replied on the afternoon of April 29, 2021, writing: “Fully agree. We should 

not engage in any renewal discussions with customer in light of the potential litigation, I would 

also not provide them with space under the existing contract. The shortfall will be compensated 

as per contract terms.” CX 220 (emphasis added). 

Mr. Li responded on April 29, 2021 at 4:52 PM, to Ms. Casanova’s 10:38 AM email, 

directing Ms. Casanova and Mr. Cheung to disengage on renewal negotiations, writing: 

Hi Andrea,

As you mentioned, I was completely unaware of their legal action against us since 

I left the TPEB team. I consulted with Juergen and the executive decision is that 

 193 6 F.M.C. 2d
we should not engage in any renewal discussion with customer in light of potential 

litigation. Please disengage on renewal negotiation with this account, thanks. 

Hi Ivan,

Please reject the new agreement mentioned below. Meanwhile, we will leave it up 

to APAROM’s decision to handle the remaining 18 FFE that required to fulfill the 

200 FFE MQC on current contract. But just to express our position on this, we 

should also consider not to provide them with space under existing contract. The 

shortfall will be compensated as per contract terms, considering we already 

fulfilled over 90% of the MQC agreement. Thanks.

CX 213 (emphasis added). 

On May 4, 2021, HSNA Manager of East Coast Sales Gonzalo Maldonado emailed Mr. 

Li, Ms. Casanova, Mr. Cheung, and Mr. Gast about Hamburg (“HS”) stating: 

Please note we were advise from customer in case that HS will not fulfill its 

contractual volume, it will proceed with legal actions against HS. We believe due 

to the small volume remaining to fulfil MQC of 200 FFE; this could be avoid it. I 

would appreciate please your feedback and authorization to grant space for this 

month of May for those 18 FFE’s needed. 

CX 227. The response by Mr. Cheung that “we have found a space,” RX 755, and his later 

identification of 18 FFE supposedly available for OJC, RX 725, suggest that Hamburg had the 

ability to fulfill the entire 200 FFE MQC. See also CX 221; RX 725-726. But, the evidence 

shows that the remaining volume requirements were not fulfilled by Hamburg, leaving a 15 

container shortfall. 

The evidence shows that under the 2020-21 service contract, Hamburg agreed to 

transport a minimum commitment of 200 FFEs. CX 125; CX 467 at ¶ 5. OJC was initially 

allocated 8 TEU/week, however, OJC was told that that number was increased to 10 TEUs/week 

in August of 2020. CX 147, CX 156, CX 206. By April 29, 2021, Hamburg had fulfilled 182 

FFEs. CX 220-221. Ultimately, Hamburg moved 185 of the 200 FFEs during the June 23, 2020, 

to May 31, 2021, contract period. Opposition at 2; CX 212. Regarding the 2021-22 contract, no 

contract was ultimately concluded between OJC and HSDG for 2021-22. CX 212 (the “contract 

expired on May 31st and renewal was not approved by Upper Management.”). 

Hamburg contends that communication between the parties constitutes negotiation even 

if no agreement is reached. Opposition at 10. After April 29, 2021, the parties continued to 

communicate. For example, Ms. Casanova emailed Mr. Weiss stating that “we are not able to 

renew the contract at this time due to the lack of space and equipment in Asia and the shortage of 

truck power in the US that we and the entire industry are facing. This situation does not allow us 

to commit with space for another period, however, we can work case by case” and “[w]e deeply 

apologize contract cannot be renewed and thank you for your support and understanding.” SCX 

513. The reasons provided by Hamburg to OJC did not match the reasons Hamburg discussed 

internally. This does not constitute the good faith communication required by the Shipping Act. 

 194 6 F.M.C. 2d
Hamburg contends that they shipped OJC containers after April 28, 2021, including 

during what would have been the 2021-22 contract year. Opposition at 9-10. The evidence shows 

that Hamburg provided short-term spot rate quotes to OJC after April 29, 2021, for cargo moving 

from Asia and Brazil to the United States. RX 608-618, RX 596-601, RX 741-745. Moreover, 

OJC shipped a small number of containers with Hamburg from Brazil to the United States under 

these and earlier-provided short-term spot rate quotes after April 29, 2021. RX 2-21, RX 45-56. 

OJC testified that Hamburg’s transportation of containers after April 29, 2021, included 

shipments that were already scheduled prior to that date, shipped from Asia via a third-party 

freight forwarder, or shipped from Brazil via limited spot quotes. SCX 509 at ¶ 3. This testimony 

is credible, especially in light of the agreed fact that Hamburg did not ship all of the containers 

contracted for in 2020-21 and there was no renewal of the 2020-21 service contract. Indeed, 

Respondents clarify that while “HSDG did handle some shipments for OJC from Brazil to the 

U.S., it did so on a case-by-case basis through rate quotations that were typically valid only for 

60 days. None of these quotes constitute a service contract.” RRPFF No. 87. Moreover, offering 

higher spot market rates does not ameliorate the problems caused by not having a predictable, 

year-long service contract. 

Hamburg also contends that there was no meeting of the minds regarding the contractual 

terms for the 2021-22 service contract. Opposition at 11. While this is true, the evidence shows 

that the terms were not reached because an “executive decision” was made that Hamburg would 

“not engage in any renewal discussion with customer in light of potential litigation.” CX 213. At 

that point, staff was instructed to “disengage on renewal negotiations with this account” and 

“also consider not to provide them with space under existing contract.” CX 213. Thus, Hamburg 

made a decision on April 29, 2021, not to further negotiate any terms for a 2021-22 service 

contract and to consider not providing additional space under the 2020-21 contract. The lack of a 

meeting of the minds, therefore, was directly related to Hamburg’s decision to disengage from 

negotiations. 

The preponderance of the evidence establishes that as of the afternoon of April 29, 2021, 

Hamburg stopped dealing or negotiating in good faith with OJC regarding both meeting its

remaining 2020-21 contractual commitment and negotiating a service contract for the following 

year. This constitutes a refusal to deal or negotiate. The next issue is whether or not that refusal 

was unreasonable. 

c. Whether the Refusal was Unreasonable 

OJC asserts that the refusal to deal was unreasonable and was retaliation for OJC’s threat 

to file a complaint. Brief at 16-21. Hamburg, however, asserts that its actions were reasonable 

because there is no evidence that Hamburg failed to ship containers for OJC when they had 

available space and because there were legitimate reasons not to enter into a new contract with 

OJC. Opposition at 15-18. 

The Commission “recognizes that an ocean common carrier does not have a duty to grant 

a contract to every potential party.” NPRM Refusal to Deal, 87 Fed. Reg. at 57677. “The Act 

does not guarantee the right to enter into a contract, much less a contract with any specific 

 195 6 F.M.C. 2d
terms.” Global Link, 2014 WL 5316345, at *18 (citation omitted). In a case affirmed by the 

Commission and DC Circuit, Administrative Law Judge Lang explained: 

The Act does not guarantee the right to enter into a contract, much less a contract 

with any specific terms; such a right has not existed either before or since the 

passage of the OSRA [1999]. All that is required is that common carriers . . . 

refrain from ‘shutting out’ any person for reasons having no relation to legitimate 

transportation-related factors.

New Orleans Stevedoring Co. v. Bd. of Commissioners of the Port of New Orleans, Docket No. 

00-11, 29 S.R.R. 345, 351 (ALJ June 27, 2001), aff’d 29 S.R.R. 1066, 2002 WL 33836158 (FMC 

June 28, 2002), aff’d sub nom New Orleans Stevedoring Co. v. FMC, 80 Fed. Appx. 681 (D.C. 

Cir. 2003).

The Commission recently discussed its prior application of the term “reasonableness” 

with regard to a refusal to deal or negotiate claim, stating:

Case law indicates that “reasonableness” of the refusal to deal or negotiate has 

historically been interpreted broadly in this context, with courts deferring to the 

Commission’s reading of that term in administering its statutes and regulations. 

The Commission has previously found reasonable those decisions that are 

connected to a legitimate business decision or motivated by legitimate 

transportation factors. “Reasonableness” can be given its dictionary definition but 

is judged on a case-by-case basis, with particular attention paid to the relevant 

circumstances; the Commission has said that a just and reasonable practice is one 

otherwise lawful but not excessive and suited to the end in view. 

Transportation-related factors can include, without limitation, the character of the 

cargo, vessel safety and stability, operational schedules, and the adequacy of 

facilities. Generally, however, transportation-related factors relate to the 

characteristics of the cargo or vessel, not the status of the shipper. 

The Commission has found various situations that inform what refusal to deal 

entails. It has found that a common carrier must avoid shutting out any person or 

party for reasons not connected to legitimate transportation-related factors. A 

common carrier must therefore give actual consideration to the other party’s 

efforts or attempts at negotiation. For example, a common carrier’s repeated 

refusal to respond to email or telephone requests for negotiations over an 

extended period of time may be viewed as an unreasonable method of shutting 

another party out. Similarly, there must be an affirmative act by a party to deal or 

engage in negotiations with the common carrier. Commercial convenience alone 

is not a reasonable basis for a common carrier’s refusal to deal or negotiate. A 

common carrier granting special treatment to one party over another because that 

party is a regular customer is likewise likely to be viewed as unreasonable. 

The Commission also has a history of recognizing that it is appropriate to defer to 

a party’s reasonable business decisions and not to substitute its business 

 196 6 F.M.C. 2d
judgement for that of an entity conducting negotiations. However, this precedent 

does not eliminate the Commission’s responsibility to evaluate whether a party’s 

decision-making practices resulted in a violation of the Shipping Act. 

The Commission continues to acknowledge that its “role is not to ensure that all 

interested parties get the same deal or make a certain profit. Rather, the 

Commission’s role is to ensure that parties are not precluded from obtaining 

preferential treatment due to unreasonable or unjustly discriminatory reasons.” 

The Commission further recognizes that an ocean common carrier does not have a 

duty to grant a contract to every potential party. However, upon establishing its 

criteria for granting preferential terms to parties who are able to meet those 

specified terms, the ocean common carrier then has a duty under the Shipping Act 

to apply such criteria in a consistent and fair manner without differentiating based 

on illegitimate transportation factors. An ocean common carrier may be viewed as 

having acted reasonably in exercising its business discretion to proceed with a 

certain arrangement over another by taking into account such factors as 

profitability and compatibility with its business development strategy. 

NPRM Refusal to Deal, 87 Fed. Reg. at 57676-57677 (footnotes omitted). 

OJC asserts that the refusal to deal was unreasonable because it was retaliation for 

threatened litigation, which is discussed more below. The question in this section is whether or 

not Hamburg’s conduct was unreasonable. The emails stating that an “executive decision” was 

made that Hamburg would “not engage in any renewal discussion with customer in light of 

potential litigation” – combined with the instruction to “disengage on renewal negotiations with 

this account” and “also consider not to provide them with space under existing contract” –

establish that the refusal to deal or negotiate was based on potential litigation. CX 213. 

Moreover, there is no suggestion in these communications that the litigation was unwarranted or 

that OJC was demanding more than they were entitled to under the existing contract and 

Shipping Act regulations. 

Hamburg asserts that its decision not to enter a service contract with OJC in 2021-22 was 

reasonable for numerous reasons, including: (1) the pandemic continued to cause supply chain 

congestion, especially at West Coast ports, (2) HSDG missed the 2020-21 MVC by 15 FFE and 

it was not clear that they could perform, (3) HSDG believed that OJC wanted the new contract to 

have the same rates, (4) HSDG was reducing the Asia to Kentucky trade lanes dues to increased 

inland transport costs as well as operational issues such as trucker and chassis shortages, and (5) 

“OJC’s disputatious manner of doing business—including almost daily demands for additional 

container space—also contributed to HSDG’s decision.” Opposition at 16-18. 

Many of the reasons identified by Hamburg as reasons for not entering a service contract 

may be legitimate, transportation-related factors that could reasonably justify a common carrier’s 

decision not to enter into a service contract. However, the facts do not support Hamburg’s 

assertion that in this particular case, any of those five factors was the actual reason that this 

particular service contract was declined. Rather, the evidence shows that this particular service 

contract negotiation ended because an “executive decision” was made that Hamburg would “not 

engage in any renewal discussion with customer in light of potential litigation.” CX 213. Indeed, 

 197 6 F.M.C. 2d
the timing of the decision on April 29, 2021, one day after OJC sent the second demand letter, 

for the first time mentioning the Federal Maritime Commission, further supports the finding that 

the decision was based on OJC’s demand letters and not on legitimate transportation factors.

An allegation of refusal to deal due to litigious behavior has been previously raised in a 

Commission proceeding. The Commission found a cognizable claim had not been raised and 

dismissed a refusal to deal claim where one party “made the decision not to engage in any more 

transactions with a party who had filed what appeared to be a baseless claim against its related 

company.” Cornell v. Princess Cruise Lines, Ltd., Docket No. 13-02, 2014 WL 5316340, at *8 

(FMC Aug. 28, 2014). On appeal, the D.C. Circuit “expresse[d] no view as to whether the FMC 

engaged in reasoned decision-making by giving deference to ‘discretionary business decisions’ 

without assessing whether there are ‘legitimate transportation-related factors’ for the refusal to 

deal or whether the FMC’s position was otherwise an unexplained departure from precedent and 

past practice.” Cornell v. FMC, 634 Fed. Appx. 795, 797-98 (D.C. Cir. Dec. 2, 2015). 

It is not necessary to reach the issue of whether a common carrier can consider 

litigiousness or a “disputatious manner of doing business” in determining whether or not to 

contract with an entity because that issue is not raised by these facts. Rather, here, the evidence 

shows that OJC sought to obtain transportation to which it was entitled under the existing service 

contract, objected to demurrage fees that have since been refunded, and otherwise raised 

legitimate concerns regarding whether Hamburg was meeting its contractual and Shipping Act 

obligations. Thus, deference to legitimate business decisions would not extend to the conduct at 

issue here. Refusing service based on these facts is not related to legitimate business decisions or 

transportation factors and is therefore unreasonable. 

Hamburg also asserts that Mr. Pump’s email was based on an internal misunderstanding, 

stating:

While OJC focuses on Mr. Pump’s response—the so called “smoking gun”—it is 

important to consider the information he received from Mr. Li before providing 

his response. Mr. Li noted that OJC was “threatening us on liquidated damage 

against the space that we couldn’t provide.” CX 220. Mr. Pump had not seen the 

threats that OJC’s counsel sent HSDG. RX 994-RX995. The primary focus of 

these threats was a breach of contract claim, which is precisely what Mr. Li 

described in his email. CX 220. Thus, on April 29, 2021, Mr. Pump had no 

indication that OJC was threatening action before the FMC. Moreover, the 

April 29, 2021 email from Mr. Li to Mr. Pump reflects Mr. Li’s mistaken 

understanding that what Ms. Casanova sent him was a proposal from OJC: “they 

are proposing a renewal contract with 400 FFE MQC but all rates remain the 

same from last year contract.” CX 220; see also RX981. 

As a result, Mr. Pump was being asked if HSDG should enter a 400 FFE contract 

at the same rates as 2020-21 with a customer that was threatening legal action for 

breach of contract. It is highly unlikely that any carrier would have agreed to a 

400 FFE service contract for 2021-22 at the same rates as a 200 FFE service 

contract for 2020-21. As OJC itself acknowledges, the market rates increased 

substantially from June 2020 to May 2021. OJC Brief at 41-46; CX435. It is 

 198 6 F.M.C. 2d
perfectly predictable and reasonable that Mr. Pump, when presented with what 

Mr. Li portrayed as a proposal from OJC for such a contract, combined with a 

threat of litigation, would decline to offer a service contract based on reasonable 

business considerations. The fact that Mr. Li and Mr. Pump misunderstood the 

source and nature of the proposal they were evaluating does not detract from the 

reasonableness of their actions based on their subjective understanding. Indeed, 

the FMC has historically deferred to a party’s reasonable business decisions in the 

context of an unreasonable refusal to deal. 87 Fed. Reg. 57674, 57677 (September 

21, 2022) (citations omitted). Finally, the record clarifies that Mr. Pump’s 

suggestion that HSDG decline to provide space under the Service Contract was 

not adopted by HSDG in any event. See RX 726-28. As noted above, after Mr. 

Pump sent his email, HSDG and Maersk continued to transport cargo for OJC, 

accounting for 24% of OJC’s volume after May 31, 2021. Supra at 4-5, 13-14. 

Opposition at 19-20 (citations shortened) (footnotes omitted).

Unlike the retaliation claim, for a refusal to deal claim there is no requirement that the 

unreasonable conduct be limited to or related to filing of a complaint before the Commission. 

Whether Mr. Pump decided not to pursue a new service contract due to a threat to file contractual 

arbitration, a Commission proceeding, or litigation in some other venue is not determinative. The 

decision made in this case to “disengage on renewal negotiations with this account” and “also 

consider not to provide them with space under existing contract,” CX 213, see also RX 981, was 

explicitly articulated as being based on “potential litigation” – not based on perceived 

unreasonable contractual requests or any other legitimate business decision or transportation 

factors – and is therefore unreasonable.

Based on the totality of the evidence, Hamburg’s failure to negotiate or deal was

unreasonable, and its justifications are not consistent with the facts as established by the 

evidence in the record, including the contemporaneous emails identifying the reason as 

“potential litigation.” Accordingly, OJC has established that HSDG violated section 

41104(a)(10)’s prohibition against refusals to deal. 

2. Section 41104(a)(3): Retaliation 

Section 41104(a)(3) provides that: “A common carrier, either alone or in conjunction 

with any other person, directly or indirectly, may not . . . retaliate against a shipper by refusing, 

or threatening to refuse, cargo space accommodations when available, or resort to other unfair or 

unjustly discriminatory methods because the shipper has patronized another carrier, or has filed a 

complaint, or for any other reason.” 46 U.S.C. § 41104(3). Therefore, common carriers are 

prohibited from retaliating against a shipper by refusing, or threatening to refuse, cargo space 

accommodations when available, or resorting to other unfair or unjustly discriminatory methods, 

because: the shipper has patronized another carrier, the shipper has filed a complaint, or for any 

other reason. Statement of the Commission on Retaliation, Docket No. 21-15, 3 F.M.C.2d 201, 

207, 2021 WL 9204128 (FMC Dec. 28, 2021) (“Statement on Retaliation”). Double damages 

may be available for a violation of the anti-retaliation provision. 46 U.S.C. § 41305(c). 

 199 6 F.M.C. 2d
OJC asserts that Hamburg retaliated against OJC by unreasonably refusing to renew or 

even negotiate a service contract with OJC, and by refusing to fulfill Hamburg’s existing 

contractual obligations and that Hamburg’s after-the-fact pretexts for its retaliation are all 

baseless. Brief at 16-26. In its reply, OJC asserts that Hamburg unlawfully retaliated against OJC 

by refusing to ship any more containers under the 2020-21 service contract and by refusing to 

renew and enter into the 2021-22 contract. Reply at 8-18. 

Hamburg contends that they did not retaliate against OJC, arguing that Hamburg did not 

refuse, or threaten to refuse, cargo space accommodations when available; HSDG’s decision not 

to enter a service contract in 2021-22 is not retaliation under the statute and was reasonable; 

HSDG’s internal emails do not establish that Hamburg retaliated against OJC; the alleged 

retaliation is not actionable because it occurred before OJC filed its complaint with the FMC; 

and finding retaliation here would create unworkable precedent. Opposition at 15-23. 

Retaliation in the shipping industry has long been a concern. The Report of the 

Committee on the Merchant Marine and Fisheries on Steamship Agreements and Affiliations in 

the American Foreign and Domestic Trade under H. Res. 587 (1914) (“Alexander Report”) 

investigated foreign and domestic shipping lines, proposing that among other things, Congress 

empower the Interstate Commerce Commission to “[a]dopt whatever measures it may deem 

necessary to protect the complainant against retaliation,” and prohibit carriers from “retaliating 

against any shipper by refusing space accommodations when such are available, or by resorting 

to other unfair methods of discrimination, because such shipper has patronized an independent 

line, or has filed a complaint charging unfair treatment, or for any other reason.” Alexander 

Report at 421 (cited in Statement on Retaliation, 3 F.M.C.2d at 202). 

“In passing the Shipping Act of 1916 . . . Congress followed the basic recommendations 

of the Alexander Committee.” Fed. Mar. Bd. v. Isbrandtsen Co., 356 U.S. 481, 490 (1958). 

Section 14 of the 1916 Act prohibited deferred rebates, fighting ships, making 

discriminatory shipping contracts and “retaliat[ing] against any shipper by 

refusing, or threatening to refuse, space accommodations when such are available, 

or resort to other discriminating or unfair methods, because such shipper has 

patronized any other carrier or has filed a complaint charging unfair treatment, or 

for any other reason.” This language was carried forward with little change as 

section 10(b)(5) in the Shipping Act of 1984 and its codification as 46 U.S.C. 

§ 41104(a)(3). 

Statement on Retaliation, 3 F.M.C.2d at 202-203. 

The Commission recently issued the Statement on Retaliation “to clarify that it will 

interpret 46 U.S.C. § 41104(a)(3) – the anti-retaliation provision – broadly to effectuate 

Congress’s intent that shippers feel free to air their grievances to the Commission, and to address 

new shipping practices and new forms of retaliation.” Statement on Retaliation, 3 F.M.C.2d at 

201. The Commission concluded the policy statement with an example, stating: 

A complainant must show that a carrier engaged in prohibited conduct (refusing 

cargo space accommodations or other unfair or unjustly discriminatory methods), 

 200 6 F.M.C. 2d
with respect to a protected entity (shipper), because the protected entity engaged 

in protected activity (patronizing other carriers, filing a complaint, or other 

activities of the same class).

Statement on Retaliation, 3 F.M.C.2d at 209. This section will address the retaliation arguments 

in this proceeding by discussing whether (a) each Respondent is a common carrier, (b) 

Respondents engaged in prohibited conduct by refusing, or threatening to refuse, cargo space 

accommodations when available, or resorting to other unfair or unjustly discriminatory methods, 

(c) Complainant is a shipper, and (d) Complainant engaged in protected activity by patronizing 

another carrier, or filing a complaint, or for any other reason. The first two elements focus on 

Respondents while the last two elements focus on Complainant. Each element is discussed 

below. 

a. Respondent HSDG is a Common Carrier

Section 41104(a)(3) applies to common carriers, either alone or in conjunction with any 

other person. 46 U.S.C. § 41104(a)(3). Therefore, the first question is whether Respondents are 

common carriers. As discussed above, the evidence shows that HSDG was a common carrier and 

that HSNA was acting as its disclosed agent here. Therefore, the entity to which this section 

applies is HSDG, as HSNA was the agent and not the common carrier. This element is therefore 

met with regard to HSDG and the claim against HSNA is denied. 

b. Respondents Engaged in Prohibited Conduct

Section 41104(a)(3) begins by prohibiting a common carrier from “refusing, or 

threatening to refuse, cargo space accommodations when available,” or resorting “to other unfair 

or unjustly discriminatory methods.” 46 U.S.C. § 41104(a)(3). Here, the first part prohibiting 

refusing or threatening to refuse cargo space accommodations when available is most relevant. 

However, the second part prohibiting resorting to other unfair or discriminatory methods could 

also apply to these facts and is helpful to understand. 

The Commission recently explained the “resort to other unfair or unjustly discriminatory 

methods” clause. 

The “other unfair or unjustly discriminatory” language is a “catchall clause by 

which Congress meant to prohibit other devices not specifically enumerated but 

similar in purpose and effect to those barred by § 14 First, Second, and the 

‘retaliate’ clause of § 14 Third.” The Court in Isbrandtsen held that only conduct 

“designed to stifle outside competition” fell within this catchall. But it is not hard 

to envision situations where a carrier might engage in retaliatory conduct that has 

nothing to do with competition with other carriers. A carrier might engage in 

conduct detrimental to a shipper (e.g., refusing to enter into, renew, or amend a 

service contract) to “get even” with or deter that shipper and other shippers from 

complaining to the Commission. Under a broad reading of Isbrandtsen, this type 

of carrier conduct would not violate § 41104(a)(3) because it would not involve 

conduct designed to stifle outside competition. 

 201 6 F.M.C. 2d
While the Commission is bound by Isbrandtsen, the Commission does not believe 

it requires such a result and interprets it as not applying where a retaliation claim 

is based on complaint-related activity (filing a complaint, participating in 

Commission investigatory or enforcement efforts, commenting on a rulemaking, 

or bringing a dispute to CADRS). Isbrandtsen did not involve allegations that a 

carrier retaliated against a shipper because it “filed a complaint charging unfair 

treatment.” Rather, at issue was a dual rate contract system designed to protect a 

conference from an independent carrier. Consequently, the Court had no reason to 

address, and did not purport to address, the language in the statute that protects 

shippers who file a complaint. Further, the Court deemed the purpose of section 

14 Third was to outlaw practices used to stifle the competition of independent 

carriers but did not discuss the portions of the Alexander Report that referred to 

protecting complaining shippers. 

Statement on Retaliation, 3 F.M.C.2d at 208 (footnotes omitted). 

OJC alleges both that Hamburg refused cargo space accommodations when available and 

that Hamburg resorted to other unfair or unjustly discriminatory methods. Brief at 18-19. The 

refusal to provide cargo space accommodations when available, at issue here, is similar to the 

refusal to deal found above. By refusing to deal or negotiate, Hamburg effectively refused cargo 

space accommodations. Respondent’s prohibited conduct is discussed first in regard to the 2020-

21 service contract and then in regard to the decision not to enter into a 2021-22 service contract. 

i. Prohibited Conduct 2020-21 

OJC argues that Hamburg engaged in prohibited conduct for the 2020-21 contract year by 

refusing to transport additional containers after the April 28, 2021, second demand letter. Brief at 

16. Hamburg contends that it “continued to transport OJC’s cargo after OJC threatened litigation 

on October 16, 2020 and again on April 28, 2021,” and that declining to enter a service contract 

is not a form of retaliation recognized under the Shipping Act. Opposition at 15. OJC replies that 

“those shipments (1) were already scheduled prior to the retaliation date, and (2) were obtained 

on the spot market by OJC using third-party freight forwarders—not Maersk.” Reply at 11. 

The facts show that Hamburg did not meet the minimum volume commitment in the 

2020-21 service contract, only moving 185 of the 200 FFEs from June 23, 2020, to May 31, 

2021. CX 212. Hamburg’s transportation of additional shipments for OJC after April 28, 2021, 

included shipments that were already scheduled or were obtained via a third-party freight 

forwarder via limited spot quotes. SCX 509-512 at ¶¶ 3, 8. Moreover, the up to three containers 

that were shipped under the contract after April 29, 2021, do not absolve Hamburg of its decision 

not to meet its contractual commitment, but only shows a delay in implementing that policy. 

Therefore, the evidence establishes that Hamburg failed to transport 15 of the 200 FFE 

containers required by the 2020-21 service contract. 

Hamburg committed to transport these 15 containers as part of the service contract. And, 

with a month left on the contract and an allocation of 8-10 TEUs (or 4-5 FFEs) a week, this 

minimum commitment should have been within reach. Indeed, Mr. Li’s April 29, 2021, email to 

Mr. Pump offered “I can work with APAROM to ensure they will get the remaining 18 FFE 

 202 6 F.M.C. 2d
before end of May.” CX 220-221. But instead, Mr. Pump said “I would also not provide them 

with space under existing contract” and then said “to express our position on this, we should also 

consider not to provide them with space under existing contract.” CX 220, CX 213. The 

contemporaneous emails do not demonstrate that space was not available but rather that these 

final containers were not shipped due to the “potential litigation.” CX 213. The evidence 

establishes a refusal to provide cargo space accommodations when available for fifteen 

containers in the 2020-21 service contract year. 

ii. Prohibited Conduct 2021-22 

OJC argues that Hamburg engaged in prohibited conduct for the 2021-22 contract year by 

disengaging from negotiations after the April 28, 2021, second demand letter. Brief at 7-8. 

Hamburg contends that declining to enter a service contract is not a form of retaliation 

recognized under the Shipping Act and asserts that other reasons justify the decision not to enter 

into a new contract. Opposition at 16-18. OJC replies that Hamburg “retaliated against OJC 

based solely on its threat to complain to the Commission” and attempted to conceal the unlawful 

retaliation with pretexts which it alleges it disproved. Reply at 12-14. 

An ocean common carrier does not have a duty to grant a contract to every potential 

party, however, ocean common carriers’ decisions must be based on legitimate transportation 

factors or legitimate business decisions. NPRM Refusal to Deal, 87 Fed. Reg. at 57676 (citing 

Ceres Marine Terminals v. Maryland Port Administration, Docket 94-01, 29 S.R.R. 356, 370 

(FMC Aug. 15, 2001)). As discussed above in the refusal to deal section, here, the evidence 

shows that the decision to “disengage” from negotiations for a renewed service contract was 

made due to the “litigation risk” posed by OJC and not for the reasons argued by Hamburg in 

this proceeding, as the facts do not support Hamburg’s assertion that in this particular case, any 

of those five factors were the actual reason that this particular service contract was declined. 

Regarding whether space was available, the evidence shows that after April 29, 2021, 

HSDG entered into service contracts with other shippers for a significantly higher amount of 

space than OJC was requesting. CX 469 at ¶ 16; CX 283-284; see also CX 285-286, HSDG’s 

Resp. to OJC RFA 1-4. Ms. Casanova’s question regarding whether the new contract could be 

increased from 200 to 400 FFE further suggests that HSDG had space available to enter into a 

contract of at least 200 FFE, the same as the previous year, and that whether space was available 

for 400 FFE had not been determined. Therefore, the evidence shows that Hamburg had at least 

200 FFE available space for 2021-22, the same minimum volume commitment and routes as the 

prior contract. 

The record does not allow a determination as to whether 400 FFE or more were available 

in the 2021-22 contract year. Mr. Pump testified that: 

Our biggest challenge in 2021 was capacity, as the existing customers, all asked, 

with very few exceptions, all asked for higher MQC, more capacity commitments, 

that was the overriding objective. And that was our biggest single challenge. 

Because we could not get a firm handle on the capacity that we would be able to 

sell in 2021. And then we had the challenge of who do we give more capacity to 

where, where does it come from.

 203 6 F.M.C. 2d
RX 993. This is consistent with Hamburg’s emails prior to April 29, 2021, for example when 

Ms. Casanova asked whether it would be possible to increase the MQC from 200 to 400 FFE, 

suggesting that it was not clear that an increased capacity would be available. CX 215. 

The statements made by Ms. Casanova to OJC that Hamburg could not provide a new 

contract “due to the lack of space and equipment in Asia and the shortage of truck power in the 

US” and “due to the space situation in Asia more than truck power and chassis availability in the 

US” (SCX 481, RX 811) are not credible as they are not consistent with internal Hamburg

emails. Indeed, that Hamburg did not communicate to OJC that the contract negotiations were 

terminated due to a concern about potential litigation suggests that Hamburg knew the real 

reason was not appropriate. Accordingly, the evidence establishes a refusal to provide cargo 

space accommodations when available for 200 FFE for the 2021-22 contract year. 

c. OJC is a Shipper

The Commission has indicated that “although § 41104(a)(3) protects ‘shippers,’ that term 

includes more than just cargo owners.” Statement on Retaliation, 3 F.M.C.2d at 201. In this case, 

the parties do not contest that OJC was a shipper. The facts establish that OJC is an e-commerce 

retailer that sells “dropship products” from domestic inventory of hundreds of brands, has a 

direct import program where OJC buys household goods, and OJC’s imports come from Asia 

and Brazil and are delivered to California or Kentucky. CX 467. Therefore, OJC is a shipper and 

this element is met.

d. OJC Engaged in Protected Activity 

OJC contends that Hamburg retaliated against it because OJC threatened to file a 

complaint with the FMC. Brief at 19. Hamburg argues that its emails do not establish retaliation 

but rather a reasonable business decision based on a misunderstanding; the alleged retaliation is 

not actionable because it occurred before OJC filed its complaint with the FMC; and finding 

retaliation here would create unworkable precedent because “every shipper would file, or 

threaten to file, claims with the FMC against ocean carriers during contract negotiations.” 

Opposition at 18-23. 

OJC asserts that not finding retaliation here “would essentially encourage carriers to 

retaliate if a dispute arose before the shipper could file its complaint, as a loophole to avoid 

liability,” which would be contrary to the Commission’s policy to interpret anti-retaliation 

provisions broadly. Reply at 16-17 (emphasis in original). OJC asserts that its claim is 

“consistent with the Shipping Act, the intent of Congress, and the Statement of the Commission 

on Retaliation.” Reply at 18. 

Section 41104(a)(3) states that a common carrier may not retaliate against a shipper 

“because the shipper has patronized another carrier, or has filed a complaint, or for any other 

reason.” 46 U.S.C. § 41104(a)(3) (emphasis added). The Commission described this type of 

protected activity as “patronizing other carriers, filing a complaint, or other activities of the same 

class.” Statement on Retaliation, 3 F.M.C.2d at 209. The Commission has indicated that 

“protected activity includes not only filing a complaint with the Commission but also 

 204 6 F.M.C. 2d
participating in Commission investigatory or enforcement efforts, commenting on a rulemaking, 

or using CADRS’ dispute resolution procedures.” Statement on Retaliation, 3 F.M.C.2d at 201. 

The complaint in this proceeding was filed on December 13, 2021. Thus, the FMC 

complaint was filed after the conduct at issue, which began the afternoon of April 29, 2021. 

Therefore, Hamburg’s actions after April 29, 2021, were not because OJC had “filed a 

complaint” as no complaint had yet been filed. Rather, the argument is that “for any other 

reason” includes OJC’s threat to file a petition with the FMC.

The first time in the record that a threat to complain to the FMC is conveyed by OJC to 

Hamburg is April 28, 2021, when an attorney representing OJC emailed the second demand 

letter to Hamburg, stating: “Failure to cure the breach by May 3, 2021, may result in legal action 

against you and your affiliates, as well as the filing of a petition to the Federal Maritime 

Commission to seek relief.” CX 210 (emphasis omitted). OJC contends that this threat to file a 

petition, presumably meaning a complaint, with the Commission constitutes a protected activity.

Therefore, the primary issue here is whether under these facts, the “for any other reason” 

statutory language includes threats to file a complaint with the FMC. 

Hamburg states:

OJC did not file a complaint before the FMC or commence any other FMC 

activities covered by the statute before the alleged retaliation. OJC fails to cite any 

precedent—and Respondents are not aware of any—that threatening to file a 

complaint before the FMC is covered by Section 41104(a)(3), as in effect at the 

time of the conduct at issue.

Opposition at 21 n.10. Further, Hamburg asserts that the “any other reason” language applies 

only to other ways that shippers may bring allegations of unlawful activity to the Commission, 

such as participating in Commission investigatory or enforcement efforts. Opposition at 21 n.10.

Hamburg is correct that this is a novel issue and the parties have not identified any case 

law that addresses whether or not “any other reason” in the Shipping Act’s anti-retaliation 

provision applies to threats to file an FMC complaint. In California Shipping, where 

Complainant had filed a complaint against another carrier, Korea Shipping Line, but was 

alleging retaliation by Yangming Marine Transport Corporation, the Commission found that 

although “section 10(b)(5) does prohibit retaliation against a shipper because the shipper has 

filed a complaint, we believe that this provision is limited to situations where the shipper has 

filed a complaint against the carrier who is allegedly retaliating against it.” California Shipping 

Line, Inc. v. Yangming Marine Transport Corp., Docket No. 88-15, 25 S.R.R. 1213, 1990 WL 

427466, at *16 (FMC Oct. 19, 1990). Here, OJC threatened to file a complaint about 

Respondent, not some other carrier. 

The statutory language, by including the phrase “or for any other reason” explicitly 

applies this section beyond cases where the shipper has patronized another carrier or has filed a 

complaint. The extent of that expansion is not unlimited, however, and the closeness of the 

alleged misconduct to the other items listed is relevant. Here, the action alleged to constitute an 

“other reason” is the threat to file a complaint with the Commission. This conduct is closely 

 205 6 F.M.C. 2d
related to the listed violations without being one of the listed violations. It is reasonable to 

anticipate that threats of prohibited conduct would be encompassed under the “for any other 

reason” language, and so finding is consistent with the Commissions’ Policy Statement regarding 

interpreting the anti-retaliation provision broadly. 

That this “any other reason” language may also apply to other conduct – such as 

participating in Commission investigatory or enforcement efforts, commenting on a rulemaking, 

or using CADRS’s dispute resolution procedures – does not mean that “any other reason” may 

not also apply to threats to file an FMC complaint. 

Hamburg also asserts that the threats here would not fall under this section because they 

related to alleged breaches of the service contract, which typically would not be heard by the 

Commission, and because the service contract contained arbitration and liquidated damages 

provisions. Opposition at 21. However, service contracts do not deprive the Commission of 

jurisdiction to hear allegations of Shipping Act violations. The anti-retaliation provision is not so 

limited, and Hamburg does not provide any legal support for this argument.

From a policy perspective, OJC contends that not including “threats” in “any other 

reason” could motivate carriers to retaliate quickly, before a complaint can be filed. Reply at 16-

17. Hamburg, on the other hand, contends that “every shipper would file, or threaten to file, 

claims with the FMC against ocean carriers during contract negotiations.” Opposition at 22-23. 

Ideally, parties should be able to discuss what they think could be Shipping Act 

violations as soon as possible, so the parties can work toward resolving them before they become 

violations or lead to litigation. These conversations may be limited if “threats” to file a complaint 

are not included in the anti-retaliation provisions as shippers may hesitate to raise issues without 

the protection of the anti-retaliation provision. Moreover, just because a party threatens to file a 

complaint does not mean that the complaint is valid or would be successful. It simply advises the 

carrier that the shipper believes there may be a violation so that the carrier can ensure that their 

conduct conforms to the requirements of the Shipping Act. As long as carriers have a legitimate, 

transportation-related basis for their decisions and comply with the requirements of the Shipping 

Act, they will not face liability. Moreover, including “threats” to file a complaint as an “any 

other reason” is consistent with the Commission’s statement that this section should be read 

broadly. Therefore, a threat to file a Commission complaint constitutes “for any other reason” in 

the anti-retaliation provision.

For the reasons discussed above, OJC’s threat to file a complaint with the Commission 

establishes that OJC engaged in protected activity and this element is met. Therefore, all four 

factors are met. OJC has established that common carrier HSDG retaliated against shipper OJC 

by refusing cargo space accommodations when available or resorting to other unfair or unjustly 

discriminatory methods because OJC had filed a complaint or for any other reason, which 

includes the threat to file a Commission proceeding. 46 U.S.C. § 41104(a)(3). The next issue is 

what reparations, commonly referred to as damages, are appropriate.

 206 6 F.M.C. 2d
3. Reparations 

OJC alleges that it is entitled to reparations for the actual injury it sustained as a result of 

Hamburg’s violations of the Shipping Act; Hamburg’s criticisms of OJC’s damages are just as 

baseless as its liability pretexts; and OJC’s damages should be doubled due to Hamburg’s willful 

violation of section 41104(a)(3). Brief at 33-49; Reply at 32-52. 

Hamburg asserts that OJC failed to prove damages with reasonable certainty, arguing that 

OJC’s expert is unqualified to offer opinions on damages and contesting OJC’s alleged lost 

profits, “Shipping Rate Differentials” method, evidence of causation, and mitigation of alleged 

damages. Opposition at 23-42. 

The Shipping Act requires that the “Commission shall direct the payment of reparations 

to the complainant for actual injury caused by a violation” of the Act. 46 U.S.C. § 41305(b). 

Complainants bear the burden of proving that they are entitled to reparations. MAVL Capital Inc. 

v. Marine Transport Logistics, Inc., Docket No. 16-16, 2022 WL 2209421, at *3 (FMC June 10, 

2022). “As the Commission has explained: ‘(a) damages must be the proximate result of 

violations of the statute in question; (b) there is no presumption of damage; and (c) the violation 

in and of itself without proof of pecuniary loss resulting from the unlawful act does not afford a 

basis for reparation.’” MAVL Capital, 2022 WL 2209421, at *3 (citations omitted). Reparations 

will only be awarded based on actual damages. MAVL Capital, 2022 WL 2209421, at *3. 

“Actual damages means ‘compensation for the actual loss or injuries sustained by reason of the 

wrongdoing’ which complainants must show to a reasonable degree of certainty.” MAVL 

Capital, 2022 WL 2209421, at *3 (quoting California Shipping, 1990 WL 427466, at *23). 

“That does not require absolute precision but does require evidence sufficient to reasonably infer 

the actual loss sustained.” MAVL Capital, 2022 WL 2209421, at *3. 

The statements of the Commission in California Shipping Line Inc. and the other 

cited cases are in the mainstream of the law of damages as followed by the courts, 

for example, regarding the principle that the fact of injury must be shown with 

reasonable certainty, that the amount can be based on something less than 

precision but something based on a reasonable approximation supported by 

evidence and by reasonable inferences, the principle that the damages must be 

foreseeable or proximate or, in contract law, within the contemplation of the 

parties at the time they entered into the contract, the fact that speculative damages 

are not allowed, and that regarding claims for lost profits, there must be 

reasonable certainty so that the court can be satisfied that the wrongful act caused 

the loss of profits. 

Tractors & Farm Equipment Ltd. v. Cosmos Shipping Co., Docket No. 81-57, 26 S.R.R. 788, 

798-99 (ALJ Nov. 23, 1992), admin. final, Dec. 31, 1992. The parties agree that reasonable 

certainty is the appropriate standard. Reply at 33 n.146; Opposition at 23-24. 

Both parties present experts, and the status of those experts and their reports will be 

addressed first. The specific damages calculations presented by OJC will then be evaluated, 

followed by an assessment of causation, mitigation, and additional damages. 

 207 6 F.M.C. 2d
a. Experts

The report of OJC’s expert witness, Richard Berning, includes alternative calculations of 

damages based on either lost profits or shipping rate differentials. Brief at 33-49; CX 415 

(Berning Report); CX 460 (Berning Supp. Report). The report and declaration of Hamburg’s 

expert, Ricardo Zayas, dispute OJC’s damages calculations. RX 1180 (Zayas Report); RX 1145 

(Zayas Declaration). 

Hamburg contends that Mr. Berning is unqualified, arguing that he did not obtain 

“sufficient relevant data” or verify the data provided to him; the assumptions underlying his 

opinions are not reasonable; and his opinions are insufficient as a matter of law. Opposition at 

25-36. OJC asserts that all of these objections are unfounded. Reply at 43-52. Both parties also 

contest the timeliness of each other’s expert reports.

i. Expert Qualification 

“Qualifying an expert . . . requires only that the witness possess the ‘knowledge, skill, 

experience, training, or education’ necessary to assist the trier of fact. As the Supreme Court 

stated in the seminal opinion of [Daubert], the trial court must determine whether the proposed 

expert possesses ‘a reliable basis in the knowledge and experience of [the relevant] discipline.’” 

Robinson v. D.C., 75 F. Supp. 3d 190, 197 (D.D.C. 2014) (citing to Daubert v. Merrell Dow 

Pharmaceuticals, Inc., 509 U.S. 579 (1993). “It is not necessary that an expert possess the 

highest possible or most appropriate qualifications.” Marine Repair Services of Maryland, Inc. v. 

Ports America Chesapeake, LLC, Docket No. 11-11, 2013 WL 9808672, at *23 (ALJ Jan. 10, 

2013), admin. final Mar. 20, 2013. 

Mr. Berning is a Certified Public Accountant, a Certified Valuation Analyst, and 

Certified in Financial Forensics, with an education in accounting and economics, and decades of 

experience in accounting and business valuations. CX 438, CX 449-459. Mr. Berning is qualified 

as an expert, and the criticisms offered will be considered in the weight given to his opinion. 

Hamburg’s other arguments, regarding Mr. Berning’s data, assumptions, and the sufficiency of 

his opinions are not a reason to disqualify Mr. Berning, but these will be considered in the 

evaluation of OJC’s damage calculations below. 

ii. Legal Sufficiency

Hamburg argues that Mr. Berning’s opinions are insufficient as a matter of law because 

they merely parrot Mr. Weiss’s calculations. Opposition at 36. OJC indicates that Mr. Berning 

did not rubber stamp OJC’s prior figures but rather came up with his own independent opinion. 

Reply at 44; Brief at 33-34; RX 1044; see also CX 448; CX 469. 

As the Commission observed in Sea-Land Service, Inc.: “Ordinarily, the fact that a party 

in interest has tendered an analysis does not automatically disqualify the analysis on the grounds 

of bias. However, bias is properly a factor to be considered in determining weight to be accorded 

any testimony.” Sea-Land Service Inc. - Proposed General Rates Increases in the Puerto Rico 

and Virgin Islands Trades, Docket No. 81-10, 20 S.R.R. 1627, 1633 (FMC Sept. 25, 1981), aff’d

sub nom, Puerto Rico Maritime Shipping Auth. v. FMC, 678 F.2d 327 (D.C. Cir. 1982). Mr. 

Weiss performing certain analyses does not disqualify the analyses; however, the source of 

 208 6 F.M.C. 2d
calculations will be taken into account in terms of weight. Differences in the total damages 

calculations before and after Mr. Berning’s involvement, which Hamburg has highlighted, 

support the impact of Mr. Berning’s participation. Opposition at 31-32. 

iii. Timeliness

Both parties contest the timeliness of each other’s expert reports. Hamburg asserts that 

Mr. Berning’s two expert reports were served after the deadline for expert reports and are thus 

untimely. Opposition at 25. OJC contends that Mr. Zayas’s declaration, constituting a rebuttal 

expert report, was served nearly two months after the close of all discovery in violation of the 

rules and is “trial by ambush.” Reply at 28. 

It appears that all three submissions were not timely filed. The Order on Respondents’ 

Motion to Compel and Revised Schedule, served June 29, 2022, states that the cut-off for 

disclosure of initial expert reports was August 5, 2022, and the cut-off for all discovery was 

September 16, 2022. Mr. Berning’s initial expert report is dated September 2, 2022, his 

supplemental report is dated October 17, 2022, and Mr. Zayas’s Declaration is dated 

December 8, 2022. CX 415; CX 460; RX 1145. 

The status of Mr. Berning’s initial report was addressed in an earlier order in this 

proceeding, which held that the “expert report submitted by Complainant on September 2, 2022, 

was not filed timely. However, striking the report or not permitting Complainant to present a 

damages expert would be an extreme remedy. Rather, the discovery deadline will be extended 

briefly.” Order on Respondents’ Motion to Compel and Complainant’s Motions for Extension of 

Time and for Clarification at 5. It is preferable to resolve this proceeding on the merits. 

Therefore, all three expert reports will be entered into the record and given the weight they are 

due. In the future, the parties should note that untimely expert reports may be stricken. 

iv. Other Critiques

Hamburg offers a number of critiques, many based on its expert’s reports at RX 1180 and 

RX 1145, which it argues apply across more than one damage calculation. These will be 

summarized here and are considered as they become relevant in evaluating OJC’s specific 

damage calculations. 

Hamburg argues that Mr. Berning failed to verify OJC’s data and calculations using 

source documents and the “lack of sufficient relevant data is obvious in eight respects”: average

revenue per container; average profit per container; containers OJC shipped in 2020-21; 

containers OJC would have shipped in 2021-22; products OJC would have sold in 2021-22; 

HSDG’s alleged refusal to deal; OJC’s alleged lost profits; and OJC’s failure to mitigate. 

Opposition at 27-31. 

Hamburg also argues that Mr. Berning’s opinions depend upon six unreasonable 

assumptions, that: Hamburg was required to enter a service contract for 2021-22; the 

hypothetical service contract for 2021-22 would have had the same rates as 2020-21; Hamburg 

would have agreed to increase the MVC from 200 FFEs in 2020-21 to 4,700 FFEs in 2021-22; 

OJC would have been able to fill 4,700 containers with products and sell all those products in 

2021-22; Hamburg would have agreed in the hypothetical 2021-22 contract to transport 

 209 6 F.M.C. 2d
containers from Asia to OJC’s warehouse in Kentucky; and the hypothetical 2021-22 contract 

would have included trade lanes from Brazil to the U.S., even though the service contract for 

2020-21 covered only Asia to California trade lanes. Opposition at 32-35 (emphases omitted). 

Hamburg’s argument that they were not required to enter into a service contract for 2021-

22 goes to the merits, while this section addresses what reparations are appropriate for the 

Shipping Act violations established above. The other critiques offered by Hamburg are

considered in evaluating OJC’s damage calculations below.

Mr. Berning calculates average gross profit per container as revenue less the costs, 

including the purchase cost, sales commissions, fulfillment center costs, shipping costs, and any 

other costs directly associated with the product. CX 423. Mr. Berning also states that OJC 

utilizes third parties for shipping, fulfillment warehousing, and other needed tasks to sell the 

product, and that all of these costs have been captured and deducted. CX 423. He finds average 

net profit per container to be equal to gross profit per container, noting that due to the structure 

of the company, the direct variable costs included produce the net profit per container. CX 423. 

Because the numbers presented are the same and the costs deducted appropriately reflect OJC’s 

variable costs, this decision simply refers to average profit per container. See, e.g., Flota 

Mercante Grancolombiana v. Consolo v. FMC, 373 F.2d 674, 677, 681 (D.C. Cir. 1967) 

(discussing and affirming reparations figure set by the Commission after Consolo v. FMC, 383 

U.S. 607, 626 (Mar. 22, 1966)); Rose Int’l Inc. v. Overseas Moving Network Int’l, Docket No. 

96-05, 29 S.R.R. 119, 2001 WL 865708, at *77-78 (FMC June 1, 2001). 

b. Damages Calculation 

OJC presents its expert’s analysis of the injurious effects of Hamburg’s Shipping Act 

violations under two alternate methodologies: (1) lost profits or (2) shipping rate differentials, 

each addressed separately below. Shipping rate differentials will be addressed only briefly, 

because the lost profits method more accurately measures OJC’s actual injury. 

i. Lost Profits

In assessing lost profit damages, the same damages standard elaborated above applies. 

Reparations will only be awarded based on actual damages which “does not require absolute 

precision but does require evidence sufficient to reasonably infer the actual loss sustained.” 

MAVL Capital, 2022 WL 2209421, at *3. The Supreme Court has affirmed that lost profits from 

being “unjustly and illegally denied shipping space” is a loss that “is real and it is certainly 

compensable under the Shipping Act.” Consolo v. FMC, 383 U.S. 607, 626 (1966) (holding it 

was error on the part of the Court of Appeals to reverse the Commission’s award of reparations). 

The “goal of awarding damages is to make the injured party whole,” thus, the “proper 

measure of damages is not reduced to one simple formula, but must be evaluated on the 

individual facts of the case and calculated in order to make the injured party whole.” Kobel v. 

Hapag-Lloyd A.G., Docket No. 10-06, 2014 WL 5316331, at *14 (ALJ July 30, 2014) (Remand 

Initial Decision), aff’d 2015 WL 3465821 (FMC May 26, 2015) (“Kobel Remand ID”); see also

22 Am. Jur. 2d Damages § 25. Therefore, regarding calculation methods for reparations claims 

 210 6 F.M.C. 2d
before the Commission, “[t]he method chosen depends on the evidence available and which 

calculation more accurately measures the actual loss.” MAVL Capital, 2022 WL 2209421, at *3. 

OJC presents four categories of lost profit damages: (1) loss for failure to meet minimum 

TEU during 2020-21, (2) loss due to failure to provide the regular weekly shipments during 

2020-21, (3) freight charges above contract rates during 2021-22, and (4) loss due to refusal to 

renew contract during 2021-22. CX 422. OJC adds these four categories of lost profits to 

establish a total lost profits claim. Each of these four categories of lost profit damages requested 

will be assessed below. However, two sections have been reordered, to allow for more logical 

analysis: what OJC labels as “lost profit damage category #4” (loss due to refusal to renew 

contract) will be addressed third in the discussion below, followed by what OJC labels as “lost 

profit damage category #3” (freight charges above contract rates during 2021-22).

(a) Minimum TEU 2020-21 

OJC contends that Hamburg was required by the 2020-21 service contract to provide a 

minimum of 200 containers and only produced 185, or a deficit of 15 containers; and proposes 

this loss be computed by taking the deficit of 15 containers, multiplied by the anticipated average 

net profit per container of $22,892.48, resulting in a loss of $343,387.18. Brief at 38; CX 424. 

Hamburg acknowledges that it shipped only 185 out of the contracted 200 FFE. 

Opposition at 2; CX 212. But, Hamburg disputes OJC’s calculation, asserting that section 3(c) of 

the service contract provides for liquidated damages of $250 per TEU “[i]n the event that the 

Minimum Volume Commitment of this Contract is reduced by 10% or more as a result of 

carrier’s failure to provide space;” such provisions are valid and can negate claims for damages 

under the Shipping Act; the contract obviates any claim for damages arising from Hamburg’s 

failure to meet the 200 FFE minimum, because the actual containers shipped by Hamburg (185 

FFEs) were within ten percent of the MVC (200 FFEs); and even setting aside the ten percent

threshold, the maximum damages OJC could receive under the service contract for a 15-

container shortfall would be $7,500 (30 TEUs multiplied by $250 per TEU). Opposition at 37. 

Many of the points made by Hamburg may be relevant were this a breach of contract 

claim, but this is not. This proceeding addresses violations of the Shipping Act. Thus, it is not 

contractual terms or liquidated damages, but rather OJC’s actual injury that must be assessed. 

46 U.S.C. § 41305(b). While California Shipping considered contract provisions, that was in the 

context of evaluating complainant’s actual injury. 1990 WL 427466, at *25 (referencing 

contracts with clauses that lowered the minimum quantity commitment if the shipper was unable 

to secure space from the carrier; thus, the contracts alleged to have been owed to complainant 

were “much less valuable”). Indeed, Hamburg was well aware, as they made the decision to 

refuse to deal and to retaliate against OJC, that actual damages “would of course be a 

significantly higher amount” than $250/TEU. CX 229. 

Here, there is no question concerning Hamburg’s obligation to fulfill 200 FFE and the 

shortfall of 15 FFE, rather, the challenge is in evaluating OJC’s calculation of damages, 

including average revenue per container and average profit per container. As explained below, 

the record demonstrates that both are calculated with reasonable certainty. 

 211 6 F.M.C. 2d
(1) Average Revenue and Profit per Container

OJC presents two averages, upon which several of its lost profit category calculations 

depend: average revenue per container of $60,250.30 and average profit per container of 

$22,892.48. OJC states that it compiled an average revenue per container shipped during the 

period June 1, 2020, through July 16, 2022, based on actual products shipped and the selling 

price of the products; and average profit per container based on the same containers used that 

that were used for the average revenue calculation, and taking revenue less costs of the product. 

Brief at 35. 

Mr. Berning’s report indicates that to compute the cost of the product, OJC captured “all 

the costs including the purchase cost, sales commissions, fulfillment center costs, shipping costs 

and any other direct costs directly associated with the product.” CX 423; see also CX 470. OJC 

added that it “utilizes third parties for shipping, fulfillment, warehousing and other needed tasks 

to sell the product” and that all these costs were captured and deducted. Id. OJC explained as 

well that “[e]ven though OJC was projecting [a] significant increase in sales in fiscal 2021 (and 

resulting need for additional containers), their increase in fixed costs would be nominal due to 

the structure of the company.” Id.

Hamburg disputes both averages and contends that Mr. Berning did not do anything to 

substantiate these numbers - he did not review, and OJC refused to produce - the shipping 

records, sales records, financial statements, and other documentation from which the calculation 

might be verified; OJC’s use of these numbers is without evidentiary support; an earlier 

spreadsheet provided by Mr. Weiss calculated different numbers for each calculation, which Mr. 

Berning was not aware of, and OJC has not explained why the calculations changed; Mr. 

Berning’s report does not address whether certain costs OJC characterized as fixed were, under 

applicable accounting standards, actually variable; and both OJC and Mr. Berning concede 

average profit per container may not have included all variable costs. Opposition at 28-29. 

Mr. Berning’s report indicates that OJC compiled an average revenue per container and 

computed the average profit per container. CX 423; see also RX 1041. Thus, these they will be 

evaluated, and any possible bias considered, in light of their being offered by OJC’s President. 

Mr. Berning’s level of review was appropriate for his use of these averages in subsequent 

calculations. While Mr. Berning did not calculate these numbers, he examined the methodology 

utilized by OJC, the data from OJC’s accounting systems, and OJC’s costs in light of the 

company’s operational structure. RX 1082-1083 (noting “the way they operated is almost as . . . 

a virtual company. So their costs, overhead and stuff, are very limited because they outsource 

pretty much everything” and that “We did look to . . . the Excel spreadsheets which have the 

company data . . . that comes directly from the company’s accounting and other systems . . . . 

[B]ecause it’s Excel-based, we can see where the calculations are made to see what they’re 

doing.”). This was a reasonable level of review by Mr. Berning to support their inclusion in his 

calculations. 

For both averages, Hamburg charges that OJC refused to produce the “shipping records, 

sales records, financial statements, and other documentation from which these calculations might 

be verified.” Opposition at 28-29 (citing to RX 1121, RX 1033, RX 1034). Much of this 

 212 6 F.M.C. 2d
underlying data was the subject of an earlier motion to compel and subsequent order denying that 

motion to compel. As recounted in the September 30, 2022 Order: 

Respondents argue that OJC has provided a spreadsheet supporting its alleged 

damages but that OJC has not provided any of the documentation upon which the 

spreadsheet is based, and that lost sales or profits should be reflected in financial 

statements or some sort of financial reports.

Complainant asserts that OJC is a private company which does not generate or 

possess any audited financials; overall company financials would not be relevant 

as the only line of business at issue is the import of house-brand products; OJC 

specifically generated the sales history of the house-brand products for 

Respondents; and OJC does not generate quarterly or annual profit and loss 

statements. . . . 

Respondents have not identified specific problems with the detailed information 

provided in this spreadsheet. In addition, Complainant’s arguments are persuasive 

that certain financial reports are not available or would not be probative because 

other product lines are included. 

Order on Respondents’ Motion to Compel and Complainant’s Motions for Extension of Time 

and for Clarification at 4 (citations omitted). The above has not changed – Hamburg still has not 

identified specific problems with the detailed information provided in the spreadsheet. Indeed, 

OJC has presented a wealth of rich actuals data (data about financials that have already occurred 

as opposed to what was forecast). OJC claims that it provided the following data to Hamburg: 

• Produced data in spreadsheets on the 737 containers shipped by OJC from June 

1, 2020, around when the parties’ Service Contract started, until July 2022. For 

each container, OJC provided Maersk with 13 points of data, including but not 

limited to the exact origin, destination, shipping carrier, ship date, arrival date, 

container value, and the exact price paid.

• Provided Maersk a total of 2,830 records of all the contents in the 737 

containers. For each line item, OJC provided 12 points of data, including but 

not limited to the product descriptions, total units, unit cost, profits, revenue, 

and pricing. 

• Provided a total of 366,709 records of sales history on all those products, 

starting from January 1, 2020, to August 17, 2022. For each sales transaction, 

OJC provided 12 points of data, including the order number, order date, order 

source, price paid, item ordered, quantity ordered, cost of shipping, cost of 

fulfillment, commissions, marketing, discounts, sales, and gross revenue, all 

from OJC’s internal database.

• All in all, in addition to the other documents and emails that OJC has 

produced, OJC provided Maersk a total of 370,276 records, with 4,444,049 

points of data, encapsulating all shipping containers during the relationship 

 213 6 F.M.C. 2d
between the parties, and all sales records of products associated with those 

shipping containers. 

Reply at 33 (citations omitted). Hamburg nevertheless argues that OJC’s “refusal to produce 

supporting documentation . . . casts significant doubt on Mr. Weiss’s estimates,” pointing to 

California Shipping, which Hamburg summarizes as “rejecting damages supported solely by 

summary exhibit that ‘was entirely the work of [complainant’s president].’” Opposition at 28 

(citing 1990 WL 427466, at *24).

But the underlying data in California Shipping was vastly different than OJC’s data. In 

California Shipping, the complainant’s President was offering “estimates of the amounts and 

types of cargoes he could have generated if given access to the three contracts.” 1990 WL 

427466, at *24. He offered these projections based on “his experience in the industry, his 

knowledge of [complainant/CSL’s] operations and customer base, and his knowledge of the 

market for service contract and tariff rates during the relevant time periods.” California 

Shipping, 1990 WL 427466, at *23. The lists of “potential customers” CSL submitted were 

generated by CSL’s salesmen, “included many customers that were not strictly CSL’s,” and 

showed “only a limited potential, as opposed to a probable commitment” causing the 

Commission to conclude there was “no convincing evidence, therefore, that CSL had a sufficient 

customer base to satisfy the particular volumes required by each contract.” California Shipping, 

1990 WL 427466, at *12. The Commission also noted there was “no indication in the damages 

summary as to what proportion of CSL’s cargo estimate would have been its own and what 

would have been cargo supplied by its ‘agents’” relevant because CSL “permitted, if not relied

upon, certain foreign NVOCCs to move their cargo under CSL’s contracts” and CSL 

acknowledged that “a ‘good portion’ of cargo moving to the East Coast would have been that of 

[its] ‘agents.’” California Shipping, 1990 WL 427466, at *11, *24. 

By contrast, OJC’s average revenue and average profit per container calculations are 

based not on projections but on actuals data, providing an inherently more fact-based and reliable 

foundation. OJC also took care to exclude non-relevant shipments, providing data for the 737 

containers shipped in the relevant time period corresponding to OJC’s house-brand products line 

of business. While audited financials are not available, this was detailed data, and Hamburg still 

does not assert the data to be problematic in and of itself. If earlier preliminary calculations 

(which have not been presented in briefing by OJC) were different from OJC’s final calculations, 

this is neither troubling nor surprising, and may be a consequence of OJC’s efforts to provide as 

much actuals data as possible.6

OJC’s average revenues per container and average profits per container, based on actuals 

data over the time period June 2020 through July 2022, is therefore found to be well supported. 

The variable costs taken into account by OJC were appropriate. OJC’s acknowledgement that it 

has captured “the vast majority, if not all of the costs relating to the sale of products,” and Mr. 

Berning’s statement to the same effect, does not impugn the reasonableness of this number, 

6

 Demonstrating OJC’s efforts to provide comprehensive actuals data, OJC noted that it produced 

data supporting its damages claims on July 15, 2022, (including data from June 1, 2020, through 

March 24, 2022) and supplemented this on September 2, 2022, with additional shipments made 

since that time (through July 2022). OJC Counterstatement Brief, September 8, 2022.

 214 6 F.M.C. 2d
where there is no indication of anything but good faith efforts from OJC to capture all relevant 

costs. For Complainant to show actual damages “does not require absolute precision but does 

require evidence sufficient to reasonably infer the actual loss sustained.” MAVL Capital, 2022 

WL 2209421, at *3; see also Tractors & Farm, 26 S.R.R. at 798-99 (“the amount [of damages] 

can be based on something less than precision but something based on a reasonable 

approximation supported by evidence and by reasonable inferences.”). 

OJC has sufficiently established its average revenue per container of $60,250.30 and 

average profit per container of $22,892.48 as reasonably certain, and these averages will be 

utilized in the damages calculations below.

(2) Final Calculation for 2020-21 

With average profit per container of $22,892.48 established, damages are calculated by

multiplying this profit by the remaining 15 containers that OJC was owed under the 2020-21 

service contract, in order to obtain OJC’s actual injury of $343,387.20. Therefore, for Hamburg’s 

failure to meet its minimum TEU by 15 FFEs (30 TEUs) in 2020-21, actual injury of 

$343,387.20 has been shown with reasonable certainty. 

(b) Regular Weekly Shipments 2020-21 

OJC claims that Hamburg was required to provide a minimum number of weekly 

shipments during 2020-21; this weekly minimum was confirmed in an email between Mr. Gast 

and Ms. Casanova; Hamburg repeatedly missed the weekly minimum and by end of the year the 

weekly shortfalls totaled 105 containers; and Hamburg has not compensated OJC for these 

shortfalls. Brief at 38-39. To compute this loss, OJC takes a deficit of 105 containers multiplied 

by the anticipated average profit per container of $22,892.48, resulting in a loss of 

$2,403,710.25. CX 424. 

Hamburg contends that this damage claim is inconsistent with the terms of the service 

contract; there is no contractual requirement that Hamburg provide “regular weekly shipments” 

to OJC; the service contract merely imposes a 200 FFE MVC during the contract term; in 

arguing that OJC was entitled to 8 TEUs or 10 TEUs per week, OJC refers not to the terms of the 

contract, but to emails to OJC or internal Hamburg emails; these communications refer to “SP” 

or “space protection” that Hamburg allocated internally in an effort to meet OJC’s weekly 

container requests and stay on track to meet the 200 FFE MVC for the contract term; these 

communications did not amend the contract to require regular weekly shipments; and in seeking 

damages for a weekly shortfall of 105 FFEs in addition to damages for failing to meet the 200 

FFE MVC, OJC argues that Hamburg was contractually required to ship 305 FFEs during the 

contract term, which is inconsistent with the contract, which states that Hamburg has the 

“option,” not the contractual requirement, to ship additional cargo beyond the MVC of 200 FFE. 

Opposition at 38 (citations omitted; emphases omitted).

This category of lost profit damages presented by OJC is not supported by the record. 

There is no enforceable commitment by Hamburg to provide a minimum number of weekly 

shipments. As Hamburg noted, the service contract refers to a minimum volume commitment of 

400 TEUs (200 FFEs). CX 125. Regarding spacing of cargo, the most relevant contract term 

 215 6 F.M.C. 2d
binds OJC, not Hamburg. CX 125 (“Shipper agrees . . . that the tender of cargo under this 

Contract shall be reasonably spaced throughout the term hereof.”). 

It is not surprising that OJC might have been confused regarding a weekly allocation. 

Hamburg says it referred to SP, but the emails show the terms SP and MQC to have been used 

sometimes interchangeably by Hamburg. See, e.g., CX 153 (internal Hamburg email indicating 

“Please note that there is a MQC of 10 TEUS per week under agreement # AECC0000291. . . . I 

appreciate that you confirm them at least to meet the MQC.”). The emails cited by OJC, 

however, do not suffice to establish an enforceable commitment, in place of contract terms.

In any case, if OJC was to be compensated for its actual injury of $343,387.20 from loss 

for Hamburg’s failure to meet minimum TEU during the service contract (discussed above), then 

OJC would already be made whole for 2020-21. “The basic objective of the law of damages in 

such cases as the instant one is to make a person who has suffered injury whole.” Adair v. PennNordic Lines, Inc., Docket No. 1695(F), 26 S.R.R. 11, 26, 1991 WL 383091, at *24 (ALJ Sept. 

24, 1991), admin. final Oct. 24, 1991. If OJC was additionally compensated for regular weekly 

shipments during 2020-21, OJC would be made more than whole for the 2020-21 service 

contract. This category of lost profit damages claimed by OJC is therefore denied. 

(c) Refusal to Renew Contract 2021-22 

OJC asserts that Hamburg refused to renew the shipping contract with OJC for 2021-22; 

the parties agreed to between 4,200 and 4,700 containers; by unlawfully refusing to renew the 

contract, Hamburg forced OJC into a position where it could not profitably operate its business 

because shipping the containers would cost more than the goods in the containers were worth; 

and Hamburg made record-breaking multi-billion dollar profits but was doing so at the expense 

of OJC’s business. Brief at 40. OJC offers alternate calculations based on the assumption of 

either 4,200 or 4,700 total containers expected for 2021-22, minus the 143 containers actually 

shipped, for a shortfall of 4,057 or 4,557 containers. OJC multiples this shortfall by the average 

profit per container of $22,892.48, for a total loss sustained of $92,874,785.49 or 

$104,321,024.77. Brief at 41; CX 425-426. 

Hamburg contends that OJC’s projection of 4,200 to 4,700 FFEs in 2021-22, a 767% 

increase over its container volume in 2020-21, is unsupported and unreasonable; and OJC’s 

claim for $92,874,785.49 or $104,321,024.77 is pure speculation and must be rejected. 

Opposition at 41. 

Actual damages must be proved by the party seeking them and to “warrant recovery, the 

actual detriment must be shown by competent evidence and with reasonable certainty.” 

California Shipping, 1990 WL 427266, at *23. Here, a 2021-22 container volume assumption of 

either 4,200 or 4,700 has not been demonstrated with reasonable certainty. This would have 

constituted a markedly different scale of relationship between OJC and Hamburg, equating to 

more than a 21-fold increase over the MQC established by the 2020-21 contract. This volume 

proposal by OJC also included new routes, which had not been a part of the 2020-21 relationship 

(discussed further below). OJC has demonstrated that it communicated to Hamburg its plans to 

move between 4,200 to 4,700 FFE in 2021, and Hamburg had begun to discuss this volume and 

its associated routes internally; but negotiations had not advanced to the point where this increase 

 216 6 F.M.C. 2d
in volume can be reasonably assumed to have been contracted for in 2021-22. CX 203; CX 217-

218; RX 809. As a result, OJC’s calculation of actual injury predicated on volumes of either 

4,200 or 4,700 is not supported by the record. 

That does not mean OJC was not harmed in 2020-21. Mr. Pump emailed Mr. Li on 

April 29, 2021, that Hamburg “should not engage in any renewal discussions” with OJC, nor 

“provide them with space under the existing contract.” CX 220. But right up until that point, 

contract negotiations had been proceeding for closing a 2021-22 contract. See, e.g., CX 218-219 

(April 27, 2021, Hamburg email discussing OJC’s plans to move 4,200 to 4,700 FFE in 2021 and 

seeking to confirm the actual MQC target for a 2021-22 contract); CX 217 (On April 28, 2021, 

Mr. Li stated Hamburg would “need a clear target in order to put it on target list” adding they 

“signed 200 FFE last year for City of Industry, CA and almost fulfilled that this year. Based on 

that what would be the MQC target for next year with and without KY business?”); CX 215 

(April 29, 2021, Ms. Casanova’s email stating “since we are working to renew the contract, I 

want to ask if it is possible to Increase MQC by 200 FFE giving a total of $400 FFE” adding “the 

customer has been constant in his volumes and is willing to commit to much more of the current 

MQC.”). Throughout those discussions, there were conversations about the MQC of the renewal, 

but never about there being no renewal at all. Amended Complaint at ¶ 41; HSNA Answer at ¶ 

41; HSDG Answer at ¶ 41.

To determine damages for 2021-22, it is next necessary to discuss: (1) container volume; 

(2) routes; (3) use of average profit per container; and (4) the containers actually shipped by OJC 

in 2021-22. 

(1) Container Volume

OJC asserts that it would have shipped 4,200 to 4,700 FFE in 2021-22. Brief at 39-41. 

Hamburg contends that this volume is speculative and not supported by the record, particularly 

where the previous contract was only for 200 FFEs. Opposition at 41. 

To assess 2021-22 volume, it is first relevant that OJC shipped 185 containers and was 

prepared to meet its contractual commitment of 200 FFEs with Hamburg in 2020-21. CX 212. It 

is reasonably certain that OJC would have shipped at least that same 200 FFE in 2021-22, given 

OJC’s actual performance in 2020-21, OJC’s constant requests for even higher volumes 

throughout 2020-21, OJC’s internal projection of and request for a significantly higher 2021-22 

volume, and the increased demand for consumer goods that even Hamburg recognized. See, e.g., 

CX 212; CX 217; CX 206-208; RX 622; RX 638; RX 823; CX 475; CX 203; CX 475; RX 1024; 

Opposition at 1 (“In 2020 and 2021, consumers spent more time at home due to the pandemic, 

resulting in increased spending on consumer goods. Increased demand for consumer goods led to 

increased imports from Asia, where many goods are manufactured.”).

Moreover, the evidence supports a finding that until April 29, 2021, Hamburg was 

interested in contracting with OJC for 2021-22 for at least the same contract volume, 200 FFE, if 

not more. The evidence shows that on the morning of April 29, 2021, Ms. Casanova asked 

whether Hamburg could “[i]ncrease MQC by 200 FFE giving a total of $400 FFE, that will not 

only cover the deficit by also show our interest to participate more of their volume” if Hamburg 

 217 6 F.M.C. 2d
could achieve that. CX 214; CX 213. This question suggests that it was not clear whether or not 

Hamburg could handle a higher volume. 

Mr. Pump testified: 

Our biggest challenge in 2021 was capacity, as the existing customers, all 

asked, with very few exceptions, all asked for higher MQC, more capacity 

commitments, that was the overriding objective. And that was our biggest 

single challenge. Because we could not get a firm handle on the capacity that 

we would be able to sell in 2021. And then we had the challenge of who do 

we give more capacity to where, where does it come from.

RX 993. This testimony is consistent with Ms. Casanova’s question about whether or not the 

volume could be increased – a question asked prior to the afternoon of April 29, 2021. Therefore, 

the evidence does not support a finding that Hamburg would have agreed to a higher volume 

than the previous year.

OJC asserts that it would have been able to ship 4,200 to 4,700 FFE. However, it was not 

clear that even before April 29, 2021, Hamburg had sufficient capacity to meet this higher 

volume request. Therefore, OJC’s request for damages based on up to 4,700 FFEs is overly 

speculative. The evidence does not support a finding that Hamburg would have agreed to a 2021-

22 contract of that volume. Therefore, although it is possible the parties would have contracted

for 400 FFEs or more, the most reasonable estimate, backed by solid evidence and reasonable

certainty, is 200 FFE. The next question is whether any adjustment needs to be made to account 

for routes, and as explained below, it does not. 

(2) Routes

OJC’s desired volume of 4,200 to 4,700 containers included routes that were not a part of 

the 2020-21 contract. Specifically, as part of OJC’s projected volume of 4,200 to 4,700, OJC 

initially requested that seventy percent of containers be shipped to Kentucky, and the remaining 

thirty percent to California. CX 203; see also CRPFF No. 73 (“Admitted that OJC initially 

requested 70% containers to KY” although OJC insists that it “informed [Hamburg] that if 

Kentucky was again an issue, OJC could ship all [containers] through California.”). 

 Based on the evidence, it is not reasonably certain that the route to Kentucky would have 

been included in a 2021-22 contract between the parties. Hamburg internally communicated 

possible interest in this route at points; Hamburg handled some shipments for OJC from Brazil to 

the United States on a case-by-case basis; and Hamburg acknowledged actually shipping some 

quantity of containers from Brazil to Kentucky, even in 2021 and 2022. CX 242; CPFF No. 87; 

RRPFF No. 87; CX 287; see also RPFF No. 25; CRPFF No. 25. However, the clearest evidence 

on this point is Hamburg’s declination of this route twice prior to April 29, 2021. Indeed, the last 

position communicated internally at Hamburg, before disengaging from negotiations, was that 

the Kentucky route would not be included in a 2021-2 contract. See, e.g., CX 217 (“I do suggest 

to maintain focus on local destination only.”). Thus, if OJC’s actual injury were being calculated 

based on an initial container volume of 4,200 or 4,700 FFE in 2021-22, that volume would have 

to have been adjusted downward, removing the container volume bound for Kentucky. 

 218 6 F.M.C. 2d
However, as already discussed, neither 4,200 nor 4,700 were accepted as a reasonably 

certain container volume for 2021-22. Just as 200 FFE is the reasonably certain container volume 

for 2021-22, so too is it reasonably certain to utilize the same routes from the 2020-21 contract 

(which did not include Kentucky). In effect, the route to Kentucky was already removed from the 

calculation of volume because the calculation of volume above does not include the Kentucky 

route. Therefore, while routes to Kentucky are not reasonably certain for 2021-22, this does not 

change the findings above. 

As a calculation of actual injury to OJC then, it remains reasonable to take 200 FFE and 

multiply this by the average profit OJC would have achieved in 2021-22, but for Hamburg’s 

retaliation and refusal to deal. But, prior to finalizing this calculation, two further questions must 

be addressed: whether it is appropriate to take average profit per container of $22,892.48 and to 

utilize this number for 2021-22 calculated losses; and whether an adjustment is necessary to 

account for the 143 containers actually shipped by OJC without the benefit of a contract with 

Hamburg. As elaborated below, OJC’s calculated average profit per container is determined to 

be sufficiently accurate; and, it is not appropriate to subtract from the 200 containers for 2021-

22, because the evidence establishes that OJC would have shipped these 143 containers on the 

spot market through alternate carriers, even if it had a contract with Hamburg for 200 FFE. 

(3) Average Profit per Container

One of Hamburg’s assertions is that it is an unreasonable assumption to think contract 

prices in 2021-22 would have been the same as contract prices in 2020-21, thereby lowering 

OJC’s profits per container. The main question that must be answered regarding the 

appropriateness of using average profits calculated by OJC for 2021-22 is whether this 

reasonably accounts for changes in contract prices that likely would have occurred. Both facts 

and case law support that it does. 

As described above, OJC calculated average profits per container of $22,892.48 by 

compiling the average revenue per container shipped during the period June 1, 2020, through 

July 16, 2022, based on actual products shipped and the selling price of the products. So, this 

average already includes actuals throughout the relevant timeframe for both 2020-21 and 2021-

22, taking into account higher spot market rates paid by OJC in 2021-22. 

The parties did not reach the point of exchanging 2021-22 contract rates before Hamburg 

disengaged from negotiations. OJC argues it can assume the same contract rates as 2020-21, 

citing to Hamburg’s internal communication referring to the new contract containing the “same 

rates” as in 2020-21. CX 214. But this was not an offer presented to OJC. It is clear in context 

that Ms. Casanova was providing information internally to begin the contract renewal process. 

See, e.g., CX 203 (“Appreciate any advice and if there are any new guideline regarding TPEB 

contracts so we can start working on this contract renewal.”). 

The evidence does not show precisely what 2021-22 contract rates would have been 

between the parties. But, this lack of information was caused by Hamburg’s retaliation and 

refusal to deal. As already described, Hamburg was negotiating the 2021-22 contract, until the 

decision was made “in light of potential litigation” to “disengage on renewal negotiation with 

this account.” CX 213. “[W]hen precise evidence measuring financial injury is unavailable 

 219 6 F.M.C. 2d
because of the nature of the violation, the Commission will rely on reasonable estimations, as do 

the courts, so that the wrongdoer does not benefit from its misconduct.” Adair, 1991 WL 

383091, at *23. The Commission has stated that “in situations where a wrongdoer has by its own 

action prevented the precise computation of damages, the Court has stated that the wrongdoer 

must bear the risk of the uncertainty and that damages can be shown by just and reasonable 

estimates based on relevant data.” California Shipping, 1990 WL 427266, at *23 (citing Bigelow 

v. RKO Radio Pictures, 327 U.S. 251, 264-65 (1946)). The average profit per container 

calculated based on 2020-21 and 2021-22 actuals is sufficiently supported to utilize in 

calculating 2021-22 injuries, especially as the profit per container includes the spot rates that 

OJC utilized in 2021-22. 

Therefore, the profit per container of $22,892.48 is reasonable to utilize to calculate the 

actual damages sustained by OJC due to Hamburg’s violations for 2021-22. The next question is 

whether the containers actually shipped by OJC impact the calculations. 

(4) Containers Actually Shipped by OJC 

OJC subtracts the 143 containers it was able to ship from its expected shipment of 4,200 

to 4,700 containers in its calculation of damages. Brief at 41. Hamburg asserts that “lost profits 

in 2021-22 is pure speculation and must be rejected.” Opposition at 41. 

To put the 143 containers actually shipped by OJC in 2021-22 in context, it is helpful to 

begin with an examination of OJC’s recent shipping history. OJC shipped 185 out of its 2020-21 

volume commitment of 200 FFE, and the evidence indicates that it would have shipped the final 

15 FFE had OJC been so allowed. OJC shipped additional containers with carriers other than 

Hamburg. See, e.g., CRPFF No. 40. As also demonstrated earlier, OJC also frequently sought 

more container space from Hamburg in 2020-21; and OJC’s projection of, and request for, a 

volume of 4,200 to 4,700 FFE in 2021-22 highlights that its desire for more containers was only 

intensifying. The consistent theme is that OJC was trying to ship as much as it could and was 

attempting to secure the container space to keep up with its projected demand. 

Thus, the evidence establishes that if OJC had a 2021-22 contract with Hamburg for only 

200 FFE that OJC would have continued to try to secure additional shipping space. This is what 

these 143 containers actually shipped by OJC in 2021-22 represent: those containers it was able 

to ship profitably outside of a carrier contact, through spot rates. Had OJC obtained a 200 FFE 

2021-22 contract with Hamburg, and also shipped an additional 143 FFE on the spot rate market, 

that would still have been significantly below its volume projection. Further confirming that OJC 

would have shipped 143 containers in addition to, not instead of, 200 FFE with Hamburg, 

Hamburg themselves point out that the 143 containers actually shipped by OJC in 2021-22 

included shipments from Brazil to the United States and from Asia to Kentucky, trade lanes 

which were not a part of the 2020-21 contract. Opposition at 40; see also CX 442-444; CX 425. 

Hamburg points out that some of the spot market transportation that OJC obtained was 

ultimately shipped by Hamburg. Opposition at 15. Indeed, the evidence shows that Hamburg 

transported shipments for OJC after April 28, 2021, including shipments that were already 

scheduled, obtained via third-party freight forwarder United Shippers Association, or obtained 

via limited spot quotes. SCX 509. But, as Hamburg acknowledges, these short-term spot market 

 220 6 F.M.C. 2d
shipments were not part of a service contract between the parties, rather they were shipments 

made on a “case-by-case basis through rate quotations that were typically valid only for 60 

days,” RRPFF No. 87, therefore being of a kind that would have occurred in addition to a 200 

FFE 2021-22 contract. Thus, these spot market shipments do not change the calculation of OJC’s 

injury.

Therefore, it is reasonably certain that had OJC shipped 200 FFE with Hamburg in 

2021-22, it nevertheless would also have sought out the spot markets to try to accommodate 

additional shipments. OJC’s total injury in 2021-22 may therefore appropriately be calculated by 

looking at the injury resulting from 200 FFE without subtracting the 143 containers OJC was 

able to ship on the spot market. Accordingly, damages for 2021-22 are calculated by multiplying 

200 FFE times the average profit per container of $22,892.48, which equals a total 2021-22 

injury of $4,578,496. 

(d) Freight Charges Above Contract Rates 2021-22 

The final category of lost profit damages to be considered is freight charges above 

contract rates during 2021-22. OJC contends it was forced to pay spot rates for containers during 

2021-22 because of Hamburg’s retaliation and not renewing their shipping contract; during this 

time, OJC could only ship 143 containers because the prices greatly exceeded the contract rates; 

in most cases, OJC was either unable to procure shipments, or was forced to not ship product at 

all because the containers would cost more than the goods in the containers; and had Hamburg 

not retaliated, OJC would have shipped 4,200 to 4,700 containers as projected given the 

enormous demand for home goods during 2021-22. Brief at 39. OJC therefore assessed 

“expected contract rates” for each of the 143 shipments, and calculated excess shipping charges, 

by comparing the actual less expected contract rates for each shipment. Brief at 39-40. 

Hamburg claims this damage claim is flawed in several respects, including that OJC did 

not provide any documents to verify the 143 FFEs it claims to have shipped or the spot rates it 

allegedly paid; OJC’s assumption that Hamburg would have agreed to the same rates in 2021-22 

is unsupported and unreasonable; OJC incorrectly includes shipments from Brazil to the U.S. 

even though these trade lanes were not a part of the 2020-21 contract; and OJC incorrectly 

includes shipments from Asia to Kentucky even though these trade lanes were not a part of the 

2020-21 contract. Opposition at 40. 

As described above, this category is no longer needed. It is not necessary to assess 

charges over contract prices, because the lost profit calculations above account for the entirety of 

the actual injury OJC has demonstrated with reasonable certainty for 2021-22. 

(e) Total Lost Profits

As explained above, OJC’s actual injury includes $343,387.20 for Hamburg’s failure to 

meet its minimum commitment for the 2020-21 contract by 15 FFE (30 TEU) plus $4,578,496 

for 200 FFE in 2021-22 which equals a total lost profits of $4,921,883.20. In holding lost profits 

to be real and compensable under the Shipping Act, the Supreme Court asserted “we think the 

court below wrongly minimized the sting of losing expected profits resulting from being unjustly 

 221 6 F.M.C. 2d
and illegally denied shipping space.” Consolo, 383 U.S. at 626. Compensating OJC with 

$4,921,883.20 would acknowledge the sting of lost profits and make OJC whole. 

Shipping rate differentials will be briefly addressed next, however, that method does not 

provide as accurate of a measure of OJC’s actual injury. Injury alone does not guarantee 

reparations, MAVL Capital Inc., 2022 WL 2209421, at *3, therefore, causation must be shown. 

The Commission has also indicated that mitigation of losses may be a factor to consider. As 

elaborated below, causation is confirmed, and OJC acted reasonably in attempting to mitigate 

damages. Therefore, actual damages are established. One final issue will be whether or not 

additional damages are appropriate in this proceeding. 

ii. Shipping Rate Differentials

As an alternative to damages calculated based on lost profits for 2021-22, OJC also 

presents damage calculations based on shipping rate differentials. OJC describes that it computed 

the difference between the contract cost (that OJC would have had but for Hamburg’s retaliation) 

to ship either 4,200 or 4,700 containers versus the spot market cost to ship the same number of 

containers, which required OJC to project how many containers it would have shipped on each 

route, to determine contract rates for each route, and to multiple those rates by the number of 

containers to be shipped in each of those routes. Brief at 41-42. To determine spot prices, OJC 

used sources including Xenta and Drewry or made specified assumptions, in the absence of spot 

rates from Hamburg. Brief at 42-43. 

Hamburg contends that there are multiple problems with this method, including that it 

assumes Hamburg would have agreed to a new contract in 2021-22 with the same rates as 2020-

21; it assumes the new contract would have included the Asia to Kentucky lanes; contract rates 

used by OJC for Asia to Kentucky are not sourced and are inapplicable; OJC improperly 

included the Brazil to US trade lanes even though those trade lanes were not part of the 2020-21 

contract; OJC’s projection that it would have shipped 4,200 to 4,700 FFEs in 2021-22 is 

unreasonable and unsupported; OJC incorrectly uses spot market rates for 2021-22 from third 

party sources; and there is no reason to use third-party sources when OJC knows the precise rates 

it paid to ship 143 FFEs in 2021-22. 

The goal of awarding damages is to make the injured party whole. Therefore, regarding 

calculation methods for reparations claims that come before the Commission “[t]he method 

chosen depends on the evidence available and which calculation more accurately measures the 

actual loss.” MAVL Capital, 2022 WL 2209421, at *3. Here, assessing injury through calculating 

lost profits most accurately measures OJC’s actual loss. Therefore, there is no need to consider 

shipping rate differentials damages in further detail. Instead, causation, mitigation, and additional 

damages can now be considered, premised on the total lost profits already established. 

c. Causation 

OJC contends that Hamburg’s illegal cutting OJC off from a service contract caused OJC 

tremendous harm, because, as a result, OJC did not have the reliability and consistency of stable 

rates and volume commitments that are the great benefit of a service contract over the spot 

market; Hamburg inappropriately uses of out-of-context quotes from Weiss’s deposition about 

 222 6 F.M.C. 2d
his regret in trusting Hamburg and working with Casanova to consolidate all OJC’s shipping 

business with Hamburg as a basis to find that it was Mr. Weiss himself who caused OJC’s harm; 

and Weiss had no way of knowing that Hamburg would retaliate and cut off OJC from all further 

service contract shipments. Reply at 51. 

Hamburg asserts that OJC offers no evidence of causation; Mr. Berning simply assumed 

it; his assumption is unreasonable given Mr. Weiss’s testimony that ‘OJC did not renew its 

service contracts with other carriers it had been using in 2020-21 and agreed to consolidate all its 

imports with Hamburg; Mr. Weiss decided to seek a single service contract with a single carrier 

for 2021-22, but the carrier he chose - HSDG - was the only carrier that failed to meet its MVC 

in 2020-21 and the only carrier OJC repeatedly threatened to sue; Mr. Weiss also made his 

decision to break off negotiations with other carriers before he had even started to negotiate in 

earnest with Hamburg; any damages OJC suffered in 2021-22 were caused by this decision and 

Weiss appeared to concede as much during his deposition stating “you know in hindsight, I felt, 

wow, what a big mistake to put all my eggs in one basket . . . . it made absolutely no sense what I 

did.” Opposition at 42 (citations and emphases omitted). 

In order to be awarded reparations, Complainant must not only prove a violation of the 

Shipping Act, but also a causal relationship between that violation and any actual injury. 

Prudential Lines, Inc. v. Farrell Lines, Inc., 1984 WL 136266, at *6 (FMC June 15, 1984); see 

also MAVL Capital Inc., 2022 WL 2209421, at *3 (“damages must be the proximate result of 

violations of the statute in question.” (citation omitted)). 

Here, Hamburg violated the Shipping Act through refusal to deal and retaliation against 

OJC. The decision not to provide space under the existing contract and not to renew the contract 

caused the damages identified above. Just as “Complainants’ losses were the direct result of the 

improper liquidation of their containers” in Kobel, OJC’s losses here were the direct result of 

Hamburg’s illegal retaliation and refusal to deal. Kobel Remand ID, 2014 WL 5316331, at *12. 

Therefore, OJC has established causation. Hamburg’s arguments about OJC’s negotiations with 

other carriers is more appropriately considered below, regarding mitigation. 

d. Mitigation 

OJC asserts that it could not obtain a shipping contract with any other carrier, because 

Hamburg retaliated against OJC so late in the contract season; nonetheless, Mr. Weiss tried to 

obtain a service contract with another carrier, to no avail; OJC obtained what limited space it 

could on the spot market at extremely high rates; but often OJC was unable to secure shipments, 

and in most cases was forced to forgo making shipments of goods to the United States altogether 

because the spot rates became too expensive to justify the cost of container freight. Reply at 51; 

Brief at 21. 

Hamburg contends Mr. Berning’s damage analysis is flawed because counsel instructed 

him not to assess mitigation; OJC failed to mitigate its alleged damages; and OJC failed to 

produce any emails or documentation showing that it made any effort to secure space or 

transport cargo with any other carrier, NVOCC, or forwarder. Opposition at 42-43. 

 223 6 F.M.C. 2d
 As explained in Rose Int’l Inc., “[m]itigation is a principle used in damages analysis to 

prevent a party from recovering damages for losses it could have reasonably avoided without an 

undue risk or burden, and is one applied by the Commission.” 29 S.R.R. at 162, 2001 WL 

865708, at *81; see also Restatement (Second) of Contracts § 350 (1981) (“As a general rule, a 

party cannot recover damages for loss that he could have avoided by reasonable efforts.”)

The “mitigation principle only applies to mitigation actions the injured party takes after a 

breach, not to actions taken prior to a breach in order to prevent damages.” Kobel Remand ID, 

2014 WL 5316331, at *13 (emphasis added). Kobel applied this principle, stating “Respondents 

have not identified any actions that Complainants could have taken to mitigate the damages after 

the liquidation of their containers. To the extent that Respondents are arguing that Complainants’ 

failure to timely pick up the containers caused the liquidation and loss, this delay did not justify 

the improper liquidation” and holding “Respondents [had] not established that the Complainants 

failed to mitigate their damages.” 2014 WL 5316331, at *13. 

Applied here, Hamburg’s arguments concerning what OJC might have done prior to the 

afternoon of April 29, 2021, refer to actions taken before the violation, which are not relevant to 

mitigation. In any case, OJC’s actions in focusing only on Hamburg for a 2021-22 contract, 

while not ideal in hindsight, were not unreasonable at the time. OJC believed, based on 

communications with Hamburg, that Hamburg would make OJC a priority customer, providing 

benefits such as supplying more containers, dedicated space protection, and committed personnel 

to ensure better service for OJC’s shipments, in return for OJC consolidating all of its imports 

with Hamburg. CX 467; RX 1024. In other circumstances, this may have resulted in better rates 

and a stronger long-term relationship between OJC and Hamburg. 

Subsequent to April 29, 2021, Mr. Weiss testified that he attempted to negotiate with 

other carriers but was unsuccessful, noting the difficulty of attempting to close a contract so late 

in the season. CX 468-469. While there is no contemporaneous evidence of Mr. Weiss’s 

inquiries with other carriers, Mr. Weiss’s testimony on this point is credible. This is consistent 

with Mr. Li’s testimony that the majority of contracts will be negotiated and entered into in the 

first quarter of the year, through April, or possibly May. RX 977; see also RX 988A. Indeed, 

OJC’s shipment of 143 containers on the spot market in 2021-22, even though spot market rates 

were generally higher than service contract rates, is strong evidence of OJC’s attempts to 

mitigate damages through shipping as much as it could ship profitably in 2021-22. It would be 

unlikely that OJC would work so hard to reach out to entities to secure space on the spot market 

without first (or simultaneously) attempting to secure a 2021-22 service contract elsewhere. As 

Hamburg also noted, OJC’s other contracts had ended before May 2021. Opposition at 42 

(summarizing that OJC’s OOCL contract ended March 2021 and its COSCO contract ended a 

“month or two” before Hamburg’s contract). 

Overall, the circumstances in terms of mitigation here are not very different from 

Consolo, wherein the Commission explained: 

In mitigation of the Board’s award Flota also urges upon us Consolo’s failure to 

charter vessels and his failure to use space available on the Chilean Line. These 

points are not tenable. We agree with Consolo that it would have been a hardship 

for him to charter ships in order to ply his trade, and we think it unreasonable to 

 224 6 F.M.C. 2d
contend he should have done so in the circumstances. Flota does not make clear 

what ships were a vailable for charter; or that Consolo could have used them; and 

if he could, on what terms. As to the Chilean Line, it has been shown, to our 

satisfaction, that Consolo did exert efforts to ship thereon and did, in fact, make 

several such shipments late in 1958. 

Consolo v. Flota Mercante Grancolombianan, S.A., 7 F.M.C. 635, 643 (FMC Sept. 16, 1963), 

validity of Commission’s reparations award aff’d sub nom. Consolo v. FMC, 383 U.S. 607 

(1966). 

Similarly here, Hamburg’s points are not tenable. There was nothing further that OJC 

could reasonably have done, as of April 29, 2021, beyond what OJC actually did. OJC exerted 

efforts both to obtain an alternate 2021-22 contract, and to continue to ship on the spot market as 

many containers as it could manage to ship profitably in the absence of a service contract. OJC 

thus was reasonable in mitigating its losses, and there were no losses that OJC reasonably could 

have avoided without an undue risk or burden. 

e. Additional damages

OJC asserts that it “has shown that its injuries were caused by Maersk’s violation of 

46 U.S.C. § 41104(a)(3) (retaliation),” which “warrants the payment of additional damage 

amounts to OJC up to ‘twice the amount of the actual injury.’” Brief at 49, Reply at 53. Hamburg 

does not directly address this argument, although they assert that OJC fails to prove damages 

with reasonable certainty. Opposition at 23-41. 

The Shipping Act provides that where the injury was caused by retaliation, “the 

Commission may order the payment of additional amounts, but the total recovery of a 

complainant may not exceed twice the amount of the actual injury.” 46 U.S.C. § 41305(c) 

(emphasis added). The parties do not cite any cases discussing this provision. 

The use of the word “may” indicates that awarding additional damage amounts is 

discretionary. American President Lines, Ltd. v. Cyprus Mines Corp., Docket No. 91-27, 1994 

WL 33488, at *14 (FMC Jan. 31, 1994) (Order on Review of Summary Judgment). The 

Commission recently made a statement suggesting that there is no guidance regarding when 

additional amounts would be appropriate. Fact Finding 29 recommended adding section 

41102(c) to the list of violations for which additional damages are available and if enacted, 

recommended that “the Commission should then develop guidance about under what 

circumstances it would order ‘additional amounts’ for violations of § 41102(c) [e.g., for certain 

types of cases (demurrage and detention only or other types of cases), or based on certain 

conduct (bad faith, willfulness)].” FMC Fact Finding No. 29, 2021 WL 3367606, at *2 (Jan. 1, 

2021) (brackets in original). 

The question is what factors are appropriate to consider when determining whether 

additional damages amounts are appropriate for the retaliation. It is clear that retaliation is 

among the types of cases for which additional damages are available. The additional damages do 

not appear to be compensation for actual damages nor for attorney fees, as both of those 

categories of damages are already available. Rather, it appears that the additional damages are 

 225 6 F.M.C. 2d
meant to be akin to a penalty. In Commission enforcement proceedings, enhanced civil penalties 

are awarded “if the violation was willfully and knowingly committed.” 46 U.S.C. § 41107(a). 

This standard is consistent with the recommendation in Fact Finding 29, which suggests 

consideration of bad faith or willfulness. Therefore, a standard of knowing and willful will be 

used to determine whether or not additional damages are appropriate here. 

The Commission has addressed the knowing and willful factor in the civil penalties 

context, stating: 

In order to prove that a person acted “knowingly and willfully,” it must be shown 

that the person has knowledge of the facts of the violation and intentionally 

violates or acts with reckless disregard or plain indifference to the Shipping Act, 

or purposeful or obstinate behavior akin to gross negligence. The Commission has 

further held that a person’s “‘persistent failure to inform or even to attempt to 

inform himself by means of normal business resources might mean that a [person] 

was acting knowingly and willfully in violation of the Act.”’ 

Rose Int’l, 29 S.R.R. at 164-165, 2001 WL 865708, at *47 (citations omitted); see also Pacific 

Champion Express Co., Ltd. – Possible Violations of Section 10(b)(1), Docket No. 99-02, 28 

S.R.R. 1397, 1403, 2000 WL 534633, at *10 (FMC April 21, 2000) (similar language). 

Here, the evidence shows that Hamburg was aware for months that it was not meeting its 

contractual commitment and that litigation was possible. As early as October 21, 2020, Mr. Gast, 

in risk management, stated: 

This is a very bad case for us which we will likely lose . . . . If we can at least 

establish we are working to uphold our contractual obligations I would feel much 

more comfortable about this case. At present based on the emails I have seen I do 

not have confidence in our ability to establish that we are doing our part under 

these terms.

CX 161. 

On April 29, 2021, Mr. Gast emailed that “I believe we are unlikely to meet our duties 

under these contract terms” and it “appears our local sales colleagues had tried to address the 

capacity issue with origin but were advised that no additional space would be granted for this 

customer.” CX 229. He further stated that “actual damages . . . would of course be a significantly 

higher amount” and that “[s]hould such a lawsuit occur I can easily imagine the cost would 

easily wipe out any profits gained from the commercial relationship due to potential breach of 

contract judgements against us and the cost of our own legal representation.” This does not 

suggest that the legal claims were not well-founded. Rather, Mr. Gast “hope[d] that due to the 

customer wanting to sign a renewal contract that they would choose to not pursuit this breach of 

contract suit for minor shortfalls under the present agreement.” CX 229. 

Hamburg was aware that they had not provided the space required by the 2020-21 

contract and made a knowing decision not to provide that space, or to engage in further 

negotiations for the next contract year, due to “potential litigation.” CX 220, CX 213. Initially, 

on April 29, 2021, Mr. Li emailed Mr. Pump and suggested that he would “ensure they will get 

 226 6 F.M.C. 2d
the remaining 18 FFE before the end of May.” CX 220-221. However, Mr. Pump responded 

stating that “[w]e should not engage in any renewal discussions with customer in light of the 

potential litigation, I would also not provide them with space under the existing contract. The 

shortfall will be compensated as per contract terms.” CX 220. Mr. Li then passed those 

instructions along, stating that they should “not engage in any renewal discussion with customer 

in light of potential litigation” and:

Meanwhile, we will leave it up to APAROM’s decision to handle the remaining 

18 FFE that required to fulfill the 200 FFE MQC on current contract. But just to 

express our position on this, we should also consider not to provide them with 

space under existing contract. The shortfall will be compensated as per contract 

terms, considering we already fulfilled over 90% of the MQC agreement. 

CX 213. OJC clearly explained why Hamburg’s conduct violated the service contract and 

Shipping Act, but rather than resolve the issue, Hamburg committed an additional violation. 

Hamburg knew that OJC would seek compensation for the failure to transport containers 

but nevertheless decided to “disengage.” On May 4, 2021, Mr. Maldonado requested 

authorization to ship the remaining FFEs, stating: 

Please note we were advise from customer in case that HS will not fulfill its 

contractual volume, it will proceed with legal actions against HS. We believe due 

to the small volume remaining to fulfil MQC of 200 FFE; this could be avoid it. I 

would appreciate please your feedback and authorization to grant space for this 

month of May for those 18 FFE’s needed. 

CX 227. Hamburg’s own employees were suggesting how to avoid legal liability but Hamburg 

still did not provide the last 15 FFE it had committed under the contract and the “contract 

expired on May 31st and renewal was not approved by Upper Management.” CX 212; 

Opposition at 2. 

The evidence establishes that Hamburg’s executive, Mr. Pump, knew that his executive 

decision violated the Shipping Act. In his deposition, Mr. Pump was asked: “Would a customer 

who had threatened to file a lawsuit or FMC complaint, or actually filed a lawsuit or FMC 

complaint, would that also be off limits with respect to discriminating against that client?” He 

responded “Yeah.” When asked whether “during this compliance training was there any 

discussion about if a customer threatened to or actually filed a lawsuit as opposed to a FMC 

complaint, whether or not that would be allowed in that situation to retaliate or refuse to deal 

with that customer?” Mr. Pump responded in relevant part that “it is clearly understood in the 

organization that this is not a factor in the decision whether or not to negotiate a service 

contract.” CX 95-96. Therefore, the decision was knowing and willful.

These facts support finding that the violation was knowing and willful. Hamburg was

aware that OJC threatened litigation and instead of resolving OJC’s legitimate concerns, Hamburg 

retaliated by not transporting containers under the service contract and ending negotiations for a 

new contract. This knowing and willful behavior supports ordering payment of the maximum 

amount of additional damage amounts, which is twice the amount of the actual injury. 

 227 6 F.M.C. 2d
As discussed above, the amount of actual injury is $4,921,883.20. The maximum award 

is no more than twice the amount of actual injury, or $9,843,766.40. Given the knowing and 

willful violation of the Shipping Act’s prohibition on retaliation, the maximum amount of 

damages is appropriate in this proceeding. 

4. Discovery violations

OJC asserts that Hamburg should be sanctioned and precluded from challenging OJC’s 

damages based on Hamburg’s repeated violations of court orders and FMC Rules and requests an 

adverse evidentiary determination that OJC’s damages be conclusively established. Brief at 26-

33; Reply at 22-32. Hamburg asserts that sanctions are not appropriate as it complied with 

discovery obligations; and, rather than seek sanctions for OJC’s refusal to produce relevant 

information, Hamburg explains why the withheld information was necessary and why its absence 

shows a lack of support for OJC’s expert’s damage calculations. Opposition at 43-49. 

This proceeding has been litigated thoroughly by the parties, including multiple motions 

to compel. It is not necessary to determine whether or not discovery violations occurred as the 

evidence that the parties are disputing was not necessary to resolving the proceeding. Hamburg’s 

spot market rates, blank sailings, and other issues raised by OJC were not necessary to a 

determination of damages and additional discovery would not have impacted the findings. 

Therefore, because the evidence does not support finding that failure to provide discovery 

impacted the determination, OJC’s request for sanctions is hereby DENIED.

IV. ORDER

Upon consideration of the record herein, the arguments of the parties, the findings and

conclusions set forth above, and the determination that OJ Commerce has established that 

Hamburg Südamerikanische Dampfschifffahrts-Gesellschaft A/S & CO. KG, which is now part 

of Maersk A/S, violated the Shipping Act, 46 U.S.C. §§ 41104(a)(3) (retaliation), and 

41104(a)(10) (refusal to deal), it is hereby

ORDERED that OJC’s Amended Complaint against HSDG be GRANTED. It is

FURTHER ORDERED that OJC’s Amended Complaint against HSNA be DENIED. It is

FURTHER ORDERED that HSDG is ordered to pay OJC reparations in the amount of 

$9,843,766.40, with interest on the reparations award running from April 29, 2021. It is 

FURTHER ORDERED that any other pending motions or requests be DISMISSED AS 

MOOT. It is

FURTHER ORDERED that this proceeding be DISCONTINUED.

Erin M. Wirth

Chief Administrative Law Judge 

 228 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION

DOKA U.S.A. LTD., Complainant 

V.

MSC MEDITERRANEAN SHIPPING COMPANY (USA) INC, 

Respondent 

DOCKET NO. 22-32 

Served: June 15, 2023 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s May 12, 2023, Initial Decision Approving Settlement Agreement has 

expired. Accordingly, the decision has become administratively final.

William Cody 

Secretary

 229 6 F.M.C. 2d
FEDERAL MARITIME COMMISSION

CCMA, LLC, COMPLAINANT

v. 

MEDITERRANEAN SHIPPING COMPANY S.A. AND

MEDITERRANEAN SHIPPING COMPANY (USA) INC., 

RESPONDENTS. 

DOCKET NO. 22-33 

Served: June 27, 2023 

NOTICE NOT TO REVIEW

Notice is given that the time within which the Commission could determine to review the 

Administrative Law Judge’s May 26, 2023, Initial Decision Approving Settlement Agreement 

has expired. Accordingly, the decision has become administratively final. 

William Cody 

Secretary

 230 6 F.M.C. 2d
 

 

 

 

 

 

FEDERAL MARITIME COMMISSION 

Office of Administrative Law Judges 

GLOBERUNNERS, INC., Complainant 

v. 

HOYER GLOBAL (USA), INC., Respondent. 

DOCKET NO. 22-27 

Served: June 28, 2023 

ORDER OF: Linda S. Harris CROVELLA, Administrative Law Judge. 

INITIAL DECISION APPROVING SETTLEMENT AGREEMENT1

On June 14, 2023, Complainant Globerunners, Inc. (“Globerunners”) filed a Motion for 

Voluntary Dismissal by Complainant (“Motion for Dismissal”), “based on settlement by the 

parties submitted hereto as Exhibit A.” Motion for Dismissal at 2. Respondent Hoyer Global 

(USA), Inc. (“Hoyer”) did not join in the motion, but it executed the confidential settlement 

agreement which references the parties’ intention to seek “Discontinuance/Dismissal with 

prejudice” of the instant Federal Maritime Commission (“FMC”) complaint and the related 

District Court action. Exhibit A Settlement Agreement at 4, ¶ 11. No opposition has been filed. 

Using language borrowed in part from the Administrative Procedure Act, Rule 75 of the 

Commission’s Rules of Practice and Procedure gives interested parties an opportunity, inter alia, 

to submit offers of settlement where “time, the nature of the proceeding, and the public interest 

permit.” 46 C.F.R. § 502.75(b); see 5. U.S.C. § 554(c). If dismissal is sought due to a settlement 

by the parties, “the settlement agreement must be submitted with the motion for determination as 

to whether the settlement appears to violate any law or policy and to ensure the settlement is free 

of fraud, duress, undue influence, mistake, or other defects which might make it unapprovable.” 

46 C.F.R. § 502.72(a)(3). “Unless the order states otherwise, a dismissal under this paragraph is 

without prejudice.” 46 C.F.R. § 502.72(a)(3). 

The Commission has a strong and consistent policy of “encourag[ing] settlements and 

engag[ing] in every presumption which favors a finding that they are fair, correct, and valid.” 

Inlet Fish Producers, Inc. v. Sea-Land Serv., Inc., 29 S.R.R. 975, 978 (ALJ 2002) (quoting Old 

Ben Coal Co. v. Sea-Land Serv., Inc., 18 S.R.R. 1085, 1091 (ALJ 1978) (Old Ben Coal)). See 

also Ellenville Handle Works, Inc. v. Far Eastern Shipping Co., 20 S.R.R. 761, 762 (ALJ 1981). 

1 This initial decision will become the decision of the Commission in the absence of review by 

the Commission. Any party may file exceptions to this decision within twenty-two days of the 

date of service. 46 C.F.R. § 502.227. 

231 6 F.M.C. 2d
 

 

 

 

 

 

 

 

 

 

The law favors the resolution of controversies and uncertainties through 

compromise and settlement rather than through litigation, and it is the policy of 

the law to uphold and enforce such contracts if they are fairly made and are not in 

contravention of some law or public policy. . . . The courts have considered it 

their duty to encourage rather than to discourage parties in resorting to 

compromise as a mode of adjusting conflicting claims. . . . The desire to uphold 

compromises and settlements is based upon various advantages which they have 

over litigation. The resolution of controversies by means of compromise and 

settlement is generally faster and less expensive than litigation; it results in a 

saving of time for the parties, the lawyers, and the courts, and it is thus 

advantageous to judicial administration, and, in turn, to government as a whole. 

Moreover, the use of compromise and settlement is conducive to amicable and 

peaceful relations between the parties to a controversy. 

Old Ben Coal, 18 S.R.R. at 1092 (quoting 15A AM. JUR. 2D Compromise and Settlement § 3 

(1976)). 

“While following these general principles, the Commission does not merely rubber stamp 

any proffered settlement, no matter how anxious the parties may be to terminate their litigation.” 

Old Ben Coal, 18 S.R.R. at 1092. However, if “a proffered settlement does not appear to violate 

any law or policy and is free of fraud, duress, undue influence, mistake or other defects which 

might make it unapprovable despite the strong policy of the law encouraging approval of 

settlements, the settlement will probably pass muster and receive approval.” Old Ben Coal, 18 

S.R.R. at 1093. “[I]f it is the considered judgment of the parties that whatever benefits might 

result from vindication of their positions would be outweighed by the costs of continued 

litigation and if the settlement otherwise complies with law the Commission authorizes the 

settlement.” Delhi Petroleum Pty. Ltd. v. U.S. Atlantic & Gulf/Australia – New Zealand Conf. 

and Columbus Line, Inc., 24 S.R.R. 1129, 1134 (ALJ 1988) (citations omitted). 

“Reaching a settlement allows the parties to settle their differences, without an admission 

of a violation of law by the respondent, when both the complainant and respondent have decided 

that it would be much cheaper to settle on such terms than to seek to prevail after expensive 

litigation.” APM Terminals North America, Inc. v. Port Authority of New York and New Jersey, 

31 S.R.R. 623, 626 (FMC 2009) (citing Puerto Rico Freight Sys. Inc. v. PR Logistics Corp., 30 

S.R.R. 310, 311 (ALJ 2004)). 

Globerunners asserts that the parties are “two sophisticated entities, both of whom have 

been represented by counsel during the settlement process.” Globerunners further states that “the 

settlement is the result of arm’s-length negotiations” and it fully resolves the issues between the 

parties. Motion for Dismissal at 3. Globerunners states, and Hoyer does not dispute or oppose: 

The proposed agreement does not contravene any law or public policy, nor is it 

unjust or discriminatory in any way. Additionally, this agreement will not result in 

any adverse effects to any third parties or on the shipping public. The proposed 

settlement is fair and reasonable and reflects the Parties’ desire to resolve their 

issues without the need for costly and uncertain litigation. 

232 6 F.M.C. 2d
 

 

 

Id. 

Based on the representations in Globerunners’ motion, the lack of opposition by Hoyer, 

and other documents filed in this matter, the parties have established that the settlement 

agreement does not appear to violate any law or policy or contain other defects which might 

make it unapprovable. The parties are represented by counsel and have engaged in arms-length 

settlement discussions. The proceeding would require potentially expensive discovery and 

briefing. The parties have determined that the settlement reasonably resolves the issues raised in 

the complaint without the need for costly and uncertain litigation. Accordingly, the settlement 

agreement is approved. 

The parties request that the settlement agreement be kept confidential. Pursuant to 

Commission Rule 5(b), parties may request confidentiality. 46 C.F.R. § 502.5(b); see also 46 

C.F.R. § 502.141(j). “If parties wish to keep the terms of their settlement agreements

confidential, the Commission, as well as the courts, have honored such requests.” Al Kogan v.

World Express Shipping, Transportation and Forwarding Services, Inc., 29 S.R.R. 68, 70 n.7

(ALJ 2000) (citations omitted); Marine Dynamics v. RTM Line, Ltd., 27 S.R.R. 503, 504 (ALJ

1996); Int’l Assoc. of NVOCCs v. Atlantic Container Line, 25 S.R.R. 1607, 1609 (ALJ 1991).

The confidential settlement agreement has been reviewed by the undersigned and is 

available to the Commission. Given the parties’ request for confidentiality, confidential 

information included in the settlement agreement, and the Commission’s history of permitting 

agreements settling private complaints to remain confidential, the parties’ request for 

confidentiality for the settlement agreement is granted. The settlement agreement will be 

maintained in the Secretary’s confidential files. 

Upon consideration of the motion, the settlement agreement, and the record, and good 

cause having been stated, it is hereby: 

ORDERED that the motion to approve the settlement agreement between Complainant 

Globerunners and Respondent Hoyer be GRANTED. It is 

FURTHER ORDERED that the request for confidential treatment be GRANTED. It is 

FURTHER ORDERED that this proceeding be DISMISSED WITH PREJUDICE. 

Linda S. Harris Crovella 

Administrative Law Judge 

233 6 F.M.C. 2d